Market update (IV)

Really. I get the damnedest emails:

Dear Garth: I am curious to know if there are any tent cities in the lower mainland due to the economic crisis? I hope you have a moment to send me an answer. Kindly, Theresa (The Netherlands)

Dear Theresa: It’s hideous. Canvas, misery and mayhem as far as the eye can see. Hourly the relief helicopters hover just meters over the blackened condo rooftops, dropping burlap containers of roasted vegetable paninis, Vivanno smoothies and java chip frappucinos. Glassy-eyed zombiesque realtors stagger far below, many tragically beyond the assistance of even the Médecins Sans Mortgages. Oh, the humanity.

We need help. Bring gauze and commissions.

Hmm. Well, an interesting thing’s just happened in the country ‘s most delusional city. Yeah, something other than the pending collapse of the city’s landmark residential development. Seems the latest stats show a hugely confusing trend – at least confusing to those who don’t understand how markets tumble.

The real estate board stats to be published next week will reveal sales in September took another huge plunge – down about 40% from the same time last year – but at the same time, average prices frolicked higher. In fact, your garden variety SFH is once again above the million-dollar mark, cavorting all the way to $1,016,324. This is likely the pattern we’ll also see in Toronto when the cartel releases the numbers – sales down and prices up. And it just happened in Victoria, too, where deals fell to a 20-year low, but the average house price jumped to over $599,000.

How could this be? Does it not prove the site you’re reading should be composted into digital worm food?

Well of course it should be. But that’s not the reason. What’s happening in Vancouver and Toronto, to be repeated in several other places as the music fades, is exactly the pattern I told you to expect. First, listings rise (that happened in the spring). Then sales drop (been ongoing now for about four months in most markets). But prices stay sticky (vendors are more rapacious than realtors). Prices may distort (the remaining greater fools buy fewer houses at bubble levels, so average prices jump). Then, the erosion starts (sellers capitulate when they see this could get worse).

This is the fourth stage. The next comes before long. November, maybe. And 2011 gets downright ugly.

Now, the ripples spread far wider than the price of a bung in Etobicoke. And this is exactly what our beloved Mark Carney’s been trying to spit out in recent days – we’re traveling the same road as the USA found itself upon four years ago. All that talk about it being different here – no bubble, conservative bankers, no subprimes, tighter rules, smarter people – was just talk. Like in Egypt, Canada’s national river is De Nile.

(I just finished doing a radio interview with CBC in Whitehorse, where people worried about runaway housing prices are being told to relax, because it’s different there. The only difference, of course, is that it snowed in the Yukon last week.)

Americans made a huge mistake in making credit universally available, and allowing housing to become too big a part of the national economy. When sales and prices ultimately corrected, down went large chunks of the financial system, consumer spending and the middle class. In areas where housing was a god – California, Florida, Arizona, Nevada – the devastation has been stunning.

And what of us?

You might be surprised to learn real estate now makes up 20% of the entire Canadian economy as measured by the GDP. It’s been growing for a decade, but exploded in the past two years as emergency interest rates created an orgy of bidding wars and raging prices. In fact, according to economist Benny Tal, if house prices drop a mere 5% nationally (a certainty), it will erase $10 billion in economic activity.

You know what that means: lost jobs. Lower consumer confidence. Less consumer spending. Lower corporate profits. Fewer jobs. Vicious cycle.

Real estate came to comprise a fifth of the economy simply because we went ape over it. Our government facilitated purchasing houses by dropping mortgage rates to historic lows. Lenders happily gave loans to people without money so they could buy big. Cheap money allowed all prices to rise. The federal government encouraged lenders to take more risk by providing insurance for high-ratio mortgages – backed by taxpayers. And politicians increased spending sharply to artificially stimulate things, giving the impression of recovery, hoping consumers would borrow more.

Does any of that sound familiar? Lower lending standards? Teaser interest rates? Runaway housing speculation? Mushrooming debt? Wall-to-wall house porn?

It should. It’s what nuked southern California, the US banking system and middle America. Any reason the same couldn’t happen to the Lower Mainland, CMHC or average folks in Ontario?

So, Theresa, I hate to disappoint. You foreigners have such silly notions.

Email me again in 2012.

Hear Garth here:

Wolfville NS
Tuesday October 5, 7 pm, Ken-Wo Golf Club. Register here.

Lunenburg
Wednesday October 6, 7 pm, Fisheries Museum. Register here.

Halifax
Thursday October 7, 7 pm, Ashburn Golf Club. Register here.

Victoria BC
10 SEATS REMAIN: Wednesday October 13, 7 pm, Victoria Convention Centre. Register here.

Kelowna
Thursday October 14, 7 pm. Register here.

Surrey
EVENT FULL: Friday October 15, 7 pm. SECOND EVENT: Friday October 15, 2 pm. Register here.

Calgary
Thursday October 21, 7:45 pm, Chapters Dalhousie, 5005 Dalhouse Dr NW

Toronto
EVENT FULL: Tuesday November 9, 7 pm, Double Tree Hilton, 655 Dixon Road (airport strip).

250 comments ↓

#1 Tom on 10.01.10 at 9:19 pm

Garth,
I’m waiting for things to tank in Vancouver and I see cracks…Developers advertising new developments $50-100K under list price, etc. However, real estate is still outrageously priced. When it does really start to tank,what metrics would you use to determine when it does make sense to buy?

#2 T.O. Bubble Boy on 10.01.10 at 9:26 pm

Somebody crank up ye old MSM spin machine!

Hey: Don Cayo at the Vancouver Sun – did you hear that the “average” SFH is above a million bucks again? That must mean that the buyer’s market is over, and balance has returned… phew, that was a rough couple of months.

Hey: Toronto Real Estate Board – did you hear that this was the slowest September in several years for real estate? That’s ok, because year-to-date 2010 numbers can still be published, and the “average” price is still holding (even with +20% listings from August).

Hey: Jim Flaherty – did you know that we have a housing bubble, and that you single-handedly made it a major risk for all Canadian taxpayers?

#3 Mikey on 10.01.10 at 9:33 pm

The reason why government promoted housing is because it is the last bastion of protectionism due to various barriers. If it was not housings’ rise in the last decade we would have entered into a corrective phase at least 5 years ago.

It is pumped up because it is largely protected from global competition and thus is a form of protected jobs. this protectionism as we shall see will be on the backs of taxpayers eventually.

As it stands, we now have two generations saddled with high debt loads which will make us uncompetitive.

This will not end well.

#4 Hovering on 10.01.10 at 9:57 pm

you can’t have change without a fire

not sure who said that first. probably Johnny Cash

#5 Prof. ANON on 10.01.10 at 10:02 pm

@ Pat from yesterday.

The cost estimate for the roof in my previous post is for metal, resheeting isn’t necessary. Flooring will be pulling up carpets and sanding down existing hardwood and buying whatever earth toned tile is on clearence for the rest. We’ll repaint the existing cabinents, but we do need a laminate counter top (whatever is on clearence). We just bought a 2 year old white washer and dryer set off of Kijiji for $150. We own a lime green 1980s refrigerator that works great, and we just bought a barely used stove for $50 from an elementary school that is being renovated. Yeah..we’re cheap.

I agree, it will be entertaining.

#6 Bobby on 10.01.10 at 10:05 pm

Sitting here in Victoria, in my area there are four houses for sale, all within an easy 7 iron shot of each other. Not too much action. In fact, one has been on the market so long it has changed realtors. Irrespective of what the media is saying, the buyers market is just getting going, it is not over.

Did you see the recent news about the CREA agreement with the Competition Bureau. Now you can pay as you go, for the services you need. None of this 6 & 3% nonsense anymore.

Yes, it’s time to list that condo in the mountains. On the mls for $400 then I will pay the realtor on an hourly basis for any showings he does. He doesn’t like it, but others in his office will jump at it. Better than standing around doing nothing.

Let the good times roll.

#7 Old_is_Gold on 10.01.10 at 10:09 pm

The coming housing Waterloo in Canada seems to be marching lock step with the continuing Economic Armageddon in the US and other parts of the world. And let us not forget the social unrest (when one does not have a roof over their head, where does one rest) spreading all over the world? Police officers in Ecuador protesting pay and pension cuts, millions marching in Spain, and Greece, and Ireland…this is just the beginning. But it’s different in Canada…we are conservative prudes, fiscally responsible unlike those beer guzzling Yanks or the Ouzo sipping Greeks or the Irish whose luck has run out and all that’s left is the whiskey. In Garth’s unmatchable prose, It’s going to get ugly, seems like it has already started.

Economic Collapse Update: Acceleration In Autumn

#8 SpaceMonkey on 10.01.10 at 10:15 pm

Garth, What is up with your choice of pictures recently? First the sexy lady in the lingerie, then the thong, and now this one ;)
I’m not one of those people that thinks there is subliminal messages in every ad, but there are definitely some “hidden” letters in that picture.
How many letter S,E,X, and Y’s do you see? I see at least two of each.

#9 Old_is_Gold on 10.01.10 at 10:20 pm

#3 Mikey on 10.01.10 at 9:33 pm

The reason why government promoted housing is because it is the last bastion of protectionism due to various barriers. If it was not housings’ rise in the last decade we would have entered into a corrective phase at least 5 years ago.

_________________________________________________
More than that it is also the biggest cash cow for all levels of government. Someone should calculate how much each level of government makes with each RE transaction, the next best thing would be automobiles but autos are not in the same league as housing. Follow the money…GST, PST, HST, Land transfer, developer’s fees, building permits… the governments make way more money from housing than the realtors, and the coming meltdown is going to hurt all levels of govt. bad, real bad. And who do you think they’ll take it out on? Started already with the HST, EI premiums rising and so many new cleverly hidden surtaxes and fees that God alone can tally them all.

And you are right – it can’t end well for ALL Canadians, even the prudent and fiscally responsible ones!

#10 Mindset on 10.01.10 at 10:24 pm

I’ll add an observation from Victoria. With all of the listings to choose from, buyers are only buying the nice stuff, and getting a great deal compared to a mere 4 months ago. One local analyst determined that the average home is 200 sq ft bigger in Victoria today than 4 months ago. It’s also been my observation that the ‘average’ home that is selling today is a lot nicer (the junk is sitting).

A few people buying premium real estate at lower than average prices = a slightly higher average price overall, but the number is skewed by the sale of premium homes only.

Think of it this way. A traditional 70% ford focus sales mixed in with 30% BWM sales = moderate average price. 10% ford focus sales with 90% BWM sales (with BWM’s prices collapsing to just higher than Ford Focus historical pricing) = higher average price. I don’t know about you, but when prices drop enough, who’s going to buy a ford focus when just a few more dollars gets you a BMW?

IMHO, the higher average is due to people getting bigger, better homes for less than ever. Don’t be fooled by the average. Just watch what is selling.

#11 Debt's Dark Embrace on 10.01.10 at 10:24 pm

Only 20% of the economy? Now that does surprise me. I would have guessed 40%. Is your 20% figure just for home sales or does it include the construction trades, home furnishing and appliance sales, real estate fees, legal fees, etc.?

#12 Old_is_Gold on 10.01.10 at 10:26 pm

#1 Tom on 10.01.10 at 9:19 pm

Garth,
I’m waiting for things to tank in Vancouver and I see cracks…Developers advertising new developments $50-100K under list price, etc. However, real estate is still outrageously priced. When it does really start to tank,what metrics would you use to determine when it does make sense to buy?
______________________________________________

It’ll make sense to buy when for every 20 ‘FOR SALE’ signs, there is 1 ‘SOLD’ sign. When ‘Power of Sale’ and ‘Court order Sale’will be the first thing buyers will look for rather than the number of bathrooms and bedrooms in the house, till then it makes no sense to buy.

#13 Tryingtobepatient on 10.01.10 at 10:26 pm

In a desirable midtown Toronto neighbourhood a rather small house was renovated–truly beautiful, so let’s give credit where it is due. It was listed at $899,000 but it was really small. The agent said they were taking offers a few days ago. I don’t know what happened because it was not taken off the market but came out this weekend at $949,000. This is what happens when sellers were persuaded to “underlist” their properties in order to incite a bidding war and it doesn’t happen. Several other properties in midtown T.O. went for over asking and many for under asking. Can’t determine a pattern yet, but in the meantime, there are now bidding wars for rentals! This is a crazy time and no one really has an answer because real estate is frightening as it totters on the brink of correction, but it’s getting too expensive to rent.

#14 Calgary Rip Off on 10.01.10 at 10:27 pm

Garth this post by Bob Truman saying that you say Calgary prices are going to skyrocket is fascinating.

http://www.bobtruman.com/blogs/bob_truman/archive/2010/10/01/calgary-average-price-to-rise-to-679-553-in-coming-year-garth-turner.aspx

This proves two things: (a) Mr. Truman can’t read (an annualization is not a prediction) and (b) he is routinely on this blog using anons. Both are sadly unprofessional. — Garth

#15 EJ on 10.01.10 at 10:31 pm

Good Lord, are they still publishing stats using the arithmetic mean instead of the median? Of course it’s distorted. Anyone who actually remembers (or learned in the first place) grade 7 math should know why.

#16 Jeff Smith on 10.01.10 at 10:40 pm

Tales of two cities
My god, what a difference 30 odd years make. I remember when I was a kid, and the US space shuttle was entering service, sitting there watching the marvels on TV, I remember dad put down the newspaper. He read and recited the article that the US is some 60 years ahead of Japan and it’s over 200 years ahead of China. Means that China would not be able to reach space for at least 200 years from that time in the 80s. So now here we are 2010, and my god, not only have they caught up, but are poised to overtake the west. It’s just staggering what China can do in only 30 years, that’s less than half of a generation.

http://www.cnn.com/2010/US/10/01/nasa.worker.layoffs/

http://beta.brecorder.com/section/37/1/1108038:china-launches-second-lunar-exploration-probe.html

http://www.youtube.com/watch?v=yzuBZc95LaE&feature=player_embedded#!

#17 Wheels Coming Off on 10.01.10 at 10:42 pm

The pattern Garth is predicting is not unlike bubble run ups in stocks. A stock (or entire sector) gets pumped by the ‘smart money’ (smart money being highly educated financial groups, who understand wealth and how to build it, beyond what most of us can grasp). While the smart money has the strength to do so, it can cause rallies and create illusional value in a stock (or entire sector – see Oil hitting $150ish a few years ago without the fundamentals to back it). Once the smart money hits a level where it can no longer safely push the market higher, it begins to unload. There is so much frenzy for the stock by the ‘dumb money’ (i.e. the financially illiterate) at the peak, the smart money easily sells into it. So what does all this have to do with anything RE related? When a stock bubble starts to burst, it is often signaled by, you guessed it… low trading volume on the stock. Why? Because the ‘smart money’ has since sold out into the final rally and the only remaining trading at the top of the market is by ‘dumb money’ trading with other ‘dumb money’.

The only thing that saved this same scenario from continuing to unfold in 2008 with RE, was the BoC stepping in and lowering rates to a historic low. Of course , the ‘dumb money’ that bought into RE during 2009 and made a 25% profit since, likes to think it is quite smart and their 2008 purchase was financially saavy. Time will tell…

If I was holding a piece of RE in a bubble town and saw a 40% YOY drop is sales volume, I would be a little more than worried. Especially when the gov’t has no more tricks up its sleeve to keep the party going.

#18 Andrew on 10.01.10 at 10:46 pm

Alec Pestov has published an update to his report “The Elusive Canadian Housing Bubble.” Hits on a lot of the same notes Garth has.

#19 realpaul on 10.01.10 at 10:50 pm

Flaherty bragged that our banks were the strongest in the world…..only because he saddled the taxpayer with all the risk of the real estate scam….now instead of a private market taking contro of itself and adjusting the government is on the hook for the trillions of debt they created through the real estate scam and plans to pass the debt onto us by way of higher taxes…..the EI increase and the HST are just the beginning.

#20 Patz on 10.01.10 at 11:21 pm

Garth sez:
“Americans made a huge mistake in making credit universally available, and allowing housing to become too big a part of the national economy.”

Yes, it was a big mistake but not one taken unknowingly. American industrial capacity began to falter in the 70s–think Rust Belt. Wages for workers and the middle-class stagnated. The choice was a flat economy and a lot of dissatisfaction (something politicians have an allergy to) or to pump up a bubble or two.

The tech bubble was a great one tying in as it did to America’s self–image as great innovators. That burst but before you could say “white picket fence” came the housing bubble. This was even better; it invoked the American Dream and besides you could make lots of money at it. Debt replaced decent wages as the engine of getting the good life. And as long as your house cum ATM was appreciating what did it matter.

As we see in the US, it mattered.

#21 timbo2 on 10.01.10 at 11:37 pm

Sent out as an “excellent comparison between the previous bubble and where the Canadian market is today” a research piece by Alexandre Pestov, recommended today by Harry Dent. More detailed than most but very Canadian. Interesting reading when you have more than a few minutes.

http://www.scribd.com/doc/38541631/38509625-the-Elusive-Canadian-Housing-Bubble-Fall-2010-Musings

#22 Foggy on 10.02.10 at 12:03 am

A million dollars, you say…
With a 4% mortgage your monthly payments are $5260. When rates go up to say, a very reasonable 7%, your payment is now $7004. If this is the average SFH house price, how does the AVERAGE Vancouver single family pay for this? Then add in all the taxes, utilities, granite toilets etc. None of this makes sense.

#23 JM in London on 10.02.10 at 12:14 am

#216 Spiltbongwater

Where ya been??

Need some to cope with the Doomers outlook lately. Need to have some of God’s own green as apparently Peterburogh will be where things get to be full of truthiness

#24 Nostradamus Le Mad Vlad on 10.02.10 at 12:16 am


Hmmm. I figured you would have told Theresa (and anyone else) that everything is just Yankee Doodle Dandy in this stunningly beautiful country, no choppy waters or rough seas, no turbulence or excessive Flaherty flatulence (hot air).

Was I wrong to assume that?

“The next comes before long. November, maybe.” — See first two links.

“All that talk about it being different here – no bubble, conservative bankers, no subprimes, tighter rules, smarter people – was just talk.”

Most here know talk is cheap. A hooker of a politician can be bought for a twenty. They are in power to prostitute, or sell themselves.

We are the crazyass wombats, because we keep electing them, giving them permission to tax and tax.
*
Rumors “The latest rumor floating around is that the USG was given enough funds to last 60 days.” — The new fiscal year for the US started yesterday, Oct. 1. Probably goes with the former.

5:13 clip Not long to wait, that’s for sure. Wot say a few weeks, if that?

Money Sheeple Not just in the US, unfortunately.

1:43 clip “This is that wonderful scene from the film “The International” in which the banker explains why banks love and create wars!” wrh.com. THEY MAKE LOTSA LOLLY!

Bill (P) and TBL — you may understand this a little more than do.

Going Green — There is a reason for it, but it’s not what most believe. Goes with this.

US-style Bill C-6. Not good for dietary supplements and health stuff.

#25 SquareNinja on 10.02.10 at 12:27 am

It’s weird how any of the real estate organizations could say that average prices are increasing… just as an anecdote, my cousins have been looking at condos on and around Yonge Street (between Steeles and Sheppard) in North York since August… and they’ve only been seeing decreases in asking price! Decreases all over the place.

They were initially excited to buy in August, but held off because of the bad news in the MSM… and now that they’ve seen the evidence in front of their faces, they’re happy to wait until at least 2011.

In relation to today’s post… even Stephen Dupuis, President and CEO of BILD (Building Industry & Land Development Association) has admitted that Canada’s 2009-2010 “recovery” can be fully attributed to the housing sector. (This was his way of saying that Flaherty shouldn’t kill the hen that lays the golden eggs, by making mortgage lending more stringent, as happened in April.)

#26 Malcolm Watkins on 10.02.10 at 12:29 am

Garth, you need to differentiate between average house prices and median house prices.

Quote from the local Victoria paper, The Times Colonist:

“The average price for a single-family home in Victoria moved up to $599,825 in September from $586,676 in August, the board said.”
“The median, or mid-way point, decreased to $531,000 from $548,500 month-over-month.”
Why the difference?
“As is usual in this region, there were several sales of high-end homes – 11 last month of more than $1 million.” These can really screw the numbers / picture.

#27 No tents yet... on 10.02.10 at 12:38 am

We may not have tent cities… hard to see how anyone could survive a winter in a tent… but the number of people living on the street seems to be way up. It’s become a gauntlet to get to the office or back to the car. It’s $15 for parking and another $15 to give change to everyone on the way. And don’t park against the fence, they hang out in between the cars and the fence if they muster enough for a 6 pack. I’m sure they mean the vehicle no harm, it’s just cover, but the fence is the only public washroom around they are allowed to use.

#28 The Original Dave on 10.02.10 at 12:43 am

Inflation, deflation, that’s all well and good, but at the end of the day, what does it mean for me? In everyday life, I see signs of both inflation and deflation, so what am I to make of a monetary deflation that only academics and economists argue about endlessly.
—————————————————–

Inflation and deflation mean a lot to you in your life. The reason you don’t see a real difference and change in your life is because we’re on the cusp of a reversal from inflation to deflation. The whole western world has experienced this in the past 3 years when the credit taps were turned off. Goods became cheaper. The credit taps still exist in Canada, so it’s just a slower process….We’re getting there though.

