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CdaUS1

Hi Garth: My husband and I have just returned to Alberta after living 11yrs in North Carolina. We were lucky to live in NC where housing prices were not inflated and even if we sold now we would make $ on our home.

We are looking to buy a home in Edmonton (West central) or St Albert… But I really think we should just rent for a couple of years… I truly think the market is going to tank… and I have a real problem spending 550,000 for a house, that really should be worth 200,000. Everyone tells me that I should not compare it to NC. I am not comparing it to NC, just to what homes and lots were worth when I left Alberta 11 yrs ago. Lots were about 38-50K, now for a good lot I would have to pay at least 220k, INSANITY.

My husband really wants to buy, but I say rent… Until the bubble bursts.. most everyone says housing is going rise or stay the same…I think they are insane or very much in denial. Please tell me I am the sane one and give me a reason to tell my husband renting is our best option for now. Warmest Regards  from Lynda.

A tale of two nations, Lyn.

In Canada, a housing bubble sweeps prices to historic highs. Buyers no longer ask, “How much is it?” Instead the question’s, “How much a month is it?” Instead of accepting financing as a burden to be shouldered, mortgages are just piles of rented money. In the new culture of homebuying, who the hell would ever worry about paying it back?

And so long as house prices keep rising and you buy to sell, who indeed?

In the US, been there. That who-cares-about-the-price mindset was exactly what poured rocket fuel on markets in Florida, California, Nevada and most of the Northeast between 2001 and the Spring of 2006. As in Canada today, lenders relaxed their standards, deals were done with little or nothing down, mortgage companies were flush with cash to lend, and there was a big federal agency ready to assume the risk.

How did that turn out?

You can gauge that by what Barack Obama did Friday. He signed a bill which will heap at least another $11 billion into the housing market to try and stop its inexorable disintegration. While average prices are up at least 13% in Canada this year, they’re down by an equal amount in America. In fact, it’s the third consecutive year of double-digit declines – a misery which has more than 16 million middle-class families living in homes they can’t sell since they owe more than they own.

Obama’s action extends an $8,000-per-buyer grant for first time purchasers to the end of June, and throws another $6,500 to everyone buying a house who has owned a home for five of the last eight years.

And this is not a program aimed at the disadvantaged, unless that’s what we’re now calling the American middle class. These gifts are being extended to couples with a joint income of up to $225,000.

Thus, it’s clear how desperate our American neighbours are to rescue residential real estate from destruction. It might also make us wonder why we’re so different. After all, we bid house prices up to the point of unaffordability. We allow people without money to buy homes. We have a federal agency taking the risk from lenders, making mortgages widely available. And we have a whole new generation (or two) of buyers who pounce only because they believe (and are being told) there’s virtually no risk in their actions.

Over the past couple of months I have detailed a host of reasons why I believe otherwise. Historic low rates will rise, due to a few unstoppable factors. So will taxes – on consumption and income, now that we are so in debt. Inflation’s return is assured. Government stimulus will end. The Boomers will unleash a listings flood. America’s cooked and so are our export plans. Energy and resource prices will romp. Disposable incomes won’t.

These are not the conditions for a continued real estate advance. Just the opposite. They are, however, well tailored to those who plan to make money on commodities, equities, tax shelters and a plateful of other financial products, maybe even the odd POS.

Welcome back to Alberta, Lynda.

Have hubs read this. Then buy him a horse. Way safer.

Hear Garth in Victoria
November 19. For a seat call (250) 475-3698

175 comments ↓

#1 squidly77 on 11.06.09 at 10:42 pm

albertas unemployment rate is surging
and as families struggle, the end draws closer
Alberta mortgage arrears soar 433%

#2 squidly77 on 11.06.09 at 10:43 pm

the above link provides delinquencies for every province

#3 Gord In Vancouver on 11.06.09 at 10:54 pm

Garth, you took it easy on the RE bulls today by not commenting on our country’s rising unemployment #’s.

Those who call you excessively negative are clearly asleep at the wheel :)

#4 Joan on 11.06.09 at 11:12 pm

I hear you, Linda! We’ve just moved back to Edmonton after 10 years and can’t believe the perception of invincibility out here. We are also laying in wait while renting but when I try to explain the bubble theory to people they just say, “Yeah, but Alberta’s economy is all about oil and gas and as long as oil and gas prices stay the same or rise my house is not going to drop in value. In fact, the more people that are pulled here by a job, the stronger the RE market will be.” Garth and others: I would REALLY appreciate a good comeback line for these people! I’m starting to think they have a point.

#5 T.O. Bubble Boy on 11.06.09 at 11:40 pm

Some forecasts predict that US prices are positioned to fall another 43% once the housing stimulus runs out:

http://seekingalpha.com/article/170526-property-values-set-to-fall-43-from-current-depressed-levels

It’s funny that this article talks about how Fannie and Freddie are “funding every new mortgage”. Isn’t CMHC taking on almost 100% of the Canadian new mortgage market?

Of course it’s different here… we have the Pan Am Games! Can’t wait for the Toronto MSM to start talking about the “2015 Pan Am Effect” on housing markets.

#6 $fromA$ia on 11.06.09 at 11:42 pm

“While average prices are up at least 13% in Canada this year, they’re down by an equal amount in America.”-Garth

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Garth, Obamma won’t lose his job if housing tanks because he has the past president to blame. Conservatives have themselves to blame, just a matter of time now. :)

#7 Watched Bubble Never Pops on 11.06.09 at 11:42 pm

#3 Gord In Vancouver

“Garth, you took it easy on the RE bulls today by not commenting on our country’s rising unemployment #’s.”

One would assume that rising home prices are not due to buying by the masses of unemployed. Unless there is data to suggest that they are of course.

Also if somebody can post data that correlates rising unemployment and declining RE values, that would be more meaningful to see. If not, the fact that unemployment is rising is just another tool in the fear chest – similar to suggesting that the rise of oil, price of gold, and average length of a goat’s chin hairs is correlated with the RE asset.

“Those who call you excessively negative are clearly asleep at the wheel”

And those who foretell an asset bust year after year despite rising prices aren’t impaired either.

#8 Just a Girl on 11.06.09 at 11:45 pm

I lived in St. Albert for 15 years. If you are also looking at Central Edmonton, I assume your jobs(s) are downtown … so before you buy in S.A., try the commute a few times at 7:15 am in winter. If you don’t mind driving in first gear for 45 minutes (and possibly even longer on the way home), then you might not mind living in the ‘burbs. There’s transit of course.

I heard the Heartland industrial development (stopping and starting with the bust/boom) might positively influence S. A. home prices in future. Generally I always found you got more house for your money in S. A., versus Edmonton. And a nice place to raise a family. River trails, amenities. I’d probably rent for a while (surely there can’t be a shortage of options) and see what you think, before sinking your cash into a home. Lots of prior boom homes, circa 1978, that need updating. Watch the foundations, look for evidence of water damage/flooding … chronic issue … part of the northern climate, and perhaps quick construction of homes, in boom years. Others can advise on this better than I …. I only lived through a flood of a home, one week after moving in, and it was *not* insured as caused by foundation water seepage, not an “act of God.”

Not to be too negative, I have many positive experiences living in both S. A. and central Edmonton. The bigger question in your letter is not where to live, but whether to buy or not. Rent first. You’ve come a long way from NC, things are different up here. You need to get the lay of the land before investing $550K … if you decide to invest in real estate at all.

#9 Enuff on 11.06.09 at 11:51 pm

Sorry, but what is a “POS?” I try to follow along but acronyms make it a little difficult. Thanks for any clarification.

#10 InvestX on 11.07.09 at 12:33 am

Hi Garth, great post.

So do you still think the real estate market will drop below what it was in the spring?

#11 Keith in Calgary on 11.07.09 at 12:34 am

Rent Lynda…….rent……rent……rent……rent……rent !!!

I am renting what is now a $500k condo (used to be $650K) here in Calgary for 1/3 the cost of buying.

#12 45north on 11.07.09 at 12:34 am

squidly: mortgages in arrears is a big deal, social problems will follow. I notice that Ontario leads Quebec but I bet there are lots of differences in Ontario.

#13 Taxpayer like you on 11.07.09 at 12:40 am

Squidly – thanks for the link. Historically speaking, Alberta is now at the same rate as c. 1997 (previous worst). BCs previous lowpoint was 1999-2002 and is now only barely half that, but it has nearly doubled in the last year.

#14 DonkeyPunch on 11.07.09 at 1:15 am

Come on, squidly, that link and your post were pretty weak. Did you expect to *not* be called out on the fact that mortgage arrears have historically been as high as 0.68% in Alberta and that, just perhaps, the 0.15% rate from two years ago represents the aberration? Did the sky fall during early 1997 when the rate of arrears approached 0.69%? Hmmm, I don’t think so.

Don’t get me wrong, gentle readers, I believe there will be a correction in Alberta. But squidly needs to be called out for the same tactics that the MSM uses to pump up housing in the cause of housing bears. To convince others, we have to be above using the tricks that the realtor associations and the MSM use.

#15 Mom in Vancouver on 11.07.09 at 1:48 am

We dare not dream to buy a home in Vancouver, actually we can not afford anything with a yard for kid to play in Surrey or Maple Ridge also although I worked several years as full time programmer. We feel shame to be poor and working poor.

#16 kc on 11.07.09 at 1:52 am

I recieved a nice information package in the mail (snail mail) box today. I am invited (for free) to the “Income For Life” meeting. Topic…. how to get rich investing in RE… and get this… with 5% or as little as no money down. Incase anyone wants to go in my place, they give you this nice web site addy to enter your particulars….

http://www.bcrealestateinvesting.ca/

Feel free to use my spot for I feel rich enough with out becoming tied to MBS or commercial properties. Or that other great one… become your own boss with renting out houses….

One thing I must say thou… for the patsies out there, the advertisement catches your eye….

cheers

#17 Nostradamus Le Mad Vlad on 11.07.09 at 1:54 am

“. . . there’s virtually no risk in their actions.”

One of the ills in society today — just about everyone (druggies, home buyers who can’t afford it, murderers, etc.) who take a wrong turn in life (deliberately) are let off close to scot-free, as very few of us have any backbone, or spine left.

That’s not what I grew up with. Then again, I’m an old fart who doesn’t “get it” anymore.
——
A sensible solution to the current situation, although it probably won’t happen. — End the Fed
——
What is interesting is that China has moved there big time (and South America), to grab the natural resources. How long before someone gets miffed at them? — Africa
——
Re: the obvious false flag op. at Fort Hood, a comment from a wrh.com reader is better — Mutiny! “ONE GUY IS SAYING THAT 2 SOLDIERS WHO WERE REFUSING TO DEPLOY AND HAD BEEN TREATED BY THE GOOD DOCTOR SHOT A BUNCH OF OTHER SOLDIERS WHO HAD COME TO BEAT THEM UP AND FORCE THEM TO DEPLOY. THAT WOULD EXPLAIN THE OTHER SUSPECTS AND OTHER GUNS. THIS STORY IF TRUE MEANS OUR MILITARY IS ON THE VERGE OF MUTINY! (Sent in by a reader)”
——
Obama seems to have switched allegiances. The WP (banned in China), like ABC is a mouthpiece for the WH. — Iran. But who organizes the protestors? Usually the CIA and Mossad find ways to mess around in others’ muck, so there have to be underlying reasons for this current state of affairs.

#18 Gonzo on 11.07.09 at 2:04 am

I actually don’t think it will be an interest rate rise which will cause house prices to start dropping (although it will certainly help). When prices had their dip last fall it was not because of high interest rates, but because markets tanked and people were scared and lost a lot of wealth. The market was all everyone was talking about back then. Another run on the markets will cause the same thing, although this time interest rates can’t be lowered to stop the bleeding. And I think another huge run on stocks could happen any day. Long before interest rates rise. And if I’m wrong, real estate will still crash for all the reasons Garth has covered in great detail.

#19 Calgary_rip_off on 11.07.09 at 2:09 am

By 2012(thats the five year renewal term) factual foreclosures will be unavoidable by the common media.

Yes if you are American and have lived in the south the prices in Canada look nuts. That’s because they are nuts.

Fast forward two years from now. What is happening now is the tip of the iceberg.

Many people bought maxed out on low interest rates in Calgary in 2007. When interest rates rise the implosion will begin. Although Calgary is a large city, it’s a guess whether that city size will protect it from the imminent cave in.

Nice to see that Squiddly is alive and well. He should keep the realtors informed of their coming doom. The renters hold all the cards.

#20 Genghis on 11.07.09 at 2:32 am

According to mortgage lender AIG an estimated 10 percent of all mortgage applications in Canada contain some element of fraud. The problem seems more prevalent in Ontario.

This is mentioned in the news article below (the risks posed by grow-ops is the main issued discussed – add this to the house-buying minefield in some markets):

http://www.reuters.com/article/marketsNews/idUSN0620121520091106

On the subject of mortgage fraud, Diane Francis lays some blame on CMHC (the link below was posted by another GF blog reader a couple of days ago):

http://www.financialpost.com/opinion/story.html?id=e09feb7b-cab4-45d2-a052-47dcc381fea7

#21 Nostradamus jr. on 11.07.09 at 3:00 am

I was wrong and I appologize to all my friends here on this board.

…..I stated that Asians, Sikhs, Persians and Zorastrians were the smart relocators to Hongcouver these past 20 odd years.

I forgot to add Europeans and Australians were also relocating here.

…As R E Prices continue to rise here, locals have been polled and they say they would prefer to double up in family homes rather than relocate to black pit of Toronto or its hinterland…because for 6 months of the year it is too cold there for normal humans.

Nostradamus jr.

#22 David Bakody on 11.07.09 at 7:13 am

Lynda:

Take your husband to your bathroom and look in the mirror and repeat your own words:

“I have a real problem spending 550,000 for a house, that really should be worth 200,000.” ( this way he will remember the words for life and not snowball with words in the future)

Then sit him down at the computer and read:

A Canadian says “Short Canada”

http://globaleconomicanalysis.blogspot.com/

If the light does not come on ….. buy big time …. but open your own bank account so when the crash comes you can leave him with the house and start a new life on your own. ( hello? renting will not deplete your savings if it is invested wisely)

Best Regards

PS US Nation Debt ( not counting what Garth mentioned above) at time of this posting.

– $ 12,047,452,634,598 growing at $3M+/minute

and how and who is going to pay for it? back to “Short Canada” for starters.

Pay down debt, save wisely and enjoy life.

#1 City in the World to live a good life is Montreal Canada . from Forbes Top 10 list 2009.

#23 NOBODY on 11.07.09 at 7:52 am

Let the market fix itself.
No more band aid$ to fix it.
Be it crash? Yes.

Regulate banks further.
Regulate CMHC further.

We need a 30% price decline in Canada: bring prices back in line with affordability
Bring interest rates at 10% now: promote savings, not spending
One should need 25% cash down to purchase a home: it is a home, not a commodity

History shows that nobody learns from history: Canada/CMHC/banks are doing here in Canada what the US did between 2005-2006

Let’s all live with a crash. 2012 will not be the end according to the Mayan calendar: it will be a real to normalcy, the end of self gratification:

Less easy credit for all: no more buy now pay later

Less mindless spending & waste

Save before you buy & pay cash for everything..

#24 Farmer1# on 11.07.09 at 7:57 am

Hey Garth, I live in the surreal place called Fort Mcmurray where housing prices are unbearable. I rent a two bedroom apartment for $2000 a month plus utilities with my wife. I cannot imagine buying a 20 + year old house with baige carpets, walls, original windows and roof. I hate to throw away 24 grand a year but am too chicken to get into that much debt. I just wonder your thoughts on the housing future in a place where the jobs are a dime a dozen and a trades person takes in 100 000 + a year. Oh yeah and I do not have a Quad, a boat, a camper, a 50 000 dollar truck or a Harley Davidson. What’s a fella to do in Fort Mcmoney?

#25 prairiegopher on 11.07.09 at 8:29 am

Okay folks, since we are focused on Alberta housing can anyone give their thoughts on Leduc. We are moving from Saskatchewan to Edmonton area and have considered Leduc. Both my wife and I will be retired so commuting won’t be a problem. Thanks.

#26 CalgaryRocks on 11.07.09 at 8:43 am

#19 Calgary_rip_off on 11.07.09 at 2:09 am

By 2012(thats the five year renewal term) factual foreclosures will be unavoidable by the common media.

If you are worried about renewals in 2012 then you should know that you can call your bank at any time and ask to extend your term with a blended rate. They will simply average your current rate with the bank rate at the time and voila.

This could easily postpone doom times into 2015 and even 2016.

#27 GenXer on 11.07.09 at 8:52 am

Enuff – POS stands for Power of Sale – when a bank or institution takes over a property due to lake of payment and sells it off to the highest bidder.

It can also stand for piece of s&!t, particularly when referring to old cars – equally applicable given the state of most properties being sold through power of sale.

#28 JO on 11.07.09 at 9:23 am

# 15 – just move to another province. Yes it is hard, but i have no clue how people can afford to live out there. You should write to the Finance Minister to ask him why taxpayers gaurantee mortgages on the weakest homeBUYERs, and why is it our financial system is designed to create around 16 dollars of debt for every dollar on deposit/equity ? Why are you enslaving young taxpayers and our children to pay for so called “stimulus” and bailing out greedy unions and corporations?..asset prices have risen artifically fast mainly due to the fact credit has grown much faster than GDP for years now..don’t worry, hang onto cash and some gold..you will be doing just fine 12-18 mts out.

