We’re different

Over the last few days I’ve terrorized Vancouver, the Okanagan, Kamloops and Saskatoon. Soon I will savage the Annapolis Valley, Halifax and the South Shore of Nova Scotia, then plow another furrow through the Lower Mainland, and onto Calgary and into godless Toronto on November 9th. I’m like a pestilence. A hairy plague with a message.

At least that’s how some see it. In Vancouver some media wiseacres declared me ‘patently wrong.’ The mighty Kamloops daily called me a ‘merchant of gloom.’ And I noticed a piece in the Toronto Star as I started by current scorched-earth tour cautioning, ‘Don’t listen to the doomsayers on housing.’

Obviously a lot of people have a tough time understanding what’s happening to our economy or our society. Poor suckers. Many of them, like business journalist David Olive, are wrinkly Boomers who measure human happiness by lot width and postal code. Despite all that has happened to real estate in the US, Britain (now entering a housing double dip), Spain, France, Greece, Australia (soon, mates) and others, these pathetic economic fossils think Canada is different.

I mention Olive, because a slew of readers here sent me his piece of a few days ago on how stupid Americans can lose their middle class to voracious real estate, but why it will never happen here. These are his four big points. Try not to wet yourself.

1. The US is unique. Because wages rose slowly, Americans borrowed against their houses excessively. That caused the problem.
2. We had no housing boom because ‘strict Canadian lending standards kept exuberance in check.’
3. There is no comparison between the countries because their market collapsed and ours is inching lower.
4. Toronto is different, “routinely scoring among the top five world cities in quality of life. It’s in the midst of a second population boom in four decades, and in recent years has been among the fastest-growing cities on the continent.”

Hmm. Perhaps your parents, GF or house-lusting spouse has been making similar arguments with a persistence that makes you dream about the long-gun registry. Whadda you say in response?

Well, try this. First, the US and Canada are hardly unique, but share more characteristics than almost any other two countries. This includes loving house porn, living beyond our means and having central bankers stupid enough to crash interest rates to manipulate spending with borrowers myopic enough to comply.

So the housing crisis down there was not caused by stagnating wages and desperate families borrowing against their homes to afford medical premiums for dying children. American real estate exploded in value after Nine Eleven when the Fed slashed rates to prevent recession and was too slow to raise them again. Greed and equity ran rampant. A credit explosion shot house values higher and to keep the party going lenders lowered borrowing standards once prices had punted – until prices went higher still and gravity took over.

This is exactly what’s taken place in Canada – mortgage costs dropped to encourage borrowing. Excessive credit goosed prices through bidding wars and the antics of rapacious realtors and vendors. Loans given to anyone with a pulse and a pen. And bubblicious prices in our major cities – Toronto, Calgary, Vancouver and even the flat bits, like The Peg and Saskatoon.

And as for those strict Canadian standards for mortgage lending, would that include the teaser interest rates destined to reset higher with unknown consequences? How about selling houses to young couples without money who needed 95% financing? Or those cash-back bank mortgages which gave the kids downpayment money even if they lacked the 5%? Or Ottawa’s dangerous dalliance with 0%-down, 40-year mortgages? Or CMHC encouraging reckless lending by wiping away the banks’ risk? Or self-recognition mortgages which didn’t require proof of income? Is this what David means?

Thank God we’re Canadian.

Now why is the US market haemorrhaging, while ours only piddles? Just wait.

Finally, is Toronto different? Or Vancouver, Calgary, Ottawa, Winnipeg?

Well, last I heard San Francisco, New York, or Chicago were pretty dynamic places to live, with robust populations, lots of immigration, technological advance and comparable incomes to ours. They even have scenery and the Internet, I hear. But speaking of quality of life, American families pay at least 50% less on average than we do for shelter, plus score low-cost mortgages locked in for 30 years and the ability to write off loan interest. That sure helps afford the rest of your life when you’re not shovelling 50% of your net earnings into a house in Toronto, or 70% in Vancouver.

So, what exactly is the Canadian advantage?

Naïveté. It’s so sweet. So virginal.

Yummy.

204 comments ↓

#1 DD on 09.21.10 at 7:38 pm

Red Deer, Alberta…land of bad restaurants and steel testicles…increase in listings, decrease in sales…slow decline in prices…just as predicted – keep it up Garth.

Steel? I’m impressed. — Garth

#2 BrianT on 09.21.10 at 7:41 pm

I remember the comments about the South Florida/Miami area circa 2004-basically it was a new paradigm and prices would steadily rise forever-the arguments were eerily similar to these Toronto/Vancouver quality of life/world class labels thrown around.

#3 Boombust on 09.21.10 at 7:44 pm

Well, I wish things would get underway sooner rather than later.

People I have “counselled” are getting tired of the sticky downward prices in the GVRD.

Some of the owners of real-life shitholes are STILL sitting at last Spring’s prices. They’re not getting it that it’s over and that it’s time to lower their prices.

More. Much more.

#4 Peter Pan on 09.21.10 at 7:45 pm

Toronto truly is a village and without David Olive, it wouldn’t have an idiot. Being the Business Columnist at The Toronto (Red) Star means you think only 4 out of the Big 5 Banks should be nationalized.

“Business Columnist” and “Toronto Star” are nearly oxymorons.

His grasp of economic reality is tenuous at best.

#5 Peter Pan on 09.21.10 at 7:49 pm

Further proof of conclusion above… Olive says…

“The current U.S. (real estate) spectacle is unique.”

———————-
Tell that to homeowner in the UK, Ireland and Spain…

#6 Debtfree on 09.21.10 at 7:51 pm

Does david olive call himself a business journalist or did some one else ? If he himself believes what he is saying he is as stupid as one can be . His bs is neither business nor journalism but then they call the talking heads on tv by the same anon …shameful .

#7 Jsan on 09.21.10 at 7:54 pm

“2. We had no housing boom because ‘strict Canadian lending standards kept exuberance in check.”

=====================================

It blows me away how so many naive people in this country like David Olive think that passing over Half a Trillion dollars, I repeat TRILLION dollars of mortgage risk from the banks and placing it on the tax payers of this country all the while handing out loans to people for up to 11.5X household earnings is sound banking? I mean seriously, how out of touch with reality are these people?? Something like this is dangerous enough if it were happening during a period of higher interest rates. When you throw in the fact that this is happening at a time of Century low “emergency” level rates this is an impending disaster. There is virtually no room for rates to go down but all of the room in the world for them to go up. If/when this happens, you can flat out guarantee that the bankruptcy costs to the tax payers would be in the Tens of Billions almost overnight.

http://www.thestar.com/opinion/editorialopinion/article/816200–cmhc-canada-s-very-own-ticking-economic-time-bomb

.

#8 Nostradamus Le Mad Vlad on 09.21.10 at 7:57 pm


“I’m like a pestilence. A hairy plague with a message.” — So that’s why H-F-C got rid of you!

“. . . these pathetic economic fossils . . . Try not to wet yourself. . . living beyond our means and having central bankers stupid enough to crash interest rates to manipulate spending with borrowers myopic enough to comply.”

So central bankers were manipulating spending in order to put us into the poorhouse. They certainly have done a magnificent job of that, along with sending the bulk of our mfg., industries and high tech jobs overseas to much lower-paying jobs.

No doubt it will continue.
*
#164 Charty on 09.21.10 at 6:07 pm — (From prior post) — “Anyone know where to get the federal spending numbers for Canada?” Scroll down and see links on left.

The Vatican Is this what orthodox religions are for, to fleece their members and have sexual abuse cases against them? Plus this.

US Debt “The actual figure of the US’ national debt is much higher than the official sum of $US13.4 trillion ($14.3 trillion) given by the Congressional Budget Office, according to analysts cited on Sunday by the New York Post.”

2:57 clip Interesting, as yesterday wrh.com had a report on wages being paid directly to the govt., then would send the leftovers to the worker. Now the US.

Tell the truth and get fired!

Stockwell Day is ready to spend millions on prisons here (what for — internment camps?), and the US is already doing the same.

Are sheeple getting into the nose hairs of the elite? Good! Rip them out!

Housing Sherman Oaks is falling faster than Warp Factor Nine. On the other hand . . .

Silly Billies ‘Of course, we’ve fallen behind: the economy is in meltdown, and infrastructure is crumbling and falling apart.” wrh.com.

Sanctions against China? It will explode right in their faces. Plus this.

Global Tax GW failed. “Government is what makes us poor. End government and you end poverty!” wrh.com.

Good News for us against Monsanto.

Soviet Union The new version is America. If Harper and his gang are allowed the freedom, they will do the same with us.

#9 DavidL on 09.21.10 at 8:00 pm

I’m looking forward to your visit to Victoria on October 13th. In the land of the “newly wed and nearly dead” you’ll find many boomers and genX-ers still in denial and the occasional new owner wondering how they will ever get out of the real estate mess that they find themselves in.

#10 Taipan on 09.21.10 at 8:23 pm

Think it wont happen in Canada?

Garth quite rightly says the australian housing bubble is about to burst.

This from yesterday.

“Within 24 hours of being appointed by HSBC as chief economist for Australia and New Zealand, former senior Reserve Bank economist Paul Bloxham has dropped a bombshell, predicting the RBA will raise official interest rates by 125 basis points by the end of next year.

Bloxham was with the central bank for 12 years and was working within its economic analysis department before joining HSBC. He would be intimately familiar with the bank’s thinking on monetary policy.”

http://www.businessspectator.com.au/bs.nsf/Article/RBA-Reserve-Bank-interest-rates-stevens-paul-bloxh-pd20100921-9H39W?OpenDocument&src=rot

Australia is about to take its medicine and Canada will have to as well.

#11 Mr. T. on 09.21.10 at 8:38 pm

It’s sad that Mr. Olive et al. are still desperately trying to prop up housing. This correction has been 10 years in the making. The fact that most Boomers are trying to retire while their inherent housing values begin their long descent has all the makings of a monumental correction. It’s funny that the cost of living has apparently gone down over the summer months. All I can say is “wait until next quarter”. As an Ontarian, the HST will have a horrible effect on household cashflow when we start our furnaces and finally start to realize that the HST is not about “passing on the savings” like Dalton would have you believe. It’s about paying someone else’s pension, and paying down Ontario’s federal-sized deficit. Speaking of federal, Flaherty took some swings at the opposition…typical fear-mongering, steeped in the Cons “perpetual-campaign-mode” trademark style. It will be tragic when they finally DO get booted out of office and the effects of routinely bad economic policy finally become clear to ALL Canadians.

#12 Bill ( Peterborough) on 09.21.10 at 8:41 pm

Truly wonderous Garth. ( how the average sheeple mind works)

I don’t get off the property much in the summer. ( I like it that way)

However: Made a trip into Kitchener, not by choice, to pick some things up. Stopped in to see a young lad who fishes up here, and grabbed a bite to eat. His friend who fishes with him joined us, at the restaurant.

The second lad drove up to the restaurant in a brand new GMC Acadia/ crossover. I complimented him on the vehicles looks, being polite. He thanked me and told me: him and his father just bought it about a month ago ( $1000.00 down, $600.00 monthly payments)

I choked on my beer, spitting it all over the table, and asked how the f–k they bought it.

The father works twice a week part time, while the son works full time @ MC DONALDS.( Flipping burgers, started there 6 months ago and excited about the endless possibilities their) Now don’t get me wrong: if you have some brains you could advance at McDonalds, but this lad here isn’t the brightest bulb in the package.

His answer almost floored me.

He stated that he realized it was a mistake since he was only left with $10.00 at the end of the month. He tried to take the vehicle back but the dealership would not accept it.( by the way he still lives at home, age 21)

I asked him why they bought it in the first place. His response ” IT SEEMED LIKE A GOOD IDEA”

Increbile how the though process works in Sheeple.

#13 Mike on 09.21.10 at 8:42 pm

Great write up Garth. So what you’re saying in a nutshell is we have actually splurged more and can potetentially be in a bigger housing mess than the U.S? Thats hard to imagine but you’ve sure made a convincing case that we are different, worse off.

#14 ralph on 09.21.10 at 8:43 pm

Canada’s five biggest banks earned a combined $4.8 billion in third-quarter profit – nine per cent more than last year

#15 MikeT on 09.21.10 at 8:43 pm

American families also pay less for food, appliances, cars, clothes and many many other things (lived in the US for 4 years, so I know what I’m talking about). Looks like it’ll be more painful here when rates go up…
Brace yourselves.

#16 Medic on 09.21.10 at 8:45 pm

Ah yes, David Olive. The man who touted Nortel all the way to the bottom. A good summary of his cheerleading is given in the book, “The Bubble and the Bear” by Douglas Hunter. When you read some of his incredibly naive arguments, you will want to vomit. It was as if he did his research at the local Starbucks.

#17 Dan on 09.21.10 at 8:50 pm

Can’t wait to hear what “VancouverGoinUp” has to say about your latest comments Garth.

VancouverGoinUp is obviously a realtor – as he/she suggests buying a house by main street in Vancouver…Main street, yah you know where all the creatures of the night hang out…also referred to as gangland. Having lived in Vancouver in the 90’s it was a nice place to live, it was even better and more polite in the 80’s. But then came the 2000’s and the gang life exploded, fuelled by the drug trade, supported by all those who use and not just the street users. Have you ever tried to get out of the city – you have to plan around a nasty rush hour…and then there’s the rain…as soon as October hits the rain comes and doesn’t leave till the following summer. Vancouver is not what it used to be and I am sure that a long time ago main street was a nice place to live, but not anymore. The only places I would live are Kits, West side, North and West Vancouver. It is not different in Vancouver…what is different is the lack of common sense and the notion that real estate even goes up in price even if you run out of buyers. I have 4 educated friends who are waiting patiently, and I am talking a combinate of life and book educated. Yes if you jumped in 6 years ago and sold you made a profit, unless you turned around and bought something bigger or just more expensive. I got out of Van, and I am glad, good for the bar crowd but that’s about it – that is if you like putting your life in danger of a possible bar shooting. SO NO Vancouver SUCKS for the most part. Do you know how many gangs now buy houses to support their grow ops. People not in the know should do some research instead of sticking their heads in the sand. Main Street LOL LOL

#18 Kip on 09.21.10 at 8:54 pm

I remember your blog when you used to write it for the Toronto Sun. Remember the three rules to house buying? Location, location, location. You should, you wrote them often enough. How times have changed.

This blog kills me. A bunch of people trashing real estate while waiting to what, buy real estate?

Good Luck,

Kip

Big surprise: Eighties strategies don’t work thirty years later. You should be shocked. — Garth

#19 bsallergy on 09.21.10 at 9:00 pm

Garth, you have such a kind way of putting things. Canadians are completely deluded. I have an auntie in Vancouver who keeps asking me why I don’t move there to which I always reply: “If I were going to spend that kind of money on a house, I’d rather move somewhere nice like Nice.” I’m not sure what people are drinking or what the aliens are putting in the drinking water, but Toronto, Vancouver, and all the other “world class” cities we apparently have are merely butt ugly suburban hellholes. None holds a candle to Paris, Rome, London, Amsterdam, Berlin . . .

#20 Fool me once... on 09.21.10 at 9:04 pm

I’m so tired of hearing the same old s*#@t! I love Vancouver. I’m 50 years old and was born and raised here. I like living here. I choose to live here. But I’m also not naive. I’m well traveled. There are many very beautiful places as good or better than here. Parts of the California coast are close to paradise. Areas of Florida are dream like. To think that Vancouver is the best place in NA to live is both naive and ignorant. If I didn’t have roots here and had a choice to live in Hollywood Fla. or a nice place in Half Moon Bay Ca. my ass would be there so fast I’d have smoke on my feet.
Get real people, there’s nothing here THAT incredible to even remotely justify what is going on.

#21 Nibs on 09.21.10 at 9:16 pm

The role of demographics in Canada’s coming housing bust:

http://financialinsights.wordpress.com/2010/09/18/primer-5-the-role-of-demographics-in-canadas-coming-housing-bust/

Keep preaching the message, Garth!

#22 CrowdedElevatorfartz on 09.21.10 at 9:25 pm

youuuuu hooooooo VancouverGoinUp . Where areeeee youuuuuuuuuuu?
I need my “delusional commentor” fix………..

#23 Caron on 09.21.10 at 9:27 pm

“Galloping life expectancy” is one of the tropes that seem to alarm people. Usually this is stated as “people are living longer.” This is not correct. Genetics have not changed. A rich Roman male circa 100 BC lived about as long as we do today. Properly, life expectancy is stated as “life expectancy at birth.” So life expectancy is an average which includes everyone from birth.

Most of the increase in life expectancy has been the result of better sewage systems and antibiotics, both of which mean substantially fewer infant and childhood deaths. Better obstetrics also means a lot fewer first world women die in childbirth. Take a walk through an old cemetery and look at all the children and young women buried there before the 1930’s. That is why life expectancy was, on average, lower.
So barring some genetic breakthroughs, those solipsistic boomers will not live substantially longer than normal. Given the amount of radioactive fallout they were exposed to thanks to atmospheric nuclear tests thorough out the 1950’s and early 1960’s it could even be argued many of them will not even have the longer lives being assumed.

