Thanks to a blog dog for pointing this one out. Should you need more evidence we live in times we’ll all probably regret, dig in.

This 15-foot-wide frame row house in the massively untrendy Bloor & Bathurst area of Toronto has just sold for $541,000. Not only is that a gag, but some schlep shelled out $31,000 above the asking price in a bidding war for the privilege of owning a structure likely intended to have a 25-year life. More to the point, it sold in seven days with multiple offers.

To buy this home with the now-average 5% down would require just under $40K in cash ($27,050 deposit and $12,670 in land transfer tax), then then a monthly of $2,400, thanks to the soon-to-be-departed VRM at 3%. Upon renewal in 5 years at a very modest 6%, that becomes $3,300, requiring an income of $120,000 to quality. That’s about double what the average family takes in.

But what average Toronto family wouldn’t die to live in this hood, eh? In digs like this?

Here, for your amusement, is the way this sale was reported in The Toronto Star.

Cut it out. Paste it on the fridge. Let us record this moment.

Koreatown: $541,000
Bloor and Bathurst Sts.
Asking price: $509,900
Selling price: $541,000
Previous purchase price: $93,000 (1973)
Size: about 1,400 sq. ft.
Lot: 15-by-100 feet, double-car detached garage, lane drive
Taxes: $1,583 (2009)
Bedrooms: 5
Bathrooms: 2
Days on market: 7

Details: Selling for over asking price in one week, this three-storey freehold row house has five bedrooms and a finished basement with a separate entrance.

“This spacious home is well-maintained and has had many updates while keeping the original details intact,” says listing agent Les Raffay.

Highlights of the home include a decorative fireplace and a walkout to a third-floor retreat.

It is walking distance to Bloor St., while the subway, shops, schools and parks are a short distance away.

Main floor has living room with hardwood floor, fireplace and wood trim; dining room with hardwood, French doors and crown moulding; updated eat-in kitchen with hardwood; powder room.

On the second floor are master bedroom with hardwood and bay window; second bedroom with hardwood and track lights; third bedroom with hardwood; four-piece bathroom.
On the third floor are: fourth bedroom; fifth bedroom with wainscotting and walkout to sundeck.

Basement is finished with recreation room with French doors and separate entrance.

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#1 Soylent Green is People on 09.13.09 at 9:59 pm

I’ve got a hankering for Kim Chee now!

#2 JET on 09.13.09 at 10:13 pm

OMG is right!

#3 unbalanced on 09.13.09 at 10:26 pm

Looks like a roofing job soon !!!

#4 OttawaMike on 09.13.09 at 10:39 pm

While I agree with all the real estate/ stock bears here that things can’t go on this way, I’m really convinced that changes in the market conditions will react like an oil supertanker’s steering response. Things will unwind over 3-4 yrs as a result of present foolishness. Anybody looking for rapid RE or equity declines like a year ago, will be disappointed.

#5 Fool me once... on 09.13.09 at 10:46 pm

Do we really need to wait for 5 years for this insanity to stop?

#6 Einsam Solo on 09.13.09 at 10:47 pm

You could walk to Honest Ed’s from there! Such a deal!

#7 Lance on 09.13.09 at 10:49 pm

Greater fool indeed. Someone is laughing all the way to the bank with a half mil in their hands.

Investing in anything is all about playing the odds and making an educated bet… and the odds of this place significantly appreciating in value is about nil. It’s all downhill from here.

#8 PVC on 09.13.09 at 10:54 pm

This is truly getting well out of order.

This bubble-cum-bust will put The Tulip mania, The Mississipi Bubble and the South Sea bubble to shame.

Carney should change his name to John Law.

I moved to emerging Latin America 3 years ago(Thank god).

Do you know what I can buy here for that price here?

A 7,000-10,000 sq ft mansion on 2-5 hectares.

Taxes $500 a year. Hydro $100 month.
Full time groundskeeper $250 month.

Before saying oh, but, that’s 3rd world. Think again.

#9 GG on 09.13.09 at 10:57 pm

I could use the wood on these houses for campfires.

I’ve been to several of these houses in the area.
Floors squeeky and warped, ceilings also warped, roof shingles over shingles, rotting porch floors, old old smell. Some old aluminum wirings, leaning and rotting back yard fences, lots of yuppy landlords in the area and yuppy residents. Realtors called these homes “classic”. I was young back then and stupid enough to try to buy one as first timer. God must live in the banks because they would not qualify me for a mortgage.

#10 dd on 09.13.09 at 11:00 pm

Anyone care to guess how much the housing market in TO is over priced? What kind of multiple are we talking about here?

#11 Men With Hats on 09.13.09 at 11:02 pm

Hope they didn’t blow their reno tax credit .
Beautiful.Simply beautiful .

#12 Barb the proof reader on 09.13.09 at 11:27 pm

Korean 맙소사! = Oh my God!

15′ wide house, ugh, claustrophobic. It would be interesting to ask the buyer, what the heck were they thinking?

#13 Investx on 09.13.09 at 11:51 pm

Wow, what an inflated market.

Garth, do you still believe real estate prices will be lower at Christmas than they were in March?

#14 BobbyV on 09.13.09 at 11:53 pm

Someone should do an interview on these schleps who overpaid for this house …. i really want to see and hear how some people can be so stupid.

#15 glenn on 09.14.09 at 12:21 am


#16 LOLz on 09.14.09 at 12:23 am


#17 Nostradamus Le Mad Vlad on 09.14.09 at 12:41 am

In 2011, when RE has taken a deserved breather there will be lots of brothels / bordellos for moi to come and choose from (lazillions from strong investments such as Nortel, Bre-X, GS etc.).

Any cheap vacancies around King and Bay, Dundas and Yonge or the Mills Bros. (Don and York)?

Lemme know, ‘k’?!
#93 Makeorbreak on 09.13.09 at 5:44 pm — Thanks Makeorbreak — plus, I’m not as intelligent as Carney; that’s why I am retired, and he isn’t!
Quite relevant cartoon from The Angry Bear. Comments are good. —

Not sure how highly Joseph Stiglitz is rated, but he says banking problems are now bigger than before Lehman Bros. —

This goes with the earlier links about getting out of US stocks for a while. —

As well, here are some other things to contemplate, esp. the first link. —
(Wonder if the third link carries over here, in some manner or other?)

Farmer’s Almanac predicts a frozen and long winter in the central areas of N.America; the weather office predicts a regular one. In any event, natural gas has risen since Labour Day. —

Things are getting testy between the US and China, and no, this is NOT the Chinese walking away from the forthcoming derivatives debacle. —

A link I posted a couple of days ago (from Vive Le Canada) said the SPP was dead. Resurrection time, but under a new guise! —

#18 brian on 09.14.09 at 12:56 am

Is that it than garth….the real estate boom to bust is over in 6 short months in Canada. (june08-dec09) I thought everyone was saying that when America sneezes, Canada catches a cold. 95% of the experts were wrong???

#19 K-D0G on 09.14.09 at 1:04 am

Just an Old Fashioned THANKS for sharing Garth !!!

#20 Bob on 09.14.09 at 1:09 am


#21 Peter on 09.14.09 at 3:37 am

Asians does have a tendency and a myth on buying and flipping real estate at a great price (probably they thought this home will rise to 1 million in 2 years) when they live in their home country and thought Toronto would be like this and they all thought that home prices will keep rising and will never goes back down…This is called “Shovel in the KASH into Hard Assets (BRICK) in Asian Way !!!”