Obama is continuing a series of sad and useless interventions in the housing market which will only make things worse. Even more outrageous, much of that “stimulus” money comes from the still notable number of citizens who are prudent, save and pay bills on time. In Canada, when this RE market crashes, the hordes of panicked homeBUYERS and the banks/housing industry will come seeking “help” from those of us who save, decided to rent to avoid the gov’t sanctioned ponzi scheme, and otherwise manage well despite exploding tax rates to help pay for big gov’t.

Make no mistake, we are in the early stages of the inevitable credit contraction on a global scale. The economy will destroy (people paying down more debt / defaulting) the excess debt. The by product is collapsing asset prices. Think your house is worth XX $ ? Sorry it is actually worth at least 30-40 % less. Same for your income.

It does not take much reading between the lines to notice how worried Carney and his predecessor are about housing and the role of ultra low rates and the CMHC ponzi fraud. These people, who helped create the conditions for this to happen (the record amount of debt only grew because there were enough people in society willing to take it on), are like kids playing baseball behind your house who hit a ball hard on purpose in the direction of your house but then say “uh oh” after the ball has been hit and hoping it doesn’t break a window..complete morons.

You can also count on big gov’t, having grown like a monster on the back of the massive credit bubble, to extort more money from you via taxes, fees, and eventually inflation – although we have at least one or more powerful deflationary phase to go through between now and 2015.

JO

#29 Boombust on 11.07.09 at 10:18 am

“Sorry, but what is a “POS?” I try to follow along but acronyms make it a little difficult.”

“Piece Of Shit”, as in the house featured in Garth’s last blog.

#30 Nostradamus jr. on 11.07.09 at 10:18 am

Updated Real Estate Prediction by Nostradamus jr.

…The current policy of 5 -35 Home Ownership taking place in Eastern Canada is none other than Socialized Housing.

Mortgage rates will not rise…this is the new norm.

…Smart Ontarians are relocating to the Atlantic Provinces…the brilliant ones are relocating to Hongcouver.

Nostradamus jr.

#31 Daystar on 11.07.09 at 10:29 am

#4 Joan on 11.06.09 at 11:12 pm

If you want a line, here it is. “Mortgage valuations are based more than anything else, on affordability of which, if interest rates double, do you expect incomes to double in Alta to offset the decrease in affordability and keep valuations where they are at now?” And if you get the dry “yeah, but interest rates won’t rise”, you can counter with, “yeah… and governments declared deficits out of the question a year ago. It looks like 100 billion dollar governmental deficits are the norm now. What is it that generally follows governments that lose their triple AAA rating?” There won’t be a legitimate comback against that one. Only the ignorant/naive would dare to try.

#5 T.O. Bubble Boy on 11.06.09 at 11:40 pm

Canada’s total estimated mortgage values are:

http://3.bp.blogspot.com/_0YOsyi5WbLY/StzRFaVPfuI/AAAAAAAAAPA/yeqWo2wRpvg/s1600-h/Canada+-+Outstanding+Residential+Mortgage+Credit+1980-2009.JPG

CMHC presently has approximately $500 billion worth of insurance in force and has Harper’s blessing to go up to $600 billion in insured mortgages which most expect CMHC to hit around the end of 2010 assuming the BoC doesn’t raise their rates by more than 2 points by the end of next year. Lets put it in perspective, as all mortages with 20% or less as a down payment are forced by regulation to be insured through CMHC. To put it bluntly, CMHC insures the riskiest mortgages Canada has.

The question I have for readers is… who up and decided that $600 billion worth of CMHC/taxpayer risk is sustainable with close to half of this number being run up since the Conservatives have been in power? Who up and decided that such a high total level of risky mortgage debtload won’t bloat and already grotesquely ballooned bubble to the point of creating a multi year recession should interest rates rise crashing RE valuations just as it did in the U.S.? What wingnut up and decided that $600 billion dollars worth of consumer debt is a good thing for this nation? (you guessed it, the guy that said we wouldn’t run deficits a year ago)

Whoever decided that this nation can handle such high levels of debtload on mostly first time homebuyers buying into an unsustainable RE bubble, decided to ruin the majority of first time home buyers lives either through direct foreclosure in tougher times that surely lay ahead, or through a lifetime of indebtedness.

And for what. My guess is it will easily destroy 6 figures worth of lives in this nation as well as send this nation backward fiscally by several years. What a waste and all for the lust for power and greed. Hate to break it to the fans of blue but even Dion had more class and brains than the present dullard blowhard who up and decided to bribe us with our own borrowed money for our votes. As you might have guessed me sayin’, this won’t end pretty.

#32 Devil's Advocate on 11.07.09 at 10:30 am

While still a very small part of our currently active MLS inventory of properties for sale in Kelowna, POS or Foreclosure Sales have increased by 35% in the last two months alone. Where once a foreclosure sale attracted frantic bidding before the courts with a subsequent sale of higher than list price, today it seems such properties sit empty and deteriorating as they wait for that first offer to initiate a court date. Foreclosures, while still not a significant part of our market, are notably increasing in prevalence while having to deal with negative pressures from a not so healthy economy.

It can reasonably take twelve months before someone who has defaulted on their mortgage is told by the courts that the bank has been awarded conduct of sale. This bad economy is just twelve months old now and we are just now starting to see such consequence of it. Until, as reported, this month real employment has not increased in the last twelve months. It doesn’t matter how low interest rates are, if you don’t have a job you aren’t buying anything but the essentials and very likely are not making that mortgage payment on the $500,000 house you bought in the summer of 2008 with a 5% down you floated on plastic.

The only thing keeping the economy afloat, like a turd fighting the siphon of a low flush toilet, is the constant infusion of fiscal and monetary policies. Hey Dude, the toilet is plugged! The pipes need to be cleaned out! The constant flushing of fiscal and monetary dollars down the drain is only going to result in one ugly mess to clean up if we don’t address the real problem. What we are trying to save is not really worth saving. It is a waste by product of last evening’s gluttonous feast. At best it might be an enlightening fertilizer of knowledge telling of what is to be avoided next time, not unlike the moment you realize “oh oh… the toilet is plugged… this ain’t gonna end pretty”.

#33 Gord In Vancouver on 11.07.09 at 10:54 am

#27 GenXer

POS stands for Power of Sale – when a bank or institution takes over a property due to lake of payment and sells it off to the highest bidder.
________________________________________

Thank you for your answer.

It’s good to see that we’re discussing these terms now before the inevitable happens.

#34 kc on 11.07.09 at 11:01 am

Today is the end of the first week in Nov and in my area on CL (craigs list) there are 2 pages of places for rent that have been posted over the last 3 days. I watch these listings pretty regular for I feel this is a good gauge as to how healthy the RE market really is. I notice that 3/4 of the ads are for bsmt suites… the landlords are (by my best guess) getting more desperate to fill these places. there are more and more first month free… dogs & cats OK, smokers OK… 6 months ago these ads rarely said free rent dogs OK. let alone smokers.

My take is 2 fold, more and more people are buying into “starter condos” and leaving the rental markets, which in turn gives the “new landlords” this void of income from those “mrgt. helpers”… these second suites will need the cash flow to help those bank payments, is there any stats on how many new sales use the potential rental income on that mrtg/loan?

Maybe on the wet coast we have a sellers market however , renters are the lone vioce who I am betting if you are a GREAT negotiator can and more than likely will get to make your own set of rules.

cheers

#35 Bill-Muskoka (NAM) on 11.07.09 at 11:07 am

#9 Enuff

I see one commenter has already explained what ‘POS’ stands for, and they are correct. However, when I see that I reflect back to Wil Smith describing the Ford Crown Victoria Tommy Lee Jones is driving in MiB as a ‘POS’ meaning Piece Of S**t. Funny how the same acronym has such a dual meaning when discussing RE, eh?

I think we need an international clearing house for acronyms. Another example would be Cold Fusion which is both an atomic fusion process for generating electricity and an SAP Server Application Software Program.

My favourite acronym remains POLITICS which equates to ‘People Obviously Lacking Intelligent Thought In Critical Situations’ (c). BTW, I own the copyright on that term whereas I first coined it. LOL

Have a nice day. Sunny here with a forecast high of 13 C so it is out to the yard to do some pre-winter preparation tasks.

#36 Nathan in Edmonton on 11.07.09 at 11:09 am

Welcome back Lynda — 550k should get you a rather nice McManison here in Edmonton, but nice homes can be found in the mid 300s — but that’s still probably about 25% over value based on income. If you are commuting from St. Albert, be prepared for a much longer drive than you had 11-years ago.
I agree about Edmonton and Alberta in general having a unwarranted feeling of invincibility — up until the fall of 08 people where still saying Boom and Alberta in the same sentence.

#37 kc on 11.07.09 at 11:11 am

About a year ago I was sent a link to an article in “toronto life”

Can someone on this board / or in TO, tell me if this is a real magazine in toronto? or is it a newspaper weekly… or is it a daily internet only circulation?

I get a kick out of reading some of the zany articles that go into email… like this one…. how to aviod a bidding war? give a bully bid…. cheers (look at the prices)

Buyers avert a bidding war with a bully offer

http://www.torontolife.com/features/big-deal/

#38 Taxpayer like you on 11.07.09 at 11:24 am

20 Genghis

Re: your link to financial post. The article quotes a source saying that mortage fraud in Canada is “rampant”. I call BS. I’m not saying it can’t or doesn’t happen, just that it’s not rampant.

http://www.ltsa.ca/land-title/security-of-land-title

#39 $fromA$ia on 11.07.09 at 11:25 am

#21 Nostradamus jr. on 11.07.09 at 3:00 am I was wrong and I appologize to all my friends here on this board.

…..I stated that Asians, Sikhs, Persians and Zorastrians were the smart relocators to Hongcouver these past 20 odd years.

I forgot to add Europeans and Australians were also relocating here.

…As R E Prices continue to rise here, locals have been polled and they say they would prefer to double up in family homes rather than relocate to black pit of Toronto or its hinterland…because for 6 months of the year it is too cold there for normal humans.

Nostradamus jr.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

*Somebody was a waste of sperm!

#40 Mike in Etown on 11.07.09 at 11:27 am

I am happy renting in Edmonton. I showed my wife a mortgage calculator with 10% on a $400K home and then bumped the interest rate to 8% in five years. She’s cool renting, too.

I wish I lived in St. Albert, though. It is a very nice community but my commute downtown would totally and completely make me miserable.

Leduc is okay but too close to the airport and Nisku, a large industrial park, for my liking. If you like that part of town, try Devon or Beaumont to the east and west of Leduc they are both much smaller, cleaner and nicer.

#41 Gord In Vancouver on 11.07.09 at 11:33 am

#7 Watched Bubble Never Pops

As has been discussed repeatedly by now, recent Canadian real estate price gains are attributed to record low interest rates. Buyers who didn’t stand a hope in heck of upgrading their homes or getting into the market when the rate was 3%+ are jumping in now.

If you consider this to be indicative of a real market, you still think that (disgraced steroid using sprinter) Ben Johnson was a true athlete.

We both disagree on the state of Canadian real estate but strongly agree that more data should be available to the general public. This information (by region of course) should be distributed to all.

– Percentage of unemployed home owners.
– Average # of empl. insurance. months remaining.
– Percentage of buyers who are upgrading.
– Average income of home buyers.
– Average down payment made by home buyers.
– Average total (not term) length of new mortgage.

#42 Dee on 11.07.09 at 11:34 am

Two credit companies, 1 Interac what do you know about the monopoly that will occur Mr. Garth?

Peace.

#43 Devil's Advocate on 11.07.09 at 11:35 am

WHY THE HOUSING BUBBLE IS ABOUT TO BURST… AGAIN

#1 Rising interest rates. The current low rates are the product of monetary policy which will eventually cave, as it always does, to the free market forces. Long term rates are a product of that free market… the bond market. As bond rates increase they will put pressure on governments to raise the BOC rate. NOTHING impacts real estate values like interest rates.

#2 A rising Canadian Dollar. This is a function of a falling US dollar. Unfortunately, as proud as we might be of our dollars newfound strength, our manufacturers loose as their products become unaffordable in their number one market… the US of A.

#3 Continued unemployment stresses. Rising interest rates are not going to stimulate employment. Rising interest rates are an economic damper not stimulant.

#4 Inflation in everything we NEED and deflation in everything we WANT. Food is going up in cost, fuel is going up in cost. The cost of that which we NEED is rising at such an alarming rate it is denying many of the opportunity to buy what they want. Consequently the cost of that which we WANT is falling due to the lack of demand. Most houses built in the past 10 years are not of what we NEED but what we WANT. McMansions are dropping in value and modest post war homes will hold, relatively, in value.

#5 Rising Taxes. If you are lucky enough to be gainfully employed your happiness will be dampened by the mountain of debt governments seek to repay and you’re forced participation through increased taxes in the retirement of that debt. The HST is but one small current example of this. Yes it will impact the cost of housing on all fronts, from the taxing of strata fees to the taxing of the labour in building that home which was not before taxable. Net effect, the core cost of housing MUST fall to compensate and bring back to market equilibrium the price increased due to tax. Net effect higher taxes and less margin in new construction. Not good.

#6 Mortgage defaults. Employment has been reported to have increased this past such that unemployment is reported to be 8.4%… reported. Even if this were true there are many who are on the verge of foreclosure for whom it is too late. There is gluttony of homes working their way into the foreclosure marketplace.

#7 Historical price trends. When housing prices break from the historical price trend to such a degree as they have it is a pretty clear indication something is going to give. Even if the economy warrants it there is a consumer aversion to such rampant price increases in such essentials as housing. If we earn more we want to feel like we are getting ahead not just treading water. The discord in current market values against the historical price trend is greater than 25%. A discord of 5 to 10% is manageable, but anything over 20% puts undue financial and emotional pressure on median families such that they begin to rebel through withdraw from the market reducing demand. This is beginning to happen and prices will fall as demand falls.

#8. Political Change. Jack Layton, believe it or not, might stand a very good chance of forming the next federal government – NDP. As Boomers begin to retire they are not so interested in business as they are their personal well being. Mr, Layton has proposed such things as “insured retirement plans”. The NDP is the workers party, the party of the common man and the unemployed. People vote where their pocketbook is and if the NDP is looking after the pocketbook of the unemployed, which retirees are, they will vote for NDP. At the very least those parties to the right of the NDP will have to take note of this demographic change and adjust to it by definition becoming more…. Socialist if not Fascist. This can not be good for condo flippers.

#9 Demographics. As stated in #8 Boomers are going to have significant impact on the direction the economy takes over the next few years just as they have for the last 40. These people are not spending like they used to. They are no longer priming the pumps of the economy. In fact they are beginning to siphon the economic flow backward. Take those dollars out of the economy and their multiplying effect and you have a failing economy. Failing economies do not sustain real estate bubbles.

#10 The myth of inherited wealth. The children of Boomers do not stand to inherit as much wealth as you are led to believe. And of that wealth that stands to be inherited the vast majority (the 80/20 rule) is held in the pockets of a significant few. Those who believe this easy money inherited wealth will flow freely into the economy with the passing of the Boomers are in for a sad surprise. It just ain’t gonna happen like you are told if will unfold.

I invite anyone to give good logical argument against these just 10 of the many reasons the housing bubble is about to burst.

Don’t be alarmed it won’t be a real bad POP… well hopefully… and provided it doesn’t continue to inflate much more before it does pop. We should anticipate a 15% correction in housing values across the nation with quite easily double that (30% or more) in those higher inflated select areas and pockets of bedlam in the market… Condos in Kelowna… Dilapidated shacks in Hankouver and TO. Still… it won’t be pretty for anyone.

#44 dd on 11.07.09 at 11:42 am

#30 Nostradamus jr.

…Mortgage rates will not rise…this is the new norm…

It is obvious that you know nothing about the bond market.

#45 dd on 11.07.09 at 11:46 am

#30 Nostradamus jr.

…Smart Ontarians are relocating to the Atlantic Provinces…the brilliant ones are relocating to Hongcouver….

People moving to Atlantic Canada and probably moving there mortgage fee compared to people moving to Vancouver and mortgaged up the wazoo for the rest of their natural lifes. That is a tough call.

#46 dd on 11.07.09 at 11:50 am

#21 Nostradamus jr.

..prefer to double up in family homes rather than relocate to black pit of Toronto or its hinterland…because for 6 months of the year it is too cold there for normal humans…

What? People will move to the jobs and where the cost of living is lower. I see BC posted mass job loses this month.

#47 Calgary_rip_off on 11.07.09 at 12:02 pm

Calgary Rocks:

Your point is what exactly? That doom will be extended in Calgary? That’s the laughable. As a renter it doesnt matter, I hold all the cards. That blended mortgage will still be at a higher rate. And folks are struggling in Calgary already. So yes, 2012 there will be more foreclosures than those happening already. This is what happens when you have a conservative pseudo american party in power that pushes unrealistic low interest rates to keep up the “boom” in housing. What is much better is high interest rates and low actual costs of housing, not the foolishness shown by Ed Stelmach and the majority of people residing in Calgary. “Buy now or you will be priced out forever!!!” No thanks. That’s coming from the same people that will vote for the Wild Rose party. Alberta, especially Calgary, is the laughing stock of all of Canada. The city would be nice if the costs were realistic to live here, but the arrogance and delusion currently present will end in doom as you have conceded.

Look at the foreclosures statistics. They arent good.

#48 Nostradamus jr. on 11.07.09 at 12:06 pm

Congratulations to Ontario who will be hosting the Pan American Games.

…..Criticism by Easterner’s will now end re: Vancouver’s Winter Olympics and it’s costs to host it.

By hosting the P A Games, Toronto will likely win a sooner than expected Summer Olympic Games too…it makes economic sense both for both the host city and Olympic Committee….because within a decade the rest of the world’s major cities will not be able to afford the infrastructure and development costs.