Incidentally, The Romanow commission into Medicare also observed that better than half of a person’s health care costs were incurred starting from age 75. That means the last year of life for men and the last 7 years of life for women (Romanow, page 11). So although health care costs increase with age, there are many fewer old people as a portion of the whole health care budget. So relax, we will have roughly 16 years of disgusting boomers when more of the budget will go to diapers and gruel they can digest, but the overall systems costs only change by about 1% per year as their demographic bulge works through the system.

But I still would not buy a condo in Van.

http://en.wikipedia.org/wiki/Life_expectancy
http://dsp-psd.pwgsc.gc.ca/Collection/CP32-85-2002E.pdf

#24 AnotherLowlyRenter on 09.21.10 at 9:29 pm

Love the theme. Whenever people talk about how unique Canada is I always point them to this chart.

http://finance.yahoo.com/q/bc?s=%5EGSPTSE&t=5y&l=on&z=l&q=l&c=%5eaord

It shows the 5-year performance of the Canadian/Australian stock markets. Can you tell the difference? Suddenly we don’t look so special after all. That’s because like Australia, Canada is a commodity-driven market. And we live in a global world.

My personal view as to why we escaped a housing crash last year is that we were saved by the resurgence of China/India buying of commodities, our piggybacking off US interest rate policy and our own CMHC’s continued fanning of the flames.

Will these factors keep the housing market going up? My opinion is NO but that’s irrelevant because it’s only my guess. But what is relevant is that with valuations at all-time highs, it will not take much to end this party. That’s because, whether it’s real estate or stock markets, money knows no boundaries and the rules of boom/bust always (eventually) apply. Even in unique places like Canada.

#25 T.O. Bubble Boy on 09.21.10 at 9:29 pm

One difference that will keep the *average* drop in Canada somewhat more moderate than the U.S.: oversupply.

Florida, Arizona, Vegas, and parts of California all went NUTS with building new burbs without any idea if people would actually want to live there. There are hundreds of suburbs with roads and sewers, but no houses.

Yes, Toronto has Milton and Newmarket and Ajax, but the developers didn’t build entire suburbs worth of houses before locking in buyers.

Also, the “vacation property” phenomenon seemed to blow up more in the U.S. than Canada… yes, we have some overbuilt condo cities (also known as “CityPlace” and “Olympic Village”), but these represent income properties in the urban core where few new rentals are built vs. vacation properties in places with plenty of supply.

Anyway — I’m not intending to be a foil head here and say that there isn’t a bubble… but the Canada bubble is different, and will POP in its own unique way.

For the pro-bubble crowd, I’ll point out that CMHC doesn’t have a maximum mortgage amount! (that I’m aware of) That’s why a first-time buyer can take out a $760k motrgage on a $800k house. I’m pretty sure that Fannie/Freddie at least had some kind of ceiling for the total mortgage size.

#26 Mohammed Bozai on 09.21.10 at 9:41 pm

Hi Garth,
This is one of your best posts. It is very informative and true. Keep up the good work. You are the agent of change. I am addicted to your articles and I daily visit your blog to read and learn.
Thank you for the valuable guidance.

#27 junius on 09.21.10 at 9:45 pm

Garth!

I took the bet with Mom. She say’s I’m a fool who will NEVER learn. She’s wrong. I passed the bar exam on my 4th try, and I barely studied! (she’s never had any faith in me).

So, now, here we are….10% +/-….Vancouver average price by Dec 31, 2010. I have everything riding on this. It is not just the case of fine scotch….its my relationship and reputation with my Mom. Who knew real estate could be so emotional???

Garth, wish me luck – this means everything to me.

junius

#28 Etienne on 09.21.10 at 9:45 pm

What about Quebec (Montreal)? You mentioned just about every city but none in Quebec. Don’t tell me quebecers are dumber and will let the prices rise even longer than the rest of Canada before realizing they are overpaying?

#29 Old_is_Gold on 09.21.10 at 9:48 pm

I see the housing issue in Canada not as a bubble but as an avalanche, the snow keeps piling higher and higher on the mountain, and everyone thinks it’s the mountain that’s growing. Except for drastic intervention by the feds it’s only a matter of time before the avalanche comes down the mountain with such ferocity and speed that it will take even the bloggers here by surprise. I do not believe Canada will have a long drawn out melt like the States, a 30% haircut across the board within months is a distinct possibility that is starting to look more probable by the day.

And how long will Canada’s unemployment hold up at around 8% (official figures) once the avalanche hits cities and towns across the nation, and buries communities from the Rockies to the Great Lakes? I guess we are about to discover that a ‘Service Sector Economy’ is another one of those media myths that ranks right up there along with David Olive’s ‘It’s Different Here mantra. Unemployment north of 15% in 2012?

#30 Roy Stacey on 09.21.10 at 9:54 pm

Different??? As a Yank, who lived in Buffao, NY and commuted to GTA every week in the late 80′-early 90’s we are FAR more similar than different. Few of us in euither country know how to manage monety, or debt wisely. Hopefully we learn by age 35-40 or so. I did, now debt-free, and loving it. The future looks a hell of lot less bright since our housing mess. Our president might do better telling the full TRUTH about our dire straits, but then he would be pilloried by the opposition, who only think of lower taxes, making wars, and cutting servicves. At least, Canada is a more “civilized” society at least for now. We shall see when you may sink to our level. Try not to lose your integrity my friends.

#31 mel on 09.21.10 at 9:55 pm

There is nothing more to be said to all those living in their overpriced status homes, except wait for the invisible hand to take all of them to the real world.

I have become tired of asking people ” are you getting it”. It is real, it is overpriced, it will fall, and you might get hurt if you don’t act now! Over, and over, they looked at me as if I was insulting their inteligence. How can that be? It is impossible!

So, I have given up. Only time will open their eyes, and minds to the reality. Unfortunatelly, by then it will be too late for most. Like all other Bubbles, they develop over a period of years. Because of that, they cannot see reversal. It took years to go up, and it will take years to go down. Down it will however.

#32 dukes of moral hazard on 09.21.10 at 10:02 pm

“Or CMHC encouraging reckless lending by wiping away the banks’ risk?”- Garth

It is because the CMHC stands for the Canadian Moral Hazard Corporation.

As for idiot journalists, Buffett said it best when he said: “Let the blockheads read what the blockheads wrote”.

Or for the youngsters: “let the idiots read what the idiots wrote”

#33 VancouverGoinUp on 09.21.10 at 10:04 pm

Vancouver is different by a long shot consistently voted the most livable City in the world – that’s right the World!
Internationally recognized as one of the Top 3 cities in the World. How many more awards can be heaped on Vancouver. It’s the best period, the Crown Jewel of Canada. This is not your typical Canadian City. People buy condos and houses here by the bushel not as a one time buy. Many of the homes are bought with cash, others are bought with huge mortgages with the cash invested in gold and other precious metals. Make no mistake Vancouverites are poised for the metal mania stage which will happen shortly (anyone take Jim Sinclair up on his million dollar bet for gold to reach $1300 by early 2011?) But I digress, when you have a couple mil in the bank why not get a huge low interest rate loan on an appreciating asset and invest the rest in the junior gold market because as the Major gold companies continue to deplete their supplies they are going on a shopping spree for the juniors. UP UP AND AWAY. Come join us in the best place on earth Beautiful British Columbia

#34 Tyler on 09.21.10 at 10:05 pm

Long time reader, first time poster. Garth, considering you expect the market to drop until 2015 and after that the full effects of a boomer generation to kick in, do you ever see the market bouncing back?

Absolutely. But years away, and no granite. — Garth

#35 Jason on 09.21.10 at 10:07 pm

Garth, when are you in Calgary ?

Oct 21. — Garth

#36 The Original Dave on 09.21.10 at 10:10 pm

Hmm. Perhaps your parents, GF or house-lusting spouse has been making similar arguments with a persistence that makes you dream about the long-gun registry. Whadda you say in response?

——————————————

the above is me. Getting abuse by my wife and parents.

On another note, someone here mentioned something that caught my attention a few weeks ago. In a couple years time, when the housing mess is sorted in the U.S and people are comfortably locked into their 30 year mortgage rates, is it possible that the U.S becomes more aggressive with their interest rate hikes? If this is the case, how the heck does Canada respond? We’d be in the middle of our downturn while the U.S starts raising rates.

I’m not good with interest rates and it probably shows.

#37 Calgary Rip Off on 09.21.10 at 10:12 pm

Yes America is so lovely Garth. Exactly why I left. The United States is a big big country with too many people. There are nice places and not so nice places. It is very very different in terms of expectations of people towards other people. It is a hostile nation both inside itself and with its policies towards outside nations. You mention real estate being cheaper there. Other than that and possibly warmer climate not many reasons to live there. Take this as you will, but its from someone that was born there. As it stands today, the United States is a disgrace. An embarassment.

So you can get cheap real estate. Can you get work there? Not likely. So how will you pay? Exactly. So although all major Canadian cities are the biggest rip offs ever for costs, work can often be had, much of which is unionized oftentimes. Americans dont understand unions. They elect conservatives who say they are for the workers and then screw them so the rich can benefit. As a politician you must realize how twisted the world is.

House equity is irrelevant if you plan on living in the place until the end and your job is almost 100% secure. So it goes way down from when you bought it. You pay it off and you have a place to retire in. Account for drops in value in determining when to buy, but dont wait forever.

#38 InvestorsFriend (Shawn Allen) on 09.21.10 at 10:16 pm

Garth and all you blog dogs. I have some information on whether Canada is different in terms of Mortgage delinquenciees.

First though I will say that about 6 weeks ago I tried to post here that was I thru posting to this Site since although Garth’s editorials are great, the anoymous blog dogs (that’s most of you) are mostly a complete waste of time. I don’t think that post ever went live for some reason. I guess that explains why there was no huge write-in campaign to have me stick around.

Anyhow, I am back with a Post tonight. (It’s okay no need for applause)

So about Mortgage delinquency figures being different in Canada.

Canadian Bankers Assoication figures show that less than 1 in 200 Canadian mortgages are 90 days past due. Whereas in the U.,S. it is closer to 1 in 10.

So yeah that is hugely different. So what explains it? And can it be true?

As to truth, the fact is that banks can easily manipulate mortgage delinquency figures.

Here is an email answer I got back from the Canadian Bankers Association just today. They said:

Hello Mr. Allen,

We have contacted some of our member banks and they have advised us that customers who are behind on their mortgage payments are included in the delinquency numbers until the loan is restructured. The loan is then considered current, but monitored for a period of 90 days before it is returned to the branch.

Regards,

Inform Centre

So… All a bank has to due to prevent a mortgage from showing up as 90 days late is offer the homeowner some kind of restructuring. For example extend the mortgage amotization to lower the payments or put it on interest-only for a while, or add the 3 late payments to the principle. Voila the mortgage is not considered delinquent.

Maybe that is okay, but clearly banks can manipulate that.

And Buffett has said of this sort of thing “A rolling loan Gathers no Loss” (If a bank keeps agreeing to a payment extention, the loan is never delinquent is it?, well not on paper at least)

The other reason for lack of delinquencies in Canada (besides possible rolling loan manipulation) is that with house prices still high the Canadian owner has an incentive to pay the mortgage. And of course in Canada mortages cannot be walked away from easily.

But if house prices fall and negative equity abounds then so will bankruptcy and delinquencies.

It may be that this sort of thing is a slipperly slope whereby a 10% housing price drop begats negative equity which begats desperate sellers which begats more price drops which begats more desperation…

Well I hope not, but I really cannot believe that Canda can possibly go on having 1 in 200 delinquent as opposed to some 1 in 10 in the U.S. That simply defies common sense.

We may be a little different, eh, but we are not THAT different. Well that’s it for now, I have to go watch T.V. which is what 90% American shows?…

#39 Dave in Victoria on 09.21.10 at 10:24 pm

One thing I still don’t understand Garth is that Canadian housing prices, especially out West got stupid before rates went to ‘zero’. I recall hearing that 0-40 is/was quite new. Did that kick off the party?

You’ve mentioned other regulation loosening that occurred before Frank and Beans but the breaks on.

Is it perhaps that the root causes (debt and over-consumption) are to blame, while the symptoms are slightly different?

Maybe that’s what the so called economists are confusing – symptoms v. cause – or, as economists seem to do, they are merely stuck in event based rationale, having no interest in a more systems based view.

#40 ralph on 09.21.10 at 10:25 pm

Canada’s five biggest banks earned a combined $4.8 billion in third-quarter profit – nine per cent more than last year.

#41 Kevin on 09.21.10 at 10:26 pm

Great presentation in Saskatoon. If anybody noticed, all questions at the end were about real estate. I wonder where most Saskatoonians have their net worth especially since the average home has tripled in price since 1998 and doubled since 2006. A great wakeup call for many. Wife and I make 90k and maybe one day we can afford a decent home here taking into account normal interest rates, daycare, student loans. A return to 2005 prices might be a stretch (140K) but 3 times income would put the average home at about 225k. Funny thing is that Saskatoon has historically been about 2 to 2.7 times income, now we are over 4!

Saskatoon housing bubble has just popped and 400 people found that out tonight.

#42 Minimalist on 09.21.10 at 10:38 pm

“pestilence” At least I am good company.

#43 Patz on 09.21.10 at 10:41 pm

But then when the crash happens, as of course it will, they will come to you Garth and say, “Oh my God, how did you know? You were right all along.” They will then install you as the unofficial oracle of all things real (estate) and financial. Then when you wake up and turn on the TV you’ll hear: “No one saw this coming. It’s the Greeks and their damn sovereign debt. Just can’t trust them. And our right wing (nut) pundits will blame people for maliciously buying too much house. (They will have a small point but it was never malicious.) Then Sherry Cooper will wheeze onto the airwaves with an invitation to tea in Rosedale where she’ll hold forth on how while it’s a bit deeper a dip than she imagined (like the Grand Canyon is a bit deeper than say the Rideau Canal) it was what she’d predicted but not to worry it’ll all be over before you can say “one lump or two?” Whereas I actually take 8. Oh, and speaking of taking lumps… well you know…

#44 Crash Callaway on 09.21.10 at 10:43 pm

“You’re All Individuals”

http://www.youtube.com/watch?v=QereR0CViMY&feature=related

#45 NFN on 09.21.10 at 10:48 pm

FACT
An old friend of mine in Calgary bought a house this year. His down payment… came from his line of credit.
END OF FACT

That’s all you need to know about strict lending practices.

We need to archive the: “it’s different here crowd” and build an article repository.

#46 Tom on 09.21.10 at 10:51 pm

As far as the quality of life in TO is concerned, the two things that come to mind are sitting on the 401 stuck in traffic, and the oppressive, sweltering summers…

In New York or San Fran, Americans don’t pay less than half of what we pay for living, in fact they pay more. Housing has held up relatively well in nicer areas of NY and San Fran. Housing there is still ridiculously expensive, which makes me wonder if we’ll ever see a really large correction (more than 20%) in Vancouver. Add to this that the unemployment rate is significantly higher in the states.

The Canadian advantage is that we don’t have the Republican Party! Though we have a self serving, overly-controlling, narrow minded Prime minister, we don’t have a highly dysfunctional political system, plagued by greedy lobbyists like our friends south of the 49th

#47 Father of Many on 09.21.10 at 10:54 pm

DAVID OLIVE – MATHEMATICALLY CLUELESS

Perhaps you noticed olive’s column today, attacking Rob Ford:

http://www.thestar.com/article/863938–olive-rob-ford-s-unimaginative-success

olive’s entire article belittles Ford’s cost-saving proposals as tiny and insignificant (only “0.003 per cent”, for example) compared to the city’s total $9.2B budget.

Unfortunately, Olive evidently has poor math skills, as all his numbers are off by a factor of 100, and the “0.003 per cent” example is actually .3% – Ouch.

#48 Old_is_Gold on 09.21.10 at 10:58 pm

Got my Enbridge bill today and noticed that 17 dollars of it was HST. Would have been around $7 before Canada Day. ,b>Harmonized Sales Tax Just the sound of it makes me want to break out into a melody. What next – The Peace and Goodwill levy?

#49 Spiro on 09.21.10 at 11:02 pm

It helps to be able to tell when people like David Olive are spinning the truth or they just don’t know what they are talking about. This way I know if I should feel angry or just feel sorry for them. I am guessing in some cases Garth doesn’t even want to respond to such idiots’ comments. But he has to because these guys are misleading people. Individuals like David have some media exposure and most people just take what has been said by the media without critical thinking. Often I listen to guys like David and say to myself “what does that even mean?!” . And I don’t say that because English is my 2nd language or I am not familiar with an issue. The sad part is that David’s job will most likely survive the housing bubble and then 10-15 years later he will still be writing crap on the next bubble or issue. We need to stop being polite to these types. Part of the reason this game is so comfortable to these idiots is because they are not dealing with real confrontation. No one makes them feel like dirt. If you have something to say to a guy like this, drop the pleasantries. Show them that you know they are pissing on you and you don’t think it is raining. Just walk to the guy and tell him what you heart feels. Make them live the life they deserve. Man, I need a blog to rant!

