Hip

Gather round, rug rats. Got a story.

Long ago at the end of a weird time when people worshipped junk bonds, Reganomics, Debbie Harry (before she got gross) and believed greed was good, the real estate market took a dump. After swelling like a gland on a date, housing soared in price until it was unaffordable, then became hugely unloved.

Leading the collapse in many places, godless Toronto being one of them, were condos. The reasons were simple: Too damn many had been built. Too many property virgins bought at stupid prices. And too many investors thought they’d buy and flip. It was wicked ugly.

Two years earlier, being a prescient weasel, I’d sold off my real estate holdings, including a commercial building on which I took back a honking big mortgage at an obscene rate of interest. When the bubble burst, the poor guy I’d sold to witnessed the recession sweep away his tenants, and one day told me he could no longer afford the payments.

So we swapped debt for equity. I tore up the $500,000 mortgage and he gave me the deeds to two downtown waterfront condos he’d recently bought for $300,000 each. Of course, now they were now worth $200,000, which didn’t matter much because they were also unsalable. Thousands of condos suddenly flooded the market, with few buyers. In fact I had to wait eight years to sell and retrieve my money. The units did not achieve the $300,000 level for another seven years after that.

Worse, they were in negative cash flow for all the time I held them. Condo fees and taxes alone (there was no financing in place) overwhelmed the market rent – because so many other investors were just like me. Rents plunged as reluctant landlords scrambled to eke out whatever cash flow they could get.

Now this was 20 years ago, when current condo-buyers were wearing Huggies and drooling on their feet. But Michael Polzler was around. In fact, about the time you could buy a Toronto condo with an afternoon delight and some Leafs tickets, he was heading up franchise operations for Re/Max.

I thought of Mike and the Nineties condo bust today when I heard his company had ejected a new media release, this one pumping condominiums as the “hot sector” in the Canadian real estate market. If there’s one thing Re/Max does, it’s pump. And pump. And pump.

The news was an increase in condo sales, year-over-year in Ontario (as opposed to Calgary or Kelowna) and a starry future to come. (Let’s ignore the inconvenient fact sales are down 18% in the last three months.) Said Polzler (whose dad, Frank, founded Re/Max Canada): “As one of few affordable housing options available to first-time buyers, the concept is poised for dramatic growth in years to come”.

“The lifestyle has also gained a foothold with younger, hipper audiences as the definition of home ownership evolves with the changing demographic,” he added. “Dreams of the small home with a white picket fence are being replaced by the funky loft apartment in proximity to shops, restaurants and entertainment.”

Well, some things never change. It was the twenty-something demographic, all hip and urban and funky, that drove the condo craze two decades ago, aided and abetted by the same investors and offshore money that Re/Max now claims will drive this thing indefinitely. And it’ll end the same way.

Take a brief look south for more recent evidence of what happens to condos when real estate staggers. In the US housing disaster, a large number of condo owners are being wiped out – their equity erased, their debts remaining and their units illiquid.

For example, in hip and urban Boston, the condo collapse is being called a major drag on what’s left of the housing market. This paragraph from a weekend New York Times article sums it up neatly:

Boston real-estate agent Randy Wilburn says it’s a “major, major issue. Many condo owners have seen the floor fall out from under them” in neighborhoods such as Jamaica Plain, Mattapan and Dorchester. He says one condo owner paid $240,000 in 2006 or 2007 for a three-bedroom unit. “Now the asking price is down to $125,000 and I am not getting any calls,” he said. Mr. Wilburn says the condo attracted buyer interest at the price of $70,000 but the bank would not agree to a short-sale at that price.

In fact, condo prices in the States have plunged about 25%, peaking at an average $227,000, and troughing at $170,600. That means scads of first-time buyers, low on equity and high on debt, were plunged into negative equity. Welcome to puberty!

Why have condominiums been particularly mauled in this USA crash, as they were in Toronto? Same reasons. Too many built (19,000 new units came on the market in the GTA this year). Too many sold to speculators who were forced to close when they couldn’t flip. Too many virgin buyers with no money and mucho hormones.

And, yeah, way too much Re/Max.

168 comments ↓

#1 Peter Pan on 11.01.10 at 8:39 pm

What’s especially surprising is how the newspapers slavishly publish each press release from CREA, Royal Lepage, Re/Max, et al. almost verbatim.

Is it journalistic laziness, pressure from the Sales Department or lack of critical thinking? And the newspapers wonder why no one bother buying their bird cage liners anymore?

#2 T.O. Bubble Boy on 11.01.10 at 9:03 pm

Garth — I see you avoided the debate on RE/Max claiming offshore investors are the ones buying all of those new condos in downtown Toronto:

“End-users account for approximately 90 per cent of existing sales in the downtown core, while Asian and Middle Eastern investors are driving
demand for newer product
.”

Besides that tidbit, I found it surprising that Burlington condos apparently target the same price point ($300k) as downtown Toronto condos… apparently it costs the same to be on the GO Train for a hour-long ride to work as it would to walk 10 minutes to work.

On a completely unrelated note: I’d be interested if someone can explain this to me: if 1989 condos were targeted at “young, hip, twenty-somethings”, why do so many of the condos from that era have solariums???

I’ve always associated the solarium concept with retiree-focused condos… a sunny room to keep plants or read the paper.

#3 Ayn Rand on 11.01.10 at 9:11 pm

Back in 1990, I know several people who bought small Toronto condos for $140K and sold for $110K 2-3 years later. Ouch. Some moved up to Willowdale or North York new builds ($300K) that gained in value, eventually, but taking a $30K bath, paying RE fees, etc hurts like hell at the time.

Painful days for many. And hard to justify selling at a loss after paying a decent downpayment.

However, my peers were hardy. Not too many relationship break ups due to financial stress……

At 47 years old, I saw one pain RE collapse so I don’t dare for a second underestimate another one coming.

#4 TaxHaven on 11.01.10 at 9:14 pm

“As one of few affordable housing options available to first-time buyers, the concept is poised for dramatic growth in years to come”.

The saddest and most tragic interpretation of this statement is that cheap mortgage money, having driven the prices of real houses through the roof, has now limited most prospective buyers to boxes in the sky.

BTW, despite our offer of unencumbered cash, we failed to get the heritage house we were after and were beaten out by a day-earlier offer who got a CHEAP MORTGAGE.

Thank you, central bankers….$#%@[email protected]

#5 Nibs on 11.01.10 at 9:18 pm

From yesterdays comment section

#145 Right all the time

“Post-Olympic crash? Nope…

Post HST crash? Didn’t make a dent in the market…

New April mortgage rules designed to target the bubble markets in TO and Vancouver? Zero effect in Vancouver…

Rising interest rates? Many banks have reduced their rates on mortgages while BOC rates up have inched up with no effect on the market….

Why not gloat? The bulls have been right for 5 years, as it was only in 2005 when people first started calling Vancouver’s market a bubble according to all the so called economic fundamentals…

The market is still on fire…good thing all those smart bears sold their homes in 2008! Given the revised predictions of a multi year decline, their gains will effectively be eaten up in 7 years of rent…”

Looks like someone called you on that
http://financialinsights.wordpress.com/2010/11/01/dead-wrong/

How you like them apples?

#6 Kitchener1 on 11.01.10 at 9:18 pm

There is a saying in RE circles about condos

They are the last to appreciate in a boom market and the first to decline in a sagging market.

Just wait until those condo fees go up big time in Jan due to HST/hydro increases.

Here it is in a nutshell.

At 150-175K these towers at Yonge/Sheppherd and City place were affordable for the 20 somethings, but at 275-350-… they are not and while living in a 650 sq shoebox might be alright when your 21, its not going to be 25 or 28 and wait for it….30 plus. What happens when you have kids??

The other line that was funny was the part about wanting to live close to resturants/shops/entertainment. LOL

News flash, there wont be any $$ left for that stuff with a huge mortgage. See, when chillin in your parents basment, when rent is free, its affordable, when your paying the bills, welcome to kraft cheese for dinner x 7.

Look at toronto, look at the downtown core, going from 50-60 nightclubs down to mid 30’s now. See all the “for lease” signs on trendy Queen st/college/spadina etc..

Back in “the day” u never saw a for lease sign in these hoods, not anymore.

