A brief word on Kelowna, which is burning.

The last news is that 17,000 people have been evacuated from those expensive subdivisions on the west side of town, up from the lake. The raging fires, two of them, remind everyone there of the 2003 inferno, which left black timber on the hills overlooking town, clearly visible on my last visit a couple of months ago.

Charred houses – and there may be quite a few before this is done – are a disaster in all communities. In Kelowna, it’s a worse tragedy, since many families have chosen to sink huge amounts of money into real estate. Two major conflagrations in six years, however, may end up costing everyone some property value.

One of our daily bloggers (Nostradamus Le Mad Vlad) writes from Kelowna, and his last entry reported the first few hours of the fire. Let’s hope he escapes the flames, as does his home. Everyone threatened and afraid is in our thoughts.

And now down to the Lower Mainland:

Hi Garth, I’m a daily reader of your blog and have also read greater Fool. My Wife and I are both 28. She is one year away from writing her CA exam and I am a tradesman with a part time job on the weekend. We live outside Vancouver. Our yearly combined income is currently approximately 105 thousand gross. We have no kids and no consumer debt and are currently renting for $850 per month. I have about 25 thousand  cash and 30 thousand +, in RRSP’s.

My Wife’s mother passed away last year and left her inheritance to my wife and her sister which consisted of a Townhouse and about 250 thousand in RRSP. The townhouse was put on the market in November of last year (for $559,000) on the advice of the first realtor… ( I knew it wouldn’t sell at that price) but no one believed me… 9 months and 130G’s lower, a new roof ($10G’s which the family paid) and (2 G’s for paint also) and the months of maintenance and fees,and now on second real estate agent (who actually knows the market), and this week we finally got an offer for $430,000….. (luckily the townhouse is  paid off) or in other terms 30G’s more than what her Mother paid for it in 2004 when she downsized…(great investment).  Hopefully it will be sold next week, and the headache will be over so our families can get on with life.

My question now, is what would you recommend we do? My wife wants to start looking for a house right away, as she is “getting tired of renting” I’m convinced that after the Olympics rolls out as a major flop and leaves all it’s bills, The GVRD will be a picking ground for cheaper houses to grab with rental suites. I don’t believe “The worst is over”….but I need to convince my Wife of this, as she’s seen friends and family purchasing recently and thinks now is a good time……I know we are in a lucky position with our money situation, but I don’t want us to mess it up and be sorry for it.

I want to be able to afford a house where one of my paycheques can cover the mortgage, as I am a firm believer that debt is meant to be paid off and not just rented…. I think a lot of young people will be in a similar position very soon. — John

Well, Johnny, I think your wife needs to read this blog, in particular the last two postings. The housing market across Canada will not maintain its value for the reasons I have articulated. This means young potential buyers like you two could easily walk into a wealth-destroying situation.

I also hope your squeeze has picked up something from the sale of the townhouse, namely that real estate’s easy to buy and not so easy to sell. Despite a robust market and generationally-low interest rates, it took the better part of a year, big price reductions and a capital infusion to get rid of the place. Factor in a little inflation, and the investment yielded zero over the past half decade.

Families across the US (some of whom post on this blog) have found a drought of buyers for four or five years. Their equity has evaporated as prices declined, and the dominate word used to describe their lives is “trapped.”

Could that happen here? Even in Vancouver?

You betcha, John boy. Big time. Especially in Van.

Let me explain. The Vancouver real estate board calculates the current “benchmark” price at around $520,000. The average price is more (closer to $700,000), and Royal LePage is calling for a 2009 median price of $560,000.

This is a quarter million dollars higher than the Canadian average of $319,000. So the first question you need to ask, is why the hell do you live there? Wife is a student accountant and you’re a trades guy. Do you need to handicap yourself with BC prices?

If the answer’s yes, and if you still need a house, why buy at the apex of the market? Your wife is being overly influenced by the sheeple around her – this is one of the worst moments possible to invest in Vancouver real estate.

I mean, what is sustaining this market other than media hype, public delusion and dirt cheap mortgage money? Certainly not economics.

At $560,000, with a hefty 20% down (that’s $112,000, plus closing costs), $3,300 a month (five-year fixed at 4.55%) is required to carry a mortgage plus modest property tax and some cheap heat. That needs an income of $120,000.

(Actually CMHC cautions even an income of $120,000 with $112,000 down is not enough to buy this home. The federal housing agency figures the maximum real estate value is $524,000 on that gross family intake.)

Here’s the rub, John: The average family cannot afford the average home. That’s because households in Vancouver earn, typically, just over $63,000. According to a recent survey of the most unaffordable cities in Canada, the US and the UK, it takes 8.4 years average income to buy a Van house, compared to 3.5 years for the rest of Canada.

Worse, says the Royal Bank, it gobbles almost 63% of pre-tax income to service the purchase of a detached bung in Vancouver, compared to 39% (on average) elsewhere in Canada. And yet Canadian real estate today, compared with US properties at their bubbliest, frothiest, insanest moment (early 2006), is itself overvalued.

Is this really what you want to spend you one-and-only maternal inheritance on? After all, mom didn’t do so hot with her real estate. Let’s hope daughter learns. It’s still her money, dude.


#1 Bottoms_Up on 07.19.09 at 9:10 pm

Key piece of information: you rent for $850/mo. (wow!)

I’ve posted this before–by renting, you are effectively ‘buying’ insurance against a housing market downturn and other ‘home ownership’ costs:

My situation:

“Rent paid to stay at current place: $13620/yr

To buy the same place and make mortgage payments on $250,000, 5 year fixed at 3.45%: $14,892/yr

However, in the first year of mortgage payments, I would pay $8,463 in interest.

Therefore, the ‘actual cost’ (i.e. ‘additional cost’) of renting is 13620 – 8463 = 5157/yr (this works out to $430/month).

So, for $430/mo, I do not have to worry about and fix and pay for appliance and house repairs/upgrades/maintenance, lawn care, furnance, roof, basement leaks, paving the driveway etc.

I also don’t have to worry about rising mortgage rates and falling real estate values (i.e. I have peace of mind).

I also don’t have to incur additional expenses involved with buying a house (2% of mortgage). I also don’t have to worry about not being able to sell the house, or the costs of selling (5-7% of mortgage).

I also have freedom to move at anytime by giving 60 days notice to my current landlords.

I suggest you do a similar calculation.

In the face of declining real estate values, the ‘bubble precipice’, your money is better invested in preferred shares, dividend paying stocks, ETFs etc. You guys are young, invest and forget about it (personally, with that much money, I’d be tempted to invest $50,000 once every two months until it was all invested)

DO NOT LEAVE your $850/mo place!!!!!!!!!!!!!!!!! (or move to a different province and a smaller city if you just have to buy)

#2 JO on 07.19.09 at 9:47 pm

Your article was brilliant. How ironic I was talking to family at dinner an hour before i logged for the first time in a few days and was mentioning the exact same thing to some people. In my decades of watching markets and over 13 yrs of working in financial services, I have never seen such a bizarre extreme optimism toward an asset class as Canadian RE. It does top the sentiment I witnessed in March 2000 toward the Nasdaq.

Of course this will not end well. Tragically, those most affected in the end will be the few who buy with 20 or more down, or who have struggled for years to payoff a mortgage by living within their means.

These silly homeBUYERS getting in with less than 10 down and using these fraudulent “insurance” programs which are tools of blatant gov’t manipulation into RE (inflating prices by allowing the weakest borrowers to get in by forcing taxpayers to underwrite the default risk) are basically paying high priced rent to the banks.

They will wake up in 3-4 yrs and realize what stupid decision they have made. Imagine, buy a home now with 10 or less, and make inflated mtg payments for at least 5 yrs, and then see the value of the house drop at least 30 %…but, as out debt based, highly leveraged fractional reserve, fiat money system collapses with waves of deflation and eventually high inflation, what will happen as unemployment easily explodes past 12 % by 2012 ? So now, you or your spouse lose your job, then mortgage can’t be paid, your house is worth 30-40 % less, and you have no choice but to walk gets its and goes through POS..ooops, the bank sells the house and is short 80-100 K, so of course they come after you and sue your butt…no job, no cash, hello bankruptcy…..all the while, most of these people could have kept their lousy 20-30K in the bank and rented for 30-40 % less with no risk whatsoever..BTW, if they rent, and jobs are hard to find, they could always move easily to get new work if needed…for those sheep stuck in a mortgage where the house is worth less, good luck..