#50 hobbygirl on 09.21.10 at 11:13 pm

YOU FORGOT ABOUT CANADA’S CHEAPEST HOUSING MARKET, THUNDER BAY! ALSO RANKED 20TH IN THE WORLD FOR AFFORDABILITY. Our local paper yesterday says we’re bucking the trend for good reason that are explained.

http://www2.chroniclejournal.com/editorial/daily_editorial/2010-09-20/good-year-builders

#51 Dan in Victoria on 09.21.10 at 11:26 pm

Post #12 Bill.
I wouldn’t be surprised if he took that 10 bucks a month and bought a house.
I had a young guy working for me a long while ago did the same thing, fancy new pickup, all the bells and whistles.
Geez I couldn’t even afford it…. and he worked for me.
His Mom and Dad were in the shallow end of the genetic pool.
Now you got me going, back about 6 years or so needed a replacement for the work van.
Saw a nice clean one at the job site young fellow had just started a sub contracting company, ground him down too 3 grand with all the racks etc thrown in.
Needed a steering box, tranny flush, tie rods, brake rotors and a couple of other things.
Couple of hours wrenching out in the shop good to go.
Saw him at a job site last year I still have his old van, he bought a new 25K fancy van.
Both vans side by side looked the same, except he spent 25K plus interest.
Me 3k and some part swapping.
Still get a couple of grand for it now.

Fools.

#52 JM in London on 09.21.10 at 11:26 pm

Well – we have Doomers on one side (again – even IF there’s a plot afoot to dominate the world, histories biggest lesson is NOT ONE will succeed. Humanities hubris is the acchilies heel here… Besides the whole council of Rome/builderburger crap is just a smoke screen and Alex Jones is not sane enough to ferret out where he put the batteries for the Bull Horn) now balanced by VancouverGoinUp (you sound like the departed D/A and we needed the scales to balance for both sides for the equation to work after all) well, I guess that’s this little corner o the blogosphere.

Centre HO!! and to think I’d be called a centrist? Well this is definitely a sign the horsemen are a comin…

#53 dark sad person on 09.21.10 at 11:30 pm

Anyhow, I am back with a Post tonight. (It’s okay no need for applause)

So about Mortgage delinquency figures being different in Canada.

Canadian Bankers Assoication figures show that less than 1 in 200 Canadian mortgages are 90 days past due. Whereas in the U.,S. it is closer to 1 in 10.

So yeah that is hugely different. So what explains it? And can it be true?

******************
That’s as far as i read–
ummmm could the ratio “possibly” be–because the US housing market crashed 3 {THREE} years ago??
Get a clue–

#54 Hovering on 09.21.10 at 11:31 pm

Garth,

can you do a post countering the wealthy immigrant myth ?

I’m so tired of hearing my neighbours and co-workers spout on about how it’s different here in (Vancouver and or Toronto) because we have so many wealthy immigrants who buy real estate

a succinct Garth-ism (Garthyism ?) post would be music to my tortured soul

#55 ExExpat on 09.21.10 at 11:56 pm

Having moved back to Canada recently, I was really astounded at the alternate reality Canadians have invented to explain the US housing crash, and why it can’t happen in Canada. The reason I have heard repeatedly is that US banks handed any unemployed applicant who asked a home loan, no questions asked, which is, of course, nonsense. Conventional wisdom in Canada about the US crash does not seem to include teaser rates that reset, making loan payments unaffordable (Canada in 4-5 years?), interest-only loans (40 year amortization loans seem about the same thing), and not so much an initial decrease in home prices but a halt in home price increases which removed the “lubricant” that allowed a homeowner/speculator to at least cover sales costs if they wanted to get out of the market and break even. This was soon followed by accelerating price decreases when these same people now had to sell at a loss or were foreclosed on and became road kill.

The main Canadian exception, however, seems to be a profoundly undeserved sense of Canadian superiority that we as a people are somehow more clever or have more integrity than the US population, our cities, climate, and geography are more desirable, the entire US is a free-fire zone filled with armed combatants, or our health care system is the envy of North America.

Don’t get me wrong, it’s good to be back in Canada, but the old standby clichés and slogans are not going to win the day here. By the way, I adamantly dodge the topic of real estate with other Canadians, although prices in Phoenix and Vegas are looking mighty good….

#56 grumpy on 09.22.10 at 12:16 am

I ran into a guy in Maui who bought a place here based on the rising value of his property in Kelowna…that was in 2009 before both markets started to crash. Too bad he didn’t go to one of your seminars. The market ‘value’ in Kelowna is down 40% and the condo market here is in the crapper..down by a third. Now aren’t both these markets supposed to have been immune because of constant supply and rich buyers who were above it all?

Top it all off with the tourist business being down 30% and rents have fallen to where they were ten years ago…good for me…bad for the ‘investor’.

#57 PrinceGuy on 09.22.10 at 12:20 am

The difference between us and our big big brothers to the south is simple (If I am getting this correct):

 The U.S. banking system was not prepared causing acute hits to the market. They scrambled to funnel all their crap through Freddie and Fannie. We had the CMHC from the beginning.

In the end it’s the same for both of us. Just at a different schedule. The important thing here is not the biggest real estate collapse in history. It’s the scary fact they are insured with tax dollars. FUTURE TAX DOLLARS.

After we are homeless, unemployed and broke – that’s when its time to start paying – Scary!

#58 Peter Pan on 09.22.10 at 12:23 am

VancouverGoinUp,

You are a sad caricature of the shallow slimeballs I encounter every day in this dreary city. If you are not a real estate agent, you really should consider Re/Max or other reasonable facscimile as a career destination.

Your abilities for self-delusion rival those of Superman’s ability to stop a speeding bullet…

#59 Aussie Roy on 09.22.10 at 12:24 am

ralph on 09.21.10 at 10:25 pm

Canada’s five biggest banks earned a combined $4.8 billion in third-quarter profit – nine per cent more than last year.
Do a little research banking sector profits are always elevated during a credit boom (housing boom).

http://www.debtdeflation.com/blogs/2010/08/11/bank-profits-a-sign-of-economic-sickness-not-health/

Aussie Update
http://www.businessweek.com/news/2010-09-21/rba-sees-support-for-targeting-imbalances-rather-than-assets.html

http://www.smartcompany.com.au/economy/20100922-china-will-burst-its-own-property-bubble-and-australia-will-be-hit-maley.html

Our Asian friends.
http://www.smh.com.au/business/low-interest-rates-are-pushing-hong-kong-property-prices-towards-a-collapse-20100921-15ld5.html

http://www.smartcompany.com.au/property/20100920-sydney-property-market-holding-up-but-queensland-perth-still-suffering-experts-say.html

#60 Freedom 85 on 09.22.10 at 12:24 am

People with maxed out HELOCs or Lines of Credit will in relatively short order receive a spiritual experience that will make their hair turn a darker shade of grey or their ulcers bleed a bit harder. So many people are still financing at 100% down and trying to eek out that last bit of equity from their asset. It’s hard to take when you know what is on the other side of the fence (it’s like you know something bad is coming and yet you have to wait for it with a sense of resigned helplessness). They understand the benefits/advantages of rising asset prices but have yet to feel falling asset prices in a way where they sit across the desk from their banker and hear the dreaded words: I’m sorry, Mr and Mrs. Joe Borrower, but you have no more room and we can’t help you at this time.” Heck, I’m not even sure the banker knows how to say those words, but it’s coming. It’s barrelling down the mountain and will soon begin taking no prisoners.

Reduce debt, regardless of rate. Debt is today’s form of slavery. When going well, assets rise in value and leverage(debt) enhances returns. However, on the flipside, when assets prices fall, debt demoralizes, removes options, reduces ones ability to make choices, increases stress. It forces one to make emotional decisions (usually turning out badly), it takes away the time for good decision making.
When you can’t make decisions freely, you become a slave to the master who affects this. This master is debt!

#61 Nostradamus Le Mad Vlad on 09.22.10 at 12:25 am


#170 bullion.bunny on 09.21.10 at 7:31 pm — Noted, and thanks for the response.

I don’t disagree with your POV. But the buck has to stop somewhere and with someone, that someone being Harper. I just have a different perspective which leads to . . .

#172 Bill (Peterborough) on 09.21.10 at 7:53 pm — Great link and so true. Around 2015 is when TPTB will have pushed us far enough, and we stand our ground.

Sure we may kick the bucket, but what the hell! I would rather die trying to do something than sit on my butt, accomplishing zip in the process.

Oh Dear. There is a bunch of nincompoops running DC now, and they may toy with the economy again. Gawd help us.

Accurate, so Canada will move in tandem.

Echoes of Detroit.

Tax roll back. Interesting idea. Is there an MP roll back? BTW, Frence, Spain and Italy have called for a new ‘global tax’ to fight poverty.

After the hoax of GW failed, up comes a new plan. Tax everyone to help eradicate poverty, by putting all of us into poverty and tell us it’s good for us.

CC This is more to the point for the implementation of a new carbon tax.

Ignore Alex Jones as he is no more than a right wing nutbar. This is what the UK govt. seems to be trying to implement. “This is about the state handing itself the power to arbitrarily raise taxes to any level it desires and then automatically seizing the money with no chance of redress or petition on behalf of the taxpayer.”

Nevermind the US Fed, this is the Global Fed. Gold up — dollar (almost) dead.

So GW is causing Arctic ice to thicken. Well whaddaya know.

#62 Devore on 09.22.10 at 12:37 am

#42 Patz

But then when the crash happens, as of course it will, they will come to you Garth and say, “Oh my God, how did you know? You were right all along.” They will then install you as the unofficial oracle of all things real (estate) and financial.

Doubtful. No one likes the one person that is right after all.

#63 Doug on 09.22.10 at 12:45 am

So, I know a couple (not me) who is about to try and sell their home and upgrade. They have purchased their house in the last 3 years and want a bigger house and a $100,000 larger mortgage. I am guessing that they have a $300,000 mortgage already, or high 200,000. They are planning to have some equity paid off when they downsize at retirement so their mortgage when they retire (in about 20 years) won’t be very big. I told them about your site and all the warning signs less than a year ago. But at work I am just a pinko commie to say such things. I fear they are screwed. Now I just bite my tongue around everyone. Only a few of us want to here your story. Keep it up for those of us who do want to here it.

#64 Taxpayer like everyone else on 09.22.10 at 12:48 am

49 hobbygirl – this explains it all:

http://www.thunderbay.ca/CEDC/Major_Employers.htm

53 Hovering – Garth downplays immigration, but the two cities mentioned both have 40% “foreign born” residents – amongst the highest in the world. Doesnt
matter if they brought money with them, they all need a
roof over their heads.

#65 dark sad person on 09.22.10 at 12:50 am

#29 Old_is_Gold on 09.21.10 at 9:48 pm

******************
I think you might be right about the speed and the drop-
There are so many different dynamics in the market today-that were not in place when the US crashed–
First-their largest trading partner-us–
were still in blow off and so-still-borrowing and buying and not just us–but the rest of the globe was still in Inflation-so this kept an underpinning under US unemployment–they were only gradually losing jobs-so this gave a great cushion-to their housing crash–
Today–barring China/Germany (in and out) the whole world has tipped into Deflation and unemployment is ratcheting up–all over the world-
If/when-this so called double dip occurs-you know-when no BS will cut it anymore and we/the world discovers-that there never was any recovery–
What cushion will we have?
Our largest trading partner–is tits up–
Nothing to hold us up–except a short lived money goose-

http://www.youtube.com/watch?v=t0UStNHQSPM&feature=related

#66 Industrial Guy on 09.22.10 at 1:03 am

Why are electricty bills in Ontario rising? It just doesn’t make economic sense. The wholesale price of electricity in Ontario is at one of the lowest levels recorded, since the establishment of the Independent Electricity System Operator (IESO) in 2002. We went through a scorcher of a Summer, yet prices and consumption were no where near historic levels. Ontario is basically awash in Electricty. When supply rises and demand falls … don’t prices generally drop? It works with house prices …..
Check the IESO Web site.
http://www.ieso.ca/imoweb/siteShared/monthly_prices.asp?sid=ic

#67 dark sad person on 09.22.10 at 1:29 am

#35 The Original Dave on 09.21.10 at 10:10 pm

is it possible that the U.S becomes more aggressive with their interest rate hikes? If this is the case, how the heck does Canada respond? We’d be in the middle of our downturn while the U.S starts raising rates.

*****************
Interesting point-if that scenario did develop–
That is a possibility-
First–
F would have another “increased trade numbers”
orgasm on BNN-

Our dollar could weaken to the point of danger-with high US rates and would no doubt-go carry trade to USD-if rates were left low-
If we were forced into matching rates-to stop the carry-our credit system would implode as all and any type of shaky debt would be forced in default-

This is always a risk-with Fiat-
You do not control your own currency value-
The market (despite government interventions) will set the value relative to the USD and especially Gold-

Very dangerous waters-we are sailing into–

#68 Yank on 09.22.10 at 1:29 am

Word.

Almost all of the major Canadian cities are experiencing a housing bubble at the same time. There is no reality check unless people are familiar with prices outside of Canada.

Young couples look at completely insane prices and think they are reasonable. 250K is cheap? really? 350K for a starter home???

#69 Peter Pan on 09.22.10 at 1:30 am

Garth, thanks for editing my post…

#70 pablo on 09.22.10 at 1:37 am

Did everyone hear the news; the u.s. recession is officially over!!!! And Canada is ranked #7 of 20 countries where real estate is still rising!!! FANTASTIC………I’ve still got time to convince the wife to sell, take our equity and go hide in the jungles of costa rica, panama or belize, where it really is different!

#71 Jeff Smith on 09.22.10 at 1:52 am

>#27 junius on 09.21.10 at 9:45 pm
>Garth!
>I took the bet with Mom. She say’s I’m a fool who will
>NEVER learn. She’s wrong. I passed the bar exam on
>my 4th try, and I barely studied! (she’s never had any
>faith in me).
>So, now, here we are….10% +/-….Vancouver average
>price by Dec 31, 2010. I have everything riding on this.
>It is not just the case of fine scotch….its my relationship
>and reputation with my Mom. Who knew real estate
>could be so emotional???
>Garth, wish me luck – this means everything to me.
>junius

Funny, everytime I am over at my mom’s place for dinner, I get to enjoy a similar contest. Mom is complaining why I am not yet a home owner. Renting is just paying someone else’s mortgage. Why I can’t be more like my brother and his wife (in their early 30s), who now owns 2 houses, not one but two houses (one is a rental unit bringing in income). Do I feel like a loser? Nope! not one bit.

#72 Jeff Smith on 09.22.10 at 1:55 am

>#32 dukes of moral hazard on 09.21.10 at 10:02 pm
>“Or CMHC encouraging reckless lending by wiping away
>the banks’ risk?”- Garth
>It is because the CMHC stands for the Canadian Moral
>Hazard Corporation.

I wouldn’t gloat if I were you. If the gigantic heavy like a ton of brick debt monster CMHC comes crashing down? Guess who’s right underneath? Yep! people like you and me and other canadians. SQUISH! We better brace ourselves.

#73 Been There, Done That on 09.22.10 at 2:01 am

@ #54 ExExpat

Just came back from 10 years in SoCal. Exact same crap there in 2005 that I’m hearing up here now. Almost word for word.

“BC is special. Everyone wants to be here. $600k houses are a GREAT investment”, etc. It’s weird because I just saw this movie and I know how it ends but NOBODY will even consider that I might have a clue even though I just lived through this in real time and watched it happen.

They ask me why I’m not in the market and act like I’m nuts when I explain that I’m renting in a great area for less than half their mortgage+property tax+condo fees. And I’m investing the difference towards my retirement while they’re paying $1000+ per month in interest alone this year and who knows what in 2014 – but they think I’m the one throwing money away.

Hahahahahahahaha.

Too bad so many of my 30ish friends got sucked into dumpy condos and townhouses in the last couple of years. They all owe between $250k-400k – with young kids and average jobs. That part isn’t so funny. I bet they don’t realize they’re stuck in those starter homes – “We’ll flip it in 3 years!” – for a loooooong time.

#74 Bill ( Peterborough) on 09.22.10 at 2:19 am

Re # 50 Dan In Victoria

I wouldn’t be surprised if he took that 10 bucks a month and bought a house.
*******************************************
I will phone the lad and offer him your advice? Why stop now ;that he is on a roll. Lol
All the best Dan.

#75 TheBigLebowski on 09.22.10 at 4:46 am

I’ll bet Garth is a closet gold bug and actually adorns himself with expensive gold jewelry when nobody is around. C’mon garth those necklaces sure look better than a bunch of drab preferds dangling beneath your curly chin.

#76 Daystar on 09.22.10 at 5:38 am

Yeah… were different alright. It sure is funny how Canadians followed the exact same path as the ones who drank the koolaid elsewhere in the world. The other cities around the world, the ones with RE that boomed only to later bust…. we tell ourselves in Toronto, Vancouver, Montreal, Calgary, elsewhere in Canada that it can’t happen here. We drink the koolaid, brainwash ourselves into believing that “its different here” and just like that, we become the same as all the rest, like those who live in San Fran, Phoenix, Madrid, London, Dubai, … in a false comfort before their fall.

What does Canada remind me of in some respects now? Try Iceland. I urge people to watch this documentary in the link:

http://www.cbc.ca/doczone/meltdown/videos.html

Click onto “The Men Who Crashed the World”.

Not only will we begin to see why Canadians are “the same”, we’ll perhaps finally begin to understand that the systemic economic crashes precipitated by rapid asset inflationary policies coupled with record low interest rates are what led to unprecidented credit expansions by many nations world wide. These same wreckless economic policies… long amortizations 40 to 50 years with zero down… coupled with variable rate mortgages near 2% for 3 or more years… wreckless banking practices… that destroyed national economies such as Iceland, have happened in some form or another with the arrival of the Harper government here. It shouldn’t be too hard to figure out what the negative consequences will be from having a government impliment these same wreckless policies in Canada, the only question mark is how long in terms of years asset deflation will it take to hit bottom and how severe will that bottom be.