What scares me the most is that these young kids, cause thats what they are, either cannot fathom math at all or are oblivous to what happens when rates reset higher (they cant stay at emergency levels for ever)

#7 For Sale: Canada on 11.01.10 at 9:18 pm

“Too many built (19,000 new units came on the market in the GTA this year). Too many sold to speculators who were forced to close when they couldn’t flip. Too many virgin buyers with no money and mucho hormones.”

Not to mention, living in a condo may be hip, but overall it sucks. Condo is just another name for apartment, only you are paying the maintenance fees to live in it.

#8 dark sad person on 11.01.10 at 9:21 pm

Gather round, rug rats. Got a story.

Long ago at the end of a weird time when people worshipped junk bonds

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

Guess what?
The past is present-cuz-
Junk bonds are smoken hot again-
**********************

Sales of junk bonds in the U.S. set a record for October as returns topped investment-grade debt and more borrowers were raised than cut. Government-backed mortgage bonds may beat Treasuries by the most in at least 10 years.

U.S. junk bonds have gained 14.4 percent this year, compared with the record 57.5 percent in all of 2009. The 1.96 percent increase this month in the Bank of America Merrill Lynch Global High Yield & Emerging Markets Plus index exceeds gains on the Global Broad Market Corporate Index by 215 basis points, after outperforming by 233 basis points last month.

http://noir.bloomberg.com/apps/news?pid=20602007&sid=a2Y4ofgICDLA

http://3.bp.blogspot.com/_nSTO-vZpSgc/TMvJRSKs7mI/AAAAAAAAJms/CTK0hTiHfSE/s1600/JNK+Weekly.png

#9 Nostradamus Le Mad Vlad on 11.01.10 at 9:27 pm


Hip To Be Square Huey Lewis and The News provide further insight to this blog!
*
We sold our townhouse in June ’88 for a tidy profit, just before TSHTF, then headed off to Limeyland for a while. It was worth all the hassle just to get out of The Big Smoke.

“And too many investors thought they’d buy and flip. It was wicked ugly.” — Are you referring to Enron, Bre-X, World.com or RE? All those sheeple were investors, all got burned. Similar pattern now?

“And it’ll end the same way.” — See above. Same old, same old. Sheeple never bother to check history to learn from it.
*
3:49 clip “China’s emergence as a major economic superpower has raised concern among policymakers in Washington. They fear Beijing’s rise could result in a U.S. fall.” The east is rising, the west sinking.

Volcano One and Volcano Two. Both hemispheres at at the same time?

History Finance “March 9,1933, . . . For on this day by the “Trading with the Enemies Act” and the declaration of Bankruptcy by the Congress for the United States (A CORPORATION), the American Dream turned into a NIGHTMARE.”

Obama needs a FF and fast!

Jolting the economy, as there is nothing left.

Mike the Engineer — The Yemen aircraft scare possibly looks like a FF. “At exactly 7:47 a.m. EST on 10-29-10, two massive electronic trades were placed aka purchases of December gold Comex futures that pushed the price of gold up $9 in less than 50 seconds (1343 to 1352).”

#10 nonplused on 11.01.10 at 9:30 pm

Got to admit that the “presale” racket helped get a lot of projects financed though. One company in town had a group of investors who followed them from project to project, signing up for a presale, waiting until the units were built, and then flipping for a nice profit. They were those dreadful 3 story wood units a block long too.

But what nobody figured about was the other side of all those nice fat profits: risk. The next condo project inevitably was marketed for more than the last, and then in 2008 there was a forest of “for sale” signs along the sidewalk. Happy financing in 2009 meant put the signs away but who knows what spring 2011 will look like.

#11 dd on 11.01.10 at 9:58 pm

Great story. You know real estate. Stick to it.

DD

#12 Behavioral Finance on 11.01.10 at 10:00 pm

Right, but picking neighborhoods such as Jamaica Plain, Mattapan and Dorchester does not really tell the story of Boston market. Those areas fetch those current prices for a reason. Checks out the latest news on those areas. Desirable places such as Back Bay, North Station, South End are still expensive.

Obviously the point related to first-time buyers. Pay more attention. — Garth

#13 AxeHead on 11.01.10 at 10:07 pm

Condo’s aren’t bad if you RENT. You can always leave when you tire of them and you want to buy your own house. Condo’s are very painful if you BUY.

I rent a condo and am very happy. It’s only while I have work in the area. Once that dry’s up, I’m off an gone. Very convenient to be ‘liquid’ in your living accomodations.

There’s a new technical term for a rented condo – ‘apartment.’ — Garth

#14 Danforth on 11.01.10 at 10:07 pm

I heard CBC radio swallow re/max’s report hook-line and sinker earlier today.

Here’s the link to the article. Web and radio sing from the same songsheet.

http://www.cbc.ca/money/story/2010/11/01/condos-sales-ontario.html

I don’t recall any intelligent investigation or fact-checking by the MSM, simply regurgitating a press release.

#15 Utopia on 11.01.10 at 10:08 pm

T.O. Bubble boy said:

“On a completely unrelated note: I’d be interested if someone can explain this to me: if 1989 condos were targeted at “young, hip, twenty-somethings”, why do so many of the condos from that era have solariums”?
————————————————–

What do you think? They were growing indoor pot!!!

#16 Cashman on 11.01.10 at 10:19 pm

I dated a real estate agent once, she bragged that if there was any business she wanted to be in, real estate was it. The sky was the limit, of course this was back in the early 2000’s when real estate was booming and the rates were ultra cheap! Fast forward to 2010 and I wonder if she is still singing the same tune, like that real estate broker on HGTV with the big frizzy hair on Property Shop. All the time I catch glimpses of that show she is so happy and singing ‘we’re in the money’. I wonder when the producers taped the show, because when I talk to RE friends of the family, they are singing ‘I guess that’s why they call them the blues’. Why RE is scarier than Hillary Clinton with her make up on, yikes.

Now about those condo’s in downtown T.O., I think I will take a front seat and watch the fireworks go off while I am sitting there with my popcorn. Oh those foolish purchasers paying obscene amounts of money for shelter. Of course we the taxpayers will have to bail them out too.

#17 Joe Q. on 11.01.10 at 10:19 pm

#12 Behavioral Finance on 11.01.10 at 10:00 pm
“Right, but picking neighborhoods such as Jamaica Plain, Mattapan and Dorchester does not really tell the story of Boston market. Those areas fetch those current prices for a reason.”

Those are the areas that gentrified the fastest. The transitions those neighbourhoods went through in the first few years of the 2000s were remarkable.

“Checks out the latest news on those areas. Desirable places such as Back Bay, North Station, South End are still expensive.”

Those are some of the most desirable neighbourhoods in the eastern USA. It’s like saying “Rosedale, Yorkville and Forest Hill are still expensive”. They are, and relatively speaking, always will be.

#18 Cashman on 11.01.10 at 10:24 pm

I would stay away from apartment style condos. The maintenance fees maybe cheap now, but throw in HST, aging infrastructure and bam, the maintenance fees just skyrocketed.

Condo-townhouses, are better, SFH are best.

#19 Paul on 11.01.10 at 10:25 pm

Here’s one with a solarium in Kelowna.

http://www.kelownanowandwhen.com/2009/07/conservatory.html

#20 Patz on 11.01.10 at 10:33 pm

ReMax = remix

#21 Timing is Everything on 11.01.10 at 10:36 pm

“The board [GVREB] noted there were 12 single family home sales of more than $1 million in October, including a sale in Central Saanich of more than $6 million.
Board president Randi Masters noted the $6-million sale, together with an increase in the value of waterfront sales last month, affected the overall average price.”

I was not aware of that? – Wayne Campbell, ‘Wayne’s World’ ;)

Whatever…Here’s the ‘scoop’…

Read more: http://www.timescolonist.com/business/Victoria+real+estate+sales+increasing+well+last+year+pace/3759484/story.html#ixzz145dLxH4h

#22 islander on 11.01.10 at 10:37 pm

If California legalizes pot tomorrow, say goodbye to a lot of your neighbors!

#23 Popeye the sailor man on 11.01.10 at 10:45 pm

Love This video its short and funny.

