Globe & Mail video:
Garth Turner on the housing bubble


Yesterday CREA announced a stunning rise in house sales. And prices. Houses changed hands at a 40% increase across the country, and deals were up over 100% in delusional BC.

At the same time, the US dollar was at a 15-month low and the stock market in New York hit a yearly high. The American president was in China trying to convince that country to unhook the yuan from the US dollar. He struck out. As a result, Wal-Marts everywhere will stay cheap and jobs stay gone.

In New York the US Fed boss was busy saying rates would stay low since the economy still sucks, even though bubbles may be forming. In Toronto, several prominent economists, when asked about a housing bubble here, said nah. Not yet.

So we all pump for another day.

It might seem to a lot of rational people that all this is connected.

  • The US economy collapses, sinks into unfathomable debt, drops interest rates to zero and watches its currency slide.
  • The Chinese wisely peg their currency to the dollar so their tidal wave of imports to the US does not rise in value, or move jobs back from Guangdong to Ohio.
  • Meanwhile China buys trillions in American debt, so it further ensnares the capitalist giant, and receives a big stream of interest income from Washington.
  • Speculators in the carry trade borrow billions at nothing in the US, invest it in China’s inflating economy, fuelled by a rapidly falling yuan (purposefully tied to the dollar), where the stock market is up 74% and a real estate bubble of epic proportions grows.
  • Unable to raise Canadian rates lest the loonie soar, the Bank of Canada keeps the prime at 2.25% while mortgages barely surpass that. Exports to the US slag, jobs leave.
  • Cheap money lets people buy houses they could not otherwise afford, creating a housing boom during a time when unemployment climbs and the economy contracts.
  • Bank economists claim it’s all reasonable because, based largely on higher housing activity, the economy seems to be improving.

For the record, some argue that the current asset bubble is no bubble at all. Simply, they explain, it’s the result of pent-up demand following last winter’s fear-a-thon, exacerbated by an imbalance of demand over supply and a reasonable expansion of credit following the credit crunch of eight months ago.

And maybe they’re right. Maybe the housing market will just run out of steam and sit there for a few years. And while that would be a bummer for the 5/35 VRM crowd who five years from now will owe more than they do today, and have no more equity, it won’t precipitate collapse.

But neither will real estate have returned anything after costing so spectacularly much to acquire. Imagine: a nation of indebted homeowners snared in their own equity, taxed to pay debt interest, wondering where the jobs went.

Damn but those Chinese are smart dudes.


Garth's latest podcast is here,


#1 Piccaso on 11.16.09 at 9:29 pm

I’m working for the Chinese in Canada as they break into the North American telecom market. There’s no smiling allowed on the job though.

#2 Nostradamus Le Mad Vlad on 11.16.09 at 9:59 pm

“Damn but those Chinese are smart dudes.”

Tell me about it. Thirty years ago (in a few weeks), we were married in Toronto, and like the Energizer Bunny, we’re still going and going and . . .

But first, a differing view on China’s economy.

This is one way the US can keep their citizens mindlessly occupied — get ready for another war.

Excellent post yesterday, and plenty of positive responses today from good bloggy doggies.
Brought to you by our cuddly resident musical genius. IT’S — The 12 Days of Global Warming. Of course, this would screw the elite up — along with many of us — when this happens — Ice Age and Early Snow
Although the source should be taken with a pound of salt, it will be very interesting if this comes to pass (esp. if found guilty). — 9-11 truth
#158 BAD — In response to BAD’s excellent link (1 in 6 goes hungry), this from, which shows how much politicians are nothing more than empty-headed, power hungry simpletons:

“But we can spend billions on Israel and trillions on war.” Fortunately, other things are happening — Lost

Gives a rough idea of what it costs Canada for military expenses. — Cost

#3 ArunPillai on 11.16.09 at 10:07 pm

Hi Garth, have a look @ this

#4 homeless on 11.16.09 at 10:07 pm

RE prices would fall!!! I have been reading now more than a year. when…? After 1 year , 2 year, 5 year or 10 year. The fact is they are going up and up.

#5 Bottoms_Up on 11.16.09 at 10:23 pm

Garth, you’ll love this one.

‘Win’ a (1%) mortgage from ING!!

#6 Mom Society on 11.16.09 at 10:33 pm

To read your blog has become our everyday hope. We desperately want to buy a place with a yard as we have an 18 months son and he needs a place to play. Although our annual income is around 15,000 more than average, we still find out we can not afford anything with a yard even in Surrey. It is annoying to see almost all our friends have moved to their new houses recently. Our hearts sink every time we hear mainstream media telling us next year housing price will continue to go up. Actually we don’t care if your prediction would be accurate, no one has crystal ball. At least your blog gives us hope in this raining winter, give us a hope to allow us still dream we may have a home with yard in the future. Thank you.
If we are belonging to middle class or working class, I feel it is not only our sadness.

#7 BD on 11.16.09 at 10:59 pm

I regularly read Mish, market ticker, automatic earth and Nathens economic edge U.S. blogs as they are contrarian like this one and look at life from the other side of the mirror. While they all nibble at the edges no where have I seen an answer to the most important question we face today. “How do we make a global economy work for everyone with two distinct wage levels, environmental attitudes and currencies that are pegged or floating”.

Simple one first is to make floating currencies manditory to trade freely thus allowing each country to build their economy around their resources and abilities. Since almost every country has some advantage then each one should be able to have a working economy that if it revs up too high is riegned in by a rising currency and if it falls behind becomes more competative due to a lower currency. The only way to achieve this is for governments to rewrite the agreement free of interference from banks and corperations who would lose tremendous profits in a more level playing field.

The environment as most economists worth the name agree can only be fixed in two words. CARBON TAX. It is the only fair way to measure the pollution produced in the production of anything and what pollution it will produce during its intended use. Again this levels the playing field for those countries that want to reduce their carbon output and penilizes those companies that only care about profit.

The biggest problem is wage disperities. Developed economies have gone through 50 years of fairly high inflation to get to the wage levels we have today while the rest of the world has not gone through that pain yet. Even so the buying power in the developed world has not increased in twenty years but has been offset by goods produced cheaper in economies with artificially low wages sold to higher wage earners. So why during that twenty years have wages not slowly increased in the rest of the world? Max Keiser had an interesting u-tube on the weekend showing an entire beautiful city empty in China. There have been a few u-tubes the last couple of months showing dozens of office towers empty and boarded up the size of the TD center as well as several empty shopping malls as big as West Edmonton Mall, empty in China. The question a few inquiring minds are asking is whether the high Chinese growth rate is fiction like all stimulous programs. The financial post yesterday had a story about the rising number of Chinese billionares which contrasts with the high percentage of the Chinese population living at or below the poverty level especially with 30 million newly unemployed after 100,000 businesses went under over the last year. You hve to go back 150 years to the industrial revolution in Britain and the southern slave plantions in the U.S. and Carribian to see the same phenominum of a high export economy with a few making incredible wealth while most people lived in poverty. Before that was the feudal times where most people were serfs. Congratulations folks, this is what we are competing against.

So there are some interesting questions if the rest of the world does not want to rise closer to our standard of living and create a larger global economy to more evenly distribute wealth. First if all the worlds wealth is concentrated in less than 1% of its population like any feudal or despotic culture then who is going to be the buyers to employ the 95% of uneeded labour in the coming economy? Second, since we are twenty years into a downward trend in wages that is accelerating, when we hit one dollar an hour wages like the rest of the world who is going to tell the doctors that they will have to pay off their half million dolar educations with $4 an hour wages? of course lawyers and those in banking and real estate will still make 6 figures! Third, just how fast can we go to reach parity without completly collapsing the world economy so that everyone starves? 1 year? 10years? 2 generations?

The only thing I know is that there is no way to lower the standard of living in any part of the world without causing massive pain in large parts of the rest of the world. While the answers to fixing the global imbalances are obvious, so far there is no one or no group of influential people that have a pair big enough to suggest any sort of real solution.

If you want a better insight into the world today check out Chris Martensons blog and watch the free lecture and put up Garths face on the screen and see if you can find any difference. Hint the only real diffeence is that he says in an hour what Garth has been trying to get people to understand for years.