#3 Just a Carpenter on 07.19.09 at 9:50 pm

I live on Mission Hill right in the middle between the two fires burning ( the expensive subdivision you described) yet do not feel threatened in any way. Opened our house and travel trailer to some famlies who were evacuated, brought home my generator in case of power outage, picked up extra food, water, ice etc.

To date less than a handful of buildings destroyed. In the years since the last big fire many have taken care in clearing fuel away from their homes in the interface areas. Yes the potential for major loss still hangs over us but the real story of the day is the community spirit that kicked in as fast as the fires spread!

The large # of evacuations is due mostly to the fact that the area potentially threatened by the “Glenrosa” fire has only 1 exit point. It is very much an established area, mainly blue collar. IMO officials ordered everyone out just in case that one road was compromised.

Next few days will determine how long we stay in the news cycle.

#4 dawson on 07.19.09 at 9:53 pm

“She is one year away from writing her CA exam… ”
Are you kidding? CA ???? I thought the regular guys don’t have a financial education in North America but it actually looks worse …

#5 $fromA$ia on 07.19.09 at 9:55 pm

To all readers here, this Gov is still allowing loose lending be warned that this will not end well. There will be allot of mad people out there comming this winter as unemployment surpasses 10%.

The opposition can’t say anything about the current Gov’s actions to perpetuate this bubble because the thought of peoples homes being worth half or less is not a popular one.

The Liberals sit back waiting for a fatle mistake by the Conservatives that will give a good chance for a change of power.

Homes with rentals suites are the norm as well as houses converted to rooming houses. There is truly desperation out their…

#6 richard on 07.19.09 at 9:57 pm

Garth and others, I am in Kelowna, and as of yet, only a few houses (yesterday) were lost. So far, the fire (s), which is very close to houses, has burned around them, according to those who stayed in the evacuated areas. Which is great news, though, with the proximity, the potential for entire neighborhoods, a large chunk of West Kelowna, to be wiped out is very real.

On the subject of real estate (which is not appropriate for discussion while the threat is on…but that is what this site is about…)
I think many of the areas, like the old Glenrosa area, are not, among the posh, high priced, neighborhoods. In fact, many moved out to the west side for lower prices.

My question is, you mentioned Garth that this is particularly bad for people who sank a lot of money in. Why is that? Wouldn’t people in overpriced homes, actually benefit from this as a way out?? (assuming insurance of course). It might also give local trades a huge construction boost (starts were down 90%!). I realize this is a rather morbid topic, but might as well look for a bright side, if it does happen…

#7 Jan on 07.19.09 at 10:00 pm

What an ungrateful little wanker you are. You weren’t left the money, honey. My advice is to your wife – get rid of this free loader, post haste. Mr. Entitlement is not a good bet for the long run.

#8 Nostradamus Le Mad Vlad on 07.19.09 at 10:00 pm

Latest — and — — Plenty of smoke, the wind has died down considerably which means the smoke and ash are settling on us.

“Let’s hope he escapes the flames, as does his home.” — We’re quite fortunate in that we are in the middle of the ’03 and ’09 fires. For those familiar with Kelowna, we’re in the Glenmore area, close to Clifton Rd. Our home was new in ’92.
There are reasons why Spain, the Czech Republic and possibly other countries are paying foreigners to leave, as well as giving them free air tickets. They can’t afford anymore free handouts, so it’s cheaper to pay them to go away.

FWIW, the ‘lympix will end up being an unmitigated disaster, with suckers (taxpayers) on the hook for the whole schmoodle.

If I were you, rent until fall 2011 then start checking homes out. There will be plenty to choose from in early 2012.

Patience is a virtue, which comes in mighty handy at the best of times. See following links.
#94 wayupnorth at 6:26 pm — “This is just one of several sites warning that implosion south of the border is just months if not weeks away.”

Third wave of bankruptcies / foreclosures / empty office spaces, added to rising unemployment, pandemic over the globe — the ripple effect here begins shortly. Kinda goes with the links others, and I have posted recently.

Italy’s debt is now 120% of GDP, France’s is 90% (no links).

As well as people walking away from foreclosures, now some banks are, too. —
#74 char on 07.19.09 at 11:31 am — “Yes, this is YOUR blog. . . . That this stuff has found it’s way into a real estate blog shows how widespread it is. . . .”

Strangely enough, it also seems to resemble a financial blog, which is what several people are interested in, as not everyone is a real estate whiz. If Garth bans my posts, fine. I have no trouble with that.

There is more than one continent in this world. Everyone / thing is interlinked with the other, whether known or not. Different countries have different problems / events happening, some of which may have an effect on us, so I will post links to those articles.

As I never mentioned the ‘illuminati’, it is better that you skip my posts altogether. Re: other stuff, I recommend doing research. Whether you like it or not, the shit hasn’t hit the fan yet. It will soon enough.

#9 Joseph on 07.19.09 at 10:31 pm

If you pursue a new life and house elsewhere in Canada, you can purchase an alternatively viable home at half the price, pocketing the difference.

However, if you choose otherwise, there are risks ahead, and what lies ahead in the global economy is unpredictable at best, and you face the prospect of being “trapped” as Garth has pointed out. Interestingly enough, Garth’s admonition mirrors the latest warning from the World Bank. The World Bank has given warning that the global economy will fall into a “deflationary spiral” unless urgent action is taken to reduce high levels of excess capacity in industry, Ambrose Evans-Pritchard reported in the UK Telegraph. Justin Lin, the bank’s chief economist, said factories running idle around world threaten to “trap” economies in a vicious cycle, risking further spasms of financial stress that require more rescue packages.

The volatility and pace of developments convulsing the world economy today makes it difficult to predict what comes next, but if you leverage yourselves too heavily in a BC purchased home, you too may find yourselves “trapped”.

Your head may know what to do, but now we’ll see if your heart does too.

#10 BBC on 07.19.09 at 10:50 pm

Thoughts are with all those affected by the fire….stay safe!

#11 BCBORNNBRED on 07.19.09 at 11:13 pm

hey garth, any chance of not using the 3 fires that are wreaking havoc on our town right now to sell yourself? there’s a time and a place and not every home that lit up was a mcmansion-the area that lit up first is actually full of older homes. if you had to check a friends house at 2 am last night and assess whether to evac their most prized possessions as they are away then you might see how offensive your daily post seems today.

The only thing I was ‘selling’ was an awareness to others across the country of the intensity of your situation. I apologize if this was done in a insensitive way. — Garth

#12 jd on 07.19.09 at 11:16 pm

Hi; Well I guess I am on the extreme opposite side of the fence on BC real estate. You see I bought a house two weeks ago. It was marked down from 639000 to 549,500 (near what it sold for in 2005) and I made a much lower offer and after a little negotiation ended up at a price way, way, way below assessment value. Assessment value not appraisal value. So why did I buy? I think we are having a window of opportunity here in the Vancouver area. Yes homes are still pricey here but look at where we live. Vancouver was again rated as the Best place to live in the world. The anticipated inflow of people wanting to live here is still increasing not decreasing. There is a current oversupply of homes in some areas of the market and prices have dropped. So, I think if you can make a great deal and take it way below assessment, even if assessments and prices go down a little more, I think that in 5 years you will have still made a fantastic buy.
Common sense says that in a weak economy, with huge job losses, sky high debt, price deflation in some things and price inflation in others, and possible interest rate increases in the near future you should just do nothing now. That is common sense. But when is the last time common sense ruled anything like real estate? Buy low when things look bleak and everyone wants to get out. That, my friends, is how the rich have made money since they invented money. I am not rich but I sure would like to be.
ps. Personally, if I were John, I would have bought my Mother in law’s townhouse.


#13 nonplused on 07.19.09 at 11:16 pm

Look, dudes, we got to look at the charts. Most people have no ability to grasp the meaning of a series of numbers or the babble that comes from CREB.

Only Ottawa managed any sort of real increase. Toronto wiggled a dollar higher than a previous peak but the prices have been fairly flat for a few years. Montreal also squeaked higher.

Calgary, Edmonton, and Vancouver all had significant spring rallies, totally within expectations as it happens every year and can be seen on the charts previously, and are all clearly still in a significant down trend.