Every Breath Bernanke Takes

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

#24 Debtisforever on 11.01.10 at 10:48 pm

I would hate to be an owner of the condo I currently live in. As I lie awake at night contemplating my future, I feel as though I’m living under Niagara Falls as I hear the water flowing through the pipes from upstairs. It’s unreal, it sounds like real waterfalls! Added to that I get to hear people clomping down the stairs all night and especially early in the morning as they go to work to pay off their expensive units. Ya, I’m pretty glad I’m just renting, I would be pretty pissed off if I’d paid the asking price of $445k for a place in this building (which I rent for $1350). You guessed it-wood-frame!

#25 New monetary terms on 11.01.10 at 10:58 pm

The US Feb has released a discussion paper trying to make some sense of economic terms for the average person. Here are some of the metaphors they suggest may help in discussions with laypersons.

QE or Quantitative Easing: Your mistress can’t pay the rent. So loan her some money with no specified terms and then hope she has rising consumer confidence and general joy and starts putting out again.

Stimulus: Give unemployed people 99 weeks of $300/week benefits, which is about what they spend throwing coins at key chains stuck to “stimulating displays”. Count every obtained key chain as GDP.

Shovel Ready Projects: Spending on the town pump is good for the economy. Government workers get to pump first.

TARP: If you’re wife is about to find out, you need to cover it up. Spending a little money here is prudent. But spending as much as it takes is wise.

Bailout: When your friend lends you a little money so you can cover the mortgage, because you are spending too much money on QE, Stimulus, Shovel Ready Projects, or TARP. See above.

Currency Devaluation: Demanding that your mistress accept less money from you than her other clients.

HOPE: Letting the mistress know who pays the bills.

Foreclosure: You’re working on a new mistress now, and the old mistress isn’t going to keep the apartment.

Cash for clunkers: Yes, the mistress can have a car on your tab, but it isn’t going to be a BMW anymore. Think Chevy Cruise.

The economy is underperforming: No, I am not paying more per visit, and the trip to Hawaii is right out.

#26 Brynn on 11.01.10 at 10:59 pm

Just more sensationalistic inflammation Garth.
Please compare apples with oranges
Although a fragile US economy tanked out by a bloated housing market certainly affects us, Do not suggest that our banks are as remiss as the hideous US banking, lending standards. NO matter how many times you click your little ruby slippers together, a US Style housing crash is NEVER going to happen in Canada.

You fail to mention one little detail when you relay stories of the glory days 20 years ago , with tanking Toronto condos etc. Interest rates were 20% !- We now have too much government control, the BOC will never let that happen again.

Mortgage rates of 20% were a decade earlier. Try to be more accurate. — Garth

#27 Popeye the sailor man on 11.01.10 at 11:06 pm

I see Garth as as our Peter Schiff for Canada right now.
Wathc the short video and note how silly the bears sound from 2006 now we know what happened in the USA

12/31/2006 Peter Schiff On FOX Bulls And Bears

http://www.youtube.com/watch?v=60CLQse27p8

#28 Crash Callaway on 11.01.10 at 11:07 pm

So I guess Remax is saying that even though last call was called an hour ago, the bartender will still serve us if we don’t look at our watches.
Willing partners in our own demise, but what a Party!

#29 Timing is Everything on 11.01.10 at 11:16 pm

[Stan] Keyes [president of the Canadian Payday Loan Association] dismissed the argument that payday loan companies drive people into dangerous debt, saying they’re no more responsible for that than are mortgage companies, banks and credit cards.

Regulated loan sharks? 31 per cent lending rate.
That’s gonna leave a mark!

Read more: http://www.cbc.ca/canada/nova-scotia/story/2010/11/01/ns-payday-loans-hearing.html#ixzz145rrpsNJ

#30 Alberta Ed on 11.01.10 at 11:29 pm

I think you meant “If there’s one thing Re/Max does, it’s pimp. And pimp. And pimp.” Of course, CBC regurgitated that press release (they don’t teach economics or business in journalism skule, and woe betide any aspiring CBC reporter who goes against the tide).

#31 TheBestPlaceonEarth on 11.01.10 at 11:29 pm

Condos are a rock solid investment in the BestPlaceonEarth. Houses will continue to skyrocket and a condos are easy pickings for Asian investors who buy a half dozen at a time renting them out long term. Asian buyers in Vancouver are like Warren Buffet, they SEE THE VALUE. They don’t get upset over the day to day chatter of the market and sell into strength. The reason you don’t see Asian investors blowing out their condos is they know we are in the biggest raging bull market of all time and we’re only at the end of the first quarter. How do you sell when prices are absolutely guaranteed to be quardruple what they are now 25 years from now? Most Canadians can’t afford a condo in Vancouver. I wonder why, sleeping that’s why, still sleeping. This will never end period. Everyday it gets better and better.

#32 Kate on 11.01.10 at 11:30 pm

There’s a new technical term for a rented condo – ‘apartment.’ — Garth

Renting a condo from someone and living in the rental apartment building are two different things ;)

#33 Brian1 on 11.01.10 at 11:31 pm

I fail to see much difference between yourself and Harry Dent. He is like you in that he differs from Schiff about gold and he likes high end corporate bonds. He probably doesn’t like preffered shares because he deals with American banks yet he also foretold the housing debacle and was thrown off by Obama’s stimulus. Sure, he made some seemingly wild calls but made corrections along the way, and who knows where the stock markets would have been if not for the subprime crisis. The only difference is that you show more guts by presenting this blog. I guess when you are a typical American all that matters is how much money you can make. He will never get me to pay for his courses.

#34 joseph on 11.01.10 at 11:45 pm

Hard to imagine a time when rent was lower than condo fees and taxes?? I mean really? Not saying Garth is a liar, I wouldn’t know.

But today I think about my condo fees in my units and the taxes. My 2 bedroom condo that rents for $1500 has condo fees of $375 and taxes of about $125 a month. So $500 total. Now rents would have to fall like 75% to be in the situation Garth describes.

#35 Nostradamus Le Mad Vlad on 11.02.10 at 12:03 am


“Welcome to puberty!” — Speaking of puberty . . .

First word in headline describes Obama perfectly, which leads to Homeland Security.

European Bank Run on Dec. 7 have anything to do with the preceding? “. . . the European banking system is in total shambles, and in far worse shape than its American counterpart.”

Savage Austerity coming to US. At least that’s what Citibank says. Can they be trusted?

QE2 No, not the ship. Sumfin’ to do with funny munny.


Schumpeterian Depressions
Me no comprende.

Mfg. not good; comments further down are.

Combination of the two. Politicos are simpletons and taking orders.

#36 yukon don on 11.02.10 at 12:20 am

“As one of few affordable housing options available to first-time buyers, the concept is poised for dramatic growth in years to come”. Funny how 100’s of empty condo’s here in Penticton are still over priced and sitting empty going on two or more years. Buying a condo here would be the kiss of death! Hurry up and lose your down payment!

#37 Marty on 11.02.10 at 12:28 am

A condo probably gives you the least privacy when it comes to real estate.

In Ottawa, we have the Governor Estates luxury condos by Minto. They had planned several phases and never went beyond phase 1 and there are between 3-4 REMAX signs hanging in the wind by the curb side year round.

Who would seriously pass up land, trees, fresh air and fireworks in your own backyard for a concrete slab?

#38 SquareNinja on 11.02.10 at 12:28 am

As one of few affordable housing options available to first-time buyers, the concept is poised for dramatic growth in years to come… The lifestyle has also gained a foothold with younger, hipper audiences as the definition of home ownership evolves with the changing demographic… Dreams of the small home with a white picket fence are being replaced by the funky loft apartment in proximity to shops, restaurants and entertainment.

These statements are absolutely stupifying! Don’t read them, lest ye lose 50 I.Q. points.

So basically, he’s saying that because detached homes are overpriced – that instead of coming down in price – people will just settle for second choice? Yes… that’s exactly what kids do these days… they don’t cry and kick and scream until their helicopter parents give them what they want. Exactly.

Umm, yo buddy, don’t young people always want to live where the scene is… but once a baby or two comes along… they’ll realize that it isn’t their scene anymore?

This article in November’s WIRED sums it up.

#39 Devil's Advocate on 11.02.10 at 12:30 am

The condo market sucks… even in Kelowna. Like no one coulda seen that one coming…

Developers weren’t building for end users they were building for speculative buyers who intended to flip them. Then when the developers saw those easy gains they started prohibiting them. Talk about cutting off your nose to spite your face.