#8 T.O. Bubble Boy on 11.16.09 at 11:09 pm

I’ll give the mainstream media some credit for mentioning the fact that comparing year-over-year stats is pointless, given that everything was frozen in November-January. (most articles that I’ve seen do mention this, even if it’s usually buried near the end)

#9 Bob on 11.16.09 at 11:13 pm

my dad sold one of his condo!

#10 Kurt on 11.16.09 at 11:17 pm

I’ve wondered for years if China is actually engaged in economic warfare against the United States. Though it would hurt China terribly, they are now in a position that they could provoke a run on the dollar. Maybe this is the current version of Mutually Assured Destruction – mess around militarily on Chinese turf and they’ll drop the debt bomb. This would allow them to do whatever they want as a local hegemon without US interference.

#11 john on 11.16.09 at 11:20 pm

Yes Garth…but when will real estate fall??

#12 Kurt on 11.16.09 at 11:22 pm

#4 – think of Garth as a “value” investor, doing fundamental analysis. For a number of Canadian markets, the fundamentals just simply don’t justify current house valuations, so invest in something else and rent the place you live in. If that’s not the way you want to do your investment, well, that’s your look-out.

#13 Onemorething on 11.16.09 at 11:31 pm

yes we all have been calling for the turning point on this blog and yes the manipulation continues and those with big bucks are the only one’s rebuilding their balance sheets.

This is what was supposed to happen with the stimulus, however, it is all starting to come undone and hitting a critical breaking point.

This occurs when people like #4 Homeless (not to centre you out), begin to feel that they have been on the wrong side of play.

This is the final stage kiddies, when you decide this can go on for a long time, a sideways market, might as well pick up some RE lock for 5 years, deal with it then!

Some say it’s at the time when people waiting on the sidelines begin to get that itch to jump in.

But what you forget to account for is the cost of living during these 5 years, and whether you will have a job, or whether that job you still have is 20% less at payroll time either through shortened weeks or taking that haircut.

The US figures show that part time workers will hit over 10M people by 2010 which is up from 6.6M in just over a year!!!!

These are people that are likely making less than 50% of their full time pay. Others who are working full time and wish to protect their current income levels camped out at the office and are working 65+hr weeks.

This is the only way the production numbers posted recently by the government in the US stick. But why do we see this a positive!

U3 at 12%+ until 2020??? U6 at over 20%??? but how it the part time income earners accounted for? If you bring everything back to a 40 hour work week and what they did earn, including the 3 typical worker scenarios:

1/ I work part time make 50% or less than what I made in my FT position!

2/ I work 40 hour work weeks but had to take a 20% haircut in salary to do so.

3/ I now work 60+ hours a week to maintain my 40 hr/w salary.

Take each and work out a real Unemployment rate not based on people but what they now earn it’s worse than the GREAT DEPRESSION!

Very close, oh, so very close!


on yeah, Onemorething, China needs to hold a fantastic hand, and run the game on their own turf as they in balancing act for their lives.

You think social unrest could be unleashed in the US, China is in the same boat, however, the Central Government has more power over it’s people and financials then anywhere else I know.

It will be a game of who is less screwed over the next decade.

#14 Coquitguy on 11.16.09 at 11:34 pm

Old news now but what are your thoughts on Buffets “all-in bet” on the US economy -Berkeshire Hathaway buying Burlington Northern?

#15 Pitaking on 11.16.09 at 11:35 pm

Garth, I know your an oil bull, what are your thoughts on monetary police in north america given the current rise in oil and other commods? Will their rise force the central banks hands or will we see an era of inflating commodities and deflation in credit and other areas?

#16 newcomer21 on 11.16.09 at 11:49 pm

So the Chinese are smart but Canadians are stupid because they insist on buying homes. How can one market be so wrong and another so right? When do you stop crapping on Canadians with your self-righteous prophesies. Face it Garth. You don’t know shit from shoe polish.

#17 bubblicious on 11.16.09 at 11:50 pm

Is everyone on board? All aboard. Were off to the magic land of Real Estate. Where everbody over pays and pays for 35 years. What a grand folly.

That real estate magazine that is on the newstand actually had an article in it that showed an apartment in Gastown(Vancouver) cash flowing. Granted you needed 20% down on a 35 year mortgage and rates had to stay at that 4 percent level for the next 35 years and the strata fees and taxes can’t go up either and your tenants have to be from some 50’s sitcom and live in such a manner that you never have to spend a dime on the on place.

Toooot toooot…..all aboard. Sounds great I’ll take two and maybe if I am lucky I can avoid renting it to some young lads that are planning on setting up a crystal meth lab to supply the east end residents. Nothing like being a stones throw away from pigeon corner and the hastings bottle depot.

#18 Bottoms_Up on 11.16.09 at 11:55 pm

Blog dogs (including Garth),

Jobs available at CMHC!!

#19 dd on 11.17.09 at 12:11 am

#4 homeless: What ever will happen it is not to smart buying a house at 5x salary. Period. It was affordable in 2005 in calgary even if house prices were still increasing.

#20 Future Expatriate on 11.17.09 at 12:22 am

Ice age… just great. Be prepared for Vancouver Island to be filled with refugees from north to south and the boom to never end. During the last ice age it was the farthest point north free of ice because of the ocean currents.

Of course, if there’s a crustal shift a la “2012”, it ends up where Siberia is now, and all bets are off.

And war? Wise folks have known for years the US has been at clandestine weather and “natural” disaster war with BOTH Russia and China for decades now. And that’s what’s heating up the planet, the sun, the entire solar system and the immediate universe.

Gravity waves make tremendous earthquake generators, but mankind has NO idea what havoc they wreak in the multiverse.

It’s all right there in string theory.

But not in “2012”.

#21 Not Garth on 11.17.09 at 12:26 am

#22 Not Garth on 11.17.09 at 12:45 am

Garth, won’t happen.

Bubbles (massive Vancouver type bubbles) don’t just fade into that dark night.

They explode with epic impact.

This will be one of those. Know what I’m saying.

I’m telling ya – its started – things in hongcouver have hit a cement wall. Its over.

#23 average joe on 11.17.09 at 12:49 am

I think you are being generous Garth. Rising RE prices in a recession is conterintuitive, as you have repeatedly pointed out. Sure it would be great if the RE market simply stabalized. However all of us with an existing mortgage should be paying off the debt as fast as we can. I’d rather have some frugal years now when I still have control of where the money goes than face desperate years when I have no control.

I remember, when I was a teenager, my parents had to take out a second mortgage ( during the early 80’s recession, and my father was a small business man). It was at 18%. We sure lived long and lean for quite a while. Money for University was gone and we kids had to work our way through it. It made me appreciate what I worked for but I was older than most by the time I finished university, and therefore older than most when I started meaningful employment, and with a sizable debt to repay. Recessions don’t just effect current wealth. It effects the future.

In my case, I vowed that my kids would not have to do University the way I did it. I made plans. I contributed heavily to a family RESP, and it lost over 30% with the crash. Now I don’t know what it is worth as my investor doesn’t reply to my emails. Isn’t that a little scary?

#24 highway61 on 11.17.09 at 12:59 am

Taking advantage of current low interest rate will reduce the real value of one`s debt for 5-10 % (first three years of being a home owner). Debt`s value will than decrease for additional 25-30 % during the inevitable inflation period. And we can also count on government that will be willing to do virtually anything to prevent RE numbers from going down. In terms of real value, all this amounts to about four times more than the 10% correction (that might, or might not occur) will bring. While I am not familiar with particulars of RE market in the rest of the country, when it comes to Calgary my advice is that those who are planing to buy a home should bite the bullet now.

#25 nonplused on 11.17.09 at 1:11 am

I’ve ranted this many times before but I still can’t get my head around how rising house prices can be a good thing. Maybe we should all be cheering for food and energy prices to double every 3 years too? All the while praying that the average wage continues to fall through unemployment and reduced hours? Rising house prices are not a good thing for anyone but the bankers. Oh. I guess I just answered my own question.

I guess since the bankers own the government, house prices might just continue to rise then.

