Contrarian soup

Van chart1

The average SFH in Vancouver. Are we there yet?

Told you before I’m a contrarian. It’s served me well. When I see widespread bullish sentiment and a can’t-lose mentality, I sell. When the moment of absolute capitulation has arrived, I buy. Needless to say, this has been a great year.

Last winter I bought stocks and real estate. In the summer I sold property. Now I’m reaping, and waiting. And by the looks of things, the wait may be over in a few more months. Maybe a year. Whatever. I’ll still be here, preening my feathers and plumping my waddle.

Regular readers already know my laundry list of reasons why the housing market will change dramatically, why current asset bubbles can’t last, and how the next few years will belong to the bold. Now let me add a few more voices, and glimpses.

“Low interest rates will not last. It’s a matter of time that the current ultra-low interest rates will spike up, resulting in home prices less affordable to home buyers. High home prices not supported by fundamentals. Whether it is a detached home, town home or a condo, the rental return is not enough to cover mortgage payment, property tax and maintenance.  This may be the best time to sell when others are buying. If everyone is thinking of selling, it may be too late. Home prices can easily fall 15% to 20% when market sentiment turns, and home sellers are rushing to sell.”

No, that’s not me talking. Just sounds like me. Instead those words belong to a realtor, James Wong, who sells houses in Richmond, BC. He writes that on his web site after release of the latest Olympic-sized numbers from the Vancouver Real Estate Board (aka The Cartel, Wet Coast HQ), which show the average SF detached home has reached $913,939.

I think Wong has it exactly right. Except for the 20% thing….

Meanwhile in Detroit, local real estate types are all happy the inventory of homes has dropped from 13 months to 8.4, which means there are only 35,000 houses for sale in a city of barely 1 million people. In contrast, there are 15,000 active listings in the Toronto area, population 6,017,837.

So, what happens when the middle-class housing chokes?

“Menhem Aouad, 38, a school psychologist trying to sell his Center Line home, hopes for a break-even deal as well. He and his wife, Lisa, 36, a schoolteacher, moved into the house in 2001. They have invested in new windows, landscaping and refinished woodwork. The couple have three children under 5 and want to buy a larger home.

“We followed the traditional model of buying your house, invest in it and it will pay you back,” Aouad said. “By the time we started to look to move, we noticed the market started to change. Houses selling for $160,000 were then selling for $120,000, $100,000.” It’s been on the market for two years and competing with foreclosures in the area that sell for less than $30,000. His asking price is now at $99,900.” – Detroit Free Press

Of course, Detroit ain’t Toronto, ain’t Richmond. But there are similar stories from outside San Francisco, down to Miami, across to southern California, into Ohio and the Carolinas, Arizona and Nevada. Makes you wonder how you’d cope if the real estate market took a dive.

If you don’t wonder about it, you’re carrion-in-waiting.

And, trust me, lots of people all over the place are concerned about our bubble society. The fact those lessons of Autumn, 2008, were so quickly forgotten. Yesterday even the IMF and the World Bank raised an alarm as they surveyed what’s happening right now in parts of Asia. In what’s known as the ‘carry trade’, investors have been borrowing billions of dollars at near-zero rates in the States and plowing it into escalating real estate in Hong Kong and other places. It’s the perfect play for speculators. And the inevitable prelude to something else.

Finally, from Calgary. A lyrical note I dare not lay an editor’s finger upon:

Hey Doc, I’m feeling better now. Here’s my tale.  I live in Cow town and have worked for City 10 years, putting the wet stuff on the red stuff.  In 20 more years I should have a decent Civic pension, but I’m not counting on it…California?  Although the pay is weak (net ~55k), I love the job. It has also afforded me the time to design, build and finish my own house over the last 3 years.  I am married, both of us in our late 30’s with two young nose-pickers.  We have made it a priority to have Momma Bear stay home with the little ones until they are both in school.  Our total debt is almost 400k all in a LOC.  Our investments of RRSP, RESP, stocks in the TFS, total around 100k.  We also have a Rec lot in BC currently worth about 200k.  It all sounds rosy except for the fact that the LOC payments were eating us up.  Only a Ukrainian would build a house that he could not afford to own.  We needed to get another job each, or sell something big.  Despite what most people say about the future of real estate in this town, now seams to be a great time to pull the shoot.  We chose our lifestyle over the big shiny house.  After a long 120 DOM the house was sold, a bargain for 820k.  The Rx is to down size the debt load and upsize the tiny inner-city yard.  I cannot see value in any of homes in this town…350k for a POS in the burbs.  The plan is to sit back and wait for the right time and place to buy back, or build again, preferably out of town.   We hope to still have enough change left over to build a small bunker, I mean cabin at the lake.  Other than being homeless, I have another problem…where to park the 400k from the sale?  It needs to remain liquid, yet the 0.02% return from the bank sucks.  Going into next year, I worry about the banks 100k insured limit and assume I should spread it around between banks?  Our combined RRSP limit for 09 is about 80k.  Thanks in advance for any ideas on treatments to come, but I also thank-you for the perspective your books and blog have provided me.  You have played no small part in my Canadian real estate awakening.

-Feeling Better.

108 comments ↓

#1 $fromA$ia on 11.11.09 at 10:06 pm

Garth ,

I just realized that the chart you have on your thread is very much like the chart on gold of the same time period.

Is there a relation?

#2 Steve on 11.11.09 at 10:28 pm

Garth, it looks like other analysts are finally on board with your predictions… 10-20% drop in prices from the 2007 highs.

http://www.google.com/hostednews/canadianpress/article/ALeqM5h8kCP0s5_qM3ug9WprGaR8AFwzow

#3 Coho on 11.11.09 at 10:54 pm

Don’t worry…be happy. Soon we won’t have any wealth left to worry about. No wealth and no middle class as we know it is on the horizon.

In the US, Fannie and Freddie (America’s CMHC and property of US gov’t) are renting back houses to those that have been foreclosed on. A disturbing trend.

There is an enormous transfer of wealth taking place from individuals to the “state”. The dollars being sucked by government today will be rationed back as pennies to the people in the future by way of renting back unmaintained (because of lack of money) delapidated housing and meager welfare checks to the millions of unemployed. That is what’s coming.

Meanwhile, a hand to mouth lifestyle which has already arrived for many will soon visit the rest us. And as if that isn’t enough, our civil liberties will be taken away just like our money. Of course it is sold as providing “safety” for the sheep, but wise and informed people know that trading “saftey” for freedom will leave us with neither. This is a taste of what is coming:

http://www.abc.net.au/news/stories/2009/11/12/2740611.htm

#4 Doug from Calgary on 11.11.09 at 11:01 pm

-Feeling Better: Re: 100k CDIC limit, check out ATB Financial. 100% of money on deposit is guaranteed by the Alberta Government with no limit. Not a great return, but Springboard savings account is .75% at the moment. That’s where I’ve parked some realestate cash for now.

#5 Cory on 11.11.09 at 11:43 pm

What does a person do with several hundred thousand in the bank? I too am leery of having my cash in one bank and only insured to 100k. Banks will win again.

What to do with it? What do multi millionaires do with their cash? there certainly are not enough banks to deposit it in 100k chunks.

#6 MarkArgentino on 11.12.09 at 12:16 am

Hi Garth, You said, “35,000 houses for sale in a city of barely 1 million people. In contrast, there are 15,000 active listings in the Toronto area, population 6,017,837.” What an absolutely insightful statistic, that’s 3.5 out of 100 homes for sale in Detroit versus 2.5 out of 1,000 homes for sale in Toronto, this is a huge difference and shows why Detroit is in such trouble compared to Toronto.

Again, being a contrarian gets you readership and press, but if you are wrong in your predictions, nobody remembers or will care. People only remember people who made bold predictions who were right.

Laundry list or not, I sure hope you are wrong in your real estate predictions.

I am not worried about my real estate business, only the future value of my principal residence and investment properties (of course, only what affects me, right?!) as I will always be able to help people buy and sell real estate.

Without me reading through all your posts, what date or period in the future do you predict the real estate bubble will burst? Then I can watch if your prediction came to pass…. or not.