So what we have is that the markets that didn’t go crazy round one are up a little bit in round 2, while the crazy markets are still trending down.

I maintain that while houses in Calgary are more expensive than houses in Toronto, houses in Calgary must be over-valued. We have lots of land. We have cheap lumber. We have trades here now. We are building ring roads and LRT lines (finally!) We have no PST and now land transfer tax. They will build them! And they are still building them.

The reason housing starts are so high is because it is still hugely profitable to build. The existing stock is over priced.

Although we do have a couple of major projects that died or are in trouble. There is a big hole in the ground on 11th Ave which all work has stopped. There is also a big 2 tower project where Penny Lane used to be (I knew it was going to be a mistake to tear down that piece of heritage) that still has no major tenant. The landlord for Encana’s new “Bow” building canned the retail section due to lack of tenants. And don’t forget, when Encana finally gets their new building, major sections of the Canada Trust tower, Bankers Hall, and especially the old Pan Canadian building, will be empty.

Oh and the building where the Uptown is located? It’s an older building, but there are 11 floors there and only the main floor retail is occupied. I think that was Concrete Equities. They were advertising 12% bonds pretty heavily on AM radio up until a few months ago. I heard a rumor they are no more so I hope nobody bought those bonds. Anybody have more info?

#14 Alberta Boom on 07.19.09 at 11:46 pm

Buy a house, after all it inheritance money anyway. So what if house prices goes up and down, the money belong to the old lady anyway….. not like you’re losing yours.

#15 ralph on 07.20.09 at 12:13 am

The following from The Economist:

California’s debt rating was downgraded to BBB, two notches above junk status, by Fitch, a credit rating
agency. As the state began issuing IOUs, a contentious special session was held in the state legislature to thrash out spending cuts.

#16 Zoronqueen on 07.20.09 at 12:20 am

Hello Garth,

I don’t think the CMHC calculator is right….

Because based on our senario…

Gross monthly income 9K
interst rate 6%
down payment 100000
property taxes 280/month
heating 140/month
monthly debt payments 300/month

max mortgage is 190k
max house is 200K
monthly mortgage is 1216
insurance at 5225

We are in serious trouble. And considering we make more money than some of the people we know that have the same amount of house.

Mortage 350K
monthly payment current 1800
interest rate 2.25%

I wonder what in the world would Johnny and his wife want to be in that much debt??

#17 Dean on 07.20.09 at 12:30 am

I think it’s not just the people that bought in lately that could bring this thing crashing down.

Lets not forget too how many people took the “bubbling” equity out of their house to granitize and buy those toys. Or cash in on that stock market run. My bank said they’d give me 80% of your equity as a line of credit. They were actually pushing those pretty hard.

A significant drop could put these people underwater just as fast. And not only that, those lines of credit are variable and the banks have been raising them to prime +2 lately just for fun.

That’s another side effect of this bubble. It has created an illusion of significant wealth. So why not go out and buy that $75,000 SUV to go with your half million dollar mansion/semi detached? I know people that have used the equity to put a down payment on an investment property or cottage — effectively doubling their exposure to any downturn.

#18 Munch on 07.20.09 at 12:46 am

WTF is it about renting that scares so many people?

Maybe the need to “keep up with the Jones’es?

Or what?


#19 albertabear on 07.20.09 at 1:50 am

Great post garth keep them coming !!!!! Now to sell my house
:( only if there where buyers out there

#20 davers on 07.20.09 at 2:03 am

I wish I could explain this to everyone in Vancouver, but no one will hear it. It seems they have been brainwashed into thinking that the only thing to do is own once you get a down payment to get a big enough loan.

Still people are buying like there is no tomorrow. My dad’s friend put his house in East Van on the market 9 days ago and got 7 offers in a week and accepted an offer for 50K higher than asking!

I would leave if not for the fact that my job, friends and almost all of my family are here. I think the “Best Place on Earth” license plates have plates have made everyone insane. It’s a nice place, but best on earth? Not quite, maybe try going on a vacation or two. Wait, people here can’t afford vacations, they have a mortgage to pay!

#21 Bilbo Bloggins on 07.20.09 at 2:29 am

The way that people are getting into houses in Vancouver is with help on the down payment side (such as our friend with the inheritance), using CMHC insurance, and taking on a 35yr AMT.

On top of that, they need to rent out the two non-conforming suites in the basement in order to handle the mortgage payments.

Is that any way to live folks???

Wake up people. It’s in big bank’s interest to keep us in debt for as long as legally possible.

Why would you listen to Royal LePage or Remax.
Do you think they’re looking after your interest?
The nature of being a realtor has conflict-of-interest written all over it.

Run the numbers yourself. It’s not that HARD!

#22 Patiently Waiting on 07.20.09 at 5:00 am

Renting at $850 month means you are in a basement suite or a low-end apartment. That’s fine to save money but it can get you down after a while. I can see why you might get tired of renting and end up buying something. Try renting something a little nicer and maybe your wife will back off on owning for a while.

#23 David Bakody on 07.20.09 at 6:08 am

Move East my dear bye, so we have winter, you may no know this but Nova Scotia is warmest province in Canada …and there is place to golf year around (they do close one month for maintenance) With your windfall alone you could pay cash for the same home ( perhaps better) and live off good investments and work part time for the rest of your life …. hello Europe is stone throw away for travel …. NYC is only a hour’s flight …..

Garth I was talking with a British couple at a local bar yesterday who moved last December from England because they had enough trying to make ends meet, they move to Tatamgouche and are loving every minute …. there were in town for the Tall Ships, the gal told me she once lived in Vancouver and would not want to live there again. They looked relaxed and healthy and that speaks volumes for anyone’s life. “Get out of Dodge Kids” because if y’all think the Olympics or any other RE scam is going to provide happiness give your head a shake! But then again BC/Ottawa needs fools to pay their wages ….. off for sail and perhaps some a trip to valley to pick fresh fruit and a fine meal for under $10 …. a road with very mild traffic in the sunshine all in the land of defeatist people!!!!!!

#24 somecatchphrase on 07.20.09 at 7:22 am

With the right mix of short term bonds, dividend paying stocks, and income trusts, this couple could probably generate sufficient investment income to almost cover their rent, without a great deal of risk. This would allow them to max out RRSP and TFSA contributions with employment income.

#25 Just a Carpenter on 07.20.09 at 8:37 am

#6 richard
but might as well look for a bright side, if it does happen…
I have to admit there are a few of us who have drifted into that thought pattern. My concern though is what a major loss would do to the Insurance companies already on the edge? Could be the straw?
I would guess that they would not be near as generous as they were in 03.
As for the couple, something that you may not have thought about as you decide on “Investment risk”. A bankruptcy means you cannot practice as a CA.

#26 VOODOO on 07.20.09 at 9:09 am

Is this any climate to be buying a new home in?

“Economists at UofT’s Rotman School expect the economy contracted at a 6.6-per-cent annual pace – worse than first quarter’s 5.4-per-cent contraction”

#27 Bill-Muskoka (NAM) on 07.20.09 at 9:15 am

‘Do you not know your life is as a vapour?’ Old Wisdom

‘Do you not know your house is as a vapour as well? New Wisdom

Put your treasure in a place that is not subject to the forces of nature and fate. When will people learn?

As George Carlin said “People build their house next to a volcano and then are amazed they have lava in their living room!”

Carry on with all your RE pronostication, we are happily increasing our home’s usability and value through the old fashioned way of Sweat Equity for the future.

BTW, how are those Upscale T.O. neighborhoods doing now that your streets are part of the landfill scene?

#28 Mathew Gibson on 07.20.09 at 9:22 am

Another fine blog to recommend:

The two most recent postings are a great analysis of why housing in Canada is overvalued and the scenario for prices to come down. The writing may not be as fruity as Garth’s, but there’s a little more meat on the bone.

Note that I didn’t suggest that a reduction in housing prices is a crisis. This inevitable marjet correction is so often presented in a negative light. While no doubt many people who made poor decisions will suffer financially, cheaper housing is always a good thing for people and for an economy. When we spend most of our income on shelter, it doesn’t leave much for the things that actually advance our society and economy, like education, arts, energy-reducing home mods, healthcare etc etc.

