Prophetic

One day recently a fool paid $100,000 over the asking price for a dodgy home sitting on concrete blocks in a weak area of Vancouver that had been on the market for five days. One of the features of this house, which traded hands for $895,000, is a “fully undeveloped basement.” Go figure.

About the same time, a few thousand clicks away sat a two-story century home with a stone foundation, on a double lot overlooking the Lunenburg harbour which was recently gutted, renovated to granite-and-stainless orgiastic levels, and sits unloved at less than half the price. In fact, in this town so visually stunning and historically cool that it’s a Unesco World Heritage Site – traditionally a magnet for money – real estate sales are down 50% from last year.

What does this tell us? That real estate is local, of course. The east coast ain’t the west coast. We all get that a house worth $100,000 in Mahone Bay might fetch $500,000 in Delta.

But it also demonstrates houses have no intrinsic or innate value. They’re worth what someone’s willing to pay on the day of closing. And that makes it the most emotional of assets. It’s also interesting that the sales chill which has hit the big cities (I told you yesterday about the dead fish numbers in Vancouver, Calgary, Toronto and Victoria)  also blows through much smaller centres.

Hell, this thing is even rattling through countries.

This week the International Monetary Fund, always a fun buncha guys, issued a report dismal enough to make a Re/Max marketing clown toss his cookies. Residential real estate, according to the IMF, will be a drag on economies around the world – for the next eight years.

Why will this happen? Well, for reasons readers of this blog can now recite by heart. This real estate bubble was not created by outstanding economic conditions, but instead by a sea of cheap money. As a result, conservative and prudent Canadians went wild, chugalugging debt as never before, loading up on real estate and sending home ownership levels to unheard-of levels.

Of course, cheap money will not stay cheap forever. House prices will fall. But the debt endures. Bummer.

Or, as the IMF puts it: “Easy monetary conditions and financial innovation gave households greater access to credit and led to a buildup in leverage. The process of deleveraging could make the macroecnomic impact of this housing bust greater than in the past.” Exactly. Bummer.

Now there’s one other key point worth remembering: the economic muddle we’re in was caused not by runaway inflation, economic contraction or an energy shock. Instead, it started with Americans pigging out on houses and ended up with Canadian porkers doing the same. So the debt overhang right now is personal, not corporate – and takes a lot longer to be resolved, especially when unemployment lingers.

Here’s the big IMF finale: “In contrast to past recoveries, there appears to be little hope for a sustained upside boost to the overall economy from the real estate sector. In economies where real estate markets are in decline, the drag on real activity will continue. Where house prices and residential investment are rebounding, concern about bubbles is eliciting policy actions that will temper any short-term boost to economic activity.”

There ya go. More confirmation of what I said a long time ago – the Age of the House is over. The era of having real estate substitute for an investment strategy is done. Those who lack liquidity and diversification are rolling the dice. It’s a new day dawning. Even in BC.

So why have prices not yet started to retreat in any meaningful way? How can real estate companies like Re/Max issue misleading releases and why does the media slavishly comply? Is the failure of values to drop proof housing is resilient and will soon rebound? Is the greater fool the lonely bearded traveler, in rags and dusty cowboy boots, dragging his prophetic butt across an uncaring landscape?

I guess we’ll see, won’t we.

149 comments ↓

#1 T.O. Bubble Boy on 10.06.10 at 10:00 pm

From what I can see, house prices are still a mixed bag in Toronto: some sellers pricing 10% or more over recent comparables to try and hook the last of the greater fools, some sellers pricing in-line with other comparables (not realizing that prices have dropped 4%-5% from the peak), and some waking up to reality and pricing say 5% off the peaks. Then, you still have a few that are caught in a Pre-May-2010 mentality, and are pricing 5% low, but expecting a bidding war (and, these places still get zero offers, or maybe 1 offer that is still under the “low” price they listed at).

The shakeout is beginning… once the last few people realize that prices are declining, houses will sit far longer than the 30 days or so that they take today, and the melt gets more momentum.

#2 Prairie Drifter on 10.06.10 at 10:00 pm

“overlooking the Lunenburg harbour which was recently gutted, renovated to granite-and-stainless orgiastic levels, and sits unloved at less than half the price”
_________________
Oh no! They gutted the harbour? It’s now a stainless basin? I don’t see the need for more granite — the town is pretty much all rock.

I was just there in May and the place looked fine the way it was. Next I’ll hear someone bought the scenic school on the hill (the one Ellen Page does a commercial from) as a teardown and is building yet another tasteless McMansion. ;-)

#3 dark sad person on 10.06.10 at 10:01 pm

US money supply has no impact on Canadian real estate prices. Or American, for that matter. — Garth

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

The crux of Bernanke’s and soon to be H-F-C’s main problem-

Unless they can find a way to sucker the peasants with good FICO scores into borrowing money and spending it-
They’re hooped-
And worse-the number of high FICO scorers is collapsing-

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

Credit scores sink to new lows
About 25.5% of Americans had credit scores below 600 in April, according to FICO Inc. Historically, only about 15% of consumers have had scores below that level.

The economic downturn has made people more aware of how important it is to lower personal debt, DeRitis said. Those who are still employed and receiving regular paychecks have decreased spending and paid down loans, he said

http://articles.latimes.com/2010/jul/12/business/la-fi-credit-scores-20100712

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

Not that 25% is extremely serious–so far-but-
what’s happened is-those who could borrow-are not borrowing-
Checkmate Bernanke & H-F-C
The Market is winning–
Can’t be good for the future of the Mortgage Broker Industry-
One would suspect–

http://research.stlouisfed.org/fred2/series/REVOLSL

#4 Old_is_Gold on 10.06.10 at 10:01 pm

Never in Canada (we hope!)

Grasping for a shred of hope as the reality of poverty sets in

Quote from above LA Times article: “Little is no economist. But he says it feels to him as if the baby boomers “reaped all that they could get,” and when he got to the party, “there was nothing left.”

Twice a month, Little visits the SOVA pantry on Pico, run by Jewish Family Services of Los Angeles. The office was crowded when we arrived, and a volunteer told me things have changed at the pantry in recent years. “You’re looking at the safety net for the middle class disappearing,” she said, and that has meant more people like Little relying on the pantry.

#5 Timing is Everything on 10.06.10 at 10:04 pm

Garth said – “It’s a new day dawning. Even in BC.”

Hmmm…Distinguishing BC from the rest.
I guess we are a bit different, even in the bad times. ;)

#6 McLovin on 10.06.10 at 10:08 pm

Kelowna BC is so dead that brand new $700K lake view high rise condo’s can’t find renters at $1,500 per month. There aren’t even enough gainfully employed people there to rent them.

Vancouver is a joke but at least condo’s can be rented.

Kelowna will be the Las Vegas of Canada.

#7 sk76driver on 10.06.10 at 10:17 pm

It is crazy. Had a friend move back to BC from back east and they are looking to buy a home here. I showed her this blog and she has read it but still I hear the same things: “I want my own nest, the security…”

I shake my head, show her the numbers, tell her to read the papers for crying out loud…..

Damn…..you really cannot fix stupid…..

#8 blase on 10.06.10 at 10:23 pm

can you post a link to the Lunenberg house?

#9 S.B. on 10.06.10 at 10:24 pm

Snapshot of Toronto condo rental prices – this is in the King St. West area, a newer nicer building: 8O

1 Bedroom$1,425
1 Bedroom + Den$1,475
2 Bedroom$1,725
2 Bedroom + Den$1,950
3 Bedroom$2,050
Prices and suite availability subject to change.
All monthly rental rates do not include utilities.

http://www.vertica.ca/525richmond/suites_rates.php

#10 dark sad person on 10.06.10 at 10:34 pm

Now there’s one other key point worth remembering: the economic muddle we’re in was caused not by caused by runaway inflation, economic contraction or an energy shock. Instead, it started with Americans pigging out on houses and ended up with Canadian porkers doing the same.

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

It was caused by runaway Inflation-not that the people who pigged out are blameless-but-cheap money always has a way of finding a home-
Lending standards were intentionally lowered and interest rates were intentionally lowered-because-
This is how (more or less) that Lord Keynes built his economic model-for how to goose an Economy-when “threatened” by the “necessary” Market force-called Deflation-
Deflation “must” happen-to keep trade and prices balanced-
They can deflect it for awhile-but they cannot stop it-
We are seeing this in Technicolor today-

Here’s how Greenspan’s Hyper-inflation of credit money-upset a cycle-that would have likely given us a severe-but short lived recession-
with Government/Central Bank interference in the Markets-
Now we are at the very least on the brink or actually in a Depression-

http://photos1.blogger.com/hello/101/3984/1024/K-Cycle-Interest-Rates.jpg

http://photos1.blogger.com/img/101/3984/1024/cycleofdeflation1.jpg

#11 Karl Hungus on 10.06.10 at 10:41 pm

Still havent righted the ship on that faulty source of Nova Scotia average price being $324,928? For anyone who wants to know the real numbers, go to the CREA yourself – not someone who falsely quotes it.

#12 Hovering on 10.06.10 at 10:47 pm

100,000 over asking

you need a proof reader garth

#13 LHHW on 10.06.10 at 10:54 pm

Great point about homes having no intrinsic or innate value. The emotional factor has been strong and has caused many to do things that they perceive to be a smart investment. My take, never treat your primary residence as an investment.

#14 CalgaryBoy on 10.06.10 at 11:09 pm

But Garth you are correct when you said look at October’s prices, well, here in Calgary anyway!

For the 1st 5 days in October, the average prices is sitting at $435K and median is sitting at $348K! I know it’s kinda early to say, but there is a trend!

It has dropped from September’s numbers and it has dropped DRAMATICALLY from the spring / summer numbers! May’s average was $483K and March’s median was $420. So that’s a decrease of about $50K from the average price and about $72K from the median price!!!

Gosh, feels like I’m dreaming! Let the dream continue!

YiPPY!

http://www.findcalgary.ca/listings?pathway=127&pageId=19

#15 Bill ( Peterborough) is a FRAUD on 10.06.10 at 11:14 pm

#175 Bill ( Peterborough) on 10.06.10 at 8:42 pm

Re # 168 Idiot who cannot come up with her own monicker.

Been to all these sites . Truly shows how naive you are.

You must be Jm’s protege. Did he get you to right all this out for him too.

As far as life is concerned it’s great.

I can sit here all day and entertain your BS. But I have better things to do. ( Catch Bass, just slamming them out here)

Both you clowns are so transparent.

Just a final word before : When senators, congressmen say the same thing as well as learned men about what I have stated. To me that is credibility.

The sites which you look at are to create smoke screens to hide the truth.
_____________________________________________
FAIL – Angry old man you FAIL!

My moniker was as easy as it is true.

“The central belief of every moron is that he is the victim of a mysterious conspiracy against his common rights and true deserts. He ascribes all his failure to get on in the world, all of his congenital incapacity and damfoolishness, to the machinations of werewolves assembled in Wall Street, or some other such den of infamy”

H. L. Mencken
http://en.wikipedia.org/wiki/H._L._Mencken

FAIL!