Mark

#7 Meggie on 11.12.09 at 12:24 am

Rory-
Could you please post a comment that just ONCE, irregardless of the blog topic, doesn’t blast civil cervants, their pensions, and your same old rhetoric. It’s really growing tired Rorey, and whether your venemous assaults hold any validity or not, your broken record is frankly inidictive of a form of envy. Diversify.

#8 Into The Sunset on 11.12.09 at 12:32 am

-Feeling Better:

Put $250,000 into the ITF- HNU for 5-6 years…..sell half. A $10 investment will = $150 …..retire.
Use you’re remaining $150,000 invested in anything paying 2% from RE-use as a downpayment on the house you would really like at that time. Take some of the returns from HNU buy a property in Arizona for the winters and kick back!!

#9 Gord In Vancouver on 11.12.09 at 12:46 am

Still More Proof That Garth Was Right – South Granville Area Of Vancouver

http://www2.canada.com/vancouvercourier/news/story.html?id=7372eabb-e422-499b-bfaa-17786e672252

#10 nonplused on 11.12.09 at 1:02 am

Feeling better – Don’t forget to park 10% of your net worth in gold related investments. Probably on a pullback to the $800 level. If we get one. The Central Bankers have changed the rules again and money printing is the order of the day for perhaps another year. I recommend TSE tickers CEF for bullion and XGD for miners to keep it simple. The RRSP is a good place for it.

#1 $fromA$ia is somewhat right, the gold and housing charts are both being driven by crazy amounts of money printing. However the people buying houses and the people buying gold are not the same group. The people buying houses are chasing profits using mostly borrowed money. The people buying gold are banks and high net worth individuals mostly trying to diversify out of dollar related investments (see the large purchase by India’s central banks at $1040). But they are both direct results of central bank policy. The difference is one can collapse of its own weight (housing), whereas the other one needs a change of policy which would collapse both.

Nobody is buying houses to avoid rent right now. It’s all a profit chase. Renting is cheaper in every market in Canada, especially if one considers a rate hike sometime in the future. Personally, I am of the opinion that the rate hikes will be farther off and of a smaller magnitude than most people think. The policy now is to print money and suppress rates and that isn’t going to change any time soon. It can’t. We are already on “the spiral”. To raise rates now would bankrupt the government and many individuals so the only path out is inflation. It’s “inflate or die trying”.

Unfortunately, it will all be for naught. The lower dollar will not balance the trade deficit and increase exports. The Chinese can double their American prices and there still won’t be anybody willing to build a TV factory to compete with them. Those denim manufacturing jobs aren’t coming back either. The dollar would have to fall so low that nobody could afford to fill up their cars with gasoline before we are going to compete with the already existing plants in China that we would now have to build. All that will happen is that the US will buy fewer TV’s at a higher price and China will have to diversify their customer base, probably targeting more completed goods sales to the rest of Asia.

And if you have been persuaded by some of those pundits who think the Canadian dollar is a good hedge when the US dollar declines, forget it! Carney is on the job, and he has already stated that no matter how impoverished the US wishes to make its citizens through a lower dollar, Canada will keep pace. I believe him. He has the tools. He has the talent. So grab those cheap TV’s now while you can. The target has always been 80 US cents on the Canadian dollar and it always will be no matter what the US dollar does.

I don’t even understand these “lower dollar is good for the economy” people. You increase exports by building a better mouse trap, improving productivity, and reducing expenses (in whatever currency) per unit. All countries who have had dramatically declining currencies have been in economic trouble (usually too much debt) and suffered an economic collapse as a result. There have been no cases where printing money and letting a currency fall has resulted in growth. But yet that is the Orwellian take on the matter.

Strong economies have strong currencies. Don’t let anyone tell you something different.

#11 Nostradamus jr. on 11.12.09 at 1:14 am

What me worry?

….$913K is dirt cheap for a dig in Vancouver.

It really is different here because Vancouver is next Financial, Trade, Culture and Leisure Capital of the world.

…and the North Shore will become the most exclusive private gated community in the world too.

Accessable only by way of two bridges and one highway from the north.

Nostradamus jr.

#12 Robert1 on 11.12.09 at 1:40 am

” Only a Ukrainian would build a house that he could not afford to own. ”

*******************************************

hmmmmmmmmm …… I would take exception with that generalization. I know many a Ukrainian and would say that as a whole, they have a very healthy understanding of real estate and economics……… as a matter of fact a much better understanding of the sheeple who are teetering on the brink of financial ruin these days.

#13 Vancouver_bear on 11.12.09 at 1:41 am

Vnacouver Police will welcome Owelympic gests with this new device:

http://www.cbc.ca/canada/british-columbia/story/2009/11/10/bc-long-range-accoustic-device-vancouver-police.html

Olympic protesters are ‘terrorists’: MLA – a truly la-la-land approach:

http://www.bclocalnews.com/vancouver_island_south/victorianews/news/68889242.html

#14 Nostradamus Le Mad Vlad on 11.12.09 at 1:50 am

The heading “Contrarian Changed Soup” is a good match for the following . . .

#95 Just a Girl on 11.11.09 at 9:02 pm — “Hello triple digit oil.” — and — “There is a strong case to be made that we are already at ‘peak gold’,” he told The Daily Telegraph at the RBC’s annual gold conference in London (first link in third para.).

Interesting to note that all that is skyhigh now (RE excepted, as that is a guaranteed money drain, esp. if there is a mortgage on it) is destined to hit the skids momentarily (Skid Row?), whereas everything at the basement will change places with it.

Hence (and the first one is quite interesting) — Barrick
and — Peak Oil — and — Funky Gold Medina. The link I tacked on a few blogs ago said that when the US$ (in the above latter category) begins surging again (as it will), that is when the DJIA, TSX, Hang Seng, Nikkei and others replace it and head south. Almost everything crashes, including predictions.

What if Israel bombs / nukes Iran within a couple of weeks of said fiscal debacle? That will make Chernobyl look like child’s garden party.

Does anyone really believe that China, which is developing the same thirst for oil that the west once had, and Russia will stand idly by and watch their resources evaporate, courtesy of a rogue state?

When everything is topsy-turvy in the world, and most of us don’t even recognize it then the US Fed defaults on their debt obligations and the WH declares bankruptcy.

Then the WH can cede sovereignty to either China and / or the Middle East sheikdoms.

And what of the H1N1 (possibly mixed with the Ebola virus)? This will be a very convenient and quick method to have depopulation + WW3 in the same approx. time frame.

Scams. Choose wisely — Peak Oil and Global Warming
. The noise on the planet is horrendously loud, and reaching ear-splitting levels, so the volume needs to be lowered significantly.
——
Gorbachev has it right. — The Beast

New York State will be fiscally broke in a few weeks, and Macau is running out of water. Which is more important — Water or Money?

#15 Chaostrology on 11.12.09 at 1:51 am

It’s all good.

Haven’t you heard, Vancouver is the new financial center of the universe. There is a never ending supply of rich people that are lusting to live in Vancouver. Housing prices will continue to rocket into the stratosphere because they always have. The Prov Govt is going to receive way more tax money due to the HST and the skies are not cloudy all day.

Oh yeah, if you can’t afford to buy or lease, you can still rent a shopping cart from Safeway for 25 cents. You can house a family of 4 for a dollar. Very reasonable. Just don’t do it while the Owelympics are in town, we have laws about be homeless during the Owelympics, you could end up in Calgary for 2 weeks. It’s not easy to push a shopping cart in the snow.

Did I mention the draw bridge we employ to keep the riff raff out?

#16 Jim on 11.12.09 at 1:56 am

CEO of ING Warning of Canadian Housing Bubble

http://watch.bnn.ca/after-hours/november-2009/after-hours-november-9-2009/#clip233226

#17 Onemorething on 11.12.09 at 2:56 am

RE Agents in Richmond are just starting to say what their clients in HK and other parts of Asia have already initiated. SELL SELL SELL!

The contrarian in me is now simply shorting GOLD and Long USD starting yesterday.

$fromA$ia – you are correct hence my play out of GOLD in which is only there for a hedge and which I bought at $850.

My Swiss Francs and AUD are prime to cash in as well for USD.