#29 GTAInsider on 10.02.10 at 12:57 am

Economic activity on retailing are currently sucks very badly, as you go to the malls, people are not spending and even if they spend, they have no cash, they are only maxing out their credit cards and hope they can get paid on time next week or so..More commercial and retail spaces are currently for lease plus more business owners are selling their business at high price hopefully to recoup some losses, cook their cash books and ready to handover their hotcakes to immigrants from China and India to feel the heat…Realtors are advertising everywhere in order to pump up the market and listing agents advised seller to either remove out their listing and try to sell at prices with open house brochures tagged the word like ” Exclusive” or “GREAT AS GOLD” in order to make the buyer feel “Immaculate GEM not being harvested from the goldmine…” Bankers are leaning towards cash back mortgages by hunting newbies with no money down…How can this end well ???

#30 Duke on 10.02.10 at 1:10 am

I’m in Etobicoke. The bungs in this area are getting torn down and replaced by homes that look like giant circus tents. And they are full of overfed debt clowns. One of my neighbours wants mere pocketchange for his new stucco covered home. Just 1.4 mil. Will he get it? Stay tuned!

#31 Another Albertan on 10.02.10 at 1:10 am

A random anecdote:

I just got back from spending a week in “Middle America”. I was in Oklahoma City for work and did some sleuthing around. It’s like everything is frozen in time. And I’m not (mostly) referring to any cultural or intellectual pejoratives either.

In the standalone stores and malls in the wealthier parts of town, there’s a whole lotta nuthin’ goin’ on. You could shoot off a cannon and no one would hear it. Seriously, there was zilch happening. Major retailers have clearly pulled back on their stocking of merch. The Apple Store was the only place with foot traffic. Restaurants were at best hitting 50% of capacity. The hotel that caters to business travelers? Say 40% occupancy tops… and that might be pushing it.

There’s a whole lot of time-biding going on. If OKC is representative of “Middle America” (and it is), then it’s going to take a whole lot of economic repair and positive incentives to get things going again. The biggest topics of discussion were OK State vs. TAMU on Thursday and the Sooners vs. the Longhorns on Saturday. Everyone’s basically resigned that it’s going to be a long haul (pardon the pun, but OK is traversed by numerous interstate highways…) before things get better.

Everyone else’s mileage may vary. (Pun certainly intended)

#32 Peter Pan on 10.02.10 at 1:39 am

It’s funny how no one in the MSM mentions that volume leads prices… Prices going up while volumes are going down are a classic technical sell signal… Doesn’t matter if it’s a stock or housing prices.

Oh well, they’ll be able to say “Whaa… No one told us… How where we supposed to know?”… The clarion call of the stupid and uninformed…

#33 12Dreams.of.Dr.Sardonicus on 10.02.10 at 1:41 am

With the imminent recall of U.S. troops from Iraq and Afghanistan something will have to be done with all those potentially-unemployed troops.

So it’s only a matter of time before the U.S. ‘helps out’ Canada by invading the lower mainland to reel in a rampant drug society, and to put a damper on pending housing riots.

Garth, hope you get your bike back soon…

http://www.calgaryherald.com/Hells+Angels+bikes+seized+after+being+clocked+160km/3611536/story.html

#34 Cameroni on 10.02.10 at 3:04 am

#179 dark sad person said yesterday:

“Let’s define-Financial Collapse-
Why do you see it as a one eyed monster?
I see it as Salvation-”
———————————————————

Financial collapse is salvation?
You are an extremist idiot and a hazard to our society.

#35 lexington on 10.02.10 at 3:24 am

This is starting to feel like the longest bubble ever. If average Vancouver home prices hit $2 million in a couple of years it wouldn’t surprise me.

#36 Its much worst then tent cities on 10.02.10 at 5:35 am

Tents cities in Vancouver I guess it was a matter of time.

Its far worse here in Ottawa soon these death birds will be fliying over cities near you.

The Government has order thousands of helicopters, they sit on launch pads with their blades running! So much for an energy crisis!

Police are on every corner with machine guns and fingers on the trigger as armored trucks line Wellington street as far as the eye can see: For those individuals who don’t know, The Bank of Canada is on Wellington street a building within a building. Mark looks out the window with dark circles under his eyes preying to the creator. (Printing presses)

Thousands of workers night and day are carrying bags of cash, back and forth from the vaults. No wonder unemployment dropped in Ottawa last month.

You read it here first, be warned! You will see these birds over major cities this weekend carrying out their deadly deed.
Sorry Ben, Canada beet you to the punch.

#37 Brian1 on 10.02.10 at 5:49 am

Mr Turner; I have a serious question today. The banks have been making tremendous profits to enable them to fund expansions. Why do they sell preferred shares to people like me? Is there some law that compels them to share their profits with us? Why are they so nice?

#38 rain8 on 10.02.10 at 7:44 am

Garth why do we even have the CMHC. What is the reasoning to have the taxpayers take on the risk for high ratio mortgages? I don’t get it.

#39 T.O. Bubble Boy on 10.02.10 at 7:53 am

@ #37 Brian1: Preferred Shares are not profit, they are debt (basically, another forms of bonds).

Actually they are equity. — Garth

#40 pbrasseur on 10.02.10 at 8:08 am

That 20% is a very scary number, maybe the scariest yet, Garth are you sure about this?

I thought it was much less than that, if that is true then we are in for BIG troubles even in case of a minor drop. If the drop exceeds 25% then the shit is really going to hit the fan.

Obviously that 20% is not distributed equaly, in some areas it would be more more and local economies would be devastated.

I think the scariest thing about that 20% is that it’s been hiding some very weak fundamentals about Canadian productivity, truer even in my own province (Québec).

This could get nasty, no wonder people go to your meetings…

#41 Dan on 10.02.10 at 8:36 am

http://www.thetelegram.com/Business/2010-09-27/article-1798111/Home-resale-values-dip%2C-RBC/1

In Newfoundland they say it’s different because of the Oil expansions….

Look how they skew the headline. I’ve been looking to buy for awhile now and in the St. John’s area there are over 1400 houses for sale on mls (not all listings) which seems like a lot when there is around 200,000 people in the same area.

#42 Jake on 10.02.10 at 9:04 am

#10 Mindset,
Great point. Statistics can definitely be hard to interpret. One thing we can see, in today’s market, is that people are getting more bang for their buck than they were at the beginning of the summer.

#43 Jake on 10.02.10 at 9:12 am

Edmonton price/square foot stats can be found here:

http://www.bobtruman.com/Edmonton_SFH_stats/page_1918017.html

I think SP/SF is probably the most reliable stat when it comes to market trends in RE.

#44 Paul on 10.02.10 at 9:20 am

http://www.timescolonist.com/business/real+estate+deal+force+agents/3613921/story.html

#45 From the horses' mouth on 10.02.10 at 9:24 am

Just completing construction on our downsize. Anyway, had a conversation with our builder (small builder) and got into “market conditions” … told him I fully expected the place to be worth considerably less next year than this etc. He generally agreed … and then the conversation turned to the amount of debt and leverage in play. When I expressed that I felt most sorry for the state of young families considering the levels of debt they were taking on to get into homes with poor prospects for being able to work their way out from under he said words to the effect of … ” Its even worse than I think even you are imagining … and its almost everyone not just people starting out. Even the small pull back we’ve already had (Calgary) there are already a lot of people who are underwater and stuck – got themselves in too deep and don’t have the resources they need to take the loss. If we do go down further it won’t be pretty at all.”

This is a smaller custom builder … and I got the distinct impression he was talking as much about many of his own customers … who in many cases would on the surface give the impression of being empty nesters in freedom 55 mode … but … yikes !!! He built 60 or 70 units a few years ago right around the peak period … only a few last year and maybe a dozen this year.

Generally people don’t like to take a loss on anything and will hold off as long as possible … until avoiding the pain is well … just too painful. Its going to take quite awhile for the market to grind out all the deeply over-extended homeowners but one by one it will indeed force many to yell uncle.

Hmmm … seatbelts snug ?

#46 Tom on 10.02.10 at 9:43 am

Vancouver’s Olympic Train wreck Rolls on
http://www.theglobeandmail.com/news/national/british-columbia/vancouvers-olympic-village-train-wreck-rolls-on/article1739080/

#47 Got A Watch on 10.02.10 at 9:44 am

“real estate now makes up 20% of the entire Canadian economy as measured by the GDP”

What was it 10 years ago? Any chart of that, please Garth?

pbrasseur – I have read Montreal did not have a real estate boom like crazy Toronto. What about the rest of Quebec, did other regions have their own little boom?

Perhaps you could give us a report from the frontlines on what you see there.

Here, in my area, rural Ontario, 1 hour+ from Toronto, there are not a lot of properties for sale, prices have not dropped much if at all, not many recent sales, though I have seen a few. The local Honda plant is still busy, farmers who grew grain or corn did great this year, the economy is still staggering forward, but you can feel the tension even so. Many people talking of layoff or reduced hours or slow business. Giant Mal-mart Superstore opened, and it’s pretty empty except on Saturday.

Not like the sluburban outskirts of The t.dot, where the most popular Broker is that aggressive top national chain “New Price!” and his brother “Reduced!”. They seem to have taken over. There are more condo towers than greater fools to buy them, by my estimation. A lot of fools expected to buy small boxes in the sky on windswept suburban roads, where you need a car to go to the variety store anyway. By the time they complete every building going, it will be a Big O situation. As in Oh Oh, OverSupply!, or UnderDemand if you will. There are no jobs, or very few, from what I’m hearing.

Times are hard all over. The new normal.

#48 ken on 10.02.10 at 9:59 am

I used to believe our govt . leaders were intelligent and responsible people, not anymore. How could you?

#49 Boombust on 10.02.10 at 9:59 am

Here in the Tri-Cities area near Vancouver, I have been watching listings drop off and come back as “NEW!”, albeit at LOWER prices.

One forgetful realtor didn’t change his write-up though. “First open house May 1”.

Duh.

#50 robert in london on 10.02.10 at 10:41 am

Someone posted what a difference 30 years has made with respect to Chinese technological progress. Closer to home here’s a twenty year difference all you get-rich-by-borrowing-gobs-of-money-to buy a house-types should find interesting. The missus is studying to be a law clerk. One of the title search examples was a home which sold in London in 1990 for 137K and was sold again in 1999 for 140K plus the buyer put 45K of their own skin in the game. That’s a more than 30% down payment. Different world huh?

Why is it that at the peak of a price mania the majority of the RE punditry and MSM confidently and stridently predict trees will grow to the sky but conveniently ignore the possibility (supported by recent history) of treading water for a decade or heaven forfend ten years or more of falling real prices? History may not repeat but it does have a nasty habit, especially for the unprepared, of rhyming occasionally.

Oh and Rosenberg says all of the recent bump up in Canada’s GDP can be attributed to real estate. To hell with productive work. Buying, selling, refurbishing and furnishing houses will save us all.

#51 dark sad person on 10.02.10 at 10:41 am

#34 Cameroni on 10.02.10 at 3:04 am

#179 dark sad person said yesterday:

“Let’s define-Financial Collapse-
Why do you see it as a one eyed monster?
I see it as Salvation-”
———————————————————

Financial collapse is salvation?
You are an extremist idiot and a hazard to our society

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

Of course you can’t debate any of the many points i made-instead you resort to your typical juvenile tactic of name calling-

Some of us can see a bit farther out-then the end of our own pompous self righteous noses-

Try debating me on subjects sometime-we’ll see who ends up looking like an idiot–

#52 Taxpayer like everyone else on 10.02.10 at 10:42 am

16 Jeff Smith

“the US is some 60 years ahead of Japan and it’s over
200 years ahead of China. ”

I Havent read the links yet Jeff, so I’ll just comment on
your post. You give no metric given for the article, so lets
use a couple of examples.

How about Pearl Harbour? Yes, Japan attacked with hot air balloons and ships from 1881.

China detonated their first nuclear weapon in 1964 – less than 20 years after America. They got a man into space in 2003 – more than 40 years after America. Hey, they’re
actually falling behind!

And this article was 30 years ago?

#53 Behavioral Finance on 10.02.10 at 10:43 am

20% of GDP, that is a scary number. Wasn’t US around 15% at the top of the market in 2005-6?

#54 Behavioral Finance on 10.02.10 at 10:46 am

Preferred stock, also called preferred shares, preference shares, or simply preferreds, is a special equity security that has properties of both an equity and a debt instrument and is generally considered a hybrid instrument. Preferreds are senior (i.e. higher ranking) to common stock, but are subordinate to bonds.

Preferred stock usually carries no voting rights, but may carry a dividend and may have priority over common stock in the payment of dividends and upon liquidation. Preferred stock may have a convertibility feature into common stock. Terms of the preferred stock are stated in a “Certificate of Designation”.

#55 Behavioral Finance on 10.02.10 at 10:52 am

MAPIX up 15.75% YTD
MSMLX up 26.92% YTD

Wow foreclosure cases are getting interesting in US.

http://www.washingtonpost.com/wp-dyn/content/article/2010/10/01/AR2010100107287.html

#56 Bilbo on 10.02.10 at 10:57 am

Even the Garden City’s (Victoria) bubble is collapsing fast!

A-Channel News
http://www.youtube.com/watch?v=DpTMV1IMRfw

#57 FreudianSlip on 10.02.10 at 11:02 am

#8 Spacemonkey: I think you’re on to something. That Y looks suspiciously like fallopian tubes and ovaries. On second thought… perhaps it’s just a light standard. :-)

#58 R1200C on 10.02.10 at 11:03 am

No Garth… Carney is not soaking in the Nile!
He prefers going to Paris and dip his head in Seine…

#59 Timing is Everything on 10.02.10 at 11:06 am

Garth said – “And 2011 gets downright ugly.”

How ‘ugly’?….For who? Really, what ever happens, will.
Folks will adjust (adapt) as we move forward, and move forward we will. That’s just life. If folks get ‘caught’, so be it. Many have already. Needs and wants….

If “$10 billion in economic activity” gets erased, it should have never existed in the first place. Funny money, Garth. 2011 will come and go like all before it.
When a storm is comig, be prepared, hunker down.
It never lasts forever.

2011…Bring it on. Time to rest.

#60 young & foolish on 10.02.10 at 11:08 am

so, if they introduce more QE, and thereby increase the money supply (did anyone say inflation), will Real Estate still be a losers holding?

Quantitative easing in the US will have zero effect on Canadian real estate asset values. — Garth

#61 Love this Blog on 10.02.10 at 11:13 am

Interesting Link for people from Saskatchewan.

http://www.johnwarnock.ca/Saskatchewanpolitics.html

#62 TheBigLebowski on 10.02.10 at 11:14 am

#7 Old_is_Gold
I agree, but I might add the only difference in Canada is the people here are completely domesticated and have lost any notion of standing up to tyranny as a unit. Like slovenly pigs, our nation has been lobotomized to the point that we no longer remember what true freedom and independence is anymore. We now accept the opinion of mysterious undifined “Experts” and “Scientists” as the Gospel. They are the new priesthood and we “eooo” and “ahhh” at every press release put out designed to guide us along this pre planned path we call society.

#63 Debtisforever on 10.02.10 at 11:18 am

Yes, why wouldn’t it happen here? I like to look at the US website “flippers in trouble” for an example of huge price reductions throughout California. It’s astonishing. And here in Vancouver where prices are now a million bux for a house….why wouldn’t a crash happen here? Why would we Canadians be able to handle just as much debt as them (or more) considering our salaries are lower? It makes no sense! It’ll happen eventually. It’s all in the numbers. Buyers drying up is just the beginning.

#64 TheBigLebowski on 10.02.10 at 11:30 am

#60 young & foolish-so, if they introduce more QE, and thereby increase the money supply (did anyone say inflation), will Real Estate still be a losers holding?

Real estate is demand driven and a “good economy” investment. It is also interest rate sensitive and that is going higher in the future. Houses will simply be a place to live for the next decade, not an investment I believe. In the U.S housing may bottom in the next 3 years but then will grind along the bottom for the next 8 years and possibly 10 to 25 years. The U.S is facing a currency devaluation and Sovereign debt default in the next few years along with around 20 other bankrupt nations. There will be State insolvency issues beginning in 2011 and the Government will have no choice but to bail them out with printed money. This will not be a market where disposable income is on the rise. Commodities will become more expensive due to currency devaluations globally. Unemployment is above 22%. 8 million high paying industrial jobs have been shipped overseas in the past 5 years, never to come back. Wages overall are therefore falling. Housing will no longer be an investment , it will only be a place to live.

There will be no US sovereign debt default, no official currency devaluation and no 22% unemployment rate. You are a groundless merchant of fear. — Garth

#65 Timing is Everything on 10.02.10 at 11:31 am

#10 Mindset

Agreed….It’s called ‘value for dollar’ (A realtor buddy taught me that one a couple decades ago)

And when you buy a home to live in, for many years to come, it will be scutinized thoroughly these days.

Also, even more important…Location, location, and did I mention location? Be wary of future irrecoverable towns and whole sections of certain cities. Happy hunting (2011-2015)

http://www.youtube.com/watch?v=mLXQltR7vUQ

#66 CrowdedElevatorfartz on 10.02.10 at 11:36 am

Enjoy Wolfeville N.S. Garth,
Check out the Gran Pre museum/ re constructed church at the edge of town. The line of massive willow trees were planted by the Acadian settlers almost 400 years ago. Interesting bit of early Canadian history.

#67 TheBigLebowski on 10.02.10 at 11:39 am

#64 TheBigLebowski
I meant..”This will not be a market where disposable income isn’t on the rise.”

#68 TheBigLebowski on 10.02.10 at 11:56 am

Gold is different. Aside from jewelry, most gold demand is monetary in nature.
Anyone who lumps gold in with other commodities such as wheat, coal, coffee, oil, well these people are dumber than dumb. All other commodities are “Consumed”. Gold is not consumed it is bought as a store of value and is driven by fiat currency issues. This will become public knowledge in a few years but by that time people will be buying and us in the know will be selling. Housing on the other hand is demand driven and not a store of value and every house ever built will always revert to zero and have to be torn down and rebuilt. In contrast, a one ounce gold coin from the Roman age is as good today as it was then, two very different markets and housing and gold should never be mentioned in the same sentence.

#69 vreaa on 10.02.10 at 12:09 pm

#1 Tom
Expect 25-30% off within 2 years; perhaps 50% off within four.

see
Five Charts: Predicting Future Vancouver Housing Prices
http://wp.me/pcq1o-1fX

#70 vreaa on 10.02.10 at 12:10 pm

Mark Carney
“Hey Kids, Don’t Smoke!”

http://wp.me/pcq1o-1p9

#71 SpaceMonkey on 10.02.10 at 12:11 pm

#57 FreudianSlip,

(I know this is off topic Garth. It’s the last I’ll mention of it)
There was a change in the picture. See the following link for the original image next to the image with highlighted letters.
Did I miss any?
http://img833.imageshack.us/img833/3001/hiddenletters.jpg

#72 Hovering on 10.02.10 at 12:13 pm

Garth,

Please write an open letter/post to vancouver mayor robertson about why he should sell the OV condos now rather than rent them “until the market improves”

(Story in sat globe and pail)

Thxs

Woof

#73 The Original Dave on 10.02.10 at 12:15 pm

oh, I get it now – Victoria is a “destination spot”. Phoenix and Vegas weren’t destination spots I guess.

Funny thing. I have a husband and wife here from Germany. He asked me, what the heck is with housing over here? He says people seem crazed and obsessed. He asked how much it costed to rent a place here and I told him him you can find a place for $900. He said “wow, $900 for an apartment with 3 bedrooms”, I said “no way, you’re lucky to get 1 bedroom for $900”. He nearly choked.

He claims that in Cologne you’ll pay less than $900 for 3 bedrooms for sure. He also said to purchase a place you’re looking at 250,000 Euros and that average households probably make 70k euros. I told him that was sensible and had to explain that things are crazy here which is why our house prices are double here.

He couldn’t believe the obsession. All the people he encountered, relatives and all, were in the midst of building, buying and upgrading their home.

It’s going to be a crash folks. I’m not going to sugarcoat things. I’ll put my neck out and say it will be ugly.

I’ve never seen so many people so optimistic about an asset. Home ownership is at close to 70%. There’s no way 70% of people had exposure to the tech bubble or even the oil boom that ended a few years ago. Yeah, everyone was preaching about runaway prices and wonderful times for those assets. This time there’s more people that are going to get clobbered.

#74 Fourtwinsisters on 10.02.10 at 12:17 pm

Tent City

Regarding the letter from the lady asking about “tent city”. I’m not sure she was referring to a slum that you’d find in a third world country. In Edmonton, we had a “tent city” spring up about 100 years ago. This was not a slum, but rather an economic anomoly, and was populated by homeless doctors, lawyers, teachers, and business people who had the means to buy a house, but there just weren’t enough houses to go around. The wait list to build was about 3 years. In the meantime, they erected tents on wooden platforms, and were subject to rules and bylaws just like houses are today. I wonder if this is the type of tent city your writer was referring to?

Read about Edmonton’s tent city here (1905 street):
http://en.wikipedia.org/wiki/Fort_Edmonton_Park

#75 Timing is Everything on 10.02.10 at 12:19 pm

#68 TheBigLebowski – said …”two very different markets and housing and gold should never be mentioned in the same sentence.”