What other inadequacies do you hide with your frauds?

More FAIL:

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

You don’t have better things to do old man – You spend all your time lurking here hoping to catch more flies in your web of BS attempting to sound smart

FAIL

Oh Yeah – telling some guy property is a good value in the welfare capital of Ontario and saying the world is coming to and end with your shite all on the same page –

FAIL!

Calling me someones robot:

FAIL!

I could use your tired ass old argument:

Refute My Posts!

FAIL

but you are old and the arthritis must hurt after poking away all day.

Good thing you surround your self with all your FAILure pals!

#16 Patz on 10.06.10 at 11:15 pm

Yesterday Garth said we won’t see 2007 again and he’s right we won’t. But paradoxically it’s still with us. We live in the neither the best of times, nor the worst of times, just the strangest of times.

We’re in a slow motion stumble; we’re, as someone said yesterday (stupidly) “in the moment” just before we bang our knee and hit our forehead. Sure the leading edges of the body politic have taken harsh blows. People have been thrown out of their homes; the great engine of commerce on the floor below now has to feed 42 million of it’s citizens. (In case you don’t know that’s considerably more than the population of Canada) Imagine if all those on food stamps were instead lining up at soup kitchens like they did in the 30s.

At the same time conspicuous consumption is still with us. Baby blue Bentley convertibles glide down Georgia Street on the way to the Bayshore. Private jets come and go from YVR. And on talk radio small businessmen go hairy apesh*t at the thought of bike–lanes on Hornby St.

Pretty soon many more are going to get a reality check and it won’t be from Bruce Allen (inside Vancouver joke).
Being on the edge of a crisis—where we are—is not the same as being up to your armpits in one.

#17 Future Expatriate on 10.06.10 at 11:24 pm

Garth, an “undeveloped basement” IS a plus. About the only decent programs on HGTV are “Holmes on Holmes” and “Income Property” as Mike Holmes and Scott McGillivray show week after week how horrific fly-by-night contractors, blind clueless “inspectors”, and homeowners with no permits “finish” their basements.

At least with an undeveloped basement you KNOW you’re not getting a complete tearout and rebuild of the entire house’s plumbing, electric, and hvac. With some of the horrific fire, water, and mold traps created by the above trio of idiot groups verging on the criminal, any savvy homeowner should view a finished basement as a huge minus, not a plus, no matter how good it looks. Because the chances that an inspection prior to sale will catch ANY problems is NIL. Whether they’re getting kickbacks from the realtors or whether they’re stoned or just complete idiots, the result is the same.

Any buyer would be wise to try and hookup with a Holmes-approved inspector and settle for nothing less.

#18 Tonguestump on 10.06.10 at 11:27 pm

Wow, yesterday on the blog the pessimism porn stars sure came out greasin their stuff. We’re not going to get cookie spammed from the site now, from like doomer dick does precious metal prepper babe vids right? by the way good to have you back DA.

#19 Nostradamus Le Mad Vlad on 10.06.10 at 11:39 pm


“Prophetic. . . fully undeveloped basement rattling through countries chugalugging orgiastic stainless levels . . .”

Orgasticchugalugging is a hard word to fathom. So far, I haven’t found any definitions of it, whether it’s a pro-adjective, nounverb or something akin to The Three Stooges (Bernanke – Paulson – Geithner – Carney – Harper – Flaherty – Cheney).

“But the debt endures. Bummer. Exactly. Bummer.” — Only to those greater fools who took on more debt when it wasn’t necessary, but to those who are profiting from this, getting fatter by the second it is not a bummer, not by any stretch of the imagination.

Mind you, hell will be a brief, but nice respite for them when they have to endure the same conditions during their next lifecycles.
*
#174 Dan in Victoria on 10.06.10 at 8:37 pm — “Is it their turn again?”

Absolutely. The Mongols (red race) and Chinese (yellow) are the next in line, accompanied by Russia, Singapore, Japan, Thailand, N. and S. Korea, Malaysia, Taiwan and others to rule the roost, or take the next shift.

My brother used to teach ESL in Shenyang, next door to the Gobi Desert. Said the wind storms were awful, kicking up mountains of dust, dirt and sand then dumping it in the city.

People are terrific, very friendly. Love foreigners.

Posted a day or two ago, but I didn’t match it up with the other link about several big players buying tons of physical gold.

Now I have an idea that the US$ may well end up being devalued by at least half, which would affect the other 25 countries who have all agreed to devalue theirs. Before or after the mid-terms.

Also Forex War and this.

Goldenballs and combining the above leads to a fall guy — here — who was bankrolled into his position by Soros.

Link in As if sheeple were so clueless. Guess some of them must be.

Silver is still a reasonable buy, but with gold, not for too long.

Link in War or Poverty. Choose wisely as both kill.

#20 Tom on 10.06.10 at 11:41 pm

Nice pics Garth, I guess if prices don’t correct soon, you’ll be the Butt of jokes!

#21 Tripp on 10.06.10 at 11:42 pm

Thinking at those people that just chained themselves in a huge mortgage at the peak of the housing folly gives me shivers.

For the vast majority of Canadians, a house is their biggest purchase ever. Any substantial mortgage rate increase will drastically change their life in a very short period of time. Meanwhile, people will still need to feed their kids, keep the house warm, pay taxes, repair the roof, fill the gas tank…

Greater fools or not, I can’t help empathizing with them.

#22 Waiting and waiting on 10.06.10 at 11:44 pm

Why are some of you surprised that people in the real estate industry are promoting their industry?

We should all look at what is said according to the bias of the person saying it. Even our host. Do you know what’s his angle?

That said, intelligent people don’t “bite the hand that feeds them” or “sh*ts were he eats”. So don’t expect intelligent people in any industry to speak negatively about their industry.

#23 Debtfree on 10.06.10 at 11:52 pm

OMG Tighten your stops boys .I think he’s trying to say “in the end it’s going to be a double dip” ….

#24 TheFirstRick on 10.06.10 at 11:52 pm

But does Lunenburg have this?

http://www.vancouversun.com/news/Metro+Vancouver+police+seize+million+drug+operation/3626588/story.html

The Narco State of the North is BC, Vancouver being ground zero. With its corruption, organized crime, bikers and Asian influence, Garth won’t go there for some reason? Too controversial, I guess.

#25 Timing is Everything on 10.06.10 at 11:52 pm

Garth said – “Is the greater fool the lonely bearded traveler, in rags and dusty cowboy boots, dragging his prophetic butt across an uncaring landscape?”

Time will tell. ;)

http://www.youtube.com/watch?v=24gDcvp9Agw&feature=related

#26 Taxpayer like everyone else on 10.07.10 at 12:04 am

3 Old is gold – thank you for the link. I am having trouble with the boomer connection. Subject was single, rented
(real cheaply too), and made $50k/yr for 20 years.
Nobly looked after his mom for half of that time. And he
has skills, though the market is dry. His age is almost irrelevant as he could have easily been 5-10 years older (ie a boomer) and in the same situation.

#27 Hector's Corpse on 10.07.10 at 12:31 am

Garth said – “More confirmation of what I said a long time ago – the Age of the House is over. ”

Apparently not in Winnipeg. Here’s a sample of how delusional buyers are in Winnipeg. Yesterday a 1300 sq/ft bungalow built in 1955 generated a bidding war with 8 offers and sold for $35,800 over list. The home has had absolutely nothing done to in 55 years and needs to be gutted. 55 year old ungrounded rotting wiring needing to be replaced.

There’s no hope. Fools are going be slaughtered when rates reset, or die an early death due to asbestos oozing from floor tiles and zonolite insulation in the walls and attic.

Crazy… simply crazy.

http://www.realtor.ca/PropertyDetails.aspx?PropertyID=9961322&PidKey=992003867

#28 Peter Pan on 10.07.10 at 12:35 am

Just goes to show people on the North Shore have more available credit than sense…

I guess the Dingleberries here didn’t get the memo about sales falling off a cliff and prices decelerating.

#29 obert on 10.07.10 at 12:41 am

The end is in sight, the bottom may be seen – in the US. But in Canada it’s different.
This blog may as well change and deal more with personal finance matters: retirement, savings, financial planning etc.
The story – about proving that there is a housing bubble in Canada, and why it happened, and that it is now popping or fizzling – is near it’s end. Time to move to new topics.

#30 Matt on 10.07.10 at 1:12 am

have you checked out the latest in awesome BC housing, http://www.twelve3.ca/ ? this is just amazing. Your very own 12’X12’X12′ house, perfect for a corner lot. They say their all about affordability, I wonder how they define that.

#31 Onemorething on 10.07.10 at 1:55 am

The Age of the House is Dead! AGREED!

The Age of Debt is all over us!

25-27% unemployment in the US is at Great Depression Level. This is real unemployment masked by Food Stamps and Medicare and why numbers of 9.7% are false.

These safety nets were not available in the 30’s but it doesnt matter the end result is the same.

That end result is that flooding the market with money, cheap credit opening the door for loose regulation will simply turn to revolution.

It had to happen, it is already here and there will be a reversal to the extremes we have witnessed.

It is right upon us in Canada, and has been going on for 3 years now in the US, UK and EUROPE.

Let’s hope this new consciousness is in full swing so we can find a new normal by 2020.

#32 tkid on 10.07.10 at 2:15 am

“Backstage” Holy … the thing is close enough to the rail line to become part of the freakin’ GO trains. Unreal.

This actually passed planning permission with the City of Toronto?

#33 Duke Jocic on 10.07.10 at 4:26 am

There’s a new bi law limiting the number of cars per household in Toronto. 2 cars if you have one garage. So the bi law police can now slap households with 5000$ fines for having too many cars on their driveway. I guess they want all those x y generation people like myself to move out of my parents basement and buy a place with my own parking space. Oh the humanity! Don’t believe me? Just google: Toronto driveway bi law.

#34 Numbers. on 10.07.10 at 5:03 am

I received an email from my investment advisor today that’s very bullish on the stock market that “September was the best since WWII, the Dow went up 8.91% in one month”, blah blah.

Ya, and what’s changed I wrote (with lots of facts to back it up) in the economy to have the “best since 1949”, we are more in debt, unemployment keeps going up, consumer and business confidence numbers are going down and RE is in the tank.

He closes

“the third quarterly earning seasons and many analysts are expecting the earnings seasons to be quite favorable”

I’ll believe it when I see it, but I’m not gambling on it. I know too many people who have lost their jobs recently and in the past year to be buying anything other than staples.

Maybe he sees something I don’t?

He might see the beginnings of a very large movement of capital from real assets into financial ones in advance of the inevitable price inflation and asset deflation and in the wake of a record amassing of corporate liquidity. Or maybe he’s just selling stocks. — Garth

#35 Grandpa Grinch on 10.07.10 at 5:21 am

No end to power & greed:

http://www.zerohedge.com/article/hr3808-equivalent-tarp-2-and-obamas-get-out-jail-gift-card-high-frequency-signing-scandal

#36 Brian1 on 10.07.10 at 5:59 am

People on this blog have made alliances. I say be careful who you play with. You don’t know that someone is visiting Thailand on a regular basis and that the RCMP monitors this site to protect MP’s. No wonder Garth is not afraid, although he doesn’t need them. He handles himself pretty well.
I find it funny that the moment I mention kiddie stuff they leave me alone. For a bunch of guys who believe in conspiracy theories, why is this one not plausible?