No evidence the buyer was Asian. — Garth

#22 Peter on 09.14.09 at 3:39 am

Lastly, Asians (Majority) believe that homes are highly appreciable assets and scarce to buy when they thought Toronto is like Seoul or Beijing or Hong Kong or Shenzhen…

#23 TomOfMilton on 09.14.09 at 3:57 am

I’ve lived in one of those houses on Clinton. I can attest to the 25 year life expectancy. If that.

#24 Munch on 09.14.09 at 4:00 am


Someone is going to Hell for this!

#25 Joe on 09.14.09 at 5:52 am

Garth, Garth in ads for the Atlantic 49 lottery they say a home like this would cost the full $1 million prize. While in Atlantic provinces you could buy a large home, cars and a sailboat with the prize. Maybe Atlantic Lotto knows something.

#26 Danforth on 09.14.09 at 6:03 am

맙소사! = Death by fire!

#27 phil g on 09.14.09 at 6:18 am

Ee bah gum, a lot of money for such a wee place

#28 kt on 09.14.09 at 6:28 am

“Lot: 15-by-100 feet, double-car detached garage”

Where’s the double garage fit? Even if it’s a tandem garage, it must take up more than half the available backyard, since the entire lot is just 15×100. Of course I guess a double garage for 2 “Smart Cars” wouldn’t take up too much space.

#29 kc on 09.14.09 at 6:41 am

#84 $fromA$ia “Garths Nugget Boy” on 09.13.09 at 1:27 pm

“Well were not hearing much on deflation anymore…
Seems like its all about the inflation ahead.

Anybody care to add to this?”

Yes, I read John Mauldin’s letter today and he touches on the Velocity factor and more over gives a good insight as to the debate (in, de, stag, …) here is a link if you care to read the paper.

“Deflation, Falling Velocity of Money Ensures Printing Presses Will Keep Running”


#30 Robert1 on 09.14.09 at 6:59 am

YIKES !! ….. and I figured my digs were bad. Think I will keep my half a million in the bank.

” fools rush in where angels fear to tread ” ………..

#31 D Griffiths on 09.14.09 at 7:00 am

This property could be the poster child for a new HGTV program called,

“Property Armageddon”


#32 mooncake on 09.14.09 at 7:06 am

Over $500K for a piece of crap like that. We really got some (make it alot) dumb people in Toronto. Let me guess the real estate agent is saying, what a good value and in 2 years you can flip it for $650K.
This will not end well, folks!!

#33 kc on 09.14.09 at 7:14 am

in “truce” I seemed to have started a China bashing spark. Yes I have to agree that so much of the stuff they produce won’t make a year or two, ( i could list my “returns”) however, the point i was trying to make was … We in N. America have sold out our industries to the “cheap labour force” and who benifits the most from these actions?

N. American companies once known for our workmanship and JOBS have turned into garbage heaps and long lines at the unemployment offices. Consumerism has taken over while replacing hard work with do you want fries with that…

I can’t say if the part that was made in China will last over a year or if it will be as strong as it is in ten, my main point was if the part was made in China and still cost 1500.00 dollars who is making all that money? cheap labour be dammed… they didn’t pass on any savings to the poor taxed out guy that needs that part to continue to drive his truck, however, @ $1500.00 doesn’t that sound like a made in N. American price? Somewhere the wheels have fallen off the tracks and untill we right the “Imported from…” problem we can bitch all we want about lack of jobs. things won’t be changing soon for this problem started back in the late 80’s and mushroomed from there.

remember the old adage “you get what you pay for” however, charging exorbant prices for inferior workmanship, or quaility won’t help fix this mess. We want better with nowhere to turn to get what we demand.

Blame wall street and corporate greed. But keep in mind where your RRSP dollars go. It truely is a double edged sword.


#34 JO on 09.14.09 at 7:24 am

The property taxes seem to cheap to be true…should be at least double that.

If the purchaser was like most that have bought in the last 4-5 yrs, they used less than 10 % down, and financed the rest through ponzi scheme enabler CMHC and are temporarily enjoying artificially low rates that at some point in the next few years will go higher. Another real world example of how our historic mountain of debt continues to magically grow. While it has grown, the value of our cash has dropped significantly as the huge flood of credit was used to buy goods and services at artifically inflated demand levels. So now people think their house is worth “541K”, that their salary is worth XXK/year and will keep rising, and seem to accept that “inflation” is normal. They forget the cost of their groceries and many other items have gone up as a result of this massive flood of debt – a mountain which was allowed to grow due to a scheme that operates very similar to a Ponzi scheme.

Like all Ponzi schemes, this one will end badly. The mountain of debt WILL stop growing very shortly here too. Once it does, the “value” (nominal or stated values) people put on things will no longer fit with their delusional sense of price. The mountain of debt will be reduced to a more manageable level as the economy is going to be crushed under it once the amount of net credit stops growing. Then, the illusion that was 2001-2009 in Canada will reveal itself. As GDP / incomes come down in a notable manner, no longer being seriously inflated by goosed credit conditions and extremely low rates, the true level of demand in the economy will prevail. That level of demand will mean less income the historic number of debt slaves need to service the huge debts they took on. So in comes the asset liquidations with rising unemployment, lenders who will suddenly become tighter than an oil drum, and then our perception of what things are worth will turn into reality within 2-3 years. Your house ? Sorry, it’s actually worth 30-40 % less. Your salary ? Sorry, you will need to get that new job, if your lucky, at 20-30 % less. Your pension promise or payment of 3500/month? Ooops, stock market and bond market dropped 50-70 % and aren’t coming back soon so you will need to take a 20-30 % reduction too….and on and on we go. The excess amount of debt will be destroyed one way or another – make no mistake about it…no matter how hard those in Ottawa want the mountain of debt to keep growing. The joke has been on prudent individuals and savers…that will change for a while too.


#35 cashman on 09.14.09 at 7:34 am

What your really buying here is a townhouse. Gee, for that much one could buy a bigger house with LAND up in a small town called Stouffville, Ontario. Not to mention that your neighbours are well, one concession lot over.


So, let those fools spend thier money foolishly, then pick up the house for $100k less when they go p.o.s. maybe 2 years from now.

#36 Denny on 09.14.09 at 7:39 am

No one really mentioned this, but it is close enough to the university (UT). You can easily rent all 5 bedrooms in this ‘house’ to students for a pretty penny and easily cover the mortgage. Student life (tuition, beer, electronic toys, partying) is expensive and they don’t mind if they have to cut corners somewhere to keep up.

So many houses that are close to UT and are dumps (i.e. student housing) are all well over 500k, and the good maintained places are much much more. Sad reality.

#37 Gypsy on 09.14.09 at 7:44 am

I want the Toronto housing market to crash. No question about that.

But I read that long term average appreciation of the real estate is 5% annually.

I used an online compound interest calculator to calculate 5% compound interest on $93,000 over 36 years, it does add up to $538,638.90.

Does it mean that people bought this house in 1973 over paid at that time?

or Does it mean that long term average increase should much less than the often quoted 5%.

#38 Expat In NC on 09.14.09 at 7:47 am

“Barb the proof reader” has a good notion. Anyone living in that area brave enough to venture over to the new owners when they move in and ask them if they thought they got a good deal? What they liked about the house? etc. Anyone know where this house is exactly? I’d love for someone to report back here with the buyer’s thoughts.

#39 stuart on 09.14.09 at 8:23 am

While I agree that the price is over inflated, I can’t understand how this blog both slogs big houses in the suburbs and smaller houses in the city ?

People have lived in houses of the size in the majority of the rest of the world, and in downtown areas of major cities throughout North America, for 100’s of years.