People in Iceland now look at their former government as either “incredibly stupid” or “incredibly crooked” or both. I urge people to watch this documentary just once. The global financial meltdown began showing its signs in 07′. In truth, insiders, people who knew what to look for, knew how bad it was and knew it would not end well in 06′. People with common sense watching overdevelopment year after year, watching RE valuations soar and credit expand wildly knew it wouldn’t last prior to 06′. Such overdevelopment defied common sense and gravity. After watching RE bubbles burst in the U.S. from 07′ on… and then Europe in 08′ and Dubai in early 09’… why on earth did this Canadian government still decide to push for record low interest rates, 100 billion dollar buyouts of mortgage backed securities, long amortizations with 5% or less down… why would any government with all of these examples of identical failed governmental policies that led to real estate boom and bust or rapid asset inflation followed by rapid asset deflation and wrecked economies in chronic recession… why would in late 08′, this Harper government enact the exact same policies here knowing how the exact same policies ended elsewhere in failure world wide, over and over?

We’ll end up looking back on the Harper government the same way as Icelanders do with their failed government. We’ll be thinking the same things because of the same reasons, the same causes, with the same effects and same fallout because its not so different here and Canadians would be really, really smart to see why we are so similar to other nations with governments that had such bad failed economic policies come home to roost because there is still some time left to control the damage.

The guy’s that brought us 40 year nothing down mortgages and 2.25% variable mortgages are still in government. Hint, hint, its time to control the damage? It can get worse. Spain, a nation with a GDP almost identical to ours has over 22% unemployment right now…

#77 Contrarian Canuck on 09.22.10 at 6:07 am

….but at least the US is now out of recession. That should help our imports. Yeah right!

http://financialinsights.wordpress.com/2010/09/21/move-along-nothing-to-see-here/

#78 TGS on 09.22.10 at 6:37 am

I saw Olive’s column in the Toronto Star and started reading it…initially I thought it was interesting that the Star now had a humorist writing a column…until I realized that he was serious!

Olive’s head seems to be so far up CREA’s a** that he hasn’t had a breath of fresh air since the 1980s….how else could this guy be soooooooo far out of touch with reality?

#79 C on 09.22.10 at 6:46 am

#18 Kip

Are you the Kip from Napoleon Dynamite?

#80 Aussie on 09.22.10 at 7:02 am

The references to Australia are interesting, and in my humble view, spot on. What is happening in our city of Sydney (median price to household income > 9.1 x) is, an EXACT replica of what is happening in Vancouver, right down to the real estate agents spruiking on the blogs, the arguments about ‘we are different’, ‘they are not making any more land’, ‘our economy is stronger’, ‘we have wealthy Chinese paying cash and moving here’, ‘our lending and banks are much more solid than the US’ and so on. I don’t know what is going to happen to our respective property markets but I am 100% convinced that what happens in one city will be mirrored in the other.

#81 young & foolish on 09.22.10 at 7:07 am

… so, location is so 80’s and does not matter anymore?
hmmm …sounds like a paradigm shift (or it’s different this time)

What about a post on what kind of RE is worth owning in there perilous times? Somehow I don’t think Garth sold all his RE holdings and is squatting in a rented “bunker”.

#82 PR on 09.22.10 at 7:14 am

#31 mel
Yes its like that: 5% really get it ,15% know something is rong, and 80% are in a deep freeze incluiding some verry “intelligent” pepole. In real life something of immense value is call “street smart”, they dont teach that!

#83 JM in London on 09.22.10 at 7:37 am

#59 Freedom 85 on 09.22.10 at 12:24 am

Not coming – HERE – we’re seeing an increase in people who think they can run to the mortgage broker to “make everything better” and somehow magically find financing on a house carrying (in certain cases these numbers are even higher) 150% in loans + HELOC + Cars + Credit cards. What’s more frightening is the ones who don’t get they are at the end of the road and screw their faces up when you let them know that the only way out is to pay down some debt…front line blood and guts at it’s finest

#84 kathy on 09.22.10 at 7:52 am

I am putting up my house for sale in Montreal; I’d like to sell as soon as possible.

Q- Do I list in October or should i wait for spring? obviously i’d like to sell as fast as possible but there are some who think on a seasonaly-basis, Spring price sales are higher than Oct/Nov sales. So there is a chance i get a lower price in Oct/Nov vs spring.

Any feedback is appreciated.

#85 S.B. on 09.22.10 at 7:52 am

Toronto is not world class – there is nothing in terms of entertainment, sports events, food, movies that is not found in other major North American cities. What we do have is very high land transfer taxes, extra licence plate fees, high real estate prices, transit rolling stock from the 70s and 80s (subways and streetcars), high one-way transit fares, still no fixed rail link to the airport from downtown (unless you want to hop on 2 subways and then a bus). World class or taxed to death in a smog-filled communist-run (the wealth is re-distributed to the top cronies) city fifedom. At least Vancouver has great views. At least Alberta has oil.

#86 Mikey on 09.22.10 at 7:59 am

I was visiting Vancouver in late August. I was in the Killarney area when I dropped into the mall. Saw some retired older Asian seniors sitting in the food court. They sat down with the area local newspaper. First section they opened up was RE.
Here’s the answer. Like my parents, they did well in RE in the 80s. They are on the same thought patterns and forcing it unto the offspring by helping with downpayments and encouraging investing. They preach the mantra that now or too late. In the last dip, they were the first to step in again. Possibly the same mentality again this August.
The other thing is that in so many neighborhoods, there is simply NO parking available because there are generations as well as basement dwellers seeking parking on the street.
I left Vancouver in the early 80s and it was a nice city then but no more.
Vancouver will correct but my guess is that the trigger will not be in Canada but in China. When the RE market in China cools and corrects all hell will break loose in Vancouver. The RE correction in China will ripple not only to our RE but much deeper than many would expect.
To people in Vancouver, RE is religion. You just have to believe in miracles and it’s different there. Really!

#87 Bill ( Peterborough) on 09.22.10 at 8:00 am

Re # 8 Nostradamus Le Mad Vlad

So central bankers were manipulating spending in order to put us into the poorhouse. They certainly have done a magnificent job of that, along with sending the bulk of our mfg., industries and high tech jobs overseas to much lower-paying jobs.

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

More food for the undiscriminating free thinker/s:

http://www.save-a-patriot.org/files/view/whofed.html

#88 yuri on 09.22.10 at 8:06 am

After going through the posts here I’ve got to agree with Kip. The comments section on this blog is a clearing house for the unloved and rapacious ideas of the homeless er… houseless.

Watching this progress is an interesting exercise in understanding political corralling. It is quite often that Garth talks about the emotional value of housing—suggesting of course that a sober analyst is above such things.

Yet there is little to no sign of data provided on this site, just daily musings with media links often inciting a riot in the comments section. Most of the commenters here exude anxiety and come here for relief. Beware your own emotions doomers!

I don’t think it would be impossible for Garth to have a data section, a Canadian Case-Shiller posted in the corner, or a rolling data feed on housing starts, building permits, major city sales or whatever. It’s just that I think he’s doing much better fanning flames than really looking at the data.

And to be fair, the data doesn’t point to any sort of crash. I honestly thought this blog would close shop after housing raged back in 2010 to establish clearly unsustainable highs (but nevertheless evade downward movement forecast by Garth years back). But no, in classic bubble fashion, his blog has now gone “parabolic” with the least savvy people jumping on board for the last push.

Again doomers, beware your own emotions. And look out below…

#89 Love this Blog on 09.22.10 at 8:11 am

LOL. Garth, you hit a nerve last night. I was at the show, ejoyed it. THIS just popped up in the Saskatoon news.

http://www.saskatoonhomepage.ca/index.php?option=com_content&id=27645&task=view.

“The Saskatoon Region Association of Realtors says last August was a good month for home sellers in Saskatoon despite the fact there were fewers houses sold.

Harry Janzen Executive Officer for the Association says there were 313 buyers this August …down by 20 per cent from 2009.

But Janzen says the average sale price was 305 thousand dollars per unit, up 8 per cent over 2009.

He says in addition the number of homes placed on the market was up 25 per cent. Janzen says that’s a good indicator of the health of the housing market in Saskatoon. ”

So, sales are down 20 percent, lisitmgs are up 25%, and that’s a good indicator of the “health” of the housing market???

#90 Nancy on 09.22.10 at 8:17 am

I’ve been to Vancouver a few times. It’s nice in an okay sort of way. But I’ve never felt a desire to live there. Those mountains make it a bit claustrophic. And then there’s the earthquake risk, the forest fires, the landslides, the endless dreary rain, the absence of anything old.

Where does Vancouver get the idea that everybody wants to live there?

Give me the east any day.

#91 T.O. Bubble Boy on 09.22.10 at 8:17 am

@ #33 VancouverGoinUp:

yawn.

Wake me up when you have some actual statistics to back the marketing spam.

I could search&replace “Vancouver” for another city name, and it would still sound the same… look, I’m a realtor:

Calgary is different by a long shot consistently voted the most livable City in the world – that’s right the World! Internationally recognized as one of the Top 3 cities in the World. How many more awards can be heaped on Calgary. It’s the best period, the Crown Jewel of Canada. This is not your typical Canadian City. People buy condos and houses here by the bushel not as a one time buy. Many of the homes are bought with cash, others are bought with huge mortgages with the cash invested in gold and other precious metals. Make no mistake Calgarians are poised for the metal mania stage which will happen shortly (anyone take Jim Sinclair up on his million dollar bet for gold to reach $1300 by early 2011?) But I digress, when you have a couple mil in the bank why not get a huge low interest rate loan on an appreciating asset and invest the rest in the junior gold market because as the Major gold companies continue to deplete their supplies they are going on a shopping spree for the juniors. UP UP AND AWAY. Come join us in the best place on earth Beautiful Alberta.

#92 Peter on 09.22.10 at 8:31 am

Threre wont be any housing crash….at least not in all canada. People keep buying houses, specially outside of the GTA. Go to places like Milton where people line up from 5am to buy a house on a new development. Places like Woodbridge, houses are selling in 2 weeks. …….Houses wont go up 10% every year but they wont crash neither.

#93 Cassandra on 09.22.10 at 8:46 am

I completely agree with Garth on the US, and would tweak it just a bit – while the social engineering post-9/11 did indeed add fuel to the house porn fire, it had started before then.

After the dot.com bubble burst, people were looking for new places to put their money, and it went into real estate. I was a buyer in the 2000 market, and it was crazy – multiple offers, escalation clauses, homes selling within hours of being listed. The drop in interest rates after the terrorist attacks exacerbated this. And the US is now entering its own double dip in the housing market.

#94 Bill Muskoka (NAM) on 09.22.10 at 8:53 am

David Olive? People actually read his tripe? Who would have thought? Oh, sorry, I forgot, down there in LaLa Land (Tornoto) they are the Centre of The Universe and the rules the rest of us live by do not apply in their dimension of time and space.

#95 young & foolish on 09.22.10 at 8:54 am

Housing crash or not, one thing is for sure ….. DEBT is your enemy. The more you carry, the less flexibility you have. So why would anybody want to saddle up with a monster mortgage when the economy is shaky, people are losing their jobs, and demographics point to an oversupply of housing?

#96 Bill Muskoka (NAM) on 09.22.10 at 8:56 am

For all the Gold officinadoes, answer this one question…’When you sell your little Precious what do you get paid in?’

#97 Aussie Roy on 09.22.10 at 9:00 am

Peter on 09.22.10 at 8:31 am
“Threre wont be any housing crash….at least not in all canada. People keep buying houses, specially outside of the GTA. Go to places like Milton where people line up from 5am to buy a house on a new development. Places like Woodbridge, houses are selling in 2 weeks. …….Houses wont go up 10% every year but they wont crash neither.”

“That sounds so California 2006”.

Why is it so hard for some to understand that you can go from shortage to glut without building a single house, just by changing the demand side.

Sorry to repeat this.
Ah – the good old supply/demand imbalance..
Gotta love it..

Spruiker definition:
Supply = number of dwellings available for occupation
Demand = total population

Economic definition:
Supply = number houses available for sale
Demand = number of buyers willing to transact at today’s prices

So fundamental, yet so hard for some to understand.

#98 BrianT on 09.22.10 at 9:02 am

Re “top cities in the world” lists-one glance at any of these and you quickly see that only cities with expensive RE are included. Even truly awful places to live (for anyone with a net worth south of 20 mill) like NYC sometimes make these lists-why? Because the town has very expensive RE.

#99 Cassandra on 09.22.10 at 9:10 am

#84 kathy – put it on the market ASAP. If Garth is right, and I think he is, things will continue to slow down exponentially, and it will be harder to sell your house. If you get an offer, do not be greedy.

True story: a distant relative of mine put his house on the market in Norther California in 2005. He had it listed for 420,000 and received a strong offer for 400,000. He turned it down. Almost six years later, he still has the house because it is the ONLY offer he ever received. He is renting out the house and has had to move thousands of miles away for work.

#100 Wise Guy on 09.22.10 at 9:12 am

#88 yuri

YURI, you must be new. Garth has backed up every argument for a housing correction with facts, stats and tons of data. If you had been reading for sometime,you would have read these facts. My suggestion to you is to keep reading…

If everyday, he were to post the stats, it would get pretty boring, pretty fast.

In terms of you stating that all he talks about is the Emotional Purchase of a House. It is true that he speaks of this, but it is only because, it is one of the reasons people keep buying in a market that is already over inflated.

In the same respect, when housing continues it’s decline in 2,3 or 4 years, the Emotional Selling of a House!

#101 ExExpat on 09.22.10 at 9:15 am

#72 Been There, Done That

Agree completely, no lessons were learned in Canada, its different here.

Maybe talking with real estate junkies is kind of like telling an alcoholic they have a problem. You can’t prevent anyone else destroying their (financial) life, let them bottom out on their own and wait for them to find help. Garth should start some kind of twelve step program for these folks.

#102 Aussie Roy on 09.22.10 at 9:28 am

Garth is the Australian media reading your blog?

Its different here, its a “paradigm shift “!

http://smh.domain.com.au/real-estate-news/blogs/property-values/bubble-or-paradigm-shift/20100921-15kwd.html

#103 Fred Ziffel on 09.22.10 at 9:30 am

Things are different here in Hooterville.

#104 Torontorocks on 09.22.10 at 9:34 am

I was informed by an agent just yesterday that prices for September are up from last year and from August as well…as well as sales.

Explain this to me – a house listed there was on the market for 90 days though..kind of in the area I want.

I’m still at a loss and still cannot justify jumping in – I chalk it up to euphoria over a small price decrease in August and continued or lower 5 year rates.

I’m either doing something very wrong or need a goddamn government job in order to guarantee an annuity (aka my income and pension) in order to pay 8 times my income for a house and say its ok b/c I’ll always get paid.

btw – David Olive is a moron. I like Toronto and am born and bred here but the way they tout the rock solid Canadian banking system – is he an idiot? 500 billion in CMHC mortgages, backstopped by the Government of Canada aka the taxpayers. Lets see this ponzi – the bank writes a crap mortgage, gets a bundle of fees etc for administering it then offloads it to the CMHC who then bundles these up, issues a CMB on it backstopped by the Fed and sells the paper in the market. So in the end I fund that paper b/c I backstop the Fed. And I fund the bank’s profits and those d-bags paying 800K to live in Trinity Bellwoods.

Yet prices are up sales are up and I’m still sitting here holding my breath….

#105 BDG - YYC - RE future in weak hands on 09.22.10 at 9:39 am

50% of Canadian Households have incomes below $60K
About a third below $40K.
70% are home “owners”.
30% of homes are mortgage free.

assumption … let’s just guess that most of the paid for homes belong to people who have been homeowners for a long time and probably have household incomes above $60K.

About half of all existing mortgages are sitting with households with incomes below $60K … BELOW $60K !

One more wild assumption based on the fact that about a quarter of all households have incomes below $30K … now it might not be entirely safe to assume that its not likely that too many of these folks have mortgages and since 30% of households don’t own homes … let’s just throw these households out and see what …

Yikes that means that about half of all mortgages must be sitting with households with incomes between $30K and $60K.

Without getting too fancy … lets just slice up that 50% of mortgages so we can pin some incomes on them … say like this … give or take …

17% … $50K-$60K
16% … $40K-$50K
16% … $30K-$40K

YIKES ! That would say that about a third of all mortgages sit with households with incomes under $50K to perhaps as low as $30K.

Now … home ownership in recent years rose from around 62% to 70% … an increase of just more than 10% … a demand “boom” increasing our national housing stock and the number of outstanding mortgages. This was aided by reduced interest rates and relaxed lending standards.

More assumptions … if its safe to assume that most of the paid-for homes representing something that must be well over half of total home equity is in the hands of households with incomes greater than $60K it might also be safe to assume that most of the remaining equity also sits in the hands of people who have lived in homes they have owned for a long time and who earn more than $60K. That actually just might be safe to assume since the top half of earners account for something in the area of 80% of all wealth. So we might harshly conclude that …

ABOUT A THIRD OF ALL MORTGAGES COULD BE SITTING WITH HOUSEHOLDS WITH INCOMES BELOW $50K WITH LITTLE OR NO EQUITY.