Then why do you keep doing it? This is an RE blog.

#76 ottawa pete on 10.02.10 at 12:23 pm

Interest rate note: My TD Bank unsecured personal line of credit rate has jumped from 5% on June 1 to 5.75% on Oct. 2.

#77 Timing is Everything on 10.02.10 at 12:26 pm

#68 TheBigLebowski said – In contrast, a one ounce gold coin from the Roman age is as good today as it was then….”

Sure, but it isn’t doing that Roman dude much good, is it?

#78 CrowdedElevatorfartz on 10.02.10 at 12:27 pm

#16 Jeff Smith ….Means that China would not be able to reach space for at least 200 years from that time in the 80s. So now here we are 2010, and my god, not only have they caught up, but are poised to overtake the west. It’s just staggering what China can do in only 30 years, that’s less than half of a generation….
+++++++++++++++++++++++++++++++++++++ I thought a generation was 25 years.
As for China, let them “rule the world” like the US has over the past 75 years. It will eventually bankrupt them AND everyone will hate them. As everyone hates the US now.
Time for some other country than the US to be “world police”. Come China step up ! Show us how its done. Dont forget your own “restless” population in the back yard wishing they could have the same freedoms that they see on tv. Baywatch reruns are HUGE in China????? David Hasselhoff will live on forever. Ugh.

#79 Stampede Sam on 10.02.10 at 12:32 pm

This is the house that was listed at $299,900 a few weeks ago to start a bidding war. Didn’t happen. Should sit for a looong time at the new price.

http://www.realtor.ca/propertyDetails.aspx?propertyId=9938696&PidKey=206104417

#80 TheBigLebowski on 10.02.10 at 12:33 pm

#19 realpaul
Our government is simply only a lap dog to the banks. The true government is the banks and the global banking class families. Governmnets are only put in front of us to deflect the attention away from the true power structure that runs the global economy. Similar to the Wizard of Oz, the bankers are the ones behind the curtain pulling the strings . Most people are still fixated on what happens in front of the curtain and therefore will never understand the true reasons why events happen economically. Government usually consists of low level sociopaths drunk on the power they have been given and will do whatever their masters tell them to hang onto that power.

#81 CrowdedElevatorfartz on 10.02.10 at 12:38 pm

#27 No Tents Yet
You actually give beggars money in Dwntown vancouver? Are you nuts? If you keep giving them money they multiply like locusts in a wheat field.
There are more than enough places for them to get free meals in downtown Vancouver. That money goes right into their crack habit or their booze habit.
Oh, and the 20 something runaways with puppies that are begging for money for dogfood……deserve a kick in the arse. If they cant afford to feed a stolen dog then they shouldnt have one.
Giving beggars money accomplishes one thing.
More beggars.
Give your money to the Sally Anne, it will do far more per dollar than some junkie will.

#82 T.O. Bubble Boy on 10.02.10 at 12:44 pm

@ #37 Brian1: Preferred Shares are not profit, they are debt (basically, another forms of bonds).

Actually they are equity. — Garth

Sorry, should have said “they are more like debt” (essentially, an alternative form of financing).

#83 bullion.bunny on 10.02.10 at 12:50 pm

#64 TheBigLebowski on 10.02.10 at 11:30 am

There will be no US sovereign debt default, no official currency devaluation and no 22% unemployment rate. You are a groundless merchant of fear. — Garth

U6 U.S. unemployment numbers are at 16.4% as of Aug 2010, Seasonally adjusted at 16.7% as of Aug 2010

http://www.bls.gov/news.release/empsit.t15.htm

Actually that includes part-time workers. The official jobless rate is 9.6%. — Garth

#84 T.O. Bubble Boy on 10.02.10 at 12:51 pm

Interesting, Flaherty is telling financial advisors to help their clients prepare for paying higher rates on their debt:

http://opinion.financialpost.com/2010/10/01/flaherty-tells-ific-to-prepare-clients-for-rising-interest-rates/

That is *RICH* coming from the guy who flooded the market with cheap mortgage debt, and then told all Canadians to go reno those highly-mortgaged houses to help the economy (and take on even more debt).

This is basically like a bartender feeding someone 20 drinks, and then telling them to drive carefully on their way home… you either should have stopped at drink #1, or taken the keys away.

#85 Alan on 10.02.10 at 1:00 pm

Vancouver appears to be the city of choice for this blog to flog, so as a Vancouverite for my entire life, I will repeat (just so we can have some assemblance of balance on this blog) to present these thoughts:

1. Vancouver continues to attract high net worth individuals from all parts of the world. One only needs to stand on the corner of Robson and Burrard and within a few minutes you will hear a number of different languages being spoken. Lately, there has been a strong trend of eastern europeans.

2. High net worth individuals have been buying the higher priced real estate in Vancouver. They pay cash or with substantial down payments. I confirmed this with my own banking representative that services only their top customers. She is very busy with mortgages and setting up accounts for transfers of money from foreign customers.

Her comments are interesting in that, those high net worth customers make statements like, Vancouver is safe, beautiful and is a lifestyle choice and destination. Many of those same customers considered the US but now they don’t see any advantages in living in what could potentially become a more hostile environment. So Vancouver benefits from a change in attitude from those who may have previously considered moving to the US and now move to Canada (Vancouver) with similar characteristics as a US destination, but better government, stable economy, without the potential downside of the US

Surprisingly, we are also the recipients of US money wanting to get out of the US. So Vancouver has not only overseas capital coming into the city but also N. American Capital.

3. Vancouver like many other notable cities will see the continued departure of salaried workers from the inner city to the outskirts due to affordability problems.
This will continue into the foreseeable future as quality high end properties are developed to service the higher end customer.

4. Lastly, the majority of Vancouverites speak religiously about the quality of life and lifestyle that the city offers. It’s one thing to talk about Vancouver as if you have never lived here, it’s another to see the majority of Vancouverites of are almost entirley from some other part of the world, come to Vancouver and declare it’s the best and finest place they have ever visited. This is undeniable and you only have to be here to see, hear and believe it. A Vancouverite will take a job for less pay in order to stay in the city. A Vancouverite will give up their car before they choose to move out of the city. A Vancouverite will lower their spending on frivilous items before they choose to move out of the city. A Vancouverite will give up most things before they ever walk away from a mortgage on a home in Vancouver.

The difference here is that people are hooked on the quality of life in Vancouver. This is not your average Canadian city or International city for that matter. I am not delusional. I’ve travelled the world and been to other great cities. Vancouver is the 21st Century city and it’s right here under our noses.

#86 The Original Dave on 10.02.10 at 1:01 pm

so, if they introduce more QE, and thereby increase the money supply (did anyone say inflation), will Real Estate still be a losers holding?
——————————————————-

for the 1,000,000th time, that isn’t inflation. If they introduced more QE and there was an expansion in credit, you could say inflation. The contraction in credit (less money) offsets any QE you could dream of. We’ve had credit contracting for 3 years. No money printing imaginable can bring inflation. There’s less money in circulation. Money is those printed bills as well as credit. You can’t assume that just because more money is printed you’ll have inflation.

Why don’t people consider the elephant in the room when talking about inflation? Credit, credit, credit. Prices of goods rise and fall depending on credit expansion or contraction.

#87 Herb on 10.02.10 at 1:06 pm

Got a Watch,

“New Price” and “Reduced” are getting lots of listings in Ottawa too. Royal Lepage better look out.

#88 bullion.bunny on 10.02.10 at 1:12 pm

Actually that includes part-time workers. The official jobless rate is 9.6%. — Garth

Yes, lets not let the facts get in the way.

#89 Love this Blog on 10.02.10 at 1:13 pm

#44 Paul, awesome link. Thanks

#90 joseph on 10.02.10 at 1:18 pm

“What’s happening in Vancouver and Toronto, to be repeated in several other places as the music fades, is exactly the pattern I told you to expect. First, listings rise (that happened in the spring). Then sales drop (been ongoing now for about four months in most markets). But prices stay sticky (vendors are more rapacious than realtors). Prices may distort (the remaining greater fools buy fewer houses at bubble levels, so average prices jump)”

This didnt even remotely happen in Calgary…

Calgary prices peaked in 2007, from 2007 to 2009 we had a relatively soft market, occasional periods of a “balanced market” and very brief “sellers markets” if you could even call them that. Since 2007 prices have been inching down. Despite what CREB reports as the average, actual prices are down 15% all over the city. Townhouses are selling for $260,000, that went for $315,000. In 2010 we had a bit of a revival in prices from rock bottom interest rates, however this was short lived and we are now seeing declines again.

Anyone who bought in 2007-2008, thousands and thousands of people are in negative equity right now, and yet Calgary continues to lead the country in consumer spending. Meanwhile Garth argues that people “feeling poorer” is going to hurt the economy, well good case study is Calgary as our prices are down for three years and people don’t seem to be “feeling poorer”.

My own rental property is in negative equity I’m sure. Its cash flow positive, I’m planning on holding it for 10+ years and to pay off the mortgage. According to Garth I should be feeling poorer. I’ll give right on that.

I’ve got nothing against Garth and I’m not saying Calgary is “different”. All I’m saying is that I’ve only been in real estate for 4 years but nothing in Garth’s post reflects what has happened here.

#91 Bill on 10.02.10 at 1:19 pm

Market fundamentals never change. I kept the following article because in 1993 to 94 the market fell 20% on a month to month basis in North Vancouver. The current sharp drop in sales volume especially in Vancouver and Victoria together with increases in average sale prices for detached homes is interesting.

EXTRACTS FROM AN ARTICLE “A MARKET LIKE NO OTHER”,
Banker’s Institute Journal 1990
P Foley, Economic Advisor of a UK BANK

The market for housing is quite unlike any other….many sellers would prefers take their house off the market rather than lower the price….the result is that initial evidence in any downturn is a sharp reduction in the volume of house sales rather than a fall in prices. ….; major agency chains report that the volume of house sales has fallen by roughly 50 per cent in the last year. However, prices remain around 10% up on a year ago
What happens next in the housing cycle? When all those who are reluctant to reduce prices have dropped out of the market, there remain those who are more desperate to sell, perhaps because their mortgage commitments have become too onerous, or because they are forced to sell by a job move. This group will be more willing to cut their price, and the consequence is prices will fall… But it should be noted that because of the sharp drop in house sales, those that do take place become less representative as a picture of the underlying demand for, and supply of, housing and may tend to overstate the weakness of the market…. month to month changes tend to be misleading … look at changes since the same period of the previous year.
Previous cycles
… Starting from the peak of the cycle, in terms of sale volume, there is a sharp drop in volume. Prices are slow to react; house price inflation sometimes accelerates further after the initial volume fall. But within two years of sales decline, price inflation has dropped significantly. Obviously each cycle has its own special features, reflecting developments in the wider economy.

#92 Ben on 10.02.10 at 1:19 pm

Mindset on 10.01.10 at 10:24 pm
I’ll add an observation from Victoria. With all of the listings to choose from, buyers are only buying the nice stuff, and getting a great deal compared to a mere 4 months ago. It’s also been my observation that the ‘average’ home that is selling today is a lot nicer (the junk is sitting).

———————————————————

The immigrants are still buying junk in Mimico. I have to slap myself daily to remember i’m at home in Canada. I’m a third generation redneck from Alberta and currently renting in Mimico or Etobicoke or whatever the frog it’s called. I’d swear I was in some have-not European country cause I’m definitely a minority in this area of TO.

#93 Alan on 10.02.10 at 1:25 pm

Vancouver, part 2

What does my previous post have to do with the prices of real estate in Vancouver?

Quite simply there is demand beyond what we might have previously thought were our property buyers. Prior to 1986 the real estate market in Vancouver was local, very local. If the unions decided to go on strike for an extended period of time, we began to see property listings go up and interest go down. These were the fundamental economics of Vancouver. Today, we see people from all over the world here and this provides a bid for real estate here. Granted, I concede that these buyers don’t support all the real estate in greater Vancouver, but in definite micro-neighborhoods. This unto itself, keeps the ball rolling in that a high net worth buyer buys a million dollar tear-down and builds the kind of house they want to live in. It creates jobs for the building industry and those people that ultimately received the million dollars take that money and payoff their mortgage and buy another home in the outlining areas of Vancouver for much less, indirectly supporting the outlying areas of Vancouver. This is what has happened for the last 10 years.

I fully understand that this cycle has a life of its own and could be slightly derailed if things slow down too much, but this is not the case at the moment and I do not see a wholesale price decline as people speculate on this blog in Vancouver. Again, people will just not sell their homes. They will take them off the listings and wait. Retired people don’t care unless they have to sell and those that can afford their homes either because they have the capital, via dual incomes or rent out their basement to renters -have the capital to stay put. Interest rates are the lowest in decades!

Where I see pricing pressure is in the outlying areas where builders have been building on spec and have lost the buyers who would normally be salaried workers who are more sensitive to rate hikes, layoffs, and debt issues.

The Millenium project that seems to be a red herring on this blog will be sold en masse to a developer or within the next couple of weeks we shall see a massive sales campaign to move all the suites and reduced prices. I GUARANTEE there will be lineups of people to buy not only one but two or three units. The city needs to get rid of the problem from a political perspective and taking a hit on the Olympic site with cost overruns (what Olympics has not had this problem) will be the way to move on.

In an era of increasing violence in countries and cities around the world, Vancouver will be a comfortable choice. At the moment, Vancouver is one of the least violent cities in the world on a per capita basis. So far, less than a dozen murders this year and the majority drug related.

Why would Vancouver be a ‘comfortable choice’ for any newcomer when 70% of pre-tax income is required to own a home? Your argument is spurious. — Garth

#94 Ben on 10.02.10 at 1:26 pm

If housing died in TO, half these immigrants would be out of work cause that’s the industry their all in.

#95 Nostradamus Le Mad Vlad on 10.02.10 at 1:32 pm


#9 Old_is_Gold — “And you are right – it can’t end well for ALL Canadians, even the prudent and fiscally responsible ones!”

The fiscal, prudent and responsible ones may not be that badly hit by exterior forces. As long as one is debt free, lives well within one’s means and has learnt how to stretch a dollar, there will be a few bumps along the freeway of life, but not many.

It’s those who were gullible enough to take on large amounts of unnecessary debt who will be crying in their spilt milk.

#34 Cameroni — “Financial collapse is salvation? You are an extremist idiot and a hazard to our society.”

I respectfully disagree. A financial collapse allows individuals to examine themselves (to live an examined life, rather than blissfully ignoring it) and their lifestyles of choice, rather than blaming their own misfortunes on someone / thing else over which no one has any control.

It would require an immense amount of short-term pain, but that would lead to a more realistic lifestyle than before.

#36 Its much worst then tent cities — Curious but interesting post.

#37 Brian1 — “Why are they so nice?”

Because they continue to make fat, massive profits by giving out loans without bothering to tell sheeple about the fine print (extra fees and the like), and collecting loads of interest and principal. That’s why!

#58 R1200C — “He prefers going to Paris and dip his head in Seine…”

Nice play on words!
*
The Bare Naked Minnesotans sing “If We Had Some Global Warming” at 20 below. 4:34 clip.

Because the US economy is almost gone, the WH and banxsters have to create and establish wars elsewhere, to take sheeples’ attention off their own troubles.

Stimuli “All stimulus is is taking a bunch of cash from the American people and giving it to the banks so that the banks can loan it back to the people at interest. Stimulus does not bring any new money into the system to pay the old debts, it just moves the debt around, transferring it from the banks onto the people. As the Native Americans like to say, only a white man is stupid enough to believe that can work!” wrh.com.

Civil War in Germany? It has taken on a life of its own.

#96 VancouverGoinUP on 10.02.10 at 1:35 pm

Another thing lost in the media.

Vancouver Real Estate is a Sport. The spoils go to the Victor (ownership)
Ever see how much America’ Cup costs? This is the same mentality which drives Vancouver Real Estate.
This isn’t just about housing or invesment. It’s about the greatest sporting event in the World.
Some people just don’t get it.

#97 OttawaMike on 10.02.10 at 1:39 pm

81 CrowdedElevatorfartz on 10.02.10 at 12:38 pm
27 no tents yet

I’m more a sucker for any sad sack story than most people but have also stopped giving to street beggars years ago.
Here’s why: I had a burnt out social worker, job shadowing me as she was trying to find a new career within the municipal work place. I asked her about giving and she cited a myriad of shelters, programs and funding available. Her executive summary was there is no reason at all for street handouts. She told me to ask the street person if they have a social worker assigned to them and if they say yes then tell them to seek emergency assistance through them.
Just asking that question usually throws them for a big loop and sends them flying off like…well locusts.

I still sometimes buy them food or coffee and give it to them if they look really bad off.
They are just going to use the money for booze and drugs but hey, who am I to judge as that is what I do with my money to.

#98 Ben on 10.02.10 at 1:40 pm

You think the immigrants I’m renting this basement suite from while I’m here in TO are declaring the rental income. LOL… not a chance, but i’m helping them meet their monthly mortgage payment on this war bungalow. There’s more underground housing reno work going on that you could shake a stick at. I hear brick saws and pounding going on daily with all the foreign language.

#99 Alan on 10.02.10 at 1:43 pm

Garth you said: “Why would Vancouver be a ‘comfortable choice’ for any newcomer when 70% of pre-tax income is required to own a home? Your argument is spurious. — Garth”

Let me be more clear: 70% pre-tax income for the average Canadian income earner would not be comfortable. The “average” Canadian is not what is driving real estate values in central/downtown Vancouver.

Oh, so it’s the “average” immigrant? — Garth

#100 TheBigLebowski on 10.02.10 at 1:44 pm

#88 bullion.bunny
And yes going from a $35/hour manufacturing job to being a part time Walmart greeter is considered fully employed according to Garth’s numbers. These are not potential house buyers in my opinion, they are simply existing. But full respect goes to anyone willing to work and do what they can for a living be it as the above mentioned job or anything else, good on you. The years ahead will be that of being grateful for any means of employment. Think back to the 50’s when owning a vehicle was considered a luxury. This is going to be a painful shift in living standards for allot of people, that’s why preparing and protectiong ones assets now is so important.

#101 Coho on 10.02.10 at 1:46 pm

#84 T.O. Bubble Boy,

Good analogy. Gov’t often likes to play both sides, often enablers of potential problems by aligning with special interests and then offering solutions to these problems with more restrictions, rules and regulations for the common folk.

There isn’t enough money in this world to satisfy both the greed of those that already have it and the need of those to earn enough of it for a decent living. And the transfer of wealth from the middle class to the “too big to fails” indicates this all too clearly. More for the few or the one, and less and less for the many.

#102 Brico on 10.02.10 at 2:00 pm

#79 Stampede Sam on 10.02.10 at 12:32 pm

This is the house that was listed at $299,900 a few weeks ago to start a bidding war. Didn’t happen. Should sit for a looong time at the new price.

http://www.realtor.ca/propertyDetails.aspx?propertyId=9938696&PidKey=206104417

****
Love it.

Thanks for the update Sam.
The Realtor games are not working. Are the Sheeple getting wiser or are there no more Sheeple?

#103 morpheus on 10.02.10 at 2:08 pm

Actually that includes part-time workers. The official jobless rate is 9.6%. — Garth

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

They only started using this U3 “official” number in 1994 under Bill Clinton. Previously it was the U6 number. So that 10.8 peak in the early 1980’s was the U6. Therefore, the current 16.4% U6 is what you should be looking at to compare to the 80’s number and even the 1930’s number not the watered down 9.6% nowadays. U3 is pure political manipulation to make Americans feel they are better off employment wise than they really are. Let’s not be naive here.

#104 WINNIPEGER on 10.02.10 at 2:19 pm

http://realestate.msn.com/video/default.aspx?vid=01843c41-1c85-4a2a-a98b-b17f770e1d3b%26tab=TODAY&from=gallery_en-us_realestate_rightrail_listed

CNBC snapshot of 3 U.S. housing markets.
The interview from Texas is an eye opener.

#105 S.B. on 10.02.10 at 2:20 pm

My only hope is that in 2011 REALscammers(r) are seen in the same light as bankers were in 2008: complicit combatants in the War on the Middle Classes.

#106 Betamax on 10.02.10 at 2:24 pm

Re. Vancouver: sorry pumpers, it was a world-wide bubble, and prices here in Van will crash in due time like everywhere else. And there’s a limited supply of stupid rich foreigners, as Florida found out.

Prices stay sticky at the beginning of the correction as greater fools will still pay all they borrow, and initial price drops are hidden as the fools simply buy more house rather than spending less than they’re approved for. Won’t be different here this time.

#107 Live within your means on 10.02.10 at 2:35 pm

.#5 Prof. ANON on 10.01.10 at 10:02 pm

Good luck. It can be challenging but rewarding.

My sis & I bought a 3 level townhouse condo about 26+ yrs ago. I swear every room was covered in wallpaper. We worked our butts off, removing paper and painting, etc. Then a few years later, my husband moved here and lived with us. A year later my sis & I both married (same day). A little later hubby decided to renovate, open up kitchen/dining area, etc. He did everything. We dumpster dived at Ikea (with permission) for ‘mouse shit & other board’ to build the frames of the kitchen cabinets. That was back in the late 80’s. We did it on the ‘cheap’, but it sure helped sell that place. I ‘staged’ the place before I even knew of the term. All of our appliances were used as well, but had a ‘built in’ look. We sold because we did not like ‘condo’ living, most on the board were corrupt, IMO, and I wanted space to garden.