Watch as the pups find reason to debate even these comments of mine. ;-)

#40 realpaul on 11.02.10 at 12:39 am

The US papers had some helpful things to say to add the honest counter point that Canadian media will not….that real estate is expected to fall at least 10% again in 2011 and that “the market will keep falling because ther is no floor established.”……no trough…no soft landing…just free fall down a hole of undetermined depth. I could add that there is a bottom to be found…they have found it in places like Detroit…….its called demolition.

I particularily found the Re Max ad amusing when the pimp said “buyers from Asia and the Middle East were buyers the market and would wait until they found thier price” as if some body was so smart that investing on the way down made more sense than what has been said on this blog. Maybe because they live on the other side of the world it makes people there think about things in the exactly opposite way…like upside down and backwards…good is bad….down is up….. losing money is investing….buying high and selling low ….a sort of Supermans bizarro world of investment logic.

I’m glad we have Re Max to sort out these things for us….that kind of investing makes no sense to me…..it’s clear now…….if it says so in the paper..it must be true.

#41 Devore on 11.02.10 at 12:39 am

#2 T.O. Bubble Boy

Garth — I see you avoided the debate on RE/Max claiming offshore investors are the ones buying all of those new condos in downtown Toronto:

… and? If they are investors, their goal is to make money, not hold an asset bleeding money every month. As distanced from it and dispassionate as they are, they are all the more likely to dump it at first signs of softening.

On a completely unrelated note: I’d be interested if someone can explain this to me: if 1989 condos were targeted at “young, hip, twenty-somethings”, why do so many of the condos from that era have solariums???

The trend continued well into the 90s. Today we have granite, stainless steel and gourmet kitchens. Aren’t those targeted at seasoned cooks hosting elaborate dinner parties, and not 19 year olds nuking KD for breakfast?

#42 smartalox on 11.02.10 at 12:43 am

The cruelest truth about condos is the realization that condos are a COMMODITY product when it comes time to sell. I sold my Vancouver condo months before a vote for an assessment for major ($50k per owner) repairs. After the president sold, and the treasurer sold, there were 3 other units for sale in the building JUST LIKE MINE – same location, same features.

After our initial listing contract expired, we interviewed several other agents. One put it this way: “units like this are a dime a dozen… the only way to differentiate is by cutting your price… In retail, you have a bunch of product that isn’t selling? Cut your price, to clear it out. Get something else and try it again”.

We ended up cutting our price to win the race to the bottom. We lost about $25k after fees and everything, but if we avoided $50k to fix a place that we were about to outgrow anyway? It was a bargain.

Now we rent a large place for less per month than we paid before, and bank the difference.

#43 Devore on 11.02.10 at 12:44 am

But really, back then apartments were dark, boxy affairs, with tiny windows. Bright sunny spaces were for land-hogging, stogy bungalows only, not cheap living digs for hip young people. Just like stainless today to spice up the tiny, closed in, claustrophobic condo kitchens of yesteryear.

#44 Right All The Time on 11.02.10 at 12:45 am

#5 Nob

Looks like someone called you on that

http://financialinsights.wordpress.com/2010/11/01/dead-wrong/

How you like them apples?
***************

The blogger did not call me on anything. He linked me to a site showing rising prices, acknowledged declining sales but rising prices, and then referenced a bunch of 2005 US predictions which are supposed to be parallels to the current situation in Vancouver.

The only problem is those 2005 quotes and parallels were referenced by bears on other more “reputable” blogs (ie. more than two visitors) since 2007.

Three years have come and gone since then, but the US parallels are still thrown out. My original post stills stands – the events that were supposed to trigger a collapse in Vancouver (Olympic hangover, HST, new mortgage rules, rising interest rates) have not even dented the market.

Oh by the way, inventory is shrinking to almost the boom year levels of 8-9k. Inventory is NOT rising with sinking sales and prices.

How do you like them apples?

#45 Noobert on 11.02.10 at 12:50 am

So if theres all these foreign buyers are they too stupid to put their money into US homes which are half the price? I thought being so savvy with their money they would see 2 for price of 1 being a deal! Gee didnt think they’d be as foolish as domestic buyers …

#46 Devore on 11.02.10 at 1:02 am

There’s a new technical term for a rented condo – ‘apartment.’ — Garth

Apart…ments… grampa, you always talk so funny! Tell us more stories about these apartments! haha

Long ago, real estate developers were busy building income properties, aka, apartments. But, as the story has it, and it could be completely wrong, things like draconian rent controls through to the early 80s (and in some places beyond, like in Montreal) drove developers to seek greener pastures, by building luxurious condos, and selling them to owners, who were perfectly willing to shell out big money for the ownership premium. This was also a great opportunity to chuck the maintenance headaches onto stratas and property managers.

Thus begun the age of the shoddily built condo. While 30 and 40 year old apartment buildings are still going strong, 10 and 15 year old condos are old and busted by comparison, coming out of warranty, badly maintained, and suddenly needing a new roof, new exterior cladding, parkade resurfacing, new windows, new elevators, etc. Individual units not faring much better, aged and dated, barely sellable and certainly not commanding prime price.

Leave apartments, owned or rented, to people who know how to build and manage them.

#47 Jody on 11.02.10 at 1:46 am

“young, hip, twenty-somethings”

Whom if married and with a kid on the way would love to live in a detachd house in the burbs. People don’t buy crap because it’s thier first choice, they buy it because it’s what they can afford. How many of these youngins would buy an APARTMENT if they won the lottery? None of them, they’d all buy a McMansion. Me? I’m looking for a farm, I don’t like the Minority Report like society we’re building. Plus I like me guns, city folk don’t. I hope prop 19 passes, but I have my doubts, the powers that be won’t allow it. Way to go Giants! So happy Texas lost, I just about threw-up when I saw that prick Bush throw out the first pitch a few days ago. I wish he’d choke on a Dorito.

#48 Aussie Roy on 11.02.10 at 4:00 am

Well the “Race the stops the nation – Melbourne Cup” was held today so was a meeting by the RBA on interest rates. Its a surprise up by .25%. With the largest housing lender CBA putting another .2% on top due to overseas financing costs. Although banks lend on a variable rate for 30 years most of their funding is done on a rolling 2 year basis. Meaning that all outstanding housing debt needs to be rolled over every 2 years. Outstanding housing debt now sits at 1 Billion AUD – 85% of GDP. Wonder why financing costs for Aussie banks are rising, could it be overseas finance providers are a little concerned about our housing prices?.

Aussie Update

But but but, its different here in Western Australia’
http://www.abc.net.au/news/stories/2010/11/02/3055203.htm?section=business

Will property prices keep moving sideways
http://www.smartcompany.com.au/property/20101102-will-property-prices-keep-moving-sideways-a-smartcompany-q-a.html

Four little piggies ready to squeal over rate rise
http://www.smh.com.au/business/four-little-piggies-ready-to-squeal-over-rate-rise-20101101-17aft.html

#49 Sam on 11.02.10 at 4:04 am

#2 T.O. Bubble Boy on 11.01.10 at 9:03 pm

> Besides that tidbit, I found it surprising that Burlington condos
> apparently target the same price point ($300k) as downtown Toronto
> condos… apparently it costs the same to be on the GO Train for a
> hour-long ride to work as it would to walk 10 minutes to work.

propety tax difference?

> On a completely unrelated note: I’d be interested if someone can
> explain this to me: if 1989 condos were targeted at “young, hip,
> twenty-somethings”, why do so many of the condos from that era have
> solariums???

> I’ve always associated the solarium concept with retiree-focused
> condos… a sunny room to keep plants or read the paper.

marketing to old people involves letting them think they’re young.

#6 Kitchener1 on 11.01.10 at 9:18 pm
> News flash, there wont be any $$ left for that stuff with a huge
> mortgage. See, when chillin in your parents basment, when rent is
> free, its affordable, when your paying the bills, welcome to kraft
> cheese for dinner x 7.