#29 Onemorething (aka DaHKkid) on 07.20.09 at 9:42 am

Hey Munch, owning RE for Canadians is purely a status symbol. Especially in Vancouver and Toronto!

The second issue is the lack of rental property in many Canadian cities which limit you from sending your kids to the right schools.

I have chosen to live outside of Canada to avoid the whole issue. Do I have the chance to come back and vulture properties, absolutely!

BUT, will home ownership be worth it?????

We will definitely see over the next 3 years.

#30 Industrial Guy on 07.20.09 at 9:42 am

Employment levels certainly are an important factor in determining the direction of Housing prices in the future. After reading all the horror stories about RE Agents on this site, I was certain no other profession could possibly rate as poorly. I was wrong.

Employment consultants are much worse than real estate agents.

As a job applicant, you’re placing your future and livelihood in the hands of what is basically an unregulated “profession”. Employment consultants have increasingly become the gate keepers of employment in Canada. (I can’t imagine why their clients want to avoid the entire messy process). In any case, employment consultants are becoming more and more the only doorway to employment at many Canadian companies. I was recently hired by a mid sized Canadian company which required me to contact their employment consultant as the first stage of the hiring process. It was a truly humbling experience. After completing the entry level aptitude test for the V.P. level job, I was “interviewed” by the 20 year old employment consultant with the addiction to her Blackberry.

Industry members point to The Association of Canadian Search, Employment and Staffing Services (ACSESS) as their claim for legitimization as a profession. ACSESS is little more than a club. Membership is not required under any of Canada’s provincial registered professions acts. Their Certified Personnel Consultant Program may be recognized by clients, candidates and peers …..but not by Governments. It’s really just a marketing ploy to give them the air of professionalism and to charge more.

OK, so how do you become an employment consultant in Canada? Is a University degree required ? No. Professional training? No. You would expect the basic minimum would be a membership with ACSESS. Not so. Lawyers have bar exams. Nurses have competency exams. Engineers have entry exams. All of which are administered by their profession and are minimum requirements to enter the field. The only barrier to entry in this profession seems to be …… well …. nothing other than a job offer from one of these consulting firms. In one case, I applied for a job listed at the National Job Bank. The manager of the consulting firm called me and asked if I wanted to work for them. To my surprise, my lack of any experience in the field wasn’t an issue. I quickly discovered that it’s mostly a sales job anyway.

Just imagine the havoc a poor reference or some error in research could have on your career if the ACSESS members shared a common database. Do they? Who knows. It’s an unregulated “profession”. Of course, If you’re unemployed, this could also explain why you’re not getting interviews after sending out hundreds of resumes.

OK, Don’t panic,

“ACSESS member companies pledge to uphold the Associations Code of Ethics & Standards. They are committed to an industry which gives clients the ability to respond to business realities and changing technologies; and to giving workers – at all levels – an ever-increasing range of employment opportunities.”

HUH? What did that mean? No pledge to work for World Peace?

RE Agents also have a Code of Ethics….. I guess you see my point.

#31 Boombust on 07.20.09 at 9:54 am

#12/JD “It was marked down from 639000 to 549,500 (near what it sold for in 2005)”

Well, duh. What does THAT tell you?

#32 rory on 07.20.09 at 10:07 am

#18 Munch

Dude, would be cool to hear a paragraph or two on RE in your neck of the woods …I know you only do one liners so you may need to work up to it …rofl …seriously, would be interesting to read.

#23 David Bakody

“and there is place to golf year around (they do close one month for maintenance)”

Everyday I like too learn something new …today this is it …seriously, I did not know this …this is a good thing to know …this is how you sell NS …it must be in the SW somewhere…right??

I can now to back to bed.

#33 Downsized and Delighted on 07.20.09 at 10:08 am

So here you say the same thing could happen in Canada “big time”(especially) Vancouver as the U.S. (but you keep correcting me that you are NOT saying this – only that we will experience a milder version. So what are you saying? – that we will experience a much milder version but that people are so stupid here that they will be wiped out anyway?

I keep bringing up this point Garth because everyone on this site believes you are saying there WILL be a market meltdown. That’s what they are waiting and hoping for – so they can make their big winfall. (while simultaneously watching their relatives go bankrupt).

I would not worry about buying an entry level or slightly better single family house in a good central location if I took a fixed mortgage for 5 or more years at a good rate in the current market, provided I did not get into a silly bidding war for the property. There is not one reason to think that there is going to be a glut of this type of property anywhere in the near future.

Read my words. They are precise. — Garth

#34 VOODOO on 07.20.09 at 10:28 am

Calgarians better wake up to reality:

“Most of Calgary’s losses stemmed from a plunge in the value of investments held by households, such as stocks, bonds and mutual funds. At the same time, Calgarians took on large liabilities in the past year, and Calgary is now the home of the most heavily indebted people in Canada. Albertans in general have 30 per cent more consumer debt than the average Canadian, the research shows. And the mortgage debt of many young people has soared.

“Perhaps they simply haven’t realized the fact that the heady boom days are now over,” the researchers said in their analysis.”

#35 Devil's Advocate on 07.20.09 at 10:34 am

When we look back on this perhaps a decade from now, we may start to realize once again that interest rates should be set by the free market and forever removed as a tool for our politicians. Sometimes you can’t delay the inevitable. Sometimes you need to make hard decisions and let a recession run its course. Sometimes you need to let assets and incomes fall in value so the market can properly support them.

#36 char on 07.20.09 at 10:37 am

To # 8 Mad Vlad,

Sorry about the fires!

I think you misunderstand. I am against all censorship. I think there’s too much whining out there about being ‘offended’. I am going to read your posts. When the “shit hits the fan”, I want to see it coming.

#37 MikeB on 07.20.09 at 11:12 am

The funny thing about economists and the like saying the country is on the cusp of exiting this “recession” and that this was a fairly “mild recession” is that if this were such a meek and mild recession than why did our central banks drop interest rates to historic lows and start spending like drunken sailors. Perhaps the powers that be and those who watch balance sheets closely are aware that things are indeed bad enough to justify these extraordinary low low rates not to mention quantitative easing. It just seems funny to me that some optimists feel that previous recessions were much worse yet in this recession we are actually taking extraordinary measures beyond these so called worse situations.

#38 confused and a little crazed on 07.20.09 at 11:20 am

Woww…$850 rent

I have a friend who is renting a 1 bedroom basement suite for $600/ month. It’s small bedroom but nice kitchen and living room. THe landlady is nice but she comes in to pick up stuff from the storage room. It is in the suite but she always call first. The place is pretty old but it’s clean. You can always find an ok place but you have to be diligent…network…look at first various posting boards…etc not just craiglist or newspaper . there have landlords who are just trying get the most $$$. Some nice folks just have a little extra place and want an ideal tenant…no problems /no parties.

good luck with your decision. But if you add tax, maintenance fees, insurance , water and heat it’ less than $850 but with mortgage it’s not financially the best choice

#39 kanata squirrel on 07.20.09 at 11:29 am

It’s her money – let her waste it when the pop happens … at least you can have a peaceful life afterward.

Think of the silent “I told you so” you’ll be able to remind her for years to come.

Each time she nags, you can remind her of the year the pop occurred and how she lost all that money. Sounds like paradise in the making – unlike my wife always reminding me how much money she did us to invest in a house in Richmond in 2005 and sell in 2008. Oh the agony….

I recommend moving out of BC. We moved from our out West to escape the pop and we just love living in Ottawa (Kanata), ON. Vancouver with all it’s drug trade on the streets, gangs, a big debt load sucks as a place to live. Not a good place for a kids.

#40 squidly77 on 07.20.09 at 11:30 am

This is my prediction:

Next month, there will be no home buyers and prices will fall off the charts.
This RE down turn is so severe in Calgary now.Prices are down 40% from the peak.
Damn I’m out of beers now.
Edmonton prices are down 30% right now….

40 year mortgages…he he.
She’s gonna blow.
Realtors, the judgement day is near.

By crhistmas, that $500K Calgary home will go for less than $175K. It’s gonna be a bloodbath!

#41 smw on 07.20.09 at 11:36 am

#18 Munch

Its not about keeping up with the Jones, it about being the Jones an percieving that your now worth $500K because…

Like Dean says above you, whats the good of equity if you can’t extract and spend it to go along with the delusion of being an Orange County housewife?