#37 CTO on 10.07.10 at 6:54 am

#28 obert

Obert?! Don’t things seem a little strange in the news and peoples behavior? CREDIT, CREDIT, CREDIT…WILL LAST FOREVER, right?

#38 House on 10.07.10 at 6:56 am

As I heard it the IMF (in it’s infinite wisdom) also said that Canada was one of the good countries. So how does that make your argument? By the way how come the term shepple has gone out of fashion?

#39 luketheduke on 10.07.10 at 7:38 am

Right or wrong Garth has no downside…He is selling books ,his public appearances are sold out.
I think he will be right eventually ,sometime in the next
10 years…and then all his followers will say “I told you so..”

#40 Nancy on 10.07.10 at 7:47 am

Check out the webpage of the Economist magazine (www.economist.com). There is an interactive map of the world’s (government) debt. Interesting to see that Canada is in abyssmal shape. This, of course, is on top of the amount of personal debt Canadians have.

#41 bullion.bunny on 10.07.10 at 8:02 am

Gold at $1365……now what?

#42 avenirv on 10.07.10 at 8:10 am

“But it also demonstrates houses have no intrinsic or innate value. They’re worth what someone’s willing to pay on the day of closing.”

sorry, it demonstrates nothing.
everyhting doesn’t have an intrinsic value. everything’s price is what the buyer is willing to pay.

#43 Soylent Green is People on 10.07.10 at 8:21 am

Blog Picture Update Alert:

Just so you know, those are two guys strolling down the beach.

#44 Moneta on 10.07.10 at 8:28 am

I guess they want all those x y generation people like myself to move out of my parents basement and buy a place with my own parking space. Oh the humanity! Don’t believe me? Just google: Toronto driveway bi law.
————
Had this family in front of us with 3 kids. At each sweet 16, they got a car. So 5 cars to a house. They were all over the place on the street. School buses could not pass early in the morning and would honk.

These kids would come in at all hours. 3am with music blasting. They’d drive fast and nearly hit the kids.

But every second or 3rd house was the the same.

The neighborhood was built in the late 60s early 70s, went through 30 years without any speed bumps, then suddenly, I had to drive over 6 speed bumps to get to the blvd.

These boomers don’t have enough to retire but they keep on buying these kids cars and give them money for cash downs.

The kids without cats were actually dirven to the train station every morning… about 1 km away!!!

Why can’t these kids take the friggin bus or walk by themselves?

#45 fancy_pants on 10.07.10 at 8:38 am

Whoa, that’s a lot of real estate on display there. Not exactly hot properties but hey, the market is cooling off.

Is that M.C. on Wreck Beach? nice haircut but you think he could afford better shades. Where did that beached whale go? If it’s there he’ll surely trip over it.

As his sign indicates, the tail… er tale…that is enfolding is grimmer than the picture reveals. It’s obvious to most that regarding the ass-ets in question, although still holding pretty firm show signs of sagging and have no where to go but down.

#46 Willy H on 10.07.10 at 8:42 am

A few weeks ago I checked MLS focussing on a 4 block region of south Richmond Hill (an expensive suburb just north of T.O.)

There were over 400 homea listed at over $600K (over half were above $700K.

A homeowner listed at $670K and ended up having to drop their price to $570K ($100K below asking) in order to sell. They were told they had no choice as their neighbours with slightly better properties on the market had dropped their prices over the past few weeks.

Garth, you had mentioned that the higher end of market would suffer first in “The Greater Fool” … your prophecy has come to pass!

What else is written on those stone tablets you brought down from Grouse Mountain?

#47 Jay on 10.07.10 at 8:44 am

One thing that does seem to stay consistent across the country is misleading news releases. “Looking at the big picture however, the market remains healthy.” London Free Press this morning: http://www.lfpress.com/money/2010/10/05/15586686.html

#48 bullion.bunny on 10.07.10 at 8:48 am

#35 Brian1 on 10.07.10 at 5:59 am

You don’t know that someone is visiting Thailand on a regular basis and that the RCMP monitors this site to protect MP’s.

Interesting and valid points

#49 bullion.bunny on 10.07.10 at 8:49 am

#35 Brian1 on 10.07.10 at 5:59 am

It’s called a honey pot operation.

#50 jed on 10.07.10 at 8:50 am

“But it also demonstrates houses have no intrinsic or innate value. They’re worth what someone’s willing to pay on the day of closing. ”

and it’s how you can slash 94k in one foul swoop hoping to get someone to close:

http://tasmanianrealestatetrouble.blogspot.com/2010/10/feast-and-famine.html

#51 Mr. D - Ottawa on 10.07.10 at 8:54 am

Reply to #32 Duke Jocic

Your interpretation of that Toronto bylaw is somewhat inaccurate and incomplete:

“City officials have put an end to the confusion over a new bylaw restricting the number of cars parked in residential driveways, saying it only applies to new developments and will not be heavily enforced.” For the full article look here:

http://www.thestar.com/news/article/871790–driveway-restrictions-for-new-properties-only

#52 Kaganovich on 10.07.10 at 8:55 am

Greetings Dawgs,

Here is the latest lowdown on the shape of CRE in the USA:

http://www.nakedcapitalism.com/2010/10/jim-quinn-consumer-deleveraging-commercial-real-estate-collapse.html

Perhaps a foreboding of what may happen to us in awhile(?)

#53 dark sad person on 10.07.10 at 9:12 am

#35 Brian1 on 10.07.10 at 5:59 am

People on this blog have made alliances. I say be careful who you play with. You don’t know that someone is visiting Thailand on a regular basis and that the RCMP monitors this site to protect MP’s

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

Safer to just keep your mouth shut-give up our right to free speech and not expose our so called leaders for what they are-

Safer to let them turn the next 3 generations into debt slaves-than to speak up and fight now-

Safer to roll over-keep quiet and let them enrich their Banker Masters-in order to hold onto the Political power they lust for-

I suppose it is safer-at least for ourselves-at least for today-

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

“Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote. ”

. A nation of well-informed men, who have been taught to know and prize the rights which God has given them, cannot be enslaved. It is in the regions of ignorance that tyranny reigns.

“Those Who Sacrifice Liberty For Security Deserve Neither and will lose both-”

“We must, indeed, all hang together, or assuredly we shall all hang separately.”

BF-

#54 JM in London on 10.07.10 at 9:21 am

#35 Brian1 on 10.07.10 at 5:59 am

Hi Brian,

As you can see by the way DSP & Fraudulent Bill (nice ring don’t you think?) “choose” to “debate” the doomers don’t use honest methods. I use parenthesis as they say they like discourse as long as they choose the direction of the topic – the moment you make one of these nuts uncomfortable they all get together and console each other about how right they are (yet another intellectually dishonest tactic) and point to the rightness of the argument.

The definition:

pseu·do·in·tel·lec·tu·al   
[soo-doh-in-tl-ek-choo-uhl]
–noun

1.a person exhibiting intellectual pretensions that have no basis in sound scholarship.

2.a person who pretends an interest in intellectual matters for reasons of status.

–adjective

3.of, pertaining to, or characterized by fraudulent intellectuality; unscholarly: a pseudointellectual book.

Origin:
1935–40; pseudo- + intellectual

—Related forms
pseu·do·in·tel·lec·tu·al·ly, adverb

#55 lexington on 10.07.10 at 9:23 am

Housing prices in Canada have defied the odds. They’ve withstood a gutting of the manufacturing sector, McGuinty’s massive tax increases and rate fee hikes, a financial crisis that came within a hair of being a full blow depression, record levels of household debt, interest rate hikes, etc.

At this point I don’t believe it is possible for housing prices to ever decline in Canada. Anyone who has sat on the sidelines for the past few years waiting for Canada’s “housing bubble” to burst has been kicking themselves.

Will Garth and those who follow his advice end up being the greatest fools of all? So far it looks that way.

#56 JM in London on 10.07.10 at 9:33 am

Well – another sign here – not news but more evidence…

http://www.bnn.ca/News/2010/10/7/Building-permits-plunge.aspx

This can easily be echoed on the sites around here. All kinds of lots with service coils sitting vacant with no foundations poured. In the boom, the concrete guys would be run off their feet right now to get them in before it froze up.

Anyone have any layoff stats for Lafarge cement?

Another telling sign around the new developments here is the third change in realtors selling spec houses on the sites as the builders try and unload the built up inventory they are still swimming in. I know a couple of the agents with the listings – both forced by their brokers by the way – who’ve said the sales managers they’ve spoken with are playing the blame game with the previous agents when they suggested a price drop…

#57 junius on 10.07.10 at 9:53 am

#21 waiting and waiting,

You asked,”Why are some of you surprised that people in the real estate industry are promoting their industry?”

It is not about “promoting their industry.” It is about intentional deception on the current state of the marketplace. Grasp the difference.

#58 Pete on 10.07.10 at 10:00 am

Snapshot of Toronto condo rental prices – this is in the King St. West area, a newer nicer building:

1 Bedroom$1,425
1 Bedroom + Den$1,475
2 Bedroom$1,725
2 Bedroom + Den$1,950
3 Bedroom$2,050
Prices and suite availability subject to change.
All monthly rental rates do not include utilities.

———————————————————-

I’ve seen condos in Toronto which are asking stupid prices like this sit empty for months and months and months. Some of them where even for sale as well. They can ask $1,000,000 a month in rent doesn’t mean they are getting anyone. Only a stupid idiot would pay such an inflated price where thousands and thousands of EMPTY condos sit. Smart money can easily knock off a few hundred dollars.

#59 Pete on 10.07.10 at 10:06 am

Duke Jocic on 10.07.10 at 4:26 am There’s a new bi law limiting the number of cars per household in Toronto. 2 cars if you have one garage. So the bi law police can now slap households with 5000$ fines for having too many cars on their driveway. I guess they want all those x y generation people like myself to move out of my parents basement and buy a place with my own parking space. Oh the humanity! Don’t believe me? Just google: Toronto driveway bi law.
———————————————————-

Ever thought they are putting a target on those who can not afford their houses and need to rent the basement while not claiming it on their taxes? If this is true the house of cards may fall fast then ever as tens of thousands can not afford their home without the rental. How many homes i’ve seen with the whole driveway packed. The housing crash is going to be ugly.

#60 bullion.bunny on 10.07.10 at 10:13 am

#54 lexington on 10.07.10 at 9:23 am

At this point I don’t believe it is possible for housing prices to ever decline in Canada. Anyone who has sat on the sidelines for the past few years waiting for Canada’s “housing bubble” to burst has been kicking themselves.

Your statement may very well be true! Try holding up house prices and you WILL see gold at $5,000. Just look at the action in the last month. Do you really want to be a slave to the banks and live in a world of $5,000 gold. I don’t think so,otherwise get out your MAD MAX gear!