…The result is….the world’s Socialist and Communist citizenry will relocate to Ontario while the wealthy elite of the world will relocate to Vancouver.

p.s….. $ from Asia $ will be first in line with his application for his family of 16, two great grandparents, four grandparents, nine kids and his wife …Asia will remain in South Korea to work, this, for his communist 1 bedroom rental apartment located at Eastern Ave and Carlaw.

Nostradamus jr.

#49 Joan on 11.07.09 at 12:41 pm

#37 kc
Yes, Toronto Life is a real magazine. I had a subscription when I lived in TO. It’s a glossy mag geared to over-achievers that need to feel like they are part of the more elite echelons of TO society. Once in awhile they also run interesting, well written, and timely cover stories. If you can ignore the pages and pages of pretentious advertisements and reviews, it’s a pretty good publication.

#50 Ken on 11.07.09 at 12:45 pm

Buyers Beware! realestate prices are unastainable.The government and the CHMC are being very irresponsible in my opinion. There will be payback time for everyone one way or another in the near future.

#51 Emma on 11.07.09 at 1:14 pm

#7 Watched Bubble Never Pops

How can unemployment NOT be a factor in home prices????

Unemployment-Related Foreclosures on the Rise
http://www.atlantarealestateforum.com/unemployment-related-foreclosures-on-the-rise-16527/

http://activerain.com/blogsview/1265167/the-effect-of-unemployment-upon-housing-for-2010

http://ezinearticles.com/?Effect-of-Unemployment-in-Mortgage-Delinquencies&id=3025563

Locally, here’s Toronto’s unemployment rate (sorry guys, but it’s what I know) …rising after 1989, looking more manageable by 1996 but not coming close to ‘88 until 2000/01 – the start of the next boom.

http://cuer.sauder.ubc.ca/cma/data/Employment/UnemploymentRate/rate-unempl-toronto.pdf

compare that to the chart at the bottom of this post…

http://www.torontohomes-for-sale.com/Toronto-average-property-prices.html

or this chart
http://www.mississauga4sale.com/avgprices.JPG

#43 Devil’s Advocate
Nice work!!

#52 Evangeline on 11.07.09 at 1:16 pm

The economic system of the whole world is based on credit, aka ‘debt’. Despite the wishful models of some flakey economists, debt cannot inflate forever, it can only be sustained to a certain finite level before it defaults. The sub prime crisis has engendered massive debt defaults (aka massive loss of wealth) therefore far fewer people are able to take on debt. That is called a ‘credit contraction.’

During a credit contraction, when fewer people can afford to go into debt (although they tempted to do so through lots of gimmicks) a debt based economy falters. Less and less people who can afford to take on debt means fewer can afford to buy houses. When far fewer people can afford to buy houses, prices go down, down, down.

That is why the bubble will burst.

#53 piccaso on 11.07.09 at 1:28 pm

EDMONTON – Alberta’s job market recovery lasted all of one month.

After growing by 3,000 jobs in September for the first monthly decrease in the provincial unemployment rate since December 2008, October came along to wipe out the gains and then some.

Alberta lost 15,000 jobs, the most of any province in Canada in October, Statistics Canada reported Friday.

That pushed the province’s unemployment rate up 0.4 percentage points to 7.5 per cent from September’s 7.1 per cent.

http://www.edmontonjournal.com/business/Alberta+loses+jobs/2192982/story.html

#54 Bottoms_Up on 11.07.09 at 1:47 pm

Talked to an M.D. who moved from Canada to Denver 13 years ago for ‘the snow’.

He said the biggest difference between Canada and the US was that in the US folks got tax incentives for taking on excess debt, and no reason to pay down their mortgage. In Canada, folks (for the most part) focussed on paying down/off their mortgage. A big difference which has kept Canada’s market stable.

Another thought: if our market heads south, wouldn’t our government step in with luscious tax breaks and cash incentives? Just a thought…

#55 David on 11.07.09 at 1:53 pm

St. Albert is a fine community as far as things go. I lived there for 8 years and owned a home free and clear title. Paid $89K for it in 1998. The housing bubble put everything out of whack and the correction in Alberta will be brutal at some point. Lynda can enjoy living in St. Albert by renting. For all the tranquility St. Albert offers, one can rest assured a good number of the burghers there are one paycheck away from mortgage delinquency or one job loss or divorce away from looking for new digs. For now at least, renting is by far the superior option financially in St. Albert. If you really need to buy in St. Albert, some of the older parts of town have some very well built homes with large yards. That is a rarity these days. There will be better days to take the housing plunge in St. Albert and your substantial down payment will not rot.

#56 Watched Bubble Never Pops on 11.07.09 at 2:04 pm

#43 Devil’s Advocate

“WHY THE HOUSING BUBBLE IS ABOUT TO BURST… AGAIN”

Considering the lack of evidence of a RE decline, your post should be titled,

“WHY THE HOUSING BUBBLE SHOULD HAVE BURST, BUT HASN’T… AGAIN”

Try posting something constructive. This pattern of trashing other people’s thoughtful remarks many times a day shows the paucity of your intellect or perhaps your insecurity. Whatever. Grow up. — Garth

#57 CalgaryRocks on 11.07.09 at 2:06 pm

This is what happens when you have a conservative pseudo american party in power that pushes unrealistic low interest rates to keep up the “boom” in housing.

TO & Vancouver have higher prices than Alberta, both in terms of absolute $ and percentage of income. It seems that none of those governments are pseudo American.

Thank God we have a sane province, ie. Alberta where people can still rebel against tax and spend gasbag governments. Why don’t you move to Vancouver or TO. Oh that’s right, cuz they don’t pay ambulance drivers 90K/year like they do here. I forgot.

#58 CalgaryRocks on 11.07.09 at 2:11 pm

The city would be nice if the costs were realistic to live here, but the arrogance and delusion currently present will end in doom as you have conceded.

Yeah, that was sarcasm. Apparently it went over your head.

I suggest you move to TO where you can live cheaply in a 600K 500sqf coffin. In Calgary you can buy a SFH for 350K, 4 times as big an with half the prop. taxes. But hey, go live with the tax and spend gasbags. See ya, please go away!

#59 The Great Gazoo on 11.07.09 at 2:12 pm

Very sad, Orlando shooting accused, an engineer formerly “snapped” due to unemployment, foreclosure, divorce and debt.

http://www.thestar.com/news/world/article/722641–orlando-shooting-suspect-mentally-ill-lawyer-says?bn=1

#60 $fromA$ia on 11.07.09 at 2:13 pm

So, why not make a lowball offer on this piece of property, and if its successful, market it to the guys on Garth’s blog who think the world is going to end? Buy it for $12,000, sell it for $24,000, and offer 50% financing. Or, buy it, add a rain water recovery system, a composting toilet, and a wind generator, and sell it for more. Start building your own real estate empire!

-Courtesy of the current thread on RobChipman.net

http://robchipman.net/blog/heres-an-old-trick

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Garth, is our world comming to an end?

#61 ralph on 11.07.09 at 2:37 pm

to #25:

Why move to Edmonton and area from Saskatchewan? Unless there is a special reason like family, etc. Real estate in Leduc is much the same as Edmonton’s. Property taxes are high as well.

Weather isn’t much different from Saskatchewan’s. Same with scenery. Cold winters that seem to last forever.

But if you must move there I would check out Devon or Beumont which are close to Edmonton. Even look at some of the other places a bit further out.

In Wetaskiwin for example are properties that have been listed for well over a year. People there just haven’t realized yet that the boom is over, finished, kaput.

Anyway, my two bits worth. Good luck.

#62 Two-thirds on 11.07.09 at 3:04 pm

@ Watched Bubble Never Pops

A simple question for you:

Will you be alive and well tomorrow and posting again?

a) YES

b) NO

#63 Jack the Lad on 11.07.09 at 3:14 pm

You guys don’t realize that properties in the ‘Chuk are completely justified…. Deadmonton ain’t no ordinay, everyday place with just run-of-the-fill folk…

It is, after all “The City of…

http://img.groundspeak.com/waymarking/display/bdc7ec80-bec9-4f9e-b746-5501b2f8334c.jpg

#64 Emma on 11.07.09 at 3:16 pm

I thought I’d posted this – sorry if it’s a duplicate

#7 Watched Bubble Never Pops

How can unemployment NOT be a factor????

Unemployment-Related Foreclosures on the Rise
http://www.atlantarealestateforum.com/unemployment-related-foreclosures-on-the-rise-16527/

http://activerain.com/blogsview/1265167/the-effect-of-unemployment-upon-housing-for-2010

http://ezinearticles.com/?Effect-of-Unemployment-in-Mortgage-Delinquencies&id=3025563

Locally, here’s Toronto’s unemployment rate (rising after 1989, looking more manageable by 1996 but not coming close to ‘88 until 2000/01 – the start of the next boom)
http://cuer.sauder.ubc.ca/cma/data/Employment/UnemploymentRate/rate-unempl-toronto.pdf

compare that to the chart at the bottom of this post…
http://www.torontohomes-for-sale.com/Toronto-average-property-prices.html

or this chart
http://www.mississauga4sale.com/avgprices.JPG

#43 Devil’s Advocate
Nice Work!!

#65 Devil's Advocate on 11.07.09 at 3:25 pm

#55 Watched Bubble Never Pops on 11.07.09 at 2:04 pm

#43 Devil’s Advocate
“WHY THE HOUSING BUBBLE IS ABOUT TO BURST… AGAIN”

Considering the lack of evidence of a RE decline, your post should be titled,

“WHY THE HOUSING BUBBLE SHOULD HAVE BURST, BUT HASN’T… AGAIN”

“Dead Cat Bounce”, “Bear Market Rally”, “Elliot Wave B”, call it whatever you want this is classic stuff, history repeating itself, fear and greed doing it’s thing. Denial and ignorance result most often in the harshest lessons learned. But lessons learned are good. When it comes time for you to return to class I hope you remember “education is a bargain at any price”. However, whenever possible it is best to learn from another’s mistakes. consider it a most valuable gift from them to you. But if you must… keep on doing what you are, thinking “this is the new norm” it’s your life. Nothing is new, there is no “new economy” it all comes down to the laws of supply and demand and there ain’t NOTHIN’ new ’bout that.

#66 Pitaking on 11.07.09 at 3:26 pm

This past week it was reported(in the back pages) that the Wild Rose area of Alberta, just north of Calgary, led the nation in big ticket infrastructure stimulus money, with 24 projects of over 1,000,000 approved. This is the only source of job creation in southern Alberta and I would guess that it’s still unable to counter act the waves of layoffs related to oil and gas equipment manufacturing that are sweeping every industrial park that I know of. My fear is what happens as most of these projects are completed? As a life long Albertan who spent most of 2009 living abroad, I’m amazed at the changes that have occurred, with a large focus on the retail sector that I’ve worked in most of my life. I’m aware of several national franchises that’s sales are in free fall in the province with many locations in “power centers” barely able to make rent at this point even with money being thrown at this area. Although some mega malls appear to be booming, many strip malls and “secondary” malls are seeing a jump in empty spaces before the holiday season or are unable to fill their bays they currently have open. How much longer will the housing bubble be able to be propped up under these circumstances? Not long I believe. For a province built on housing, nat gas and retail, having 2 of the 3 sectors in free fall will spell doom for the 3rd, housing. For those bulls putting their faith in our resource sector, bring up a chart of GAS on the TSX to see how our provincial budget will look over the next few years. Rent is the way to go in this province, keep up the good work Garth.

#67 kc on 11.07.09 at 3:29 pm

#49 Joan

thanks. I was wondering about this mag for I did subscribe (for free) and it arives into email. you are right there are some interesting articles in here. I was really wondering about the format and you have given the answer i was looking for. thanks

#68 Barb the proof reader on 11.07.09 at 3:31 pm

#47 Calgary_rip_off: “.. happens when you have a conservative pseudo american party in power that pushes unrealistic low interest rates to keep up the “boom” in housing.. the same people that will vote for the Wild Rose party. Alberta, especially Calgary, is the laughing stock.. The city would be nice if the costs were realistic to live here, but for the arrogance and delusion currently present”
………

Calgary_rip_off,

I agree. Costs in Calgary are ridiculous for what you get. “The Industry” governs Alberta. And our Corporatocracy, or is it corpocracy, is now Canada’s — thanks to the con game and their deluded Ideology. Real people don’t matter any more. What dominates is blind short term thinking, fake and misleading ‘information’ and Big soft money to back it all.

When the rest of Canada fell into their con game the weakness began. Comfortably in power they can now fulfill their Little America Dream: 2006 will be remembered as the moment Canada Jumped The Shark. No wonder we are now at the centre of international frustration mounted against Canada for delaying progress on climate matters, since Canada’s leaders think the world is only 6,000 years old. I suspect Africans would tend to disagree with them on that..

Africans urge Canada to be tougher

Canada criticized for obstructing the process. Canada won the Climate Action Network International’s Fossil of the Week award for doing “the most to block progress in climate negotiations

Canada not likely to show any leadership on the environment

#69 Piccaso on 11.07.09 at 3:33 pm

Wetaskiwin…. lol
How much is a box going for in that one street Alberta prairie town?

#70 Bottoms_Up on 11.07.09 at 3:46 pm

#4 Joan on 11.06.09 at 11:12 pm
—————————————————-
Instead of a one-liner, show them the following graph and ask them to explain to you the price action between 1980 and 1984:
(click ‘residential real estate’, then ‘real homes prices’ under ‘Edmonton’):

http://cuer.sauder.ubc.ca/cma/index.html

#71 Bottoms_Up on 11.07.09 at 3:52 pm

#9 Enuff on 11.06.09 at 11:51 pm
———————————–
POS = ‘piece of $hit’ or ‘power of sale’, depending on context. Can mean both at the same time too.

Another one that took me awhile to figure out: MSM = main stream (street?) media.

#72 OttawaMike on 11.07.09 at 3:52 pm

What makes the USA bust even more astounding is that 95% of homeowners are still in their houses. If only a 5 % default rate caused that kind of tumble what lies ahead in 2011 when the next wave of mortgage resets hits the conventional mortages?
This is probably a big reason for Helicopter Ben firing up the Sikorsky again this week with his low interest money for a long time announcement.

#73 Piccaso on 11.07.09 at 3:58 pm

#67 Bottoms_Up on 11.07.09 at 3:46 pm

Just looking at Edmonton’s real estate chart and it looks like a pump and dump penny stock chart. lol

http://cuer.sauder.ubc.ca/cma/data/ResidentialRealEstate/HousingPrices/housing-pri-edmonton.pdf

#74 robert on 11.07.09 at 4:01 pm

#5 T.O. Bubble Boy

I was going to post that link to Mr. White’s excellent article but you beat me to it. The comments and the gracious way the author responds to asinine real estate hyperbole are an illuminating read. I found a link in the comments that is also a worthy read for those trying to get a historical perspective of real estate values and what the post bubble future might hold. (www.thepanicnews.com/2)

#18 Gonzo

I concur with your assessment of the catalyst for a decline. Everyone expects higher interest rates will trigger a drop. Most have not taken into account the magnitude of wealth destruction both in terms of destroyed savings and diminished or destroyed current incomes. Even if the lending institutions have thrown caution to the wind I do not believe anyone should ever lose sight of the standard affordability ratio of 3X annual income when buying a home. Going forward it will be the three Cs: capacity (income), character and collateral that will determine affordability (not fairy tale mortgage instruments).

I expect a massive point of recognition lies directly ahead. Higher taxes, lower incomes, further investment losses will eventually awaken the necessary mindset to eschew and or pay down debt as a first priority. It has already started in the US although the government there is doing its damndest to thwart any outbreak of financial common sense. By the way no government will be able to stop this deleveraging juggernaut. If this were not true then we would have never experienced financial panic and depression in the past as government would have magically prevented it from happening! All government is doing this time around is what they usually do: making a very bad situation infinitely worse.

#43 Devil’s Advocate

Agree with your thesis but disagree with some of the reasons cited. See above response to Gonzo re. interest rates in particular. If inflation occurs in the things we need there will be no money left over for the things we want. How will people respond to higher prices? My guess is by spending less, much less on anything that is not deemed essential and, surprisingly to some, much less on the things they need too. Commodity bulls please take note.

I suspect the wind is going out of the sails of the Canadian dollar. Look at the deficit. Is it likely to moderate, fall or increase? A strong currency should reflect a healthy economy. Is our economy really healthy? Or is our currency merely one of the healthier horses in the glue factory? And for how long? The federal and provincial governments are in absolute denial with respect to spending. I honestly do not believe they are going to get away with increasing our taxes without cutting spending, especially in the public sector. Unfortunately governments at all levels in this country have been captured by public sector unions. These delusional folks stridently believe their already high standard of living should forever be preserved and enhanced at the expense of the rest of us non unionized working stiffs. This during a time of historic job losses and pay cuts. Atlas Shrugged redux anyone? If we are not careful Leviathan will devour us all.

As for Jack Layton ever leading a government in this country, I suppose anything is possible. I don’t think the NDP can insure (guarantee) retirement plans without stipulating 100% investment in fixed income Government of Canada bonds. But of course, no one will want to invest in these securities knowing they are only a CMHC backstop in disguise.

Much as I admire and respect the work and views of some NDP members (my local MP Irene Mathyssen or Charlie Angus for example) the party as a whole and Mr. Layton in particular does not inspire much confidence. However on a lesser of evils note, when push eventually comes to shove between Harper, Harper lite and Mr. Layton (though I would prefer a new party leader more in the Huey Long mold) I know where I will be casting my vote.