Since the consumerist society took hold people can justify living beyond their means.

here’s one justification:
” I moved close to work now I don’t have a $35000 car, I can eat out 3 days a week”

(not that I do this, just something I’ve heard in casual discussion with neighbors)

#50 Future Expatriate on 11.02.10 at 5:32 am

Don’t count on the much-vaunted GOP “sweep” tomorrow down south. It’s been grossly exaggerated by refusing to poll the young, black folks with cell phones and no landlines, and lists of Democrats.

Expect a surprise. I do.

And then a really dumbass Tea Party riot. And stock market crash (within the week) as all rich GOP pull out all the money in the market in a snit.

Wouldn’t be the first time.

#51 Sherri on 11.02.10 at 5:34 am

Use this blog for entertainment purposes only.

#52 Leith on 11.02.10 at 5:38 am

All. I have just updated an article on my blog comparing the total value of housing assets to GDP for Australia, New Zealand and the UK (all bubble housing markets). I would like to add Canada to this analysis, however, I have been unable to find time-series data on the value of Canada’s total housing stock. If you know where to find this data, could you please email me (address available on my website or in article). Thanks Leith

Here’s the link to the article: http://www.unconventionaleconomist.com/2010/11/battle-of-bubbles-revisited.html

#53 Behind the Numbers on 11.02.10 at 5:46 am

Garth, thanks for the life lesson and the history. I believe in life there are 2 ways to learn:

A. Learn from the mistakes of others so you do not repeat the same mistakes yourself.

B. Repeat the same mistakes of the past and learn from your own experience.

I do my best to follow A, and try to teach others by example. Most of the people want to take B.

#54 Behind the Numbers on 11.02.10 at 5:50 am

#7 For Sale: Canada ” Condo is just another name for apartment, only you are paying the maintenance fees to live in it.” & “There’s a new technical term for a rented condo – ‘apartment.’ — Garth”

Funny you two should mention this, I was talking about the same thing with my wife two days ago. Condos are just apartments and the condo fee you pay is “rent”. The difference is with a condo, you pay a hell of a lot of rent upfront, that subsidies your apartment rent.

It is like: Buy a condo for $$$, then the superintendent will cut off $ per month on your rent.

Crazy people.

#55 David B on 11.02.10 at 6:02 am

Election Day in the USA, will a new congress set the worlds largest economy on fire, driving up jobs and wages there and here? “NO” !

Can real estate recover and boom there and here “NO”!

Can money be made through all this “YES”! & “YES”

That is why smart investors put their thinking caps on and stay out of Real Estate!

#56 mark on 11.02.10 at 6:04 am

Interest rates went up in Australia and it’s time for the debt addicts to go cold turkey.

http://tasmanianrealestatetrouble.blogspot.com/2010/11/addicts.html

#57 TS on 11.02.10 at 6:23 am

Some up to date stats on the current state of the US economy can be found by using the following link. Canada is not out of the economic woods and as the US economy continues to falter ours’ will decline along with it….and we all know what happens to home prices when people can’t get jobs.

http://www.forbes.com/2010/10/29/treasury-bernanke-bonds-yield-markets-lenzner-jobs.html

#58 TS on 11.02.10 at 6:32 am

#3 Ayn Rand on 11.01.10 at 9:11 pm

A lot of painful lessons were had during that period! Two of my brothers-in-law purchased a 3-bedroom, 2 story detached home in Burlington in 1989 as an “investment”. Like many people they thought that that housing market would continue to rise and it was their last chance to get in at an ‘affordable’ price.

The housing market tanked in 1990 and they held onto the house for 5 years or so – but after some bad tenants, falling rents etc., then had to get out of the place and they sold at an $80,000 loss.

#59 Apsalar on 11.02.10 at 6:41 am

I confess, I just don’t “get” the whole condo thing. Not only am I shelling out coin to buy the thing, but then, on top of property taxes, utilities, etc., I am paying monthly maintenance and condo fees? To me that doesn’t make sense. I guess it’s peace of mind for some, but I think that I would resent having to spend those extra dollars on a monthly basis.

#60 Moneta on 11.02.10 at 7:04 am

You fail to mention one little detail when you relay stories of the glory days 20 years ago , with tanking Toronto condos etc. Interest rates were 20% !- We now have too much government control, the BOC will never let that happen again.
———-
As if the BoC chose to raise the rates to 18-20% of its own accord.

#61 pbrasseur on 11.02.10 at 7:08 am

I confirm, here in Quebec, Montreal and its far suburbs condos are still being built by the hundreds if not thousands. Houses have become too expensive for first time buyers so now the industry directs people towards products that are “more affordable” (ie: condos). For builders and promoters condos are the Klondike (lots of profit per square foot), for Realtors they prolong the good times.

I suppose this is the last legs of this bubble, I wonder how long it’s going to last and how much damage it will do…

#62 Moneta on 11.02.10 at 7:10 am

Who would seriously pass up land, trees, fresh air and fireworks in your own backyard for a concrete slab?
——–
Yu’d be amazed how many millions of people who would. Even the rich! Look at NY, Los Angeles, Mexico City, Hong Kong.

Hundreds of millions are willing to live in smog just to be able to rub shoulders with other people and get their recognition… or a job.

#63 Brian1 on 11.02.10 at 7:14 am

Basil Fawlty; Yesterday; I too have a problem with Q.E. but my understanding is that if no one lends or borrows then QE has no effect. However, if government pays all their debts with it then I have difficulty.

#64 pbrasseur on 11.02.10 at 7:15 am

I don’t remember much from the last housing bear market in the early 90’s, I wasn’t paying much attention then.

But one thing I remember clearly is that condos where near impossible to sell then (I was renting one of them for a while), even if technically there had been no bubble in that area (west of Montreal). This time there was.

#65 MrC on 11.02.10 at 7:22 am

The overall message in Garth’s posts from the last few months is to spread your investments out and not have all your eggs in one basket. My wife and I are about 55% in investment account (mixed fixed income, equity, private equity) and 45% real estate (our paid off house). That is a little higher than what Garth has recommended (I believe he recommended 30% RE) but our net worth is at an all time high and we can sleep at night. We dont worry about a RE downturn, if Gold is going to $0 or to $3,000 or if bonds are going up or down. Being diversified has worked for us. We have some Gold stock, bonds, equity etc and they balance out ad seem to be beating the overall market. (Yes we were down in 2008/9 but it has come back.)

Its funny how this simple message does not seem to be getting through to a lot of people. It seems for some people its hit a home run or go bust in the process.

#66 Brian1 on 11.02.10 at 7:23 am

I had a discussion about the limits of gov’t protection of bank accounts. I thought that they protected 100,000 in your account if it should be lost. I’ve been told that it was 60,000. I thought that this was the prior limit. I also assumed that if I had 100,000 in 3 seperate banks I would be protected for 300,000 but I was told no, I am only protected for 100,000 and would lose 200,000 (or 120,000 in the other two banks). If this is true then all 5 Canadian banks are actually just one bank disguising themselves as seperate individual banks.

Don’t count on deposit insurance. — Garth

#67 Brian1 on 11.02.10 at 7:25 am

Correction; (120,000) in the other two banks.

#68 Grant on 11.02.10 at 7:35 am

All of the economic data I have gathered really shows a 4 year period of price stagnation before we can realistically see a steady appreciation in price across the board. That being said, there will be micro housing economies within every city that do well in the near future.

#69 Ben Rabidoux on 11.02.10 at 7:40 am

@ #44
“Oh by the way, inventory is shrinking to almost the boom year levels of 8-9k. Inventory is NOT rising with sinking sales and prices.”

There are 5829 detached homes for sale, 2184 attached homes, and 6062 condos as of November 1st for a grand total of over 14,000 homes for sale.

http://www.yattermatters.com/2010/11/vancouver-averager-price-mythical/

This is over 15% higher than last year’s inventory. Quit talking smack and back up your ridiculous claims.

“The only problem is those 2005 quotes and parallels were referenced by bears on other more “reputable” blogs (ie. more than two visitors) since 2007.”

That’s cute! I love your logic…Throw any measure of fundamental value out the window. Prices will keep rising well above long term fundamentals because they’ve been rising above long term fundamentals.

You are a fool!

#70 David B on 11.02.10 at 7:44 am

CBC Radio just had a good peace on Florida and Foreclosures. It appears some Real Estate vultures are setting up shop in Toronto to lure in Greater Fools. Not much to say other than all has been mentioned here. It appears things are so bad even people who bought as far back as 1982 have lost their home. Not good!