Correction in CAN Nationwide simply 20% on avg from 2007 peak 100% correct, upto 50% in big bubble territories. More than 50% in Stupid Pocket Bubbles like areas in VAN and TO.

I might still purchase that summer home in Whistler yet, but only when $1.4M CAD turns into $650K —– SWOOP! 24 months!

That will give everyone enough time to realize and get used to their downfall and huge mistake.

One thing for sure, we are at the tipping point and when it turns you wont be able to sell your property, just watch it go underwater to the point of forecloser!

Banks in the US will be in a new line of business, landlords, offering you your foreclosed home at very sweet rental premiums! BUT for their balance sheets they need to write down each unit to 1985 levels so that the cost of money (via increased rates coming) will show them positive cash flow and shareholder value. You will need 30% down so you have no credit rating left, no money and a part time job selling trinkets in Ebay!

Love that chart Garth, love that Richmond RE quote and feeling good brother!

#18 Rob in busted bubbleland (spain) on 11.12.09 at 3:01 am

‘I have another problem…where to park the 400k from the sale? It needs to remain liquid, yet the 0.02% return from the bank sucks. ‘

-But what sucks even worse is losing a good chunk of your money because you were chasing yields and got royally burnt.

Quite a few years ago I stuck my wife’s pension payout into a 30 year bond, somewhat contrarian but it’s paying a health 6% yield and it’s a government bond so it’s safe.

#19 freedom_2008 on 11.12.09 at 3:20 am

Hi -Feeling Better in Calgary

You can park your money in Canadian Direct Financial KeySaving account, 2% interest, CDIC insured. Open one acount under your name, one under your spouse, one joint under both of you, you then have 300K covered with just one bank.

Note that I don’t work for CDF or anyone else, I am just someone like you who needs to park money safely for short term.

The CDF link is the first one below, and you can find others like them in the second link. You can google them to see comments posted by people who have good/bad experiences with them, and make your own choice afterwards. As for your RRSP, without knowing the details. no one can tell if they should be filled, so you are the best one to make that decision.

https://www.canadiandirectfinancial.com/Personal/

http://www.canadianbusiness.com/my_money/rates/deposit_account/index.jsp

#20 vreaa on 11.12.09 at 4:26 am

The Vancouver RE Bubble Haggle…

http://www.youtube.com/watch?v=p2yfHKAcF_c

#21 Ulsterman on 11.12.09 at 5:14 am

The city employee in Calgary thinks 55k NET per year is “weak”? Wow, many, many Canadians would love to have that after taxes and pension contributions. He has no idea how good he has it. City employee you say? Mmmmm

#22 Repatriated Expat on 11.12.09 at 6:12 am

The MSM is reporting on the housing bubble with increasing frequency lately. It’s not a complete consensus, just a smattering of articles here and there. But it seems to be a change from even just a few months ago. The real lynchpin keeping the wheels on the real estate bandwagon is mainstream thinking.

Perception is everything.

I’d like a place to live that is a little better than my rental but I don’t need to live in a place better than my rental. So I’m not even bothering to look at house prices until the topic of a housing bust is published on the front page of the G&M with lots of red ink, negative percentages and photos of rows of for sales signs.

#23 TS on 11.12.09 at 7:19 am

http://finance.sympatico.ca/Home/ContentPosting?newsitemid=113686325&feedname=CP-BUSINESS&show=False&number=0&showbyline=True&subtitle=&detect=&abc=abc&date=True

The above link will take readers to a news item predicting a 10% to 20% decline in Canadian house prices in 2010.

#24 David Bakody on 11.12.09 at 7:21 am

I will be brief: ha ha LOL.

It’s over the die has been cast, the words have been hashed over and over again and now the time has come to sit back and wait for what all here know what is coming.

Bon Chance, good luck many will need it.

#25 Hiteclowtec on 11.12.09 at 7:43 am

Home insurance rates soar

The sheeple are being sheared. Has anyone checked thier grocery bills lately and the prices of those quality goods from china. Up,up and away!!! To add insult to injury the Gov will soon announce low CPI and no inflation.

http://www.yourhome.ca/homes/newsfeatures/article/724672–home-insurance-rates-soar

#26 Grantmi on 11.12.09 at 8:19 am

#11 Nostradamus jr. on 11.12.09 at 1:14 am

Nosty! Dude… you’ve got to get off the weed man.. (or give us your source!!!! )

http://i33.tinypic.com/33uu06v.jpg

#27 robert on 11.12.09 at 8:30 am

#17 Onemorething

“The contrarian in me is now shorting Gold and long the US Dollar starting yesterday.”

I have one of those fellows living inside me also. So far he has done nothing but cost me money for being too early.

From the way silver is behaving (has not confirmed its previous $18+ highs while gold has made a new high) I think it is a better candidate for the short side right now. DZZ and ZSL are my choices for gold and silver plus they have the added bonus of being denominated in US dollars. Very risky 2X inverse though and not recommended for the faint of heart.

Lately, the particularly strident tone of denial that gold is not in a bubble leads me to believe it is. Gold inspires a lot of strong emotions among “investors” which can impair judgment and produce very negative results. I have found that if you have a strong stomach and a detached view of the hyperbole spewing from the sector you can make a lot of money trading both sides of precious metals (and mining stocks).

#28 Alex on 11.12.09 at 8:45 am

Ops! Mainstream again.

http://www.yourhome.ca/homes/realestate/buyingahome/article/724613–mortgage-lender-warns-of-housing-bubble

#29 Downsized and Delighted on 11.12.09 at 9:21 am

Menhem Aouad, 38, a school psychologist trying to sell his Center Line home, hopes for a break-even deal as well. He and his wife, Lisa, 36, a schoolteacher, moved into the house in 2001. They have invested in new windows, landscaping and refinished woodwork. The couple have three children under 5 and want to buy a larger home

With the state of U.S. real estate this is your best example of economic hardship? Menhem wants a bigger house (for his 3 kids) but can’t sell his old house? In Detroit no less? Maybe he should just pick out one of the vacant ones and move there?

And you are definitely right Garth – Detroit is not Toronto.

The point was not to try and find a unique case of hardship. Quite the opposite. A very normal and typical case of it – middle class professional people with an improved house on the market for 2 years, and in a major city 3 hours from Toronto. The lesson: there but for the grace of God (and a few economic indicators) go I. Too bad you have difficulty seeing such comparisons. — Garth

#30 Downsized and Delighted on 11.12.09 at 9:31 am

“Last winter I bought stocks and real estate. In the summer I sold property.”

So why are so many people (followers) on this blog still waiting to buy their “house”? Didn’t you tell them to buy? I did – many times. I told them how the market was showing signs of improvement (it was) – nobody wanted to hear it.

Did anyone else buy when Garth did?

More importantly, did they sell when I did? — Garth

#31 Kurt on 11.12.09 at 9:36 am

@ #12 Robert1 – chil. Long-time Calgarians recognize that remark as code for “I’m originally from Edmonton” – you’d have to ask the guy to be sure, but I think it was intended as a shot at our fair sister city “Edmonchuck”, not at Ukranian heritage in general.

#32 Downsized and Delighted on 11.12.09 at 9:37 am

Garth – You and I have the unique ability to actually have the same opinion and disagree at the same time.

#33 Makeorbreak on 11.12.09 at 9:38 am

http://online.wsj.com/article/SB125780714976639687.html?mod=rss_US_News#printMode&ref=patrick.net

#34 Alex on 11.12.09 at 9:50 am

#10 Nonplused
Thank you for your postings.

Here is the extract from US Constitution and question for you.

Section. 10.
Clause 1: No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

Does this mean that current US dollar is fraudulent and unconstitutional?

#35 Gord In Vancouver on 11.12.09 at 9:50 am

Vancouver’s toast if interest rates spike next year

“Bryan Yu, an economist with the B.C. Real Estate Association, told the Straight by phone that near-record-low variable mortgage rates have been the primary cause of the market rebound in Metro Vancouver. He said that the low rates are making homes affordable for more buyers.”

http://www.straight.com/article-270305/vancouver/real-estate-bounces-back

#36 Calgary_rip_off on 11.12.09 at 9:52 am

Garth

that Calgary dude that makes $55K has no business owning a home. I make $90K a year which is increasing and I still rent. Nobody who makes that kind of money can survive in Calgary. That’s poverty level here.