#75 Opportunity on 11.07.09 at 4:04 pm

Comparing RE market prices in Canada and that place south of us is like comparing apples and oranges.

In Canada you sell a house and the tax bill is nil.

In US you sell a house and Uncle Sam has his tax hand out. No incentive here to push up prices.

Simple reason why Canadian prices are much higher than US prices.

Greater chance for greed in Canada.

Learn the facts. There is no capital gains in the US on real estate when it is sold to buy another property. This has no impact on price differentials. — Garth

#76 Devil's Advocate on 11.07.09 at 4:10 pm

What concerns me most is how quickly people believe we have recovered from what was potentially the “Mother of All Economic Collapses”. Things just don’t happen that quickly and if they are perceived to be doing so it is because this is nothing more than “The Mother of All Dead Cat Bounces”.

Elliot Wave B Therory, and I am not an authority on the subject, would suggest that Wave B would be proportionate to that before and the subsequent Wave C would be proportionate to the both prior. That would suggest a heck of a ride down from the peak of this Dead Cat Bounce. That our governments are trying desperately to breath life into the battered body of the economy with copious quantities of economic stimulus suggests, to me, that ride down on Wave C is indeed likely to be the “Mother of All Crashes”. I’m talking Canadian Real Estate… I don’t know so much about the stock market but suspect it too is in for a ass kicking.

Hate to rain on your parade Bulls, this is just how I see it. I couldn’t afford the expensive domestically made crystal ball though and bought the Chinese knock off which has only a 50/50 accuracy so, hopefully, maybe I am wrong.

#77 Barb the proof reader on 11.07.09 at 4:21 pm

Lynda,

Only buy if you’ve considered the following.. Alberta’s housing prices will slowly decline for ten years with blips to the upside now and then. One quick decline will happen in 6 to 8 months for obvious reasons.

There will also be a widening gap in the price ranges (already happening) .. and as well there will be an ever-widening price gap between desirable locations and those that are not so desirable, as top money vies over which perfect location they covet.

Desirable Location is something you can’t change, and it includes proximity to downtown and desirable “view” from the home — the “perk” of having a great location is that the home’s value is more stable in tough economic times, due to it’s inherent, irreplaceable desirability, and rareness. All aspects of Location, matter, and Location moderates the ill effects of falling prices.

Lynda, therefore, wait until next summer. Then, buy a home in a great location only if you plan on living there for at least 15+ years. If you nest in a great home, you’ll want to stay there a long time anyway. So if buying is an urge your husband can’t control, at least “time it” properly and do it “for the long term”.

Do it right.

#78 Daystar on 11.07.09 at 4:41 pm

#43 Devil’s Advocate on 11.07.09 at 11:35 am

All of your reasons make sense other than#3 and #8. I do believe Jack has matured over the years and has gotten better at the game but he won’t ever be a PM. The NDP could stand a chance technically to become a governing party but the one thing that stands in their way actually is Jack Layton.

The NDP needs 4 things to happen to become more than a contender. They need the Cons to burn out on their own failed policy and go down in flames which is inevidable. The question is when and I believe it will come with a RE collapse that spins this nation back into a recession with steep losses passed onto the taxpayer (assuming Canada was ever out of one to begin with). They need the Libs to be a no show federally not only with a lack of talent put forth by candidates but an organizational breakdown from top down… the NDP needs provincial governments both Liberal and Conservative to fail badly with NDP governments replacing them (this isn’t a far stretch to imagine by the way), they need a platform that is far more in line with spending than they have and a change in terms of their own parties ability to be a legitimate party to govern and it is this last reason more than most which holds them back.

Its a gamble to replace leaders with unknowns but for the NDP to break out federally, they have to and they have to do it with a person that is highly charismatic and has true leadership abilities. Do they have anyone as an MP right now that can do it? Possibly…. Pat Martin would be a hard leader to run against. He may not be smooth or charismatic but he forces everyone to take him seriously (because he so often right) and that is what is most needed for the NDP to bust out. Right now… 85% of the population doesn’t take the NDP seriously federally and the reasons are obvious, at least in my own mind.

What the NDP needs is a better leader than they have now and while you probably don’t agree with this statement, in terms of being number one, they need a leader that has has way more vision (someone who can articulate frugality in terms of budget platforms) and quite simply, someone more popular. Its not that people don’t like Jack, its that he comes across as opportunistic, someone who will say anything to get your vote. We already have leaders like this in other parties, we need someone new, someone different. Its why I liked Dion by the way, at least in all his faults, he was genuine. And Jack, if you are smart enough to read this blog, if you don’t like like what I’m saying then change it. Step up. It’ll be hard for you to change your own stigma now, but at least you can become that man of power in handing down the torch, so to speak.

As for reason #3, I should mention as well that lowering interest rates does stimulate the economy, no question. Its as easily seen as looking at what few sectors in the economy grew in terms of GDP: Real esate, financials, residential construction, wholesale, retail… but take low interest rates away and these same sectors shrink as asset valuations fall and most often, it shrinks below the levels seen before interest rates began to fall forcing me to think your conclusions are also quite conservative. The U.S. housing collapse offers an excellent example of what we can expect here should the RE collapse couple with a poor performance economy overall.

Just a final thought, would I ever introduce asset inflationary policy as a governmental leader? Only at or near the bottom of a recession that has already deflated assets substantially. The Harper government (if one can call it a government, I guess they try) up and decided to introduce rapid asset inflationary policy at a time when the economy was already red hot, they did it at a blazing pace (from 25 year 10% down to 40/0 is an insanse vote buying scheme to do it in good times) and they have ran rapid asset inflationary policy now for over 3 years running.

If people don’t think 3 years worth of governmental rapid asset inflationary policy won’t create a RE bubble that can ruin a nation or knock it back 10 years, just look south of the border. By all means, do it now! Search REMAX online, pick a state thats bubbled (Cal, Arizona, Florida) and check out what loonies can buy. By all means, please do and very quickly the truth will come home as to how inflated home values are in Canada. There will be no bubble deniers after one takes a look at whats happening to the U.S. now and keep in mind that 30 years mortgage rates are very comparable to our own. The question you will be left asking is… where are the buyers? Why aren’t these homes moving at such low prices? Monthy payments are cheap, almost as cheap as they are in Canada, maybe just as cheap. Where is the money? And thats when it will sink in as to just where the U.S. is at right now. Hard times. We aren’t far off ourselves. 2011 and 2012 will be very hard on all Canadians and the government we’ve had this last 4 years should take the brunt of the blame. History will not be kind to this current regime.

#79 Joan on 11.07.09 at 4:48 pm

Thanks to everyone who responded to my question. There’s some good stuff here. I SO want to be a vulture!

#80 squidly77 on 11.07.09 at 5:05 pm

its not over by a long shot
The “Real” Mega-Bears

#81 Devil's Advocate on 11.07.09 at 5:10 pm

#71 robert on 11.07.09 at 4:01 pm

Don’t disagree with you entirely. Please understand I am a long time OPPONENT of the left. I am a staunch free enterprise redneck who prescribes to the Austrian School of Economics. My point is we are heading further and further down the road to socialism. NDP has a lead on the other parties to that end. More to the point is a greater segment of the population seems poised to screw the others by voting, short sightedly, where, as always, their own pocketbook is but that might lie with a completely different party than they are used to.

On th Canadian dollar matter, I agree we are but a healthier horse in the glue factory stables. Yet our American cousins are our largest trading partner and their economy is certainly a lot more fragile than our own. Don’t get me wrong I believe we are due to head in the general same direction as the US economy but we do have some sound fundamentals (commodities) which should/could keep us from heading so far down that road. But, unless we find other markets, our dollars relative strength is going to be more a burden than blessing.

#82 Calgary_rip_off on 11.07.09 at 5:17 pm

Calgary Rocks:

So you are happy with your salary of $90K driving ambulance? That’s great!! I hope I see you some time in the hospital and ask how your mortgage is going. Hopefully its not up for renewal. Cause then you might be doomed.

What part of PC(phony conservatives) and the wild rose alliance is sane? Ed Stelmach says the main problem is not enough media attention. Alberta is the laughing stock of all of Canada. Its an embarassment.

Remember: $350K on a house that was $200K in 2005 is just such a bargain. Do the other ambulance drivers you work with find these prices a good thing? And do they enjoy the sane way the H1N1 vaccination was presented? Did you get your shot?

So prices in Toronto and Vancouver justify rip off prices in Calgary? How is that trusty logic? WTF?

It’s alway great having a bilingual speaking ambulance driver, I’m glad you are here assisting Calgarians without your H1N1 shot. You can thank the chiefs of chafe, Liepert and Stelmach for that. Hopefully there isnt a large severance package lined up for those inepts.

#83 Nathan in Edmonton on 11.07.09 at 5:19 pm

Speaking of Edmonton — anyone else notice a huge increase in photo radar lately? The city needs cash I think.

#84 Daystar on 11.07.09 at 5:24 pm

#76 Joan on 11.07.09 at 4:48 pm

Vulture huh? Ok, try Phoniex Arizona. One can buy alot of house for 120 K Canadian (with central air, a pool and no crackheads next door!). As for Canada, wait two years and there will be blood in the streets, fear and panick, and bad smells of rotting RE values that are sure to make vultures circle everywhere, lol!

#85 Concerned Citizen on 11.07.09 at 5:29 pm

#28
Jo, I love your comments, do you have a website?
just wondering.

#86 jess on 11.07.09 at 5:41 pm

lagging indicators

When criminal activity is the business model, business as usual has to stop.

Circular Trading
What Does Circular Trading Mean?
A fraudulent trading scheme where sell orders are entered by a broker who knows that offsetting buy orders, the same number of shares at the same time and at the same price, either have been or will be entered.
Investopedia explains Circular Trading
These trades do not represent a real change in the beneficial ownership of the security.

==================
The case, if proven, may be among the biggest hedge-fund frauds to target banks, said Thomas Newkirk, a partner at Jenner & Block in Washington and former US Securities and Exchange Commission enforcement official
http://www.smh.com.au/business/world-business/jpmorgan-finds-a-nasty-surprise-20091107-i2jc.html

#87 Not Garth on 11.07.09 at 6:11 pm

Went to an open house yesterday just before closing. Ferraris were stacked like cordwood, and double-and triple-parked where the road was wide enough. The driveway was littered with the corpses of weaker couples or those encumbered by children, whose bodies were either trampled on their way in, or shot by the listing agent, who was delirious as a mosquito at a nudist retreat. Wallets simply thrown at the property from a distance piled up in drifts; high-value bills fluttered everywhere. Pigeons nested in brown, red, and green bouquets of capital.

Inside, the stream of visitors had worn six-inch ruts in the hallways and stairwells. In one particularly tight corner, thousands of pairs of turning feet actually ignited a small fire. Light switches were worn through to gleaming copper. The handles of bathroom fixtures had simply disintegrated, and water sprayed freely. Part of the top storey had collapsed under the weight of hundreds of guests, crushing the hundreds more immediately below.

I found the listing agent in the basement. He gurgled sickly at me – I suppose his vocal cords had hemmorhaged and filled his lungs with blood – and waved the stump of his right arm, where his shaking hand had been. He pointed towards a note, indicating that the owners would entertain offers between seventy and eighty times assessed value. Nearly overcome by the opportunity this presented, I made an offer on the spot. You bears are such morons.

#88 Bill-Muskoka (NAM) on 11.07.09 at 6:19 pm

#72 Opportunity

Contrary to Garth’s statement, which is partially true, the trick in the U.S. to avoid Capital Gains Tax is that you MUST buy a house of higher value within two years after the sale of your primary residence. At least when I lived there that was the case.

If you buy a lower prices home then the difference does get taxed as a Capital Gain by the Federal Governement, and the State as well. remember, they have to fund all those military/industrial contracts somehow. You don’t really think a hammer costs $33,000 or a toilet seat $650,000 do you? LMAO!

When you die then the estate taxes kick in as do the Capital Gains Taxes. Hence the saying ‘Two thing no one can avoid are death and taxes!’ Each of the States there really tend to nail your coffin shut for your inheritors. There are exemptions, but they are tricky to get.

I still laugh when I hear Canadians whine about our taxes. They have no idea what taxes are, especially all the hidden ones Americans get nailed with, usually at the worst time possible. We get sanity and healthcare, they get more weapons sysyems and another unwinable war. Remember that about 50% of every U.S. Federal tax dollar goes towards ‘defense!’ They have an organization called the I.R.S. (Infernal Revenue Service) that would make the torturers in Iraq seem like Boy Scouts on Holiday with their tactics. They are not even polite about it, they are America’s KGB and GRU.

What maroons as Bugs Bunny would say!

#89 Bill-Muskoka (NAM) on 11.07.09 at 6:23 pm

#76 Joan

Want to be a vulture, eh? Okay, here is your game plan. Gather up all your money and go play the Detroit RE market. Homes for as little as $625 are available NOW!

Believe me there is plentiful RE carrion in Detroit just waiting for you to come. Oh, don’t forget to budget a recognized gang to provide ‘protection’ of your investments.

#90 Kent on 11.07.09 at 6:32 pm

Hey, the Prince of Pot has given a short (and very positive) review of your book “Sheeple” from North Frazer Pretrial Centre. Have a listen:

http://www.cannabisculture.com/v2/content/marc-emerys-prison-potcast-episode-5

I have a lot of respect for Mr. Emery, he’s a great Canadian and a great advocate for freedom.

#91 CalgaryRocks on 11.07.09 at 7:28 pm

I still laugh when I hear Canadians whine about our taxes. They have no idea what taxes are, especially all the hidden ones Americans get nailed with, usually at the worst time possible.

So true, if you live in the US chances are that sooner or later all money you’ve saved will go towards your health care. Unless you’re ‘lucky’ and die fast.

#92 Bottoms_Up on 11.07.09 at 7:44 pm

.#85 Bill-Muskoka (NAM) on 11.07.09 at 6:19 pm
——————————————
You’re right about the taxes in the US. The doc I was talking with said municipal taxes (in Denver) are ridiculous, they tax all his assets like there’s no tomorrow (maybe there isn’t….)

To put the Mayan calendar into perspective, they stopped counting the years at 2012 because of some weird cycle of the stars (NOT a sign the world is coming to an end):

http://www.webexhibits.org/calendars/calendar-mayan.html

#93 CalgaryRocks on 11.07.09 at 7:44 pm

So you are happy with your salary of $90K driving ambulance? That’s great!! I hope I see you some time in the hospital and ask how your mortgage is going. Hopefully its not up for renewal. Cause then you might be doomed.

DOOMED! Whoooooooooo! Halloween was last week. Speaking of mortgage, I just renewed mine for another 5 years at 4.18% (it was 4,85%), with the little blending trick I gave you, so thanks. The goal is to pay it off at that point, and if not, bring it down so it’s worth less than your fully equiped Prius.

I’m thinking of renting the house out after that and treating myself to a sabbatical with the income. Maybe Costa Rica, we will see.

I still think you should move with your people. Canada is full of lefties that blame everything on Harper. You’ll be a lot happier in Ontario or BC.

#94 Bottoms_Up on 11.07.09 at 7:46 pm

#84 Not Garth on 11.07.09 at 6:11 pm
——————————————
That could be the intro. to Garth’s next book. Hilarious.

#95 CalgaryRocks on 11.07.09 at 7:51 pm

#76 Joan on 11.07.09 at 4:48 pm

Thanks to everyone who responded to my question. There’s some good stuff here. I SO want to be a vulture!

As someone that has bought a POS (the Power of Sale kind) before I can tell you that this not how to make vulture money in a bad economy. The bank does not have to sell just because you are the highest bidder. In lots of cases, the whole process is aborted when the owner works out a deal with the bank to stay in the house.

It’s kinda risky too because you need to put up 10% when you put in your bid, you’re not allowed to see the property and on top of that, you are not guaranteed to get an actual good deal, in comparison with what else is on the market. (How can you really tell what the property is worth anyways, since you can only see the outside)

It’s much better to get to these properties before they get into a POS situation. Which means, trying to reach troubled homeowners through advertising or a RE agent that specializes in these.

#96 dd on 11.07.09 at 8:05 pm

#48 Nostradamus jr.

…The result is….the world’s Socialist and Communist citizenry will relocate to Ontario while the wealthy elite of the world will relocate to Vancouver….

Oh that is funny. This coming from a Province that have more NDP per sq km than anywhere else in Canada!

#97 Investor on 11.07.09 at 9:22 pm

That tax incentive for Americans is so over used its not even funny. The bubble in America popped because there was no one left to buy overinflated real estate. Remember during the peak in real estate in US the transactions were hitting all time highs. Once the ball starts rolling quickly enough the prices decreases are very hard to stop. In Canada late 2008 showed what can happen to real estate and in my opinion was a preview to what the future will hold. Obviously that could be wrong, but its more likely and the longer this is postponed the more severe the correction will be. The interest rates will rise eventually as investors will demand higher interest rates to compensate them for the risk and ultimately the markets will force the central banks to raise interest rates. There is a bond bubble brewing as we speak.

#98 Devil's Advocate on 11.07.09 at 10:08 pm

RE: Vultures

Vultures are not what they think they are. Property in any market sells for market value. Forclosures sell for market value, in a hot market the price gets bid beyond asking price and in a sluggish market they sit and wait a buyer until the bank tells the REALTOR to reduce the price low enough that they attract interest.

This whole notion of swooping in and taking advantage of a distressed seller is bunk. Yes you may buy a property from a seller for less than they paid not long ago but make no mistake you will pay market value. In fact, as I have said before on these Blogs, price a property just ever so slightly below market value and a feeding frenzie will ensue such that it likely will sell above market value. Just as for each dollar you over price a property leads to an equal dollar less than market value achieved upon final sale, to a point, so too is the inverse the result in underpricing a property.