#108 dark sad person on 10.02.10 at 2:50 pm

#95 Nostradamus Le Mad Vlad on 10.02.10 at 1:32 pm

I respectfully disagree. A financial collapse allows individuals to examine themselves (to live an examined life, rather than blissfully ignoring it) and their lifestyles of choice, rather than blaming their own misfortunes on someone / thing else over which no one has any control.

It would require an immense amount of short-term pain, but that would lead to a more realistic lifestyle than before.

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

Wow–a deep thinker-
Someone who has the ability to look beyond the Government’s tired old proven useless-Keynesian spend and tax methods-

Seems the Austrians agree with you as well–

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

Unfortunately, paying off a national debt that will soon reach $4 trillion would quickly bankrupt the entire country. Think about the consequences of imposing new taxes of $4 trillion in the United States next year! Another way, and almost as devastating, a way to pay off the public debt would be to print $4 trillion of new money—either in paper dollars or by creating new bank credit. This method would be extraordinarily inflationary, and prices would quickly skyrocket, ruining all groups whose earnings did not increase to the same extent, and destroying the value of the dollar. But in essence this is what happens in countries that hyper-inflate, as Germany did in 1923, and in countless countries since, particularly the Third World. If a country inflates the currency to pay off its debt, prices will rise so that the dollars or marks or pesos the creditor receives are worth a lot less than the dollars or pesos they originally lent out. When an American purchased a 10,000 mark German bond in 1914, it was worth several thousand dollars; those 10,000 marks by late 1923 would not have been worth more than a stick of bubble gum. Inflation, then, is an underhanded and terribly destructive way of indirectly repudiating the “public debt”; destructive because it ruins the currency unit, which individuals and businesses depend upon for calculating all their economic decisions.

I propose, then, a seemingly drastic but actually far less destructive way of paying off the public debt at a single blow: out-right debt repudiation. Consider this question: why should the poor, battered citizens of Russia or Poland or the other ex-Communist countries be bound by the debts contracted by their former Communist masters? In the Communist situation, the injustice is clear: that citizens struggling for freedom and for a free-market economy should be taxed to pay for debts contracted by the monstrous former ruling class.

http://mises.org/article.aspx?Id=1423

There is no reason for the US to pay off its national debt, which is why this will never happen. — Garth

#109 S.B. on 10.02.10 at 3:19 pm

#40 wrote:

“This could get nasty, no wonder people go to your meetings…”

Meetings – funny! Looking forward to the GTA revival ‘meeting’ where we’ll shout stomp and holler to Brother Garth, punctuating his points with a scattering of amens and fist pumps.

Then we will invite debt sinners to the front of the room: “Hi my name is ___ and I’m a debt-a-holic. My first hit was when I borrowed $1 for a hot dog lunch in grade school and it’s gone downhill from there.”

Deliverance will be offered (for a small fee) whereupon Garth’s Good Book is pressed against the foreheads of debt sinners, and they will swoon and begin speaking in tongues: “Preferred shares REIT cashflow house ATM bad it’s not different asian investors niche balanced median market” and other assorted gibberish that is intelligible only to True Believers.

:P :P

#110 Bast on 10.02.10 at 3:23 pm

More anecdotal info from Calgary…
One trust company is foreclosing on 40-50 homes a month, and they estimate 10% of their mortgage holders are behind in their payments.
It’s gonna get ugly out there….

#111 Michael W on 10.02.10 at 3:23 pm

Did anyone see that real estate agent walking beside that ledge with no safety barriers at around the 2:50sec point of the video above? I feel like calling the MOL on this builder due to safety conditions, but I feel bad doing so because with decreased sales and a stop work order on his home building he may be left out on the streets!

#112 Love this Blog on 10.02.10 at 3:41 pm

#85, Alan,…………….yes, it’s different there. You will soon fing out “how much”. Not much.

#113 andrewS on 10.02.10 at 3:43 pm

22 Foggy

“A million dollars, you say…
With a 4% mortgage your monthly payments are $5260. When rates go up to say, a very reasonable 7%, your payment is now $7004. If this is the average SFH house price, how does the AVERAGE Vancouver single family pay for this? Then add in all the taxes, utilities, granite toilets etc. None of this makes sense.”

They’ll manage. As another poster said, they want to stay in Vancouver. Even if they have to pick up a second job as a Safeway Cashier they will manage. They might even get a brief glimpse of the mountains in those few minutes a day they’re not at work or asleep, or sitting in traffic. Assuming the rain stops for long enough to see them.

The real shock is 15 years from now when they find out that by taking that cashier position at Safeway they’ve taken the only job an under-40 in Vancouver can actually find, and that the next generation that they want to sell to got fed up with the low pay and high costs and left vancouver years ago.

Seriously though, and I say this as someone that grew up in the lower mainland and lived in Vancouver itself for a while, that Vancouver in its current state IS. NOT. WORTH. IT. A mountain view and not having to shovel are not worth the thousands of extra dollars a month it costs over living in similarly urban Toronto. I can live in Toronto – everything within walking distance. Hire a kid to shovel for me, and fly out to Whistler once a month for a ski retreat and it’s STILL cheaper to live in Toronto.

You can talk about foreign investors all you like, but foreign investors cannot sustain a pretend economy forever. Vancouver will fall so fast it will shock everyone, even the eternal pessimists reading this. Millenium waters is the first manifestation of that.

#114 S.B. on 10.02.10 at 3:48 pm

And the 1320nd sign of a gold top is…

http://www.msnbc.msn.com/id/39383743/ns/business-personal_finance

‘Gold-to-Go’ taps into gold fever with ATMs
German firm plans to introduce machines in the United States this year

#115 Patz on 10.02.10 at 4:04 pm

So with all the talk about prices I decided to get specific and see how it plays out in a low average deal in Vancouver. I picked East Van where you can still get a little bungalow for ~$600K. So let’s see what the numbers on that look like:

First you will have to have a family income of about $136K for even a 10% mortgage, so affordability is already a problem.

I actually found a house in E. Van selling for $609K. It’s a small bungalow 1820 sq. ft. renovated. Looks nice on the outside, what realtors call “charming.” It has a basement bedroom which can be converted to a suite. I’m not even adding the reno cost and am being very generous to say you could get $1000/month for it.
Lets say you get your home for an even $600 large.

$600,000
Property transfer transfer tax = $10,000
10% down payment = 60,000
Out of pocket = $70,000

Mortgage $2985/month @ 5% variable
offset $12,000 rent income

First year Mtg = $35,820
— rent = 12,000

Net = $23,820

+ prop taxes = 3,000
+ insur = 2,000
Mtg/taxes/insur = $28,820

With down payment and property tax added in

Total outlay year 1 = $98,820

Rent a comparable 3 bedroom for $2000/mo = $24,000/yr.
(Checked this on Craigslist and very doable)

Consider the loss of two market drops:
10% drop, have to sell for $ 540,000

Loss = dp $60,000
Agent fees 32,400
Loss ~ $90,000

20% drop sell for $480,000

Equity loss $120,000
Agent fees 28,800
Lose $148,000

Now you have to come up with almost $100,000 more than you had to start with and it’s still only a 20% ‘correction.’

If you bought a new house consider an extra roughly $20,000 up front in HST.

If your rate goes up 1% you will pay another $4000/year on your mortgage.

None of this considers anything you may have to pay in home repair or deficiencies on the reno. And if you think that won’t be a factor, you’ve never owned a house.

And selling into a headwind won’t be easy. The above could look like a very rosy scenario—why would you even think about it? Oh, I know, it’s always been your dream…

Disclaimer: If I’ve made any mistakes fire away.

#116 Calgary Rip Off on 10.02.10 at 4:19 pm

#90 Joseph:

“Calgary real estate is down”. Only if you bought in 2007. If you bought before that you are still ahead. Im glad I didnt buy in 2007-as a renter Im no further ahead or behind than if I had gone ahead and bought-actually I would be much much worse if I had purchased(no down payment).

So its 15% down off of prices that are DOUBLE their true values. Big deal. Calgary real estate is still so overpriced its amazing.

All the people I talk to cant believe how much I pay for rent-more than their mortgage. And that the majority of 40 something adults I know would never ever be able to buy if they hadnt bought pre 2005.

And here I am struggling along making great money at a great job, scraping a down payment together.

I dont care that people that had no finances to buy and ended up buying are now in “negative equity”. These are the people who screwed it up for everyone else and created a bubble. These people are costing me serious money. So let them go underwater. Its not like they wont have clean water, good food, motorized vehicles and healthcare.

Its truly amazing the arrogancy of many in Alberta who think that they are the privileged few. I believe that the world and noone owes me anything. I have to earn it through long, hard and oftentimes painful labour.

#117 Bill ( Peterborough) on 10.02.10 at 4:23 pm

Re # 24 Nostradamus Le Mad Vlad

Looked at the site, informative , links with it. Problem is the same as a mase with moving walls. The closer you get to exposing the truth , they just put another wall up. Trying to throw you off. They been doing this for centuries , thay way those trying to discover the truth are called nut jobs , conspirators.

The general populous choose’s not to believe you through there lack of reasearch. Can’t fathom that such such things are happening.

Nobody wants to believe this is all orchestrated by a
few. Easier to say ” stupid politicians screwd us again”.

That way they can sleep better at night.
___________________________________________

Re # 108 dark sad person ( Garths comment)

There is no reason for the US to pay off its national debt, which is why this will never happen. — Garth
*******************************************

The debt created by the Banking Cabals is not designed to be payed off. It is designed to wipe out the middle class through taxation.

If any body thinks that the economy is going to pick up over her shortly you truly are dillusional, or are in politics or sell real estate… look around see what is going on , good jobs lost, more minimum wage jobs created, a expanding deficit.

Cost of living going up , while wages are decreasing, for alot of people, taxes on the rise… Wild.

And the populous just keeps on hypothisizing as to what is going on through their vast knowledge of reading/watching MAINSTREAM MEDIA.

Truly wonderous creatures you are. Fuffy, bleeting little fools being led to slaughter, and not realizing you are being led to slaughter.

You have flipped. — Garth

#118 AnthEmic on 10.02.10 at 4:25 pm

As for the tent city thing… Abbotsford has had a pretty large one for about 5 years now in the woods on the east edge of town. Chilliwack has several smaller and more transient tent cities that usually grow in the summer. So yes, it is happening here. I work as an employment counsellor and have noticed more of my clients coming in with tent city “addresses” over the last 2 years.

#119 Alberta Boy on 10.02.10 at 4:33 pm

#90 Joseph,
ROTFLMAO. Re-read your post and ask yourself why you think all will be well in Calgary. You seem to be proud of Calgarians for their willingness to spend. Calgarians are the most indebted people in the country. They are addicted to credit. You are one of them. Calgary will feel a lot of pain. Good luck getting rich with your rental.

Here’s a quote from a Calgary realtor blog.

“Most of Calgary’s losses stemmed from a plunge in the value of investments held by households, such as stocks, bonds and mutual funds. At the same time, Calgarians took on large liabilities in the past year, and Calgary is now the home of the most heavily indebted people in Canada. Albertans in general have 30 per cent more consumer debt than the average Canadian, the research shows. And the mortgage debt of many young people has soared.”

http://www.theglobeandmail.com/globe-investor/vancouver-ranks-first-for-net-worth/article1223946/

#120 Dale in TO on 10.02.10 at 5:07 pm

I have had the heartfelt job over the last few months of counselling a close friend during his days of anguish in trying to sell his home in a what I would call a moderately nicer than usual neighbourhood of this forsaken city. I have never pushed but only offered advice when asked, but have seen him go from delusional to realistic to desperate. Maybe these are the three stages that most sellers will go through in the coming months and years. Garth .. what do you think? I have been in in shoes and feel the pain. But in experiencing this, I have had the an insightful look into the mind of a seller at this time, in this City. At this moment, most sellers insist on being perpetually stubborn with what they have determined there little piece of heaven is worth, and probably to the chagrin of their agents. I see the same listings that have been there for six months and have not dropped a nickel. As RE values drop, sellers only see this as what ‘they have lost’, when in reality they have not lost anything. What I tried to explain to my friend was that this increase in RE values over the last year have been artificial, like ‘not real’, like ‘it should not have happened’. But what does that mean to a seller … the answer is ‘nothing’. It means ‘nothing’. If someone you know cashes out their chips and you did not, and you then find out its too late to cash out, you then see this as a loss. This is part of the delusion. You might as well be pissed off at every guy who bet on the winning horse, while you were in the clubhouse slugging brews. What about all the gains that RE has made over the last 10 years … is that not enough for home owners? Apparrently not. My loving fiance once said that I should not be wishing for RE prices to drop because it was the same as wishing for bad things on people. Kinda of sounds like Government propaganda. I explained to her that it has been the ridiculous unsustainable rise in RE prices over that last few years that have made peoples life difficult … like ours .. . two working professionals that can not afford a property in this City. How am I responsible for keeping some fools head above water if he decides to jump in with his eyes closed. I have had my share of being ridiculed at work for holding the views I do and have tried in the past to help and explain to people why they should wait. But I am fed up with that and now concentrate on my own affairs. Sorry for the ramble, but yeah, I am getting impatient. Bring on the destruction! Hail Sparticus! Yours truly, BASEMENT DWELLER DALE.

#121 Burnt Norton on 10.02.10 at 5:17 pm

#85 & #93 Alan

——————-

Agree.

The % pre-tax income / affordability argument rests on the assumption that the buyer pool is limited to local workers earning / declaring taxable income.

It does not account for buyers who have at their disposal:

Intergenerational wealth.
International wealth.
Undeclared income wealth.

Who else could be buying the $2 million + properties that have been and are still selling out here?

People on this blog argue that Vancouver has nothing on London, Paris, New York or San Fran because there’s “no economy” here. So what! Most of the buyers are already rich so they don’t have to work, or else they stay at home, work in a minimal income tax environment and send money over to support the wife and kids in Vancouver. Most people I know who’ve lived and travelled around the world rank Vancouver in the top 3 (along with cities in Australia). Isn’t that what the global livable city surveys usually come up with also?

#122 Bill Gable on 10.02.10 at 5:18 pm

File this under: HOLY COW!

You think Mr. Turner has sobering news for us blog dawgs?

Check this commentary; but do it BEFORE you take a sip of a beverage, or eat some of Mom’s chow.

>>
I’m always interested when I see analysts who are willing to put a number on how far they think home prices are likely to fall. Myself, I’m hesitant to put a number on how far I think housing prices are likely to drop because of the state of the economy and the foolishness of all the government interventions. Ordinarily I’d go with a reversion to the mean (after a slight over-correction) but a severely damaged economy could result in a permanent shift of the mean.

One analyst, Jeff Nielsen, recently speculated that home prices could potentially drop another 75%- the most bearish figure that I’ve seen. That seems rather pessimistic, even to me, but the analyst pointed out the following: (Thanks L!)

The average wages of Americans have been falling (in real dollars) since 1970, making 1970 house-prices a reasonable point-in-time to look at as a possible, long-term equilibrium point for prices. That implies that U.S. house-prices will fall another 75% from current prices. Indeed, with the average American now earning (in real dollars) what their great-grandparents earned during the Great Depression, 1970-prices suddenly look much less far-fetched.

Also interesting was how long Nielsen felt this correction would take:

[T]he U.S. government continues to delay the real, necessary correction in prices. Instead of this crash being spread over merely five to ten years, the U.S. government is ensuring a full generation of slow, steady decay.

http://tinyurl.com/297llen

#123 john m on 10.02.10 at 5:19 pm

Personally and i have stated this before in my opinion the US will be on their recovery long before we will. Our government’s actions are borderline dictatorship they no longer work for the people they work for power,freedom of information has become a joke,we really do not know where we stand, they tell us what they want us to hear. The “temporary recession” through their actions has blossomed into the potential for disaster and perhaps the largest destruction of personal wealth in our history. Our future with their actions was clearly visible from our neighbors to the south…but they were smarter and bragged about it.Parliament is no longer run by smart people but a bunch of power hungry thugs who defy the laws our forefathers created to make our country a better place. We need a huge clean up starting at the top IMO.

#124 Bill ( Peterborough) on 10.02.10 at 5:39 pm

You have flipped. — Garth
*******************************************

Ya you right we’ll just believe what these people say, and all the other puppets before them.

http://www.youtube.com/watch?v=cuASoVK8f9c&feature=related

And I guess some people have nothing better to do than sit around making this up, right Garth.

http://www.youtube.com/watch?v=0P-hvPJPTi4

Nice piece of real estate, Eh Garth. Wonder if they have a bunker.

#125 Brian1 on 10.02.10 at 5:42 pm

Nostradamus; I am asking why,when the banks have billions of dollars, do they sell preferred shares to us when they don’t really need our money?

Ben; be patient. The noise will stop. Peace will return.

#126 UrbanCowboy on 10.02.10 at 5:48 pm

#79 stampede sam
This is the house that was listed at $299,900 a few weeks ago to start a bidding war. Didn’t happen. Should sit for a looong time at the new price.

http://www.realtor.ca/propertyDetails.aspx?propertyId=9938696&PidKey=206104417

So if no bidding war at about 299,900 why would they think they can get $500K+?

Not really following the strategy here.

#127 Brian1 on 10.02.10 at 5:55 pm

I watched Garth’s Howe video and do not think that the babyboomer is waiting for prices of anything to drop. He is more likely waiting to die from retirement. He might be waiting to sell his house but he is pulling back from spending now.
Q.E. will not affect Canada, but neither do I think that it will affect the U.S. Noone will borrow and noone will lend and I think it is what the powers that be want because this is all inevitable.

#128 dark sad person on 10.02.10 at 6:09 pm

There is no reason for the US to pay off its national debt, which is why this will never happen. — Garth

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

I agree withe the US does not have to default-because their debt is owed in USD’s –
but-i think you’re forgetting there is such a thing as a Bond market and it will dictate whether the US decides to go nuclear with the USD and inflate until the $ blows up-or if they would choose to stop spending-stop supporting failed banks and businesses and stop unloading debt on an impoverished middle class-
At some junction ahead of us-these ridiculous Keynesian clap trap policies-are going to blow up-
They cannot forever-pay debt with more debt-
At some point-it’s going to matter–

#129 Brian1 on 10.02.10 at 6:10 pm

What is the purpose of the music videos? Are they supposed to lull me into trusting the commentators? Are they meant as some sort of superior intellectual statement that is too high brow for we mere mortals? Are they some form of “talk to the hand”? Are these people supposed to be sophisticated investors whose only proposal is gold?
They pretend to be dynamic human beings yet, when you survey the times of their comments, they appear to be on their computer all day. I suspect that either they still live at home with their mothers waiting for their inheritance or they own comic book stores.
And what is with the Apocolypse Now video. Oh, I get it.
If we had dropped American dollars on the Vietnamese we would have won. No?

#130 morpheus on 10.02.10 at 6:17 pm

There is no reason for the US to pay off its national debt, which is why this will never happen. — Garth

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

You are correct in absolute terms. No government in the history of fiat currencies has ever paid of their National debt. The REAL question is about servicing your National debt and at what point do you have so much compounded interest that the IRS cannot collect enough to cover it on an annualized basis. That dubious figure that has been talked about from the likes of Alan Greenspan and Paul Volcker is when debt reaches 100% of GDP. Which in the U.S. will be sometime in 2011. That is where the rubber meets the road. What you are really saying is that they will simply print money out of thin air since they are a reserve currency. The consequences of that decision on the value of their currency and their bond market would be catastrophic. So there you have it. Either they outright default or they make their currency worthless. Pick your poisin. Out of control debt has consequenses. Eventually.

#131 Maxamillion on 10.02.10 at 6:18 pm

I already miss the good old days. Remember when someone who lived in a million dollar home really had money and you wondered what they did for a living. Now it’s that dummy you went to high school with who lives in that same million dollar home.

#132 Devore on 10.02.10 at 6:28 pm

#45 From the horses’ mouth

Its even worse than I think even you are imagining … and its almost everyone not just people starting out. Even the small pull back we’ve already had (Calgary) there are already a lot of people who are underwater and stuck – got themselves in too deep and don’t have the resources they need to take the loss.

Of course the picture of Canadians housing health is skewed if you only look at mortgages. We hear all the time how many people have their houses paid off, how many have 20, 30, 40% equity, and it’s only the new buyers that are in trouble. But everyone is ignoring how many people have monster lines of credit secured by their equity. Money for renovations, granite, stainless, basement suites, landscaping, pools, hot tubs, cars, trucks, toys, electronics, vacations, children’s downpayments, furniture, and just about everything in between.

The number of people in danger of going underwater or being in trouble if interest rates ever rise is much higher than I think we imagine.

#133 Nostradamus Le Mad Vlad on 10.02.10 at 6:31 pm


A decent story on the radio the other day. Married father of four, tradesman, laid off a few weeks prior when the company he worked moved to the US or Mexico, won $6.5 mln. on the lottery (not sure which one).

Instant (positive) karma!