What do you expect the size of a house to be in a high density city ? Some people, including myself, would rather live in a smaller house and be close to the features of the city, without having to rely upon a car all the time, then have a big house in the burbs completely segregated from street life and the rest of neighborhood.

I thought Garth was an environmentally minded person, with a thought towards reducing ones ecological foot print ? Wouldn’t that mean living in smaller homes, in a higher density and not relying so much on a vehicle ?

#40 Patrick on 09.14.09 at 8:38 am

Previous purchase price in 1973 was $93,000?

Uh, unless that’s indexed for inflation, that’s not cheap either!

#41 DG on 09.14.09 at 8:42 am

@21 & 22 (Peter): As Garth notes, where is the evidence that the buyers are Asian? More to the point, it’s certainly not cash-rich Asians who are buying inflated real estate in Toronto right now, but rather people with no money at all, and modest incomes.

#42 infernalmachine on 09.14.09 at 8:50 am

Well the consumer price index says inflation alone makes that property (sold for 93K in ’73) worth about 450K in ’09. However that doesn’t take into account that the thing is likely in rather poor repair (in realtor speak “well maintained” translates to “well it isn’t falling over yet”) and likely needs rewiring, new roof, new flooring and finishes, etc.

The location itself isn’t that bad though, almost the annex. I’d live there (but not for 500K plus 100K renos)

When is toronto going to come back down to earth damnit?

#43 Chris no longer in England on 09.14.09 at 8:59 am

“False Dawn in UK Housing Market”


The US and UK housing markets went down pretty much in tandem a couple of years ago and the UK, like Canada, has seen a rise in sales and prices this year. However, all is perhaps not what it seems and someone has finally come out and said so.

Also, a house this size (5 bedrooms, double garage, 100 foot garden) would be pretty big to the average UK family where they are squeezed in together, particularly in newer properties which are being built smaller and smaller.

Here’s a 5 bedroom house in London that appears to be less than 13 feet wide. £2 million.


#44 Bill-Muskoka (NAM) on 09.14.09 at 9:03 am

This clearly illustrates why Toronto (and much of the GTA) should become a province. Then the rest of Ontarians can build a wall around it and keep the Loonies away from the rest of us. What are these people NUTS? Obviously, and to think they breed and vote. God save Canada.

#45 Bill-Muskoka (NAM) on 09.14.09 at 9:06 am

This dump would be called a Slum Area in most American cities!

#46 Soylent Green is People on 09.14.09 at 9:10 am

#17 Nostradamus Le Mad Vlad on 09.14.09 at 12:41 am

I never read those posts… too long and cluttered looking.

#47 $fromA$ia "Garths Nugget Boy" on 09.14.09 at 9:13 am

At the park last night listening to a son talk to his mom about a house he wanted to buy. The mom said that house is in a lousy neighborhood and the son responded that hes got a choice of the one at $499k and $550k.

Garth, when are we going to see Canadians say publically that this market is over priced?

Why is it you can get a $500k mortgage to buy property but you cant get a $500k loan to buy gold?

Thank goodness loads of theres a$$holes are priced out of other markets such as Gold and Stock!

#48 Gord In Vancouver on 09.14.09 at 9:26 am

Financial Post Article – Debt becomes us


“The enormous debt levels in Canada, now 140% of personal disposable income, do not even include all the financial commitments and contracts we have from cellphones to car leases, says Doug Porter, deputy chief economist with Bank of Montreal.”

“Scott Hannah is president of the Vancouver-based Credit Counselling Society, a non-profit group that helps consumers find their way out of debt. He notes a strong surge in demand for its services. “Compared to a year ago, the demand for our services is up 118% from last September,” says Mr. Hannah.”

#49 D from London, ON on 09.14.09 at 9:39 am

# 33 – kc

I have enjoyed following the “China Bashing” posts.

I agree that the Chinese employ low-wage labour, keep the yuan down vs. the USD, ignore environmental effects of industry, subsidize development of new industries, etc. etc. All of this leads to a cost structure that the First World cannot compete against – and hence the outflow of jobs to China (and other parts of Asia too).

But when it comes to the increasingly crappy products we get, please also check out concepts like “value engineering”. This is basically a euphemism for a race to the lowest possible quality AS A DESIGN INITIATIVE. This has come upon us at the ame time as globalization, so we tend to lump the consequences in with that. However I believe that the Chinese, etc. can make products as good as any in the world, when the design specs call for it (e.g. their space program, ballistic missle programs, massive and impressive infrastructure programs, etc.). It’s just that crappiness is now designed into consumer products in order to reduce costs.

Value Engineering = “an organized approach to providing the necessary functions at the lowest cost”. A great idea when necessary functions spec a high quality product. Not so great when necessary functions are defined at the lowest quality the vendor can get away with.

#50 Dmitriy on 09.14.09 at 9:50 am

Based on the brief calculations: 5 bedrooms and a separate entrance may bring in 2,900 once rented. Overall expenses of mortgage payment of appr. $1,740 (with 2.45% mortgage rate, 5% downpayment, 35 years amortization period, paid bi-weekly), 3,600 in property taxes and all utilities for 6-7 people, leaves us approx. $400 /month in rental income. Which transforms into $400/month loss once mortgage rate goes to 5.25%.
Meantime it is still a zero cashflow, if there is 20%+ downpayment, which is not so bad.
Note: all income/ loss number are before taxes.

#51 Artisuseless on 09.14.09 at 9:53 am

As someone else pointed out, five bedrooms could easily be rented to students or if there’s a separate basement apartment, which there appears to be, that could probably be rented to cover roughly half their costs – my guess, that’s probably the buyers’ intent.

It’s at least in the heart of the student ghetto – I know people who’ve done the same thing (same money too) but way in the East end.

The 1973 price seems a little high and considering Parkdale houses were going for 6-700K even a couple of years ago, that price isn’t that bad.

The problem is that there are so many people who have the same idea – can’t afford the house – rent the basement or have a few condos as ‘investment properties’ to rent out. Isn’t there already a 4% vacancy rate?

Although housing is a bit stupid in Toronto, and completely absurd in Vancouver I still think it’s condos that’ll really get wiped.

#52 Halifaxfamily on 09.14.09 at 9:57 am

WOW. Good luck to the poor soul who bought that house. I agree with one of the previous posters. The place looks like it needs a roof job – look at the color of the roofing tiles (they look faded) in comparison to the other 1/2 townhouse beside it.

Cheap debt makes dumb people do dumb things.

#53 smw on 09.14.09 at 10:00 am

Good read from Ambrose Evans-Pritchard on China & gold…


Did you know middle class housing in China is 10 X incomes?

#54 Makeorbreak on 09.14.09 at 10:10 am

Good news for us…may be we’ll get some of our doctors back…


#55 JFoo on 09.14.09 at 10:11 am

Recent Survey shows most Canadians are living paycheck to paycheck, especially those 18 – 34… go figure.


This was from MSM, but it shows how much people in Canada were making in 2006. A better way to gauge what people really have, and not what people indebted think they have.