#61 JB on 10.07.10 at 10:16 am

I know those two women.

One of them was my teacher

#62 bullion.bunny on 10.07.10 at 10:20 am

#52 dark sad person on 10.07.10 at 9:12 am

“Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote. ”

. A nation of well-informed men, who have been taught to know and prize the rights which God has given them, cannot be enslaved. It is in the regions of ignorance that tyranny reigns.

“Those Who Sacrifice Liberty For Security Deserve Neither and will lose both-”

“We must, indeed, all hang together, or assuredly we shall all hang separately.”

I could not put it better myself! Canadian common law and our criminal code are full of protections for the average human being. It’s so sad so very few are willing to understand it, never less live in a peaceful and responsible manner.

#63 dark sad person on 10.07.10 at 10:23 am

#53 JM in London on 10.07.10 at 9:21 am

As you can see by the way DSP & Fraudulent Bill (nice ring don’t you think?) “choose” to “debate” the doomers don’t use honest methods. I use parenthesis as they say they like discourse as long as they choose the direction of the topic – the moment you make one of these nuts uncomfortable they all get together and console each other about how right they are (yet another intellectually dishonest tactic) and point to the rightness of the argument.

************
blah blah

I’ll let you pick a topic JM–“any” topic-

Let’s rock

#64 CTO on 10.07.10 at 10:26 am

41 avenirv on 10.07.10 at 8:10 am “But it also demonstrates houses have no intrinsic or innate value. They’re worth what someone’s willing to pay on the day of closing.”

“sorry, it demonstrates nothing.
everyhting doesn’t have an intrinsic value. everything’s price is what the buyer is willing to pay”.

You forget the reverse of this is almost a certainty!

everything’s price is what the buyer is NOT willing to pay”

WHEN PRICES DROP, HOME SELLER WILL HAVE TO CAPITULATE!!! A WISE PERSON KNOWS, IT GOES BOTH WAYS. TIMING IS THE KEY!

#65 OttawaDaddy on 10.07.10 at 10:27 am

Is Ottawa different given the guaranteed government jobs, great pensions and raises (PSAC got 5% over 3yrs)??

#66 Kevin on 10.07.10 at 10:36 am

#40 – Gold at $1365……now what?

Gold is currently way overbought/over-hyped and probably needs a rest at the present level. A good setback and the inevitable bears coming out of the woodwork and calling this the end of the bubble would be good for gold. The best time to buy is when everyone is bearish.

It is never a bad idea to take some profits when things get frothy.

#67 Devil's Advocate on 10.07.10 at 10:44 am

Thought I would put before you the last ten years respective year-to-date (Jan 01 through Oct 06) stats for our local board (Okanagan Mainline Real Estate Board – Central Division (Kelowna)).

Please feel free to do your own analysis and come to your own conclusions… Me? I see that volume peaked in 2007 and subsequently price was dragged up, as it always is, beyond sustainable levels such that volume dropped significantly as buyer balked. Currently those sellers who bought in at the peak are now wanting out but holding to their lofty price expectations. Some buyers are buying in but many are waiting it out. This is supported by the days on market to sell which jumped by 41% from 2008 to 2009 with a modest drop this year as those buyers who gave up on real estate Armageddon returned to the markets.

In short the peak of the market was NOT last year it was almost THREE years ago. You all should have been calling it then. But hindsight is 20/20 vision isn’t it?

What is happening now is some believe the worst is behind us and are living life moving forward C’est la vie… Others want in but are holding their hand close to their chest not quite sure how to call it yet. Exasperating their dilemma is the negativity being called so late in the game (3 years hence).

You would not know it by reading these blogs and to be sure it is not a pretty sight out there but from one in the trenches there is no question in my mind that there is pent up demand. This is demonstrated to me every day as good well priced properties continue to sell fast some with multiple offers. I expect we will see average price continue to fall to $400,000 here in Kelowna at which time volumes will rise to something in the equivalent to 3,000 for the YTD (Jan 01 to Oct 06) range at which point we will have achieved more of an equilibrium point. The last three years have been a bouncing along bottom toward that point which I expect to have been achieved by this time next year where it will remain for another five years when then the process will begin to repeat itself but starting from an average $400,000 rather than $195,925.

Year to Date (Jan 1 – Oct 6) Data 2001-2010

YEAR Volume Avg Price DOM
2010 2567 $446,463 89
2009 2691 $408,636 96
2008 2838 $462,174 68
2007 4399 $428,234 61
2006 3668 $371,261 62
2005 4024 $317,612 67
2004 3447 $274,421 58
2003 3320 $223,568 66
2002 3136 $195,925 68
2001 2519 $178,413 81

Volume is the total units sold including single family residential and strata properties.
DOM is days on market under the then current listing that the property took to sell.
Excuse that the table may not have posted as I tried for it to.

… And no I am not going to debate it with you… you can come to your own conclusions and hold dear to them, most of you “hoping and wishing and preying that prices will drop but if you wait for that to come true well then you must live with that too”… (sung to the tune of WISHING AND HOPING Burt Bacharach Dionne Warwick).

#68 lonely limey on 10.07.10 at 10:49 am

@ JM in London

I find you have some good observations to relate from your position as a Mortgage Broker. Try not to get distracted by locking horns with those posters which wind you up so much. Leave it be and move on, it’s not worth your energy.

Keep us updated from the trenches.

#69 Patz on 10.07.10 at 10:52 am

If past is prologue, a boatload of manure may just be docking. Check out this article and the accompanying chart from that “doomer” rag the WSJ. The writer has superimposed the chart from 1937’s big market crash over the current market trajectory. The match is eerily precise.
http://tiny.cc/ykig5

So does that mean we must follow the same path? Is it just a spooky coincidence? Who knows. I suspect they match because the underlying dynamics are so close but it could be just a coincidence.

I don’t follow the market but I think I read somewhere recently that market volume is about 50% of normal which would mean very few players are controlling the play. Maybe somebody who does follow it could comment?

#70 Medvedev on 10.07.10 at 10:54 am

One thing that puzzles many people is the fact that all the conditions for inflation seem to be there. They are printing a lot of dollars, but inflation doesn’t seem to be taking off, though gold and silver are acting as though it is. But gold and silver are right, inflation is taking off.

First, let me define inflation. To the economist, inflation is not rising prices any more than wet sidewalks are rainstorms. Inflation is an increase in the supply of money. It should really be called dilution because it dilutes the value of existing dollars.

In fact, a more proper term would be “monetary inflation.” Monetary inflation is currently raging as the Federal Reserve is printing more and more money, and gold and silver are responding.

Price inflation is another matter indeed. Price inflation is the end result and trails monetary inflation. Monetary inflation is now rampant. Gold and silver, being smarter than you and me, are reflecting that by the increase in price and the big rallies we are seeing now. So inflation is here.

But what about price inflation? Price inflation has also already started. Look at the increase in commodity prices. How much longer do you think it will be before these higher wholesale costs filter down to the retail level?

For example, Agricultural Raw Materials are up 24%, The Mineral Index is up 25%, The Metals Price Index is up 26%, Coffee is up 45%, Barley is up 32%, Oranges are up 35%, Beef is up 23%, Pork is up 68%, Salmon is up 30%, Sugar is up 24%, Wool is up 30%, Cotton is up 40%, Palm oil is up 26%, Hides is up 25%, Rubber is up 62%, Iron Ore up 103%. Those are prices at the wholesale level.

As the price increases continue up the chain of production, is there any chance they will not cause price inflation? Do you think there is any chance at all that producers and retailers will not pass these costs onto consumers?

Let’s face facts. These cost increases will filter all the way through the system. Soon your paycheck will not stretch nearly as far. Monetary inflation is here. Price inflation is coming. Commodity price inflation is also here.

These are the reasons that gold and silver are soaring at the moment, as the price of gold keeps setting new highs. Silver has experienced extraordinary gains recently. The U.S. mint has raised their absolute pricing above spot on American silver eagles from $1.50 to $2.00.

Invest in inflation, it is the only thing that is going up!

#71 Devil's Advocate on 10.07.10 at 10:55 am

Canadian real estate prices will not drop so fast that they get to where you expect before the US economy begins to breathe healthy again and subsequently lifts our markets too. I think we will see a 10% drop on average, in Kelowna, by this time next year where it will remain until that US economic resurrection begins. But understand “Kelowna is different” as is all of British Columbia The Best Place on Earth and will surely outperform your Eastern markets which will tank abysmally ;-)

#72 Devil's Advocate on 10.07.10 at 11:00 am

Maybe this will be a more legible presentation of that table for you…

YEAR – Volume – Avg Price – DOM
2010 – 2567 – $446,463 – 89
2009 – 2691 – $408,636 – 96
2008 – 2838 – $462,174 – 68
2007 – 4399 – $428,234 – 61
2006 – 3668 – $371,261 – 62
2005 – 4024 – $317,612 – 67
2004 – 3447 – $274,421 – 58
2003 – 3320 – $223,568 – 66
2002 – 3136 – $195,925 – 68
2001 – 2519 – $178,413 – 81

fill your boots, I’ve got to get to work but will read your anticipated comments before bed tonight… ;-)

#73 JM in London on 10.07.10 at 11:23 am

#56 Junius

And not all in the RE & mortgage biz are in the business of deception – too general of a brush on both sides. It will in the long run, prove itself by those who are left standing.

#74 Foggy on 10.07.10 at 11:23 am

Garth is right about home owners not clueing in to a soft/decreasing market. A friend I know lives on a small street in the “beaches” and I always check Guava to see the activity there. Houses for sale on that street were listed and gone in about 2 weeks. Now there are 3 on there unsold for up to 69 days. No price reduction on any of them. Not one cent. Do these homes get more desirable the longer they sit unsold?
Here’s one of them (69 days old) listed as “a renovated masterpiece”. The front porch looks like it belongs in the backyard, or at a cottage.
http://www.mls.ca/propertyDetails.aspx?propertyId=9786400&PidKey=1553327031

#75 Don't Believe The Hype on 10.07.10 at 11:31 am

So you don’t think the economy and by extension the financial markets are being manipulated? Here is an excerpt from a speech on Oct 4 by New York Fed VP Brian Sack:

“Nevertheless, balance sheet policy can still lower longer-term borrowing costs for many households and businesses, and it adds to household wealth by keeping asset prices higher than they otherwise would be. ”

The Fed wants to keep assets prices artificially high. Because if household wealth declines too much, the economy goes further in the crapper because consumer spending is 2/3 of the U.S. GDP figure.

Anyone else not see a HUGE problem with that policy of keeping asset prices artificially inflated?

Link to the full article:
http://www.newyorkfed.org/newsevents/speeches/2010/sac101004.html

#76 dark sad person on 10.07.10 at 11:32 am

#39 Nancy on 10.07.10 at 7:47 am

Check out the webpage of the Economist magazine (www.economist.com). There is an interactive map of the world’s (government) debt. Interesting to see that Canada is in abyssmal shape. This, of course, is on top of the amount of personal debt Canadians have.