Unless. Unless interest rates skyrocket and kill the delusion. As a renter I can sit and wait while “investors” lose their cash. “Investors” in real estate and stocks play a gamble with their cash. They would be better off putting it somewhere that is guaranteed.

As of today, more crap is in the Herald about house prices going up. That just means more rental opportunities if that happens, the idiots. http://www.calgaryherald.com/business/house+prices+more+than+expected/2214407/story.html

Its no wonder that kids think adults are complete idiots. They are judging by what is published as “news” in the papers everyday.

#37 titicaca on 11.12.09 at 10:03 am

Thanks for Comment #4 from Doug from Calgary about ATB Financial deposits being guaranteed by the Alberta Government with no limit. This has to be the most useful financial advice I received in a long time. I’m Feeling Better this year and I don’t want to worry about the 100k CDIC limits.

#38 Tony on 11.12.09 at 10:13 am

what goes up when gold goes down? anybody?

Polite discourse. — Garth

#39 Bill-Muskoka (NAM) on 11.12.09 at 10:32 am

Seems there will be room for a new high-rise condo development in Vancouver? Get in line now or lose your chance to become a millionaire (debtor)!

Massive fire destroys Vancouver businesses

#40 smw on 11.12.09 at 10:35 am

#38 Tony

Interest rates….

#41 curious on 11.12.09 at 10:42 am

Thank you to the person who tipped me on CDF online savings accnt @ 2%.

I knew about GMAC ALLY at 1.75% but could be more comfortable with the Canadian Western Bank. ING is awfully low at 1.05%

#42 Downsized and Delighted on 11.12.09 at 11:00 am

#17 One more thing- ” summer home in Whistler”

You really are a contrarian.

#43 OttawaMike on 11.12.09 at 11:26 am

Nice healthy balanced real estate market here in Canada with some pent up demand thrown in for good measure:
http://www.bloomberg.com/apps/news?pid=20601082&sid=aD.PxGrrV6f4

#44 Ken on 11.12.09 at 11:43 am

L to mmmast nite the CREAB said the market is balancing out, and by spring it will be a sellers market,prices will rise substantially. With unemployment and the situation in the USA and beyond,what gives? None of this makes any scence to me.I am referring to calgary ab.

#45 Jeff Smith on 11.12.09 at 11:45 am

What is an ITF ?? Does it pay dividends or interests or anything like that?

>#8 Into The Sunset on 11.12.09 at 12:32 am -Feeling
>Better:

>Put $250,000 into the ITF- HNU for 5-6 years…..sell
>half. A $10 investment will = $150 …..retire.
>
>Use you’re remaining $150,000 invested in anything
>paying 2% from RE-use as a downpayment on the
>house you would really like at that time. Take some of
>the returns from HNU buy a property in Arizona for the
>winters and kick back!!
>

#46 getoveryourself on 11.12.09 at 11:49 am

Garth, nice to see you’re able to brag about your great real estate choices when it so obviously contradicts the advice you gave others at the same time.

Your told everyone to sell in winter (you bought) and that there was no hope to sell this spring/summer (you sold) — remember the “faux spring market”?

Contrarian indeed?! If anyone followed your advice in Toronto (sold in winter at 2004/2005 prices) and watched and waited with their reduced cash until now (prices at all time highs), unless they jumped into highly leveraged equity investments (oooh very conservative) they have watched 10s of 1000s of dollars evaporate along with your hot air.

Honestly, I think being contrarian is watching a contrarian like you give advice, and doing the OPPOSITE.

Nice revisionist history, but I actually detailed a long list of vulture strategies here in the days of the market decline – which I used myself to buy a POS. And the last thing I would recommend at this time would be a purchase (which is why I sold). But go ahead and do the opposite of me. It works for billions of others. I’m just a guy with an opinion. And you, anon? — Garth

#47 pjwlk on 11.12.09 at 11:58 am

#5 Cory said: “What do multi millionaires do with their cash?”

Have a read of a book called “The Charity Game” if you can get a copy. It was pulled from the shelves not long after it was released because it “offended” some people — yeah, some of the 80,000 people in Canada who use the charity scam… Most importantly, pay attention to what charitable foundations are really all about.

About 1-1/2 years ago the President of the corporation I work for sold half of his shares in the company. The big boys aren’t going to lose money you know that. Yes, he disclosed the transaction as per the law. It wasn’t long after that however when the value of the shares dropped to $1.67 from somewhere around $8 or $9. Imagine that…

I’ve been looking for a long time to understand what the big guys do with their money and how they are able to NOT pay as much tax as the rest of us. I’ve only partially uncovered some of the secrets, the rest seem to be a mystery, one I’m afraid will remain so for a long time…

#48 Devil's Advocate on 11.12.09 at 12:07 pm

#6 MarkArgentino on 11.12.09 at 12:16 am

Mark… Re-read your post after contemplating this;

Once was a time, no doubt, in Detroit where the real estate market forces were much like that of Toronto today. It’s ALL about supply and demand at any given point in TIME. As, you imply, Garth may be wrong in his predictions given he were forced to narrow the specific date of his predictions, so too could you.

Not yet at this particular point in time is it a question of who might prove right or wrong. At this time it is a more a question of which forecaster is considered a more credible source with a more logical argument that leads us to agree with him.

It’s not even a matter that “even a broken clock is correct twice a day” so much as which clock is more reliable.. telling the correct, if not closer to, time of day.

#49 Dave on 11.12.09 at 12:16 pm

Without me reading through all your posts, what date or period in the future do you predict the real estate bubble will burst? Then I can watch if your prediction came to pass…. or not.

Mark

———————————————-

maybe you should stick to selling properties. If you had any background in understanding markets, you’d know that picking tops and bottoms are things that are virtually impossible. Warren Buffet, George Soros (best market timer ever), Peter Lynch, Jim Rogers – some of the best investors ever, cannot do what you’re asking. They simply see assets as over valued or under valued and enter or exit that market. They’re never in at the bottom or out at the exact top, that’s because market timing is impossible.

Garth is telling you real estate is over valued today. His opinion is the same as it was a year ago. Maybe there’s a noticeable difference in the market in a month from now, maybe a year from now.

I find it comical that you come here saying “i want to know when the bubble will burst and then I can judge your palm reading tactics blah blah blah” – as if someone owes you something…On top of free information, statistics, daily updates you act is if you’re doing this blog a favour by reading it. You need proof so that you can do Garth a favour and read his blog..lol.

#50 Elle on 11.12.09 at 12:16 pm

” Last winter I bought stocks and real estate. In the summer I sold property. Now I’m reaping, and waiting. And by the looks of things, the wait may be over in a few more months. Maybe a year. Whatever. I’ll still be here, preening my feathers and plumping my waddle.”

Well Garth, good for you.

So while home owners are taking your advice to sell……. you are buying….. hmmm. You are contrary aren’t you.

Maybe we should buy gold!!!

Be my guest. Buying at the top is always fun. You can see so far. — Garth

#51 Scrooge McDuck on 11.12.09 at 12:26 pm

So Garth, were does one park $400k?

Depends entirely on how long it is parked. Buy a strip or a T-bill at a discount to face value, for example, to guarantee the principal, then use the surplus to buy some high-octane options on oil, gold or market indices. That way you can be a cowboy and a Presbyterian at the same time. — Garth

#52 Devil's Advocate on 11.12.09 at 12:28 pm

#17 Onemorething on 11.12.09 at 2:56 am

Nice… What a glowing ray of sunshine that post was. So you’re a classic example of a “vulture” right? And proud of it right? You believe yourself to be like a modern day Robin Hood finding a legal way of robbing from rich such as to “purchase that summer home in Whistler…, but only when $1.4M CAD turns into $650K”

What you don’t realize, if it is true that you have $650K sitting on the shelf for just such a purchase, is that you already live lavishly far beyond the means of the vast majority of Canadians. And to a good part of them you are a just sad misguided individual bickering with his piers over money while the rest of us go about living life rather than seeking higher “perceived” status.