Hmmm … I wonder how much of a drop in housing prices we need to put a quarter of households underwater on their mortgages. Are we there yet?

Watch for rats abandoning the ship … err … listings.

A very large part of the market lies in very weak hands.

Now would it also be safe to assume that households earning $30K, $40K, or $50K, or $60K don’t have much chance to accumulate much in the way of savings? I think not.

#106 Joe Realtor on 09.22.10 at 9:40 am

Stricter lending policies? LOL.

There are people who can’t manage money everywhere.

Not clients of mine, but I know of a couple…. separated. She purchased a home for under 100k. He for just over 100k. Neither had any cash to put down, but the bank “lent” them the downpayment.

Both make about 50k a year. No kids.

He went into power-of-sale about a year ago. She’s behind on mortgage payments now and wondering what to do. (Won’t get what she paid for it… prices have declined)

Hello? Your mortgage payments were less than what you’d be paying in rent but you didn’t pay them on time or just “couldn’t keep up”?

Too busy keeping up with the Joneses I’d say. Toys, holidays, appearances etc.

#107 Dan on 09.22.10 at 9:41 am

The housing crash is getting worse by the months. Sales in the GTA have crashed 25% and outside of the GTA is worse. Places like Milton , woodbrigde , brampton houses are sitting on the market for MONTHS without any buyers and even after price drops. Realtors will spread their propaganda of lies on this blog and in the media. If sales where going so strong outside of the GTA why are sales down 25% and prices down 8% ? People who bought houses since May have not lost OVER $35,000. The housing crash have just started and many selling are close to going bankrupt. Yes, tens of thousands are close to going bankrupt. Sellers(NO M ONEY) and RE agents are running scared . Look at the furniture of those who are trying to sell and you will quickly see these people have NO MONEY and are in need to sell before they go bankrupt. If you are a buyer you need to take that information and use it against the NO MONEY buyer. The best thing to do is wait and watch NO MONEY go bankrupt. The economy is doing poor and what 60-70% are one payday away from ruin? Sit back and watch NO MONEY crash and burn while realtor scream and cry for money.

POP………………………

NO MONEY………Please buy…..everyone wants to buy? PLEASE!

Realtors…………………….Please buy now! You have to buy now! Please

Mortgage brokers………..Glad I am doing this part time now.

#108 CTO on 09.22.10 at 9:42 am

Garth

I am a housing bear for now…but…

Since I sold my house up north and moved to T.O. three years ago, I felt extreme sticker shock! Any house over $300,000 was way too expensive to buy! My wife has had a house in T.O for 20 years ( the one we live in now) and thinks any price under $500000
Is cheap! I was shocked!…but…over time CONDITIONING has took it toll. I’v recently seen a house in the neighborhood just outside the city we desperately want to move to for $475000. The house and lot are beautiful, (two hundred in upgrades and landscape)…seems like a good price. Then I remember that a few years ago, I wouldn’t ever entertain that price…conditioning maybe?
I dare not tell my wife, as she would jump in feet first. No analysis. However, we could sell our/her house further in the city and with about $100000 extra we could own this one. I have cash to inject as well from my sale in 2006.

There is going to be an open house this weekend and I believe that if this caught my bearish eye, then I would imagine a full open house on this one with multiple offers.

Two houses across the street have been languishing on the market for months now at a higher price with empty open houses but I believe this boomer took your advice (lower listing price).

What should I do???

#109 ken on 09.22.10 at 9:44 am

You could not be more right particularly about the interest rates.

#110 centralbankshategold on 09.22.10 at 9:48 am

More “quality” from David Bozo the clown Olive. This was from 2009.

http://www.thestar.com/business/article/742619–olive-don-t-believe-hype-over-gold

#111 Yeri totali wrong on 09.22.10 at 9:49 am

#88 yuri “After going through the posts here I’ve got to agree with Kip. The comments section on this blog is a clearing house for the unloved and rapacious ideas of the homeless er… houseless. To be fair, the (Garth’s or anyone elses) data doesn’t point to any sort of crash. I this blog would close shop back in 2010”

Yer new here, ain’t ya. Not from around these parts. Stick around yellow belly and ya might learn a thing or two.

HAHA, ok, you can seriously think there has been no data provided by Garth or anyone else here that points to any sort of housing price drop?

Keep hoping the blog closes up shop or gets hacked or attacked again, maybe your house will go up in value if it does!

#112 Numbers. on 09.22.10 at 9:56 am

Rough numbers we worked out last night:

– 73ish% of Canadians own a home.

Shouldn’t that be much higher, say 90% because:

– You have x% that are too young or too old to own/buy a home.
– You have x% that are the right age but do not make enough money to buy.
– You have x% that have too poor a credit score to buy.
– You have x% who rent and enjoy renting even if they can pay in cash for a home.

So, who is going to be buying the small starting homes?

So who is going to be buying the boomer homes when the boomers are the BIGGEST age bracket by number?

Oh oh.

So, has the vast majority bought a home now and who are they going to sell to? The last “10%” who are looking to buy?

#113 SK on 09.22.10 at 10:04 am

Garth, you are the Marty York of personal finance.

#114 Buffy on 09.22.10 at 10:10 am

I love your blog and would really like to hear you speak in person.Are you going to be appearing at a large enough venue in Toronto in November to accommodate all the GTA blog dogs?Will you please post the info on how to get tickets prominently so I don’t miss signing up?Thanks for all the good advice and keep up the good work.

The venue is set and registration details will be published here Thursday evening. Thank you. — Garth

#115 Bill ( Peterborough) on 09.22.10 at 10:12 am

What alot of people fail to see/realize is that all this real estate crisis which has been orchestrated, like a well tuned violin, is just another one of many smoke screen’s too further reduce/delete the middle class.( To achieve a 2 tier society of haves and have nots)

The North American economy has been fueled on credit for close to 10+years, not productivity.

Global economy is screwing us over, unless we start working over here for just food.

Society has been condition for the longest time to acquire materialistic wealth as a status symbol, in general. (whether they bought it outright or are on the payment plan)

Do people not realize that the Rothchild Lineage is estimated to own at least “HALF OF THE WORLDS WEALTH”.

How much do you really need. Unless you are driven by a sheer madness to control everthing on this earth. Far fetched you say; well just look at history and the previous empires/rulers/ dictators/ madmen who tried.

The only difference being these ” So called Elite” is that they work in the shadows pulling the strings of every person who has been bought and payed for. Paying/ buying off people with currencies which they print at almost no cost to them, since they have set up their Banking Cabals throughtout the whole world.( Its like playing monopoly and being the banker with unlimited funds, YOU CAN”T LOOSE)

If you see your enemy it is easy to defend yourself, however if your enemy is behind closed doors constanly assualting you from every direction through many channels to subdue you , its hard to comprehend that one such force exists. Instead you think that there are many enemies attacking you.

In this case exposure is the greatest fear of these people. Only then will people be able to see what is really happening. Trying to see this is very hard because medias are controlled by them. Alternative sources must be read and crossrefrenced to get to the bottom of it all. ( which they are trying to censor now)

This information is out there for those who have the time . Or for those who are starting to question why do we have to work harder every year to try and substain the same lifestyle, based on our individual goals of comfort.

What we have been living throughout history is sort of like a ‘David Copperfield” show. ( smoke and mirrors to distract us from the real truth).

The only difference being this one is sort of almost uncomprehendable.

Truth is stranger than fiction.

Alot of Senators, Congressmen/women, Presidents saw/seen this… as well as affluent educated people.

I guess they were tin foilers as well

#116 T.O. Bubble Boy on 09.22.10 at 10:13 am

@ #105 Torontorocks:

Prices and Sales almost always go up in September over August due to seasonal trends… but if your realtor is saying that this September has more sales than September 2009, he/she is lying to you.

http://guava.ca/indicators.html

You see that there is always a September uptick in price (due to a few more high-end homes selling I suspect), and quite often a September bump in # of Sales as well.

Sales for the GTA in September 2009 were 8196, and the mid-month September 2010 sales were sitting at 2623… so any claim that Sales are up over last year is false. I believe that the GTA is still on track for the slowest September in 6+ years.

Listings also appear to be rising through the month… one area that I search for on Realtor.ca is up 17% from the end of August.

#117 young & foolish on 09.22.10 at 10:19 am

… still waiting for rents to drop in downtown Toronto so I could move into a nicer apartment …. sigh!

#118 Peter on 09.22.10 at 10:23 am

The housing crash is getting worse by the months. Sales in the GTA have crashed 25% and outside of the GTA is worse. Places like Milton , woodbrigde , brampton houses are sitting on the market for MONTHS without any buyers and even after price drops. Realtors will spread their propaganda of lies on this blog and in the media. If sales where going so strong outside of the GTA why are sales down 25% and prices down 8% ? People who bought houses since May have not lost OVER $35,000. The housing crash have just started and many selling are close to going bankrupt. Yes, tens of thousands are close to going bankrupt. Sellers(NO M ONEY) and RE agents are running scared . Look at the furniture of those who are trying to sell and you will quickly see these people have NO MONEY and are in need to sell before they go bankrupt. If you are a buyer you need to take that information and use it against the NO MONEY buyer. The best thing to do is wait and watch NO MONEY go bankrupt. The economy is doing poor and what 60-70% are one payday away from ruin? Sit back and watch NO MONEY crash and burn while realtor scream and cry for money.

POP………………………

NO MONEY………Please buy…..everyone wants to buy? PLEASE!

Realtors…………………….Please buy now! You have to buy now! Please

Mortgage brokers………..Glad I am doing this part time now.”

I have no idea what the hell are you talking about……Milton? Woodbridge??…..houses are not having multiple offers, no selling in 3 days…. but crashing….no

#119 dark sad person on 09.22.10 at 10:46 am

#84 kathy on 09.22.10 at 7:52 am

Q- Do I list in October or should i wait for spring? obviously i’d like to sell as fast as possible but there are some who think on a seasonaly-basis, Spring price sales are higher than Oct/Nov sales. So there is a chance i get a lower price in Oct/Nov vs spring.

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

I’m not so sure seasonality will be as much of a factor as before-
That only works when prices are climbing-or-at least not dropping–
Knowing these total jackasses that run this country-I would suspect they’ll try and prevent the much needed correction-with taxpayer money-same as the US did-
If/when that happens-it might give you a selling window-because-stimulus gives Dan’s “no money” people the crazy notion-that the Government will “never” let house prices fall-so-back into the market they will fly–with “no money” and what you see on the US-RE price chart below-is quite likely to happen here–
That could be your only shot–if it happens–

http://calculatedriskimages.blogspot.com/2010/08/case-shiller-home-prices-yoy-june-2010.html

#120 Reasonfirst on 09.22.10 at 10:49 am

#33 VancouverGoinUp

hahahahahaha!

#121 rory on 09.22.10 at 10:58 am

#24 AnotherLowlyRenter

“It shows the 5-year performance of the Canadian/Australian stock markets. Can you tell the difference? Suddenly we don’t look so special after all. That’s because like Australia, Canada is a commodity-driven market. And we live in a global world.”

I have attached a link to our currencies. I do not know what it means but the Aussie $ is eating us for lunch …as it is almost at parity and 2 years ago we could buy 1.3 AUD for one CDN $ give or take…does this translate that the Aussies house market can last longer then ours or are they even more in bubble territory?

http://ca.finance.yahoo.com/currency/convert?from=CAD&to=AUD&amt=1&t=5y

#122 grantmi on 09.22.10 at 11:03 am

Anecdotally!!

I’m getting more and more new IPO offer’s in my “inbox” from TD Canada Trust!

They are sure pumping the IPO shares out there. Is this a sign.. that maybe the TOP is in again?? And we’re headed back for a another low from March 2009??

Hmmmmmmmmmmmmm!!

#123 Dan on 09.22.10 at 11:06 am

Peter #119

Sorry realtor peter you do not like the FACTs and numbers? The GTA is getting hit hard with crashing sales and falling prices. ANYONE who bought in May is now underwater on their mortgage with prices falling OVER $35,000 or 8% . People with NO MONEY are just a payday away from going bust. You can spin and lie and hope all you want realtor peter but the housing crash is getting worse.

POP………………..

peter……………What was that?

NO MONEY…………We are going bankrupt.

Realtors………….please buy……it’s a balanced market.

#124 Andy N. on 09.22.10 at 11:06 am

Garth, I’ve registered for your Surrey engagement and was told I’d receive email confirmation within a couple days – that was pm the first day registration was open – any ideas?

Cheers.

#125 JM in London on 09.22.10 at 11:14 am

#116 Bill ( Peterborough) on 09.22.10 at 10:12 am

“Far fetched you say; well just look at history and the previous empires/rulers/ dictators/ madmen who tried.”

If there were this complex a plot out there (seriously unlikely BUT that level of sophistication FULLY suggests the shadow aspect would be FLAWLESSLY designed to keep pseudo intellectuals furiously ferreting those shadows – Hearing an echo anywhere?) it would leave a much larger trail of bread crumbs & evidence. The endless cyclic argument here is the tail chasing going on described by the foil hatters as “it’s them secret shadow organizations distortin da facts…er somthin like that” when they run out of virus infested quack URL’s to point to…

The common thread to it all and the end point of the argument:

ALL schemes have FAILED – FULL STOP

#126 bruce corell on 09.22.10 at 11:28 am

Yes there is a big difference and its called CHMC.
When this falls then you will see how different we are.

Read and weep….

http://www.thestar.com/opinion/editorialopinion/article/816200–cmhc-canada-s-very-own-ticking-economic-time-bomb

#127 VancouverGoinUp on 09.22.10 at 11:32 am

T.O Bubble
I could search&replace “Vancouver” for another city name, and it would still sound the same… look, I’m a realtor: Calgary

Calgary is a ripoff. Drive East to the outskirts of town then take a look – you can see the Canadian Shield in the distance. You could build a City there of a billion people and still have room. Vancouver is boxed in by the US Border, Mountains and Ocean and for the complainers of rain it has the best weather in Canada period. Anyone watch the 2010 Olympics this past “winter”? People sitting outside at the outdoor sites in their short sleeves. Calgarians staring out at the snow and spinning wheels on ice going up hill. Vancouver is not a typical Canadian, US or World City for that matter; it is recognized as being in a elite group of Cities. There will ALWAYS be demand for Vancouver real estate. I know it’s a slap in the face of other Canadians but Vancouver is not for your typical Canadians, it’s for the best in the world, the most educated, the richest, and that’s why it’s going up. Actions have consequences! The consequences of renting in Vancouver is a future of uncertainty, a future of rising rents (latest trend in the West End is renovating affordable rental apartments and raising the rent 1000 bucks or more), a future of knowing for the rest of your life you made a crucial crucial financial mistake that can’t be undone. You renters missed the boat buying but the good news is you can still get in and redeem your financial future for yourself your children and get your self respect back. Up Up and Away

#128 RichieRich on 09.22.10 at 11:32 am

Garth – You say you’re back in Calgary Oct 21st… how do we get more details and sign up for tix? Last “show” was very interesting (and entertaining) – have you updated/changed the presentation?

Working on details now. — Garth

#129 Apsalar on 09.22.10 at 11:33 am

A little ray of sunshine amidst all of the gloom:

http://cnews.canoe.ca/CNEWS/World/2010/09/22/15434236.html

#130 jen on 09.22.10 at 11:43 am

The powers that be in Ottawa are clearly getting worried- see link below. So worried some feel Harper cant wait beyond this fall to call an election. By January the problems in housing may be obvious to those with a mere pulse including those in the mainstream media.

http://www.hilltimes.com/page/view/wiseguys-09-20-2010

#131 Carruthers on 09.22.10 at 11:50 am

Bill Muskoka wrote: For all the Gold officinadoes, answer this one question…’When you sell your little Precious what do you get paid in?’”

OK, I’ll bite….Money Bill? What is your point? What else would you expect an investment to pay in when you liquidate it? Another gold-hater who is too uneducated to understand what a 500% return in investment is? Almost 500% since the early 2000’s Bill. Too bad you were too lazy to do your homework and get in front of a building trend. Instead you spit smarmy invective at those who did. You missed it and now you are bitter aren’t you Bill?

You invest, hold, sell, take your capital gains, and pay your taxes. That’s how it works Bill. Be it gold, preferreds, antique braziers, whatever. Get over yourself, take responsibility and start educating yourself as to the next potential trend Bill…so you don’t get left behind again! You could always put some of your money on gold Bill. Still not too late! Perhaps you should talk to Garth as well.

#132 Phil on 09.22.10 at 12:00 pm

Garth, what do you think of the Claymore Preferred ETF, as opposed to holding a few preferred shares? I would assume the yield would be slightly lower, but if interest rates were to rise, the ETF would cycle into new issues of Preferreds, so you would not be stuck holding a lower yielding preferred. Thoughts?

#133 Ron S on 09.22.10 at 12:02 pm

Why do Canadian media like CBC, CTV or Global never bring that news or discussion among economists who do not sleep with govt and bankers?

#134 Get Real on 09.22.10 at 12:06 pm

#90 Nancy: I’ve been to Vancouver a few times. It’s nice in an okay sort of way. But I’ve never felt a desire to live there. Those mountains make it a bit claustrophic. And then there’s the earthquake risk, the forest fires, the landslides, the endless dreary rain, the absence of anything old.