#42 Dawn in Calgary on 07.20.09 at 12:06 pm

My thoughts go out to those in West Kelowna and Westbank. We were just gearing up to head out there for a week but given the situation, we’ve decided to stay in Calgary.

I hope things take a better turn shortly.

#43 Mark on 07.20.09 at 12:41 pm

I think John’s situation is fairly typical here in Vancouver. People inheriting money (or borrowing from parents), and then buying into an over priced market, continuing the bubble a little longer.

In my case I’m in my mid forties with almost no savings, a very small income, and no chance to ever inherit a single dollar (more likely paying for my mother’s funeral), and reading blogs like this out of curiosity. I can’t imagine why I do to be honest with you – buying real estate is not in the cards for me anyway.

I were John, I’d either a) keep renting for a couple of years, or b) follow the advice of another poster – buy a house in another province like Nova Scotia, and live the life of semi retirement at 28 years old. :)

#44 Mark on 07.20.09 at 12:42 pm

Being from Oakville Ontario and now living and working in Kelowna, it is no wonder why Westerners aren’t fond of folks from Ontario.

When I read your comments about the Kelowna / West Kelowna fires, they couldn’t be more incorrect.

In 2003 when over 200+ homes were lost, this lead to a major financial BOOM in construction and real estate values and the homeowners who lost their homes, while tragic, made at least $100,000 per home with re-building of their old home into a new modern home with new furniture, new clothes, etc.

Plus the effect of this major tragedy galvanized this community as 30,000 evacuees where taken into the homes of others, and who, as in my own experience have forged new friendships for life.

Now with this new fire, which has only burned 9 or 10 homes, Kelowna is once again showing it’s extreme kindness in taking in the 17,000 people who had to leave their homes.

You should stick to what you know vs. trying to use a disaster to promote your own products.

How distasteful and even a little sad that you have to resort to this low level! Stay in Toronto!

Mark, I know you are a realtor in Kelowna with a personal vested interest in higher property values, but this comment is absurd even for you. You may be happy people profited from their houses burning down, but elsewhere in Canada we view this as misfortune. — Garth

#45 betamax on 07.20.09 at 12:46 pm

Jake: “Buy low when things look bleak and everyone wants to get out. That, my friends, is how the rich have made money since they invented money.”

As so many people are currently buying into real estate, buying now is a mistake according to your own adage.

#46 Jim on 07.20.09 at 12:48 pm

Re#12 Common Sense?
How can buying something at the peak of the market be called common sense? Assessment values will drop when the market drops. If it can happen in San Fran, London and Manhattan, it will happen here, especially given the dearth of good paying jobs here. Wait until the Olympic hangover. This province is fueled by construction, when that dries up, look out. I think you have just caught yourself a falling knife…


#47 bigpictureguy on 07.20.09 at 12:51 pm

So Garth what do you think? Pls read this article. They feature a a young 30 something who’s networth is primarily concentrated in RE.

G&M – Vancouver ranks 1st in highest networth

I think of Phoenix or Las Vegas or Miami, circa 2005. — Garth

#48 Barb ... reader, Calgary on 07.20.09 at 1:15 pm


Ask your wife to try to ‘imagine’ in her head that she had “earned” that money…. It might be a valuable lesson for her — with any luck it will help shift her attitude — to one of more actual respect for her inheritance if she can imagine having worked hard for decades to save that much money. Right now, her attitude shows no respect for the inheritance and she will therefore throw it away. That’s what happens in these cases.

As one of the other bloggers pointed out weeks ago, people who receive a windfall often do not spend it well.

I think it’s because with ‘sudden money’ like an inheritance you haven’t had time to learn to respect it. It’s a learning curve. If she doesn’t try to teach herself fast, how to respect the inheritance, then she will let it slip away on an ill-timed purchased while sitting smack in the middle of the warning signs that she should have waited just a couple of years.

#49 gold bugger on 07.20.09 at 1:17 pm

You’re predicting no sales, squiddly? I hear your medicine cabinet calling your name. Realtors are not going out of business any time soon, despite your fevered hopes. The world will always need salesmen. Always.

Industrial Guy, the only thing that would result from government regulation of “employment consultants” would be six inches of paperwork and six-week waits to hire a guy to push a broom. What is it about Canuckleheads that every time they get an itch, they reflexively call for government-regulated bum-wipers?

#50 Munch on 07.20.09 at 1:35 pm

I told you guys already – South Africa is in a bursting property bubble.

All the same issues, people are the same the World over!

Garth’s advice as relevant here as it is there.

Stupidity is Universal, it knows no boundaries of nationality.

Okay, enough now – this is five posts in one!



The Munch

#51 Mark on 07.20.09 at 1:39 pm

If even proof was needed that the media is firmly in the pockets of the realtors… The front page of the vancouver sun’s website:

links to this nonsense:

Without any explanation telling you that you’re going to another site.

And again, as often with these things – the comment section is full of smug people going “well all the doomsayers will wrong – i hope they carry on renting – they dont DESERVE to own, etc et”

While completely not “getting it”

#52 Mark on 07.20.09 at 1:40 pm

Addition to last post : Just noticed – THE LINK IS FROM TORONTO?!? (linked from VANCOUVER sun)

#53 Devil's Advocate on 07.20.09 at 1:55 pm

#42 Dawn in Calgary on 07.20.09 at 12:06 pm

Don’t let the media scare you away from visiting Kelowna. It’s largely over sensationalized… nothing like the fires of 2003. That is not to say they couldn’t have been equally devastating, but they do have them under control. Weather is in the 80’s F and the lake has warmed up to 74 degrees.

BTW forest fires are completely natural and necessary phenomena of nature. A spectacular act of nature, in most cases, to watch really. That we choose to live in such interface areas is our mistake just as it is to try to prevent such fires to the degree that we do. It’s like the economy… left alone a natural equilibrium is achieved but when we try to intervene and make life “good” for our species all we are doing is postponing the inevitable.

Oh and… before the hypocrites have their way with me… we did loose our home in the fires of 2003.

About 20 years before the fires of 2003 some friends and I were taking a break and discussing how our forestry mismanagement was going to result in a major forest fire on the south slopes of Kelowna. After that fire there was much discussion about West Kelowna being the next on Mother Natures list.

When will we ever learn we are mere guests on this planet. Be our guest and come to Kelowna…

#54 Nathan in Edmonton on 07.20.09 at 2:09 pm

I’m sure many children of boomers are counting on a large inheritance to give them financial security in the years ahead, which is a huge mistake as that money won’t be there. John, your wife getting her inheritance years earlier than she should of, and she should not be looking at it as a way into home ownership; she may need it later — if you can’t afford a home without that money you and your wife shouldn’t be buying yet. You seem to know that, but good luck convincing her.

#55 pjwlk on 07.20.09 at 2:12 pm

Can somebody please explain to me why it always seems to be women how are “getting tired of renting”?

What the heck does that really mean?

#56 TJ on 07.20.09 at 2:37 pm


“My Daddy has a bigger House than you….”

Grade Three playground chatter. Make notes.

I think this predilection for envy is a particularly dangerous way to think in any economy – but today it is committing financial hari-kari.

Reading today’s post I am particularly taken with the word inheritance.
The old “win the Family Lottery”, deal.

Families have a tendency to be the things Shakespeare wrote about – if you catch my drift. Planning your whole golden years around grabbing Mom’s condo seems like a pretty shaky foundation to me.

#57 SF Banker on 07.20.09 at 2:52 pm

I saw some commentary on the CMHC exposure from the last thread, where one poster disputed the total exposure. I went through all the filings as well and I get the following mortgage exposures for December 2008 (actual) and December 2009 (estimated). I wrote a huge analysis for this in ppt format that I haven’t share with anyone. Look at the huge upward divergence relative to the “planned amounts”, and how much these amounts are expected to grow in 2009 – scary!

($CAD billions)

Mortgage Insurance (planned)
2008A: $408 ($316)
2009E: $441

Securitization Guarantees (planned)
2008A: $243 ($153)
2009E: $373

“Owned” Securitized Mortgages
2008A: $25 ($0)
2009E: $125

Total Exposure:
2008A: $667
2009E: $938 <— WOW! over 2/3rds of GDP!