Really… people…. step back… nothing to see here.

Vultures are not unlike those who got us in this mess to begin with.

#53 Popeye on 11.12.09 at 12:37 pm

http://finance.yahoo.com/tech-ticker/article/370734/Chinese-Homebuyer-Maxes-Out-Borrowing-So-as-Not-to-'Miss-the-Boat‘?tickers=FXI,XHB,CHINA,GMF,EEM,EMF,MSF

#54 Pat on 11.12.09 at 12:40 pm

@#10 nonplused,

Very good post; especially your comments about the strength of the Candian $. My thoughts exactly.

#55 Calgary_rip_off on 11.12.09 at 12:42 pm

Garth,

here’s another great article from Mario and bros at the Herald. Perhaps Mario should go about reporting on something else such as hockey until 2012 when things will be as juicy as a Burger King Whopper. Please note the classic comments from local Calgarians, also, many of which as longstanding residents would be renting if they were buyers in today’s market.

http://www.calgaryherald.com/business/Calgary+home+price+decline+third+highest+Canada+Sept/2214429/story.html

#56 David Jensen on 11.12.09 at 12:53 pm

Garth, there is only way the housing crash can be turned into a long, slow gradual decline:

Decrease the value of money.

If the world ran according to the principle that money was worth a constant amount, well, real estate, stocks, and companies would be CRUSHED by the contraction we have seen. The debt loads to income are destructive, and spending has been rising faster than incomes for a long time. If all efforts weren’t made to debase the value of money, this would have been a negative spiral downwards, and it would have been worse than the Great Depression.

However, Quantatative Easing is literally creating money out of nothing.

That money can be used to buy debt (thus keeping interest rates absurdly low despite massive borrowing needs), buy assets (like toxic debt and the companies which hold it), and pay back government debt.

Think of a price as a Numerator / Denominator, with the “value” being the top, and the value of a dollar being the bottom. Decrease the value of the dollar enough, the “price” rises, even as the value holds steady.

People are getting confused over the inflation vs. deflation debate.

We have seen deflation in all the things Central Banks haven’t been giving money to the Aristocracy to buy:
Labour, food, services, computers, ect, and will for some time.

However, Houses have been propped up by artificially low interest rates, WHICH CAN BE KEPT ARTIFICIALLY LOW by printing money.

As Japan proved, this doesn’t neccesarily stimulate the troubled economy, but thanks to the Carry Trade, inflates asset bubbles everywhere else (which is why we had the stock market bubble of the 90’s).

So, prepare to see a continued, absurd gap between the Real Economy, and Asset Prices.

The value of assets like stocks, commodities and housing will all be held completely out of line with the ever faltering economy. Which means anyone who doesn’t already have assets, will get further and further away from owning them, as their ability to buy them from real earnings deteriorates.

This won’t mean houses can go up much, if any from here over the next few decades, but I don’t think you’ll get the huge crash either. Just a slow, gradual decline against the value of everything else.

Commodities will surge in this environment, further hammering the weak developed economies.

Wages will fall faster than the cost of living, and eventually you’ll get widespread defaults on national debts.

Anyone loaning money to a Government right now is a fool. You’ll either get paid back in devalued dollars, or not at all.

Anyone buying assets on debt right now, who does not have access to Tim Geithner’s home phone number is a fool. There will be no bailout for you, except for bizzarely low interest rates, for a long time.

#57 Soju on 11.12.09 at 12:55 pm

How will interest rates go down when the Canadian dollar is so high?

#58 Devil's Advocate on 11.12.09 at 12:58 pm

#10 nonplused on 11.12.09 at 1:02 am

Excellent perspective… !

#59 jess on 11.12.09 at 1:02 pm

google appraisal fraud …think it doesn’t happen here? Human nature is what it is.

#60 jess on 11.12.09 at 1:30 pm

The B.C. Supreme Court has ordered a home inspector to pay nearly $200,000 in compensation to a North Vancouver couple for a faulty home inspection he performed.

http://www.cbc.ca/canada/british-columbia/story/2009/11/11/bc-home-inspection-lawsuit.

#61 It's Just The Market on 11.12.09 at 1:34 pm

In terms of the Vancouver number (and the numbers elsewhere in Canada), the market has spoken. That means 10,000s of people all over Canada (including your constituents Garth) have said, modestly, each in their own individual way, “I need to buy a new home for myself and my family”.

These are ordinary people’s motivations based on what they feel they need at a point in time.

Who are you to say they are all wrong. What gives you any expertise in the matter or real estate markets whatsoever as well ? What is your expertise exactly when it comes to real estate ?

Stop denigrating the action and needs of ordinary Canadians because you despertaely need to sell a book who’s time is already past.

I am sue you won’t publish this on your blog because it is a contrary opinion. “Contrary” ….where have I heard that word before ??

#62 rory on 11.12.09 at 1:57 pm

#7 Meggie, hi and good morning …you said:
Rory- Could you please post a comment that just ONCE, irregardless of the blog topic, doesn’t blast civil cervants, their pensions, and your same old rhetoric”. It’s really growing tired Rorey, and whether your venemous assaults hold any validity or not, your broken record is frankly inidictive of a form of envy. Diversify.

Yes I can …the civil service in this country is doing a smashing good job. They deserve absolutely every penny of your money and undying adulation for their sacrifice every day. Please, if you see a homeless civil servant or one making minimum wage please dig deeper and donate.

P.S. – Meggie, ONLY 3 spelling mistakes + irregardless …cool + good for you.
http://www.merriam-webster.com/dictionary/irregardless

Now for the real post:

Your concern/disdain is overwhelming …feeling a little scared I may be right about your future.

So, do you agree that this country is too much in debt? If yes, then what are your solutions – you can reduce expenses or raise additional revenue. Your answer is obviously to raise revenue. Where would that mostly come from? My guess would be the private sector. Is that fair? No. (Very over simplified explanation)

Look at any third world country and its public service. It is big, ineffective and provides a huge buffer to the ruling class. If you want this for your country let Gov`t become bigger and more inefficient. Just do not be surprised when the citizenry turn on you.

As you know we all cannot work in the service of the citizens of Canada – that is why is called public service not “f off Rory this is mine“.

I like fairness, which is why I bring it up as it will be a defining issue as this train wreck unfolds. You should prepare versus ‘killing the messenger’.

Meggie, please, if you have a better idea or any kind of plan at all vs. the status quo then please let me know and I will shut up.

As to envy, yep you bet. Imagine never having to save for retirement. Never wondering where the next pay cheque will come from nor having to worry whether you are overpaid.

In reality (+ repeating myself), lots of civil servants work hard. Lots do work that is beneficial to the country. Also, a lot do neither…so reduce wages across the board or fire half the gov’t …take your pick.

Sorry Meggie I just cannot back off when the size of the public service and the amount of cash they consume is too high …nothing personal.

#63 jess on 11.12.09 at 1:58 pm

Do regulators drink from the same liquid?

large numbers divided into two

The Irish Financial Regulator’s failure to control property bubble contributed to the economic crash and consumer wealth losses, according to a new report. ..
The Financial Services Consultative Consumer Panel, which is appointed by the Minister for Finance, to monitor the performance of the Financial Regulator from a consumer viewpoint, said in a report issued late Monday, that most consumers have lost “significant amounts of money” due to the inadequacies of the financial regulatory structure. It also slammed the “deficient” response of the Regulator to threats to consumers, including the domestic property bubble.

“We are unclear as to why the regulator did not move to dampen the bubble at an earlier stage, for instance by requiring banks to set aside more capital for riskier products,”the report said, highlighting products such as interest-only loans.

In 2007, Finfacts contacted the Central Bank of Ireland seeking data on interest-only loans. We naively expected that the bank would have collected such pertinent data from the lending institutions as part of its normal data collecting function on credit activity. The bank did not have any data on interest-only loans even though beyond the sheltered workshop on Dublin’s Dame Street, anyone with a clue of the buy-to-let market in particular, knew that the standard financing was a 5-year interest-only loan. For big values, it was generally sufficient for an accountant to supply a statement of new worth.
http://www.finfacts.ie/irishfinancenews/article_1016759.shtml

bad bank/good bank

Nov. 12 (Bloomberg) — The biggest financial gamble in modern Irish history is about to exit the realms of theory and enter the real world.