But as Ludwick von Mises more than amply explained many years ago, all credit fueled bubbles eventually lead to a collapse, either through the voluntary withdrawal of further credit extensions at some point, or through a complete abandonment of the currency system involved. I do not think the US government is really planning to abandon their currency, no matter the crazy talk about a dollar collapse. Decline maybe, collapse, no.

The problem with rising house prices for the average home owner is that there is no way to monetize this supposed new found wealth without borrowing against the home, which leads to higher debt service costs. It’s not like a stock you can just sell and you won’t miss it. And of course higher house prices place a profound debt burden on first time buyers immediately.

But, if the government can figure out a way to push the mortgage market down to 0.25% and maybe go to a 50 year amortization, maybe the average price of houses in Canada can go to $1,000,000. A little CMHC magic in there and anything is possible. It will still be cheaper to rent. So buy gold instead, which doesn’t go up in value but only seems to go up when priced in dollars. 1982 correction excepted. But I’d get out of that too if I smelled higher interest rates wafting in the breeze.

The next big “news” is going to kill these markets. And we have plenty of candidates. Say Israel decided to drop a few bunker busters in Iran, Pakistan destabilizes, something happens in Georgia again but this time Americans get caught in the crossfire, or even a really bad crop (Australia is having a drought and the US is having so much rain this year the farmers can’t get the crop in. No need to panic yet but this is the stuff to watch.) Even something as benign as China agreeing to let the Yuan appreciate 30% could send the American consumer to his grave as the cost of living goes up yet again but the jobs don’t come home for years, if at all. The Chinese stuff will still be cheaper than we can make it at 100% Yuan appreciation. Although Glascon and Fleetwood might rally as they won’t have as much competition from those Chinese boats and RV’s. What? The Chinese don’t make boats? Oh. Well, I guess they crash then after people have less money left for boats after they buy their TV’s and other gadgets and the price of resin explodes to the upside. Maybe the Canadian market will absorb the boats. What? We all already have one? Why? The water is frozen 8 months of the year!

The gold price, by the way, is a play on 2 factors, money printing and interest rates. In the late 70’s it certainly was in a bubble, running from $42.20 per ounce to $850, but at that time rates were too low for the amount of money being printed and were below the inflation rate. Volker fixed all that with 18% rates, and then for a long time rates were high but declining. The “high” part lead to gold coming back down to earth. Now, we have even lower rates, but low inflation in those things included in the index, so gold is rising but not at the same crazy pace. And it will continue to rise until we either have outright deflation (the government will not let that happen no matter what the gold price for longer than it takes to figure out how to get new money into the system), or rates rise. If and when rates start a prolonged move up, the deal with gold is over again. But so is real estate. Until then either one is a good bet if you don’t use leverage (which includes a mortgage). The reason you don’t want leverage is that you could be wiped out if the move is rapid. For example, a home owner who owns the house outright, facing a 20% reduction in his house’s market value, looses only 20% even if he has to sell. That same home owner with 80% financing looses all his equity. 100% of what he had. If the market goes down some more, the bank kicks him into the street, whereas our mortgage free example only has to wallow in depression because he’s worth less than before, but he need not worry about whether he has a roof over his head.

#26 LB on 11.17.09 at 1:20 am

Just thinking about the thousands of people whose mortgages have come up for renewal lately at significantly LOWER interest rates. Staying in their houses just became significantly cheaper, so those who may have been considering selling are now staying put. Perhaps this is why there are fewer houses on the market and is why we are seeing price increases in those that are.

Could the plan be to keep interest rates low long term and rely on escalating PRICES to determine eventual unaffordability and curtail purchases – NOT through higher interest rates?

#27 Nostradamus Le Mad Vlad on 11.17.09 at 1:44 am

“. . . in delusional BC. . . . the US dollar was at a 15-month low and the stock market in New York hit a yearly high.”

Well I know I’m delusional, so all is well taken care of there.

Not too long ago, I posted a link which stated that when the US$ rises, the markets will tank.

OK, I’ll bite. Say that happens — the greenback rises mightily and the markets crash, the loonie falls to 80 cents and other currencies head south vs. the greenback.

Other than making mincemeat of Wall St. earnings and other indices, what would happen to de- and inflation (not counting stag- and hyperinflation).

Does inflation become head honcho again? When do mfg. jobs come back? (Hint — they went bye-bye a long time ago, and they ain’t coming back).

As one poster said previously, next July 1 is when the HST kicks in, interest rates start heading north, summer doldrums so anyone trying to flog their place in fall ’10 and on will probably have to drop their prices quite a bit and / or wait several months.
For Greg W. — Fluoride
Two separate sources, but curious how one parrots the other — Mimic 1 and Mimic 2
A new culinary delight! — Spam and Bacon Flavored Furniture

#28 kansai_92 on 11.17.09 at 1:54 am

My circle of of friends, family and associates have all purchased in the past 6 months in Vancouver.

One couple bought a SFH on a small lot for $720K and then put up another $35K in renovations.
They already own a condo downtown. The husband’s financing strategy?
Keep re-financing the condo with 1yr terms at variable.
And of course, rent out the basement in the SFH.
The only way to keep afloat.

His wife says to me confidently that she expects the home to be worth $900K in 2010.

Wow, and all this time I thought the path to financial freedom and wealth was to work hard, save like a bastard, and invest wisely. Turns out, all you have to do is buy some property… any property.

To make matters worse, at social functions, everyone’s looking at me like a leper because we rent.

#29 rp on 11.17.09 at 2:09 am

Geez Garth, are you giving up on seeing a collapse? I think we’ve gone waayyyy too far off the deep end to see a soft landing now. Too much leverage.

#30 Chaostrology on 11.17.09 at 2:23 am

What we are witnesssing, is no less than the fall of the American Empire, in real time.

Yikes, how can it happen so fast?

Time to start asking ourselves, “What’s going to happen to us?”

Could it be that we will be sacrificed on the altar of global capitalism?

Sold out to the lowest bidder?

Addicted to consumerism, wandering aimlessly looking for our next fix. Consumer hookers selling ouselves to the next trick. At every turn losing more of our self respect. Watching our confidence bleed away with each successive cut. Now knowing that someone else is living our destiny. Sickened, disgusted, suicidal.

Can we withstand the take over from with-in?

Can a world war solve this mess?

Is the brainwashing of our culture nearly complete?

In the end what did we amount too?

Will we go quietly to the ovens or will we put up a fight?

Who’s left that we can sell-out?

The light bulb burns brightest just before it burns out.

Where the hell is Batman when you need him?

#31 Ronaldo on 11.17.09 at 2:24 am

FORTY YEARS AGO NEXT MONTH my wife and I purchased our first home. It was December 15/69, 2.5 years after we were married. She was 21, I was 23. We had just paid off our debts and we had $500 in the bank and trying to decide what we should do with this extra cash. We thought of buying a new TV to replace our B&W GE 12″portable but the cost of a new 19″ in a nice cabinet was $1000 so that was out of the question. I was working in Vancouver with a railway at the time making $660 per month which was decent money back then. We were renting a 1 bedroom apt in the West End near Robson and Bute for $132/mo including parking. My boss approached me and told me about some Townhouses that were being built in N.Van just across the 2nd Narrows bridge up from the Coach House Hotel on Lillooet Rd near where the Capilano College is today. So we decided to have a look at them. The one we looked at was a corner unit at 933 Lillooet Rd which had underground parking. 3 bedroom, unfinished basement, 1864 s.f. on two levels. The identical unit as in the link above (935 Lilooet Rd). The asking price was $20,800 and required $3000 down payment and interest at 9 3/8%. Strata fee was $20.66 per month, Mortgage pmt was $151.79 (25 year amortization) and taxes around $180.00 per year. My total payment was $190.00 per month. This worked out to 28.8% of my gross salary. Since I only had $500 to my name, I borrowed the $3000 from my mother and paid her back a month later after taking out a loan from the same bank that I had the mortgage with and told them I needed the money for furniture. No problem. Even with the additional loan we were able to handle the payments quite well. So forty years later what has happened.

The asking price is now $469,900. An increase of 2159%. Not bad.

The same down payment as in 69 (14.4%) would leave a balance of $402,234 to mortgage.