#56 Smith-Martin on 09.14.09 at 10:32 am

The lot is 15ft.by 100ft. So where would you fit a 2 car garage? Most garages are wider then that. What happens on that street if someone drops a smoke that is still burning? Where could you plant a garden ? as suggested in#43. Doesn’t anyone stay in one place any more? If you have a house/home paid for, or nearly paid for stay put. The market for over priced shacks will come crashing down. Before these poor souls allow themselves to buy into this nightmare, they have to look at the employment situation, it has gone belly up. Things will never be what they once were, every time we fall into depression/Recession there are less jobs that come back. low paying jobs in the service industry will not pay for all the debt that has been plunged in by consumer spending,nor will part-time, or job sharing. Be prepared people to take on two or three extra jobs. If you can’t have or don’t have a garden, better buy a huge hat with a veil,so your friends and neighbors don’t recognize you on your trips to the food bank.
Good luck Garth on your return to politics. I wish there were more politicians like you, Lord knows we need a return to integrity

#57 Jonas on 09.14.09 at 10:39 am

Someone please explain to me how real estate all over the world in every civilized country is tanking by up to half and in good old Canada real estate is rallying hard. It makes absolutely no sense whatsoever. Bidding wars, selling over asking price in a week – hello!! we are in a recession with a very questionable recovery, unemployment rising, incomes falling… what gives? Are Canadians ( or the buyers) just exceptionally stupid? Are our banks too loose? We saw up to a 20% correction in many areas from March 08 to March 09 and it has rebounded to above the previous high in many areas. Treasuries are rising hense rates falling no CB or Fed will raise short term anytime soon. What can cause the market to fall other than a sudden awakening of the general public (aka sheep). Smoking is really stupid but lots of people still do that too.

#58 Got A Watch on 09.14.09 at 10:55 am

No matter how much the propagandists blab about how “desireable Toronto is”, and how you have to over-pay to live there, the plain truth is that the real-estate market in the ‘GTA’ is a chimera built on mass delusion. But compared to Vancouver, it is an island of sanity, so you can fill in your own blanks on how out of touch with reality they are on the Left Coast.

The usual metric in a non-insane world for how much house you can afford to pay for on a mortgage is: it should cost no more than 36% of your annual GROSS FAMILY INCOME to meet those payments.

If the average family income in Ontario is around $60K, and falling as unemployment rises, that would translate into $21,600/year or $1,800 per month MAXIMUM spent on the mortgage and municipal taxes. So even at a historically unusual 3% interest rate, it is beyond the reach of the ‘average’ to live in this dump. It must be for exceptional people – exceptional in their stupidity IMHO.

Another way to look at affordability is the classic metric “the average home in an area should cost about 3 X the average annual family gross income for that area” and that includes the muni taxes. If you used that yard-stick, this house should be $180K-$200K (with some ‘Toronto premium’), if you optimistically assume this is an average house for the GTA.

Even if this is an upscale area where the average family income is $90K, the price should be $270-$300K. If the incomes are highly exceptional in the area, (<1% of the population) at $120K, the price should be $360-$400K – except this house is not 'exceptional' enough for most of that kind of upscale citizens.

I know the area, and while it is "close to _____" it is also full of crackheads and other assorted night creatures that normal people don't want to live next to. Better be home by dark, and have secured windows and doors, an alarm system, cameras, guard dogs and a can of 'bear-spray' ready. I would not live there now if it was free, and I used to live near there in the '90s.

/ No, real estate is not over-priced in these places. Never a better time to buy than when prices are high and interest rates are low – guaranteed. sarcasm/off.

#59 Nostradamus jr. on 09.14.09 at 10:58 am

Toronto is in a bubble…comparitively, Halifax & Vancouver are dirt cheap.

…Ontario needs Garth to bring the Province back down to Earth.

#60 You're_missing_the_point_AND_the_peak on 09.14.09 at 11:01 am

Garth said: “My theory is that within a year, the brew of rising interest rates, erosion of manufacturing jobs, a natural economic slowdown, the brake of rising energy costs and a wheels-coming-off US recession could seriously pierce the housing bubble enveloping us today.”

That was four years ago and stands as a testament to the ass-covering virtue of the word “could” ;-):

On today’s topic, I absolutely agree. Print that article from the Toronto Star, tack it to your fridge, and look at it in several years; see if it was worth coming here to this blog and getting worried about Toronto real estate.

That 2009 is supposed to be 1990 all over again in Toronto Real Estate is supposedly a given around here. Not so.

2009 smacks of 1988. One year after the 1987 stock market crash. Several years into the S&L Crisis that rocked US real estate. Several years before deficit reduction became a talking point (no doubt this is what Garth is back in politics to address). And, I almost forgot, 1988 was just before two years of massive home price surges in the Toronto market.

Additionally, sales levels are following the same pattern, cratering in 1987 after the stock market crash (i.e. 2008), surging spectacularly in 1988 when the sky didn’t fall (i.e. now), and declining thereafter until 1990 (i.e. 2011).

You can see all this at Randi Emmot’s site (enjoy…): http://www.randi-emmott.com/market.htm

Basically, the peak has not been reached.

Right now your only choice is to buy now, or cross your fingers, and calculate if $60K-$100K burned on rent money over the next five years (approximating an early and safe market bottom akin to 1993) is worth it to be a “vulture”.

Now on interest rates… It is only now that the Associated Press (i.e. MSM) in the US is starting to build a case for deficit reduction (i.e. the brutal but elusive interest rate rises that Garth is talking about):


“Half of those surveyed said deficit reduction should be a national priority over increased spending on health care, education or alternative energy.”

Of course this is all baloney, but this is how it starts. Deficit reduction will creep slowly into Obama’s policy making at first (anyone remember Clinton?), and once there is a real recovery, then the game starts. And Canada will follow, But that is so far off (2011 at least).

So, anyone feel like handing me $75K for a 5-year rental contract, while I use that as a downpayment on a modest GTA home? Wake up guys!!!

To Garth: If you have any respect for ideas other than your own, you will not moderate this post out. I accept that you will deride my notions at times, and this may mean people ignore my post and the links I provide… to their detriment. However, your virtue has been that you attempt to make these issues accessible, and that is commendable… except when you moderate out all contention. Thanks!

Actually my comment on this issue was three years ago. I’d say I was prescient. — Garth

#61 Jonas on 09.14.09 at 11:02 am

Vancouver is higher than Toronto now.

#62 Denis on 09.14.09 at 11:08 am

Brace for Aggressive Rate Hikes in 2010 Says Laurentian

Great Advice about the effects of increasing mortgage rates coming from a prominent Mortgage Brokers blog and a nice little reference to Garth:

“Do others agree? Well, if they do, not many are putting it on the record.

Real estate bear, Garth Turner, is one exception. He says BoC chief, Mark Carney, “knows he’s playing a high-stakes game of rate roulette, aware ultra-low rates can do as much damage as good.” Turner believes Carney will be “adamant” about controlling real estate and inflation with higher rates.”

#63 Calgary_rip_off on 09.14.09 at 11:11 am

Hi Garth, thought you might appreciate the Herald’s view on the boom ahead for economic times.


I wish they would fire this guy-it makes Alberta look like a bunch of complete cocaine addicts.

There is no chance he is writing about possible increase in interest rates or the fact of unaffordable housing and the working homeless in Calgary-that wouldnt support current politicians or the so called “boom”.

#64 JeffinPickering on 09.14.09 at 11:12 am

“#57 – Jonas on 09.14.09 at 10:39 am Someone please explain to me how real estate all over the world in every civilized country is tanking by up to half and in good old Canada real estate is rallying hard. It makes absolutely no sense whatsoever”

*Cheap rates
*Lack of foresight by buyers
*It ain’t the banks putting their necks on the line. If it was, things would have plummeted (sorry, ‘corrected’, many months ago). The bulk of these buyers are using CMHC, which also doesn’t really need to stick it’s neck out (as the feds are dumb enough to just keep buying the toxic mortgages, just like they did 9 months ago).

We aren’t special or different. We’re just lagging.

#65 Barb the proof reader on 09.14.09 at 11:19 am

#54 Makeorbreak Good news for us .. maybe we’ll get some of our doctors back”
Makeorbreak, I hope so too. As an aside, my friend walked away from high pay as a stateside doctor to return here to 3/4 their income. They simply found U.S. mindset too often narrow and intolerant.