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

Yes-The Government debt load is extreme-

Your point at personal debt-is the biggest problem-

Governments can off load their debt onto us-on top of the already negative debt to equity on personal balance sheets-

And yet-the fools are relying on consumers to re-stoke Inflation-

Ain’t happening and ain’t gonna happen–

http://sas-origin.onstreammedia.com/origin/gallupinc/GallupSpaces/Production/Cms/POLL/cahsmz4o7kivr0fd3f0jhq.gif

http://sas-origin.onstreammedia.com/origin/gallupinc/GallupSpaces/Production/Cms/POLL/cahsmz4o7kivr0fd3f0jhq.gif

http://sas-origin.onstreammedia.com/origin/gallupinc/GallupSpaces/Production/Cms/POLL/ktiw7tglmu-rljm7jwqwea.gif

http://sas-origin.onstreammedia.com/origin/gallupinc/GallupSpaces/Production/Cms/POLL/ysoxxq-0hkato8ufkl3c1w.gif

#77 Mister Obvious on 10.07.10 at 11:43 am

#38 luketheduke:

“Right or wrong Garth has no downside…He is selling books ,his public appearances are sold out.”

I’ve been to a Garth appearance. (I found him more entertaining than Bill Cosby although that’s not saying much these days) Anyway, it cost me $0.00 plus bus fare downtown. And neither is Garth a Stephen King, I doubt his book sales amount to much. Get real.

#41 avenerv

“everything doesn’t have an intrinsic value. everything’s price is what the buyer is willing to pay.”

Way to miss the point. If you are stranded in Death Valley, water has great intrinsic value. Gold, for example, none.

#78 Dan on 10.07.10 at 11:52 am

Realtor lexington

Who are you kidding? Sales in Toronto have fallen between 20-30% or 1 and four LESS SALES as the housing market is falling and falling hard. What seems like $20,000 price drop is more like a $100,000 price drop since homes that used to sell for $600K are now going to $500K. The averages do not tell the true story and realtors will not tell the real story in public. All the garbage is sitting and the good houses are now selling for garbage prices. Example a buddy bought a home in 2006 for $650K and put in about 90-$100K. Buddy was able to sell in May(before price drops) for $760K. as you can see they lost or at best made no money. Buddy claims they just broke even but we all know what that means. Realtors are running scared with their propaganda of lies. The fact is the housing crash is here and now and sales prove it along with falling prices.

POP………………………….

Realtor lexington ………You must buy now or else? Yes…..sales are down 30% for the past five months but that is a balanced market. please buy or else.

#79 jess on 10.07.10 at 11:53 am

One would think, that the past years have been filled with bad news. Corruption, wars ,flood, earth quakes, diease outbreaks, etc…notice how the market seems to go up on bad news? Should this not be the other way around?

#80 dark sad person on 10.07.10 at 12:04 pm

#44 fancy_pants on 10.07.10 at 8:38 am

Whoa, that’s a lot of real estate on display there. Not exactly hot properties but hey, the market is cooling off.

Is that M.C. on Wreck Beach? nice haircut but you think he could afford better shades. Where did that beached whale go? If it’s there he’ll surely trip over it.

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

Theme tune-for the guy with the sign-

http://www.youtube.com/watch?v=wS0_h_bYe8I

#81 bullion.bunny on 10.07.10 at 12:04 pm

http://www.businessinsider.com/who-is-bullish-on-gold-right-now-2010-10#john-paulson-1

I need not say more.

#82 Another Dan on 10.07.10 at 12:08 pm

Lexington and others be patient…Rome wasn’t created in a day and didn’t fall in a day. The premise of real estate rising forever is plain delusional to say the least. Think about that for a moment, if wages remain stagnant, unemployment high…who the hell is going to buy your hole of a house for 1 million plus. Denial is one of the stages and we are certainly seeing house price decreases so I would say the decline of the real estate sector is already upon us. IT is happening right NOW, the writing is on the wall, all you have to do is open your eyes. For real estate to keep rising in price would mean that sooner or later you would have to be a billionaire to buy. AGE doesn’t guarantee wisdom and nor does formal education, I see tons of younger and middle aged professionals etc, who have jumped in the market without doing some historical research. People technology has changed the world a fair deal in the last 15 years, but not enough to change the principles of logic. Back in the 80’s I learned what a mortgage was all about when people started to loose their houses and realtors were scrambling to earn a wage. If you fail to understand the simple cycles of nature, human nature and ponzi schemes so be it. My friends and I are eagerly waiting to low ball you. Yes at one point it was smart to get in to the market and sell high, but it is not smart to listen to peer pressure, just because everyone else is doing it…don’t follow the herd based on emotion. I’m just glad my wife didn’t force us to nest in a slave house when we got pregnant…that would have been grounds for divorce in my eyes. But then again my wife is a realist. Do your research..and make sure it is unbiased that is you only defense. Nothing lasts forever.

#83 realpaul on 10.07.10 at 12:56 pm

Why not enjoy the best of both worlds? A gold AK-47 is the perfect solution.

http://www.businessinsider.com/11-ways-to-cash-in-on-gold-2010-9#gold-plated-firearms-11

#84 dark sad person on 10.07.10 at 1:08 pm

#70 Medvedev on 10.07.10 at 10:54 am

One thing that puzzles many people is the fact that all the conditions for inflation seem to be there. They are printing a lot of dollars, but inflation doesn’t seem to be taking off, though gold and silver are acting as though it is. But gold and silver are right, inflation is taking off.

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

Gold and to a certain extent Silver (at this point) do not point to Inflation-
They point to “risk” (credit/default) risk–
They always have–

Gold is passed over in times of Inflation (credit expansion)

!980-2001 were years of Inflation (credit expansion)
Gold underperformed-because rising asset values (houses mainly) have a far greater asset appreciation % then does Gold–

You can clearly see here-during the credit expansion 1980-2001–gold was flat-

http://www.kitco.com/LFgif/au75-pres.gif

It wasn’t until 2001-that Gold took off-
This was no ordinary Inflation-
IMO-This was Hyper-inflation of the “credit money” supply–

http://www.kitco.com/LFgif/au00-pres.gif

Gold does well in only 2 types of monetary occurrences-
Hyper-Inflation and Deflation-
Both are to do with Monetary “risk”
That is what Gold signals-

http://www.kitco.com/LFgif/au00-pres.gif

Prices of commodities have been climbing because of a stimulus fed money goose and with food-the price rise has been world wide crop yields have crashed-because of weather-
Yet-prices are still below a year ago–

http://www.barchart.com/cache/9eddfb9878ee91b5fe00f85f1a95064e.png

Printing is for sure Inflation-but Velocity must be positive-or it is not Inflationary–

http://research.stlouisfed.org/fred2/series/MULT

Japan printed/QE for 20 years and did not halt Deflation
It is not about how much money they print-but more important is-
What money is doing-ie–“circulating”
It didn’t circulate in Japans Deflation and it is not circulating now–eg above in –M1-MULT

http://4.bp.blogspot.com/_nSTO-vZpSgc/SrssXujMYGI/AAAAAAAAG8g/it4rvb6RoSY/s1600-h/japanese+cpi.png

#85 jess on 10.07.10 at 1:09 pm

..i think many americans feel this way

http://www.commondreams.org/views04/0312-08.htm
http://www.thomhartmann.com/

#86 kansai_92 on 10.07.10 at 1:23 pm

Here is the latest gimmick to sell the Olympic Village condos.
http://i54.tinypic.com/a9u4ja.jpg
See the luxury automobile on the crane?
Man, might as well bring out the 30ft inflatable gorilla.

#87 Duke on 10.07.10 at 1:41 pm

Way to miss the point. If you are stranded in Death Valley, water has great intrinsic value. Gold, for example, none.

—————————————————–

Death Valley is full of water. There are springs all over the place. Google: Scotties Castle. My point is that appearances can be deceiving. Gold has a purpose: store of value. I know you can’t eat gold but it has been money for thousands of years. If you see an end to this situation I would love to hear it.

In addition, gold production has been falling since 2001. Peak Gold in 2001! Tell the Indian people that gold has no value. They will fart in your face! I’m not a gold bug. I just know that supply and demand dictates the value of all commodities. Supply is down, demand is up.

#88 junius on 10.07.10 at 1:49 pm

#73 JM in London,

You said,”And not all in the RE & mortgage biz are in the business of deception – too general of a brush on both sides.”

I have made it clear in the past that I don’t paint a broad brush regarding the industry. I have plenty of realtor friends and both my parents were in the industry.

The difference in the Real Estate business can be demonstrated by contrasting it with the Legal Profession.

The Legal Profession is guided by very principled and moral professionals yet there are obviously a number of unethical members in the ranks. The Real Estate profession is guided by an unethical group of pumpers and has a large number of decent people in its ranks.

Remax, CREA, etc. We all know that a fish rots from the head down. This is the difference.

#89 dd on 10.07.10 at 1:54 pm

… Officials outside the Fed have proposed using higher inflation to get real interest rates down. Earlier this year, International Monetary Fund chief economist Olivier Blanchard suggested that nations doubling their inflation target to 4% from 2% wouldn’t be risky …

The 6% preferred shares might not be looking so good now. Time to dump bonds. Or at least get some that track inflation.

http://online.wsj.com/article/SB10001424052748704689804575536391713801732.html?mod=WSJ_hpp_LEFTWhatsNewsCollection

#90 Old_is_Gold on 10.07.10 at 1:54 pm

Competitive Currency Devaluation: The Biggest Loser Wins

One of the better duo of financial analysts in cyberspace; well worth a listen!

#91 Bill ( Peterborough) is a FRAUD on 10.07.10 at 1:56 pm

#62 DSP

Got called out for the fraud (not to mention perv) you are and this is your comeback??

FAIL

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

Here’s what hurts you the most JM–

You got your ass kicked by a dope smoking writer of useless diatribe- Ouch
Remember?
I’m no intellect–but i have a fantastic memory–

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

JM asked legit questions old man?

Balls to shrivelled to answer?

#92 IpadAtStarbux on 10.07.10 at 1:57 pm

#11 Hovering

He also needs a reality check, but hey, who would notice?

#93 TheBigLebowski on 10.07.10 at 2:09 pm

#66 Kevin
Yes , I agree corrections do happen. But why try and trade the biggest bull market in history. Go long and stay long, use dips to add to your position. You would hate to try and trade this market and be caught offside when it really starts to run. Eventually it will be trading $200 swings a day in both directions, not the type of thing you want to try and trade short term. Just go with the trend and accumulate when you can. A good fund for non-professionals to hold is an RBC fund. Along with physical metal, this would be a good start.

http://www.theglobeandmail.com/globe-investor/funds-and-etfs/funds/summary/?id=18215

#94 C on 10.07.10 at 2:18 pm

#74 Foggy

And that house is listed by good ol’ Al Sinclair, except his picture looks about 20 years old? He’s a regular on soon to be “Cold Property”.