Lawmakers will today pass a bill creating a so-called bad bank that will pay the country’s biggest banks 54 billion euros ($81 billion), or about a third of gross domestic product, for property loans to free up lending. The agency plans to start buying loans by the end of the year, according to a plan published last month.

Finance Minister Brian Lenihan is seeking to end a crisis that’s wiped 70 percent from the country’s benchmark stock index, sent bond spreads soaring to the highest in at least a decade and destroyed Ireland’s status as Europe’s most dynamic economy. Real-estate prices have on average dropped 50 percent since peaking in 2007, and bad debts at lenders led by Bank of Ireland Plc and Allied Irish Banks Plc are surging.

#64 rory on 11.12.09 at 1:59 pm

#51 Devil’s Advocate

Truly, truly …what do you really think will happen to OK RE when the boomers start to retire or as a safe haven …Palm Springs North in full bloom or overpriced farmland.

See Meggie I can do other things :).

#65 dd on 11.12.09 at 2:09 pm

Markets going sideways for years?

If commodities are going up and banks give OK earnings (as you have predicted) then the TSX will increase. Commodity and banking make up about 60%ish of the TSX.

#66 dd on 11.12.09 at 2:13 pm

#11 Nostradamus jr.

….$913K is dirt cheap for a dig in Vancouver….

I see that Vancouver real estate is not the only thing that is high on the coast. Man.

#67 Popeye on 11.12.09 at 2:19 pm

#57 Soju on 11.12.09 at 12:55 pm How will interest rates go down when the Canadian dollar is so high?
——————————————————-
The Canadian dollar is high so they would lower interest rates (if they could) to make it weaker.

#68 kenken on 11.12.09 at 2:22 pm

#5 MarkArgentino

your post shows how stoopid realtors are in inducing greaterfools to buy buy buy!!
while you are at it, do you want us to give you the 649 and Lotto numbers too for the next few years???

As other posts have said, before and today, prices are determined by demand and supply, which are dictated by economic and financial fundamentals. All is pointing to one thing and this is what Garth has been saying. Noone can predict the future and there is certainly no need for someone like you to come here to ask for dates, numbers and percentages so you can verify!!

You seem to think that there will be no correction!!

Right??? …. THEN Why don’t we do this – YOU predict what will happen to the housing market in Toronto for the next 5 years for the average detached Single Family House!!!
And YOU give us your personal guarantee about it happening!!!
Then we can watch if your prediction came to pass…. or not.

#69 Devil's Advocate on 11.12.09 at 2:35 pm

#44 Ken on 11.12.09 at 11:43 am :

Balancing out from it’s peak as it passes through equalibrium on it’s way down. What you think is coming is going Dude. You’re just still at the wrong end of the trip.

#70 D from London on 11.12.09 at 2:40 pm

#12 – Robert1

Lighten up Rob. When one finds oneself in a laugh-or-cry situation, laughing is usually the better option. At least after laughing one can still get to work to change things. After crying, not so much.

As a Ukrainian Canadian I know where “Feeling Better” is coming from. We are a self-deprecating people by nature. This has come in handy many times over history, since as a people we see ourselves as card-carrying members of the M.O.P.E. set.

Also, Feeling Better’s actions have proven your point for you. Leave it to a Ukrainian to see which way the wind is blowing and take steps to save his or her family from disaster! ;-)

#71 tech4monkies on 11.12.09 at 2:52 pm

Reality is kinda depressing after awhile, so, I thought I would share this article about no HST tax on Timmies are meals under $4 at a restaurant. LOL! now admittedly my financial sense is lacking, but I DO know that if you get a meal for under $4 it is probably mac & cheese served from a used generic cardboard box from “jimbo the hobo” in a van down by the river. Let the good times roll!

http://www.thestar.com/news/ontario/harmonizedsalestax/article/724751–no-new-sales-tax-on-fast-food?bn=1

But if you prefer doom and gloom, here’s links to recent statcan how bout we’re circling the drain:

http://www.statcan.gc.ca/daily-quotidien/091112/dq091112c-eng.htm

http://www.google.com/hostednews/canadianpress/article/ALeqM5jVwS048OOk_8nOixFrY6ohxd1uSQ

Forget the timmies! All I need it this fine blog to get me going in the morning. If I don’t get it I’m irritable and cranky all day.

cheers! :)

#72 somecatchphrase on 11.12.09 at 2:54 pm

High real estate prices are a stealth tax. Governments, at all levels, pursue policies that tend toward higher real estate prices.

Why? It’s a way to raise taxes without officially “raising taxes.”

The key beneficiaries are the municipal politicians and municipal public employees, but also the provincial governments, along with the federal government.

Higher assessments mean higher property tax revenue. This means that municipalities require less in the way of transfer payments from the provinces, and, in turn the provinces need less from the federal government.

Feeding the municipalities with high real estate prices leaves the feds and the provinces with more money to “redistribute.”

This is before we even start talking about the sales tax revenues associated with building, buying, selling, and maintaining property.

Maybe we need to rethink the way we do municipal finance?

Perhaps eliminate all property taxes, with a corresponding increase in provincial sales taxes, with municipalities getting a transfer from the provinces based on population?

Has anyone thought about or written about the housing bubble from this angle?

“None are more hopelessly enslaved than those who falsely believe they are free.”

Johann Wolfgang von Goethe

#73 smw on 11.12.09 at 2:58 pm

Those looking for more predictions from the Garthster, look no farther, seems the “industry”, almost two years later is now in agreeance…

http://www.google.com/hostednews/canadianpress/article/ALeqM5h8kCP0s5_qM3ug9WprGaR8AFwzow

Real estate recovery will be weak in Canada due to limp demand, report shows…

#6 MarkArgentino

Whats you prediction, let me guess, RE is going to the moon, right?

So what happened in the TO RE market in the early 80’s and early 90’s, or were you working as a Eng at that time and missed it?

#74 Mensa on 11.12.09 at 2:59 pm

FYI-All banks have multiple ‘umbrella’s for the CDIC limit. You could easily invest the 400k with 1 institution AS LONG as the banker split the funds under each separate subsiduary( Wrong term, but Can’t think of how else to explain it). They put 100k in each investment so that you don’t have to worry about the CDIC limit. Ask your bank

#75 Emma on 11.12.09 at 3:08 pm

#50 Elle

In my opinion, with the need for a mortgage and a desire to nest there has not been a good time to buy recently. Garth has neither.

Garth, I always thought with fees and commisions, there’s no way to make a profit on RE in that short a timeframe. Did you just happen to stumble upon a relatively undervalued property or was it all ripe at the at particular time?

#76 rory on 11.12.09 at 3:18 pm

Just had another thought or two …Governments set minimum wage guidelines yet no one in any level of Gov’t, that I know of, works for minimum wage …curious!

Garth’s latest podcast talks about another 43,000 of job losses …what a tragedy to the public sector …opps sorry, tricked you … no public service jobs were lost (assumption here) …another curiosity as to why so one sided … hmmm.

Meggie, thanks for the kick start.

#77 Devil's Advocate on 11.12.09 at 3:35 pm

#44 Ken

CREA doesn’t know what direction it’s moving just that it is moving. The market is changing. CREA only hopes it is that direction they state.

And… as is the case in TREB, their biggest member board, there is a shortage of listings (as per paragraph 7 of Garths most recent post). They want owners to list… increased supply brings prices down and balances the market. I personally don’t think they are thinking that far ahead nor deliberately have that much influence but thems the facts my friend.

#78 Cariboojohn on 11.12.09 at 3:56 pm

Hi Garth
I live downtown Vancouver- Gastown, in somewhat of a new building. 1996 It has 170 suites in it.
I was just reading my council minutes.
One lien has been placed on a unit.
Two last warning letters for two units.
And four warning letters to units.
That seams high to me.That thay can`t pay the mantenace fee`s

After the crash was book of the year for me !