#71 Keith in Calgary on 11.02.10 at 7:44 am

Being a Realtor is not easy.
I have to rent my desk space, getting business cards printed out and getting advertisement in the calgary herald this week end for my first open house along with squidly’s girlfriend.
It’s easier for me to criticize the RE industry but actually it is an eye opener and realtors actually work decent hours for their commission… if they do sell.
Despite of my apprehension, I do believe that I am offering a good service and with the market crashing and prices going down, I’ll have the strategy that now is probably a great time to buy in Calgary!

#72 Moneta on 11.02.10 at 8:12 am

Every quarter, the St. Louis Fed has a little text, usually putting a positive spin on the economy. This quarter’s text is in some sense creepy:

http://research.stlouisfed.org/publications/net/20101101/netpub.pdf

What’s their goal?

#73 bigrider on 11.02.10 at 8:28 am

#71 Keith- Was your post for real or meant to be comical ?

#74 Drake on 11.02.10 at 8:52 am

Might be more going on than meets the eye. Google “Agenda 21” and keep reading.

#75 Expat in NC on 11.02.10 at 8:53 am

Condo market showing strain?

http://www.moneyville.ca/article/884199–strong-gta-condo-market-shows-signs-of-strain

#76 conf in T.O on 11.02.10 at 9:04 am

#26 Brynn

How old are you? I remember the early 90s. interest rates started dropping in the eighties, which created the boom of 1988-1990! Sound faniliar???

#77 mousy on 11.02.10 at 9:06 am

#31 please see #27, then post again please.

#78 punk lover on 11.02.10 at 9:23 am

Debbie Harry (blondie) grossed you out ?

Seen her lately? — Garth

#79 Yo Mamma on 11.02.10 at 9:26 am

AT #50: Future Expatriate, you’re so right! I spoke with a friend in the U.S. in the Bay Area who has a large company that sells drug tests to large, Fortune 500 companies. He said there is typically a two to four month lead time from the time of the purchase of the tests to the time the tests are used on a potential new hire. His point is that his company’s business shows a direct correlation between his sales and employment in the U.S.

Well, here’s what he said. He’s never had so many drug tests ordered since in this last 30 days since his company began over 10 years ago. He is expecting a tremendous influx of jobs back into the U.S. economy early 2011. He also said he strongly felt these jobs would exist already TODAY, but these companies are “holding back” on employing new hires until after the mid-term elections – a tactic these companies are using in order to try to secure a win of the GOP. Higher unemployment numbers equals pissed off voters at the power that be, ultimately aiding a win for GOP. Let’s hope that doesn’t happen, though. I don’t think the GOP will take nearly as many seats as Yahoo or Fox News would like one to believe. Let’s face it, Ruprecht Murdock is a right-wing fanatic nut job who constantly spins news to the GOP’s favor in hopes the American voter will believe it and go in that general direction.

U.S. Companies are running at 115% – 120% of capacity, with production levels at or near that of pre-recession. This is not sustainable, and the companies know that as their employees are getting burned out and morale is very low. The companies are holding off on hiring as much as they can to make the Dems look bad, but they know they cannot hold out forever. They’re gearing up for hiring a sh*t-ton of hiring in 2011 in Jan, Feb, and March, regardless of election outcome. They really want the GOP to take it because it is good for business… well, it is good for THEIR business as the GOP is notorious for deregulation, lower taxes, and sending jobs overseas for cheaper labor.

#80 BrianT on 11.02.10 at 9:37 am

#72-obviously some hack was given the assignment of writing an article explaining why economic depressions are in some ways postitive-the goal appears to be making the reader feel good about the poverty of others.

#81 T.O. Bubble Boy on 11.02.10 at 9:40 am

@ #31 TheBestPlaceonEarth:

“Asian buyers in Vancouver are like Warren Buffet, they SEE THE VALUE.”

Warren Buffet has lived in the same house in Omaha for decades… a far cry from playing the Vancouver RE Ponzi scheme.

#82 Slice on 11.02.10 at 9:52 am

Why learn from the mistakes of others when you can repeat them yourself?

#83 Frank from Calgary on 11.02.10 at 9:54 am

Come on Garth, it is different here in Canada. We are a bastion compared to Japan, the EU, and the good old US of A. ….Don’t Worry…Be Happy.

By the way, read today’s Calgary Hearal Business Section. Front page. “October’s Housing Sales lower than expected.”

Let the blood letting begin.

#84 Tom on 11.02.10 at 10:06 am

T.O. Bubble boy said:

“On a completely unrelated note: I’d be interested if someone can explain this to me: if 1989 condos were targeted at “young, hip, twenty-somethings”, why do so many of the condos from that era have solariums”?

It was suppose to replace a backyard psychologically.

#85 Republic Of One on 11.02.10 at 10:12 am

Nice bedtime story. Too bad it isn’t true.

Let’s be honest here – “the supply of condos in Toronto is going to be too much for the market to bear” story has been published a hundred times in a dozen different ways over the last decade.

Yawn.

Sounds like you just bought one. Good luck with that. — Garth

#86 mid-Ontario on 11.02.10 at 10:23 am

Watched BNN “grill” the RE guy (REIN head) last week over the softening prices.

MSM should be hung with the rest of them for not doing their jobs when the big day comes and we see ruined lives all around. Our kids and grandkids do not deserve to inherit all our reckless debt.

This creative slush-bucket had the nerve to describe 20% ROI after 2011. Not house prices going up (which most people would conclude) but rather, follow the fun with figures… the 25% down now will increase at 5% a year after 2011 indefinitely, hence the 20% tax free return. Smooth as liquid manure!

Meanwhile, our southern neighbors who bought similar bull 4-5 years ago are now being foreclosed on at the rate of 8,000 per week this year and the same expected next year.

As one contributor says over and over ” this will not end well”.

The changes in US govt. today will not stem the tide of frustration. The pot is warm in the US, still cold in Canada but both are about to boil down the road. I give the US 1 year and Canada 2-3 years.

#87 mid-Ontario on 11.02.10 at 10:24 am

Correction to the last post – foreclosures in the US are at 8,000 per day, not per week.

#88 Ottawa S. on 11.02.10 at 10:24 am

In the past month, I looked at 20 houses seeing if I could find a deal. Of those twenty houses, one sold. The other 19 are still on the market. Of those 19 houses, three had price reductions. The other 16 are still at original asking price.

I had one real estate agent admit that the market was going down and economics would play a role. And her business partner said that there aren’t any really good listings – mostly junk. I have to agree, as there was only ONE house of the twenty that was in great shape and required little work. The rest all required a larger investment ($50K seems to be the going figure) to bring it up to snuff. They were still asking/expecting to get what the house would be worth in top shape, hoping some fresh paint would hide the problems.

Greed and unrealistic expectations are alive and well here in central Ottawa!

After making what I believe to be a very reasonable offer on a house (that of course got rejected due to greed), I decided to stop looking and play the waiting game….

#89 David B on 11.02.10 at 10:25 am

India, Australia Raise Interest Rates

India and Australia raised interest rates to fight inflationary pressure, underscoring the delicate balancing act Asia’s fast-growing economies face as the Fed is expected to add to the global money supply.

———————————
Good news for American exports …. perhaps

Not good news for the strength of America overall

Why? you ask, stop and think about American inerests world wide and just how money they have invested off shore …. smarter people than I can explain better.

#90 timbo on 11.02.10 at 10:25 am

#75 Expat in NC
good link—–
“The problem is not with costs, but with rental rates that are too low,” says Johnston.

lol, damn renters!

people just cannot figure out that it is a ponzi scheme by outside investment to buy,flip and then move on. Rents are dictated by the true economy because wages in the area dictate the ceiling.

Again for those who did not know,

in Calgary in 2006-2007 a subdivision was one of the area’s we installed plumbing. we worked with 2 builders with 60 homes on 2 streets. I noticed that the same 6 or so names were on 80% of the work orders.
I also noticed that names had changed from r/i to final stage with the 6 same names moving to another house. I went back and checked old work orders. It was organized and inflated the market past a point where buying was insane but people fell for it and still do.

Wages cannot keep up as it will price out our exporting potential and drive capital away.