At 9 3/8% the payment would be about $3140 per month (just the interest). The equivalent salary for the job that paid $660 back then would be about $5000 today. So, if interest rates were same as then, this would represent about 75% of that persons salary if you account for the principal payment. A far cry from the 28.8% that I was paying when interest rates were much higher than they are today. We need only go back to April of 1995 to find the same mortgage rates.

In order for the same 28.8% of the equivalent salary of $5000 for my position in 1969 to apply, the value of the condo at 9 3/8% interest could not exceed $153,000.

What does this tell us? Either our interest rates are too low, or the value of the condo is too high.

The other thing is, I did not need my wifes salary to qualify for the mortgage.

Hope you find this of interest Garth. I sure did.

P.S. We bought a fridge and stove with the $500 and we were broke once again but happy. How things have changed.

#32 jungberg on 11.17.09 at 3:36 am

If Boomers do sell their houses in 5 years to buy condos and free up cash, what effect will that have? Will X/Y be trading spaces with Boomers? Net result — minimal change in demand and values?

#33 Blobby on 11.17.09 at 4:22 am

@homeless : (quote): “RE prices would fall!!! I have been reading now more than a year. when”

Well you go out and buy your house.. my guess is – not long after you’ve done just that.

Oh and whie you’re at it.. buy gold.. that just keeps going up and up too!

Oh, and do you want to buy some web company stock off me? Web companies are a sure fire hit nowadays i hear!

#34 Emma on 11.17.09 at 5:12 am

Not to worry Garth, CREA’s “economist” has got it all figured out….


“If we have 10-per cent-unemployment, that means 90 per cent of people are employed,” he said.

Where exactly do they find these guys????

#35 confused and a little crazed on 11.17.09 at 5:21 am

Hi Garth,

Why doesn’t the chinese just use the debt to buy up california and Alaskaa off the US. There is no way the US caan pay off the chinese?

#36 confused and a little crazed on 11.17.09 at 5:47 am

#4 homeless

are u saying re prices are going up or they are going to fall …make up ur mind

#37 NOBODY on 11.17.09 at 6:54 am

One day, the Chinese will rule the world.
First they have to be the #1 military… They are 10-15 years away from that. So for now they can always poke the US where it hurts the most: their wallet.
Not bad for commies, hey?

So let’s all learn mandarin: that’ll keep us busy when our western system collapses along with our economy and we are in the dark as our grid is gone.

P.S. I miss Nikki already

#38 Mikey on 11.17.09 at 7:34 am

Garth,are you changing your tune?

And maybe they’re right. Maybe the housing market will just run out of steam and sit there for a few years.


#39 Kash is King on 11.17.09 at 7:42 am

This appears to be quite timely:

“China quietly introduces new financial system”


And this is interesting:



#40 David Bakody on 11.17.09 at 7:48 am

#2 Nostradamus Le Mad Vlad on 11.16.09 at 9:59 pm

#38 NOBODY on 11.17.09 at 6:54 am

Get ready for War Why>

( who knows, but sooner or later something will happen, 9/11 did as did WW I & II)

Does anyone really think that our American Cousins can continue to kill millions of innocent people around the world and threaten even more and there will not be some kinda mass retaliation. Here in Canada where we were once seen to be better than that, Canadians having money in the bank and a substantial emergency jumped on the Harper go get em cowboy bandwagon for lousy 2% cut in the GST and ONE CENT drop in cup of coffee!

What have we left for children and grandchildren?

Massive Debt …. and a bunch of sticks worth what?

US Debt …… – $ 12,091,390,982,239 @ 19%
Canada’s …… ??????? @ ?????? ask Flaherty for the truth.

#41 Future Expatriate on 11.17.09 at 8:13 am

#38- The Chinese do NOT have to have the #1 military to rule the world. ONE standard nuke on the La Palma volcano in the Canary Islands sends a super-tsunami several hundreds of miles high to the east Coast of the US from the Everglades to Maine, taking out all major cities including the capitol and all military bases. “2012” from border to border. Manhattan and Wall Street? Buh-bye.

And don’t be fooled by disinfo websites put out to keep coastal real estate values intact and public panic.

They could easily do the same to any of a couple Hawaiian volcanoes to wipe out the entire WEST coast.

The question is not IF, it’s WHEN they finally grow tired of supporting the worlds’ bully state, and if that state should be so stupidly suicidal as to nuke Iran.

#42 Nostradamus jr. on 11.17.09 at 8:28 am

Garth’s bunker living alternative may have just earned a double take, second look, hmmmmmm, maybe he’s got something….

Pneumonic Plague hits Ukraine and China?

Is Gold as good as Tungsten?

#43 pjwlk on 11.17.09 at 9:16 am

#4 homeless: “The fact is they are going up and up.”

As someone on this blog once said, the markets can remain irrational a lot longer than the will remain rational.

#44 HouseBuster on 11.17.09 at 9:26 am

Meredith Whitney most bearish in a year and sees an increase of 10% in mortgage rates in the US:

#45 David Bakody on 11.17.09 at 9:36 am

#42 Future Expatriate on 11.17.09 at 8:13 am

Perhaps it is the threat of global destruction that keeps us safe ….. read Helen Caldicott ‘s The 1994 Jacob Bronowski Memorial Lecture …. many US Presidents have had to sit and wait when the big red alarm went off (all have been false and it happens more than it should)…. Why? because we must be 100% sure North American is under attack before the buttons are pushed …. and that means we must take the first hit. It is just that simple.

So pay down debt, save wisely and enjoy life … because everything else is 100% out of your control. Speculating RE 5 years from now let alone 35 is foolish at best under present world conditions.

#46 pjwlk on 11.17.09 at 10:19 am

#7 BD “How do we make a global economy work for everyone with two distinct wage levels?”

We don’t, our wages are going down, third world countries are going up. How can we not have an eventual global equalization of wages?
“CARBON TAX. It is the only fair way” – NOT, have a read of Jeff Rubin’s new book on peak oil. The real purpose of carbon tax is to effectively add a tariff on imports from the countries who emit the most carbon, which coincidentally just happen to have the cheapest labour forces as well, like China and India for example.
Chris Martenson: Great DVD/youtube videos but his calculation for 1 gallon of fuel doing 500 hours of labour is false. I have real-world data that proves, at least in one instance, that the work done is only around 25 hours.

#47 Gord In Vancouver on 11.17.09 at 10:21 am

#23 Not Garth

Bubbles (massive Vancouver type bubbles) don’t just fade into that dark night.

They explode with epic impact.

……..and middle income people always get hit the hardest when they explode.

#48 Again, Again & Again on 11.17.09 at 10:24 am

My goodness, how many times can one repeat the same old war cry that the end of the housing market is upon us.

Let’s face it, the bears completely underestimated the potential resurgence of the market last Spring, and continue to question its strength.

How many YEARS is everyone going to question the strength of the market. Keep questioning it for a few more YEARS and maybe you might see things level off.

All the other “bubbles” around the world expanded and “popped” in a few years, here we are, almost 8 YEARS into a “bubble” and things are still going strong. Rates will remain low for some time (oh right, rates were supposed to be going up for some time due to external pressures – how’s that one working out for you).

Hate to say it, but being in the red is the new black, and the means to wealth. Massive amounts of debt is good. The last 8 YEARS has certainly shown that.

Of course all those patient savers, those that are financially prudent, have really benefited haven’t they during the last 8 years :) Keep swimming against the majority bears, and you will continue to benefit on the same level that you have for the last 8 years :)

#49 miketheengineer on 11.17.09 at 10:38 am

Ukraine Plauge

Worth reposting. Everyone should read.

Guess what is coming to a city near you?

Are you prepared?


#50 miketheengineer on 11.17.09 at 10:40 am

Garth et al:

How many of us can you get in the bunker?


#51 Marie T on 11.17.09 at 10:41 am

What worries me Garth, is — What if our dollar seriously depreciates given our Country’s abysmal economic state?

Couldn’t real estate (a hard asset, after all) then rise further in terms of our depreciating dollars?