#66 BDG YYC - Weeee ... What a ride !!! on 09.14.09 at 11:37 am

WEEEEEEEEEEEEEEEEeeeeeeeeeeeeeee are lucky ducks indeed !!! Fog a mirror and qualify for free money – if you are the highest bidder. Yup we’re biddin’-’em-up-‘n-flippin-’em-out just as fast as we can stuff CMHC (bottomless pit) full up with mortgages no bank would touch (on its own dime) with a ten foot pole.
Worry? Not to worry … unless you happen to be one of the taxpayers (bagholders) that will be picking up the tab when the music stops …


#67 The 'VULTURE' on 09.14.09 at 11:49 am

Unbelievable guys….


These prices are nuts….

A fool and his money is easily parted with.

#68 Crash on 09.14.09 at 12:00 pm

My wife was visiting a friend of hers over the weekend and this friend and her boyfriend (both in their 40s) are looking to sell their condos and buy a house together. My wife said we (her and I) think R/E prices will drop over the next few years and this was just inconceivable to the friend (my wife said her friend looked at her like she was crazy). These are all intelligent educated people with MBAs. The argument used by the MBA friend was “we have a better banking system in Canada”.

#69 Jonas on 09.14.09 at 12:00 pm

So we peaked in March 2008, fell hard to March 2009 and rebounded equally as hard to now, mid Sept. Is this the dreaded double top? a dead cat bounce? do we fall now or stay at this level? Let’s hear some opinions with back up – ie. treasuries will fall, rates will rise, banks will tighten therefore prices will fall. I think we are in a bubble, no question but let’s see some calls here.

More importantly Garth – what’s your call?

#70 john mania on 09.14.09 at 12:01 pm

Hi Garth,

Do I win a t-shirt or gold star for using my post? Last night I thought the post was quashed for being offensive.

I guess it actually is offensive to those of us with some financial sense.

take care,

Your star will be overhead tonight. Look up. — Garth

#71 Genghis on 09.14.09 at 12:11 pm

Regarding Canadians living paycheque-to-paycheque, I have seen signs of this with my own eyes, in the huge office complex that I work in. There is a large food-court in the complex. You can tell which days are paydays by the line-ups at the ATMs. Line-ups for establishments in the food court are also noticeably longer that day and for the rest of the week. The following week line-ups drop off, until the next payday, when the pattern cycles again. Cash-flow must be pretty tight for those that need to wait until payday in order to come up with $10 for lunch.

#72 Al on 09.14.09 at 12:14 pm

#39 stuart,

It’s not the size of the house, it’s the size and quality relative to the price.

#73 Ian McDonald on 09.14.09 at 12:35 pm

This house would go for $50,000 at Main and Portage in Winnipeg. Not much difference in weather either. It is amazing how much silly money is out there! Hey, one man’s garbage is another man’s gold.

#74 View on 09.14.09 at 12:42 pm

“But I read that long term average appreciation of the real estate is 5% annually.”

From what I understand, it is typically 4%… making it $391,586. I guess it may be disputable.

That would include average upgrades with good maintenance. Is it possible the home was updated to a level above what the neighbourhood standard is, and someone fell for the “granite counters and crown molding.” It’s an overpriced pig with lipstick!!

#75 Ian McDonald on 09.14.09 at 12:57 pm

It is obvious this is a very manipulated market. With no capital gains reported on a primary residence, I would suspect there are ‘teams’ of family members working diligently to drive up the price of neighbourhoods. We Canucks can’t compete with all that Asian money coming in. There are more Asian millionaires than there are people in Canada. Better learn another language other than English and French!

#76 Future Expatriate on 09.14.09 at 12:57 pm

#8 PVC- Love your idyllic life while it lasts. During the next US CIA-created revolution, welcome the peasants and their pitchforks and axes with open arms.

Other than your choice of where to ride it out, I agree with you.

#77 You're_missing_the_point_AND_the_peak on 09.14.09 at 1:02 pm

“Your comment is awaiting moderation.”

Hmmm… how do I know when I’ve been moderated?

What’s the deal?

#78 The 'VULTURE' on 09.14.09 at 1:03 pm

Most Canadian workers living close to the (financial)abyss

“We were shocked by that number. So many Canadians are now living so close to the line that, if they miss a single paycheque, a majority will find themselves in financial difficulty,” said Janice MacLellan, chair of the Canadian Payroll Association. Source: The Toronto Star

Could it be that debt levels, ie; primarily mortgage debt is at insane levels right now??????????? You should have bought on up to date material finacial data, not opinions nor sales/media hype.

I am quietly waiting and playing the patience game right now…more rental properties to grab…at Honest Ed prices.

I am going to feast on your home sucker. Nothing personal, just business…

Love the VULTURE.

#79 dave99 on 09.14.09 at 1:06 pm

#44 Bill Muskoka,

Toronto is estimated to suffer a net $6billion annual shortfall in federal taxes paid to benefits received. However, born and raised in Toronto, I take a lot of pride in the economic contribution that Toronto makes to Ontario and Canada. (transfer payments to have not provinces, support for rural Ontario, etc).

But every so often, I wish that we could grant the dimwitted requests of people such as yourself and let you and your communities pay your own way for a few years.

Maybe you should take a look at the economic reality of the numbers before you start biting the hand that feeds.

God save Canada. <==I refer to a tolerant, prudent and multicultural society. I don't know what "Canada" you are talking about.

#80 The 'VULTURE' on 09.14.09 at 1:08 pm

“The majority of Canadians are feeling strapped for cash and unable to save as much as they would like to, according to a recent survey.

Nearly two-thirds of Canadian workers say they would have trouble making ends meet if their paycheque was delayed by even one week, the survey conducted by the Canadian Payroll Association found.

“We were shocked by that number. So many Canadians are now living so close to the line that, if they miss a single paycheque, a majority will find themselves in financial difficulty,” said Janice MacLellan, chair of the Canadian Payroll Association.

Younger workers feel the most pinched, with 45 per cent of those ages 18 to 34 saying it would be difficult for them to meet their financial obligations if a paycheque were delayed.

An overwhelming 72 per cent of single parents agreed that they would have trouble making ends meet if their pay were delayed.

The results are not surprising given the recession, said Patricia Lovett-Reid, senior-vice president at TD Waterhouse.

“But hopefully this will be a wake-up call to some people, that as they begin to feel better about their jobs and the economy begins to turn, they may say, `Hey, I need to put a plan B in place.'”

The poll, to be released this morning, also found that one-third of Canadian workers say they have been trying to save more money than a year ago because of the economic uncertainty, but have been unable to do so.
Source: Toronto Star

#81 jess on 09.14.09 at 1:26 pm

the ships no one whats? so if you park a ship at sea, is there a parking fee?


#82 miketheengineer on 09.14.09 at 1:28 pm

Ha. Ha. Ha. Ha…..He is laughing all the way to the bank….I bet 25 people will all cram into that house…he should have noooo trouble paying the mortgage, even if it goes to 8%. And make a profit to boot.

Mind you, I saw some home in Hamilton, on Kenilworth ave, that looked identical. All could be had for about 140k, some even for less. I will try and dig up the listing.

It goes to show you real estate is all about location, location, location and the sweet smell of “demand”.

#83 jess on 09.14.09 at 1:34 pm

[Geithner is proposing that] there should be a new “resolution authority” for the swift closing down of big banks that fail. But such an authority already exists and was used when Continental Illinois failed in 1984.