#99 T.O. Bubble Boy on 11.07.09 at 10:09 pm

Again, I will look into my CMHC Crystal Ball… more Freddie/Fannie bailout billions in the US:

“Despite signs of recovery in home sales and prices, rising delinquencies and unemployment levels mean the housing market is still fragile, Freddie said. High unemployment, foreclosures and excess inventory will impede the recovery “for some time” and push house prices lower, the company said.

This means that Freddie Mac’s survival will continue to depend on support from the government, which forced the company and Fannie Mae into conservatorship in September 2008.

Freddie Mac has taken $51.7 billion since then while Fannie Mae’s draw will rise to $60.9 billion.”

http://finance.yahoo.com/news/Freddie-Mac-posts-5-billion-rb-3083454207.html?x=0&.v=3

*ONLY* $112 Billion in bailout money so far! Keep in mind, this is after they went bankrupt – I’m sure that billions were also lost on the way down. Can’t wait to see that final total to get 70% of US households living the “dream” of home ownership.

Let’s say CMHC is 10% of that (since we are 1/10th the size)… that’s $11.2 Billion that Dim Jim Flaherty’s replacement would need to come up with to pay off the Banks. I guess this is why Flaherty is already buying up as many 5%/35-yr mortgages as possible — so this can all be buried under some creative accounting when this blows up.

#100 Nostradamus Le Mad Vlad on 11.07.09 at 10:29 pm

#14 DonkeyPunch — “. . . Did the sky fall during early 1997 when the rate of arrears approached 0.69%? Hmmm, I don’t think so.”

No, but the tech bubble did pop shortly after, and bankrupted quite a few greedy ones (now, where have I heard that one before?).

#39 $fromA$ia to #21 Nostradamus jr. — Main thing is to see RE prices in West and North Van. around 2012 and after; that will give a much more realistic of the reality of life.

#83 jess — “What Does Circular Trading Mean?”

The wheel always turns. What goes around, comes back around again (and again, etc.), then bites hard into one’s arse.
——
As always, another side to the story. — Cdn. Foreclosures
——
Re: Ukraine and Joseph Moshe: Clip of Phase 2 of a bioweapon.

GS is an Oligarchy; most already knew that anyway.

“. . . tyranny of the elites with government and Wall Street ruled by the powerful few — and the Obama administration is part of it.”

Speaking of the lame-stream media (LSM), this — Rare footage of Flt. 93 clip (not long).

El Buffett — Hey! I Want Some Money!

Ever figured out who is gonna bail out the banks? Yes! We are! Bailout Banks

In reference to a lot of Silly Billies. Recall I mentioned earlier that first, Monsanto will poison us (in conjunction with this bioweapon of a pandemic, the health companies will add to our ills — hence, Bill C-6 — and finally, the Happy Sex Tax (HST) will cause us to screw ourselves (pay tax) on our own funerals (unless we prepay them first).

#101 Daystar on 11.07.09 at 11:29 pm

#78 Devil’s Advocate on 11.07.09 at 5:10 pm

Wow, you’ve really inspired me today. Two in a row! (its that or I have way to much time on my hands… which I do… for now)

Here are the passive ingredients of the Austrian recipe at least as I understand it so that we are all clear on your preferences. Please correct me if I’m not clear on the definition as outlined as it would skew my conclusions if I’m at error:

1.Allow liquidation of bankrupt firms and debt (no bailouts)
2.Allow prices to fall (no monetary inflation)
3.Do not prop up employment (no stimulus)
4.Give no assurances against failure (no nationalizations of GSEs or expanding FDIC coverage)
5.Do not subsidize unemployment (no extending of unemployment insurance)
6.Do not discourage “hoarding,” i.e., saving

Above is the passive side of the Austrian school of economics as I understand it. The agressive side is reduce the size of government, taxes, budget and regulations and for me, Austrian economics represents “small goverment” where free market forces decide everything and thats where I take issue.

I have no issues with Austrian philosophy as the desired passive goal in terms of as little interference by goverment as possible. Who really wants goverment to step in and bail everyone out? But the obvious glares at me in that the systemic failures of capitalism within regards to regulations should never have been allowed to happen to begin with should our economic systems be regulated properly. Every government has the obligation to protect its consumers, its businesses and its citizens in general from environmental, financial, social and physical harm. This to me, is the role of government. To me, its not a choice which puts me directly opposed to the political right in the way it is often practiced.

Lets be clear that Austrian economics has been tried before. In light of the great depression era historical example and Austrian philosophy instilled by the governments of the 20’s and 30’s, do you believe that the governments of the 30’s in practicing Austrian philosophy did the right thing and that the handling of governments in the 30’s was the correct path to take?

In other words, if there is widespread systemic failure, should the system remain broken until a market bottom is reached however painful and allow a pure capitalist system unregulated, running on greed and fear to sort itself out? The belief is that this is the quickest way back to stability but in practice, the great depression never really did sort it self out to begin with in retrospect. WWII is what distracted and healed the economy. Simple war driven consumption run amuck is what ended the great depression (not to mention the baby boom of brand new consumers that followed, driving consumption to greater heights).

The arguement can easily be made that capitalism in pure form without governmental regulations to even the playing field is seriously flawed and has directly led us into the U.S. bond market meltdown and fallout we are experiencing today. It is populace to publicly run for office on a campaign of “less government is more or smaller government is better” and “big brother won’t tell you what to do or get involved with business”, but in practice its like parents letting their children do whatever they like unsupervised regardless of age and risk.

I have no issues with capitalism other than the fact that it needs to be regulated with government laws in force for our systems to actually function or the system itself will fail and fail as miserably and surely as any other system in existence. However… once that systemic failure has taken place as even with the best of all systems there will be those who don’t play by the rules, every government is obligated to protect and look after its citizens. Allowing massive bank failures to happen that wipes away all the uninsured deposits and life savings of consumers as an example is hardly a move that I would call a functional role for government to take.

To me, deregulation has been the reason for the U.S. bond meltdown leading the world into a financial crisis and not just in the U.S., but deregulation world wide. Deregulation of the banking industry, in the bond markets, in securities, in the mortgage industry, in financials is just a primer. Imagine deregulation in consumer protection in all sectors never mind financials from food and drugs to transportation and the environment. Imagine for a moment what Canada would be like with penal and police systems that are run “for profit” just as health care is in the U.S. in pure capitalist form. Is turning all ESSENTIAL SERVICES for profit only, the true way to go? If one is beholden to the Austrian economic dream, thats exactly what it means. Its not as if the primary motive of the capitalism is to provide the best of services or most bang for your buck. Pure profit is king in a capitalist system unless big brother says otherwise. Do we want a full third of our citizens to go without essential services from education to healthcare where only the priviledged can access these systems as is Austrian economically practiced in the U.S.? Do we want a system where everything is done with a for sole profit motive? Money is our God? A system that decides personal success or failure depends not so much on potential but on whether or not our parents can afford to feed, educate and keep us healthy? Do we want a system where human rights are trumped by human priviledge based on simple affordability?

Because this is, in fact, where the political RIGHT comes from, make no mistake. At the risk of framing the political right, all things are not a right at all but rather a privilege one must earn, regardless of whether one is born into less than fair circumstances. Smaller government is “better” from all angles. Less laws, eliminate regulations, privatize ALL ESSENTIAL SERVICES and just let everything self regulate under a for profit environment and somehow, consumers and citizens will remain protected with mere “self regulation” regardless of its entity. This is what the political RIGHT symbolizes at least to me in pure form and should the system fail, let them all suffer regardless of the fallout. And just to clarify, its opposite evil twin that has ones individual existence serve the state is hardly any better.

I guess what I’m trying to say here is that “less government” or less laws in force to protect the consumer from inferior products from all sectors be it deregulated financial “instruments” or the environment or otherwise INCLUDING CAPITALISM fully unregulated in pure form, is a recipe for failure. Lets call a spade a spade and agree that Capitalism exists solely for people to get rich and the rich to get richer. It doesn’t exist for human rights or for people who are dependent on others or government to survive. Pure capitalism doesn’t exist for human rights but rather, for the privileged. It offers no safety nets or backstops should the system fail. Pure deregulated capitalism is essentially in my mind, Austrian economics.

And lets be clear here that I don’t exactly support the pure political left either. Their own record on human rights is also abysmal. What I’m really trying to say here is this, Devils Advocate. What in the world ever makes one think that one has to have less government to achieve economic health and stability? To me, the role of government is clear. Protect its citizens from harm be it environmental, financial, physical or social at all times. That means a government must clearly define and enforce laws to do so and it begins with the enshrining of human rights because a good deal of us, capitalists at that, are not “self regulating” with nothing more than getting rich quick motive driving us regardless of who pays for it. Some of us capitalists do it quite successfully and quite illegally. We talk up capitalism or “market forces” as deciding who suceeds or fails based on the higher level of services provided but in the end, its really about who can provide the least for the most. Its called the most bang for your buck that ends up in your pocket.

We come on this site to get informed, keep up on things and often to debate (of which I’m self professed, never short for words). To me, Austrian economic theory has goals worth striving for but its not realistic in practice when failures are systemic in origin. When there is widespread systemic failure, the government has to step in and the ugly reality is that widespread systemic failure is often the direct fault of the government thats governed before hand to begin with so its simple. What are we really after? Enshrining human rights? Or human privilege… or both? (I obviously prefer both, I’m centrist) The american dream where anything is possible, where one can go from rags to riches based on potential regardless of ones birthplace, gender or race? Or the Austrian dream where its all pay as you go and entitlement comes only to those who are priviledged enough to afford it regardless of truer potential, where its pretty much a system where every person fends for themselves.

Essentially, what I’m asking you to do is to reverse engineer. Put yourself in the shoes of government and ask yourself how you can be responsible to your citizens without some kind of governmental control or help should the system fail in part or whole. How can any government under the sun guarantee consumer protection and enshrine human rights without being somehow being directly involved with the delivery of essential services? Ask that question, and you’ve found the answer to why we have public healthcare and public education. Ask yourself what the life expectancy of business is without regulations and one will see very quickly why regulations are so needed to begin with. Without it, most businesses won’t survive. As an example, ask Maple Leaf foods how self regulation of their meat inspections worked for them.

Who should government serve? Who does “for profit” capitalism serve? Who should we as individuals serve? Who is our master? One cannot guarantee human rights without leveling the playing field, without law, order, regulations, clear cut boundaries, and stepping in to deliver essential services where for profit entities have failed, its as simple as that and if that means tax and spend, so be it. If there is a system of goverment that does not enshrine human rights over human privilege as its primary goal, both governmental and systemic failure is certain long before the question of bailouts or the expense of social safety nets come into question and that is directly why to me, the school of Austrian economics as I understand it, is a failed direction for any government to take which speaks loads for what I think of the current leader of government we have in power now because this is the school Harper is from.

I guess, in a long winded nutshell, everyone has to be given some kind of chance to succeed and as such, I much prefer the ideal of the american dream where potential can be best realized by governments who ensure basic human rights to education, healthcare, food and shelter, simple basic human needs… over the Austrian dream (at least as I understand it, feel free to correct me) that ensures basic human rights come only to those who are privileged enough to afford it.

http://mises.org/story/3465

#102 Calgary_rip_off on 11.07.09 at 11:30 pm

Some posters have referred to “POS”

This refers to the power of sale in Calgary of a piece of crap property. The power of realtors to sell you an overvalued property at its peak created in part by big oil. The lovely right wing conservative government in Calgary has squandered its resources trying to be like George Bush. Ed Stelmach and the gang are the laughing stock of North America.

For those who bought before the peak mortgage renewal isnt a problem and these individuals dont have any clue as to the reality of the current dynamics. Their mortgage is less than many renters in Calgary. There is the problem, the city is able to sustain any real growth, its all due to a massive bubble created by a conservative government who had lax lending practices. So those in Calgary look the other way about what all this will truely mean in 2 years. Likely less property taxes for most. Foreclosures for fools who bought recently maybe, assuming they are maxed out. And for renters, possible good deals on housing.

For the clueless who remain in Calgary they count on being able to find renters forever who will want to actually rent their property. The nice thing about renting is that a person is mobile. And the last thing a person should do is to think that their security comes from home or no home ownership. Security comes from having a brain and not thinking hold. The phony conservative party thinks old and has to go.

#103 Chaostrology on 11.07.09 at 11:36 pm

Bottoms Up.

If the Maya were correct, and time will tell (not long to wait now), get ready to put your head between your knees and kiss your bottom goodbye.

To the Maya, December 21 2012 represents the rebirth of the earth when our star (the sun) aligns with our galactic center after a 26000 year journey around our galaxy.

In this scenario our star crosses our galactic equator and begins a pole reversal at which point our sun will literally go crazy, not a good outcome for us. We will suffer the same outcome as we are a prisoner of the sun and will be dragged across the same galactic equator and earth’s poles will reverse also.

A prime example of this is Alberta, which used to be sub-tropical and dinosaurs roamed to their hearts content. After a pole reversal, Alberta is now a cold grass desert and we burn the dinosaurs to get to Safeway.

Another gentler scenario is that during our galactic conjunction the entire spiritual knowledge of our galaxy, contained in the center of the Milky Way will be available to us to become one and begin our journey anew. A pole reversal on an individual basis.

Either way, this is not some weird cycle of the stars.
The Maya were sky watchers and observed the precession of the constellations and when the placement of our solar system planets conjunct the sun aligned with the galactic center in the December sky things changed, stuff happened.

This has happened many times before and will continue after December 21, 2012.

Less than 800 days to go. Don’t worry, be happy. You are a child of the universerse.lol

There are many books written on this subject, if you start reading now you may attain enlightnment before “THE END” comes in less than 800 days.lol

As above, so below.

#104 Daystar on 11.07.09 at 11:41 pm

#86 Bill-Muskoka (NAM) on 11.07.09 at 6:23 pm

So true Bill, so true.

#105 SWM on 11.08.09 at 12:11 am

#7 Watched bubble never pops: “Also if somebody can post data that correlates rising unemployment and declining RE values, that would be more meaningful to see. If not, the fact that unemployment is rising is just another tool in the fear chest – similar to suggesting that the rise of oil, price of gold, and average length of a goat’s chin hairs is correlated with the RE asset.”

I made a huge spreadsheet from about 20-30 years of data. Where would you like it posted?

You could also look up what has been happening in the States. While unemployment has been rising, home prices have been falling.

If you want Canadian data on this (since things are different here) look here: http://cuer.sauder.ubc.ca/cma/index.html#

A few things (of several) to compare: In Toronto around 1990, unemployment skyrocketed from 4 to almost 12% and housing tanked badly for a long time. For Vancouver around 1990, unemplyment went up a bit and housing went down a bit then started rising.

#106 Leaked Movie Script! on 11.08.09 at 12:22 am

Universal Studios denies that they have been working on a new movie, the script of which was recently leaked to the press.

Dr. Strange-rate, or “How I Learned to Stop Worrying and Love the Modern Finance System”

“What do you mean we have a ‘wealth effect gap”???

“Well, you see, American house prices have gone through the roof, making their citizens feel wealthy. In order to close the wealth effect gap, we need to inflate the price of our houses too.”

“Is that sustainable?”

“No.”

“Then why would we do it?”

“You see, we could also arrange to have the top 1% of society secluded in tax shelters from the fallout. Of course this one percent will be tasked with repopulating the earth, so perhaps say, for every one eminent banker, we would also take 3 or 4 women of reproductive age.”

“Healthy women?”

“Oh yes, only the most healthy women!”

….

“Tell me general, could one of these big ‘black swans’ of yours really penetrate the entire world banking defense system and launch an attack on a weak sector of the economy?”

“Oh you ought to see it sir, a great big bird flying at 350 mph, wings glimmering in the sunshine only 200 feet off the ground, it can sweep right in there and stuff a disruption right up the arse of a chicken before anyone even knows it’s coming. It’s just a beautiful thing sir, just beautiful, you ought to see it sir! Er, I mean, um, yes sir. It could get through.”

….

“Ambassador, what do you mean your country has built a Derivatives Dooms Day machine?”

“Excuse my interruption sir, but ambassador, what is the purpose of building a dooms day machine if you don’t tell anyone about it? The whole point of building a dooms day machine is lost if you don’t tell anyone you’ve built it. You’ve missed the whole point! (Banging his rate-setting hand on his wheelchair) A dooms day machine is pointless if nobody knows about it!”

“It was supposed to be announced at the next TARP expansion meeting.”

#107 SWM on 11.08.09 at 12:28 am

Another point about the unemployment vs. home price trend is that it is obvious in either direction. Look at Calgary or Saskatchewan around 2004-2007. Unemployment falls very low, house prices go up very fast.

#108 Watched Bubble Never Pops on 11.08.09 at 1:00 am

#62 Devil’s Advocate

In the supposed interest of ‘posting something constructive’ I will try to represent the opposite side of the ‘RE will bust soon’ coin.

““Dead Cat Bounce”, “Bear Market Rally”, “Elliot Wave B”, call it whatever you want this is classic stuff, history repeating itself, fear and greed doing it’s thing.”

I’m calling it ‘the other side of the coin’ or, with regards to this blog, ‘devil’s advocate’. The concensus on here is that RE ‘won’t end well’, but this has been shown to be dead wrong month after month, year after year.

If readers were given a dollar every time a poster said ‘this won’t end well’ you would be able to buy a house in Hongcouver.

“Denial and ignorance result most often in the harshest lessons learned. But lessons learned are good. When it comes time for you to return to class I hope you remember “education is a bargain at any price”. However, whenever possible it is best to learn from another’s mistakes. consider it a most valuable gift from them to you.”