#108 dark sad person — “There is no reason for the US to pay off its national debt, which is why this will never happen. — Garth”

Curious. If I take out a $500K loan with no guarantee from me to the bank that I will ever pay it back, would the bank then have the option of lending or not lending said amount to me?

There are no guarantees in life, and accordingly there should be no reason to have life insurance, no RRSP / non-registered plan(s).

Further, there should be no govt., BoC, US Fed or anything like that. For the most part, people are trustworthy and can be left alone to fend for themselves.

Hence, no authorities are necessary either; just a complete change in attitudes and outlook on life.

Those who are trained in growing foods should be allowed to do that. Same for home builders and the accompanying trades. Goes for all walks of life.

The words of St. Paul, the architect of modern Christianity come to mind: “For the love of money is the root of all evil.”

“For the love of . . .” — A very select, few people, given too much power, have become enslaved by things. Eventually, as The Wheel Of The Eighty Four continually turns (Buddhism), they will correct past mistakes and pay their debts.

For example — 7:48 clip Criminal Real Estate Bank Foreclosure Fraud.

#117 Bill (Peterborough) — “. . . those trying to discover the truth are called nut jobs, conspirators. You have flipped. — Garth”

Pink Floyd’s “Welcome To The Machine” is a nice tune to sink on down by! We’ve both flipped. I’m upside down, you’re inside out!

No reason for the Chinese to hold onto worthless paper debts. Change those into tangible, hard assets — they are a far better bet.

Is the tide turning? Overall, I doubt it. Seems more like a ‘feel-good’ procedure than anything else.

Now I wonder who do such a thing? Certainly not the goody two-shoes CIA and accomplices! Who benefits from creating animosity?

Nature Pix Very interesting photos.

#134 Dan in Victoria on 10.02.10 at 6:55 pm

Watched the real estate video, good to know that cartoons are still on tv.
Both those guys need to get a grip on whats going on.
They have zero experience in a real estate cycle. Zero.
Just because they have been involved in a bit of construction and sales in this run up does not mean they have the knowledge and experience.
“A News” should interview some guys that have been around the block, you know guys with gray hair and a finger or two missing. I can tell you the grizzled guys are battening down the hatches.
Its starting to rhyme.
But what ever, like I always say, you pay for your education how much is up to you.
Its also good to know its diffrent here in Victoria and we’re a destination spot.
Yeah Right. Try a round of the “Colwood Crawl”
Just keep repeating after me…theres no place like home….theres no place like home…

#135 VancouverGoinUP on 10.02.10 at 7:07 pm

Copied this from one of the comments above and speaks to the crux of the matter.
Economy, Income, Job Security, What happens in the rest of Canada doesn’t matter period.
***THIS IS NOT CANADA THIS IS VANCOUVER***

******
Most of the buyers are already rich so they don’t have to work, or else they stay at home, work in a minimal income tax environment and send money over to support the wife and kids in Vancouver. Most people I know who’ve lived and travelled around the world rank Vancouver in the top 3 (along with cities in Australia). Isn’t that what the global livable city surveys usually come up with also?
******

#136 TheBigLebowski on 10.02.10 at 7:11 pm

There is no reason for the US to pay off its national debt, which is why this will never happen. — Garth

other than the small fact that within this decade a 100% tax bracket for all income earned by every citizen won’t even be enough to cover the interest payments on their national debt. A default is coming, bank on it.

Not in your lifetime, as much as you pray for it. — Garth

#137 S.B. on 10.02.10 at 7:17 pm

#123 john m – to revist an old arguement from this blog, about the apparent lack of corruption in goverment:

I ask rhetorically: is it considered corruption to unilaterly spend 1+ billion on G20 and fake lakes, to spent up to 16b on a no-bid fighter jet and maint. contracts in the midst of a recession. If this is a “democracy” then we’ve sunk to the US’s level. Let’s join them in shipping pallets of cash to points unknown in afghanistan, maybe to pay off tribal leaders.

It’s global all right, and the CONservatives and LIEberals and NDPee will lead us down the same road, to insistant wails of: but…but…Sept 11th changed everything!!

Ring ring! Who is it? This is the Wall calling, please see the writing on me: Communist China is the new golden child of the global bankers.

I read Investors Business Daily’s newpaper weekend edition today and there were several stories confirming China’s new dominance. It’s an open secret now.

#138 Devore on 10.02.10 at 7:33 pm

#108 dark sad person

Although Garth succinctly summarized it, I’ve seen this line of argument before.

Simply put, there is no reason, purpose, point, urgency, need, or intention for any sovereign government to ever pay off its debt. For one, there is no reward or benefit for doing so.

From a political standpoint, paying off debt has no immediate positive impact, and requires either drastically cutting services without cutting taxes, or raising taxes without increasing services, political suicide, to say nothing of the need to firstly cut deficits to zero.

At any reasonable rate, paying down national debt would take decades. People aren’t ready for this, nor would they tolerate it.

The thing I wanted to inject is that this is a mistake often made by amateur economists and idle blog speculators. Analyzing the world according to how they perceive it SHOULD work, instead of the way it actually DOES.

Yes, there is a huge amount of debt, yes, debt should be paid off, no it will not be paid off. If a time comes when it is not possible to service it any longer, many years from now, something will happen, and probably not what anyone is expecting. No, this is not how things should work, but it is how they do work.

#139 Old_is_Gold on 10.02.10 at 7:41 pm

How the bubble will burst

While folks dwell (inordinately so) on the price of housing in Terminal City inhabited by comatose creatures that somewhat resemble humans, the real story that should warrant big bold block letter headlines is the latest but most dangerous ‘war’ our southern neighbors have undertaken.

I am speaking about the US military action in Pakistan. Currently under the MSM radar, this is almost certain to be the action that will eventually result in a war with India, and it may well be the nuclear variety, and China will almost certainly be involved. So much for the economic recovery coming from ChIndia. The probability of the whole Mideast blowing up via Pakistan is far greater than via Iran or Israel. The #1 Economic activity of empires is War, especially when the economy at home has been destroyed because of unprofitable wars. Watch this military action evolve into a real war and that within the next year or two at most.

Like the stealth action in Cambodia while the media kept Vietnam front and center, the real action is in Pakistan while the media keeps Afghanistan front and center. If and when this illegal and immoral activity blows up into something that will resemble WWIII even if it may not be officially classified as such, then the price of housing in Hollywood North will matter about as much as a juicy Porterhouse steak to a lifelong Vegan.

Kindly peddle your apocalypse elsewhere. — Garth

#140 Dan in Victoria on 10.02.10 at 7:42 pm

Prof. ANON @5
Yeah baby, I like your style.
Watch out on those cabinet clearance tops 22.5 inch and 24.5 inch, suck a a lot of people in.
Some have blocking others don’t. (on the back)
Recommend 8 inch Klien diagonal cutters (offset , curved style) for removing the underlay staples. Works like a hot dam.
Tremclad is your friend…..

#141 Whistler Dude on 10.02.10 at 7:48 pm

20% of the economy is RE. That’s scary. Here in Whistler we’re seeing closed stores, commercial RE is over priced in the age of austerity and the stay-cation. The new and improved sea-to-sky highway mostly makes it easier to daytrip. Hotels rent rooms out for $99 a night (it was once double). Most of those rooms are condo strata. The tax aution list has 45 properties on it. Mostly condo’s and hotel rooms. Whistler is international, however 70% of the RE is owner by Vancouverites.
Our own Olympic Village is a boondoggle. There is an Asphalt plant and quarry next to it. The Muny and RE agent promised they we’re looking to relocate it. The politicians (our mayor was once the biggest enviromentalists- now he’s industrialist), it turned out only wanted to move it 150 metres. Well, the peasants revolted (it’s locals only housing). And the plant is without zoning. Some legacy. The town also has to sell $24 million in market lots- a trade from the Province to pay for the social housing (townhouses @$400 grand!).
The irony is that as the locals flee to Cheakamus Crossing as it’s now called, they’re crashing the rental pool that was too expensive and caused the need for social housing.
If Vancouver falls, then Whistler will crash. The toys are always the first things to go.

#142 Nostradamus Le Mad Vlad on 10.02.10 at 8:04 pm


#125 Brian1 — “. . . they sell preferred shares to us when they don’t really need our money?”

The only answer I can give is from Garth’s response to #82 T.O. Bubble Boy — “Actually they are equity. — Garth”

Keep in mind that the average person doesn’t understand enough, or can’t be bothered to find out about Preferreds.

If 10 mln. Cdns. had $1 mln. each, and bought all the preferreds available, where would large investors park their dough? They also need a relatively stable place, with a positive incoming cashflow.

Plus the banks like as many tax deductions as possible, which improves their net earnings.

#137 S.B. — “Communist China is the new golden child of the global bankers.”

True, and in a convoluted sort of way, Obama and his backer Soros are of the same ilk.

However, see the link — things are moving very quickly now. WW3 “Based on early maneuvering it is evident that the masters of war have already drawn up sides. You may have missed it, but the U.S., Israel and the NATO alliance have already put Iran, Lebanon, Syria, North Korea, Venezuela, Russia and China on notice.”

California Sinkin’ Partial list of companies who have exited stage left (ain’t coming back). Don’t be a Girlie Man!

Hmmm. The new fiscal year in the US began Friday. “One has to wonder if the executives of Russian banks are expecting a volatile Forex market.” wrh.com.

Benny Baby — 1988, over two decades ago. He knew then that QE didn’t work, so why are all the printing presses going flat out?

6:09 clip on The Deliberate Attempted Bankrupting of America in mid-September, 2008.

Oil and Gas — Time to invest? Both quite cheap.

US (and Cdn.) govts. want public’s gold. 3:55 clip.

33 Conspiracy Theories. All true!

11:28 clip US govt. already spying on citizens; how far behind is the CPC? Hint: Ask Garth.

Good Will Hunting 2:41 clip. Anyone recall this film? Right on the money!

Bankers who broke the law and got rich in the process.

Bill (P) — It appears we men are fading into The Twilight Zone!

#143 farmer on 10.02.10 at 8:05 pm

#93 Alan: I think your viewpoint has merit, and I think Garth missed the point completely. You just finished explaining, I think reasonably, that newcomers were buying the top end (to paraphrase), and if that is correct the 70% of income is not a factor at those levels. I was in Victoria yesterday, along the waterfront roads, did a listing check later at home and was amazed at the prices….$1m was on the lower end!!

There are not enough immigrant buyers to save to top end, let along the middle or the bottom. Time will demonstrate this amply. — Garth

#144 Voinz on 10.02.10 at 8:09 pm

apparently, there is still realtor propaganda out there claiming the market is still strong in Toronto, and not heading down, but rather up. Check out Al Sinclair’s lastest shpeel on Hot Property

http://www.cp24.com/servlet/HTMLTemplate?tf=ctvlocal/hub/hub.html&cf=ctvlocal/cp24.cfg&hub=CP24Hotproperty

Can’t say I’m surprised.

#145 Cameroni on 10.02.10 at 8:11 pm

Nostradamus and Dark Sad Person,

Do you guys even know what “Financial collapse” really means or how it will impact on all society? Living on the fringes as you do you probably never considered that ATM’s would cease to function, that barter would rule and that most of our financial institutions would be no more. A survival of the fittest mentality would take hold. Hoarding would be the order of the day and people would be pressed to defend their homes with live ammo and firepower. Corruption would become rampant and the rule of law could easily fail.

Stop kidding yourselves that you will somehow escape that disaster and come out on top because it is doubtful there will be any winners. You two included.

And PS Nostradamus, I have read (too) much of the junk conspiracy that you post up daily so I have a good idea how you think. You can join DSP in the group of Canadian extremist outsiders who have no interest in being part of a real functioning society and are actually looking forward to the day the system falls apart.

I called you an idiot yesterday DSP and I stand by that assessment. You are not worth debating.

#146 Calgary Rip Off on 10.02.10 at 8:30 pm

http://www.calgaryherald.com/business/real-estate/Interest+rising+Calgary+buyer+housing+market/3613226/story.html

Article like this one show that sellers are desperate in Calgary. Interest is rising? As if saying something will make it reality. Maybe its just that renters are tired of subsidizing moron landlords.

Mario Tonegucci is a lousy reporter. Poor quality articles tacked together to bolster the joke real estate that defines Calgary, at any cost.

New buyers get ready to enjoy your vinyl and tight fence lines at a price double the real value of the place.

#147 Pat @ YVR on 10.02.10 at 8:37 pm

#121 – Burnt Norton
You said, “The % pre-tax income / affordability argument rests on the assumption that the buyer pool is limited to local workers earning / declaring taxable income. It does not account for buyers who have at their disposal:
Intergenerational wealth.
International wealth.
Undeclared income wealth.”

I agree that these types of buyers exist, but how many are there relative to the total market?

You need to back up your argument with some valid numbers that quantify the effect of these wealthy individuals on the real estate market in Vancouver before you can claim that they have a significant impact.

What markets are they targeting specifically and what percentage of those markets do these buyers represent?

#148 S.B. on 10.02.10 at 8:53 pm

Whistler Dude

http://whistler.kijiji.ca/f-housing-housing-for-sale-W0QQCatIdZ35

What’s this in the titles:

“Reduced $100,000 – Charming Whistler Home for sale”

“PAID $307,000. Now At $219,500. Slopeside 2 bedroom 1/4 share”

“Luxury 2 bedroom Four Seasons Resort Whistler Suite. Motivated!”

“1/10th Share, Ironwood – MASSIVE PRICE REDUCTION!!!”

Squamish I see a 4 Price Reduced on the main page!:

http://vancouver.kijiji.ca/f-squamish-housing-housing-for-sale-W0QQCatIdZ35QQKeywordZsquamish

#149 Terry on 10.02.10 at 9:29 pm

Well, not so suprising that the Vancouver bulls are shouting “It’s different here! What about the 7 months of inventory guys?

They once said Florida RE couldn’t crash because 1000 people PER DAY move there. Hows that going for them now?

#150 TheBigLebowski on 10.02.10 at 9:34 pm

#145 Cameroni
A Mad Max scenario is not what I foresee , at least the odds are against that. But the reality of the situation does conclude that our global financial system is in an out of control nose-dive and most people are still sipping drinks and watching the free DVD movie. I think what will pull us out is not a sudden religious experience by government. It will be voters in the streets , boycotts, protests, similar to what is beginning in Greece and Spain. It will be the voting public waking up and grabbing the stick and pulling us out. But don’t get me wrong, to get to that point allot of pain must be endured to wake the masses up. This is the course we are on I believe. The question then becomes, what a person must do to protect themselves from the rough ride ahead.

#151 VancouverGoinUP on 10.02.10 at 9:34 pm

Looks like we’re short 550, yes that’s right 550,000 homes and some feel real estate is a bubble which will collapse (insert big belly laugh).
*****
7 Oct 2008 … Metro Vancouver is expected to be home to 3.4 million people in the next 30 years. The region expects to add 600000 jobs and ***550000*** new homes in the next 30 years.***
2010 Olympic Games that’s not sport, Vancouver is sport.

#152 jed on 10.02.10 at 10:02 pm

i’m guessing that frank simon from the video must be on some hit lists now

http://www.victoria-mortgages.com/blog

#153 Burnt Norton on 10.02.10 at 10:05 pm

#146 Pat @ YVR on 10.02.10 at 8:37 pm

Well, I doubt that the national long-form census includes stats on the proportion of total wealth of property buyers in Vancouver West needed to service the costs home ownership here.

Anyone who lives here and talks to their neighbours and sees everyone else living it up knows that there is no way in heck the TRUE affordability ratio is close to 70%.

Smarter people than I have figured out that living life solely on the basis of stats is not living at all.

“Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted”

– Albert Einstein

#154 timbo on 10.02.10 at 10:14 pm

128# dark and sad,

but-i think you’re forgetting there is such a thing as a Bond market and it will dictate whether the US decides to go nuclear with the USD and inflate until the $ blows up-or if they would choose to stop spending-stop supporting failed banks and businesses and stop unloading debt on an impoverished middle class-
At some junction ahead of us-these ridiculous Keynesian clap trap policies-are going to blow up-
They cannot forever-pay debt with more debt-
At some point-it’s going to matter

you can always pay debt with more debt as long as you own the fiat copier.

With such a concentration of wealth by few and most major nations realizing that they have no choice but to play along this will be fixed.

Your going to have massive printing by all and the US dollar will be allowed to slide to a point where manufacturing at home will start because imports are less compeditive.

My take on Canada is that we are in lockstep. We will buy more bad loans off the US and buy Bad loans off our banks to keep them liquid while we go thru our own housing crash. It is horrible to say but we are going to have to socialize the housing debt bubble like everyone else. I truly wish someone would go to jail but when so few own so much it really makes justice blind.

Finger pointing , changing elections , blame, all are in the cards but its behind the scene’s that pull strings.The Global rich and elite will straighen out the game so we can play again, but they will take your savings if your not properly placed…

#155 wetcoaster on 10.02.10 at 10:14 pm

Alan,

You’re on drugs. It is well known the rich immigrant driving the market theory is all bullshit. If it was true every agent would be pumping those factual percentage numbers to their grave. No one other than a few industry desperate sleaze bags will lower themselves to say that but never have the numbers to back up the claims.

A foreign language on every street corner of the west end does not compute to biggest money in the world flocking here. The best known guesstimates are like 5%.

Give up the homie pump job, Vancouver prices are going down the tubes no matter how many rich immigrants with too much money waste their cash. They are in a different league cause they don’t care.

Plus your bank manager makes less than a plumber, you think he’s going to tell you the truth ? Get off the crack, maybe you’ve been standing at Hastings and Main too long. Lots of different accents down there too.

#156 S.B. on 10.02.10 at 10:31 pm

CNN poll on their front page now:

http://www.cnn.com/

Does your job make you feel depressed?
Read Related Articles
This is not a scientific poll

No 39% 37527
Yes 36% 34092
What job? 25% 23973
Total votes: 95592

#157 timbo on 10.02.10 at 10:36 pm

keep this in mind….

with this figure “googled from distribution of wealth”

— 10% of the population owned 71% of the wealth and the top 1% owned 38%. —

My prediction in the US:
all this concentrated wealth will not let the bond market crash but will let the dollar slide. The wealth went somewhere and that was gold oil etc. It is calling sheep to the new bubbles and when it is time it will leave to go back where ? real-estate……..

it is a circle and we have really no control. Not a conspiracy but as long as that wealth walks in lockstep and pulls all taxpayers along it is what it is.

#158 Ron in BC on 10.02.10 at 11:12 pm

Here’s an market update for ya. Look what you can get for a mere 848K in a location excitedly described by the realtor in “Prime West of Main Street location!!”

http://www.mls.ca/propertyDetails.aspx?propertyId=9899540&PidKey=-617971485

Actually, it’s in the east side of Vancouver, an area infested with hookers and crack heads.

Look like there’s no bubble there.

#159 Patz on 10.02.10 at 11:29 pm

#85 & #93
Alan I really have to take you on with your “it REALLY is different here—because it’s Vancouver” argument.

You say you’ve been a Vancouverite all your life. That’s part of the problem, you have trouble seeing beyond. To you it’s all Kits Beach at sunset.

I’m a Vancouverite but have lived in Los Angeles, New York and Toronto as well. I’m fairly well traveled and know many places through long and repeated visits, Napa Valley in California for instance.

Your arguments: Your points 1 & 2 are the same points, foreign buyers keep prices high.
Everything you’ve said is anecdotal. Nobody on this blog or anywhere I’ve seen has presented any real evidence of these high–rolling foreign buyers we keep hearing about. Sorry, your friend at the bank doesn’t count as evidence, neither does all the languages you hear on the street. It’s an urban myth a lot of people have bought into. And as you yourself said if things drop badly people would be less inclined to want to buy here.

Point 3. Salaried workers moving to the outskirts. Huh? I guess that’s true of just about any city of more than a million or two people; so that doesn’t distinguish Vancouver at all.

Point 4. “People are hooked on the quality of life.” And on the downtown eastside they’re hooked on other stuff.
Vancouver really is not that great. I like living here but there are lots of places with as much and more to offer. Vancouver is to residents as trophy wives are to husbands. Fun to show off to friends and relatives but it doesn’t go deep. Let me give you an example: All the yachts in our harbors suggest a love of the sea right? Wrong. Today was a perfect sailors’ day, bright, sunny and with a stiff breeze. Couldn’t have been more than 1 in 100 of those pretty boats out in open water. Water’s deep; the people are shallow. The only neighborhood worth calling a ‘hood is Commercial Drive, the rest are simulacrums anchored by Starbucks, may as well be in the mall.

Then you post a whole long ‘nother screed which says… Ta da, wait for it: Vancouver has people coming from all over to live here—just what you said before. If you spent any time in Toronto or Montreal you would see and hear the same thing. Immigrants come to large cities first; they have as many or more than we do. And you’d be surprised at how many Chinese choose Toronto over Vancouver despite our Pacific Rim cred—maybe more than come here.

Face it Alan, we’re no different than all of the other places that felt they had some special immunity. They didn’t, neither do we.

#160 Victoria Mortgage Broke-er on 10.02.10 at 11:57 pm

And now from the mortgage broker in question on the Victoria A Channel video clip at http://www.victoria-mortgages.com/blog

Not on any hit list as of yet, but did receive two scathing emails from realty owners since the blog was published…and five emails from realtors thanking me!