Give me the east any day.

Nancy, memory serves
-that the EAST had the last earthquake,
-Ontario has more forest fires than any other province
-last year we had something like 180 days non stop sunshine! we only order the rain when people like you show up….
-who the $#%% wants to live in anything old?
-claustraphobic???? seek help…it’s not an elevator….

Please stay in the east…your nice polluted, muggy in summer, freeze your nads off in winter, can’t drink or swim in the water east….

#135 DJ on 09.22.10 at 12:07 pm

#116 Bill ( Peterborough) on 09.22.10 at 10:12 am

If these shadowy guvment types are listening in Bill, I’d say you have about 2 hours (because they are naturally located in Toronto, and that’s the commute time on the 401) to pack your belongings and head to your secret bunker. You don’t think they can’t locate you via your IP? Or maybe they’re there already! Check out your window. Is there a cable TV van outside?

Stop watching old episodes of the X Files.
The government can’t even balance a cheque book.
And as for global conspiricies, the world can’t even agree on a common electrical outlet.

#136 Bill ( Peterborough) on 09.22.10 at 12:11 pm

# 126 JM in London

ALL schemes have FAILED – FULL STOP
**************************************

You might want to try and do abit more reading here on my discussed topics, before forming an opinion. Try Andrew Hitchcock ,Tex Marrs, Ellen brown along with countless other people who have crossed refrenced, read , searched libraries… to expose these people for
what they really are.

What you have failed to take into consideration is the plan is the same. Once in a while it slowed down by exposure. But the goal is the same.

Many factual articles have been written on this. Interesting how no slander or libel suits have been thrown on the people who have written and exposed what has been/ is going on , against this group of perpitraitors.

Unfortunatley alot of people make opinions on topics which they generally have little knowledge about: whether through lack or reading/research, or they just can’t/won’t believe such things do go on.

Here’s something you might want to look at.

http://www.iamthewitness.com/books/Andrew.Carrington.Hitchcock/The.History.of.the.Money.Changers.htm

#137 Aussie Roy on 09.22.10 at 12:14 pm

#122 rory on 09.22.10 at 10:58 am

IMHO Aussie bubble is more wide spread through out the country. Places which we call “out in the sticks” little country towns are as over valued as the mid-sized cities in Australia. Of course here there are excellent tax incentives to speculate on housing, just another reason why I believe we have the mother of all house bubbles in the western world.

Sydney and Surfers Paradise (the Gold Coast) are the most expensive areas with prices around 9 times annual household income.
A mid size city like Adelaide is around 6 times household income.

From a rental yield perspective, I purchased a unit in Darwin in 2002 its rental yield was 8.5% despite raising the rent by 5% per year the same unit today if I still owned it would be yielding 2.7%. When I sold in 2008 the investor (well speculator imho) was happy to buy it at 3.6% yield.

To me its a classic bubble, prices have moved away from wages and yields have been so squeezed you cant make money without capital gains. Thses two things are and have been present in all bubbled house markets around the globe. Of course some are patiently waiting for the delusion to stop and reality to kick in.

#138 Dorf on 09.22.10 at 12:28 pm

Garth, I have a brand new plan for your success.

Do another tour, $50 per ticket.

Walk in and tell everybody they are doing everything right, there are no worries, and that everyone will get gloriously rich off of their real estate no matter what.

Shake hands, sign books, and leave.

You will suddenly be the most popular person on the topic of real estate and financial investments. The media will hail you as a hero. The fatcats will praise your genious and insight. The banks will send you gift baskets.

Most of all, nobody will believe that you are wrong.

#139 AnotherLowlyRenter on 09.22.10 at 12:35 pm

@ #122 Rory

———

Hi Rory – To be honest I’m not sure how to interpret it. Personally, I find currencies even harder to figure out than stock markets/real estate (and they’re hard enough).

There are so many conflicting factors to consider: How do locals and foreigners respond to the currency movements and how does it shape future decisions?

For what it’s worth, the CAD/AUD have traded in a range though over the last 5 years – and it’s currently at the low end.

http://finance.yahoo.com/q/bc?s=CADAUD=X&t=5y&l=on&z=l&q=l&c=

#140 BrianT on 09.22.10 at 12:44 pm

Mish is a good read today-some piece of garbage bank manager from Sask had the nerve to defend grifter Munger’s comments the other day http://globaleconomicanalysis.blogspot.com/

#141 jess on 09.22.10 at 12:50 pm

http://www.pbs.org/wgbh/nova/megaflood/
“Kolks, a kind of underwater tornado that occurs in deep flows of fast-moving water, tore huge potholes in the scablands and probably also flung debris right out of the floodwaters. ”

80’s thinking and the floods of today:
1980s U.S. farm crisis.
low prices+ high interest rates falling land values = farms+banks
= foreclosure

Today
high crop prices +low interest rates =?

==============================

Regarding taxpayers pay for sports areas I googled this story:
As Stadiums Vanish, Their Debt Lives On – NYTimes.com
“7 Sep 2010 … Taxpayers in New Jersey and in other areas of the country are … Paying for arenas and stadiums that are now gone or empty is a … For one, they viewed the project as a way to compete with New York, which cast a long shadow in the region. … Fearful that their sports empire would not be built, ..”.

=======
#123 grantmi
http://www.nytimes.com/2010/09/23/business/global/23swiss.html?_r=1&ref=business
“Swissness” -lol -secret treasures and tax evaders move to Singapore and Hong Kong.

“I’am Worth it”
Truthselling and making money
Le Monde, Mediapart

#142 TheBigLebowski on 09.22.10 at 12:54 pm

Nobody is talking about silver hitting a 30 year high in the last few days. Gold/silver and the shares are moving into stage 2 of a 3 or 4 stage long term bull market that is 11 years old. The fiat money bugs continue to keep their heads in the sand over this but eventually even their denials will seem childish to the average sheep. Anyone who thinks taking money out of Canadian real estate and cramming it into a U.S property is smart needs to put down their economic 101 text books. We are in the middle of a secular bull market in hard assets and a secular bear market in the general stock market and real estate. If you can accept this reality through all the noise put out to distract us, then you can protect yourself financially.

#143 DJ on 09.22.10 at 12:57 pm

Hi Garth,

I know you have been preaching biflation (meaning debt based deflation and commodity based inflation). Do you think that stock prices have taken this into account? It’s weird. I would think that with all the unemployment and negative equity, there wouldn’t be as much money in the stock market, which would drive prices down? Or is it just the rich investing?

Do you expect the Canadian markets to drop with the RE drop? We as Canadians seem to be egocentric when it comes to investing. Could there be a significant pull-out of the TSX as people try to pay off their debts?

#144 BrianT on 09.22.10 at 1:10 pm

Great charts from Alan Newman-http://www.cross-currents.net/charts.htm

The funniest comment is about Alan Greenspan and the staggering level of absolute B/S this shmuck has spun for decades-“rapid growth in derivative products is necessary for sustained economic growth”-priceless.

#145 Renting in Rosedale on 09.22.10 at 1:12 pm

Happened across an interesting investment opportunity today….

Was researching preferred shares when I found a particular convertible that seems like a bargain. Its BPO.PR.I and I picked it up for $25.15. Dividend is $1.30

According to the prospectus it is convertible into BPO common stock at the owner’s discretion after Dec 31 2010, “by dividing $25.00, together with all accrued and unpaid dividends up to but excluding the date fixed for conversion, by 95% of the then Current Market Price”

So I intend to collect dividends for now, and eventually if something better comes along I will convert it into roughly $26.30 worth of common stock, for a $1.15 capital gain.

#146 Teena on 09.22.10 at 1:14 pm

2. We had no housing boom because ‘strict Canadian lending standards kept exuberance in check.’

Ha,ha! I can attest from personal experience to these so called “strict Canadian lending standards” What a joke!

Back in Oct. 2004 me and my common law husband of just barely 1 year were presented with an opportunity (private sale) to buy what would be our first home in a small industry town in Alberta. I had just barely finished university (August 2003) and had just started working in my profession (jan 2004)and at the time was on probation in a temporary position.

I also had an outstanding debt load of around $55,000 and zero in assets. My common law was in debt about $10,000 and had a $15,000 RRSP. When we applied for the mortgage he was also technically unemployed/between jobs at the time. This seemed like a lot of red flags to me, but we thought we would apply anyway. So, due to these “strict lending practices” we had absolutely no trouble obtaining the mortgage for $162,000. In fact, we were told that I alone would be able to easily secure the mortgage. I remember being surprised by this comment. It turned out (supposingly) that not all my debt was showing up in her information about my status. When I told her about my total student loan and cc debts, I remember her stating “well, it’s not showing up in my information so we will just ignore it” . As for my husband’s work status she also fudged the information and took his previous employer information to fill out the form to make it look like he was working in the same job for over 5 years. We ended up buying the house and selling it 9 months later for $52,000 more than we originally paid. So, if these are the “strict lending standards” he’s talking about than there is guaranteed trouble on the horizon and a whole lot of people out there need a wake up call.

#147 JM in London on 09.22.10 at 1:15 pm

OH NO! Cue horseman # 1…

http://www.bnn.ca/News/2010/9/22/A-warning-for-homebuyers.aspx

*COUGH* *WHEEZE* *SPUTTER*

#148 dukes of moral hazard on 09.22.10 at 1:17 pm

>#32 dukes of moral hazard on 09.21.10 at 10:02 pm
>“Or CMHC encouraging reckless lending by wiping away
>the banks’ risk?”- Garth
>It is because the CMHC stands for the Canadian Moral
>Hazard Corporation.

“I wouldn’t gloat if I were you. If the gigantic heavy like a ton of brick debt monster CMHC comes crashing down? Guess who’s right underneath? Yep! people like you and me and other canadians. SQUISH! We better brace ourselves.”

Not gloating, but as soon as I am done with school I am moving back to my home country. I am not going to stick around and pay for the mistakes of delusional canadians.

#149 tom on 09.22.10 at 1:29 pm

China banking problems.
Seems to me Canada has a similar dilemma.

http://www.greenfaucet.com/the-market/rumors-of-pboc-deregulating-chinese-bank-deposit-rates/60138

#150 Another Albertan on 09.22.10 at 1:32 pm

#55/Grumpy:

It’s beyond that.

I have friends who own a condo overlooking Kaneohe Bay on Kona. Kona is a favourite of the well-heeled Edmonton crowd. Has been for a long time.

The condo was bought nearly 30 years ago for what would translate into basically CAD $500k back then (outright cash deal). Add USD $500k of renos and upgrades over 3 decades. Currently, with the state of Kona real estate, it would sell for about $500k (with exchange essentially at parity).

Summary: 500 in. Add 500. 30 year total investment of 1 million. Current value of 500.

Many of the high-end buyers on Kona in the last decade have been levered Americans. When their leverage on the mainland was eviscerated, their holdings in paradise were summarily executed. Only over the winter of 2009/10 did the temporary residents really start to understand how precarious some of their neighbours’ financial situations really were. High-end Kona vacation spots… that market is probably wrecked for at least a decade.

Everyone else’s mileage may vary.

#151 Bill Gable on 09.22.10 at 1:39 pm

>>Cue up “Blue Skies” – Willie Nelson…and then read this: (*OY GEVALT, said my friend, Jules) –

Vancouver is one of five metropolitan areas in Canada that recorded sharp year-over-year increases in housing starts in August, according to figures released Tuesday by the Conference Board of Canada.

“Vancouver was fifth [out of 27],” economist Jane McIntyre, who wrote the Conference Board report, said in an interview. “And we expect more improvement in the next year in Vancouver.

“Basically, when the recession hit in 2008-09, housing starts took a big hit in Vancouver,” McIntyre said. “But interest rates have remained low, there was the recovery of the economy in general, and the Olympics happened. There were a lot of things that drove the market back up. And that increased demand for housing in the region.”

Saint John, N.B., Regina, Winnipeg and Oshawa, Ont., in that order, recorded the sharpest increases.

In Vancouver in August, there were 14,091 starts on a seasonally adjusted basis, compared to 6,495 a year ago.

Victoria and Abbotsford, the other B.C. metropolitan areas cited in the report, also showed increases.

“Victoria and Abbotsford are also doing quite well, with positive expectations,” McIntyre said.

Tsur Somerville, director of the centre for urban economics and real estate at the University of B.C.’s Sauder School of Business, said in an interview that it took a while for construction to get going again in Vancouver after the recession.

Generally, Somerville said, “starts reflect an overall favourable environment, with low interest rates and a recovery from a recessionary environment.”

http://tinyurl.com/24ssb7e

#152 T.O. Bubble Boy on 09.22.10 at 1:43 pm

Obama’s new head of the Consumer Financial Protection Bureau (Elizabeth Warren) wants to save Americans from hidden mortgage costs and ‘fine print’:

http://www.slate.com/id/2268094/

Maybe they should focus on basic math skills first?

#153 TheBigLebowski on 09.22.10 at 2:04 pm

Ok girls and boys, class is now in session.
http://www.youtube.com/watch?v=dYw1JL6ZIpU

#154 brunt on 09.22.10 at 2:17 pm

For all the Gold aficionadoes, answer this one question…’When you sell your little Precious what do you get paid in?’
——————————
I will get paid in the currency of the realm. And it will quite likely be significantly more than what I can get now, and certainly substantially more than what I paid for it.

The same can be said for properties, stocks, and anything else that buys or sells. They are not money, but can be a successful hedge against a fall in the value of a currency. They are a store of value, they are not money themselves.

Now, having said that, I am not a classical gold bug. I view it as something into which I can temporarily put money as a hedge. I bought in 2000-2003 when I felt that it was a move that couldn’t possibly go wrong.

I know that Garth views gold bugs with some disdain. I respect that, and fully understand it. I know full well that gold will not “save” me. It is but one tool that I have used.

When we hit the point in time where I believe that there exists an asset with a better future than gold, I will gladly trade for it.

#155 Daystar on 09.22.10 at 2:25 pm

#102 bullion.bunny

I like Hugh Hendry, he’s a straight shooter. Thanks for the link, well worth my time. Cheers!

#156 TheBigLebowski on 09.22.10 at 2:41 pm

For all the Gold aficionadoes, answer this one question…’When you sell your little Precious what do you get paid in?’

you don’t get paid in fiat currency. You take the increased value of your gold and role the proceeds into depressed assets such as real estate, dividend paying stocks, a business, a farm etc. To maintain your purchasing power and will increase your buying power since this market has been so suppressed. Thats how gold/silver and the shares work.

#157 Devore on 09.22.10 at 2:43 pm

#88 yuri

There are plenty of numbers, if you care to look. Each major Canadian city has at least one housing blog, with regional stats posted usually daily by the resourceful and knowledgeable locals.

But you actually have to care, instead of demanding it be handed to you on a platter.

#158 PR on 09.22.10 at 2:54 pm

151 TheBigLebowski
The whealthy pepole who are not prepare, they not gona like it…..not one bit!

#159 Old_is_Gold on 09.22.10 at 3:00 pm

#67 YANK / “Young couples look at completely insane prices and think they are reasonable. 250K is cheap? really? 350K for a starter home???”

_____________________________________________

Yeah the insanity of it all! It wasn’t that long ago that TO Star would mention in RE column whenever a $1 million house would sell in the GTA. In the late 90’s there would no more than one or two a month, and none in some months. Even at the turn of the millennium, a townhouse could be had in the GTA for under 100K, and even detached homes all over Toronto, and in the suburbs for 150-200K. Now builders proudly advertise townhouses closer to the moon than they are to downtown as ‘Starting in the LOW 300’s’ – bowl me over while I break open the piggy bank and run out to buy a few of these.

As Garth has said a few times, and I fully agree, ‘It is going to get ugly’, and the only way for sanity to be restored (if it is ever restored) is for it to get UGLY, real UGGGGGGGGGGLLLLLLLLY!!!!!!!!!!!

#160 VICTORIA TEA PARTY on 09.22.10 at 3:03 pm

#12 Bill in Peterborough and #50 Dan in Victoria.

A truck! A truck! My kingdom for a truck!

I enjoyed your comments greatly, you guys, and I’m totally serious.

The young men who drive these 2010 gaudy “maisons du nuit” (French for whorehouses on wheels, I do believe!) off to the next spittleboard subdivision, or fast-fooder, to do a little plumbing, or flipping, is still a past-time that I continue to view with considerable amusement.

But I think I’m going to have to find something else funny to while away those empty hours, given the time when these young mens’ chrome-wheeled wet-dream fancies turn to “you owe me…” dross.

That’ll happen shortly after the work runs out which it is happening in droves, everywhere in this economy, pardon the sort-of pun.

This sadness will be followed by unaffordable lease payments, in excess of income levels and, to add insult to injury, there’ll be the penalty payments to pay for the “customizing”.

They’ll lose their steeds, but will still have to pay, unless they head for personal bankruptcy. Sad and so unneccesary. If only they’d listened to you gentlemen.

BTW, I think some of the Detroit Iron of the 1960s was just incredible: the 1967 Ford Econoline van, the later GMC Vandura, and a few Chrysler trucks. They were made of steel driven by people of substance that is, they too, had steel in their spines. Good trucks, good people.

I hope that some of these young men learn from their ego-driven mistakes and come back to you for help in finding a truck, a real truck.