I find it ironic that the term ‘denial’ is used by individuals who ‘foresee’ a downturn in RE where there is none.

“But if you must… keep on doing what you are, thinking “this is the new norm” it’s your life. Nothing is new, there is no “new economy” it all comes down to the laws of supply and demand and there ain’t NOTHIN’ new ’bout that.”

Nobody said anything about a ‘new economy’. However, I have mentioned the following:

1. To those who suggested that the government of Canada will need to raise yields on bonds to compete with other issues and thus force mortgage rates higher: hasn’t happened. In fact, even at their pathetically low yields, government of Canada bonds are selling like hotcakes. Rising yields? Not happening. If you want to argue this point, make sure you cite the 0.0000035% rise in mortgage rates – that makes it sound huge. Even better, since mortgage rates are at historical lows, quote the rise in percent, to make it sound like a huge increase!

2. To those who said that Canadian household debt is increasing and that this massive debt will kill us all: hasn’t happened. Household debt rose 3.4% in the first half of the year. Debt interest payments as a share of disposable income is at a low since 2006 of 7.7%. During the 1991 recession it was clear above 10%. Anyway you slice it, the debt isn’t killing us any time soon.

3. To those who said that the rise in interest rates in Australia will force the BoC to raise rates as well: wrong. All the educated economists who thought Australia was relevant forgot that Australia isn’t Canada.

4. To all those who thought that rising unemployment is a factor have been wrong again. There is no data that correlates unemployment and real estate. In fact, it is highly unlikely that the rise in real estate values is due to buying by the hordes of the unemployed; unless you have data to suggest otherwise of course. By flogging the dead-unemployment-data-horse as a reason why real estate will collapse is simply a fear-tool that holds no basis in reality.

5. To those that felt that the CAD was going to hit parity with the USD and some who confidently proclaimed that they will start amassing USD when we hit $1.10 as if it were a foregone conclusion: with our manufacturing sector in shambles what made these people feel that the BoC was going to allow that to happen?

6. For those who said that the flood of free money will cause inflation to rise forgot two things: 1) inflation has been negative for months and 2) inflation would take borrowers off the hook for their million dollar mortgages. How did posters deal with that problem? They ignored it. Don’t worry, inflation doesn’t exist.

7. For those who think that the stock market rally is ridiculous because the economy is weak and dying: there is no data to even hint that the stock market is correlated to the general economy. In fact, there is data to suggest the opposite – that they are not correlated.

8. To those who said that ‘investors’ who are buying RE right now will contribute to the downfall of real estate: wrong. Only a small fraction of buyers are investors compared to the U.S. before their collapse. Then to ‘prove’ their point, some say that anybody using 5/35 are ‘investors’ but then fail to add the same number of U.S. ‘subprime’ buyers as ‘investors’ to the U.S. data. If you want to be fair about the term ‘investors’ at least have that common sense. In either case, there were more ‘investors’ in real estate in the U.S. than there are in Canada.

9. And of course, for those who feel that now that Canada is starting to run a trade deficit, everything will unravel: where have you been living for the last 40 years? The U.S. has run a trade deficit for like 34 of the last 35 years and people are worried about 3 months of a trade deficit? Come on. Get real.

10. To those that feel that predictions made by economists hold any value: they should try to quote economists from both sides of a debate instead of simply using those that support their own opinions. Economists have been wrong about 9 of the last 5 recessions.

The reason I don’t make predictions is that they are a waste of time, more often wrong than not, and I can’t make any money off of it – unless I gave speaches and sold books to sheeple who believe that speculation has merit.

Your inability to open your mouth without demeaning and belittling others is not in the spirit of this blog. Adios. — Garth

#109 Nostradamus Le Mad Vlad on 11.08.09 at 1:19 am

To keep y’all warm and cuddly 2nite, a lil’ off-the-wall entertainment . . .

Evan Frustaglio Truth: Breaking News —4:19 clip — Did Even Frustaglio die from meningitis?
——
Another Kinsporacy Theory appears from Hell! — FOX Strikes Again!
——
4:14 clip — Food For Thought

#110 Happy Renter in North Van on 11.08.09 at 1:28 am

Watched Bubble Never Pops AKA Jim Chuong…

Why don’t you go flog your newsletter or non-“investment advice” (because you aren’t licensed anywhere) somewhere else…

I’ve had the privilege of working with some of the smartest portfolio managers in Canada who manage billions of dollars (and they don’t brag about being millionaires either) and ALL of them are sensitive to to idea of valuations. Obviously, this is something your methodology has no appreciation for. Go try to find some attendees for your cheezy non-“investment seminars” somewhere else… You’re a troll and won’t find any converts here…

#111 Jojo on 11.08.09 at 2:29 am

Ha,Ha,
She can’t understand that Canada is different than USA and Western World? Yes,baby it is different.
11 years ago Canada has different population, and today is realy different with new 4 mil. immigrants.
So majority Canadains have less jobs but we need more immigrants? I’m immigrant too but what I can see from politics we need only cheap labour and creation of bubbles in RE. But in near future about 3 to 5 years period when shit hit the fan, in Canada will be much worst than USA and Western World.

#112 Tony on 11.08.09 at 2:47 am

Read the very first comment #1. Alberta mortgage arrears soar 433%. Edmonton real estate has tanked with some townhouses and apartments falling by more than 50 percent from the peak. That’s why arrears have soared 433 percent. Maybe you’ll get it since you don’t live in Edmonton. When your mortgage payments are less than half the price of rent a month only a total fool would rent instead of buy. Toronto and Vancouver prices are increasing, there is no where in Canada for Edmontonians to go. If oil goes to 100 dollars US a barrel real estate prices will increase big time in Edmonton. Buy in the West or South West areas and double or triple your money in 5 years or less ecspecially on townhouses or apartments that are being given away by complete fools who have no knowledge of how to make money only lose it.

#113 Brainsail on 11.08.09 at 9:36 am

#85 Bill-Muskoka (NAM)

The rules were changed in 1997.

“Homeowners already know the many tax breaks that Uncle Sam offers, most notably mortgage interest and property tax deductions. Well, he also has good tax news for home sellers: Most of them won’t owe the Internal Revenue Service a single dime.

When you sell your primary residence, you can make up to $250,000 in profit if you’re a single owner, twice that if you’re married, and not owe any capital gains taxes.

“Most people are not going to have a tax obligation unless their gain is huge,” says Bob Trinz, senior tax analyst for the Tax and Accounting business of Thomson Reuters.

Some sellers are surprised by this break, especially if they’ve been in their homes for a while. That’s because before May 7, 1997, the only way you could avoid paying taxes on your home-sale profit was to use the money to buy another, more-expensive house within two years. Sellers age 55 or older had one other option. They could take a once-in-a-lifetime tax exemption of up to $125,000 in profits. And in all instances, there was tax paperwork, Form 2119, to fill out to show that you followed the rules.

But when the Taxpayer Relief Act of 1997 became law, the home-sale tax burden eased for millions of residential taxpayers. The rollover or once-in-a-lifetime options were replaced with the current per-sale exclusion amounts.”

http://www.bankrate.com/gookeyword/itax/news/taxguide/home-gain1.asp?caret=18

#114 mikef on 11.08.09 at 9:50 am

TO:#43 Devil’s Advocate

Easy way to pop NDP’s popularity?

Remind everyone that the NDP voted with the BLOC
to impose Bill 101 on federal services in Quebec

Nuff said

Yes I live au Quebec

#115 cybil on 11.08.09 at 9:57 am

I just bought a rental property in southwestern ontario. It is cash flow positive right now and even if interest rates go up to 7% I will still be breaking even after property taxes, insurance, etc. If rents rise in the future (which they likely will), then my profits continue to rise even with rising rates. Is there anything wrong with investing in real estate that is cash flow positive? I’ve lived in Europe and find real estate here to be very reasonably priced given the high salaries.

#116 Devil's Advocate on 11.08.09 at 10:25 am

#98 Daystar

While presented a little harshly yes those are the passive ingredients of the Austrian recipe. The aggressive side is reducing the size of government, taxes, budget and regulations. Austrian economics represents “small government” where free market forces decide everything.

If you don’t think the free market does today decide everything I would suggest you think about it further and you will likely realize you are mistaken.

Keynesian economics is all about the free market as well… ultimately.

Pump billions of stimulus dollars into the economy; be it through fiscal or monetary policy, ultimately it ends up in the hands of the “free market” as it filters down to corporations and individuals who become drunk on perceived wealth and newfound opportunity. Consequently, as I have best heard it explained through the simile; Capitalism has not failed us so much as Big Government for having forced free booze upon an alcoholic. Stimulus dollars are not free market dollars they are distortions to the free market. The free market ultimately tries to find equilibrium once again after the disruptive interjection of those stimulus dollars. But in finding that equilibrium there will be winners and losers just as were there no stimulus dollars to begin with. Stimulus dollars do not come without obligation to some more powerful lobby group.

Ever been to Cuba? There is an underground economy there, as there is in any socialist/communist state, which is an essentially a free economy but for its need to evade the watchful eye of the ruling class. Another thing you will note in Cuba is the lack of enthusiasm in the people. Oh they are friendly enough on a one on one basis after you have broken through the personal emotional walls. But generally they appear a demoralized, bored, unenthusiastic people who do nothing more and nothing less than their assigned job.

Too big a government is demoralizing. Without liberty there is no enthusiasm.

I understand where you are coming from and there must be some balance between the two camps for too much of one is equally as bad as too much of the other. But, a Libertarian must assume some risk to be truly free. I’ll take the risks of far right freedom any day over the security offered by a far left ideology.

Hey I understand the need for government. All I am saying is government has gotten far too big.

This is a debate better had over a beer as here it would waste far too much of Garths cyber real estate and play out like a year long chess game.

Essentially, yes I am that which you paint a picture with words of me to be although you did so with crude harsh strokes of a close up picture on one aspect of my beliefs without the background which would clearly show a more palatable rendering. To give you better understanding of my tepid adherence to the Austrian School of economic thought I find the writings of Thomas Jefferson of great inspiration. I think together Ludwig von Mises and Thomas Jefferson make ideal role models.

#117 Nostradamus jr. on 11.08.09 at 10:29 am

“Chris, formerly from England”

…What are your overall thoughts now that u have established ur roots in Canada?

Nostradamus jr.

#118 Bill-Muskoka (NAM) on 11.08.09 at 11:21 am

#110 Brainsail

Thanks for the update. I immigrated to Canada in 1996 so that explains why I was unaware of the 1997 change.

#119 Onemorething on 11.08.09 at 11:23 am

Garth, action on #105, much appreciated and justified!

#120 Bill-Muskoka (NAM) on 11.08.09 at 11:26 am

#103 Leaked Movie Script!

ROFLMAO! Absolutely HILARIOUS! I remember Dr. Strangelove very well.

#121 Bill-Muskoka (NAM) on 11.08.09 at 11:38 am

#89 Bottoms_Up on 11.07.09 at 7:44 pm

To put the Mayan calendar into perspective, they stopped counting the years at 2012 because of some weird cycle of the stars (NOT a sign the world is coming to an end):

I suggest reading Robert Lomas’ book ‘Uriel’s Machine’ which details the findings in the British Isles regarding the Grooved War People (Ancient Celtic and Druid) who built highly accurate observatories to track the 40 year cycle of Venus. They did this in 10,000 BC and they still exist today.

Venus tracks a five year cycle that repeats every eight years, thus the 40 year cycle. It is still considered to be one of natures most reliable chronological references.

These ancients also understood the sun’s journey as well and developed the Megalithic Yard which compensates for the latitude of the observer. They could build an observatory anywhere on earth and have the ratio’s correct. Stonehenge is but one of thousands of their constructs.

There is also an almost magical number ration based on 12345 that has now been deciphered to be a a basis for temples and observatories build around the world including the Mayan and Aztecs.

These ancient people knew a great deal more about astronomy and geometry than most do today. The current Hollywood fad on 2012 makes me laugh. But hey, it sells theater seats and DVD’s, eh?

Oh, and I have a friend who is Mayan and he, too, concurs there is nothing to the 2012 thing, just more ignorant hyperbole.

#122 Dawn in Calgary on 11.08.09 at 11:39 am

“Your inability to open your mouth without demeaning and belittling others is not in the spirit of this blog. Adios. — Garth”

THANK YOU — that guy was repetitive, tiresome and only flogging his ‘investment’ website. Boot those trolls.

#123 rory on 11.08.09 at 11:41 am

#98 Daystar you said:

“…best realized by governments who ensure basic human rights to education, healthcare, food and shelter, simple basic human needs…”

You said it yourself …the word BASIC …the problem with government is that they do not know how or where to stop or draw the line …they are becoming too intrusive, too big, too powerful …so the question is how does the citizenry ensure that the regulations you embrace also apply equally to Government…basic things like rule of law, property rights, equally opportunities for anyone to be elected to gov’t, term limits, fairness, instilling , reward hard work and/or creativity…i.e, – put the ‘real’ basics you talk about in place, step back, and let the people make it happen…big gov’t is bad no matter how anyone spins it.

#124 jess on 11.08.09 at 11:47 am

Lottery of Hope or THE Lottery of last hope.

…people knew the market of the late twenties to thirties was rigged yet they played anyway. not so different today.

Hopemoniac criers need to lead us to paradise found?

#125 rory on 11.08.09 at 11:56 am

#100 Chaostrology you said:

“The Maya were sky watchers and observed the precession of the constellations and when the placement of our solar system planets conjunct the sun aligned with the galactic center in the December sky things changed, stuff happened.”

Dude, not possible …the Mayans did not have the Wal-mart super duper $69.99 skyway telescope so there is only one possible conclusion how they know…Aliens told them …fits the theory and some of the legends.

#126 Bottoms_Up on 11.08.09 at 12:31 pm

#100 Chaostrology on 11.07.09 at 11:36 pm
———————————————-
The earth completes a full turn once every 24 hours and the world doesn’t end. The earth completes one circling of the sun once every 365 days and the world doesn’t come to an end. The sun completing a cycle once every 26,000 years is not going to change anything.

You sound like someone trying to profit from the Mayan calendar. Were you a believer in the Y2K doomsday scenario?

I do agree that at some point in the future, humans will be no more (1000 years? 100,000? 1,000,000?)

#127 Joshua on 11.08.09 at 12:41 pm

Hi Garth,

When you coming to Calgary…we re waiting like everyone else.

#128 CalgaryRocks on 11.08.09 at 12:54 pm

#100 Chaostrology you said:

“The Maya were sky watchers and observed the precession of the constellations and when the placement of our solar system planets conjunct the sun aligned with the galactic center in the December sky things changed, stuff happened.”

This could be the next big topic for fearmongering. The media is going to have a ball, although between SARS, H1N1, Marxism, Glenn Beck, Fox News, illegal immigration, global warming, climate change, global cooling and one World Government it will be tough to stand out.

#129 Watched Bubble Never Pops on 11.08.09 at 1:06 pm

#119 Dawn in Calgary

“THANK YOU — that guy was repetitive, tiresome and only flogging his ‘investment’ website. Boot those trolls.”

Repetative unlike the posts here. To make you feel better I’ll remove the link to my web site.

With regards to personal attacks, I should tell you that I do read the comments here. I see what other posters have written about various politicians and the governor of the Bank of Canada. I also read what others say about others whom they feel make too much money, have no mortgage or too much cash and all sorts of other things.

The vast majority of my comments are focused around the supposed predictors of the RE crash.

I apologize if your skin is so thin that you can’t handle an opposite opinion.

#130 Devil's Advocate on 11.08.09 at 1:25 pm

#116 Onemorething on 11.08.09 at 11:23 am
“Garth, action on #105, much appreciated and justified!”

I think Jim Chuong aka “Watched Bubble Never Pops” adds something to these forums. I might not agree with him but there are, apparently, a lot who subscribe to such similar beliefs as he. That so many do has influence on our markets to one degree or another.

It would be boring to return to these forums only to read affirmation of my own thoughts and beliefs. I for one don’t think you should bid him “Adios”. Maybe some cautionary warning for his improprieties, but outright omission? Not so much.

I wish I too could be more transparent with respect to my identity without fear of reprisal by my colleagues. Unfortunately, in life, too often we seek a conformity we might come to regret. REALTORS like conformation which they are now realizing was not such a good idea (as per Gaths “Carving the Cartel” although there are some inaccuracies there-in but none that ought be blamed on anyone but CREAs poor public relations skills).

Variety is the spice of life after all.

#131 Evangeline on 11.08.09 at 1:28 pm

#133 Devil’s Advocate

((I’ll take the risks of far right freedom any day over the security offered by a far left ideology.))

One of the big problems that divides people in political discussion today is that ‘the people’ are often talking past each other, using different meanings for the same words. For example the words ‘left’ and ‘right’ as they apply to politics.

One side sees the left-right continuum as communism on the far left and nazism/fascism/corporatism on the far right. The other side sees the left-right continuum as government totalitarianism of any kind as the far left (communism, fascism, nazism) and the opposite of totalitarianism, aka absolute libertarianism, as being the far right.

Those who think of themselves as centrists or moderates usually lean either left or right; those that lean left favour government and see business as an evil force that is taking over government. Those that lean right favour business and see growing government control as an evil force that destroys prosperity for all.

#132 jess on 11.08.09 at 1:47 pm

“Imagination is the only key to the future. Without it none exists — with it all things are possible.”
Ida M. Tarbell
================displacement tradeoffs

http://www.pbs.org/frontlineworld/stories/carbonwatch/
Brazil:The Money Tree

http://www.centerforinvestigativereporting.org/blogs/project/4231
On Democracy Now!, CIR’s Mark Schapiro discusses his reporting trip into the heart of the carbon offsets market on the Atlantic coast of Brazil–where a tree owned by General Motors is given an offset value of $1.