#52 pjwlk on 11.17.09 at 10:46 am

#13 Onemorething: One more thing Onemorething… :) . There is a book called Panics Manias and Crashes that gives a historical account of, and explains how our financial cycles work and always have. Since we know it’s NOT different this time, according to the book history shows that there will need to be a trigger event before a massive slide will begin. There are a few economists who currently believe that really high energy prices will be the trigger of our next downward trend. Until then I guess we’ll just have to wait.
I’m kind of in the same boat as #4. I would love to get into some RE at a great value but I’m getting tired/disheartened by the wait (Over 2 years for me) – wondering if it’s ever going to come. Mean while I’m moving as best I can into a cash position in the stock market…

#53 pezzazz on 11.17.09 at 10:46 am

Garth, I love that even some of the blog bears on here are starting to capitulate. That to me is one of the great indicators. I also love the dinner party peer pressure that lingers over peoples heads and how the car ride home is filled with verbal abuse directed at the member of the couple clinging to rental strategy. When this is all over the make up sex is going to be epic.

#54 Finanzkrise on 11.17.09 at 10:48 am

Speaking of running out of steam, how long before the CMHC runs out of steam from supporting the housing bubble at the current breakneck pace? How much longer can the government sustain this?

And how long before the bond market runs out of steam from buying up government debt at ridiculously low yields? Will yields rise slowly, or will there be a full on crash in the bond markets resulting in a wave of defaults?

This can’t end well when the easy credit inevitably slows down…

#55 Soylent Green is People on 11.17.09 at 10:50 am

Journalists may not like the way Prime Minister Stephen Harper slips in and out the back door of the Commons, avoids scrums and news conferences and the like, but it’s working, says the Hill Times.

More discouraging, for fans of openness and transparency, is Tim Naumetz’s observation that the media has been collectively worn down.

Gallery President Helene Buzzetti says the struggle came to be too draining, a distraction from work, and there has only been one tentative exchange with Harper’s new communications director, John Williamson. Nothing has come of it so far.

Outside Ottawa, Harper most often arranges his news conferences at venues packed with party members, who usually applaud his remarks and occasionally express disapproval at reporters’ questions.

Favourable PMO photos of Harper now arrive at media inboxes across the country on almost a daily basis.

Gallery veterans are convinced Soudas has a black list, journalists who won’t be recognized for questions.

Nelson Wiseman, a prominent commentator and political scientist at the University of Toronto, says the press gallery and the media have caved. “Why are you putting up with these shenanigans?” the feisty Wiseman asks. “I thought the media was going to be a bit tougher.”


#56 Downbytheriver on 11.17.09 at 10:53 am

Jim Chanos, the famed short-seller who ‘outed’ Enron’s book-cooking is now apparently trying to short the entire country of China.

Japan’s GDP ‘growth’ this past quarter according to one article, came from deflation growing faster than economic activity.

What I worry about though is that there’s little incentive in the US for these big banks to actually let the economy on main street actually improve since real recovery might mean the punch bown gets taken away.

I can’t figure out why there’s so much US-Dollar doom except that there’s a lot of either Austrian school or neo-classical ideologues who’ve convinced everybody that US debts and ‘money printing’ are out of control even though the money supply has actually shrunk and that every major central bank in the world is doing the exact same thing. I can’t figure out why the Euro is high and European stock exchanges keep skyrocketing except that that’s where all the lending is going.

I have this same feeling in the pit of my stomach that I had in 2007 that this will not end well. And the craziness is even worse now than it was then.

#57 Davinci on 11.17.09 at 10:54 am

“As someone on this blog once said, the markets can remain irrational a lot longer than the will remain rational.”

So true, no one is buying gold except central bankers! Clearly they are irrational since they have a printer.

The longer you take to figure out paper is not wealth and only real goods have value, the bigger the transfer of wealth will occur into real assets.

#58 pjwlk on 11.17.09 at 11:02 am

#26 nonplused: “But, if the government can figure out a way to push the mortgage market down to 0.25% and maybe go to a 50 year amortization, maybe the average price of houses in Canada can go to $1,000,000.”

Or maybe we can all spice up our marriages a little and bring in a third partner with the added bonus of becoming a 3 income family to boot! That will also allow for $1M homes…lol

#59 DaBull on 11.17.09 at 11:13 am

29 kansai_92

Wow, and all this time I thought the path to financial freedom and wealth was to work hard, save like a bastard, and invest wisely. Turns out, all you have to do is buy some property… any property.

1. Work Hard. They are must be working hard to afford that payment on a $720k mortgage.

2. Save like a bastard. They did that too. It would take $36k just for a 5% downpayment on a 720K mortgage. Plus they spent $35K on reno’s, so that makes $71K they must have saved up some where.

3. Invest wisely. They bought a house with the expectation of a rising value. Isn’t that what investing is all about? Buying something with the expectation of a rising value.

So in the end they more or less are following your guidelines but you think thats wrong only because they have invested in Real Estate. Make up you mind man… They are doing just what you would do only with a different asset.

PS: I know you are hoping and praying that your friends fail so you can say I told you so (don’t know how can call them friends when you despise them so much). There is only one problem though, no one knows the future, you can only guess at it at best. So if your friends and associates are right, in your mind your going to look even more like a leper than you are now (I think the only person who thinks you are a leper is you, because you definitely have an inferiority complex by what you posted) . But if your right, your friends and associates will most likely still treat you like the leper you think you are. Why? Because you will turn into an even bigger arrogant condescending smug little arse than you are now and I doubt anyone will want to be around you. With friends like you, who needs enemies.

#60 Jim on 11.17.09 at 11:47 am

Now you are saying that maybe the housing market will stagnate for a few years? Are you slowly changing your tune? You have been arguing for a severe correction, yet prices continue to escalate. You have shown reasons why housing is overvalued and now you admit there is a possibility that we won’t see a large correction and it will just stagnate?


A correction will still occur. But if central banks insist on allowing a bubble to continue with artificially-low rates, the inevitable outcome may vary in intensity and speed. Ask Mark Carney. — Garth

#61 Robert1 on 11.17.09 at 11:47 am

” Strong earthquake strikes off coast of B.C.: reports ”

Read more:


Grab yer life jacket Nostradamus Jr. Dem “bubbles” you see is the mighty Pacific washing Vancouver real estate down Granville.

#62 Mike B formerly just Mike on 11.17.09 at 12:07 pm

In my opinion the economy is really not improving by any great degree… if at all… The big problem out there is the scariness from the cost of gold. This is not a good sign or a sign of improving economy. The big guys know something. Perhaps January will be a blood bath.
As for the housing market. Any listings I get here in Toronto are often Sold Conditional well before I even get the listing. And some of this stuff is junk to say the least… Who’s buying? Dunno…
Most of my economics friends think this is just like Japan… a slow muddling economy which is propped up by the government. Really nothing has changed except that our banks around the world are still liquid but some of the US ones are truly insolvent.. Truthfully the entire US is INSOLVENT… China to the rescue…MAYBE

#63 tech4monkies on 11.17.09 at 12:07 pm

OK, I am impressed with CBC News this morning. They even quoted Mr. Turner.

“Rapid rebound fuels fears of housing bubble”

#64 Calgary Fools on 11.17.09 at 12:09 pm

Nice post Garth. Im priced out now forever in Calgary now eh?

So as a renter I get to look forward to Ukraine flu, low interest rates, lots of traffic and business people predicting the endtimes?

Nah. I’ll endure the present with my friends, family and electric guitar, left handed, I might add.

#65 Evangeline on 11.17.09 at 12:11 pm

((I do not think the US government is really planning to abandon their currency, no matter the crazy talk about a dollar collapse. Decline maybe, collapse, no.))

George Soros recently gave a series of lectures in Europe … I listened to one of them posted online. He is gunning for a global currency and talked a lot about the world economies needing to be ‘balanced’ … then I read one of 0’s speeches in China and he is talking the exact same language as Soros, ommitting only talk of a global currency because if he did that he would be crucified back home.

The ‘balance’ they want is to have other currencies go up and the USD go down …. currencies at par value to each other set the stage for a global currency. That is the endgame.

#66 Some Guy. on 11.17.09 at 12:27 pm

Why always a blue suit and yellow tie?