Indeed, even the FDIC mentions Continental Illinois in the same breadth as “too big to fail” banks.

And William K. Black – the senior regulator during the S&L crisis, and an Associate Professor of both Economics and Law at the University of Missouri – says that the Prompt Corrective Action Law (PCA), 12 U.S.C. § 1831o, not only authorizes the government to seize insolvent banks, it mandates

#84 Jake on 09.14.09 at 1:36 pm

If our banks/economy really are in a better position, expect the insanity to continue until they are just as unhealthy as their US counterparts. We could learn from the mistakes that our southern neighbours made, but that does not appear to be part of the plan. I get the feeling that this won’t end until our nation is officially bankrupt and primed for major restructuring.

#85 smw on 09.14.09 at 1:40 pm

#37 Gypsy

Early in 2008 either REMAX or one of the banks, maybe BMO,had a press release stating that housing had gained 5% a year since the early 80’s; they had to revise because they forgot to factor in this gain adjusted to inflation, which brought it down to 3% and which made the original exciting story pretty bland.

Bringing me to my point, central banks and goverments target that 3% as the benchmark of inflation and GDP. That house at the 3% target YOY becomes valued at $270K.

Considering family incomes are greater in TO than the average Canadian(70K)family, that $270K number fits suprisingly well into the income to home ratio of about 3 to1. That’s factoring the average family income at $90K. The above example shows today’s price requires double or 6 times income to afford.

One more thing, considering compound interest at 3% from the 1973 price, it would take 59 years at 3% compounded anually to reach $540K.

Even at the 4% YOY increase suggested above by another poster, the house is overpriced in that case by $160K!

Garth is being humble when he says correction, simple math tells a story of a crash in these types instances…

#86 thecomingdepression on 09.14.09 at 1:43 pm

Check out the latest new craze! Closing of Libraries. Not one but ALL OF THEM:

#87 dontcallmeshirley on 09.14.09 at 1:53 pm

Aww, c’mon guys…don’t judge a book by its cover. This place was subject to an appraisal by one of our fine lending insitutions so how bad could it be?

There will always be a buyer with sufficient credit to scoop up property like this.

If Todd Mcfarlane paid $3M for the McGwire ball this ain’t so bad.

#88 Think Again on 09.14.09 at 2:15 pm

#73 – You post this drivel when you are a mortgage broker? Gee, the rich asian myth has not been brought up here before….

#89 PVC on 09.14.09 at 2:33 pm

I see debt people.

In your dreams?

While you’re awake?
Debt people like in graves? In coffins?

Walking around like regular people.
They don’t see each other.
They only see what they want to see.
They don’t know they’re debt.

How often do you see them?

All the time. They’re everywhere.

#90 dave99 on 09.14.09 at 2:46 pm

#81 SMW,

You post contains several errors, because you incorrectly assumed that the 1973 purchase price of $93k was adjusted for inflation and restated in 2009 dollars (it was not).

The property’s sale price is 5.8 times higher after 36 years (not adjusted for inflation). This is exactly equal to a 5.01% annual appreciation (not adjusted for inflation)

Ironically, that 5% nominal appreciation (nominal=not adjusted for inflation), is identical to the rate quoted by the financial institution in your first paragraph. With further irony, you made the same mistake that institution made when you improperly reflected the appropriate adjustment for inflation.

Also, in your second paragraph you claim that central banks target inflation and GDP at 3% annually. The BoC is widely known to target inflation at 2%, and within the range of 1-3%.

Finally, in your 4th paragraph, as previously mentioned you predicated your calculation on the incorrect assumption that the 1973 sale price was revised into current dollars to adjust for inflation.

#91 Keith in Calgary on 09.14.09 at 2:50 pm


Here, on a sleepy stretch of shoreline at the far end of Asia, is surely the biggest and most secretive gathering of ships in maritime history. Their numbers are equivalent to the entire British and American navies combined; their tonnage is far greater. Container ships, bulk carriers, oil tankers – all should be steaming fully laden between China, Britain, Europe and the US, stocking camera shops, PC Worlds and Argos depots ahead of the retail pandemonium of 2009. But their water has been stolen.

It is so far off the beaten track that nobody ever really comes close, which is why these ships are here. The world’s ship owners and government economists would prefer you not to see this symbol of the depths of the plague still crippling the world’s economies.

#92 Keith in Calgary on 09.14.09 at 2:50 pm

Another interesting Calgary RE story from the weekend. “La Rive” is a 4 story “luxury” condo that is in the final stages of construction directly across the street from our place in Mission. We have watched it go up over the last 12months and now they are having open houses every weekend as they are close to being finished. Remember this paragraph for later on in my story.

One suite on the ground floor is ready as the show suite so the wife and I went and had a look as were walking by anyways. I have 3 salient observations……

1-The materials used were of really poor quality, totally low end wood panelling for the floors, minimal coats of paint everywhere, and cheap granite and cabinets in the kitchen. The bathroom fittings were damaged in places, and of the lowest priced brand that you can get if you were to walk into any plumbing/bathroom supply store. The baseboards and door frames were already separating and in some places, cracked. The lobby was cheap, and our rental place is more luxurious by far both in the commmon areas and the suites.

2-The handout sheet with the suites for sale was marked SOLD in all of the large suites with the best views. In other words, all that was stated as being “available” were the top floor at ridiculous prices or the lower suites with SE and SW views. The coveted city, mountain and stampede fireworks views were not for sale……heh. Over all, 10 out of some 60 suites were “available”, so if that is truly the case (and we know the state of the Calgary condo market), why bother with constant open houses and heavy marketing when you really don’t need to ? The typical developer’s sales lie in action, trying to pawn off the rabble before the good stuff gets out there.

3-The prices are a joke. $300K including GST for a one bedroom 571 square foot unit, more if you want upgrades like nice carpets, nicer floors and granite, etc. $1.15 million for a 1,600 square foot top floor (4th floor) 2 bedroom, 2 bathroom…..ROTFLMAO !!!!

I rent 1,100 square feet, 2 BR 2 BTH with parking for $1,500 a month across the street in a nicer building (The Rouleau) that is only 3 years old…….so, subtract the $300 a month condo fees they wanted, that leaves you with $1,200…..subtract $50 for insurance and $50 for electricity and $100 for taxes, you now have $1,000 a month to service debt…….which qualifies you for a mortgage of $150,000 amortized over 20 years at 5% fixed rate with accelerated bi-weekly payments.

Even if you are total fucking moron first time buyer and you go for a 35 year amortization, that is only a $200,000 mortgage payment and you still need to come up with a downpayment and fees. The equivalent suite for sale that has the same size and features as my rental across the street was $500,000 including GST. Where is the other $300K going to come from ???

ROTFLMAO…….!!!! Don’t even get me started on the realtot that was there, she looked like she belonged in Madame Tussaud’s Wx Museum and and a personality to match. She asked us if we were in the market and I said no “I am waiting for interest rates to go back to their historical norms first, and the bubble to start deflating again”…….

#93 Alberta Ed on 09.14.09 at 2:54 pm

We no longer subscribe to the Calgary Herald, in part because of its misleading reportage on the economy (Mario, et al). With rags like that, CanWest deserves to sink.

#94 Gypsy on 09.14.09 at 3:08 pm


The 1970’s

Back in the beginning of the 1970’s, Pierre Elliot Trudeau was Prime Minister of Canada and you could buy a house for an average price of $30,000 *. The first big oil price shock happened in 1973-4 and people lined up around the block to gas up their cars. A recession quickly followed. The government turned on the taps of spending, lowered interest rates and the average price of a house spiked to $44,000 *.