Schapiro’s report is part of a joint project between CIR and FRONTLINE/World that launched this week: “Carbon Watch: Tracking the New Currencies of Global Warming”

… Schapiro speaks with people who were displaced from a preserve where they’ve lived for generations—a forest now owned by General Motors. The forest was purchased by GM in partnership with the Nature Conservancy as part of an initiative to preserve biodiversity. What does GM get out of the deal? “The potentially lucrative rights to the carbon sequestered in the trees,” Schapiro explains in his article.

And unfortunately for the Guarani Indians and subsistence farmers who live in and near the forest, the new designation of the land as nature preserve and carbon offset project means they are no longer welcome. “I heard numerous stories of people being harassed, arrested, and shot at while looking for food, wood, or reeds,” Schapiro writes. He notes this has dire consequences for the community:

By excluding villagers from the forests, says Jutta Kill, a researcher with the Forests and the European Union Resource Network who has spent months interviewing locals about the project, the reserves are pulling out the communities’ lifeline. “In this area,” she says, “everyone is cash poor but no one goes hungry. If you take the forest away, you take away everything. The preservation projects here are designed to generate offsets for the largest polluters, and they’re doing it by cutting off people from the land.” Few of the people here have motors on their boats, she notes; even fewer own cars. People with some of the smallest carbon footprints on Earth are being displaced by companies with some of the biggest.

http://www.greenpeace.org/usa/news/carbon-scam

The new Greenpeace report Carbon Scam investigates how American Electric Power, BP and Pacificorp invested in the Noel Kempff Climate Action Project (NKCAP) in Bolivia to try and avoid cleaning up their own act. The investigation shows how NKCAP sponsors overestimated pollution cuts from the project by 90 percent, how overall deforestation rates in Bolivia have actually increased since the project started, and how fundamental questions about the project remain unanswered.

“When Greenpeace says the only reason American Electric Power wants to do this is because it doesn’t want to shut down its coal plants, my answer is, ‘You bet…” AEP CEO Michael Morris

==========
toyota city
Toyota’s Corporate ‘Green’ Effort Flowering at Prius Plant in Toyota City

We know that Toyota Motor Co., interested in all things renewable and sustainable, has an agricultural operation in Japan where it grows plants for use in the manufacture of bioplastics.

Now comes word that the giant automaker also has developed two new flowering species for the purpose of absorbing nitrogen oxides (NOx) from the atmosphere and lowering the temperature of the grounds surrounding its Prius factory, reducing the energy used to cool the building.

The “Toyota flowers” are derivatives of two existing plans – the cherry sage (left) and the gardenia.
http://blogs.edmunds.com/greencaradvisor/2009/10/toyotas-corporate-green-effort-flowering-at-prius-plant-in-toyota-city.html

#133 Taxpayer like you on 11.08.09 at 1:50 pm

Garth et al: Why banish “Watched bubble”? If you don’t want to read him, just skip his post. Otherwise, you’ll actually see where fellow bloggers have replied with informative links etc. In that respect WBNP is actually a
positive influence on this site.

From his name, I think he believes in the “elevator fart” theory – a slowly deflating asset, as opposed to the “pop” so many frequenters of this blog expect (and want) to happen. Again, I think that viewpoint is of benefit to many. While we sit and wait, maybe for years, we could miss the next investment opportunity.

He can fart in splendid isolation. — Garth

#134 Elle on 11.08.09 at 2:15 pm

# 98 Daystar….

Before I draaaag myself out for a run in the pouring
rain …

……… after a year of reading your great posts, just wanted to say that your ‘common sense’ intellect and ability to explain things, are impressive! You are a stand-out on this blog! At first I thought you were really Garth….writing under another name! lol
Though somehow your post #31, while I appreciated it, ….does not seem to have the same cadence as is your norm……..who are you really?

#135 Devil's Advocate on 11.08.09 at 2:27 pm

He can fart in splendid isolation. — Garth

No one’s fart is quite so sweet to any one else as it is to themselves.

Mr. Chuong has exphibited what one might call an offensive brain fart.

http://en.wikipedia.org/wiki/Brain_fart

#136 Taxpayer like you on 11.08.09 at 3:16 pm

He can fart in splendid isolation. — Garth

Ah yes, the old “spacesuit fart”

#137 Taxpayer like you on 11.08.09 at 3:28 pm

Latest stats for VI

http://www.vireb.com/assets/images/pdf/10-october_09_sales_summary.pdf

Volume up from a year ago, prices generally down a
few%.

#138 Chaostrology on 11.08.09 at 3:31 pm

Re: Post #100

Sorry.

My bad math has denied Rory and Bottoms_up an extra 365 days to make more money.

Carry on gentlemen. The end is not nigh.

Still I would read up on the subject before I made any boiler plate conclusions.

You can start by google-ing Pole Reversal.

I bet the dinosaurs would have wished that they had google. They might have bought real estate farther south.

#139 squidly77 on 11.08.09 at 3:35 pm

the next crisis to hit Canada

the family crisis that brought or by money troubles
Til money do us part

#140 Piccaso on 11.08.09 at 3:36 pm

#112 cybil on 11.08.09 at 9:57 am

The big difference between North America and Europe is the amount people vs land. There’s scads of it here, especially in Canada.

Germany with over 82 million, France with over 63 million, U.K. with over 62 million.

You could fit 5 United Kingdom’s into the province of Alberta alone that has a population of 3.5 million.

#141 Daystar on 11.08.09 at 4:08 pm

#113 Devil’s Advocate on 11.08.09 at 10:25 am

Apolgies if I come across as a bit harsh (I would have blown you away if you would have witnessed it from me a year or two ago), I’m simply reacting to the causes of this worlds financial crisis in general and I can’t help myself, I get passionate over it. Yeah, maybe a little harsh but its nothing personal (at least, with you). Lets face it, the world’s mess we are in today came directly from deregulation and so called “less government”. DA, its destroyed millions of lives of which were completely and entirely preventable and I take issue with it. I’m human!

No… I’ve never been to Cuba. I can only speak of Cuba in terms of the people I’ve talked to that have lived there or were born there and what they’ve had to say about it. I’ve heard few complaints. Interestingly, the one person I know best from there misses it and wants to move back permanently. Apparently the women are kewl ;-) Many don’t know the value of money and surprisingly, many aren’t losing sleep over it. From those I’ve talked to overall, the impression I get is that the governmental system in Cuba is not a full failure creating depressed people.

Conversely, look at the U.S. and their values and systems. What would the opinions be of the average Cuban be travelling to america… would they hold a different view of your own concerning how the size and impact of government on the lives of americans? Are Americans free and happy right now?

And yeah… I agree in that I would much prefer to clink glass and converse with you in an easier setting than this, but its not possible (I think, I’m in Sask) and as for discussion or debate of economic theories or schools of thought that influence our politicians, policies and in essence our lives, I believe our discussion is right of the heart of our problems and is in fact, a major central theme to this blog.

To state the obvious, its a blog on real estate, true. But when one looks deeper, what impacts real estate the most? The economy. Market forces. Govermental systems and policy. Peoples values both moral and logical. Politics. Economic systems and yes, their schools of thought. I would argue that our discussion right now is right at the center of real estate as all effect its value and its future.

Take for example, Canada’s ever bloating asset bubble which has been the daily topic for what seems like ions now. Some will say that its mere market forces, supply and demand at play and nothing more that have contributed to it but upon closer reflection, its all about the widespread availability and affordability of credit. Major bells and sirens and whistles have been sounding off here with the arguement oft told that a good number of people, most of them first time homebuyers, are getting in over their heads because they aren’t looking at the long term ability to sustain the size of debt they are taking on. They aren’t asking themselves if they can afford the debt they’ve taken on in changed future economy scenarios with higher interest rates, potentially higher unemployment, changed regulations, tougher times and changing demographics (retiring boomers). And I’m one of those who are making big noise for good reasons.

This blog exists from what I’ve gathered because Garth wants to prevent first time home buyers from making serious mistakes that will last them a lifetime. Its highly commendable that Garth does it with this in mind. I doubt that he needs the money. (well, maybe the attention, lol) With this in mind, the causes to today’s risk to homebuyers/sellers are systemic and all that influences the systems we have that most control the economic environment for home buyers/sellers in my view are fair game to discuss at any and all times on this site. You won’t find me quoting poetry or passing out soup recipes here.

Naturally, what I’m saying here is that all economic schools of thought, if widely held enough to influence the lawmakers that have the power and authority to infuence and in some circumstances outright change the governmental systems we have in place that directly effect our economy and hence, real estate, such discussions, while some would consider to be dry and others consider misplaced, such discussions truely have their place on this site.

On that note, I agree with you as well that there needs to be a balance in terms of the size and role government plays on our lives. Jesus was a libertarian… I also agree that risk in light of some of the better examples set by others before us, is necessary. (lol)

I will, however disagree with your will to take the risks of far right freedom any day over the security offered by a far left ideology simply because I agreed with your acertion of the need for balance. There is no need to take the risks both the branded political right and left have to offer. The causal effects leading to failure by both camps should be well known and obvious to those who look with an open mind. Seek and one shall find, lord knows we’ve left plenty of historical examples of failure from left and right for all to see.

And hey, while we understand the need for government, where does this need begin and end? If you feel the government is far too big, by all means, define for us where you feel this is. Take my word for it, its relevant as surely as change impacting real esate. Should we privatize education and healthcare? Water down the charter of rights? Privatize our penal systems and police? Privatize our judicial system perhaps? Sell off all of our crowns? Sell off our crown land? Get rid of all regulations that get in the way of profit and save only the systems that allow the free flow exchange of money? Where would you like to shrink government? (I could have re-wrote this and I’m likely being smart assed here just to let it stay, but my main goal here is to provoke you into defining the roles that government cannot walk away from)

I truly want to know your thoughts on this. I for one, don’t believe we needed a 15 billion dollar home reno program designed to further inflate an asset bubble to create a wealth effect for re-election at the cost of creating 100 billion dollars of new homeowner debt at a time when we’ve already got far too much of it putting homeowers in even greater risk of finanical ruin than they already are… just off the top of my head. (must be the Austrian in me)

Just keep in mind what my own thoughts are that every government has the obligation to protect its consumers, its businesses and its citizens in general from environmental, financial, social and physical harm. This to me, is the role of government and what I feel is that if one can shrink the role of government without impacting its ability and role to protect its citizens from environmental, financial, social and physical harm by all means, lets do so. Enjoyed Thomas Jefferson’s writings as well by the way, and shall take your advice as sage that Ludwig von Mises work is worth the read! ;-)

Oh, and just an afterthought. Obviously I’m not big on Austrian economic theory or practice, but I”m not big on Kensyian theory or practice either. I don’t like either of them. Austrian economics created the mess we are in from how I see it, and applying full blown Kensyian theory as damage control after the fact is a major blunder as well. Some bailouts were necessary while others were clearly not. In Canada as an example, I wouldn’t have ever contemplated bailing out a foreign corporation in this nation regardless of what role they played here (like Dodge). The solution I would have seeked would have been a made in Canada auto corporation half financed by the feds and half financed by our lending institutions to meet and exceed our own domestic needs. We could have had an 8 billion dollar auto corp made in Canada with the same level of federal fiancial commitment in mind. And this approach has worked successfully elsewhere. Instead, we will be lucky to get .25 cents on the dollar with the Dodge bailout and where are they now?

Prevention in my mind is the cure and this worlds mess humans have made for themselves in is entirely preventable but now that we are in this mess, full blown Kensian theory is hardly the way to approach it either. We have huge systemic issues in governments world wide as a result of business entities (corporate/individual) dictating government policy through puppet politicians and until the electorate can somehow find a way to elect people who aren’t corruptable or elect those who blindly follow leaders who are, our systemic failures will continue on regardless of the camoflauges of increased consumption and depletion eventually feeding economic growth. But my oh my, time fly’s, hope you and the rest have yourselves a great day!

#142 Dave on 11.08.09 at 4:13 pm

I just bought a rental property in southwestern ontario. It is cash flow positive right now and even if interest rates go up to 7% I will still be breaking even after property taxes, insurance, etc. If rents rise in the future (which they likely will), then my profits continue to rise even with rising rates. Is there anything wrong with investing in real estate that is cash flow positive? I’ve lived in Europe and find real estate here to be very reasonably priced given the high salaries.

——————————————————

what Don Cambell forgot to tell you is that when prices of homes fall, so do rent prices. I don’t know if he’s uninformed or if he’s just lying to the people that pay sacks of dollars to listen to his stuff

#143 OttawaMike on 11.08.09 at 4:16 pm

Please return the Watched Bubble Guy to the forum.
He was like the rodeo clown of the blog. I read many of his posts.

#144 bigpictureguy on 11.08.09 at 4:25 pm

Hey Garth do you know Murray Dobbins?

http://rabble.ca/news/2009/10/canadas-sub-prime-mortgage-time-bomb

#145 Dave on 11.08.09 at 4:26 pm

#126 Watched Bubble Never Pops on 11.08.09 at 1:06 pm

The vast majority of my comments are focused around the supposed predictors of the RE crash.

——————————————————

listen you need to delve into more research outside of real estate and into Klindeberger, Mackay, Le Bon, and Humphrey Neill. You’ve run your mouth for too long. Obviously, you’re right for now. Like your name states ” A watched bubble never pops”. The fact is, bubbles are what they are and can last tediously long, so the idea is to remove the emotional element and see it for what it is. Warren Buffett was ridiculed for not buying into the tech boom in the 1990’s and with each passing day the ridicule got louder for him. He stated that he felt that sector was completely over-valued and they were in bubble territory. How long did it take for his point to be proven? Years! Was he right? of course he was, that bubble was insane. At the time when the sector was flying day after day and year after year, Buffett looked like an old man unable to understand modern technology.

#146 Daystar on 11.08.09 at 4:28 pm

#120 rory on 11.08.09 at 11:41 am

For me, the role and size of government is simple. What is the role government can and should play to maximize the greatest potential of ALL of its citizens at all times past present and future? Ask that question… and you will know the roles and size all governments should play.

#131 Elle on 11.08.09 at 2:15 pm

Thanks. Thats inspiring for me to read this. I do still put out dud comments but the more one writes, the more one risks themselves to error both in facts and conclusions and thus the more one regrets, but in general, I feel that I do ok. Its my time for sun now :-)

Namaste..
Lorne Mccuaig (just another spoke in the hub of the wheel that turns over… and over… and over again, lol)

#147 Daystar on 11.08.09 at 4:36 pm

http://www.cbc.ca/world/story/2009/11/07/us-health-care.html

Its past the house now. Even if defeated in the senate, its no waste of time to try for the very reasons I’ve outlined earlier. Basic human rights must always trump privilege or the system will fail. Is the collective pursuit of human health a right? Or a privilege… (or both!) Who contributes more to society, the sick? Or the healthy…

Its a game breaker for the U.S. economy in the long term if it passes through senate relatively unchanged. Its landmark, opening the door for public tax payer money to be spent on non profit, public health care. It will cost… yes. And it will also heavily reward.

Is it needed? One cannot expect an unhealthy person to produce or perform as efficiently as one who is healthy, its as simple as that. If america is to become a force again, it must invest in its own health. The last thing america needs right now is to invest in its own sickness. If the U.S. government invests in what is right over what is so called “profitable”, the rewards for its people will be beyond numerical measure. (geez, I think I heard Obama say this once upon reflection in a union address so it must be true!)

#148 Emma on 11.08.09 at 4:58 pm

#98 Daystar

“The american dream where anything is possible, where one can go from rags to riches based on potential regardless of ones birthplace, gender or race?”

Tell that to the partially clothed, hungry (and about to start dealing) kids in the South Bronx where the valedictorian of a junior school can’t get into any of NYC’s high schools that lead to college (yes, NYorker’s apply!). I personally have profited from the Canadian version of the dream – I was able to go to university at three times the cost, thanks to government backed loans at really high interest rates with no negotiation possible. I am grateful, yes but angry also!

It seems to me that the Austrian dream, rather than give ‘entitlement to those privileged enough to afford it’ is merely practicing an inability to protect the privileged as is done in North America. The 6 steps mentioned, if changed to positives (as Keynesian economics would have it) would seem to benefit the owner classes far more than the guy who is looking to have his basic needs met – many of whom have never and will not ever qualify for employment insurance despite the fact that they pay into it with every pay check. I’m not even going to touch your assumption that America ensures ‘basic human rights to education, healthcare, food and shelter’ because this post is long enough.

If systemic failure occurs, why would anyone want to bankrupt the country to FIRST bail out the privileged and then, when that fails anyway, use very expensive borrowed money to help get the basics to the populace? I am really not a fan of this trickle down stuff because having been near the bottom, the drips really suck!

As for less gov’t, it is reasonable to assume that a smaller government would have less bureaucracy, less overlap, better reaction time and a clearer distinction of roles and responsibilities.

I was unfamiliar with the Austrian School of Economics until today but I think I just got converted by a non-believer.

I would like to know if any country practices this as I think I should move there. And don’t point at Harper because he says one thing and does the opposite! (Sep 2008 said no bank bailout … October 2008 = bailout!)

#149 Taxpayer like you on 11.08.09 at 5:51 pm

[email protected] has said:

“every government has the obligation to protect its
consumers, its businesses and its citizens in general from
environmental, financial, social and physical harm.”

I think we’re pretty clear on the environmental and pysical harm, not so clear on the social harm just by definition.

What I’m more curious about is the “financial” harm. Can you explain just what that covers?