#95 Bottoms_Up on 10.07.10 at 2:23 pm

#65 OttawaDaddy on 10.07.10 at 10:27 am
——————————————–
The goverment jobs should/do provide a buffer in Ottawa (does anyone have stats on Washington DC?), but I think an equally important factor is that prices didn’t go up as fast and as high as some of the other Canadian cities.

I think these two factors combined will provide for a smoother behaviour in prices relative to other cities.

Here’s one economist’s take on different scenarios for potential corrections in major markets (see figure 4 in particular):

http://www.policyalternatives.ca/newsroom/updates/canadas-housing-bubble

#96 Apsalar on 10.07.10 at 2:29 pm

From today’s Globe and Mail — looks kinda sceeeeery…

http://www.theglobeandmail.com/news/national/british-columbia/olympic-village-developer-confident-bill-will-be-paid-in-full/article1747968/

#97 Real Estate Realist on 10.07.10 at 2:31 pm

“financial innovation”

Wow, that’s a fabulous way to say it. Way to go IMF.

As for the debt overhang ~ it will be corporate before you know it. The good ‘ol domino theory as you know Garth, except this one just ricochets off of everthing. Actually, it’s happening all over the place already but it takes a lot to get someone’s attention in Canada.

Speaking of that, why have prices not started to retreat in any meaningful way? Well, first of all, in some spots, yes they have. I say the drops are “meaningful”. To the homeowner, to the neighbourhood, and to the Bank (eventually, or in some cases, already). I’ve been watching specific properties in various areas of Toronto for fun and watching the price drops due to no activity. Mostly in the $400K to $900K.

Anyway, why? Because Canadians are not Americans, not by a long shot…. and Americans are not Canadians. Everything is bigger down there ~ the fun, the crime, the desperation, the joy. They reacted sooner to the logic of lowering because they are not like us. It will take us WAY longer than them to swallow reality pills. Having said that, it will still happen, thank God. Why prolong the inevitable? This horror show has to be righted so future generations have a chance.

p.s. On another note, I learned of something today that shocked me, and then not really, but the shock should have lingered. I am acquainted with these people and won’t offer advice against this ~ no point, it’s been tried :

Young couple wants to buy $400K house in the city, NOW.
Guy has a bad credit rating (collections agencies, etc) so can’t be involved in purchase, however is working full time.
Girl has a good one and can qualify for $200K mortgage only, also works full time.
Girl calls Daddy to co-own home instead of Guy and be joint Mortgagor with her so she can have her cute little house.
Daddy says “sure”.
Daddy already has a mortgage on a condo downtown. Equity approximately $70K. Wants to sell it right before it renews in May/2011. Figures it will be “no problem”.
Daddy goes to his Bank where current mortgage is held and asks for a “pre approved mortgage” so he can buy the house with this daughter. The daughter who will live there with her boyfriend who will make his share of the mortgage payments without bureau credit for them. What about his other debts you say? Dunno.
Daddy, after meeting with his Bank, and explaining his own income vs. expenses and that he has no cashflow from month to month currently but has an excellent credit rating, is APPROVED for this new endeavor.

Not only did a major Bank give a mortgage to someone who clearly can’t afford the payments (Daddy), in a time of a major bubble, but so a young couple in trouble already can (SHOULD they stay together) amortize their lives away on a monster debt for a 2 (!) bedroom, tiny sugarshack in the burbs. Guy plans to try to rebuild his rating back (naively believes this will happen just because he eventually pays off the other debts, um…nope, takes a wee bit longer than that). After getting his rating back the plan is for him and Girl to refinance and alleviate Daddy of his responsibility. Daddy the boomer with a minimal amount in GIC’s and 3 yrs away from retirement, albeit with a small pension coming. Woohoo. The market should be just peachy when the kids decide to refinance, ya think? Rolling over $400K on a property worth about half of that. Sorry Daddy…. OR…..Guy and Girl split up, Guy has no legal liability to home or mortgage whatsoever, leaves, and Daddy and daughter live happily ever after. No cramping of styles there. She’s in her twenties. OR…. should this scenario happen and they both want out they’re doomed due to a little CRASH coming. Selling won’t be an option, especially on a sugarshack.

Anyway, there’s your morning smile. Banks are sick. Boomers are clueless often. Young people are totally delusional. Oh, and the Guy and Girl? They’re both school teachers.

#98 JM in London on 10.07.10 at 2:34 pm

#88 junius on 10.07.10 at 1:49 pm

I stand corrected – pardon my misunderstanding of your point…

The reasons i was reactionary are likely obvious – but again, this is an apology…

#99 JM in London on 10.07.10 at 2:36 pm

#91 Bill ( Peterborough) is a FRAUD on 10.07.10 at 1:56 pm

Thanks for the support…I think? ;)

#100 Debtfree on 10.07.10 at 2:53 pm

@ who ever it was that asked about ozzie yesterday. He’s alive and well . If there were a yin and yang of re ozzie would be yin and da would be yang. Ozzie used to be on global once a week . Now we get fed sara daniels and it’s all about morgages . When ozzie was on it was all about housing .
http://www2.jurock.com/hotproperty/

@ da I suggest you read the Western Investor oct. addition to see the opposite of kelowna read the # 13 article . If you do read it try not weeping.

#101 dark sad person on 10.07.10 at 2:54 pm

#91 Bill ( Peterborough) is a FRAUD on 10.07.10 at 1:56 pm

JM asked legit questions old man?

Balls to shrivelled to answer?

***************
I suppose G will let little coward weasels post under multiple names-

Try me on subject “little man” and I’ll make a complete fool of you–

Play nice. — Garth

#102 jess on 10.07.10 at 3:20 pm

“the newest (fee) revenue streams jail infrastructure”

My estimate is that 20 to 25 percent of all local incarcerations statewide are for fines and costs, while about 50 percent of arrests are for fines and costs … [until 2000], none of the persons arrested for nonpayment of fines and costs appeared on any court docket. Nor were they ever scheduled to appear at any particular time before any particular judge or magistrate.” Before county jail records were computerized, Dewar said, “the scope of the problem, in terms of both numbers of arrests and days in jail, remained hidden … the county also expanded jail space at a cost of millions, unaware of the fact that it was not for criminals but debtors.”…

Brennan Center for Justice notes:

Many states are imposing new and often onerous “user fees” on individuals with criminal convic­tions. Yet far from being easy money, these fees impose severe – and often hidden – costs on com­munities, taxpayers, and indigent people convicted of crimes. They create new paths to prison for those unable to pay their debts and make it harder to find employment and housing as well to meet child support obligations.

http://www.brennancenter.org/content/resource/criminal_justice_debt_a_barrier_to_reentry#Author

#103 David B on 10.07.10 at 3:20 pm

“Free Lunch”

Yes indeed there was c/w a good cup of coffee with the lunch held here in beautiful Dartmouth NS. The room was packed and the sponsors were the perfect hosts.

As is was a home town kitchen get to-gether atmosphere Garth spoke directly to those in attendance providing a good overview of not only Canada’s economic future but that of the world we live in as he sees it. Politics was set aside when mentioned, of course politics plays vital part in economics but smart investors go with the flow as pointed out by Mr. Turner. The crowd was of course baby boomer (+) and asked some good questions that went past scheduled time and to view not one person left early.

Again thanks to all who were attendence.

#104 dark sad person on 10.07.10 at 3:37 pm

#98 Real Estate Realist on 10.07.10 at 2:31 pm

Having said that, it will still happen, thank God. Why prolong the inevitable? This horror show has to be righted so future generations have a chance.

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

Someone gets it–
We’re all going to end up-where the Market puts us-which is at much lower valuations then where we are today-
Your point about facing reality now-instead of rolling over the cost of this unrealistic lifestyle-to future generations-is bang on-

I’m almost shocked at the amount of “give a f–k” amongst parents here-
This is troubling-but i suppose indicative of the results of dishonest money (credit) mania in the later stages of an insanity blowoff-especially when you have studied past manias-it fits-
The denial/greed and self centered interests are all part of the cycle-
I really do hope the X/Y’rs–tell all boomers to f–k off-for “allowing” this to happen–

#105 Randman on 10.07.10 at 3:56 pm

Gold rises on fear and fad. This faux justification referencing inflation, money supply and QE is quite amusing. — Garth

Yes Garth you’re right!!

FEAR of inflation
FEAR of QE
FEAR of the Fed!!!

You need a hug, dude. — Garth

#106 JM in London on 10.07.10 at 4:10 pm

#103 DSP

I only post under my original name DSP

#91 Bill ( Peterborough) is a FRAUD on 10.07.10 at 1:56 pm

Thanks for the help but I have this one, really – That’s where the “I think” part came from as this guy often attempts to shift focus.
*******************************************

I stand by my original questions.

You’ve attacked many professionally- not just me-

Now what is it you do?

Your method of “debate” is invalid and use of personal attack distasteful – what I’ve said all along – the way you insult people with a caustic tongue claims by inference you are some sort of superior intellect

Your retort?

I’m not an intellect

Making everything you say suspect.

Why won’t you answer the questions posed?

#107 dark sad person on 10.07.10 at 4:22 pm

#108 JM in London on 10.07.10 at 4:10 pm

Now what is it you do?

Why won’t you answer the questions posed?

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

JM–give that 2nd computer back to your partner whatever his/her name is-

I didn’t answer the question-because i didn’t think it was important-

But-since that’s the only angle you are running here-
I’ll tell you–then “maybe” you can comeback with something a “bit” more intelligent-

I am an Oilfield consultant-
I get paid in the 6 figures/year–4 figures/day
I get paid for what i know-
I sit beside 3 screens most days and i talk-to pain in the ass people like you-cuz-
I get bored-
Simple enough for you?

#108 Tennie on 10.07.10 at 4:33 pm

#11 Hovering

$100K over asking?
you need a proof reader garth

It’s true, out here in Vancouver there have been a couple of properties in our desired neighborhood go for $100K over asking.

#109 Live within your means on 10.07.10 at 4:44 pm

#105 David B on 10.07.10 at 3:20 pm
“Free Lunch”

Yes indeed there was c/w a good cup of coffee with the lunch held here in beautiful Dartmouth NS. The room was packed and the sponsors were the perfect hosts.

As is was a home town kitchen get to-gether atmosphere Garth spoke directly to those in attendance providing a good overview of not only Canada’s economic future but that of the world we live in as he sees it. Politics was set aside when mentioned, of course politics plays vital part in economics but smart investors go with the flow as pointed out by Mr. Turner. The crowd was of course baby boomer (+) and asked some good questions that went past scheduled time and to view not one person left early.

Again thanks to all who were attendence.
………………

David – I and my husband attended as well. Excellent presentation and some good questions and responses from Garth. And the sandwiches were very good as well, tho we were totally prepared to pay for lunch. We sat with a couple, both retired & with pensions who had invested with CIBC Growth Fund, IIRC, and lost lots of their money during the down turn and then cashed in. She follows Garth’s blog.

We spoke to Garth after his presentation and hubby said he was very impressed with his investment strategy.

#110 Gord In Vancouver on 10.07.10 at 4:52 pm

The Pathetic West Coast Pumpathon Continues….