And to the one individual who thanked me profusely for stating my position at the expense of my commissions…THANKS.

Looking to build relationships not individual sales, but not finding much industry support.

Still sleeping soundly at night though…

#161 604genX on 10.03.10 at 12:09 am

Graphical illustration of Vancouver stats by area – August v. September 2010.

The sales volume numbers have collapsed. They were low in August and have now fallen off a cliff.

http://www.yattermatters.com/2010/09/all-in-one-reveiw-7-days-of-vancouver-real-estate/#more-21401

WhistlerBoy – interesting comments. I suspect you’re right. Those Boomer owners of Whistler condo-hotels will bail out there before selling Vancouver. The second-home market is going to take a beating. Old skool.

#162 Nostradamus Le Mad Vlad on 10.03.10 at 12:27 am

#145 Cameroni — “Do you guys even know what “Financial collapse” really means or how it will impact on all society?”

Umm, no, but I trust that you do have first-hand experience in these situations. Sure, I’ve read about Zimbabwe, Russia, Argentina and places that have been through economic collapses, but I’ve never been in one. What’s it like?

“. . . so I have a good idea how you think.”

At least you make an attempt at thinking. As I live in the reality of life, there is more interest in debating a cabbage. At least I would get straight answers.

#153 timbo — “The Global rich and elite will straighen out the game . . .”

Through world war, no doubt. Besides, the US has to stay in business for a little while yet.
*
Rampant inflation next year?

Old Is Gold — Pakistan is mentioned here. Link in. Plus this.

Second Revolution On the brink in the US, but copying Spain, Iceland or Greece won’t do much good.

Dividing the US May go with the link a few months ago, which said the US will be broken up into six separate parts. The NAU / SPP may have something to do with this.

Imperial Power “The new IMF rules that will destroy social services in Europe and the US are already causing riots and insurrections to pop up.”

#163 Debtisforever on 10.03.10 at 1:09 am

I don’t know why millionaires (which is what it takes to buy a house in Vancouver) would bother buying here. A lot of the houses for sale are ugly as sin. My bf told me that an elderly friend of his family recently passed away and the house was sold at a “discount” price-$500k. He also said the house hadn’t been updated in about 50 years and had rats running amok in it. Rats! Perfect for an up and coming business executive! All I have to do is take a look at houses for sale down south (cheaper and newer and bonus-no rats!) to know we are sadly delusional here in RainCity.

#164 realpaul on 10.03.10 at 1:40 am

House prices aren’t going up…..purchasing power is going down. It doesn’t matter what a house ‘costs’….if everything else also costs double and triple then you are not getting rich…you’re getting duped. Sorry Garth…but the only thing that has outpaced inflation over the past 10 years ( the creation of paper money ‘M3’ in the system) is gold..

“Proclaiming a gold bubble has been the mainstream financial media’s Pavlovian response to every incremental increase made by the yellow metal since it emerged from a two decade low in 2001. Appreciating an astounding 400%+ in USD’s from its bottom, gold has handily outperformed all major asset classes over the past 10 years. Importantly, this achievement was attained without the support of, nay, despite relentless negative coverage by mainstream financial pundits and highly esteemed economic academics.

Cockeyed thinking in the conventional camp.

Conventional thought concludes that gold must be overvalued, since it has appreciated so forcefully against the professionally managed dollar (and all other central bank controlled fiat currencies) the past 10 years. The basic premise supporting this thinking is fundamentally and fatally flawed. The foundation for this belief lies in a blind devotion to the idea that the US dollar, cast as ultimate and omnipotent medium of exchange, has achieved a state of permanence. In reality, such a position could only be ascribed to a medium of exchange far less vulnerable to the misguided policies of error prone men. Further, this myopic US dollar centric mindset demonstrates a dangerous lack of appreciation for history.”

I am an investor…with a diversified portfolio…but I have an overweight position in gold…not because I’m a gold bug…but because it keeps going up…in spite of the doomsayers and conspiracy haters. 10 years is a long time to be wrong eh?……Personally I think that raw commodity prices will continue to rise…..why? The rest of the world isn’t stupid…if the currencies are going to be devalued to compete for market share than the people who receive those paper dollars are going to want current value…not the depreciated ‘monetized’ value. This is why things ….like oil…will increase ad perpetuum…in lock step with the depreciation of the dollar currency it is valued in.

We gold investors are not wrapping our fish in the Book of Daniel….I don’t think its the end of the world. I did come to the conclusion almost twenty years ago that the purchasing power of currency was being eroded by ‘inflation ( increase in the money supply eroding each dollar I had in hand) and that inflation was not within the two percent range stated by the government ( even shadow stats has inflation at 8% although I believe that it is about 14%). What I concluded was that 5 and 6% investments wouldn’t be adequate in the long term. Yes…commodity investing has a risk component..but so do’s cash. If you believe that the world isn’t coming to an end then commodity investment…including gold..will out perform the equity market going forward…as it has for the past decade.

#165 dark sad person on 10.03.10 at 1:46 am

#145 Cameroni on 10.02.10 at 8:11 pm

Nostradamus and Dark Sad Person,

Do you guys even know what “Financial collapse” really means or how it will impact on all society? Living on the fringes as you do you probably never considered that ATM’s would cease to function, that barter would rule and that most of our financial institutions would be no more. A survival of the fittest mentality would take hold. Hoarding would be the order of the day and people would be pressed to defend their homes with live ammo and firepower. Corruption would become rampant and the rule of law could easily fail.

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

lol–what a self centered “all knowing”description of “your” vision of what defines an economic collapse-

I said at the very beginning-of this “topic” in reply to G’s retort to “me” about a debt default-

“There will never be an economic collapse”

I simply asked him–

“Define an economic collapse”

I guess you decided to be G’s golden haired little boy and answer for him-so ok–

Your definition is of an Armageddon-
lol- and you have the gall to say me and LMV are “out there”

Did you read the link i posted from Rothbard and his method of debt default/repudiation??

Never seen any of those wild assed scenarios your frightened little mind conjured up even spoken about–
{none of them}

It was all orderly and made complete sense-AND-
get this OK?
You and me-would not even know it happened-until we were told-
But somehow–likely from too much TV-you envision things like–
Piles of tires burning on the streets-thick acrid smoke pouring from buildings–a woman’s hysterical laughter coming from somewhere in burned out hulk of building–the sound of a kicked dog yelping as he runs down the street on 3 legs–

Wow–
*****************
I called you an idiot yesterday DSP and I stand by that assessment. You are not worth debating.

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

Well you got me real good–Ouch-

*********************
#129 Brian1 on 10.02.10 at 6:10 pm

What is the purpose of the music videos? Are they supposed to lull me into trusting the commentators? Are they meant as some sort of superior intellectual statement that is too high brow for we mere mortals? Are they some form of “talk to the hand”? Are these people supposed to be sophisticated investors whose only proposal is gold?

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

You’ll have to check the music closer-maybe recruit G’s new bum boy above–you know–dig between the lines–or–maybe try playing it backwards-
there must be someway to unravel the “hidden” code–likely some nefarious goldbug plot huh

http://www.youtube.com/watch?v=UCnWlD6xyFk

********************
#138 Devore on 10.02.10 at 7:33 pm

#108 dark sad person

Although Garth succinctly summarized it, I’ve seen this line of argument before.

Simply put, there is no reason, purpose, point, urgency, need, or intention for any sovereign government to ever pay off its debt. For one, there is no reward or benefit for doing so.

The thing I wanted to inject is that this is a mistake often made by amateur economists and idle blog speculators. Analyzing the world according to how they perceive it SHOULD work, instead of the way it actually DOES.

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

Well-sorry to pop your bubble but-there is a Bond market and the Fed cannot continue to control it-by printing-
Sooner or later the bond market will simply puke-the Vigilantes are not dead and rates will eventually spike and when they do-the jaws of the liquidity trap slam shut-

You see-what all of you are missing-is the 3-500 trillion in CDO’s and CDS’s that sit in level 3 assets-all hinging on the value of the bundling that makes them up-
you know–all the sub-prime garbage that was interlaced and grade rated by Government sponsored rating agencies–ie–Moody’s–S&P etc-
Which–if you even knew about their disclaimers-which i have posted here before and if you knew the “fact” that the “insurers” of this not so tiny amount-have nowhere near the collateral to cover and this–

No insurer or rating agencies can reliably quantify the amount at risk–
There is no liquidity in any of the exotic credit markets-
They did try an action some of these off in the market a few years ago most caught no bid at all–

These toxic “assets” sit in Banks-and with “special accounting” rules all over the globe and on monster Corporate balance sheets and are all connected to Counterparts –and– Counterparties do not trust each other–
Toxic Balance sheets are causing financing arrangements to be pulled–

We know–Various CDOs and CDSs as well as counterparty guarantees on those products are worthless–

A major counterparty failure is all it takes to cause a cascade of defaults and when this unravels and it “must” at some point-
Expect at “least” a tiny consideration of an “organized” “Default”

Here’s something–that “should” tell anyone who cares to look-
That a major event to do with “risk” is coming–

http://4.bp.blogspot.com/_nSTO-vZpSgc/SZSdmIllNMI/AAAAAAAAFmc/JwlCwZ1f0eg/s1600-h/gold+in+euros.png

http://4.bp.blogspot.com/_nSTO-vZpSgc/SZSd904-RhI/AAAAAAAAFmk/tzWUcOOkYT4/s1600-h/gold+in+canadian+dollars.png

http://4.bp.blogspot.com/_nSTO-vZpSgc/SZSe4D5hmxI/AAAAAAAAFms/MUuBUqKGATo/s1600-h/gold+in+australian+dollars.png

http://1.bp.blogspot.com/_nSTO-vZpSgc/SZSfOPsC_AI/AAAAAAAAFm0/aki4X5Q-NEU/s1600-h/gold+in+british+pounds.png

http://3.bp.blogspot.com/_nSTO-vZpSgc/SZSfpeT73WI/AAAAAAAAFm8/OmSkAFsFs-0/s1600-h/gold+in+Yen.png

http://2.bp.blogspot.com/_nSTO-vZpSgc/SZSSzU0uwWI/AAAAAAAAFl0/J0vhlsE4dDA/s1600-h/%24gold+Monthly.png

Ignore the “Old Silent Sentinel” at your own peril-

Anyway–it’s after midnight here and i have sneak off to a Secret Goldbug meeting–cuz–
somethings shaking–

http://www.youtube.com/watch?v=p8uWDA3EBCE&feature=related

#166 Cameroni on 10.03.10 at 1:52 am

@149 The Big Lebowski wrote:

“The question then becomes, what a person must do to protect themselves from the rough ride ahead”.
——————————————————-

Hey Big L.

I do agree that times could get rocky and that is certainly being reflected in the actions of many who are already taking steps to protect themselves and their families as financial uncertainty lies ahead. We are talking about investment strategies of course.

Where I differ in opinion with a couple posters here is that I do not actually hope for social breakdown or calamity nor look forward to the extremely negative outcomes that come hitched with “end of the world” theorizing.

These guys are promoting a financial collapse as a solution to our problems. WTF.

Excuse me. Since when were our lives in this country so difficult that we needed a financial collapse to correct the past. Idiocy. Their thinking does not make any sense at all.

We do have worries for sure and most Canadians do not really acknowlege how difficult the future might be particularly if we endure a serious market sell-off this fall as the technicals all suggest is inevitable.

But we have been there before. Our society did not fall apart or disintegrate and collectively we toughed it out. We will do that again if need be. Let’s not start by thinking that this country is an economic weak link or we lack the resources and fortitude to go nose to nose with a hard recession. We will get through it just fine.

I dislike the philosophy of the extremist element that is attempting to take over many of the good blog sites and I will not relent in my criticism of their dangerous agenda.

Buying gold and other precious metals is a great way to preserve wealth at this time. Openly and publicly pining for the collapse of society is just an invitation to gettting yourself locked up if times get as difficult and dangerous as these guys hope for.

Nobody likes a trouble maker.

#167 45north on 10.03.10 at 2:19 am

timbo: as in Tim Hortons?

My prediction in the US:
all this concentrated wealth will not let the bond market crash but will let the dollar slide. The wealth went somewhere and that was gold oil etc. It is calling sheep to the new bubbles and when it is time it will leave to go back where ? real-estate

I remember my father bought a penny stock back in the sixties. It went up and up and up. He couldn’t decide whether to cash in or hold. He couldn’t take the anxiety so he sold. A couple of months later the stock crashed.

pump and dump

#168 Cameroni on 10.03.10 at 2:19 am

@138 Devore said:

“The thing I wanted to inject is that this is a mistake often made by amateur economists and idle blog speculators. Analyzing the world according to how they perceive it SHOULD work, instead of the way it actually DOES”.
——————————————————

Good comment Devore, good common sense.

#169 Jeff Smith on 10.03.10 at 2:58 am

>#19 realpaul on 10.01.10 at 10:50 pm
>Flaherty bragged that our banks were the strongest in
>the world…..only because he saddled the taxpayer with
>all the risk of the real estate scam….now instead of a
>private market taking contro of itself and adjusting the
>government is on the hook for the trillions of debt they
>created through the real estate scam and plans to pass
>the debt onto us by way of higher taxes…..the EI
>increase and the HST are just the beginning.

Don’t forget, they just passed a new law (or rather rescind some existing laws) so that employees of the world oldest professions can be better protected in their profession. Guess what will happen next? That’s right, taxing the revenues of employees of the profession. Cash cow anyone? Maybe next up is the legalizing of hemp, yup, another taxable cash crop right there.

#170 Jeff Smith on 10.03.10 at 3:02 am

>#52 Taxpayer like everyone else on 10.02.10 at 10:42
>am
>16 Jeff Smith

>“the US is some 60 years ahead of Japan and it’s over
200 years ahead of China. ”

>I Havent read the links yet Jeff, so I’ll just comment on
>your post. You give no metric given for the article, so
>lets use a couple of examples.

>How about Pearl Harbour? Yes, Japan attacked with
>hot air balloons and ships from 1881.

>China detonated their first nuclear weapon in 1964 –
>less than 20 years after America. They got a man into
>space in 2003 – more than 40 years after America. Hey,
>they’re actually falling behind!
>And this article was 30 years ago?

Ok you are right, panic for nothing. Glad that they are falling behind. I feel much more comforted now that we are still way ahead of them. Whew!

#171 Brian1 on 10.03.10 at 6:56 am

#120 Dale is right on. People should look at their house as a stock and now take profits. Perhaps even Garth should sell his house except he probably rights it off in big ways and, even more so, just doesn’t want to create another fool.

#122 Bill Gable: Finally, someone who sees the possibility of great declines, and still gold won’t do it.

#144 I watched the Hot Property video. I knew it. They manipulate the listings. Al Sinclair admits it proudly. This is illegal or should be. Definatly no ethics. That is one scammy show. Ann Rohmer covers herself pretty good but if she doesn’t know by now she must be stupid and and I know she is not stupid. Just no ethics. It seems so Mafia.

#172 Brian1 on 10.03.10 at 6:57 am

#120 writes it off.

#173 Moneta on 10.03.10 at 7:14 am

Why do they sell preferred shares to people like me? Is there some law that compels them to share their profits with us? Why are they so nice?
——————-
Because they were forced to boost capital ratios… remember the credit crisis?

#174 Moneta on 10.03.10 at 7:25 am

It will be voters in the streets , boycotts, protests, similar to what is beginning in Greece and Spain. It will be the voting public waking up and grabbing the stick and pulling us out. But don’t get me wrong, to get to that point allot of pain must be endured to wake the masses up.
———-
When you include entitlements, US debt-to-gdp if over 400%. History has shown that countries get into financing trouble when the ratio gets above 200% because you need to take future GDP from the workers to finance past debt.

If households get into trouble at over 300%, then it’s easy to understand that nations can also hit a wall when the ratio hits a certain level. However it takes longer for a country to feel the pain than for an individual.

Currebt US GDP is at 14 trillion and debt and entitlements are currently above 55 trillion. To bring the ratio down to 200%, the US would need at least 7% annual nominal growth over a decade IF entitlements stay flat and governement stops incresing debt.

Considering that nominal growth has probably avergae around 5% over the last deacde, it’s hard to believe they will reach the 7%. Furthermore, the US governement needs to increase debt to get that growth. Everyione what they want but it’s mathematical. The system needs a reset.

We are going to see a cut in entitlements or huge inflation or something in between. Have your pick.

#175 eddy on 10.03.10 at 7:50 am

money appears digitally, it can disappear digitally.
some think the 08 financial collapse was a false flag cyber attack . makes you wonder ‘who would do that?’

politician ‘spilling the beans’ on electronic bank run

http://www.youtube.com/watch?v=pD8viQ_DhS4&feature=player_embedded

#176 jess on 10.03.10 at 8:16 am

what next so much for electronic systems
foreclosure mills using call centers in India !!!!!!!!
watch the video good grief

…”Grayson blamed the massive foreclosure problems largely on the electronic shortcut called MERS. “The banks simply digitized mortgage titles into a privatized system, called the Mortgage Electronic Registry System (or MERS),” he said. “And it did the transfers by trading Excel spreadsheets among the banks and trusts, rather than endorsing the notes as required by their own contracts, by state real estate law and by IRS rules.” He stated that 60 million properties are recorded in the name of MERS — 60% of the mortgages in the USA, and 97% of the loans made between 2005 and 2008….”

#177 jess on 10.03.10 at 8:18 am

forgot the link
http://www.truth-out.org/shock-therapy-wall-street-jpmorgan-suspends-56000-foreclosures-gmac-and-boa-many-more63803

#178 T.O. Bubble Boy on 10.03.10 at 8:44 am

@ #150 VancouverGoinUP:

You *must* be a realtor, since you can’t reference the real stats…

The article that you are referring to does not state that Vancouver will see 550,000 new homes within 30 years.

It states that Metro Vancouver (i.e. the region that extends all the way down to the U.S. border) may see 1M+ new residents and 550k new homes, but the majority would be in the burbs, including 1/3 in Surrey and White Rock.

Only 144,000 people were forecast to move to Vancouver proper… over 30 years, that is less than 5,000 per year — that’s basically a handful of condo towers!

http://www.metrovancouver.org/planning/development/LRSPreview/LRSPDocs/DraftRGSFeb2009.pdf
(Appendix A)

#179 Off the Leash on 10.03.10 at 9:03 am

While it is true that real estate unit sales volumes for September this year are down in many markets by 40% over that of September 2009 they are up over September 2008 by almost 20%.

Prices follow volume, agreed, but prices are at unreasonable levels beyond affordability and price capitulation at this time is a good thing all around. The real estate community welcomes falling prices as such will, ultimately, lead to more stable markets. Again volumes appear to be falling and that too is not a bad thing… but notice that I use the word “appear” as there is no concrete evidence this trend will continue even though we have good reason to suspect it obviously will as it should.

The greatest imbalance in the real estate markets right now is excess inventory. But it goes deeper than just the excess. The unrealistic price expectations of a good number of those sellers is confusing buyers and scaring them away from the markets. Most buyers are not sophisticated enough to understand that the asking price means nothing. It is what the property sells for that is its true measure of worth. A seller can ask what ever they want – it does not mean they will get it.

The predominance of overpriced inventory, inventory that sits and sits and sits with for sale signs growing increasingly faded on the front lawn, is sending an entirely incorrect message to the public. Good homes continue to sell – fast – some for more than their list price. But price is paramount to a successful sale.

What the sellers of those overpriced listings do not realize is that it is they which are the successful sellers greatest marketing tool. Their overpriced listing makes that well priced listing next door look like a real bargain. Subsequently some of those realistically priced properties end up with more than just one buyer pursuing it and it subsequently sells for more than it’s asking price.

Say what you like of the markets at this time the “SHIFT” is not necessarily as you might believe. It is still too early to tell for sure where it is going and how it’s going to get there let alone how far in that direction it will venture before pulling back. As I stated in my opening line… volumes are down from last year but still up from two years ago. As a matter of fact volumes this year to date still exceed that of last year.

I do believe the markets are “correcting” and prices are returning somewhat to the historical trend line but neither will happen over night. They might overshoot as they return but don’t bet on their return being simple price capitulation alone. Prices could remain sticky for some time to come… long enough that the economy does for one reason or another begin to improve and meet those sticky prices halfway in their respective journeys. This will not happen overnight. It will be another ten years before we see such exuberant markets as we have these past five.

Personally this REALTOR® welcomes the shift as markets “correct” to more sustainable levels. It’s just a matter that the steroids are wearing off. Lets hope our governments don’t shot us up again.

#180 junius on 10.03.10 at 9:22 am

#93 Alan,

You said (and other drivel), “The Millenium project that seems to be a red herring on this blog will be sold en masse to a developer or within the next couple of weeks we shall see a massive sales campaign to move all the suites and reduced prices. I GUARANTEE there will be lineups of people to buy not only one but two or three units.”

The Millenium project is not a red herring. It is the face of the bubble crash in Vancouver. Get used to it.

I am hearing that the developer deal you speak of will not happen. It is rumoured that the developer wanted all of the land west of the village along with a rezoning for high density as part of the deal. This is where the park and school were to go. Rumour is City (rightly IMO) said no.