I’m a Macaw. — Garth

#67 jess on 11.17.09 at 12:34 pm

mike the engineer

Pandemic (H1N1) 2009, Ukraine – update 2
17 November 2009 — Preliminary tests reveal no significant changes in the pandemic (H1N1) 2009 virus based on investigations of samples taken from patients in Ukraine. Analyses are being performed by two WHO influenza collaborating centres as part of the global influenza surveillance network

#68 CM on 11.17.09 at 12:51 pm

Watched Bubble Never Pops writes…

“Crashes never happen when articles about ‘bubbles’ appear in the national media.”

Interesting you mention that, because I was curious myself as to whether or not the bubble talk in mainstream media in Canada could have an effect or not.

If we do a search for ‘housing bubble’ in the Google News Archive, you can generate a graph showing when the peak number of news articles about this topic occurred in the USA…

The peak was summer of 2005.

and I think if I remember correctly, the Case-Shiller index shows that the bubble burst in second quarter of 2006, about 8 or 9 months later.

#69 Peter @ Canadian Banks on 11.17.09 at 12:57 pm

#19 Watched Bubble Never Pops

On a contrary the sentiment is VERY BULISH, just look at the sales numbers and the average prices climbing. Prices and sales DO NOT explode when the sentiment is bearish. It really doesn’t matter if the crash will happen now, in 3 months or in a year. People who bought with lots of leverage in the last 5 years will be wiped out.

#70 Munch on 11.17.09 at 1:07 pm

Just a couple more taunting bullz, then KABOOM! the Bubble Gods will open the trapdoor and press the Global reset button {courtesy someone here who posted earlier}


End of rant, thanlks for listening :o)

#71 CM on 11.17.09 at 1:09 pm

Kind of interesting to read some of these news articles from summer of 2005 in the USA…

Google News Archive Search (2005) for ‘Housing Bubble’


“There’s no national bubble. You have to have a huge deflationary scenario to make a national bubble make any sense. The Fed isn’t going to lose control of the money supply and take us back into a very significant deflation and cause a collapse in housing prices. “

#72 David on 11.17.09 at 1:40 pm

As I said a few months ago,

The FIRST REACTION to plummeting interest rates are asset price bubbles. Simpletons can’t think that they owe $700,000 dollars, they can only think about owing $2500 a month at these interest rates.

The Second Reaction is either
A. Increase in interest rates
B. Increase in inflation as money is printed to keep rates low

Now, A is obvious…all the lemmings get CRUSHED, and fast. However, we are all now WAY TOO FAR IN DEBT to ever think option A will be choosen.

So, B…the cost of essentials which are NOT in surplus supply (food, energy) go up, as wages stagnate. Eventually, SLOWLY, people’s falling income are squeezed tighter and tighter by higher food and energy costs, leading to a cutback in consumer discretionary spending, more job losses, and a slow, constant bleed in housing prices.

So, as always, politicians have voted for Long Term Pain, for Short Term Gain.

This time egged on by Boomers fearful of a decline in their million dollar real estate portfolio.

So, relax. There will be no hard, fast crash. It will be a long, slow, grinding descent that will affect a generation. Option B will be taken, not Option A.

#73 Soju on 11.17.09 at 1:47 pm

All I can share for insight for today is that we still haven’t reached our previous peak concerning RE prices and today interest rates are lower than at that period. Does that mean we’re running-up to a new high?

#74 jess on 11.17.09 at 1:56 pm

America’s hedonic pleasures

Wages are measured in relation to price indices, but price indices are not as straightforward as they may seem. “Hedonic” pricing methods, used to translate quality improvements in products into price declines even if the actual prices are climbing, are effectively artificially inflating individual and national wealth.

An example: Automobiles that now sell for $30,000 used to sell for $10,000, but the inflation rate of automobiles is registered as declining because cars are technically more sophisticated. The consumer is supposed to be getting more “car” per dollar; nevermind that $10,000 won’t buy anyone a car any more. Rents for apartments are registered as declining even when rent payments rise, because renters get air-conditioning, marble bathrooms granite kitchens and high rise views.
The takeaway? Prices can rise — with no inflation. Hedonic pricing keeps wage earners from enjoying any hedonic pleasure with their stagnant wages, because in reality wages are falling faster than prices of goods. So that iPhone may look like a deal, but only if you don’t do the math and figure out how many work hours it now takes to pay for one.

As this measuring technique is being extended to a growing number of goods, it has become an important factor in reducing the US inflation rate, and intrinsically raises nominal GDP growth while the real GDP may actually decline. But its overall effect on monitoring the economy is kept secret from the public. The hedonic price adjustments for computer hardware and software alone went a long way to explain US growth and productivity “miracles” of the past decade. …continued

#75 pbrasseur on 11.17.09 at 2:07 pm

“A correction will still occur. But if central banks insist on allowing a bubble to continue with artificially-low rates, the inevitable outcome may vary in intensity and speed. Ask Mark Carney. — Garth”

Didn’t you say recently that rising public debt (and competition to obtain financing) would cause mortgage rates to rise despite the central banks best efforts?

Fact is (with all due respect) you just don’t know.

The only thing we know for sure is that this market is unsustainable and unbalanced. However predicting how the markets will react and how long it’s going to take is a totally different game. For all I know this bubble could continue for years (but I doubt it)

#76 Betamax on 11.17.09 at 2:08 pm

#60 DaBull – thanks for the ironic lecture on morality, but it’s all about economics. What can’t be sustained won’t, later or soon.

#77 David Bakody on 11.17.09 at 2:17 pm

Would it not fair to say: The longer Harper & Co ( Mark Carney & Jim Flaherty) allow interest rates to remain low the more foolish people will be led into the RE/Debt bubble? Having said that any Canadian must know Mr. Harper’s prime concern above even the welfare of the working class is a majority government. So:

a) He must keep rates low regardless because raising rates and going to polls is suicide

b) Once he has his majority he can once again snowball taxpayers by spinning the reasons for higher rates and taxes

c) Mr. Harper will then be able to slash and burn years of social programs and benefits thereby setting the stage for the private business sector to likewise, and

d) Mission accomplished a New Reform Canada.

What does this have to do with housing and person debt, everything because the majority of Canadians have all there wealth in their home and many more have mortgaged their children’s future in RE with no where to go. Thus becoming beholding on Harper’s Ottawa for existence. And they never saw it coming and it is almost a done deal.

#78 $fromA$ia on 11.17.09 at 2:20 pm

Guys , theres just too much printed money out there to fail.

The banks and Corporations are just to big to fail.

Looks like it’s our money thats going to fail, got $?

Money savers are losers. Debased dollars inflating and reflating economy. May Day May Day.

Gold $1140/ounce in a deflationary environment???

Not the GOLD fault, its our currencies, not just USD but all stimulous countries. Canada’s printed more stimulous proportionately, compared to the US.

#79 Josh on 11.17.09 at 2:27 pm

As I said in an earlier post, cut off trade with China! An import tax equivalent to what the yuan should really be at is in order and should be instituted immediately on anything coming from china. Furthermore, no raw materials should leave our borders without value-added processing. I don’t care where it’s going.

#80 kabloona on 11.17.09 at 2:43 pm

CM #68 and #71: nice posts, thanks….. ;-)

#81 Niergen on 11.17.09 at 2:45 pm

China to resure is a joke. If you understand how can a Chinese apply a mortgage you will agree with me.

A person in China without any income can still be qualified for mortgage if he/she has 5 relatives to co-sign the mortgage contract. But for most Chinese, to co-sign such contract document does not mean libiality. Who cares?

China to have a war with any country is a joke too. Reason? See above how do a common Chinese sign a contract with no liability in mind.

#82 Niergen on 11.17.09 at 2:50 pm

typo of my last post
resure – rescue
libiality – liability

#83 Kate on 11.17.09 at 3:31 pm

Crash or no crash, the main thing is I cannot afford the house I want. If crash happens, I am a winner with cash and will buy. If it doesn’t, I am still living within my means and w/out debt. Apart from RE, there are other things in life.

#84 Ken on 11.17.09 at 3:34 pm

The society suffers from plain greed to a great lack of resonsibility and realism.