Good luck with blaming rents because more and more people are going to be forced to rent underwater properties which will force rents even further down.

#91 Jan Etter on 11.02.10 at 10:29 am

Seriously, who are these posters who deny the boom-bust cycles in condo development and prices? I was lucky enough to get in the market in the mid ’90s and picked up an 1100sf unit in downtown TO that the poor greater fool I bought it from paid $320k+ for. I got it for 40% less than that.

#92 timbo on 11.02.10 at 10:34 am

Garth,

Is there a way to find out the ratio of the number of homeowners in Canada and compare that % to the credit ratings %. With the record amount of home ownership are banks going deeper and deeper into credit risk to finance expansion or are we now relying on an external market for good credit risk.

Sooner or later you have to run out of buyers who have good credit?

#93 Basil Fawlty on 11.02.10 at 10:43 am

“Basil Fawlty; Yesterday; I too have a problem with Q.E. but my understanding is that if no one lends or borrows then QE has no effect. However, if government pays all their debts with it then I have difficulty.”
Part of the reason for QE is to stimulate bank lending. However, the big concern is the declining currency and what happens, as a result, to the prices of goods required to stay alive. The US Federal Reserve, which is neither federal or a reserve, is monetizing it’s own debt, since it has run out of options. To think there will be no consequences is pure folly.

#94 Got A Watch on 11.02.10 at 10:49 am

I was watching the TV news last night, in between runs out to the BBQ.

On ‘A-Channel’ Barrie, (CTV) a long puff piece about how condos in Barrie (a distant suburban sprawl, 1 hour north of Toronto on the highway) are selling like hotcakes, and how everyone wants to own one. Several Realt(ho)rs(TM) were prominently featured, telling the world how great it is to buy a condo.

So I flipped over to another channel (Global Toronto) and there was the exact same thing, a puff piece about how condos in Toronto are just soooo popular and how everyone wants to buy one. It was deja vu all over again.

Sunny days, fluffy bunnies, puppy dogs, ponies and blue skies for all. Nary a hint that a condo might, one day, gasp, fall in price. Re-Scam always tells you the truth, except on days that end in a number, or weeks that have 7 days. Credibility like that just can’t be bought.

The 6 PM news is a bit early for an infomercial, but if I didn’t have a clock in the room, I could have mistakenly thought I woke up at 3 AM and turned on the TV. I was waiting for the “Ab Obliterator” to be shown next. Or the “New Nuclear vitamin that will make you glow like Chernobyl!” etc.

I don’t know why anyone would be surprised. Realt(ho)rs(TM) are probably one of the biggest, if not THE biggest, advertisers, and of course “the customer is always right”. The media is just catering to their biggest customers. It would be wildly counter-productive to their media businesses if they told you the truth: real estate goes up for a while, then it goes down for a while after that.

The “print newspaper” birdcage liners are even more captured. If they didn’t have real estate advertisers, they’d be long out of business.

As usual, the MSM will be the last ones to ever tell you any truths. Which is why they are going the way of the dinosaur. I have to laugh every time I see some fools paying big money for a print newspaper business (CanWest, cough, Chicago Tribune, choke) to “extend media reach”. There really a lot of Greater Fools out there, and they aren’t all buying just real estate.

Which is why the MSM don’t like to mention Garth much, if at all, for example, as doing so would acknowledge that Blogs are actually widely read and give valuable information not found in their propaganda organs. You can tell by the contempt they regard Blogs with – “they’re Not Professional Journalists!” – ROFL. Finger, meet point.

They are too busy walling off their little shrinking gardens from reality, and whining about Google. Which really makes me laugh, all you have to do is add the line “Bots=0” to your webpage, and Google or other search engines and web crawlers won’t index it, and it won’t be found by searching. Of course, they would not do that, as then their pathetic web sites would see even less traffic. Bit of a conundrum there for old school medias.

Ever notice (I do) that “newspaper web sites” are among the slowest to load, wildly over-burdened with redundant links, and poorly designed in almost every way. That’s what happens when your industry is still stuck in the ’90s, mentally. I hope they are working on their resumes.

#95 Keith in Calgary on 11.02.10 at 11:10 am

The condo market here in Calgary is done like dinner.

There were 310 sales in October and the current MLS listings total 2,054 units…….roughly a 7 month supply……..then you count the additional units for rent on Kijiji.ca which amounts to an additional 2,876 places. Take 50 % of that figure to “estimate the shadow inventory” that was taken off the market and you have around 3,400 units……then start adding in the new construction not listed on MLS but advertised for sale in the 50 page glossy condo magazines that are given away free at every store………there’s another 1,000 or so places……..we’re up or 4,400 units or roughly15 months supply…….

Of course, you don’t want to even start to count the 20 or so holes in the ground and the fenced up lots in the downtown core and beltline area of the city that were supposed to be new condo buildings, but were stopped during the crash of 2008.

#96 Kitchener1 on 11.02.10 at 11:13 am

Simply put, in the GTA there is too much inventory of condos coming online.

Factor in that a lot of that inventory is built on spec, investors trying to flip them. factor in that we have the lowest requirments ever to purchase with the lowest interest rates ever and home ownership is at record levels (7 out of 10).

A slight increase in interest rates or a sudden reversal of investor sentiment means that market crashes hard first.

With a SFH, when things get tight, renting a basment, even short term is possible or getting room mates to help out is doable. In a 650 sq foot shoebox in the sky, you simply cannot rent out or get a roomate.

Im telling you folks, working in the industry (design-build-management) the way these condo’s are built is a joke. Thats why you see big increases in condo/strate fees after the 2nd-3rd-4year of ownership.

Even look at some very well managed and built condos in the GTA that are 30-40 years old, look at their maint. fees, most are pushing $650-$800 and more a month for 1000-1300 sq foot places.

its all good, keep buying condos but dont say that you were not warned.

we are going back to year 2000 prices in the GTA when this is all thru.

#97 BrianT on 11.02.10 at 11:15 am

#70Mamma-your nonsense gives a bad name to Conspiracy Theorists.

#98 Sean on 11.02.10 at 11:26 am

Dumb question… in the US the smart people, basically the ones giving out those mortgages, bet against themselves and profited huge…

High prices and declining sales… is there a way to bet against the obvious in Canada? Or is that diversifying in financial assets like you say?

#99 Timing is Everything on 11.02.10 at 11:27 am

Mortgage rates of 20% were a decade earlier. Try to be more accurate. — Garth

Well, they were not 2% either. They were double digit.
I bought in ’91 (SDH) and I recall 11.5% (5year) or so.

http://www.bcrealtor.com/d_bkcan.htm

#100 SwampLily on 11.02.10 at 11:43 am

Hey, Debbie Harry didn’t get gross; she got old (she’s 62). Happens to everyone who’s lucky enough not to die young.

#101 ekstso on 11.02.10 at 11:46 am

END of LIBERTY

http://www.youtube.com/watch?v=AQv-sdMCClQ

#102 SwampLily on 11.02.10 at 11:50 am

My mistake… Debbie Harry’s 65. Pretty cool grandma.

#103 somejerk on 11.02.10 at 11:56 am

– #32 Kate – Renting a condo from someone and living in the rental apartment building are two different things –

I’d love to know the difference.

One is a individual and the other is a company?

oh I know, granite and SS appliances…

#104 Thetruth on 11.02.10 at 12:04 pm

Nice censorship of the facts Garth. Hope you sleep well knowing you do exactly what the MSM does. But luckily, there are other blogs out there that already know what you do. Just don’t feed other peoples misery by propagating a doomer scenario that may not happen.

Your immigration misfacts were amusing for a while. But now you bore me. Off with your head. — Garth

#105 Crash Callaway on 11.02.10 at 12:17 pm

The USA has handed everything in the bunker over to Wall St. The citizens are now screwed as their Govt has squandered their safety net.
The US is going to bring the world down with it.

In Canada, despite “F” and Harper constantly shaking the tin can to reassure us there are still pennies in it and how special we are, the only difference here is the jet lag.
What color is your parachute?

#106 Kevin on 11.02.10 at 12:25 pm

Here is a list of Saskatoon housing market indicators and other stats for anybody interested. http://saskatoonhousingbubble.blogspot.com/2010/11/indicators-and-other-stats.html

#107 Devore on 11.02.10 at 1:01 pm

Over in the land of plenty, consumer sentiment hits new lows. Just in time for the holiday season. Oh yeah, and elections. Bond market was ecstatic on the other hand. It’s always good news somewhere.