#79 Barb the proof reader on 11.12.09 at 4:07 pm

#108 Sylvia advised:

we’ll resort to not carrying insurance

Sylvia,

With all due respect, gambling on your business by asking your clients to provide product liability may have worked fine for you, but your advice to people to not insure their home is a completely different animal.

Insurance rates are high for many reasons, a stupidity dance between arrogant and criminal insurance corporations, clientele who act no better, and the huge costs of dealing with all the other greedy.

Simply put, a large fire loss is devastating and most people would not be able to rebuild. The best bet is to shop around, buy basic insurance and use a high deductible.

Insurance is a dirty but necessary cushion in the closet you hope you never have to use.
….

BTW, at least the B.C. supreme court protected these homeowners from negligence – hope the inspector had insurance:

http://www.cbc.ca/canada/british-columbia/story/2009/11/11/bc-home-inspection-lawsuit.html?ref=rss

#80 Men With Hats on 11.12.09 at 4:14 pm

Put it ins a piggy bank and STFU .
Braggert .

#81 jess on 11.12.09 at 4:26 pm

to peg or not to peg

What if Mr. Obama pulls out all of the troops out of Asia. Would would that do to the dollar?

The US military has about 97,000 troops in Asia, not including the Middle East, and Central Asia. (wiki)

#82 Sukh on 11.12.09 at 4:26 pm

Demand is still there for housing and will keep accelerating with immigration (closer to 500,000 and not 260,000 like the MSM reports). Here me out. Even those posting about a crash here want to buy a house if the price is at something they can afford. Also, they wait thinking that prices should be tied to incomes. This was true in the past, but globalization has changed everything.

For your info, India recently doubled (to $200,000)the money Non-resident Indians (NRI’s)–means Canadians of Indian origin– can take out of the country to buy assets in western countries. Having been there, believe me there is incredible amount of wealth tied up in land there and the prices are not tied to incomes. The problem up to now is that NRI’s have been unable to sell a portion of their land there and bring the money here to buy a $913,000 home due to policy. What has been happening in the last 10 years is a land swap. For example, the NRI seller of a home in vancouver gets land back in India for exchange. The NRI buyer gets the house in a private sale. Wait until India totally lifts the restriction, the 1,000,000 NRI’s mostly in vancouver and toronto, will go into a buying frenzy. Those living in the basement suites will be your landlords.

Believe me, even though the retired NRI’s collect OAS/GIS, they have alot of wealth tied in land there. That is why many retired immigrants go back to India for 6 months during the winter. The land is leased and the money stays in India so not to be reported to Revenue Canada. What a life? BTW I’m of indian origin too so dont call me anything ;-)

It happened in China as recently lifted restrictions allowed mainlanders to take money out of there and invest in Hong kong. Most did it in real estate and Hong Kong prices are up 85% since March. The rise is not tied to incomes. Wait until 1.3 billion mainland Chinese are allowed to invest in real estate in Canada.

If India were to totally lift restrictions and China followed (which will happen one day sooner than you think), use your common sense to think of what would happen. House prices will become less detached from job numbers and incomes. — welcome to Globalization. And for those who say look at what happened inthe USA, Canada has much more immigration per capita.

#83 calgary mls listings on 11.12.09 at 4:27 pm

Thanks for showing all the detailed information in such a lovely blog as i was searching on the net and got connected with this blog. I appreciate your hard work you have put in for compiling such an amazing & informative blog!!! :) i will be monitoring all your updates from time to time. Maze of information, clustered in one place, Great!
calgary property

Buzz off, trolling realtorbot. — Garth

#84 BAD on 11.12.09 at 4:55 pm


With the family median after tax income of $63,300 in BC the median and average RE prices there make total sense if one uses (in large quantities) the main BC export product.

But then again the income from those exports is not captured in the statistics…

Other provinces… again one needs the BC product…

#85 Alberta Ed on 11.12.09 at 6:12 pm

The Conference Board of Canada has issued a bullish report, so everything’s going to be all right in 2010 (except for Newfoundland and Labrador). I suspect they have been smoking something…

#86 GregW., Oakville on 11.12.09 at 6:49 pm

Hi Garth, FYI

Say No to Vaccines: Dr. Sherri Tenpenny In-studio with Alex Jones
Infowars
November 12, 2009
http://www.infowars.com/say-no-to-vaccines-dr-sherri-tenpenny-in-studio-with-alex-jones/

#87 Jim on 11.12.09 at 7:07 pm

$900,000 for a house in Van? No problem, you can get a job at Kodak (Creo) as a high tech engineer-oops, they just laid off most of their software development team and sold all three of their building and closed the Annacis facility, you can get a job at BCIT the largest technical college in western Canada-oops they have a hiring freeze, you can work at City Hall in Vancouver with those incompetent city councillors who gambled our tax money away on Olympic village-oops they have a deficit and are laying off staff. You can get a job at Electronic Arts as an programmer or game developer-oops they just announced they are laying off over 100 people, you can get a job at BC Hydro-oops they have a hiring freeze and are being “reviewed” by the Provincial Govt… Well, you can get a job at a coffee shop or you can get a job building or selling overpriced condos…

Why not take the $900,000 and use the $45,000 worth of yearly mortgage payments, property taxes and maintenance to rent a pent house in the upper east side of Manhattan?

#88 gary on 11.12.09 at 7:19 pm

behind china’s GDP
http://www.youtube.com/watch?v=0h7V3Twb-Qk

#89 Nostradamus Le Mad Vlad on 11.12.09 at 7:22 pm

What’s the US$ doing today? Who cares!

#110 Soju on 11.12.09 at 4:22 pm — “You can never time your entrance into the market.”

A really good time is when the markets all take a brief time out, just like after the ’87 re-adjustment (that was really good timing!).

There were plenty of really good bargains then. Now, slightly more than two decades later, one would have a very healthy pension plan.
——
US still on track to eliminate their own currency; so these two may have something in common — http://ncoal.com/blog/?p=741 — and — China
——-
Swine Flu Shots and pregnancies (apparently) don’t mix — For Ladies / Teen

#90 RM in Oakville on 11.12.09 at 7:32 pm

#86 GregW., Oakville on 11.12.09 at 6:49 pm

Greg, do you EVER contribute anything that’s on topic? Just curious.

#91 Downbytheriver on 11.12.09 at 7:50 pm

Funny about oil, for those who mention it…

http://www.philstockworld.com/2009/11/11/goldmans-global-oil-scam-passes-the-50-madoff-mark/

Anytime someone tells you that the price of something can never go down you can bet there’s a bubble forming somewhere.

#92 Claudius Emeperor on 11.12.09 at 8:13 pm

#82, can you tell me please then why the prices in Toronto colapsed 10-15 percents in just 2 months following October 2008 before the government of Canada backed the subprimes insured by HCMC?

Where were all these rich Asians at that point?

BTW. You can get easily investor green card status in US if you just deposit amount lesser then the average SDH in vancuver in a US bank/factory.

and BTW the prices in UA are 2-3 times cheaper than in Canada, not to mention the taxes, the wheater etc.

But we are different, right.
Not to mention Australia, Europe etc as an option for all these ‘rich’ Asians coming here…

#93 Onemorething on 11.12.09 at 8:30 pm

#42 D&D, yes sir, I take my son to hockey camp and with my knees shot play golf. It gives me good exposure to the prime rental months. Dont get me wrong love the snow! But Bali or the Maldives is where I spend Christmas.

#52 Devils Ad, your rant amused me, your assumptions even more. I am only looking for affordable property and set my buy price based on return and property usage.

Again, your overall posts descibe someone looking for answers, you came to the right place!

#94 Future Expatriate on 11.12.09 at 8:38 pm

#50 – “Be my guest. Buying at the top is always fun. You can see so far. — Garth

Garth, for gold to be at the top, wouldn’t the dollar would have to be at the bottom?

The dollar is nowhere NEAR the bottom.

#95 Devil's Advocate on 11.12.09 at 8:50 pm

#64 rory;

Kelowna will, to a point, always maintain popularity as a retirement destination amongst Canadians… to a point. Of course if prices maintain such a relative premium over those areas Canadians plan to retire to Kelowna from clearly that will dampen the demand. Additionally, with higher taxes being imposed upon all Canadians I see more and more choosing to retire in places like Mexico. I mean our Provincial Medical System is clearly degrading and it is doubtfull it would be worth sticking around for in not so many years.