What makes Vancouver a great place to live?

Read more: http://www.vancouversun.com/business/What+makes+Vancouver+great+place+live/3639520/story.html#ixzz11iBP7IYc

http://www.vancouversun.com/business/What+makes+Vancouver+great+place+live/3639520/story.html

#111 jess on 10.07.10 at 4:55 pm

hum..just as my neighbour was telling me
faked credentials that led to doctors,pilots,

Rampant Fraud Threat to China’s Brisk Ascent
By ANDREW JACOBS
Published: October 6, 2010
.British journal that specializes in crystal formations announced that it was withdrawing more than 70 papers by Chinese authors whose research was of questionable originality or rigor.

In an editorial published earlier this year, The Lancet, the British medical journal, warned that faked or plagiarized research posed a threat to President Hu Jintao’s vow to make China a “research superpower” by 2020. ..

http://www.nytimes.com/2010/10/07/world/asia/07fraud.html?pagewanted=1&ref=general&src=me

#112 dark sad person on 10.07.10 at 4:59 pm

#107 Randman on 10.07.10 at 3:56 pm

FEAR of inflation
FEAR of QE
FEAR of the Fed!!!

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

Yes-the first 2 are definitely feeding into Gold right now-which is-imo-bearish for Gold-
These are the weak hands-
They’re in the right market-but for the wrong reasons-

We have to look at the credit market destruction (Deflation) (marked to market) and weigh it against the tiny amount they’re printing “in comparison”

If we do have a double dip-money will run to “perceived”safety and a lot of that will go into USD/CHF/ –which will likely strengthen the $

I “suspect” that if panic stock selling occurs-
Gold Miners will likely sell off as well-because-90% of investors have no clue under pressure-what is good and what is bad-so they scream sell everything-
Miner capitulation-could pull Gold down fairly hard (at first)

If history is any measure-I think Gold will act like this “again” in a Deflationary environment-

http://2.bp.blogspot.com/_nSTO-vZpSgc/RbmMtplgCjI/AAAAAAAAAPk/NtN5JDlwHio/s1600-h/homestake.png

You can see-in 1929-the price fell for about 3 months from about $90–$70
Then it stayed in the low range and tracked sideways for almost a year (weak bull move) then-she headed to the sun-
I think this has a good chance of playing out in a similar pattern–this time as well–

Number 3–Yes-
That reason alone is more then enough reason to hold Gold-

#113 VICTORIA TEA PARTY on 10.07.10 at 5:10 pm

# 70 Medvedev

Inflation’s the thing isn’t it? Excellent job, Medvedev. Inflation eats into your soul, guts your good intentions, makes you feel like hell and, destroys your dreams.

The antidote to inflation is higher interest rates.
Just great!

And some of you still believe the Remax one-trick pony squabbies? Shame on you, Property virgins and virginettes.

Medvedev wrote something quite profound and I’m being totally serious. Check out his post that lists the commodities streaming through the long inflation pipeline and ask the next question: where did THAT come from?

I’ll tell you. The Sick Man of the World, the good ol’ USA.

The US dollar’s the world’s RESERVE CURRENCY and its handlers are using that big stick to punish China’s amazing financial success, because it’s frightened of that country’s future world roles.

In the process it’s sideswiping all other economies with the potential for inflation and an international currency war. And, finally, they’re looking for a way to pay back their considerable loans with China using worthless inflated bucks. Great bunch, what?

This process started a few years back with US demands that China raise the value of its currency, to even things out in goods-pricing, as if that would cure the US ecomomic malaise. And now it has the rest of the G-20 at today’s IMF meeting (China excepted, of course) onside.

Theose US allies are all piling on China, because they ALSO have put themselves into their OWN debt-holes, and are also looking for someone else to blame!

But the good old Yankee Trader mentality will come back to bite the Geithners and the Bernankes hard and where it hurts most, their wallets.

In debasing the world’s reseve currency, the US breaks faith with the rest of the world.

Other countries may get resentful, seeing their citiznes suffer from higher interest rates, inflation and unemployment. They may also decide to join the currency race to the bottom.

This finely chiselled plan by the US “elites” could backfire, based on previous “successes” like their actions that led to Lehman’s 2008 breakup, their responses to the sub-prime real estate crisis, and the current foreclosure documentation scandal that will make the last five years, of the US real estate collapse, look picayune indeed.

These masters of the universe were so sure about their actions prior to the 2008 meltdown, remember?

We await with interest.

#114 antonio on 10.07.10 at 5:20 pm

In a funk today. An entry level house in the beaches (toronto) just went for 611k versus asking price of 589k with multiple offers. I am starting to feel that the increasing average price despite declinibg sales may not be a statistical distortion.

#115 Ron S on 10.07.10 at 5:21 pm

Why do Realtor not attack the logic?

It seems Sara MacLennan and Sheldon Johnston (http://www.edmontonrealestateblog.com/) blocked me when I copied given links to their site.

http://www.youtube.com/watch?v=scvuZgyNU10&feature=player_embedded

http://financialinsights.wordpress.com/2010/10/05/primer-6-the-great-connection/

#116 JM in London on 10.07.10 at 5:27 pm

#68 lonely limey on 10.07.10 at 10:49 am

Thank you – I do try and keep what’s happening front and centre for everyone. I know there are those out there who do appreciate the reports and I’ll always oblige – The picture that develops here has helped in so many ways (both personal and professional) and I highly value the discourse.

I’m not that wound up, I promise – a push back against the doomers is required at least as much as it is against the pumpers don’t you think? If I can make one person question what they claim as truth (truly anti-semitisum cloaked in conspiracy) then it’s something.

And I do realize the futility. The supreme irony is they’re every bit as close minded as they claim to be open minded…

You’re a landed Brit I take by the name? Two of my best mates originate from the UK.

Thanks again for the kind words.

#117 Sherri on 10.07.10 at 5:40 pm

“He might see the beginnings of a very large movement of capital from real assets into financial ones in advance of the inevitable price inflation and asset deflation and in the wake of a record amassing of corporate liquidity. Or maybe he’s just selling stocks. — Garth”

How slippery of you Garth.

#118 dd on 10.07.10 at 6:19 pm

#93 dd

…Gold rises on fear and fad. This faux justification referencing inflation, money supply and QE is quite amusing. — Garth…

Call it what you will. Gold was $35 in 1970. Now it is $1350. This is alllllll based on fear and fad. Whatever.

#119 Nostradamus Le Mad Vlad on 10.07.10 at 6:19 pm


#2 dark sad person on 10.06.10 at 10:01 pm

“US money supply has no impact on Canadian real estate prices. Or American, for that matter. — Garth

“The crux of Bernanke’s and soon to be H-F-C’s main problem-”

See the 10:58 clip. Something is happening, leading to the mid-term — Breaking Down Could be the reason why gold / silver have been going up.

29 acre property sold for $10 mln. (front page of the KDC) on the lakefront. Nice, but we’re too old for the upkeep and maintenance!

#12 LHHW on 10.06.10 at 10:54 pm — “Great point about homes having no intrinsic or innate value.”

Unfortunately, realism takes a back seat to emotions. Good post.

#30 Onemorething — “That end result is that flooding the market with money, cheap credit opening the door for loose regulation will simply turn to revolution.”

QE2 and possibly QE3 will certainly turn the screws much tighter on those in debt, while devaluing currencies all across the board.

This world is in a mess but it is only the tip of the iceberg.

#69 Patz — “If past is prologue, a boatload of manure may just be docking.”

Nicely stated! Check the above link.

#75 Don’t Believe The Hype — “The Fed wants to keep assets prices artificially high.”

A link posted recently said the US Fed and WH were going to keep the DOW, S&P and others high until whenever TPTB were ready, then pull the plug. Before or after the mid-terms?

#98 Real Estate Realist — “Why prolong the inevitable?”

All in good, but short time.

New language discovered?

Yup, something’s cooking.

Mind Readers I certainly don’t have anything useful to think about!

Can anyone describe GS or JPM? Not fiscally, but criminally.

#120 S.B. on 10.07.10 at 6:24 pm

Van Sun says Wall planning condos near 2010 Village

The Vancouver Sun reports in its Thursday edition that Wall Financial Corp. is planning to build the $280-million Wall Centre False Creek complex of 560 condo units in four towers on First Avenue. The Sun’s lobby correspondent, Malcolm Parry, writes the first two, with 300 units, should be occupied by summer, 2012. Mr. Parry says such speediness is why buyers are hurrying to get their money down. Eighty-six invitees did so over the weekend, 27 more on Monday and 22 Tuesday. Many had signed before. That was in 2008, when 140 opted into what was then a 400-unit development. Sensing market uncertainty, though, Peter Wall returned their deposits and had architect Stu Lyons design smaller units that now average $60,000 below 2008 prices. Realtor previews for the project begin Oct. 20. If sales hit 250 by Nov. 30, Wall will release the next two towers. If they do not, “Peter will fire me,” said Bob Rennie, whose Rennie Marketing Systems sells the units. Rennie’s firm also handles the Millennium Water complex on the other side of First Avenue. Regarding that troubled former Olympic Athletes Village, where units are moving at a snail’s pace, Mayor Gregor Robertson said he should be “chief salesman” himself.

� 2010 Canjex Publishing Ltd.

#121 Maxamillion on 10.07.10 at 6:30 pm

#98 Real Estate Realist

A Metlife report finds that baby boomers are paying for their kids and grandkids education, add the purchase of a house to the mix and you’re screwed.

http://www.jugglingdynamite.com/blog/_archives/2010/10/6/4648850.html

#122 45north on 10.07.10 at 6:47 pm

Real Estate Realist: Young couple wants to buy $400K house in the city. Guy has a bad credit rating however is working full time. Girl calls Daddy to co-own home instead of Guy Daddy says “sure”.

I’m guessing TO?

by the way: Wall Street (the movie) is excellent, great script, great acting. I think they are talking about Bear Stearns and Lehman brothers. Very relevant to the housing crisis

http://www.imdb.com/title/tt1027718/

#123 OttawaMike on 10.07.10 at 6:54 pm

#96 Bottoms_Up on 10.07.10 at 2:23 pm & Ottawa daddy
I provided some data and links from DC about a month ago on here and they certainly have seen some big drops.
Mainly in the outlying ‘burbs.

In fact it is the first time Washington has ever had those type of foreclosures.
I vacationed there in Aug. and found the core to be undergoing large scale gentrification. I believe those neighbourhoods fared well through the bust and I suspect inside the Greenbelt in Ottawa will be the safest from decaying values.

#124 bullion.bunny on 10.07.10 at 6:56 pm

Need I say more…………

There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved.
– Ludwig von Mises

#125 Jeff Smith on 10.07.10 at 6:57 pm

>#43 Moneta on 10.07.10 at 8:28 am
>These boomers don’t have enough to retire but they
>keep on buying these kids cars and give them money for
>cash downs.

Well canada is a socialist country, she takes care of her people. There is always the government to take care of you. There is OHIP, CMHC, CPP etc. So actually you are ok as long as there are others people working and paying tax. That’s why we let in a large number of immigrants a year. Hey tax revenues.