#85 jess on 11.17.09 at 3:55 pm

Unidentified Toronto-based real estate company buys Pontiac stadium for $583,000

The 80,000-seat Silverdome built in 1975 for $55.7m 127-acre plot

#86 BAD on 11.17.09 at 4:15 pm

Smart dudes:

China, soon to become the world’s second-largest economy, has also become increasingly outspoken in criticizing the U.S. for what it calls trade protectionism. Indeed, even as Obama was arriving in Beijing from Shanghai, China’s commerce ministry was taking the U.S. to task for backsliding on economic openness. “We’ve always known the U.S. and the West as free-market economies. But now we’re seeing a protectionist side,” said Commerce Ministry spokesman Yao Jian, citing 10 separate trade actions, including those against steel pipes and auto tires, that Washington has taken against Beijing this year. Yao also criticized continuing U.S. restrictions on high-tech exports to China.

Obama’s China Visit Yields Little Progress

Free-market economies of the West are being smartly strangled by the Chinese monetary policy. While “protectionism” is a dirty word “currency pegging” does not have the same connotation, yet it’s the broadest possible protectionist weapon.

Let us guess who is wielding power in these talks…

Dudes spin:

Hu Yafei, one of China’s vice foreign ministers, defended China’s exchange rate policy. “In the process of tackling the financial crisis, keeping the RMB stable not only was a contribution to fighting the crisis but also helped stabilise global financial markets,” he said.

In recent days, several senior Chinese officials have criticised the US Federal Reserve, arguing that loose monetary policy in the US was creating bubbles in asset prices and endangering the global recovery. Yu Yongding, a researcher at one of China’s leading government think-tanks and a former member of the central bank monetary committee, said on Tuesday that Europe and China “should play together and put pressure on the US to change its monetary policy”. China and much of the world was being held “hostage” by US monetary policy, he said.

US urges China to strengthen renminbi

So… whose monetary policy is holding hostage whom?

#87 BAD on 11.17.09 at 4:31 pm

Meanwhile on the home turf:

Despite warnings from some bankers that consumers should be prudent when taking on household debt, Canadians are gaining a healthier appetite for risk and taking on longer-term mortgages.

A survey released Monday by the Canadian Association of Accredited Mortgage Professionals shows 18 per cent of mortgages are long-term, compared with 16 per cent a year earlier and 9 per cent in 2007.

Mortgage debt soars in Canada

Everything’s fine, just be prudent, eh?

#88 Too Old Bob$ on 11.17.09 at 4:56 pm

“#67 Some Guy. on 11.17.09 at 12:27 pm
Why always a blue suit and yellow tie?”

Blue conveys importance and confidence without being somber or sinister, hence the blue power suit of the corporate world and the blue uniforms of police officers. Long considered a corporate color, blue, especially darker blue, is associated with intelligence, stability, unity, and conservatism.

Yellow is the color of sunshine. It’s associated with joy, happiness, intellect, and energy. By wearing a yellow tie it means I am a positive person and full of energy. I am not a quitter and I will finish what I started. I am also an intelligent person. It can also mean caution, warning, tread lightly and the most important feature is that Aphids love yellow. ;)

#89 Too Old Bob$ on 11.17.09 at 5:00 pm

“#60 DaBull on 11.17.09 at 11:13 am”

That was quite a funny response you had to that person.

Maybe you should call yourself: “DaBully”

#90 Bill-Muskoka (NAM) on 11.17.09 at 5:17 pm

Oh OH! 2 earthquakes hit B.C.’s coast

That should ‘shake up’ the RE market?

#91 Bill-Muskoka (NAM) on 11.17.09 at 5:26 pm

#75 jess on 11.17.09 at 1:56 pm

America’s hedonic pleasures

If you check I believe you will find it is ‘hedonistic’.

The old Epicurean and Hedonistic cultures are thriving today, and known as Gluttonous Gourmets and Wimps.

#92 Those were the days my friend on 11.17.09 at 5:45 pm

#32 Ronaldo on 11.17.09 at 2:24 am

P.S. We bought a fridge and stove with the $500 and we were broke once again but happy. How things have changed.

They sure have. Now you buy a fridge/stove/washer/dryer/hot water tank/whatever and they’re all made in China (or major parts) and before or after 5-7 years they’ll need major repairs or replacement. We talked about planned obsolesense (sp?) back in the 80’s. Now we’re just in a totally throw away society.

#93 Ken on 11.17.09 at 5:48 pm

It seems like most of the population wants to get wealthy without working for it eg your residence or the market.What happened to working for your money and save.If we wish to return to sanity that will be the new/old philosophy.

#94 kansai_92 on 11.17.09 at 6:02 pm

#60 DaBull,

You don’t know shit about me. But calling me condescending and smug already tells me a lot about you.
If you troll some of the other RE sites, then you’d know I already own properties, so I don’t really give a rats ass if prices go up or down.
If they go down, I buy more.
Ya I rent my PR. Got a problem with that?

If your friends want to go down Niagra Falls in a barrel, do you think they will survive? No.
At the same time, do you wish them to survive? Yes.

Break it up, girls. — Garth

#95 Evangeline on 11.17.09 at 6:05 pm

#76 pbrasseur

just curious … do you think a global currency would be a good idea?

#96 Niergen on 11.17.09 at 6:51 pm

I don’t understand how will it be beneficial to increase RENMINBI value to Canadian consumers in short term.
For Chinese consumers, it does not matter either because Chinese buy using their currency. Not like 20 or 30 years ago, Chinese liked to buy imported stuff – cars, tv, comperter – made in Japan, USA, whatever country. Now, Chinese make everything, anything. Only Chinese government needs to buy from other countries – high end cars, aircrafts, weapons, etc.
So how will strong Renminbi be beneficial to Canadian consumers?

#97 Dan on 11.17.09 at 6:56 pm

Bad # 88
“Canadians are gaining a healthier appetite for risk and taking on longer-term mortgages.”

Wow…… big debt = financially healthy

war = peace
debt = rich

The year is 1984…………scary.

#98 Vancouver_Bear on 11.17.09 at 6:59 pm

CMHC needs to review policies

#99 Soju on 11.17.09 at 7:16 pm


Work hard and save and then what? I thought you were suppose to make those savings work hard for you? Imagine… In the past people could rely on saving 10% of their income with the expected 10% return to retire properly. Now Canadian bonds are giving you 1.5% return. Better start saving 30% or more of your income now to retire properly. Then add you rent, food, clothing… Wow, It’s the highlife alright!

#100 Grey on 11.17.09 at 7:27 pm

Garth, you’ve got a ‘fan’ club building in the comments section of this article:

#101 Sid on 11.17.09 at 7:32 pm

Garth, what’s your take on duplexes and fourplexes in Hamilton with good returns (about 7% when purchased mortgage free, excluding expenses)? If interest rates go up to 10%, could that somehow lead to rents decreasing?

#102 Nostradamus Le Mad Vlad on 11.17.09 at 7:34 pm

#41 David Bakody — Thanks for the link. David.

It’s easy to figure out that with the karmic pace of time having greatly sped up, with individuals / govts. having to live with the consequences of their choices so quickly now, soon there will a blinding flash somewhere, and only that flash will stop reasonably-minded people into what has been unleashed.

We have to live with what we caused ourselves.
My my Mai Tai cocktails. Now there are tungsten
-filled ‘quakes happening off the Queen Charlotte Islands. Shake, rattle and roll!

#89 Too Old Bob$ and #96 Evangeline — “. . . the blue uniforms of police officers. . . . do you think a global currency would be a good idea?”

Speaking of the local constabulary and a one world currency, see the 4:17 clip (especially the last part), and note the new tech-tools police have to work with.

As far as a global currency, that is one of the main reasons the planet’s finances are so presently screwed up.

The NWO (the elite, consisting of the Bilderberg Group, the Rothschilds, the Rockefellers and a few others) is what they are driving for, and to hell with anyone who gets in the way. Human collateral, remember?

Unlikely if they will succeed, ‘tho — too many independent-minded countries / individuals who are currently in power, and they will never concede to another’s demands.

Some of you may have seen this. For those that haven’t, it’s a 4:17 clip of new technology (starts about 14 seconds in). Last part is very clear as to where we’re headed — here.