By the late 1970’s Joe Clark very briefly became Prime Minister of Canada and the average price you paid for a home was $69,000.

It looks like that the $93,000 purchase price of this house in 1973 is stated in 2009 dollars, adjusted for the inflation.

#95 jwk (nee jwkimba) on 09.14.09 at 3:46 pm

Little over priced, but not too bad. I kind of like this area – it’s bascially the annex area but not priced as such. A two car garage will be 15′ by 15′ in th eback yard, facing the alley. the backyard will be about 35×15′ patio. Room for a tree and a nice BBQ. As others have pointed out, the rooms can be rented failry easily as it is walking/riding distance to U of T.

It is not a outrageous as some of Garths other examples.

Our friends bout at 129k bachelor when they first got married ten years ago at college/yonge. They flipped that to a 1 bedroom (229) on king st west. Three kids later they were looking for a place like this, but decided instead on 400k 2bedroom+den condo on lakeshore practically on the water,1200sf, 2p arking, 2 lockers, 900sf terrace. There mortgage is $225k. Shrug. They could sell now and easily put 300k down on place like this. Their new mortgage would stil be only 250k.

It’s not like this is someones first house…

In the context of ‘the great run up’ there is TONS of equity out there looking to trade up. That is also what is keeping prices high.

I saw the exact same phenomona in California in 2004/2005. And then values stopped going up, and the market stopped dead….

#96 Bilbo Bloggins on 09.14.09 at 3:47 pm

The rich asian myth only holds water in Vancouver.
Don’t get me wrong, I see Koreans, Persians, and Chinese in my building all the time (Yaletown).

Even then, I don’t get why people buy into it.

We already know 98% of RE is sold to locals.
We already know that 90 to 95% of of recent mortgages taken out are backed by CMHC.
If rich asians are buying, why do they need CMHC insurance?
Wouldn’t it be all cash purchases or at least 25 to 50% down in Yuan or Won?

If anything, out-of-town buyers affect a small percentage of the higher end market.
As far as I’m concerned, it’s a red herring for the overall market.

#97 sun burned canuck on 09.14.09 at 5:10 pm

I wished I had the chance to bid on this exceptional once in a lifetime property. What a Gem! How will I ever sleep again, knowing I missed out?? Something this good at such a bargain price is hard to pass up.

#98 thecomingdepression on 09.14.09 at 5:48 pm

Majority of Canadians live paycheck to paycheck. No doubt Real Estate is on the rise. Can’t a law be made that if you are too dumb you can’t borrow? I concur that 60% of Canadians are Dumb?

#99 Nostradamus Le Mad Vlad on 09.14.09 at 5:51 pm

#55 JFoo on 09.14.09 at 10:11 am — In line with David Crane’s excellent column today (“No recovery until people have jobs”), it is now oh-so-easy for realistic, down-to-earth practical people (such as on this blog) to see what is approaching very rapidly.

Looking at the overall worldwide scenario, posters put links up about the shipping slump and mortgages coming due in 12-18 months in the US, which will result in plenty more foreclosures.

So it is simple to realize that with the exodus of manufacturing and assembly jobs from this continent to cheap labor ones, we will end up with thousands of McJobs, filled with grads working for $12 / hr.

The really good jobs will require skilled people in their mid-20s to leave home, live and work overseas.and learn new and different cultures (not such a radical idea anyway).

Whether it was the IMF, Bernanke / Geithner / Paulson or someone else who began this nonsense-talk of a jobless recovery (doublespeak for next-to-nothing jobs), I don’t know, but the person / people who did clearly don’t have an inkling of what Jack and Jill Public have to live with now.

Crane’s headline and article flies in the face of the term jobless recovery, so when one puts all the pieces into place it is easy to know the next few decades will be unpleasant, as this ship sinks and Asia rises.
One of the reasons most things are rising against the US$ was because the greenback is heading south. — http://smallsizeurl.com/savvy/

Which goes with this — http://smallsizeurl.com/asia/

#100 andthen on 09.14.09 at 6:02 pm

How new and nice was the house in 73?
“oh thats a fine price all you need is 5 people to rent it”
HAHA 5 people to pay for one house?
If it takes 5 person per one house, we will never recover.

I think that basement is counted in the Square footage
‘finished with its own entrance.’

So you have 350 Square feet per floor.
That is a wooping 2 sheets of plywood wide and 3 long. lol
Wow, do you know how cheap I could build that house?

#101 jess on 09.14.09 at 6:38 pm

Congressial Oversight committee – august 09
page 55 and 56

Commercial Mortgage-Backed Securities
Bank troubles with CMBS are two-pronged: defaults are rising, suggesting eventualwrite-downs of ownership stakes, and the new issuance market remains nearly completely silent. By one estimate, CMBS trusts hold 45 percent of outstanding U.S. commercial
mortgages.147 The CMBS market has been virtually frozen since the spring of 2008.148 (No
CMBS were issued from January 2009 through May 2009.) During its last active period,
the spring of 2008, banks were estimated to hold an estimated 23 percent portion of total
CMBS investments.149 These CMBS investors are now holding asset pools with a delinquent unpaid balance of $28.85 billion, an alarming 585 percent increase over the June
2008 delinquent unpaid balance of $4.18 billion.150 In line with this sharp jump, CMBS
pools held as collateral 54 percent of all commercial loans that moved from delinquency to
outright default.151 The number of CMBS pool loans either 90 days delinquent or already
foreclosed (thus in default or on the cusp of default) rose 32 percent from May to June and
is up 411 percent versus June 2008.152
Bank CMBS holdings represent nearly a quarter of an increasingly troubled overall
CMBS market whose now diminished value is still nevertheless a substantial $750
billion.153 Banks do generally report their CMBS holdings on quarterly filings.154 But, as
with other possibly troubled assets, it is an open question as to when or if a bank chooses to
write off a troubled asset, whether commercial or otherwise. Regardless of whether this
write-off occurs, though, testimony at the Panel‟s hearing in New York on commercial real
estate suggests continued losses in commercial real estate (CRE) asset value over the next
several years as the pools containing the most troubled loan vintages face high rates of term

#102 Dan in Victoria on 09.14.09 at 6:39 pm

Drove through Sooke City this afternoon,theres a condo/townhouse? project going in over looking the harbour nice view but right on the hi way.Usual sign..blah …blah… blah right at the end- Starting at 189,000 Cheaper Than Rent!!!!Yep for now.

#103 jess on 09.14.09 at 8:18 pm

nassim taleb before congress and his attacks on VaR


#104 jess on 09.14.09 at 8:26 pm

CALGARY – One Alberta man is under arrest and another is believed to be at large in Honduras after the Mounties say they broke up a “significant” Ponzi scheme that they allege bilked thousands of investors worldwide out of $100 million.

The RCMP arrested and laid fraud charges against Milowe Allen Brost, 55, on Sunday after a three-and-a-half year investigation.

Charges have also been laid against another suspect – Gary Allen Sorenson, 66 – who is believed to be out of the country. Both men are charged with fraud over $5,000 and theft over $5,000.

Supt. Eric Mattson, with the RCMP’s Integrated Market Enforcement Team in Calgary, said the two allegedly bilked 3,000 people out of $100 million.

“That’s a minimum,” he said. “That’s probably very much on the low side of what we believe this is. It’s a very large one. It’s very significant.”

Police say the two men allegedly took money from thousands of investors in Canada, the United States and overseas between 1999 and December 2008. RCMP allege that the pair set up Syndicated Gold Depository S.A., which was supposed to lend money to Merendon Mining Corporation Ltd., with the promise of a high rate of return and tax advantages.