#126 SK on 10.07.10 at 7:00 pm

Just curious Garth – when you started out writing this blog, did you think this is what your readership would turn into? I would wager to say the answer is a resounding “no”. You have somehow attracted the doomsday, end-of-the-world, bottom-feeder crowd to your site; not the types of people who will buy your books. An interesting strategy.

As a long-time real estate investor, I do feel it is important to gather opinions from both sides of the coin and thus I do feel your blog adds value from time to time (sensationalism aside), so thank you.

#127 Jeff Smith on 10.07.10 at 7:03 pm

>#54 lexington on 10.07.10 at 9:23 am
>At this point I don’t believe it is possible for housing
>prices to ever decline in Canada. Anyone who has sat on
>the sidelines for the past few years waiting for
>Canada’s “housing bubble” to burst has been kicking
>themselves.
>Will Garth and those who follow his advice end up being
>the greatest fools of all? So far it looks that way.

Still I rather be a fool without that kind of debt for several generations.

#128 Devore on 10.07.10 at 7:09 pm

Fresh off the presses in the US, from Dr HousingBubble, fun with numbers:

29 % of all mortgage debt is underwater, representing 22% of all mortgages. 10% of those are underwater 25% or more. I don’t think a 25% rally in the housing market is imminent. These guys are getting foreclosed, or will simply stop paying their mortgage.

#129 Nostradamus Le Mad Vlad on 10.07.10 at 7:18 pm


Baby Boomers 4:50 clip. John Stossel nails it!

Dollar Decline Manipulation? “As reported on 4 October, 2010 at:

http://www.theglobeandmail.com/report-on-business/economy/timing-is-big-question-for-more-us-stimulus/article1740337/?cmpid=rss1

“Quantitative easing does have a potential downside: taken to excess, it can cause inflation through the creation of all that new money. That’s why central bankers only use it during difficult times, such as the Fed did in the financial turmoil following the Lehman Brothers collapse.”

Currencies “With everybody hoarding their chips, economies from the U.S. to Europe and Asia effectively shut down.”

Obama’s economics. Not the greatest.

Good and bad debt and 7:33 clip Using money as a WMD.

5:27 clip Chinese UFO. On the other hand:

“This video suggests a hypersonic wave rider type craft, with indications of stage separation. At one point the exhaust changes from a parabolic shape to a true cone, which tells us the object has climbed above the atmosphere. If China or Russia have succeeded where the US failed, then WW3 is already over and we did not win it.

“Alternatively, we may be seeing what was built with that $3 trillion that went missing from the Pentagon budget in 2001 and the US is flying it over Russia and China to send a message to them.” wrh.com.

The ‘Burbs “Welcome to Ameristan, brought to you courtesy of the last two administrations!” wrh.com.

Economies are not the only things that are cratering.

GW hoax “This confirms that the Medieval Warm Period was warmer than today. Obviously the world did not end.” wrh.com.

Booga Booga! The US has issued terror alerts about Europe, who in turn have shunned them. In-house fighting?

#130 Basil Fawlty on 10.07.10 at 7:44 pm

Gold rises on fear and fad. This faux justification referencing inflation, money supply and QE is quite amusing. — Garth
Tell that to the rich boys who are purchasing by the tonne.
Presently, at about $46M per tonne, they know the world currencies are in a race to the bottom. A 400% increase in ten years is more then a “fad” or “fetish”, in my humble opinion.

#131 T.O. Bubble Boy on 10.07.10 at 7:45 pm

Garth – one of your favourites strategies (RRSP Mortgage) has gone mainstream!

CTV News actually highlighted this the other day… I wonder if they scan greaterfool.ca for article ideas?

http://www.ctv.ca/generic/generated/static/business/article1745125.html

#132 Devore on 10.07.10 at 7:48 pm

The people of Iceland show the world how democracy works, putting people in jail who were asleep at the wheel and steered their country into a disaster.

And should there be any doubt about the direction of central banks and governments, savers are told to stop moaning (about zero rates) and start spending. “It may make sense for them to eat into their capital a bit.” Oh yeah, these guys are running the world financial systems.

Back in the US, the FED has now surpassed Japan as the second highest holder of Treasuries this summer, and is well on the way (at a rate of $4B/week) to surpassing China as #1 sometime in November. Monetization, it’s what’s for dinner.

And this week marks 22 weeks of consecutive withdraws from equity mutual funds. What are they buying? I don’t think it’s ETFs and preferreds.

#133 S.B. on 10.07.10 at 8:09 pm

Things that make ya go hmm: :o

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aSlK0UOI9gzY

Oct. 8 (Bloomberg) — Public debt in some of the world’s largest economies is on an “explosive path” as aging populations and the cost of fighting the financial crisis erode government finances, Standard & Poor’s said.

Based on current fiscal policies, median net debt as a percentage of gross domestic product in 49 economies accounting for more than two-thirds of the world’s population will rise to 245 percent by 2050, the ratings company said in an e-mailed report in London today. That compares with a 2007 forecast of 148 percent.

#134 Devore on 10.07.10 at 8:16 pm

#116 VICTORIA TEA PARTY

Medvedev wrote something quite profound and I’m being totally serious. Check out his post that lists the commodities streaming through the long inflation pipeline and ask the next question: where did THAT come from?

No no no, that’s not inflation, all those are just due to supply shortages and production issues. Deflation is just around the corner.

/facepalm (insert picture of Picard executing a facepalm)

There’s plenty of credit and liquidity for those blessed enough to get it. Where is it going? We can see where all that money is going, and that’s certainly not into my pocket.

#135 dark sad person on 10.07.10 at 8:22 pm

#128 bullion.bunny on 10.07.10 at 6:56 pm

Need I say more…………

There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved.
– Ludwig von Mises

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

Ludwig Who?

Much too doom and gloom sounding-

So far-what he says has come to pass–but–
He can’t be right-in the long haul-

Could he?

http://www.youtube.com/watch?v=bgnCB7oni8o

#136 Brian1 on 10.07.10 at 8:29 pm

Two par’sticular gold bugs did not show up to work today;
circumstantial evidence.
One showed up more than usual because he’s scared; circumstantial evidence.
All wiping their computers hard drives clean;
circumstantial evidence.

#137 Brian1 on 10.07.10 at 8:30 pm

Two particular goldbugs(correction).

#138 Brian1 on 10.07.10 at 8:34 pm

Lou Grasso of Millennium group says gold will fall substantially.

#139 Brian1 on 10.07.10 at 8:38 pm

Drove up Islington and saw many election signs as well as new for sale signs since last week. It seems that people would rather listen to Flagherty than Garth. Dummies.

#140 S.B. on 10.07.10 at 8:45 pm

False Creek area…over $1000/sq foot?

Askig 589k for a 585sq ft apartment err I mean condo:

http://www.realtor.ca/propertyDetails.aspx?propertyId=9872267&PidKey=1021421708

#141 Tom on 10.07.10 at 8:52 pm

Buyers Trying to Back out of Olympic Village condos
http://www.vancouversun.com/business/Olympic+village+buyers+trying+back/3614575/story.html

#142 tjmikey on 10.07.10 at 8:58 pm

Re: Oilsands expansion

We are turning in SUCH whores…..seriously.

What won’t the links to oil do for a buck?

#143 Brian1 on 10.07.10 at 9:10 pm

Someone has three computers. Which one has the goodies?

#144 Shawn Allen's mom on 10.07.10 at 9:18 pm

#109 dark sad person

since you’re a big shot in the oil sector, what is your prognosis on oil depletion and peak oil?

enough about that yellow rock, lets talk about something more valuable, black liquid gold.

#145 Timing is Everything on 10.07.10 at 9:29 pm

#136 Devore – “The people of Iceland show the world how democracy works, putting people in jail who were asleep at the wheel and steered their country into a disaster.”

Well, the population of Iceland is about 315,000.
Not really a country per se. Smaller than Greater Victoria, BC.
Vancouver Island has a population of 750,000.

So in the big scheme…Who gives a rat’s about Iceland?
What are they going to show the world? How to get crushed…Now they they can go back to fishing…if there are any left. What a scam of a ‘country’.

“Thousands of Icelanders have moved from the country after the collapse and about half of those moved to Norway. In 2005, 293 people moved from Iceland to Norway, while in 2009 this figure was 1,625 Icelanders to the same country.” (wiki)

“…historically its economy depended heavily on the fishing, which still provides 40% of export earnings…”

#146 Randman on 10.07.10 at 9:44 pm

Two par’sticular gold bugs did not show up to work today;
circumstantial evidence.
One showed up more than usual because he’s scared; circumstantial evidence.
All wiping their computers hard drives clean;
circumstantial evidence.

What kind of lame comment is that?
Some reference to the PM correction today?
Shows how limited your knowledge is of markets

#147 George on 10.07.10 at 10:02 pm

My uncle finally sold his home in a selling war? Sellings wars coming to Toronto? Uncle and a few other sellers in the area had to out lower their home price inorder to sell. The buyers demanded a lower selling price or else they would buy the other house just down the street. Uncle claims the realtor told them to lower or else the buyer would go down the street. Lucky for him he out lowered his home and sold it. This housing crash is getting interesting. I heard about it last month from a co-worker but never thought much about it. These selling wars must be happening all over the GTA. I guess realtors don’t want you to know about it.

#148 dark sad person on 10.07.10 at 10:13 pm

#123 Nostradamus Le Mad Vlad on 10.07.10 at 6:19 pm

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

I think he’s mostly correct for the price rise reasons as of late–
I disagree-long term on Asia/China/Brazil decoupling from this and expanding farther–
China is completely overheated from massive Inflation expansion since 07-
As soon as the US tipped over-China gunned their economy with Stimulus-
They did it different then the us–
They give the Banks Trillions of Yaun and “made” them lend and they did and still are-although now-they are trying to cool it some-
This has been one of the most influential factors in driving up Commodity prices-

“China reported a surprise surge in imports during August, leading to a fall in its trade surplus to $20bn (£13bn).
(link below)
They have brand new Ghost City’s and their factory’s went into high gear and have over produced almost everything and now-their largest costumers–us–
are pulling in our horns and not buying-so even though they are still in Inflation and producing-inventory buildups are going to be their undoing and “if’ that happens-Brazil et al will suffer a collapse in exports–imo–
**************
Chinese steel exports fell 38% versus the previous month, as widely anticipated, after a 9% tax credit from Beijing for exporters was allowed to expire.

Imports of iron ore – processed by China into exportable steel – also fell 13% from July for the same reason.

Chinese shares fell back on the latest trade figures, following signs that net exports – a key driver of Chinese growth – may be flagging.

http://www.bbc.co.uk/news/business-11256738

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

That is an extreme m/m drop in steel-a leading indicator of Industrial growth-
They might gun it again-but dead consumers on this side of the Planet-have ate their lunch–imo–

#149 JM in London on 10.08.10 at 9:23 am

sorry Garth that should have been on the next page – Cut N pasted to the wrong page – re-posting in the proper local if you’ll oblige?