Derivatives exposure at the end of 2008 is $184 billion as well. A "modest" 1/3rd of the annual federal budget. While I am sure some of this is portfolio hedging, one has to wonder how well they are managing their risk given the way their portfolio is BALLOONING. This is what happens when public policy meets the financial market – risk and valuation dislocation.

Also, there may be SOME double counting in the insured/owned line items, but if they were "one and the same" they wouldn't need to guarantee securitized products they have already insured now would they? Looks like their counterparties/conduits are throwing up on their products and forcing them to add layers of guarantees.

CMHC and Canada real estate is a ticking timebomb folks that on a price to income basis is an even bigger bubble than the good old USA.

#58 Nostradamus Jr's Analyst on 07.20.09 at 3:07 pm


“U.S. taxpayers may be on the hook for as much as $23.7 trillion to bolster the economy and bail out financial companies, said Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program.”

If my math his correct, that’s $80,000 for every man, woman and child in the country.

Our neighbor and largest trading partner is history – we had better look to other countries to trade with, and fast.

R.I.P, U.S.A.

#59 Nostradamus jr. on 07.20.09 at 3:12 pm

“”When banks “just walk away” we see what these so-called communities aren’t worth the ground they were built on.
Welcome to coastal re-urbanization.””

…Ouch, Detroit, Cleveland…..which city is next?

#60 highway61 on 07.20.09 at 3:13 pm

tj, “My Daddy has a bigger House than you….”:

alain de botton’s “status anxiety” is a fun (and insightful) summer read.

#61 The Coming Depression on 07.20.09 at 3:31 pm

Here’s the latest: the US rescue bill will be 23 TRILLION DOLLARS. The US dollar is completely falling apart and GOLD is moving bigtime. GOT GOLD? Forget housing it will topple like the Berlin Wall.
Economy is so bad: Whitehouse trying to figure how to spin the words on BUDGET DELAY ….

#62 POL-CAN on 07.20.09 at 3:35 pm

Anyone seen this yet?

IG: Treasury ‘failed’ to adopt bailout safeguards

Two takes on it so far:



TARP Special Investigator Says Bailout Total May Reach $23.7 Trillion

Stop this train wreck…. I want to get off :)

#63 confused and a little crazed on 07.20.09 at 3:37 pm

pjwlk #55

” getting tired of renting”

Women had a tendency to buy stuff…why do u think Malls mostly cater to woman. There is also a nesting ( emotional )_ factor more prevalent in woman. The woman will most likely give you a tour of her new place

Women also want to show off their wedding rings…guys just tell one another and give each other a firm handshake/ hug.

#64 lemontory on 07.20.09 at 3:40 pm

#44-Mark: so it’s good that people’s houses and all their worldly possessions burn down because they can make some money from it all and the community can have a kumbaya moment?? WTF???

#65 Jonathan on 07.20.09 at 3:49 pm

I did some research on CMHC and posted it to my blog: some key findings:

1. 90.5% of all mortgage growth since 2007 has been from CMHC mortgage back securities. Most of these are 5 year terms for 30+ year ams. The banks issues these securities and then sell them through CMHC to international investors. The government of Canada insures 100% of the entire security (not just the 20%). By the end of 2009, Mortgage backed securities will have tripled to $372 billion.

2. Mortgages on the banks books have only grow 0.01% since 2007. The banks are only keeping the very best loans on their books – which is a very small minority of loans. No wonder they want you to buy – they get the profit but don’t bear any risk AT ALL in a downturn.

3. In 2007 the average equity (downpayment) for all home buyers in Canada was 6%. That includes buyers who moved up.

4. In 2008 CMHC admits that it approved 42% of all high risk applications due to government pressure.

5. In 2009 non regulated financial institutions can now issue mortgage backed securities and have them backed by the government of Canada.

6. By the end of 2010, the government of Canada will be insuring more debt than the entire mortgage debt of the United States on a per capita basis.

Please go to for full story:

#66 MenWithHats on 07.20.09 at 3:52 pm

Wow ! That BC scenery tax is a killer .

#67 Marc on 07.20.09 at 4:03 pm

#55 pjwlk on 07.20.09 at 2:12 pm

Can’t explain it, but my wife got tired of renting, so she went and bought a place. Our divorce will be complete in 2-3 months. She now owns a place smaller then what we were renting, and for a higher price, but at least she doesn’t have to rent anymore, and can join her “rich friend” in condo ownership. Did I mention her “rich friend” took out a home equity loan, and now owes 300K on a unit she bought for 180K? I don’t think of her friend as rich at all, stupid comes to mind before that.

#68 wayupnorth on 07.20.09 at 4:10 pm


We have 34 fires burning in the territory right now and only a couple being supressed as we have only one rule that unless it threatens assets we don’t fight it and let nature take care of itself. Closest one is the biggest about 30km away on other side of a mountain range. If the wind blows from the east like last week we are covered in smoke and it is heading towards us. Last few days have been clear though as the wind is from the north-west.

When the news media drones on and on about disaster and evacuation anybody who doesn’t live near forests or along the red river or in hurricane alley down east etc. has no real idea what that means. You get notified that you need to load your car with whatever you can because you might have to leave on 15 minutes notice. In ‘o3 with a fire 3km away we were told the next notice was we were leaving so be prepared. It is amazing how having to choose between that shiny new BBQ or family pictures and heirlooms or sleeping bags and extra clothing for the family along with a few valuables brings new perspective to the value of the things in you life. Try explaining to your kids that they can only take their most favorite toy. Minor things like whether you wil have house to come home to or a job the next day are something to be worried about when you get to safety. Unlike us who are lucky to get notified most people in the world pay with their lives in natural disasters or flee with nothing to save their lives.

When you talk about being guests on this planet I suspect you too have been up close and personal with a grizzley bear or moose etc. in the wild and realize the only danger you are in is if you startle them or intrude on their daily patterns. I’ve spent hours fishing one side of a river in Alaska wth bears fishing the other and the only time I have been in danger is when some fool from the outside panics and gets their attention that something is wrong. When I used to work in the cemetary years ago we knew it was 10 o’clock coffee break when the old coyote did his circle aound the outside same time every day. 2 o’clock break was when the two mule deer came in to feed on the plastic flowers on the graves. (sometimes they got lucky and they wre real) Last night on the way to work I had to miss the beautiful gray fox wth the whte tip on his tail that chose our neighbourhood as its territory.

I often wonder if man evolved on this planet. For those of us lucky enough to live in nature you can easily see that every inch of space grows some form of life. Also you see that every form of life fits into the food chain at some point. It is only man alone that doesn’t fit in because we are the only creatures that try and change the world around us to suit our needs and not live with what it gives us.

Enough sermon I just want to point out that 1 in 4 Americans and large numbers of others in Europe are experiencing their own “fire” right now and are forced to leave their houses with few possesions with a big difference, they KNOW they have no house to come back to and probably don’t have a job already. I’m sure most saw the videos doing the rounds a couple of months ago about forclosures of the first 12% with 12% losing their houses now and another group in two years. There is now a great cry down there for AFFORDABLE housing and many here including Garth have already described what that is.

#69 Just a Carpenter on 07.20.09 at 4:12 pm

55 pjwlk
“Can somebody please explain to me why it always seems to be women how are “getting tired of renting”?

It’s sometimes referred to as “nesting”. Can’t explain how or why but trust me, it is very much a reality especially when children are involved.

#70 SF Banker on 07.20.09 at 4:39 pm

Last one got eaten? -> repost ->
I saw some commentary on the CMHC exposure from the last thread, where one poster disputed the total exposure. I went through all the filings as well and I get the following mortgage exposures for December 2008 (actual) and December 2009 (estimated). I wrote a huge analysis for this in ppt format that I haven’t share with anyone. Look at the huge upward divergence relative to the “planned amounts”, and how much these amounts are expected to grow in 2009 – scary!

($CAD billions)

Mortgage Insurance (planned)
2008A: $408 ($316)
2009E: $441

Securitization Guarantees (planned)
2008A: $243 ($153)
2009E: $373

“Owned” Securitized Mortgages
2008A: $25 ($0)
2009E: $125

Total Exposure:
2008A: $667
2009E: $938 <— WOW! over 2/3rds of GDP!