#103 jess on 11.17.09 at 7:36 pm

OTTAWA — Unpaid child and spousal support now tops $2.5 billion across the country, according to a Statistics Canada survey released Tuesday.

The unpaid support has risen by about $50 million each year since 2004. The $2.5 billion figure is now equivalent to the cost of funding the Conservative government’s Universal Child Care Benefit program.

The arrears have steadily accumulated over years, said Statistics Canada analyst Paul Robinson.

#104 Downsized and Delighted on 11.17.09 at 7:42 pm

So everyone is waiting for the bubble to burst? Well it already has. It burst around last December. Trouble is, some of the market has come back (the part all of you are interested in – the cheapest part). But the high end stuff is not moving. High end is definitely a buyers’ market. Same is true of descretionary property like cottages.

Problem is – no one here is interested in the high end stuff. You all want the same thing – the $400,000-$500,000 perfect house. But there lies the problem. There is a huge demand for this house, and there always will be. The market may slow down, but it will never crash and burn for this type of property (or the lowest price house in any good neighborhood).

#105 CM on 11.17.09 at 8:18 pm

^^^ new arrears data from CBA posted today. Up to 0.67% for Alberta (Sep 2009)

Food Banks See Surge In Demand

#106 Gonzo on 11.17.09 at 9:01 pm

The urge to buy is always hardest to resist when everybody else is doing it. This is why we herd, and why bubbles form and burst.
I also love all the arguments that say prices won’t go down, will never go down for mid-range houses, etc… People — LOOK AT THE U.S.!!!!! Everything is falling. Apart from a bit more maple syrup and a few less guns, we’re not THAT different. Even monkeys learn to not touch red button when their monkey friends are touching it and getting burned (I’m not sure if this is true, but it should be).

#107 ontheshoreline on 11.17.09 at 9:14 pm

My local credit union has raised its 1 year gic rates from

1.25 to 1.50…heee hah.

does this indicate a bottom in interest rates?

#108 Future Expatriate on 11.17.09 at 9:32 pm

Hmmm… wonder what they’re planning for?

Urban camo uniforms

Shades of Amerika…

#109 Piccaso on 11.17.09 at 10:09 pm

We have an economy built on bubbles. Now it’s Debt Bonds and the Stock Market. Easy money makes a bubble blow up somewhere and that is how they want it. Real Estate and lending are in deflation in the U.S. so have to pump up something. Completely Disingenuious remarks by Treasury Sec. “want a strong dollar” or “strong dollar in best interest of U.S.” and Fed saying it has not been responsible for the asset bubbles and now the markets are not out of balance. It is obvious they are saying one thing and playing their games the opposite. Funny thing is, every one knows it but has no choice but to wink and play along.

#110 Calgary_rip_off on 11.17.09 at 10:18 pm

#107 Gonzo:

Yah sure. However, its pretty difficult getting a down payment in Calgary when your rent is close to $2K a month. So even though I would buy if I could, I dont have the cash flow. There are many though that do have the cash flow and continue to buy like idiots at the top of the cycle. I dont envy whoever these people are, cause there will always be people better and worse off than you in every single avenue of life.

It doesnt look like things are falling apart in Calgary. Its more like a constipated state, with things moving slowly. That’s a given in a farming province. Things move slowly and this gives people time to really think things through. That way they have sufficient time to forget about all the fiascos that were caused by the idiot Harper government and right wing whackos come poll time. The housing market has yet to receive help from the Bank of Canada to remove the blockage and get things moving again. Harper will likely address Alberta in the French language the next time he speaks here regarding what’s happening.

Kate #84 sums up the current(since 2005) crap happening in Calgary(and likely to continue-forever) nicely.

What people should be worrying about more is not having a heart attack or stroke and waking up dead because things are moving slowly regarding Canadian housing.

#111 Gord In Vancouver on 11.17.09 at 10:30 pm

#106 CM

Food Banks See Surge In Demand

…..and donations are down while real estate sales rocket.

Schmidt said the problem is exacerbated because demand for food bank supplies is increasing at a time when donations from business and individuals are falling off.

So much for the “kind and compassionate” image that Canadians used to have.

#112 vic on 11.17.09 at 10:34 pm

Garth. Remax is hiring..wanna send your resume?

#113 DaBull on 11.18.09 at 1:02 am

#95 kansai_92

I’ll scratch you eyes out….. Biaaaatch. LOL.

#114 pbrasseur on 11.18.09 at 7:46 am

#96 Evangeline

“just curious … do you think a global currency would be a good idea?”

I doubt that would be a good idea.

Because it is based on trust a fiat currency must be backed by a strong, democratic, reliable and reputable (etc…) organization such as the US government. This would be pretty near impossible to do internationaly.

Just look how difficult it is for Europe with the Euro. That overvalued currency is killing Spain and other European economies yet they can’t do anything about it, and the central authority that manages the Euro does not have the powers to transfert wealth to soften the problem.

#115 Evangeline on 11.18.09 at 9:36 am


thank you for your thoughts … a global currency is something that I ‘feel’ is wrong but don’t know exactly why I feel that way. I have been on a tear lately researching everything I can about currencies, monetary policy, etc.

what if there were a return to a gold standard? I watched a recent video of Larry Kudlow (who is very critical of of letting the USD dollar tank) where he said the world is already turning to a de facto gold standard (central banks buying lots of gold)

there is also the question of whether the U.S. is virtually insolvent due to its massive debt etc. and does the devaulation of the dollar reflect reality

#116 Bill-Muskoka (NAM) on 11.18.09 at 10:41 am

#103 Nostradamus Le Mad Vlad

The Tungsten article will soon turn into a fissionable material when the word becomes more wide spread.

I bet all the Gold aficionados here just wet their britches?

#117 pbrasseur on 11.18.09 at 11:52 am

The US is no more insolvent than other nations, in fact it is probaly less (especially if you look at the real debt as opposed to the debt that includes future liabilities such as social security that are not calculated elsewhere, of course the medias mostly prefer the big scary numbers…). US debt to GDP ratio is more or less equivalent to Europe but its productivity is higher, taxes are lower and the demography is healthier. As for individuals, saving rates are up, a new and positive development and americans still control about 25% of the world assets…. I’d say bankruptcy is pretty unlikely and many other nations could head for trouble much sooner. At the worse of this crisis the USD was seen as a refuge, there’s a reason for that.

Gold standard is a nice idea indeed, only in a perfect world where there are no crisis, no market manipulation and no gross government intervention in the economy…

If there are crisis however the gold standard can become a very rigid scheme which can force you to restrict the money supply at the worse possible moment. In fatc the first country to get out the the great depression was Great-Britain after they gave up the gold standard.

That being said I would hope governments would start acting more responsibly and limit their interventions to prop up easy credit.

#118 Evangeline on 11.18.09 at 2:37 pm


Your perspective makes a lot of sense. I hope you will keep contributing to Garth’s blog


#119 David Gurvey on 11.19.09 at 8:16 am

It is always interesting to hear a “fall of the cliff prediction” but without timing…Sure, there will be a downdraft in real estate pricing in the future….but does that mean the house you buy today at $400,000 will fall to $250,000 or, the house you buy today for $400,000 will top out at $600,000 and then fall back to $400,000….Mr. Turner is a dangerous individual who accurately predicts the future….without any responsibilty due to lack of predicting timing…There are several fundamental reasons why real estate will rise into the near future…building costs are rising, and the BOC needs an accomadative monetary policy to spur a bit of inflation…This inflation will cause real estate prices to rise…causing price protection from those currently entering the market place..wages will start to rise in advance of rising interest rates, pushing up affordabilty…and, many canadians are taking 10 year mortgages at todays rates…Eventually rates will rise to a point where they push down pricing…as always…and the economic cycle will start again

There will be no inflationary increase without higher borrowing costs, for many reasons related to monetary policy and the bond market previously discussed here. The BoC is helpless to set its own rates independently of the Fed, since any country which is adding public debt at a record rate surrenders many policy decisions to the marketplace. No asset rises forever, and certainly not past the ability of purchasers to acquire it. All today’s sustained low rates are really doing is borrowing future demand. That’s why the future’s looking empty. Is that not obvious? — Garth the Dangerous