#181 Boombust on 10.03.10 at 9:42 am

“Subsequently some of those realistically priced properties end up with more than just one buyer pursuing it and it subsequently sells for more than it’s asking price.”

Listen, REALTOR, I am sick and tired of your “Buy now or be priced out forever” schtick.

Buggar off.

#182 Off the Leash on 10.03.10 at 10:13 am

#180 Boombust

You don’t read very well do you? Read the post again you presumptive prick and you might realize that what I am saying is more akin to what you heard than the extreme you assumed.

ASS-U-ME… when you “assume” you make an ass not just of me but yourself. Take off your led hat and open your mind. It’s the likes of you which give these Blog DAWGs a bad name, you narrow minded dipshit.

#183 Off the Leash on 10.03.10 at 10:22 am

#180 Boombust

It’s morons like you which undermine the good arguments of those who attempt to forewarn and forearm greater fools. Do yourself a favor and learn to open your closed bitter mind before you spout off venting your only too obvious bitter discontent with your own miserable life. If you would do this maybe you would get a life and see some level of optimistic future outcome for it.

#184 Another Albertan on 10.03.10 at 10:39 am

#180/Boombust –

178 is Devil’s Advocate. Nobody used the term SHIFT as often as he. The only thing that is missing is the advanced HTML markup in the posts, including that term capitalized and italicized. The writing style is a fingerprint.

Everyone else’s mileage may vary.

#185 Dan on 10.03.10 at 10:51 am

What stupid Mark C and idiot F do not understand is high home prices are an economic drag. At firat the housing boom is a great way to have fake economic growth. As the housing bubble gets to big and people are maxed out spending most or all of their income on housing the economic drag begins. Now we see the effect of the housing bubble as mom and pops go bankrupt and close down as well as big box stores. Drive around Canada and you will see the for lease and sale signs of commercial RE everywhere since people have no money for anything else. The best thing stupid Mark C and idiot F can do is allow the FREE MARKET to price over valued housing back down to 30% of income. CHMC needs to stop backing NO MONEY and they should change it to 10-15% down and 25 year mortgages and the free markets will take care of everthing else. This will cause a fast crash which will be painful but the economy will come back much sooner and faster. The other option is to do what stupid Mark C and idiot F current plan of following the US into a depression which will last for years and years and maybe even Japan like long. Realtors and those indebt plus other vested interest groups hate the free markets and they would suffer the most. Allow the free markets to work stupid mark and idiot F or else the pain will be the same just much harder and longer.

POP………………..What was that?

#186 Bid it Up on 10.03.10 at 10:55 am

I seriously don’t get it!

How can we be right and, yet, the stats show us wrong? Inventory in Vancouver continues to drop (see: http://agentwill.com/weekly-stats/) and prices continue to climb all the while the number of buyers continue to fall.

I also don’t understand why people aren’t selling. We were on pace to match record listings then it all came off the rails. What happened? How can there be fewer listings now than at almost any point this year? Why aren’t the investors selling, and laughing all the way to the bank?

#187 junius on 10.03.10 at 10:56 am

#178 Offtheleash,

You said,”Personally this REALTOR® welcomes the shift as markets “correct” to more sustainable levels.”

Something I hope we can all agree upon. You do realize that to return to sustainable levels in this economy we are looking at multi-year declines are very large percentage drops in most areas of this country?

You still seem to be infering that any correction would be minor and temporary. I do find this is the new line of the RE industry. They keep saying this is just about balance and everything will now flat line or dip a little until it goes up again.

Think again.

#188 Dan on 10.03.10 at 11:03 am

Off the Leash #178

What you fail to understand that prices are in fact crashing. The fact is you get a better home for your money. A home that would of sold for $870000 a few months ago now sells for $770000 . A buddy bought a nice home for $665000 in North york in 2006 and sold it a few months ago for $770000. You might say “see prices are up” but are they? It’s to bad buddy put in almost $100000 to renovate the house so doing the math $665000 + $90,000(to be nice) =$755000 . How much did he make? Think about it , almost EVERYONE did some sort of renovations and made nothing after selling. The realtor propagandists do not want you to understand this fact. The housing crash has much more to fall.

POP………………What was that?

#189 torontorocks on 10.03.10 at 11:10 am

To Original Dave #73 – similar to your story, I was talking with the hotel concierge (!) in a Paris Hotel, right in the city, next to Louvre. Just over 50 square metres, say 540 square feet, costs 600 EUR per month. And that’s Paris. 600+ square feet in Toronto in the Distillery District in the sh*tty, but artsy, east end gets you $1300+ per month. And that is not Paris.

It will all come home to roost, for better or worse. You CANNOT have an economy’s GDP premised off of 1) rising home prices, 2) the equity extracted from the runup, 3) the equity reinjected in the economy from said withdrawal of the house on goods and services and expect that to drive your economy. Yes, it will get the factories working, but that’s only until a) house prices start to flatten or decline and b) all the equity is taken out. The ‘bank account’ is dried out, nothing left to spend, the factories stop. That’s why you have a housing multiple times income increase each year and which is only funnelled by more debt, due to the low crisis rates and the end result is 144% of income is debt. And Carney, while the rest of the world continues with crisis rates, toys with increasing rates to curb personal debt.

Our government and banks worked a great scheme – offload mortgage debt to the government,so the banks look strong. Offload government debt to the consumer through low interest rates (instead of the Fed borrowing on the open market, let the consumer do it from the banks, the Fed then eats the debt and collaterizes it out in Collaterized Mortgage Bonds with the Fed rating on it). Our people are as indebted as all the economies currently in the crapper – England, Greece, Spain, US. We’re no different. Eventually, however, once the government cannot backstop the rating or the Government rating is coming close to getting a rating review, then you will have the drastic hits to the economy – CMHC will raise the minimum equity requirement and amortizations will fall back to 25 years. And then you’ll have your crash. And raising of rates to tune back the borrowing, or to make available those rates ONLY to businesses, which was the primary incentive – low rates for capital and labour expansion, etc.

Because at that point, I won’t get $750,000 to buy a house. So I won’t – but I might get $600,000….and then I’ll buy. And someone will have to sell b/c the refi rates are too high, or the economy is still flat and debt costs have increased.

Btw – Toronto is turning more and more into an expensive dump. I was out last nite (I’m born and bred here) and can say that man, is it expensive here and is it EVER a rip off. They’re doing me a favour with $4.00 slices of cheese pizza when I can have a fresh baguette, Bayonne ham and cheese for EUR4.00 if I buy it retail, half that if I make it myself!

Later all!

#190 Expat on 10.03.10 at 11:17 am

A good indicator of how much trouble will be ahead for the Canadian housing market would be the number of owners who have bought a home they couldn’t afford using the widely accepted monthly cost of 30% pre-tax income rule of thumb. This would help to understand if rich foreign investors or owners who purchased before the run-up will offset the overstretched buyers. This in turn would give an idea of the number of homes relative to the market that will need to be sold or handed over to POS in a housing price downturn when the overstretched buyers get hammered. The rich owners could presumably ride out a downturn forever, unless they decide to finally dump an underperforming asset at a loss for a tax write-off. The long term owners can wait out a long time, unless they have to sell because their house is also their retirement plan, interest rates increase and their mortgage resets such that the house is no longer affordable, or an unexpected life event comes up.

The Wall Street Journal recently published this number for the States, and before the crash 41 million buyers there bought a home they couldn’t afford. Of course, this was three years in hindsight. I have no idea if Stats Canada data can be mined to get this information, but I think it would be enlightening.

#191 BarryinBarrie on 10.03.10 at 11:20 am

Garth, clean up the blog…its getting pretty sour.
Photo for tomorrow’s blog post…to all the cry baby blog
dawgs…

http://www.funnypicturefunnyphoto.com/Funny_picture_photo_childtoilet.htm

#192 Taxpayer like everyone else on 10.03.10 at 11:32 am

165 Cameroni – Just tell the GAGA crowd (Gunds, Ammo,
Gold, Armageddon) that if society collapses the internet wont work.

173 Moneta – I’m surprised you’re referencing the implied liabilities statistic. Not a very meaningful figure.

#193 VancouverGoinUP on 10.03.10 at 11:35 am

T.O Bubble
****
You *must* be a realtor, since you can’t reference the real stats…

The article that you are referring to does not state that Vancouver will see 550,000 new homes within 30 years.

It states that Metro Vancouver
*****
That’s what my quote said “metro Vancouver”
Nope not a realtor just someone with their ear to the street. America is not a place to be investing. Gold and Vancouver are the places to be. You want to know where you should be invested in the next 2weeks? Think Noah!
Another article here on what is happening

World According to Gold: Here Comes Tokyo Rose
by James West on September 29, 2010

By James West
MidasLetter.com
September 29, 2010

Now that gold is muscling its way towards $2,000 an ounce, the forces of ignorance embodied by post-secondary-accredited yet nonetheless clueless commentators are being given voice by government sponsored media outlets such as CNN. Tokyo Rose was the generic handle accorded to any of a dozen women who, during World War 2 broadcast programming designed to undermine the morale of American troops over the radio.

Coverage such as stories like today’s “The Case Against Gold” on CNN Money are designed to undermine the determination of gold accumulators who are genuinely frightened about the purchasing power of their dollars as their government ‘quantitatively eases’ the economy back onto its feet. By continuously counterfeiting fiat currencies and flooding the markets with such ersatz lucre, the final rush towards economic collapse is momentarily cushioned.

But make no mistake. The acceleration of the rate at which gold increases – the average has been $87 per year since 2000, and in the last 365 days from today, that number is $317 – is an analogous signal that the rate of deterioration of the global economic system as a whole is itself accelerating proportionately. Contrary to the misguided tone in the CNN article suggesting now is not the time to get into gold, the correct sentiment should be that now is the time to put ALL of your liquid, dollar –denominated wealth into gold. All of it.

Here’s what is going to happen next:

1. We’ve reached the brink where the next phase is hyper-inflation. This is where money can’t be printed fast enough to keep up with its devaluation. Governments will stop accepting, first and foremost, U.S. dollars for the settlement of international trade, and will look to its own currencies. This will have the effect of paralyzing the global flow of commodities and commodity derived industry, which will further paralyze national economies, which will respond by printing yet more money, which will cause another devaluation in purchasing power, in this end-game spiral to the bottom of this hole we’ve dug.

2. The first casualty of the collapse of the economic system will be civil order. Crimes against property will skyrocket roughly proportionate to the rate of currency devaluation as families find themselves cornered by lack of goods on the shelves in markets, and there is no choice but to steal from whomsoever is weaker.

3. Finally governments desperate to restore order and re-establish a new global economy to facilitate the flow of goods again will sit down and negotiate the establishment of a new form of global currency that will essentially tie the amount of money one can print to the value of a country’s GDP, which at the end of the day, is the only realistic way to mark a currency’s value accurately. Gold at this point, will be re-embraced as the defacto standard by which currencies are valued, and should be able to hang onto that role as long as history is accurately recorded and taught.

4. This will bring about an end to the meteoric rise of gold, and should see its price flatten out, if this scenario unfolds.

As to the exact dates of this scenario, it is impossible to predict, because the variables that will force the final capitulation economically are unknown, such as how much money will be issued before the diminishment in purchasing power surpasses the rate at which money is created, and when exactly any given food producing country will stop accepting currency from its trading partners.

In this scenario, less developed and less populated countries that are agriculturally self-sufficient will fare much better than over-populated, over-industrialized agriculturally import-dependent nations.

Countries like Peru, Argentina, Vietnam will continue to eat. Europe, China and most fittingly, the United States, will suffer most.

The current war of words between China and the United States over currency, and Japan’s present requirement to sell its own currency to push down the yen’s value, are also indicators of a broadening monetary crisis. Here’s Tiny Tim Geithner and Barack Obama, neither of whom have a native macro-economic brain cell that functions properly, issuing threats to China about unfairly propping up the value of its currency while apparently ignorant about Japan’s violation of the free trade mantra supporting free-floating currency exchange rates.

Its truly astonishing that the hypocrisy of such policy remains under-reported in the mainstream financially media – clear evidence of the Tokyo Rose type of role that top tier financial programming has been roped into.

China holds all the cards here. If they decide the United States needs to be taught a lesson, it will just sell of some of its vast holding of treasuries and force the United States into hyperinflation. The final days of the U.S. hegemonic empire are at last coming to a close, and the world, including clear-minded Americans, should sigh in relief when that day finally comes. Then we can get to work, as a unified world, to build a more realistic and equitable global economy.

#194 TheBigLebowski on 10.03.10 at 11:45 am

Quiz Question for the day.

What did 25 countries do together in the past week ?
.
.
Answer… They competitively devalued their currencies against one another in the market.
Anyone who can’t see the trend forming here is spending way too much time following mainstream pundits and needs to start taking proactive measures. Its called competitive currency wars and its not good for anyone holding cash, and not good for the general stock market medium to longer term.

#195 kc on 10.03.10 at 11:47 am

85 Alan on 10.02.10 at 1:00 pm
93 Alan on 10.02.10 at 1:25 pm

Ok, confess, who are you? Bob Rennie? or Ozzie Jurock?

142 Nostradamus Le Mad Vlad on 10.02.10 at 8:04 pm
“Good Will Hunting 2:41 clip. Anyone recall this film? Right on the money!”

That is one of the best segments of the many in that movie. cheers.

#196 T.O. Bubble Boy on 10.03.10 at 11:55 am

Apparently the Financial Post was able to find 1 couple who are doing well:

http://www.financialpost.com/Planning+sabbatical/3598045/story.html

Couple, both 56 years old, $2M net worth (2/3 of it in liquid assets) + a government pension… they should start a blog!

#197 Alan on 10.03.10 at 12:23 pm

Junius,

While I abstain from judging your sideline commentary, I am aware of the ongoing negotiations with the Millenium site. The developer, is playing hardball with the city (rightfully so) and the City has a problem it needs to rectify otherwise the project becomes an anchor for which the public shall wrap around the neck of the existing council and toss into False Creek. So, you need to understand that this problem will be dealt with for political reasons and the quicker the better. The first and easiest way is to strike a deal with a developer who will take the project en masse. This takes care of the problem tout suite. The second plan is to hire a marketing agency (probably Rennie) and have a huge sale with incentives. Both are on the table and one will win. Problem is gone.

Lastly and most importantly, we are not seeing any of the cratering of real estate pricing you and others have suggested. There will be pressure on some developers to move units and they are still selling. Develpers in outlining areas have more pressure due to the market they deal in -mostly local, salaried workers who carry debt. If the market does start to soften considerably, we will see the biggest impact in these areas.

#198 Love this Blog on 10.03.10 at 12:31 pm

Good link

http://canadabubble.com/

#199 Bill Gable on 10.03.10 at 12:37 pm

Mortgage Fraud – jaw dropping Video – from Legislator in Florida – it should give one pause, if you are bottom fishing in Los Estados Unidos.

I couldn’t believe the stats and what has allegedly been ‘common practice’ in Foreclosures, in the USA.

The CMHC better watch this carefully. Incredible.

goo.gl/68U3

#200 West Coast on 10.03.10 at 12:42 pm

This exercise in human nature still has a long way to go.

What happens to construction quality when a builder can pre-sell anything?

#201 T.O. Bubble Boy on 10.03.10 at 12:48 pm

Hey look – a central bank that didn’t fall for the “cut rates to zero and watch the magical recovery” trick:

http://ca.news.yahoo.com/s/reuters/101002/business/cbusiness_us_hungary_cbanker

Maybe F should go on an exchange program to Hungary?

#202 CrowdedElevatorfartz on 10.03.10 at 12:49 pm

#85 Alan.
…The difference here is that people are hooked on the quality of life in Vancouver. This is not your average Canadian city or International city for that matter. I am not delusional. I’ve travelled the world and been to other great cities. Vancouver is the 21st Century city and it’s right here under our noses.
++++++++++++++++++++++++++++++++++++
Well at least you didnt call Vancouver a “world class” city . Like all the other Vancouverites that parrot that ridiculous statement.
Unless you consider a city of 2.7 million with a freeway system for 1.5 million. World Class
Or the cruise ship tourists from New York or Detroit that comment they have NEVER seen so many beggars and drug addicts. Yeah, World Class.
Or the ridiculous “Pie in the Sky’ politics of Gregor Robinson ( yup the world class mayor that hired a pr team to post anonymous emails praising him ).
Or the World Class drug trade.

The people I see flocking to Vancouver over the past 10 years seem to be either Rich Lazy EuroTrash types that are only interested in the latest “bling ” watch and Italian sports cars. Or Rich lazy drug dealer steriod monkeys that are only interested in the latest “bling” and Italian sports cars.
If you consider ‘salaried” city dwellers the unfortunate schmucks that have to suffer and move away. i have one question.
Who’s gonna pick up your garbage next week?

#203 CrowdedElevatorfartz on 10.03.10 at 1:06 pm

#93 Alan
aaaaahhhhhh yes . The Millenium Project.

Perhaps one of the reasons its been sitting unsold for so long is . The poor quality of construction.

I work in the maintenance industry AND I personally know several tradesmen of different vocations that were working on the Olympic village in the last few months that it was being “fast tracked” to get it completed for the IOC inspectors( Now THAT is a salaried job I would take in a heart beat).
Every one of those contractors (plumbers, electrcians, sprinkler fitters ,.. you know..`real workers !) stated the buildings were garbage.
Slapped together by subcontractors that will stand by their warranties for as long as it takes to get the cheques cashed.
Perhaps even those rich immigrants you are so quick to praise , recognize crap when they see it.

#204 CrowdedElevatorfartz on 10.03.10 at 1:11 pm

97 OttawaMike
Good one ! Me too !

#205 groundzeropat on 10.03.10 at 1:14 pm

I’ve read a lot of negativity about realtors and their scare tactics of trying to get more victims to buy in this market. This is 99% true. However, my realtor told me prices will drop by 20% before the end of this year and told me to sit tight. How about that? She stands to make a commission if I buy now but she is telling me to wait. I read a couple of other posts that people were being told the same from their realtors too. So there are good apples in the bunch. Scary to hear 20% drop from a realtor. Do they have inside info. that most of the general public doesn’t?

#206 Old timer on 10.03.10 at 1:46 pm

I can’t help but notice that noone has mentioned the supply of empty houses in neighbourhoods – houses that are not for sale (at the moment) but just sit there empty. I live on the west side of Vancouver (Arbutus area) and my side of the short block I live on has four empty houses, three of which have been for sale off and on over the last four years. What will happen when the “investors” decide they need that money. Every block in my area has such vacant houses, most are large alarmed relatively new 7-bedroom, 8-bathroom places. I will go out on a limb and predict them to be the new rooming houses of the future. It also seems self-evident that if the “investor” markets stalls there will be a waterfall effect on prices. (BTW, the average asking price for the big ugly houses tends to be $2.5 – $4.0M).

#207 wetcoaster on 10.03.10 at 1:46 pm

Alan,

If your claim of rich immigrant buying power is the truth, then how come the Olympic Village wasn’t bought out a long time back ? Cause filthy rich immigrants recognize an over valued market. End of story, your excuses are so lame with no facts to back them up. Which agency do you work for ? BCREA ?

#208 Sam on 10.03.10 at 1:49 pm

“Alan” finally shows his true colors

RE pumper. Rich asians & rich Eastern Europeans. Paying cash for Vancouver RE.

Natch.

Why didn’t you show up truthfully as yourself instead a lying “balanced analysis” pretender?

#209 Alan on 10.03.10 at 1:51 pm

Crowded #202

Actually, in my predjudiced opinion, Vancouver is better than a world-class city. And for what it’s worth, the beggars in Vancouver don’t compare to New York or Detroit or Chicago or Pittsburg. In fact one might be able to discern the quality of a city by it’s homeless, drug addicts and beggars. For example, I am positive that our beggars are in better shape than most north eastern city beggars. They work out daily, wash windows, walk Stanley Park, feed the ducks and get fed themselves by passersby including their pets who get fresh filtered water free at most cafe’s or outdoor deli’s. Ever wonder why we have stainless steel bowls full of water near every doorstep? This is not just reserved for pets of the elite. Everyone is welcome to this watering hole.

Of course no one gets left out in the cold anymore. It’s now law in Vancouver that the police can force you inside if it’s too cold outside.

In all seriousness, Vancouver will continue to be a destination for 21st Century citizen. Those that can and need to plant a flag different from their own country. Russia seems to be falling apart along with Euro zone countries who can’t seem to handle their finances, threatening their own citizens with massive cutbacks. The Brits, Irish and Findland have their own slippery slope to contend with and the US will take years before they see light at the end of their tunnel. Where to move to? Canada has one of the best immigration policies in the world. I suspect their will be more refugees landing on our western shores. Defintely more who choose more conventional methods and certainly with more money.

If you need someplace to shoot-up, without being disturbed along with a fresh supply of minted needles, Vancouver is the place. Want some pot, hashish it’s everywhere. Let’s face it, even the druggies find solace in Lotus land.

#210 wetcoaster on 10.03.10 at 1:54 pm

The only credible guy in the video was the one guy with the blog who they didn’t interview. The other two rookie agents don’t have a clue about what a real crash looks like.

One is a pumper of mistruths of the Victoria market, the other is trying to play the fence but in reality claims he can’t see the market correcting even 20%. He’s just milking the media for his own greed like most agents.