Derivatives exposure at the end of 2008 is $184 billion as well. A "modest" 1/3rd of the annual federal budget. While I am sure some of this is portfolio hedging, one has to wonder how well they are managing their risk given the way their portfolio is BALLOONING. This is what happens when public policy meets the financial market – risk and valuation dislocation.

Also, there may be SOME double counting in the insured/owned line items, but if they were "one and the same" they wouldn't need to guarantee securitized products they have already insured now would they? Looks like their counterparties/conduits are throwing up on their products and forcing them to add layers of guarantees.

CMHC and Canada real estate is a ticking timebomb folks that on a price to income basis is an even bigger bubble than the good old USA.

#71 Maureen on 07.20.09 at 5:13 pm

Just a couple of thoughts…If you are concerned about purchasing now and buying at too high a price…why not get a rate commitment at these historically low rates from your lender …it’s usually good for 120 days. Ask the lender to alert you to any rate changes and continue to have them get a 120 day rate guarantee just prior to the rate increase. This is available to you at no cost…the lender has to pay the hedging costs for the funds.
If you have a line of credit mortgage on your residence, check your statement. This spring lenders have taken advantage of these historically low rates to increase the spread above prime for their line of credit products.
I recently met with a client who had arranged an open line of credit for $300000 on his residence in 05. He advised me the rate was prime but upon review of the statement it is shown to be prime + 3 or 5.25%

#72 Dawn in Calgary on 07.20.09 at 5:34 pm

Re: Devil’s Advocate:

I sincerely hope it is over hyped by the media, but those fires can turn on a dime, or a breadth of wind. The resort we were booked into is evacuated and without power — we like the Westbank side :-)

I worked the phones all day yesterday and today, and every place I can find that accepts pets is booked solid until after the long weekend.

So much for the recession. A ‘staycation’ it is. Bleah.

#73 dd on 07.20.09 at 5:43 pm

#68 Just a Carpenter

…“Can somebody please explain to me why it always seems to be women how are “getting tired of renting”?…Can’t explain how or why…

It is one of those questions that remain a mystery. Hint … don’t even try and solve it.

#74 richard on 07.20.09 at 5:43 pm

@ #25 Carpenter…..thanks for the verification. I am sure we aren’t the only ones. In fact, my thoughts drifted to a young flipper I know, stuck in his mostly finished, 1600 sq foot house for which he wanted 600,000+ (now low 500,000!). As sick as it may sound, I guarantee that he was probably openly wishing the fire was in the upper mission where he is. (in his particular case, NO sympathy is warranted as it was his ego and cockiness,a self professed money/RE genius, that got him into this, and he reaped rewards during the boom)

And as I mentioned, construction is hurting from what I’ve heard(you would know far better).

Again, naturally I odn’t mean to be disrespectful, I was evacuated in 03, and know how upsetting it can be at the time, and recognize, the potential for house destruction was far greater here.

Nonetheless, given a couple posts lambasting Garth here, to put things REALLY in perspective, not a single human life has been lost yet (poor pets and wildlife might be another story). Yes, momentos etc. are psychologically traumatic to lose, but they are just THINGS. In that sense, not a day goes by, where dozens of more tragic things aren’t happening in BC, let alone, the world.

#75 dd on 07.20.09 at 5:47 pm

#58 Nostradamus jr.

…Welcome to coastal re-urbanization…

You must just gloss over that 8.0x house price to average wage ratio. If you can buy a house in Seattle for $200k why would any international $ buy into overpriced Vancouver?

#76 bigpictureguy on 07.20.09 at 5:52 pm

Seems like a disease or fixation on home ownership with women (sorry yes generalization). I separated from my idiot wife who insisted on buying a Vancouver condo after selling our home in Toronto because she felt that paying $1000/mth in rent was throwing money out the window. I was happy being liquid with no debt and patiently waiting for a downturn.

66 Marc on 07.20.09 at 4:03 pm
#55 pjwlk on 07.20.09 at 2:12 pm

Can’t explain it, but my wife got tired of renting, so she went and bought a place. Our divorce will be complete in 2-3 months. She now owns a place smaller then what we were renting, and for a higher price, but at least she doesn’t have to rent anymore, and can join her “rich friend” in condo ownership. Did I mention her “rich friend” took out a home equity loan, and now owes 300K on a unit she bought for 180K? I don’t think of her friend as rich at all, stupid comes to mind before that.

#77 jess on 07.20.09 at 6:27 pm

“toxic titles” by jingle mail

Bank ‘walkaways’ from foreclosed homes are a growing, troubling trend
These so-called “bank walkaways” are another troubling development in the foreclosure crisis…
Lenders or mortgage companies decide they don’t want homes they have already foreclosed on, sometimes because the value has plummeted or they believe the homes could become costly liabilities if they are socked with housing code violations.

But without that sale, the property can languish abandoned and ripe for vandalism. As liens and liabilities mount — creating a so-called “toxic title” — it becomes even harder to transfer the property. Neighborhoods and local governments are left to deal with the mess….

Renetta Atterberry thought she had lost her East 102nd Street house. So she was shocked to learn in January — five years after her mortgage company filed for foreclosure — that it was still in her name.

Worse, the long-vacant rental home had been vandalized and she faced a raft of housing code violations. Since then, she has been saddled with debts of about $12,000 to pay for demolition and back taxes.

#78 charliegosurf on 07.20.09 at 6:42 pm


dont try reasonning nostra. even his poo smells better than most, thats’ why vancouver and victoria amidst having the highest house assesment in canada still dump their raw sewage in the not so pristine pacific ocean..

the wal-mart in n-van, is da place to shop for most, same as evrywere, and thres one big blvd and tiny hwy 1, were they all drive in the passing lane at 65 flashing you if yu dare passing them on the rigth, coz yu know they are from north-van, not [email protected]

anyhow, on the smokey side, my eyes burn and the wind is still weak south of k=town, so many irresponsable ppl lit those wild fire up, some even do it for fun, a least if ppl would remember those kidos storie’s like the 3 little pig, and buildt their house with sometin else than matchstick…

keep on rollin, till you exhale!

#79 Nostradamus Le Mad Vlad on 07.20.09 at 6:52 pm

Radio station said that all three fires were human caused, whereas 2003 was a single lightning strike. No word on whether the fires were deliberately set, or accidental.

Google (maps) “2009 west kelowna fires” and that gives a clearer picture of where the three fires are. The Fintry and Rosevalley ones are mimally- to uncontained, the Glenrosa one about 40% contained. The fires have not advanced so far.

Light to moderate winds, normal temps. (low- to mid-30s), three homes lost so far. Quite remarkable, considering the steep terrain of the area. 10-20,000 people either evacuated or on alert to go.
#36 char on 07.20.09 at 10:37 am — Hi Char.

Possibly I did take your post out of context, so I live and learn.

As far as seeing “the shit hits the fan”, there are some excellent posts today. I have put links below, which (somewhat) show how govts. / business are taking full advantage of people, spending unwisely, etc.
Today we look at teeter-totters. Up / down, always two sides to every story. One side is the BS; opposite is reality, so briefly look at two different headlines, both covering the same thing and figure out which is right.

1– Reckless Spending?

2 — Unemployment (include the world, not just US)

3 — Big biz will always try their hardest to screw us — the banks and biz. are only in it for higher and larger profits, which is unsustainable (it’s called greed)

4 — The Ripple Effect of a ‘big daddy’ retail lending institution going broke is that retailers end up broke as well. That’s why next year will be significantly worse than this one, with malls / stores closing at a much faster clip.

5 — Positive outlooks

For each down, there must be it’s opposite up. Contrarian stocks are a good place to look!

#80 YourGuru on 07.20.09 at 7:09 pm

I know 3 people (all b/w 25-35) where i work in the GTA that have just bought a house recently (all ~$300,000-$400,000) ……. i ask them why they’re buying during a recession?. Their answer …… ‘we got approved for a low rate at 3.69 or 3.79 that ends in September so we had to buy one before it expired …. we didn’t want to lose the rate’. This is the mentality which is fueling a mini-bubble all across Canada …… these are all first time buyers. I’ve said many times before, there is only so many first-time buyers and once they are purged from the market we will start to see a devastating drop in sales. It will not end well……

#81 jess on 07.20.09 at 7:36 pm


The subprimes pushers are the new loan “modifiers” and of course they collect their fees upfront !