Kelowna is a VERY expensive city to live in. It is also a VERY competitive city to earn a living in. Retirees who might look at Kelowna as desirable for a variety of reasons might well become disenfranchised once they experience the consequences of the cities crumbling employment infrastructure and increasing homelessness and crime.

Canada’s “Palm Springs North”? That might not be so much something to brag about. Certainly the city seems to be evolving in that direction at those costs mentioned above. With that we do loose that middle class family friendly city I remember of days gone by. Replacing those families are a different class of people at both ends of the spectrum; well monied at one end and homeless at the other with not many, certainly not enough, in between. I don’t think that would appeal to anyone. It is already happening and driving people away from this city. Obviously not a good thing.

Still the city seems hell bent on courting that “affluent retiree”. And with good reason as that, appears at first glance, to be where the money is. But it is most certainly a narrower, more specific market, of smaller size which I don’t think would not be the highest and best use (target market) of and for our city as a retirement destination in any event.

Really imagine a city with only $1,000,000 condo dwellers and homeless. While that might seem a gross exageration it is an apt description of what transformation is taking place in this city at this time.

So my answer to your question is a bit of both, Palm Springs North (not a good thing) and overpriced farmland (again not a good thing). Certainly my wife and I doubt that we will be retiring here. By the time we’re ready to we doubt it will hold any appeal for middle class folks such as ourselves.

#96 grumpy on 11.12.09 at 9:33 pm

Great time to sit on a pile of cash. That chart looks like a classic double top building towards a meltdown. Considering the ‘recovery’ is just phony money from the government and not from a recovering economy I would be a bit cautious at theis time.

However I am being a bit of an ass and building a portfolio of junior golds that have actual assets in the ground. It is the sleeper market of the century.

#97 Calgary_rip_off on 11.12.09 at 9:37 pm

Sukh:

I guess I will be priced out forever when housing prices skyrocket by eager people from foreign lands wanting to purchase shacks. You are entitled to drive the prices up through the sky. I can see it now: $1 million cool for a 1 bedroom condo in Airdrie Alberta. Sorry dude, I suspect that isnt going to happen. But then again it might. As a renter though I can just sit and watch until I am homeless making $100K a year. If that happens I’ll just quit my job, go on welfare and live somewhere cheap like Hudson Bay in Manitoba. I should be able to rent a basement somewhere there for cheap where I can play my music all day long while the new housing hungry people from the foreign lands support me. :)

#98 Kelly McMae on 11.12.09 at 10:37 pm

#3 Coho
….and the 700B plus that private interests stole from the public good? hmmm. yeah, the state is on the take. more like the other way around.

#99 Devil's Advocate on 11.12.09 at 11:13 pm

93 Onemorething

$650,000 summer home at Whistler and Bali or the Maldives at Christmas. Yes.. affordable properties

What? Me looking for answers? Why yes I suppose I have come to the right place as clearly you have it all figured out…

#100 Sukh on 11.12.09 at 11:21 pm

claudius/calgary rip off.

The point I’m making is that policy changes can cause real estate prices to rise. Chinese and Indians can’t buy homes in Toronto for cash just yet. But as restrictions are lifted, they will. An example somewhat similar is how Hong People bid up Vancouver real estate in the late 80’s…and never loked back.
My bet is policy changes will favour rising home prices. I’m willing to bet that there will be 1) no reduction in amortization from 35 years. 2) 5% downpayment will remain. 3) A new credit for first time homebuyers like the states will be introduced. 4) immigration will be stable or increased. 5) Foreigners investing in Canada will be made into an easier process. 6) Interest rates will be kept low or a very long period thereby devaluing our cdn dollar.

Willing to bet against this? If one were to change this, they would have to make housing a right…policy changes. 15% dp, 30 year amortization, no credits, higher taxes on residential real estate investments to make them unnatractive, reduced immigration,..so on… Where is the money going to come from to lobby those in charge?? The lobby that allways win is the one where higher prices result. see dairy industry ($24,000 for the right to have a cow in Canada??), airline industry (lack of open skies), cell phone industries, retail industry (compare US best buy prices with best buy canada or costco), gasoline industry, the list goes on.

Which way do you think policy will shift with respect to real estate? Which lobby group has the money? Im not trying to pump up prices. Please tell me where I am wrong so i can reconsider my thoughts.

#101 Coho on 11.12.09 at 11:35 pm

#98 Kelly McCabe,

The US government under duress handed over the 700 billion to treasury secretary Paulson (ex Golman Sachs CEO), who did a bait and switch and used the money for other than its initially intended purpose.

For all intents and purposes, Wall Street is government and the government is Wall Street. It is a revolving door between CEO’s at Goldman Sachs and top advisory positions in the US treasury department as well as top positions in private central banks posing as national banks, eg; the BOC and Mark Carney.

This scheme of privatizing profits while socializing losses is what this transfer of wealth (the bailouts) is all about. Our taxes for many generations to come are slated to prop up this present scenario which will bankrupt the country (the people) for the foreseeable future. The “chosen” banks and corporations will get the cake and taxpayers will get the crumbs, if we’re lucky to get even that.

Capitalism is gone. Corporations have merged with government. Hello Fascism.

#102 Sylvia on 11.13.09 at 8:08 am

#79 Barb the proof reader,

Simply put, a large fire loss is devastating and most people would not be able to rebuild. The best bet is to shop around, buy basic insurance and use a high deductible.

You’re right and withdraw my advice to not carry insurance on homes even if it is free of a mortgage. We’ve had some really bad experiences in business with insurance companies and were forced because of high costs to not carry it. We did however, always cover our commercial building for liability because the risk was too high that a customer or child go trip over something stored on the outside of the building that would open us up to law suits. Insurance companies always have the upper hand–they capitalize on customer’s fears. In this instance not paying higher premiums would be a mistake. Thank you for pointing out that the way to reduce costs is increase the deductible.

#103 X on 11.13.09 at 8:17 am

Well this is one way to hit 8% GDP growth. China’s empty city:

http://www.zerohedge.com/article/other-side-chinas-8-gdp-growth-ghost-cities

#104 Emma on 11.13.09 at 4:42 pm

#103 X

Nice link – truly insane. Reminds me of the building of Mirabel Airport – only time will tell if it measures up on the embarrassment scale.

#105 David Bakody on 11.13.09 at 9:16 pm

Buy Buy Buy if the Victoria is any indication act now, quick!

From Nov/10/09

Hong Kong, China (CNN) — The most coveted property on Hong Kong island is called “The Peak,” overlooking the city’s stunning Victoria Harbor.

But these days, the prices are what is taking people’s breath away — a modest apartment here now can go for $30 million. Recently what is claimed to be the world’s most expensive apartment — a 6,200-square-foot duplex — sold for a record $57 million.

Just returned from Scrooge 3D …. good movie funny time though ….got the Christmas Spirit and expected snow when I left the theatre … on well did not last long.

#106 Taxpayer like you on 11.13.09 at 11:31 pm

105 David B

Makes Vancouver look cheap.

Stop feeding Nosty Jr.!

#107 Tory Times are Tough Times on 11.15.09 at 5:56 pm

#79 Barb the proof reader on 11.12.09 at 4:07 pm

Barb – Brought back old memories. In the early 70’s I and my 2 sisters rented a fab. apt. on Nun’s Island (Mtl) overlooking a green space courtyard. We were in our glory as we had a large balcony and I could garden. Six months later the apt above us had a major fire. Most renters on our end had NO insurance. We did, but found out we didn’t have enough. At that time we had $10K for our furnishings, etc. We lost, but many in our end of the building had No insurance & lost everything. My husband and I also went through a fire. We believe it was due to aluminum wiring in our condo/town house which our province had approved. Insurance companies will go to the ‘nth’ degree to screw you. Thankfully my husband pushed and the insurance company paid up.

#108 cheap van insurance quote Vancouver – Latest cheap van insurance quote Vancouver news – Mahindra Gio Review on 11.26.09 at 4:57 am

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