#211 robert james on 10.03.10 at 1:56 pm

#202 CrowedElevatorFartz Here is a tenant that does not think to much of the quality either.. http://www.theprovince.com/Tenant+green+building+sees/3616378/story.html#ixzz11JwcKp8I

#212 US Dairyland View on 10.03.10 at 2:29 pm

I’ve seen the US real estate Bubble Deflate, unevenly, unkindly, and even humorously – at times. What’s ugly is the side effects, job loss, loan tightening, rental costs increasing while sold/close prices fall….What you don’t know is: a reduction of 45% in Vegas better than 38% in Detroit or 12% in Madison, WI??
You are just getting the first pangs of a market rolling over… Listings up, sales down…yet prices seem steady…or even rise a bit….just WAIT It’ll come to you the effects of high prices, unsure rates (mortgage re-sets in 1-3-5-10 years), demographics undeniable demographics-DAM!!!
If you have a home, try best to pay it off -quickly- if you cannot in 3-5 years sell now. You’ll be able to buy it back for less in 1-3 years no question on that bet!!
Well, that’s my opinion we are 2-3 years ahead of you in the melt.

#213 bill on 10.03.10 at 2:30 pm

Alan
‘ Lastly and most importantly, we are not seeing any of the cratering of real estate pricing you and others have suggested’
well according to what I read here on garths blog it was not a ‘cratering’ of prices but a ‘long slow grind down starting in 2011”. IE next year.
I also read right here on the blog that it would be a process that would take 5 years plus to actually develop.
and spare me the ”world class city of the 21st century”.
take a look at condo and house prices in hawaii. half of what is being charged here and no end in sight for the continued drop of the aformentioned re.
I have also lived in Vancouver all my life and events have conspired to direct me [ when sufficient cash reserves and investments,enable me] to get the hell out of this city.
when I was a kid growing up in south van it was a nice place. Not great ,but nice. it is way to crowded now and the Fraser valley is far to air polluted for my lungs.
To many rats in the cage for this guy.

http://www.luxuryranchrealestate.com/listing_detail.cfm?listing_guid=71071EE5-8769-4043-A379-20DCC6613D05

maybe we will look at this place once it comes down 10 million or so

#214 Brian1 on 10.03.10 at 2:30 pm

Moneta; cannot their profits meet capital requirements and didn’t the credit crisis take place in the states and not in Canada?

#215 joe larue on 10.03.10 at 3:08 pm

Ben#98
Why would a redneck want to live in multi-cultural Toronto?

Are they out of basements in Alberta?

The attraction of Mimico is the lake and the GO station, which is 15 minutes to Union station downtown….and of course the Blue Goose Tavern..

#216 Brian1 on 10.03.10 at 3:11 pm

Bid it up; Voinz @ #144 has an interesting video which even he missed. 5 minutes into the Hot Property show Al Sinclair proudly admits that they were manipulating the market by keeping houses off the market. I don’t know what Ann Rohmer was thinking. What would her father have thought.

#217 CrowdedElevatorfartz on 10.03.10 at 3:14 pm

#208 Alan
I liked your rebuttal, some good/bad points and you didnt get personal. ( a rarity here at times)
I guess I just dont like the idea that the only way to achieve home ownership in this city is to be Uber Rich. If only 5-10% of the population (foreign or otherwise) can actually afford to buy a place here then whats the point? The rest of the population might just as well surrender their aspirations of eventual home ownership and move to Merrit and enjoy 3 hour commutes(each way) to the City of Lotus Eaters. Not my preference.
Eventually I will retire, sell my house and move back to the East coast of Canada. Where land and houses are affordable, people are actually friendly, and your neighbor isnt living 3 feet away.
And if it snows 3 feet in one night, who cares? I’m retired, I dont have to go anywhere in a hurry. I will either toss another log on the fire and read this blog, or go skidooing.
Either way, a nice relaxed exsistance.
Enjoy those junkies, in the time it took to read this your car could have been broken into and the change in your ashtray cleaned out. Remember, ICBC doesnt cover the first $250

#218 Increasing that 1% on 10.03.10 at 3:17 pm

Sorry if this has been addressed here already,

MSM reported this week;

some ridiculously expensive cancer meds are not covered in certain Provinces, yet are in BC-

Since approx. 1 in 3 are killed by cancer here,

question to BCers -without an agenda-

could this be having much of an effect on real estate in areas there that have good access to quality health care?

#219 CrowdedElevatorfartz on 10.03.10 at 3:31 pm

Alan
Please check out #210 Robert James “link”
Very informative article about the “quality” construction at the Millenium Project.
My prediction.
That site is going to become an “Owe-lympic” sized lawsuit for years. The city should dump it as soon as possible to a private sector developer and take their lumps. Sell it for pennies on the dollar if thats what it takes to wash their hands of it. Remember the Fast Ferries ? $440 million to build and the govt dumped them on ebay and sold them for $22 million. Less than their scrap value for gods sake ! Vancouver Voters have the attention span of fruit flies. They will be outraged for 2 years and then then the price of Starbucks coffee will hit $5 a latte and “poof” no more outrage over “millenium gate”.
No wonder Gordo got reelected after his DUI. We’re all lemmings at the edge of the cliff.

#220 Debt's Dark Embrace on 10.03.10 at 3:45 pm

#183 Another Albertan on 10.03.10 at 10:39 am

#180/Boombust –

178 is Devil’s Advocate. Nobody used the term SHIFT as often as he. The only thing that is missing is the advanced HTML markup in the posts, including that term capitalized and italicized. The writing style is a fingerprint.

Everyone else’s mileage may vary.

………………………………………………………………………
BINGO !

#221 Taxpayer like everyone else on 10.03.10 at 3:51 pm

200 TOBB – Hungary? You’re kidding, right?

Google “Hungary Economic crisis”

#222 junius on 10.03.10 at 4:32 pm

#196 Alan,

You said,”Lastly and most importantly, we are not seeing any of the cratering of real estate pricing you and others have suggested.”

First of all, yes we are experiencing price declines. The homes that are selling are those that are reducing their prices. The fact that first time buyers piled into the market last fall and this spring which is why the average prices of homes sold is staying high. However you shouldn’t confuse this with the overall price of homes within the marketplace.

Secondly, most of us – myself include – made it clear even this time last year that we didn’t expect prices to really start down until late this year. Keep watching as fall has just begun. The market spent the summer repositioning.

In respect to the OV – if anything you said about Vancouver was true then the units would have already sold.

#223 Off the Leash on 10.03.10 at 4:52 pm

#183 Another Albertan on 10.03.10 at 10:39 am

#180/Boombust

178 is Devil’s Advocate. Nobody used the term SHIFT as often as he. The only thing that is missing is the advanced HTML markup in the posts, including that term capitalized and italicized. The writing style is a fingerprint.

Everyone else’s mileage may vary.

………………………………………………………………………
BINGO !

Greater fools too smart to be fooled…

http://www.youtube.com/watch?v=ChWs1d5kots

Hell is eternity ;-)

#224 Bobby on 10.03.10 at 5:01 pm

For#204. Groundzeropat

Remember on a $100k price drop a realtor will only lose about $1500 and out of that about $500 probably goes to his or her broker anyways.

So why would they try and entice you to buy in a plunging market, unless of course they have the listing.
It is in their interest to have you wait as you will be pleased with their service and probably offer a referral.

#225 Tripp on 10.03.10 at 5:02 pm

@#201 CrowdedElevatorfartz

Careful with the adjectives. Rich and lazy are hard to mix. Usually it is the other way around.
Regarding “European trash”, I assume you have not been there.

#226 Bobby on 10.03.10 at 5:05 pm

Further to my post 221. It’s not rocket science so that’s why it only takes a 6 week course.

The big story is the recent agreement between CREA and the Competition Bureau. Now you will be pay as you go, rather than signing on for the full commission.

It will certainly weed out the weaker and less professional realtors. A little competition is certainly best for everyone.

#227 Ben on 10.03.10 at 5:15 pm

The story of the greatest financial crisis of our time, the one that’s on it’s way.

http://www.youtube.com/watch?v=4ECi6WJpbzE&feature=player_embedded#!

#228 Alan on 10.03.10 at 5:21 pm

Crowded

At the risk of being pummelled by the flock, I am not a real estate agent or marketer of real estate. I do understand the problems of Millenium and most of the issues revolve around the LEED status which involves a number of eco-friendly alternatives to the existing building process and code. This is still a new process in building and it may be possible that this experiment was ill timed and of course not very well prepared. Getting the bugs out of the system will probably take time and be problematic for most people. Although, most new building have issues that need attention by the builder, this is just one more thing the project does not need to contend with. I do say in all fairness, the buildings are beautiful and the views to the mountains and false creek to be fabulous. All the units have 10 year guarantees so the protection is there. LEED technology is supposed to save on maintenance costs by up to 50% and to also provide enviro friendly systems that transfer cool air in the summer and heat exchange in the winter. The buildings are concrete and not going to fall down any time soon. I’m waiting for the bailout. Could be the deal of the Century for waterfront in Vancouver proper. No pumping, just vultching.

#229 Devil's Advocate resurrection on 10.03.10 at 5:25 pm

#221 junius

”First of all, yes we are experiencing price declines. The homes that are selling are those that are reducing their prices.”

Fail. We are NOT seeing price declines yet. Prices are actually up. Those properties which are selling are the more realistically priced of those on the market – the ones the overpriced listings make look like a bargain.

”Secondly, most of us – myself include – made it clear even this time last year that we didn’t expect prices to really start down until late this year.”

I’d call October well into late in the year as I am sure most others would. Typically November is a seasonally “off” season. What are you waiting for the stats that suit you best? Might end up waiting a while… In the meantime FAIL again.

#230 jess on 10.03.10 at 5:40 pm

#200 T.O. Bubble Boy
what about Vienna –didn’t Hungarians take out home loans/loans via Austria

03/11/2009
Vulnerable in Vienna
Austria Feels Pinch of Eastern European Downturn
By Rüdiger Falksohn and Walter Mayr

Major Vienna banks wanted to capture the Eastern European market and benefit from its growth. Now they are waking up to the hangover caused by what could end up being a series of bad loans. The government, while trying to reassure the banks, is also seeking international assistance
http://www.spiegel.de/international/europe/0,1518,612608,00.html

#231 Nostradamus Le Mad Vlad on 10.03.10 at 5:56 pm

#192 VancouverGoinUP — “China holds all the cards here. If they decide the United States needs to be taught a lesson, it will just sell of some of its vast holding of treasuries and force the United States into hyperinflation . . .”

— and —

#193 TheBigLebowski — “What did 25 countries do together in the past week? They competitively devalued their currencies against one another in the market.”

A link from a day or two ago said the Chinese were using a lot of their debt holdings to acquire tangible assets, as they will be around for quite a lot longer than fiat money.

China also holds 97% of the world’s rare earth metals, so they are setting themselves up nicely when something major occurs.

TBL’s post about 25 countries devaluing their currencies may be a warning shot against the Yuan / Remnibi, China’s two currencies. There’s a lot afoot here!

#194 kc — Great film, but not many like that are being made these days. Pity.

Received a fascinating PPS e-mail this morning re: the underground city of Derinkuyu, Turkey.

It holds a population of 10,000 and was very well designed and built, possibly around 1000 AD. The things one learns about the hidden treasures of earth are quite astounding! Need Power Point to see it (google “free power point”).

How many people knew that bin Laden was never involved, nor connected with 9-11 (courtesy Dick Cheney, the one who ordered the USAF to stand down for an hour)?

4:25 clip End the Fed. People are angry at the govt.

Poverty “Tracy Young says they’ve been doing this midnight run on the last day of every month for so long now that they’re on a first-name basis with Gloria, their cashier.”

#232 Jake on 10.03.10 at 5:59 pm

# 178 Off the Leash,
Great post. I agree with you that the RE market will be better off for everyone, including realtors, when the steroids wear off.

#233 Al on 10.03.10 at 6:13 pm

There were quite a few cars/people at an open house in Bayview Village area of Toronto – same amount of activity as in the boom times.

#234 Future Expatriate on 10.03.10 at 6:15 pm

“no one can predict the future”.

No one except Garth and several bear blogs.

Sellers. Yeah you.

PANIC!!!!!

Or sit and bleed as it gets far, far, far worse.

Tent cities? “No darling, in Victoria it’s a niche market, we do things different here.

We live in our cars.”

#235 Future Expatriate on 10.03.10 at 6:20 pm

Thanks for the video of Binab, of der Binab und Strasser… I’ve been trying to think of the adjective “effete” for days now and that just popped it into my head.

Thanks Jase!

#236 jess on 10.03.10 at 6:30 pm

lookback

http://www.pbs.org/wgbh/pages/frontline/shows/cyberwar/warnings/

The Slammer worm, also known as the Sapphire worm, hit at 5:30 a.m. GMT on Jan. 25, 2003 — Superbowl weekend. Exploiting a vulnerability in servers running Microsoft SQL Server 2000 software, Slammer was the fastest cyber attack in history. According to a team of researchers from the University of California at San Diego, Lawrence Berkeley National Labs, and Silicon Defense, the number of infections doubled every 8.5 seconds and Slammer did 90 percent of its damage in the first 10 minutes of its release. Among other things, the worm took down parts of the Internet in South Korea and Japan, disrupted phone service in Finland, and slowed airline reservation systems, credit card networks, and automatic teller machines in the U.S

The Slammer worm (also known as the Sapphire worm) was the fastest worm in history — it doubled in size every 8.5 seconds at its peak. From the time it began to infect hosts (around 05:30 UTC) on Saturday, Jan. 25, 2003 it managed to infect more than 90 percent of the vulnerable hosts within 10 minutes using a well known vulnerability in Microsoft’s SQL Server. Slammer eventually infected more than 75,000 hosts, flooded networks all over the world, caused disruptions to financial institutions, ATMs, and even an election in Canada. Here’s a map that shows how quickly the worm spread over the first half-hour of tracking

#237 CrowdedElevatorfartz on 10.03.10 at 6:40 pm

#224 Tripp
Rich and Lazy….Lazy and Rich?
ToMayto, Tomato
As for Eurotrash (NOT European Trash as you incorrectly stated). This is a term widely used since the 1970’s to describe, rich, lazy, elitist people who TRIP around enjoying their hedonistic pleasures without a care or concern of cost or consequence. So a “Paris Hilton” or a “Saudi Royal” could be considered Eurotrash. Whether they were from Europe or not. I didnt realize it was a necessary requirement to visit Europe to be permitted to use the term Eurotrash. Do I have to visit the Moon to use the term Moonstruck ?
Perhaps I should have referred to theses people as Rich, Arrogant, Trash or RATs…….?

#238 Onemorething on 10.03.10 at 6:45 pm

Quite of bit of discomfort between bloggers today I see. You must all see the error of our ways and that there is very little that can be done to avoid more loss of the middle class….yes you!

There will be deflation, a SH*T load of it. There will be huge RE losses as part of it, mapped to less pay, more tax, higher costs of everyday goods.

Gold may move only with fiat currency devaluation but mark my words, if it moves too far, you wont be able to keep it. Paper gold is like paper money folks.

I have been out of USD for 2 months now or anything pegged-attached-dependent to it via other currencies, stocks or economies.

How do Canadians honestly expect the party to continue on wages via limited GDP on demand let alone strong CAD. Get ready for a paycheque that is taxed even more with a devalue of assets with increased cost of living that will have you netting nothing before October each year.

Look out 5 years —– I believe Garth keeps saying and then you’ll understand where this country will be.

#239 rosie on 10.03.10 at 7:01 pm

Any comments on Gov’t Canada Real Return Bonds. Curiosity demands answers.

#240 T.O. Bubble Boy on 10.03.10 at 7:12 pm

Sales are already the slowest in several years, and now F is considering further mortgage rule tightening?

http://www.nationalpost.com/news/Ottawa+ponders+further+tightening+mortgage+rules/3617608/story.html

This could get interesting… imagine if lending standards went back to something like 10% down and 25-year amortizations?

Sanity might finally be coming back!!!

#241 Devore on 10.03.10 at 7:19 pm

#221 junius

First of all, yes we are experiencing price declines. The homes that are selling are those that are reducing their prices. The fact that first time buyers piled into the market last fall and this spring which is why the average prices of homes sold is staying high. However you shouldn’t confuse this with the overall price of homes within the marketplace.

Houses are still selling, but is it much higher quality of house. Houses in good locations, of good quality and ready to move in condition with no work needed are selling. The crap isn’t. As a result, average price is still relatively high, although price per square foot is down, indicating actual price drops are already here. Buyers are simply getting more house for their money.

#242 John_2008 on 10.03.10 at 7:22 pm

Has anyone heard of this?! States like North and South Dakota, Nebraska, Iowa are basically without law enforcement these days, while crime such as domestic abuse, assaults and property crime are up.

http://plainsdaily.com/story/6631

“The lack of law enforcement has caused some departments to stop responding to some calls altogether and leave stretches of busy interstate highways unpatrolled for hours.”

“Some residents worry they are being targeted by out-of-town criminals who know there is scant law enforcement.”

“Some calls don’t get a response at all anymore: The area no longer has a game warden. Weeks’ office doesn’t have the time to investigate hunting violations, so no one looks into them.”

#243 eddy on 10.03.10 at 7:30 pm

this is one of my favorite blogs, because of the wide variety of posts. I get the impression that some folks are waiting for a big drop in prices. however,
if rates go up, prices Will drop – you only win if you have cash, if not ,mortgage payments go up- you come out even, but you lose Time.

this link is off topic but may be of interest, it’s about the Illuminati

http://wn.com/september_clues_4__extremely_important_top_secret_uncovered?orderby=rating

#244 S.B. on 10.03.10 at 7:48 pm

Oil just made a moonshot in overnight trading now – word of infrastructure attacks in Pakistan.

Black gold…pain at the pumps.

#245 Devore on 10.03.10 at 7:48 pm

#242 eddy

The math always works out in favor of low price/high interest vs high price/low interest.

What do you think the Illuminati have to say about this?

#246 Taxpayer like everyone else on 10.03.10 at 7:59 pm

241 John 2008 – thank you for that link.

I find this interesting because ND was mentioned on this blog more than once as an economy that didnt participate in the big run-up on real estate.

Often touted as one of the reasons for the states stable economy was that it had its own state-controlled bank – the only one in the US.

Seems ND has its share of problems anyways.

#247 VancouverGoinUP on 10.03.10 at 8:03 pm

T.O Bubble
***This could get interesting… imagine if lending standards went back to something like 10% down and 25-year amortizations?***
That’s the standard that should be in place to protect Canadians. The lax standards are why last generation towns like Toronto are not going to fare well going forward. Key point is investing in Vancouver where mortgages are a non issue. Vancouverites unlike Canadians buy with Cash. For the rest of Canada there should be strict lending rules to protect the ordinary Joe.

#248 Off the Leash on 10.03.10 at 8:32 pm

#240 Devore

I don’t know that I agree. In any event were it true or not… as the average/median sale price is up it indicates that there are buyers out there willing to pay the price. Furthermore that volumes, while apparently trending down, are still statistically speaking consistent with last year and up from the year before indicates there are at least as many willing to do so. I’m not making this shit up, nor am I spinning it in any way… those are the facts as they stand at this point in time. Quite clearly different than is being touted about on this blog.

Now… I don’t disagree that volumes will trend down and prices will eventually follow. That does, however, remain to be seen and is nothing more than armchair forecasting until then. I do hope it happens to a reasonable degree as quite clearly from where I sit in my armchair there is a whole lot of pent up demand – if only that of the vultures lurking around this blog.

Now I have vastly exceed my posting quota for the month and must get back to work fleecing the greater fools by telling them to buy now or be forever priced out of the market. ;-)

#249 45north on 10.03.10 at 8:34 pm

US Dairyland View: I’ve seen the US real estate Bubble Deflate, unevenly, unkindly, and even humorously

good to hear from you Dairyland. A year ago, there was a huge surplus of milk in the US and dairymen were slaughtering their herds while in Canada they weren’t. In Canada, dairymen can sell only their “quota” which effectively controls their production. The quota system is not the “free market” for sure but it does prevent over production of milk and too many cows.

T.O. Bubble Boy: Sales are already the slowest in several years, and now F is considering further mortgage rule tightening?

10% down payments are inevitable. Harper should increase down payments to 10% and then let Ignatieff, Layton and Duceppe call him on it.

#250 Nostradamus Le Mad Vlad on 10.03.10 at 8:36 pm


#226 Ben — Great link.

#237 Onemorething — “. . . mapped to less pay, more tax, higher costs of everyday goods.”

Exactly. All is interconnected, but the middle class will be thumped by higher and more taxes. Food has also skyrocketed. Not great times for those who are overloaded with debt.

#243 S.B. — Runs with a link from a day or two ago, that said oil could hit US$200 / brl. Natural gas should also be on the up soon.

Euro Two from Europe. And we think we’re getting it tough here!

Nuke Money In case money’s not your game . . .

6:20 clip At least Big Brother will be here in 2012!

dubya’s third term. The more things change, the more they stay the same.

Fraud “A huge percentage of US mortgages written during the Bush era were fraudulent, in violation of lending laws and/or so carelessly handled the banks can’t find the paperwork.”

3:29 clip Top 10 low fly-bys!

We’re in a photo-finish to the end!