…FedMod is among dozens of similar companies that have been accused by state and federal authorities of fraudulent business practices…

Many of the companies formerly operated as mortgage brokers, The Times found. Since October, the California Department of Real Estate has ordered 210 businesses and individuals to stop offering loan modification or foreclosure prevention services, because they lacked a real estate license, as required by the state. In fact, nearly half the people have roots in the mortgage industry or other areas of real estate, according to public records.
Many of the companies formerly operated as mortgage brokers, The Times found. Since October, the California Department of Real Estate has ordered 210 businesses and individuals to stop offering loan modification or foreclosure prevention services, because they lacked a real estate license, as required by the state. In fact, nearly half the people have roots in the mortgage industry or other areas of real estate, according to public records.

#82 Soylent Green is People on 07.20.09 at 7:43 pm

My ex-husband (mall labels are his passion) and my b/f (ebay obsession) are extreme shoppers, rather famous in my opinion for being a penny wise and a pound foolish.

My b/f buys or tries to buy me things which I am forever selling off on craigslists as I don’t want all that crap cluttering up the house eg how often am I going to use a pasta maker, hello, just buy it at the grocery store.

He is so bogged down with all his things, collections, art, stamps, books, whiskey, wine, clothes, shoes, he’s practically paralyzed by life. Then the best is he can never find anything when we need it and has to go buy it again.

ps Women don’t like to rent because they can’t fix the house the way they need to use the space, or they don’t feel protected by their men from nutjob landlords.

Everything goes both ways people.

#83 john m on 07.20.09 at 7:53 pm

Hundreds of thousands to lose unemployment benefits
Many Americans face the expiration of their standard 26 weeks.
Posted by Elizabeth Strott on Monday, July 20, 2009 10:21 AM

Unemployment © Jeff Kowalsky/Bloomberg News /LandovThe recession has erased 6.5 million jobs since it began in December 2007, and hundreds of thousands of people without jobs are now preparing for the next big blow: the loss of their unemployment benefits.

Hundreds of thousands of Americans will start running out of their basic unemployment benefits over the next few weeks, with more than 650,000 people losing their unemployment benefits by September. A total of 4.4 million people, or about two-thirds of the entire population of people who have filed for unemployment, are expected to see their benefits expire. <<<<<<<anyone who thinks the worst is over better think again–WERE next!

#84 infernalmachine on 07.20.09 at 8:25 pm

check out this NY Times article. houses under $275K all over the USA.

some of this stuff is in downtown locales and is So Much More than what you could get in toronto (or calgary, edmonton, or any of the BC boroughs)!!!

why do we put up with this crap? will i ever be able to find a place in toronto at this rate?

#85 Patiently Waiting on 07.20.09 at 9:00 pm

“ps Women don’t like to rent because they can’t fix the house the way they need to use the space, or they don’t feel protected by their men from nutjob landlords.”

I agree, and that’s why I won’t wait-out this bubble in a substandard rental. Been there done that, and both my wife and I had to move for sanity.

Here in Vancouver, I’ve seen half million dollar houses, duplexes, nice townhouses and luxury condos renting for $1200-1300. I know it may seem like a lot but if this is under 20% of your income, you can save well enough.

#86 nonplused on 07.21.09 at 12:01 am

You can still rent a really nice place for less than the cost of ownership. You just got to pay a little more.

My landlord has been really good so far, quick with the maintenance items. The rent is not cheap but the cap rate works out to around 2%.

#87 Pjwlk on 07.21.09 at 10:21 am

#83 Patiently Waiting

“ps Women don’t like to rent because they can’t fix the house the way they need to use the space…”

Ah yes, and that leads to the second biggest complaint on the list of most people I know or have read about. “The wife” wanting outrageous amounts of money spent on renovations, stainless steel appliances, granite etc, etc. When does it stop?

I guess it depends on how you look at it but it seems to me that renting is going to save you a lot of money in the end – if you can withstand the nagging that is…

#88 Peter Wiener on 07.21.09 at 11:29 am

general comment

After reading Garth’s post and its attendant links re CMHC, I am truly depressed and despair of ever seeing a free (and fundamentally valued) residential real estate market in Canada.

Canada has been pulling a Holland act and the Dutch bubble is still inflated with the average home having gone up 1,000 % (yes 10 TIMES) since 1991-2 in price.

This was achieved in much the same manner as Canada has embarked upon with the government de facto price support mechanism of cheap mortgage money and ultra easy (read no qualifactions, down payment schemes, etc.). The glaring diffenece is that there is very litlle land in Holland (population 16 million, size of New Brunswick, 1/3 of land mass reclaimed from the sea {ain’t cheap to do})and it is far more expensive to secure, develop and build there (approx twice as much) and there is believe it or not, a lot of immigration due to generous welfare support.

I believe the average housing unit in Holland is about CDN$ 600,000, but with a much, much higher mix of flats and condo-like smaller (cheaper) housing units which are also 40% smaller on average than what we have in Canada). So apples to apples, its a CDN $ 840,000 price tag. Gross average income about CDN $72,000 and heavily taxed equals 11.67 times income.
Canada is at 7 times income, US was at 5 times at the peak. Still silly room left for prices in Canada, the question is for how long?

If we follow the Dutch, we’ve a long way to go yet. If we follow the US example, sooner. Either way, all of us who rent and can safely afford to buy now and those folks who are saving right now towards a good downpayment are looking at 2 years minimum IMHO before it will pay to even start looking.

The alternative is to tempt financial suicide for those of modest or even of good means. It truly is too important a decision to make under the duress of “being priced out forever”.

In reality most people are already “priced out” and have been for at least 6 years (if one does not want the mortgage to rule your life), but don’t know it. Inject the fundamentals of the economy, its prospects, levels of debt, no pensions nor savings for them, living costs inflation, more and higher taxes and tax rates, etc. into the equation and one quickly sees how expensive housing truly is as a percentage of after tax income and how important it has become to the economy.

Any wonder your government is enslaving you today to pay for your fellow citizens housing folly bust up tomorrow? (think CMHC policies above)

HOUSING IS THE ECONOMY now, and if you doubt this, try to raise mortgage rates and see what happens. All monetary policy now considers housing primarily and it is where capital is being invested and lent the most. That is where your immoral government are and will continue to pervert the laws of economics until they are re-elected (or die trying). Mark my words, it will prove to be the most expensive political campaign Canada has ever seen and we’ll all be paying for it as tax payers regardless of our own political affiliations.

They are efectively buying the votes of your careless neighbour as he drinks the kool-aid and you get to foot the bill. But, don’t dismay, Iggy or any other political hack that follows the current regime will be forced to play the same tune until economic reality reposses their fiddle.

Buy now and finance now at your own peril!
Hardly, I think we’ll all be facing the peril together, hence my despair today.

#89 Peter Wiener on 07.21.09 at 11:32 am

sorry for spelling errors, tired

#90 dd on 07.21.09 at 1:14 pm

#83 Patiently Waiting

…Here in Vancouver, I’ve seen half million dollar houses, duplexes, nice townhouses and luxury condos renting for $1200-1300….

Similar in Calgary. What a bargin.

#91 Frank on 07.21.09 at 6:47 pm

Garth, quick question on the north part of Toronto. Specifically, Vaughan and Richmond Hilll. I’ve been looking for a home for the past 8 months and there’s a couple of things i’ve noticed:
a) very little supply is in these areas, especially under the $550,000 range.
b) a lot of what go up for sale, sells fast and many with bidding offers.
These areas seem to be immune to current market conditions and i’m not sure what this means. I was hoping you could give me some insight to this.

#92 Jon Boyd Ann Arbor guy on 07.21.09 at 11:27 pm

You’ve got to have a really good reason to buy there at this time.

I hope things can turn around!

#93 Rick on 07.22.09 at 6:11 pm

The MSM is out is full force to spread propaganda of lies . Look at thestar with their “Car sales lead May retail surprise”. Cars sales in May were horrible but the MSM will spin any lie and manipulated stats. The MSM contradicts their propaganda of lie almost daily. Like when it comes to the garbage strike the workers must take concessions since the economy is in a deep and bad recession. Then three seconds later talk about housing is selling well and we may be out of the recession soon. This recession is being held up by government spending of billions of dollars which when it’s spent the market will crash. We live in a world where people would rather believe a lie then hear the truth.