And if its possible, I’ll gladly accept the “executive summary” version. Thanks.

#150 CdnExpatInNC on 11.08.09 at 5:55 pm

Hi Linda,

My wife and I moved from Toronto and have been in NC for almost exactly 11 years now. We almosted moved back this past summer (all our family is in and around Toronto), but we just couldn’t do it (well, I couldn’t)…so we pulled our house off the market.

Yes, looking at how we live here in NC (I live in Cary, just outside Raleigh) and comparing what we were going to move into, I just couldn’t stomach it. I think we’ll move back within two or three years anyway just because our parents are getting older (and I don’t think we’ll have a problem selling here in this part of NC), but we’ll have to do it with “blinder on” and not compare here to there, otherwise we’ll never move back.

#151 jess on 11.08.09 at 6:19 pm

What if the majority of americans could no longer afford health care ….what would these companies be saying?
Price vs. income the results are obvious.

#152 MAXIME on 11.08.09 at 6:24 pm

Here is an interesting link for a canadian housing price index.

http://www.housepriceindex.ca

#153 Peter Wiener on 11.08.09 at 7:17 pm

RE: Watched Bubble Never Pops banishment

I say let him post for now _ I GUARANTEE HE WILL DISAPPEAR AS SOON AS RE PRICES START HEADING DOWN.

I watched the most strident commenters posting on stock chat boards (since about 2000) go very quiet after the first 1,000 points down on NASDAQ.

Face it, if the guy had any credibility (or money for that matter) he wouldn’t post on this blog as frequently or stridently as he does. He’s kind of pathetic and sad in his own little way in his ignorance of economics and history and serves as a representative microcosm of the delusion of the Canadian RE market.

Just my two cents.

#154 Cory on 11.08.09 at 7:24 pm

Garth,
the speech in Victoria this week, is there a fee for it? what is the reason for the speech? I am in Calgary and the wife and I have a flight credit we need to use and were thinking on going out that way anyway…thanks

All my talks are free – it’s a condition that I set when a group engages me to speak. Please call ahead and ensure there are still seats available. — Garth

#155 Gord In Vancouver on 11.08.09 at 7:41 pm

#149 MAXIME

Thank you for the link, which further confirms why Carney slashed interest rates.

#156 Cory on 11.08.09 at 8:08 pm

looks like I was a week early! The 19th is next week! I will call and it there is availability we will likely travel out that way…..

thanks

#157 Onemorething on 11.08.09 at 8:19 pm

All, it’s quite simple, many of us with very little time who look forward to the important insight that this blog delivers, wish not to spend it reading anything that is not on topic nor in the character of it’s creation.

Garth in this respect is a very patient moderator, has even turned a few troublesome bloggers around I feel to continue posting here!

Lastly, read the HELPFUL REMINDERS at the bottom once again, especially for those who seem to be writing a book each time you visit!

#158 latinlife on 11.08.09 at 8:36 pm

#150 Peter Wiener

That was a cutting, classic post!!!

#159 random guy on 11.08.09 at 8:43 pm

@150 Peter Wiener

With that line of thinking, we still have squidly going crazy, and he’s been going on this site for eighteen months about how the market is going to take a big dump

goes both ways, muchacho

#160 Emma on 11.08.09 at 9:16 pm

#112 cybil

It is totally possible that your purchase is sound, depending on your location. However, have you factored in major fixes (like roofing), minor repairs or those needed when tenants turnover? Do you have contingency plans in case your units are vacant for a while, tenants move without notice or worse – stop paying rent without moving out? And most of all are you still making the return after paying taxes on the rental income? I think it’s great if all of that is covered and the mortgage is paid in 5 years, you should be able to get your original investment back and be running pure profit after 10 years or so (after the mortgage is paid). If not, then you could be investing your money in other ways for a similar return and not have the hassle of managing a property.

The trick is getting rid of the mortgage – 7% is still a low mortgage environment, in my opinion. Try your calculations with 12% and 15% just in case. If you use your other income to get the principal down, you can chase the rates (the more you put down, the more easily you can absorb an increase). I’d like to do this one day but Toronto is not one of those locations!! The average hold here now is closer to 30 years if you need a mortgage and if you’ve got the cash, other investments would bring a better return.

#161 eddy on 11.08.09 at 9:24 pm

it’s starting to look like a well orchestrated boom-bust magic show: “for our next trick, we’ll need several thousand young volunteers from the audience, raise your hands if you have nothing down”

Harper and Carney are using CMHC as a credit default swap proxy printing press. Who do these guys work for?

Real estate is the only graph that’s going up. CMHC’s philosophy is “if it’s garbage, and it smells like shit, and the banks won’t touch it, we’ll insure it!”
What’s next for Harper and Carney?- Maybe a Nobel Prize for economics? Maybe a tie for Goldman Sachs ’employee of the month’ ha ha ha

#162 Emma on 11.08.09 at 9:49 pm

#112 Cybil

I forgot to mention that rent increases are based on the consumer price index
http://www.ltb.gov.on.ca/en/Key_Information/246696.html

Given the fact that the CPI is may actually decline this year, does anyone know if landlords have to actually reduce rents?

#163 Peter Wiener on 11.08.09 at 9:58 pm

# 156 Random Guy

That was my point in supporting WBNP’s continued posting on this site. Let everyone air their opinions and experiences to hopefully foster discussion and force us to substantiate our views. WBNP is a part of this process and can help in that discussion.

My point that I THINK he will stop posting (or at least posting under the WBNP tagline) as history, economics and commom sense disprove him is my opinion born of my experiences and that is my contribution to the discussion and no less nor more important that the next poster’s comment.

Absent outright ad hominem attacks, vulgarity, rudeness, cursing, etc., everyone should have a say and who knows, we all might learn something – even if it is only humility.

#164 random guy on 11.09.09 at 12:15 am

@160 peter

good point my man

two sides to every story, it’s good to get some perspective from both ends

#165 Nostradamus jr. on 11.09.09 at 1:42 am

Watched bubble never bursts should not be banished.

…But some of your dummy, renter, communist, pansy a$$, double faced, two timing, rootin tootin guns for hire should be.

Nostradamus jr.

#166 Dan in Victoria on 11.09.09 at 1:43 am

Post #150&160 Peter W, you’re more than likely correct in your assesment.I just thought it was the Philosophy of Nihilism in action.

#167 Daystar on 11.09.09 at 3:45 am

#145 Emma on 11.08.09 at 4:58 pm

Where to begin.

“I’m not even going to touch your assumption that America ensures ‘basic human rights to education, healthcare, food and shelter’ because this post is long enough.” – Emma

I don’t ever recall saying America does this. Its certainly the goal of any government that actually is there to serve its people. 50 million are without healthcare. A further 50 million aren’t fully covered with insurance. I wouldn’t call this statement correct even if I said it, the evidence speaks for itself. As for the rest, keep reading.

#146 Taxpayer like you on 11.08.09 at 5:51 pm

I might as well address Emma, Devils Advocate one more time and yourself with what I’m about to say next.

We should all know by now with the human experience being what it is, well… we are all flawed. Well, so am I.

My greatest flaws in forums like this are to simply not take the time to research and know the field of interest or subject in question as well as I should before I make ascertions, propose facts and naturally come to conclusions. Its not that I’m not capable… I just don’t take the time. Part of it is due to the fact that I don’t have the time (y’all know that rushed feeling?) but in the final analysis, its an excuse. Take the time or lessen participation until one takes more time to actually know all the bases (if at all possible. Are you reading this, bubble boy?)

As well, I get emotional sometimes to the point of being insensitive and while some might cheer it on in agreement, emotions do skewer logic. (working on both issues and I do take only small comfort precisely because I know I have loads of company)

If I was ever to work as a journalist or a researcher these days, the very first thing I would my editor is, “give me time. When I come back to you with something that I feel is ready to go, send me back to the computer or library and keep digging until I’ve covered all the bases. When I come back a second time, do it again. If its something as large or complex as the U.S. economy, give me several months. When I believe I’ve got it all figured out, give me several months more and I won’t disappoint.”

Take today’s posts from myself as an example. I took a look at a link last night (in comment #98) and expanded on it without taking a much closer look at the history of Austrian economics. Had I done so, I would have seen some things differently. If I would have let it perculate for a couple days, the comment probably wouldn’t have seen the light of day. DA’s ascertion that I in some ways don’t know what I’m talking about is based in part in his suggestions in reading the works of Ludwig von Mises. Let it be said that I won’t agree with everythintg Ludwig has to say. Why? Because he’s just like I am. Human! As powerful an analyzer as he is, he will make ascertions that aren’t true. Why? Because he’s dealing with systems that are designed by human beings.

I will say this however, there is some Austrian economics in me after all. Ludwig von Mises theory Austrian business cycle theory as far as I’ve understood it, seems flawless. (Taxpayer like you, the charter of rights is an excellent example of a government protecting its citizens socially. Financially, an excellent place to start is with this link below and I’ll surely expand on it in the future). Keep in mind that Ludwig’s theory was published in 1912 nearly a century ago, so its nothing new which begs one to ask why its logic hasn’t been applied, especially in Canada today.

http://en.wikipedia.org/wiki/Austrian_Business_Cycle_Theory

And lets also take a crash course into Ludwig’s life for a moment, its needed:

http://en.wikipedia.org/wiki/Ludwig_von_Mises

Lets frame it accurately. Ludwig has me sold on his theory in a big way but just because he’s right about things doesn’t mean he’s right about all things. I should know. I’ve taken great lengths to tell you all that humans are flawed and Ludwig is one too! And I’ll tell you all right now that what I’ve learned in my lifes experience is that no one can succeed all buy themselves. We are far more dependent on others than we would all like to admit.

Ludwig was a big proponent of Capitalism being the most successful economic system in the world to come and it is… from an economic point of view. He’s an economist, not an environmentalist. Will it be the most successful system in the future with floating currencies and the largest national economy in the world completely ignoring his Austrian business cycle theory? Things change. We have the internet now. The gold standard is gone. The worlds population has almost doubled since his death. Environmental issues and commodity shortages are becoming the forefront dangers to future economies that don’t adjust. In other words… some on his own beliefs can no longer be applied or held as entirely valid in today’s world because of change.

Who is to say that those who believe Capitalism is the best economic system of today will be the mother of all solutions tomarrow? Will it solve the worlds issues in the environment or just make them worse? Will it bring peace to the world, or bring more war? Will it bring us closer to enshrining basic human rights or lead us farther away?

Capitalism is relatively young in the way its now practiced with fiat currencies. How can anyone pronounce it as the system of the future when centuries are a blink in the eye to the large scheme of things? Should God exist, what kind of economical system would he favour? Would he favour and economical system at all? Would he favor democracy as the best system of governance? Propaganada sure can make a mess of it.

Near as I can tell humans are the only species of life on earth, perhaps life in this universe that has put themselves in the position of needing money to survive. I throw it out there because all teachings need to be questioned and if dysfunctional, outright challenged. A teaching that flies today might not fly tomarrow. Its like the question of bailouts. It should be the last resort. What happens if we don’t?

Its like me pulling a crazy Ivan, looking back and re-questioning the bailout of Dodge and Chev by our Canadian government. Why should we bail out a foreign corporation? Seem logical to me that we shouldn’t. Is it logical to the Canadian auto workers who will lose their pensions should these corporations fail? Oh, the humility, er, humanity. And where is Chev, now majority owned by governments anyways headed? Fuel efficiency for real this time? Electric cars finally?

And one final thought on bailouts, Emma. Its the last resort. If all else fails, bail. None of us like it, but… what would happen if the government did nothing? What would Ludwig have to say about the bailouts of the last year and a half? Are you so sure he would be saying no to all of them? Some of it will turn out to be a waste, sure… and some of it won’t. Ludwig Von Miser is one of the founding fathers of Austrian economics and possessed a brilliant analytical mind, I have no doubt. His contempt for the minds of politicians in general never mind working particularly systems that weren’t capitalist were also evidenced. What would he think of the capitalist model of communist China today? Their currency doesn’t float. What would he think of Obama? Ludwig isn’t the only possessor of a brilliant analytical mind. A few do get elected.

As love is the key to forgiveness and peace, humility is the key to wisdom. None of us come to learn these things without the help of each other.

#168 bigpictureguy on 11.09.09 at 1:02 pm

#150 Peter Wiener on 11.08.09 at 7:17 pm

Peter I would have thought you were twin brother. We seem to think exactly alike! LOL

#169 bigpictureguy on 11.09.09 at 1:06 pm

#150 Peter Wiener on 11.08.09 at 7:17 pm

Did you check out his investment seminar site? – a real classy piece of professional work. He will show you how to make a $ 1 million for $30.

Tom Vu is back. LOL

#170 Soju on 11.09.09 at 3:54 pm

Canada can’t afford to increase interest rate unless the Canadian dollar goes down. Our export industry can’t afford a higher Canadian dollar.

#171 Emma on 11.09.09 at 7:58 pm

#164 Daystar

Life would be boring if we were right all the time. I’m sure that no one school of economics could solve all problems – they are more like a toolbox and the more tools you know how to use, the better the results. I appreciate your comments and point of view greatly – this blog has taught me more in a few months than many years at school. I am also in the very early stages of learning how to communicate contentious ideas without face to face interaction so I hope you weren’t offended.

We definitely agree that a bailout is a last resort – but we disagree on the timing. I would rather help something that has sunk than keep it floating in a life jacket. It’s like a parent that pays off drug debts without insisting on rehab.

With regards to the mortgage crisis in the states – if I were in charge I would have first of all waited for prices to bottom out so people could decide if they want to try to keep their homes at the true price they are worth. For those that wanted to stay, I would have split every troubled mortgage in half and given people 15 year terms – at the end of that, I would have given them the other half over another 15 years. This would have only cost me, the government, interest on half the amount for 15 years. Expensive, yes but nowhere close to what they have tossed at the problem so far (and it ain’t over yet because prices still haven’t bottomed due to the meddling).

So obviously, the Austrian School appeals to me because this intervention stuff, in my opinion is just dragging out the pain. But it is also obvious that I’m not a true Austrian because I wouldn’t just sit back totally – somewhere in the middle would be nice. First rule of first aid is to assess the scene for safety…

When Canada’s RE crashes you can bet our pansy government will prop it up somehow but why should it when my ‘smart’ friends have been sitting on the sidelines for up to 6 years waiting for some semblance of reason to kick in. If we are just going to bail everyone out, why shouldn’t they jump in as well? Why should they pay a price just because 80% of new homebuyers can’t use a fricken calculator, I believe it is called moral hazard!

#172 Devil's Advocate on 11.09.09 at 10:33 pm

Daystar

Sorry I was not quicker to respond to your inquiry. Fact is I suspect it could evolve into an inappropriate lengthy discussion for these forums.

Let’s just say that I subscribe to the “Give a man a fish and he will eat for a day. Teach a man to fish and he will eat for a lifetime” theories. Eventually we must all be thrown from the nest… learn to fly or die. Just as this is how we have taught our own children so to do I believe government should trust that it’s citizens are capable of fending for themselves.

#173 nonplused on 11.10.09 at 12:43 am

#105 Watched Bubble Never Pops said:

“bla bla bla bla bla the tend is still intact! Intact I say! Since it hasn’t happened yet it never will!”

Except the trend is not intact, even the recent rally hasn’t put house prices “back in trend”, and a speculative vehicle that trades below trend eventually starts a new one, which is down.

Even trees don’t grow to the sky.

#174 Daystar on 11.10.09 at 3:12 am

Fact is I suspect it could evolve into an inappropriate lengthy discussion for these forums. – Devils Advocate

Oh, I don’t know about that… ;-)

And I agree with you that we all have to learn to stand on our own two feet. But… how many times did will we fall flat on our faces before we learned how to walk on our own? And who was there to smooth out the bumps for us along the way?

When it comes to human growth, there must be a plan for human failures as failure is often a necessary component of success. Government has a big role to play here because some of us, no matter how good the system is designed to accomodate success, some of us will fail. Some of us never will succeed or rise from failure so there has to be a big brother out there looking over our shoulders to soften the landings as much as possible. Its the same old same O, the allocation of resources and its a given that we must invest in success, but we do have to invest in the results of failure as well. Its called damage control. Its not a question really about whether or not those who are independent should look after those who aren’t… its a question of who ultimately pays for it and by how much and if those who are independent tire of paying the way for those who aren’t, then show dependents the way to independence if at all possible.

Just as government must trust most of citizens to fend for themselves, government must also trust that some of its citizens can’t. Not everyone is independent or fully capable. Not everyone who has the potential to fend for themselves will live up to that potential. Its called free will and as such, there must always be a plan for failure. Its why we have what we have, from public systems of education, welfare, old age pensions and EI, to judicial and Penal systems because to many of us have tried to educate ourselves or our loved ones on our own, tried to keep ourselves and each other healthy, tried to stay working and couldn’t, tried to save but didn’t or ran out of time, or simply didn’t try at all and became a public danger.

Let the weak perish and the strong survive… we can’t be rigid with this belief because history teaches us that where there is weakness, often we will find strength. Where there is strength, often we will find weakness and these weaknesses and strengths are often intangible. Some things are black and white, while others will always be a shade of grey and I really like that quote of yours, “give a man a fish and he will eat for a day. Teach a man to fish and he will eat for a lifetime” because it applies precisely to what I’m talking about (or inspired it)

Yes, I like that one very much!

Have a great day, DA and you too, EMMA! I’ve run out of energy and time or otherwise I’d honor your response with more of the same. Cheers!

#175 Bertie on 11.10.09 at 12:35 pm

daystar – quick question was your handle on the other blog brain? Enjoyed those posts.