Today’s vehicles, all of them, are larded up with cheapo airbags, because the steel has been some thinned out so much that it can barely hold the door and floor stampings in place (Car and Driver Magazine: recent issue 2010)

Airbags and Windbags. What’s next? Self-inflated hot water bottles?

Meanwhile back at the Carnival of Crash…

Gold prices pushed to within six bucks of $1,300.00 US an ounce overnight.

Translated into Plain English, it amounts to 1,300 reasons why the world-wide economic meltdown continues apace and now starts to pick up steam.

Gold buyers are saying they don’t trust fiat currency in ANY COUNTRY ANYMORE. PERIOD. Gold buyers come from every corner of the known universe, not just downtown HogTown or the city of the newly-partnered and dearly departed.

Finally, did you catch today’s BCTV (Global) real estate pump-show on the noonhour? Sarah Daniels windily talking up million plus lots and SFHs in Greater Vancouver, as if it’s not a problem! Need any deck chairs, young lady?

#161 PTDBD on 09.22.10 at 3:18 pm

Hyperinflation on way – selling your home and sitting on a big bundle of cash may not be too wise.
——————————————————————–
Bernanke yesterday – ” inflation is likely to remain subdued for some time”

Bernanke May 17 2007 – “we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system. ”

http://robvstate.com/2010/01/04/bernanke-quotes/
Why hasn’t Bernanke been replaced after being so wrong?

Have a look at government Wep statistics for Aug:
http://www.bls.gov/news.release/cpi.t01.htm

Look at the food total and then do the math on the food items using the relative importance. It doesn’t compute.

Finally, look at historical, long tem commodity prices:
http://www.chartingyourfutures.com/historicworksheet.htm

Hint: the things you need to live and the resources that industries need to produce are going stratospheric.

So, what’s Bernanke going to do? Another paperprestidigitation ( Quantitive Easing ) to offer free money to the select Financials allowing them to speculate these items even higher and further devalue the few dollars that you still have.

Interest rates will stay at zero until hyperinflation hits. That’s what gold is saying.

How can companies continue to increase their profits year after year by the claimed 7% or more while consumer costs are reportedly only rising by 2%?

:-) going forward :-)

#162 Bill ( Peterborough) on 09.22.10 at 3:21 pm

Re #133 DJ

Stop watching old episodes of the X Files.
The government can’t even balance a cheque book.
And as for global conspiricies, the world can’t even agree on a common electrical outlet.
******************************************

Thank you for your intellectual rebutal, very concise, factual..

Truly are a learned shcolar.

#163 Grandpa Grinch on 09.22.10 at 3:39 pm

From Zero Hedge:

http://www.zerohedge.com/article/guest-post-primer-5-role-demographics-canada%E2%80%99s-coming-housing-bust

Discussing the role of demographics in Canada’s coming housing bust. A few key points:

Housing constitutes 48% of the average persons net worth – the highest in 20 years;

59% of homeowners live in a house larger than their last house; (wonder when this will change…..boomers)

Average net worth of retirees at 65 is $420,000 – half of that in RE.

Some great charts in this article and worth the read.

#164 JM in London on 09.22.10 at 3:57 pm

#134 Bill ( Peterborough) on 09.22.10 at 12:11 pm

Been there, done that – the endless cyclical argument is a dance around the may pole and an intellectual dead end – I’ve done the debate a a few times – it will not happen here – just have to speak every once in a while when the foil hatters run amok – it’s like scratching an itch – it just has to be done every so often – the reason your crackers haven’t been sued is that it’s pointlessly cruel to keep repeatedly beating on a drum that someone is crazy when it is patently obvious that they are…just like drawing a foil hatter into a debate…

#165 junius on 09.22.10 at 3:58 pm

#149 Bill Gable,

I see the Conference Board of Canada is back with yet another irrelevant article with which to cheer lead “it is different here.” I have learned not to even listen.

Their batting average remains worse than the Toronto Blue Jays. Just pathetic.

#166 Al on 09.22.10 at 4:14 pm

Saw quite a few “SOLD” signs while driving in Toronto today

#167 Shawn Allen's mom on 09.22.10 at 4:39 pm

Listen to my Shawny you filthy blog dawgs, he knows best and very modest about it to. Hopefully he can get back my life savings that he gambled in the big boy Casino last year.

Please post your identities as I will be posting Shawnys home address in my next post, what’s fair is fair doggies.

#168 victor on 09.22.10 at 4:45 pm

Approximately one year ago I asked you to stop scaring the kids! I check in from time to time and find that the theme hasn’t changed. Once again, had I listened to Howard Ruff, et al, in the late 70’s, I would never have purchased a house. Instead I listened to my financial wizard wife (GIC’s are safe), bought the house, paid it off, retired, and life is good.
Number one son just sold his house in St. Albert in 3 days for $3k under list. Bought another one and life goes on.
Number two son purchased a condo in the GTA in ’08, 25% down, 1.85% mortgage, has no idea how much it’s worth today, doesn’t care, needs some place to live, just like everyone else.
Where do people who are counseled to sell and not buy until after armageddon, live until then? Do they live in some magical kingdom for free or does their rent equal the mortgage payment, more or less?
For the record, in 26 years the value of our home went from $101K to $73K to $410K to $375K today. None of that mattered – we weren’t moving.
So, stop scaring the kids!

#169 jess on 09.22.10 at 4:47 pm

commonwealth interesting word ..I prefer the archaic

noun
(the commonweal) archaic
the welfare of the public
common well-being
====
so what mircle can prevent the flooding?

Gandhi was known for his obsessive attention to personal health and hygiene and had a rigorous daily routine of ablutions of which bowel movements were a vital part.
He also believed in the “responsible” disposal of human excrement to avoid disease. His lavatory was constructed in such a manner as to allow waste to flow out to fields around his house.
“Our (Indian) lavatories bring our civilization into discredit. They violate the rules of hygiene,” Gandhi wrote in 1925 and recommended that all the “night-soil” should be removed to fields.
“I learnt 35 years ago that a lavatory must be as clean as a drawing-room. I learnt this in the West. I believe that many rules about cleanliness in lavatories are observed more scrupulously in the West than in the East,” the Mahatma added.
Gandhi also cleaned his toilet himself and often referred to it as his “temple”. (ANI)
http://timesofindia.indiatimes.com/city/delhi/Sewer-backflow-swamps-North-Delhi/articleshow/6609764.cms#ixzz10IPpjq1j

NEW DELHI: Heavy rains continued to lash the city which led in rise of water level in the river Yamuna which has been flowing well above the danger mark of 204.83 metres.

The rain gauges measured 30 mm of rainfall for a period of 24 hours till 8:30am.

Delhi has seen one of its wettest monsoons this year with the city receiving over 1,000 mm of rains.

Meanwhile, the threat of flood continued to loom large over the national capital as the level of the river Yamuna remained well above the danger mark.

The water level in the Yamuna had touched 206.48 metres last night which is 1.65 metre above the danger mark of 204.83 metres.
NEW DELHI: The Commonwealth Games organising committee (OC) may have promised to clean-up the Village , but will it be able to to do anything about the massive water accumulation in the low-lying areas surrounding the residential complex ? Not likely from the look of things.

The Yamuna already touched the 206.48 m mark on Tuesday and is expected to continue its upward spiral till Thursday morning. The river running along Akshardham Road towards Noida is nearly touching the main road. Officials said other than waiting for the water to recede, there’s not much they can do.

The biggest worry for authorities is the possibility of large-scale mosquito breeding once the water recedes. ‘‘The area around the Village is low-lying.

Hence, even if the river recedes, it will leave behind pools of stagnant water. Though water has not entered the Village yet, it’s right at its doorstep and one really can’t say what the situation will be once the river peaks on Thursday morning,’’ said sources.

The National Disaster Management Authority (NDMA), which was asked to step in on September 8 to handle the dengue menace, said anti-larval spraying has to be done at least once more since the medicine sprayed earlier had been washed away by the flood water.

“In the past few days, the water has receded quite a bit and we could not use boats to spray the medicine. However we are closely working with the MCD’s flood department to ensure that proper fogging is carried out,’’ said an NDMA official.

Initially, there were plans to pump out water from the pools and releasing it into the river. But the idea was shelved as there’s just no space anywhere in the river bed.

‘‘ Even if we were to run the pumps, where could we possibly release the water. Besides , the volume of water in the area is too huge for pumps to work. The river is also rising and unless it starts receding, we can’t do much,’’ said an official of the irrigation and flood control department.

Sources said the huge amount of garbage that was lying about in the Village would compound the problem. ‘‘This is a serious health issue and fogging may not be able to take care of the problem if large-scale mosquito breeding starts here,’’ said sources.

#170 SeanR on 09.22.10 at 4:53 pm

Some more food for thought.

http://www.planbeconomics.com/2010/09/22/the-recession-is-over-but-the-depression-has-just-started/

#171 CrowdedElevatorfartz on 09.22.10 at 5:00 pm

#33 VancouverGoinUp
ahahahahahahahahahahaha, same drivel different day. And if you think your the first realtor from “Vansterdam” to push $400+ K leaky condos. Think again.
Next time your with a client in an elevator in Yaletown and something smells BAD, think of me :)

#172 Crash Callaway on 09.22.10 at 5:34 pm

#169 Victor
Stop scaring the kids!
Aw come on now fess up…
you’re just terrified someone will wake your kids up and they’ll move back into your basement.

Do the spoils really go to the victor???

#173 OttawaMike on 09.22.10 at 5:42 pm

Just came back from a mini holiday/sailing adventure up the N. Baja coast of Mexico into San Diego. Mexico is hurting badly due to the drug war, recession and swine flu scare. Many half built hotels and closed businesses as the tourists have abandoned them. Central Pacific coast cities especially have seen 50% drops in property values as expats try to unload their holdings.

San Diego is starting to see a slight recovery in the prized locations near the ocean but renting is still the preferred option as you can get a 600k$ near the beach house for 1300-1500$.

On the connecting flight back , i sat beside an attractive Detroit commercial realtor. She told me how she just wrote a deal up for an office complex that the owner lost to the bank. He had bought it 4 years ago for 3.4 mil$ and it resold for 800k$. The new owner could carry it with 5-6$/ft cap that would attract tenants. The best commercial properties around Detroit high end suburbia fetch 20-25$.
Vultures with cash are coming out to buy commercial paper for 50-60 cents on the dollar in hopes that they can own/carry the property until things turn around.

In my mind these are good stories as they are finally letting the chips fall and the deleveraging take hold without the artificial hand of govt.

I’m really glad we’re different up here in the superior north with our potash, hockey stick industry,oil and maple syrup saving us.

#174 josh on 09.22.10 at 5:42 pm

Re : Approximately one year ago I asked you to stop scaring the kids! I check in from time to time and find that the theme hasn’t changed. Once again, had I listened to Howard Ruff, et al, in the late 70′s, I would never have purchased a house. Instead I listened to my financial wizard wife (GIC’s are safe), bought the house, paid it off, retired, and life is good.
Number one son just sold his house in St. Albert in 3 days for $3k under list. Bought another one and life goes on.
Number two son purchased a condo in the GTA in ’08, 25% down, 1.85% mortgage, has no idea how much it’s worth today, doesn’t care, needs some place to live, just like everyone else.
Where do people who are counseled to sell and not buy until after armageddon, live until then? Do they live in some magical kingdom for free or does their rent equal the mortgage payment, more or less?
For the record, in 26 years the value of our home went from $101K to $73K to $410K to $375K today. None of that mattered – we weren’t moving.
So, stop scaring the kids!

Wow, a 5.17% return a year on your house. So you might have caught up with inflation after paying maintaince costs, property taxes and intrest costs. Hmmm, if I had invested $101K at 7% (very conservative portfolio and reasonable estimate) for 26 years, I would have $600K. Or almost 2 of your houses….

#175 Love this Blog on 09.22.10 at 5:53 pm

@95 Young and Foolish

“Housing crash or not, one thing is for sure ….. DEBT is your enemy. The more you carry, the less flexibility you have. So why would anybody want to saddle up with a monster mortgage when the economy is shaky, people are losing their jobs, and demographics point to an oversupply of housing?”

BINGO. You may be young, but you aren’t foolish.

#176 kellie on 09.22.10 at 6:05 pm

Lots of comments already – but you know something? We’re no different. Look around folks – lots of people are losing their jobs in Canada – or getting decreased hours or work. Lots of pensions have already been lost and depending on where you sit in the boomer years; you may not have Canada Pension and OAP to count on. If you chose not to believe everything – that’s fine – but at least consider the information we’re being given. Someone needs to spread the message instead of allowing all of us to have false hopes in our Government to protect us. We’re responsible for ourselves and to me – forewarned is forearmed.

#177 wetcoaster on 09.22.10 at 6:13 pm

GlobalBC TV back pumping/flogging the ex-weather girls listings. Bragging of multiple bids on a million dollar plus place in order to sway the sheep that Muir the hoor is the smartest dude in BC.

The oohs and ahhhs were once again hard to stomach as flashes of a re-gutted 1940 Dunbar dump was flaunted with some hokey looking kitchen. That channel is a disgrace, what a bunch of self serving ho’s. All you sheep deserve to be led to the slaughter.

#178 Love this Blog on 09.22.10 at 6:18 pm

#127

GOOD link. Thanks.

#179 jess on 09.22.10 at 6:28 pm

Alan Greenspan’s double indebtity

bailout by taxpayers then raise taxes for the bailout?

#180 Nostradamus Le Mad Vlad on 09.22.10 at 6:35 pm

Sure had a surprise yesterday. We took the van down to the shop for an oil change a check up.

Seems Al, the mechanic who owned the business, has shut up shop. He was there for almost two decades, but did his apprenticeship at a Vancouver Mazda dealership and worked there for about 15 years.

Then he moved here in the mid-90s and went solo. Now, gonzo. The work tapered off to the extent that it wasn’t worth renting the space anymore. Pity. Al was a great person.

#47 Old_is_Gold — ” What next – The Peace and Goodwill levy?”

As the whitewash of GW failed to bring in a new world wide carbon cap-and-trade tax, the emphasis has now shifted to another global tax, a tax to eliminate poverty.

Ahmenajine said recently capitalism causes poverty, whereas Merkel (Germany) said that bringing in a new tax to eliminate poverty is the only method needed.

Y’all know who is right and where this is headed.

#59 Freedom 85 — “. . . receive a spiritual experience that will make their hair turn a darker shade of grey or their ulcers bleed a bit harder.”

Could be time to drag out the DVD of “The Exorcist – The Version You’ve Never Seen”, and watch the last 75 mins.

Other than the obvious two changes, the last part is identical to what did happen in that house in Maryland, circa 1949.

People with squeamish stomachs should skip it!

#61 Devore __ “Doubtful. No one likes the one person that is right after all.”

It would simply be a case of saying that person was correct (within reason), so kudos to him / her.

Eating humble pie is not necessary.

#75 Daystar — “The Men Who Crashed the World”.

The more posts like this become public knowledge. the more TPTB will try to bring in rules and regulations to control the ‘net.

Whether they are successful or not remains to be seen. My guess is they haven’t got a cat in hell’s chance, but that’s JMO. Good post.

#84 kathy — “Q- Do I list in October . . .”

A – If the home is ready to go to market (interior and exterior fluff), sell it ASAP and follow Garth’s advice — put the net amount in a mixture of dividend-paying stocks, bank preferreds, bonds, utilities and health, with a professional of course.

Then use that extra income to rent. My two cents worth.

#87 Bill ( Peterborough) — Great link and thanks!

#131 jen — Thanks for the link. Interesting that Flaherty said that a snap election will hurt business, and that it probably won’t happen.

An open blog like this is great for passing info. on — TPTB can’t stop the flow of info.!

#154 TheBigLebowski — Excellent link, and it may also tie in with what you mentioned earlier, about gold / silver going up and the link I posted earlier, about the US$ eventually finishing (as everything does).

#161 VICTORIA TEA PARTY — “Airbags and Windbags. What’s next?”

‘Owzabout Barfbags, primarily for BCTV, Global and all these maggots who continuously spew forth their propaganda / drivel about how well and happy everything is?

Should be time for a major reality check (hit) now Xmas is almost here.

#181 grantmi on 09.22.10 at 6:37 pm

Garth!!

I think Nasty Jr. is backkkkkkkkkkk!! (God help us all!!)

#33 VancouverGoinUp on 09.21.10 at 10:04 pm

#182 Old_is_Gold on 09.22.10 at 6:56 pm

The United States: Record Foreclosures, Growing Supply

“…consider these words from Rick Sharga, Vice President with RealtyTrac:”

“We’re on track for a record year for homes in foreclosure and repossessions. There is no improvement in the underlying economic conditions. Whether things fall precipitously depends on government and lenders controlling the inflow of new foreclosure actions. If the market is left to fend for itself, you may see more serious price depreciation.”

“There is also more pain to come amid the housing burst bubbles of Europe, as we shall explore. And in China, Canada, Hong Kong and Australia, there are still-inflated housing bubbles that have not yet popped. Before all is said and done, these unpopped housing bubbles are virtually certain to bust.”

#183 Dan in Victoria on 09.22.10 at 6:57 pm

Post #169 Victor.
Paid 101,000 for it 26 years ago.
Were you making around 12K a year then?