These perks were used to entice investors into investing in offshore shell companies which were run by handpicked nominees and marketed by Brost’s firms Capital Alternatives Inc. and The Institute for Financial Learning Group of Companies Inc., police said.

The shell companies included Asset Trax Inc., Quatro Communications Corp., Rapid Express Corporation, Strategic Metals Corp., and Merendon Mining (Nevada) Inc.

“Investors wished to make investments in companies – offshore – to get high rates of return and some tax advantages,” Mattson said. “Funds were sent offshore but they did not end up with their returns and they did not get what they thought they were going to get.”

Merendon Mining Corporation’s website lists Gary Sorenson as CEO. The site says the company is no longer based in Canada, but operates in Belize and has its headquarters in Honduras.

That’s where police believe Sorenson now lives.

“Canada doesn’t have an extradition treaty with Honduras so that certainly complicates the situation,” Mattson said.

A note signed by Sorenson on the website’s main page said the company is not involved in any illegal activity. The note added that the company has never used the Merendon name in the United States.

Investors in “the US Merendon Companies may have been victims of fraud,” but the Merendon Mining Corporation is not involved, the site said.

“Any person who has received such a false representation should contact their local authorities and report the matter,” the note said, adding Merendon Mining Corporation Ltd. won’t be refunding money to people who invested in U.S. Merendon companies.

Alberta RCMP are asking anyone who was victimized by the alleged scheme to come forward with information.

Brost has already been sanctioned by the Alberta Securities Commission.

In 2007, the commission ordered a lifetime market ban and fined Brost $650,000 for “fraud on investors.” The securities panel said Brost was “at the centre of this fraudulent scheme” to lure public investors into putting money into a shell company which the panel said was intended to finance Sorenson’s offshore mining ventures.

At the time of its decision, the panel said, “Brost not only does not recognize the seriousness of his misconduct, but is also prepared shamelessly to overlook it.”

#105 dd on 09.14.09 at 8:29 pm

#58 Nostradamus jr.

“Toronto is in a bubble…comparitively, Halifax & Vancouver are dirt cheap”

One day you might even believe you own BS.

#106 dboy on 09.14.09 at 8:35 pm

Sounds like a bargain compared to vancouver:


#107 catamaran guy on 09.14.09 at 8:35 pm

Sooke City lol…yes i saw the same thing lots of condo developments…still on the ass end of the west coast road eh?
Hopefully all Alberta retires buying so they don’t clog up the Colwood crawl for the rest of the Sookian wage slaves going to work in the morning.

#108 Seilfworcehtsa on 09.14.09 at 8:37 pm

Its a steal at any price but which side is doing the stealing? That is 10-15 years gross pay for most people. It is ok for a small gro-op with a payback of a year or two if you don’t get caught. There is little habitable life left in the house. But it could teach the owner a little humility for he certainly has an abode to be humble about.

#109 Gord In Vancouver on 09.14.09 at 8:41 pm

59% of Canadians live payday to payday

Vancouver and Toronto real estate pumpers are relieved that percentages for their cities weren’t mentioned.


#110 smw on 09.14.09 at 8:46 pm

#86 dave99

I did no such thing(assume the price of $93K was inflation adjusted) but maybe the math wasn’t that simple, or clear.

I’m under the assumption that homes values have kept pace with inflation(2%-3% since 1890), as per Robert Shillier’s Irrational Exuberance. You know 3% nominal a year, the housing growth benchmark before “the happening”.

Like the other guidline we used to use, home/income ratio of 3/1, until we started strecthing credit.

That forth para states that considering inflation at a benchmark of 3% it would take 59 years for the home value to hit $540K, IF the property was $93K in 1973.

We’re here 23 years early but its a red herring anyways.

NOMINAL home price increases of 5% – 10% with target inflation of 2% – 3%(and public/private corporate salaries maintaining this target) are not sustainable for decades at a time.

Big bubble go pop.

Here, go nuts, whether it was worth $93K in 1973 or worth $93K in 2009 dollars doesn’t matter, the BoC’s calculator says its WAY overpriced in either event.


#111 conan on 09.14.09 at 8:48 pm

I am surprised the bank does not consider this property tenents in common. You can get a mortgage on this ?

#112 dave99 on 09.14.09 at 9:03 pm

#90 Gypsy,

The 1973 price of $93k has not been adjusted for inflation. Inflation 1973 to 2009 has been 384% (you can check here http://www.bankofcanada.ca/en/rates/inflation_calc.html)

If the price of $93k was after being adjusted for inflation, that means the 1973 purchase price would have been $19k. A house in downtown Toronto would surely not have been 35% less than the avg price in Canada (using your figure of $30k at the beginning of the 70s)

The following graph shows that the avg price in Toronto in 1975 was $50k.

Bloor & Bathurst is in the artsie downtown Annex U of T neighbourhood, and while 1.9x the city avg (ie $93k) seems high, it’s more reasonable than 0.4x the city avg (ie $19k)

#113 Weeping in Windsor on 09.14.09 at 9:08 pm

And then there is this home for sale:

in the Windsor area for the asking price of $539,800.

Weeping in Windsor

#114 Weeping in Windsor on 09.14.09 at 9:09 pm


here is the link


Weeping in Windsor

#115 Chaostrology on 09.14.09 at 9:26 pm

There is no way in creation that this POS sold for $93,000. in 1973.

In 1973 a rich person could have bought a REALLY nice house on the Westside of Vancouver for $93,000.

Today on the Westside that same house would probably list for $10,000,000.

But I could be out by a coupla mil.

#116 dave99 on 09.14.09 at 9:58 pm

#108 SMW,

Inflation since 1973 has been 4.5% and not 3%.

#117 DrC on 09.14.09 at 10:54 pm

Hey! I live at Bloor and Bathurst! We prefer the term ‘bohemian’ thank you! ?541k? Were paying 1600 PCM for a furnished duplex. So that house sold at a yield of 3.5%. Oh they are so screwed…

#118 TheFirstRick on 09.14.09 at 11:52 pm

I can hear Archie yelling, ‘Edith, you dingbat!!”

#119 Mike (Authentic) on 09.15.09 at 2:12 am

Keith in Calgary “Don’t even get me started on the realtot that was there… She asked us if we were in the market and I said no “I am waiting for interest rates to go back to their historical norms first, and the bubble to start deflating again”…….

That’s exactly the wake up call that needs to be told to those in the RE business that “just don’t get it”.


#120 tatacrio on 09.15.09 at 9:02 am

Just look at the US. If Canadians don’t learn from other countries’ mistakes, I guess you already know what is going to happen in a couple of years. Or less.

#121 Travis on 09.15.09 at 11:05 am

You can pickup similar houses in Detroit for $50.

#122 Oracle on 09.15.09 at 12:55 pm

The cost of housing in Toronto is high and my be over due for a correction but consider there is a limited supply of housing in Toronto.

The lake Ontario and the Oak Ridge moraine limit new home development.

All land redevelopment is consumed by monster homes and condominiums. Starter homes are not built in Toronto.

There are 85,000 new arrivals to Toronto every year.

If you want to live in Toronto you have two options. A <1,000' sq. condo or pay a very large premium for a house. Not everyone can or should commit to paying the premium for a house.

Over time a lot of people living in homes will be force pear down expectations and choose to live in an apartment.

There will likely be volatility in the Ontario economy, but if you can ride it out having a house in desirable location might prove to be a great investment.

On the other hand, condominium prices will likely not hold up.

#123 HouseBuster on 09.15.09 at 4:43 pm

The picture… All in the Family redux?