#184 Love this Blog on 09.22.10 at 7:07 pm

FWIW,

I posted this link earlier today

http://www.saskatoonhomepage.ca/index.php?option=com_content&id=27645&task=view

I have submitted comments 3 times today, regarding this article being Real Estates answer to Garth’s appearance last night. Each comment was polite, and simply stated that Realtor/RealEstate Industry is getting desperate, and that this is their spin to refute Garth.

Guess what?? They will NOT post any of my comments. They know where their bread is buttered, and the truth or differing opinions be damned. Maybe some of you should try??

#185 Bill Gable on 09.22.10 at 7:21 pm

Sarah Daniels is a great example of why most RE people are lumped in with, uh, used car sales people, thieves, muggers, and broadcasters.
This woman WAS A weathercaster and smart alec, until a few years ago, and so I see things haven’t changed.
Disgraceful.

#186 Old_is_Gold on 09.22.10 at 7:35 pm

It’s 1979 all over again – anyone remember Roberto Calvi, Pope John Paul I (the 33 day Pope) and the Vatican Bank that cost S. American investors a few billion back then (which would be like a 100 billion nowadays)? Sounds like the script for Godfather III – art imitating life once again.

‘Vatican Bank ‘investigated over money-laundering’

If only people knew what a Bizzarro world they live in, but for the majority the shock would be too great, so they prefer the head in the sand routine.
If by now you haven’t figured out that nothing happens by accident in the financial world, the political world, the business world, the military world, the religious world, the academic world, and the media world, then it may be best to stay ignorant and pray that your days pass by blissfully. I kinda suspect that much bigger shocks than the collapse of house prices are on the horizon, and being blissfully ignorant may not be a choice available to the majority. And the awakening will be rude at best, at worst…we’ll leave that for another time.

In Canada the comments section of this blog may be one of the few places that truth is written, by those who are not afraid to go all the way down the rabbit hole. To be specially commended are Le Mad Vlad, Peterborough Bill, Big Lebowski, Dark Sad Person, Victoria Tea Party and a few others. Garth is also to be commended for allowing them free access to post unlike the MSM where all information is triple filtered on a local level and quadruple filtered on a national level.

#187 T.O. Bubble Boy on 09.22.10 at 7:54 pm

@ #133 Phil:

With CPD (Claymore ETF), you don’t get the same tax advantage as with individual preferreds. The tax treatment is somewhat different — a higher percentage gets taxed as normal income vs. dividend income.

I still believe that it is a good entry point into owning preferred shares… you just lose more of that yield in taxes.

#188 DaBull on 09.22.10 at 8:12 pm

#174 OttawaMike

On the connecting flight back , i sat beside an attractive Detroit commercial realtor. She told me how she just wrote a deal up for an office complex that the owner lost to the bank. He had bought it 4 years ago for 3.4 mil$ and it resold for 800k$. The new owner could carry it with 5-6$/ft cap that would attract tenants. The best commercial properties around Detroit high end suburbia fetch 20-25$.

It’s Detroit OttawaMike, it’s Detroit. Why do bears have to find the worse possible scenario and make it the norm. Give you head a shake man.

Hell I would bet Detroit would give you any property you want, as long as you just pay the back taxes owing on them and find someone to live in them.

Economic conditions have nothing to do with Detroit’s downfall, Naaaa… not a chance

Sounds like you have never been. — Garth

#189 Old_is_Gold on 09.22.10 at 8:13 pm

#120 Dark Sad Person

#84 kathy on 09.22.10 at 7:52 am

Q- Do I list in October or should i wait for spring? obviously i’d like to sell as fast as possible but there are some who think on a seasonaly-basis, Spring price sales are higher than Oct/Nov sales. So there is a chance i get a lower price in Oct/Nov vs spring.

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

I’m not so sure seasonality will be as much of a factor as before-
That only works when prices are climbing-or-at least not dropping–
Knowing these total jackasses that run this country-I would suspect they’ll try and prevent the much needed correction-with taxpayer money-same as the US did-

___-___________-_______________-____________

This game will go on until the decision is made (in London, NY, Zürich, Rome, anywhere but Ottawa) to pull the plug on RE. When that happens, nothing gonna save the housing market anywhere in the developed world…I believe that decision may already have been made which is why the MSM keeps hyping the RE boom myth to keep the sheeple from waking up to the reality of the sinking ship without any lifeboats. Every man for himself!

#190 DaBull on 09.22.10 at 8:22 pm

#175 josh

Wow, a 5.17% return a year on your house. So you might have caught up with inflation after paying maintaince costs, property taxes and intrest costs. Hmmm, if I had invested $101K at 7% (very conservative portfolio and reasonable estimate) for 26 years, I would have $600K. Or almost 2 of your houses….

Except for the fact that maybe Victor has 2 well grounded kids. All the money in World can’t buy you that. If Victor had been renting and moving all over hell and gone, instead of staying put, his kids may have turned out differently.

So for Victor, I say money well spend. Nothing

Interesting how most children in Europe are raised in rented accommodations. Is that why they have a debt crisis? ;-) — Garth

#191 Nostradamus Le Mad Vlad on 09.22.10 at 8:25 pm


#187 Old_is_Gold — “To be specially commended are Le Mad Vlad, Peterborough Bill, Big Lebowski, Dark Sad Person, Victoria Tea Party and a few others. Garth is also to be commended for allowing them free access to post . . .”

Great company here, and lotsa fun exposing these stories which the paid for m$m won’t touch with a bargepole!

Cheers!

Inflation Things are becoming as clear as mud!

41 words inside S-510. Here they are:

“. . . to set up a global corporate economy, / to put us under a single global currency, / to control all resources and energy here, / to tap into “premises ID” for animal disease traceability (also under S 510) so they could take US farmland as collateral on the debt, . . .”

Blockbuster Looks as if it bit the dust.

Looting The last act of a broken nation is to loot it, and screw the sheeple!

BP Anyone remember BP?

Obama’s replacement-in-waiting? Or Nancy P. – Hillary C.? They’re all vultures, incl. Obama.

A link yesterday said the swine flu vaccine had been made part of the “normal” flu shot. This is another reason to avoid it.

Possible link with the earlier post, about employers’ sending paycheques straight to the govt., then the govt. sends what is leftover back to the employee. Yup, the West is skint and are looting sheeples (nations).

2:04 clip Plan B is the Gold Standard. Also — Gold — Perfect Storm.

Iran One way or the other, they (you know who) won’t give up.

Going down? What floor?

US and Canada are bankrupt, and all of us blog dogs already know it, but sheeple don’t!

Helsinki “You know, when you are up to your ass is snow from last winter, it is time to wonder if the bozos screaming that it’s getting hotter might be full of shit!” wrh.com.

#192 Patz on 09.22.10 at 8:46 pm

#61 Devore re: #42.
Jeez Louise D. didn’t you read the next line?, which goes “then when you wake up and turn on the TV…” Gawd, I hate explaining jokes—even bad ones. If I’d been any more obvious I woulda been wearing a clown suit!

#193 victor on 09.22.10 at 8:51 pm

175 – josh
It’s not an investment, it’s shelter, a house, a place to live. The returns come from the oil and pipeline stocks that pay 8% plus 9% growth ytd, and don’t forget about BCE, etc.

184 – Dan in Victoria
The number was $34.500 but, what difference does it make? It’s paid for.

#194 Taxpayer like everyone else on 09.22.10 at 8:59 pm

106 BDG YYC – not sure if you used this info:

http://www12.statcan.gc.ca/census-recensement/2006/dp-pd/tbt/Rp-eng.cfm?LANG=E&APATH=3&DETAIL=0&DIM=0&FL=A&FREE=0&GC=0&GID=0&GK=0&GRP=1&PID=96272&PRID=0&PTYPE=88971,97154&S=0&SHOWALL=0&SUB=0&Temporal=2006&THEME=81&VID=0&VNAMEE=&VNAMEF=

Wow thats a long link. Hope it works. Numbers from 2005 so its a bit old.

Now you made a few assumptions (and stated so). But I think you have missed some important points.

Many retirees are also home owners, and often have modest incomes compared to their working years, so you cant assume having no mortgage makes you a high
income earner. Or they may still have a small mortgage.
Either way it can skew the average down from what is more typical.

I think if you check the tables, the “owners with mortgage” have the higest ave/median income of the three groups.

Cant wait for the most recent data.

#195 OttawaMike on 09.22.10 at 9:01 pm

#189 DaBull on 09.22.10 at 8:12 pm

Right on time, thanks for not disappointing me with your retort.

The commercial realtor was from suburban Detroit not the bombed out core. It was a Detroit bound flight and I was surrounded by natives from there. Posh Bloomington Hills, Ann Arbour and Farmington Hills are a world away from inner Detroit.

The man buying commercial paper was another passenger who resided in San Diego. He was buying a newly constructed self storage facility in distress.
Or is San Diego a bad bear, selective example as well?

#196 marcus aurelius on 09.22.10 at 9:11 pm

#25 TO Bubble Boy and #46 Father

DUALITY TALES: DAVID OLIVE AND ROB FORD

Picking on David Olive (or his employer) is like hurling witticisms at a mentally-handicapped boy. It is cruel, difficult to watch, and says more about the speaker than the intended target. David has a long and unbroken history of writing moronic things. He writes for a rag that once hired a Liberal troll with no business experience other than having been surgically sewn to Frank Iacobucci’s ass for 20 years as its last CEO. That tells you all you need to know about Torstar. Think about the average IQ necessary to ‘read’ folks like Haroon Siddiqui (“Western Culture bad. All immigrants deserve government jobs as a right”) or the hot older babe who thinks “it’s the oil, dude” (‘America very bad. We no like it’). David Olive is probably the most coherent fellow there, which makes him the tallest pygmy in the Honderich tribe.

Now to my friend, Rob Ford. Let me finally answer the dumbest question being posed repeatedly by “Toronto Journalists”: “Why do people like [this buffoonish, racist, DUI-prone loudmouth] candidate?

Here a clue: I am a professional. I have 4 degrees. I am a 5th generation Torontonian. I am politically correct, very nice and honour my ‘diverse’ ethnic background (it’s a Canadian thing).

And I am going to go through fire if I have to, to vote for Mr. Ford.

I can accept all of the low-blow ‘mud’ thrown by Mr. Ford’s negative-campaign opponents.

Here’s the news, Rosedale Journalism: Ford is reliable. He’s not going sucker the taxpayer/voter like every other scumbag that you like better. And just to say ‘thank-you’ for my vote, he is going to cut $20-40K off the cost of my next house purchase in the city of Toronto, by eliminating David Miller’s extortion fee (LTT). He is also going to stop the single greatest reason Toronto is a third-class city and a sump-hole of graft – payroll overhead and unions that need to be broken (if they can wake up from their on-the-job naps long enough to get the pink slip). If I represent anything at all to these dumb pollsters, it’s all over. All we ask of Mayor Ford in return is to remember the only intelligent thing Brian Mulroney ever said “You dance with the one what brung ya”.

PS – As you know, Marcus Aurelius is not a Granite Club kind of name, even though I am part of the Canon of what Haroon and his buddies at Torstar hate so much : Western Civilisation. Yet the fact that Rob called Giorgio Mammolitti, the real estate agent huckster-cum-ward heeler a ‘Gino Boy’ only makes a Roman like me love him more dearly, rather than bridle with ‘offense’. He nailed that one. It just comes right out of his idiot-savant mouth. Because he sometimes says what we all think. And we’ll give him the chain of office and a mule-whip. Get it done.

#197 eddy on 09.22.10 at 9:22 pm

doom and gloom here-
http://www.globalresearch.ca/index.php?context=va&aid=21099

“The third and final phase of the Global Financial Tsunami will devastate Asian economies and with it, the greatest depression in history will ensue.

Time Line?

Between now and anytime in 2011.

At the latest, 2012.

God help us. “

#198 DaBull on 09.22.10 at 9:31 pm

Interesting how most children in Europe are raised in rented accommodations. Is that why they have a debt crisis? ;-) — Garth

Those European countries that have a debt crisis also have major problems with corruption, both at the Government and personal level. So I guess that means renting in Europe really did cause the European debt crisis. Who would have thought renting could do that. Another reason to buy. LOL.

#199 Behavioral Finance on 09.22.10 at 9:37 pm

eddy

Is this a title for a fairy tale “Global Financial Tsunami”?

I highly doubt Asian economies will be devastated as they are slowly decupling from the dependence of Western Economies. The way I see Asia will become the economic power house in the future.

If you want to read a great book on Asia. I recommend this one.

http://www.amazon.com/Tomorrows-Gold-Asias-Age-Discovery/dp/9628606727

#200 DaBull on 09.22.10 at 9:41 pm

#196 OttawaMike

The man buying commercial paper was another passenger who resided in San Diego. He was buying a newly constructed self storage facility in distress.
Or is San Diego a bad bear, selective example as well?

No… Non-existent example. What San Diego Man and what commercial paper?

Here’s your comment.

Just came back from a mini holiday/sailing adventure up the N. Baja coast of Mexico into San Diego. Mexico is hurting badly due to the drug war, recession and swine flu scare. Many half built hotels and closed businesses as the tourists have abandoned them. Central Pacific coast cities especially have seen 50% drops in property values as expats try to unload their holdings.

San Diego is starting to see a slight recovery in the prized locations near the ocean but renting is still the preferred option as you can get a 600k$ near the beach house for 1300-1500$.

On the connecting flight back , i sat beside an attractive Detroit commercial realtor. She told me how she just wrote a deal up for an office complex that the owner lost to the bank. He had bought it 4 years ago for 3.4 mil$ and it resold for 800k$. The new owner could carry it with 5-6$/ft cap that would attract tenants. The best commercial properties around Detroit high end suburbia fetch 20-25$.
Vultures with cash are coming out to buy commercial paper for 50-60 cents on the dollar in hopes that they can own/carry the property until things turn around.

In my mind these are good stories as they are finally letting the chips fall and the deleveraging take hold without the artificial hand of govt.

I’m really glad we’re different up here in the superior north with our potash, hockey stick industry,oil and maple syrup saving us.

Don’t see no mention of a San Diego Man anywhere in that post, little alone commercial paper.

#201 dark sad person on 09.22.10 at 10:01 pm

#190 Old_is_Gold on 09.22.10 at 8:13 pm

This game will go on until the decision is made (in London, NY, Zürich, Rome, anywhere but Ottawa) to pull the plug on RE. When that happens, nothing gonna save the housing market anywhere in the developed world

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

I think that they’ll try one last snatch at a new crop of debt slaves-with a money goose–
Similar to that 8K cash back BS-the US came up with-
That brought in a whole new batch of fresh meat-as that chart showed-
Most of that buying went into new homes-that we’re sitting on the market-for not much more-then already lived in homes that were listed-so the net effect was-those who were trying to bail-had few buyers and remained trapped and blew up-

The US does not want House prices to fall-not that the total mortgage/lending loss is all that serious-in the big scheme of things-
The big one-is the leverage in the CDO/CDS market–based on collateral-the collateral being solely on–US house prices–
The leverage gearing was anywhere from 30-90-120/1
This is where the 3-500 trillion dollar problem lies-
This is why the US/Fed did everything they could to prop house prices-because as prices fall-the negative leverage winds up-
Of course this is all hidden in-level 3 and being monetized/absorbed-slid into FNM/US taxpayers-onto the Fed balance sheet/US taxpayers-
But-one day this hidden debt-will have a blowback effect-a loss of confidence “somewhere that matters” and-you wont see nothing but smoke coming from the holes it all fell through-
I suspect-we bump along for awhile-but on the other hand-it could all blow up tomorrow-
World default-of some sort–debt slaves excluded-

http://www.youtube.com/watch?v=8-5Wqv6M0Sk&feature=related

#202 Bill ( Peterborough) on 09.22.10 at 10:14 pm

Re # 164 Jm London

Been there, done that – the endless cyclical argument is a dance around the may pole and an intellectual dead end – I’ve done the debate a a few times – it will not happen here – just have to speak every once in a while when the foil hatters run amok – it’s like scratching an itch – it just has to be done every so often – the reason your crackers haven’t been sued is that it’s pointlessly cruel to keep repeatedly beating on a drum that someone is crazy when it is patently obvious that they are…just like drawing a foil hatter into a debate…

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Thanks for a great rebutal as well.

No facts just alot of hot air, probably pattying yourself on the back as well.

#203 BrianT on 09.22.10 at 10:47 pm

#199Marcus-IMO Ford wins the job but you are getting carried away here-he will be one guy opposing a whole structure based around latching onto taxpayer money. I wouldn’t expect much in the way of tangible results-if he can slow down the decline of TO slightly that might be the best one could hope for.

#204 Dumfucanuck on 09.22.10 at 11:07 pm

My God, Canadians are perhaps the most delusional (and misinformed) people on planet Earth. Why is it Canadians NEVER can stand on their OWN arguments, statements, and misgivings without mentioning the U.S.? It is so very interesting.

If you look up “Canada” in the dictionary, you’ll note it says “The stalker of America, often caught in the bushes whacking off to pictures of the U.S. Also referred to as canaDUH” Also, you may consider taking or retaking English as most of you appear to have a difficult time deciphering the difference between “your” and “you’re” and “there,” “their,” and “they’re.” Seems to me you have an AMAZING educational system with top-tier talent! ROFLMFAO Oh wait! Any real talent that was in Canada has already left and moved to the U.S.