#108 Soylent Green is People on 11.02.10 at 1:06 pm

Got gross?

It’s called aging FW. Look in a mirror.

#109 Vinny on 11.02.10 at 1:08 pm

WHEN A CONDO MAKES THE MOST SENSE.

-Purchased 3 years ago off plans in the Yonge&Eglinton area.
-No kids
-No commute; 2.5-3.0 hours extra to build your career, daily
-7 min. walk to work; so no parking spot to pay interest on, and no car to maintain, repair, gas-up, etc.
-no time for house chores; too busy with career development
-limited crime in the area
-residential urbanization protected area directly south preserves view from the 20th floor _common_ deck area & hot tub with a skyline view
-gym and cable TV upstairs in the building — so no need for gym membership or TV, and incentive to workout! there’s also a theatre room

OUTGOINGS+DOWNPAYMENT:
-$50k down (a 75% mortgage)
-$1136/month. Includes: maint, ins, p.tax, utils, mortgage payment
-Cell phone and internet adds about $100 more, but that’s the extent of the fixed monthly costs.
-2.85%, 3-year mortgage, effectively 2.53% because of 2k in “home dollars”
-Flexibility to save the difference and drop against the principal whenever I feel like it. Contractually obligated to very little, and easily enough to rent-out and cover expenses if necessary.
-Why rush to pay back interest when they are practically giving the money away? Stash in a TFSA in laddered bonds, and dividend stocks…I think you can do better than 2.5% on plenty of stocks…

SOME ALTERNATIVES:
-Condos in the same building range from $1500-1700 month to rent
-Or, you can rent a dump in the area, 15-min walk from the subway, barely over 400 sq. ft, in 20 year old building for $845/month.

The area has a good mix of young and old, and is a known receiver area for people that are retiring. Small units will avoid a lot of the downside exposure particularly in the area, since there will always be demand from another 20-something that will come after me.

MISTAKES:
Where people get into trouble with condos is when they buy into areas with _too much_ choice, too little convenience, and too little consideration for the “who will buy this from me when I am done” question. How many people are going to hit retirement age and downsize? How much _choice_ enters into this decision with non-existent life savings? Houses in the burbs that aren’t in prime locations are going to have their valued destroyed –there is no echo-boom to sustain it. The time to buy family homes in the burbs was 15-20 years ago, not now. When people are rushing for the exits in 5-10 years take advantage of the distress sale. Play the game, and drive your offer into the floor. We are all playing the game — why be a sap?

A small condo actually _avoids_ housing leverage in the near term, while giving you a place to live, and eliminating many of the headaches of life for a young professional. Where kids get in trouble, is when they buy “too much house”. 600 sq. ft. is tons if you have an active life. But expecting a family to buy your 3-bdrm, 5% down condo off you to save you from bankruptcy is not part of the plan.

For a start, the best rule I heard for Toronto was: It has to be inside the ‘square’ created 401/427/Gardiner/DVP.

South of the Gardiner? Too many — Disaster.
West of the 427. Disaster.
East of the DVP? Disaster.
North of the 401 and off the subway line? Borderline.
More than 15 minutes walk from the subway? Disaster.

Are you getting the picture?

#110 Evangeline on 11.02.10 at 1:22 pm

#85
((It was suppose to replace a backyard psychologically.
))

I wonder if the 23 mice that were trapped by a couple I know in their hip downtown condo were to give a country barn feel, psychologically.

#111 toastmaster on 11.02.10 at 1:36 pm

Australia and India both raise interest rates to curtail inflation but oil hits $84 and we hold the emergency rates cause no one has faith in the Canadian or US economy.

Meanwhile thousands of dumb ass Canucks keep buying houses cause “we are on solid ground ” according to The Church of Remax who just keeps sucking the disciples in with a few Hail Mary’s and “keep the faith brothas” with a butt slap tossed in. Amen.

#112 Charts and Graphs on 11.02.10 at 1:37 pm

Except after the last housing crash we had a strong trading partner (US) and cheap commodity prices (therefore a cheap Canadian dollar) to bouy our economy.

Not this time.

#113 Sherri on 11.02.10 at 1:44 pm

WOW….Look at all that inflation…OIL just hit 84.34 deflationistas.

#114 jess on 11.02.10 at 1:47 pm

Nostradamus Le Mad Vlad
geological journey part II/ cbc the nature of things
=
What tax base and they want to lower taxes?

Last night on cbc.ca news they had a report on Dayton foreclosures . It was reported that they lost 1/3 of the homes to foresclosure compared against the storm hurricane Katrina 275,000 homes lost. That would be around 92000 homes!
Dayton, Ohio Population — 166,179
http://quickfacts.census.gov/qfd/states/39/3921000.html
The American Redcross estimated approximately 275,000 were destroyed in Louisiana, 65,000 in Mississippi and Alabama during Hurricaine Katrina.

#115 dd on 11.02.10 at 1:48 pm

#89 David B
…Good news for American exports …. perhaps…

I don’t think so. Americans has to save for this to happen. Exports / industry will nead investment dollars. At the moment the government is hogging it all.

#116 Evangeline on 11.02.10 at 1:52 pm

#23 ((Love This video its short and funny.))

It’s a bit out of date. The intro should include Obummer’s appointment of and approving words re Bernanke.

It’s amazing how the Won blames the economic mess all on Bush, but when he had the chance he didn’t appoint a non-Bush Federal Reserve guy.

#117 Datz on 11.02.10 at 2:14 pm

No, I don’t have a mortgage – I have a life instead.

#118 BrianT on 11.02.10 at 2:16 pm

#115Evangeline-Yes, considering Barack has always been afraid to even use the washroom without checking with Robert Rubin first, he has a lot of nerve blaming Baby Bush.

#119 Sherri on 11.02.10 at 2:22 pm

look! no inflation

http://abcnews.go.com/Business/wireStory?id=12026090

#120 jess on 11.02.10 at 2:22 pm

i have rented a three bedroom 1200sq. ft. townhouse since 1992

A new build appraised at 148k . Not one sold and the developer was stuck with all 14 units. Condo fee 100k.
This is a nice location – 3 back onto a park.

It took until 2003 for the units to finally sell.
120k. as is. or 130k with new paint and carpet. Most chose the 130k price.
The maintenance over the years has been minimal mowing/shoveling. The new hip owners were not happy since they now have discovered all the problems e.g. leaks etc. IN 2008 Three of the units flipped at 150k and a year and a half ago one unit went as high as 183k. The hipster in that one cannot afford living there ,as the condo fee is now 250/mo and climbing.

In 18 years
Move in rent 750. Rent i pay now 910.
Raised both my boys here and it was super. Could walk to school,swim,skate and a tobaggon run right behind the units.

#121 BrianT on 11.02.10 at 2:25 pm

#93Basil-don’t believe everything you are told-Goldman does very little lending with their taxpayer subsidized funding-they mostly speculate with it. These trillions of dollars are not going to be lent out to anyone-they will pump up some asset prices-depending on where they are deployed.

#122 Popeye the sailor man on 11.02.10 at 2:35 pm

Best visualization of housing statistics I have found. LMAO!

http://tasmanianrealestatetrouble.blogspot.com/2010/11/addicts.html

“At the moment housing statistics are like a bunch of mopes furiously jacking off as they await their turn at a bukkake. Some are hard, some are soft, but overall it’s an odious circus of confusion and desperation. With the threat being, you might not get your chance to shine before the camera.”

#123 dark sad person on 11.02.10 at 2:41 pm

#112 Sherri on 11.02.10 at 1:44 pm

WOW….Look at all that inflation…OIL just hit 84.34 deflationistas.

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

WOW–you’re right-
Look how far its fallen-
Those silly Inflationistas huh

http://www.barchart.com/chart.php?sym=CLZ10&style=technical&p=MN&d=M&sd=&ed=&size=M&log=0&t=CANDLE&v=1&g=1&evnt=1&late=1&o1=&o2=&o3=&x=42&y=16&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

#124 Wilde_at_heart on 11.02.10 at 2:42 pm

#34 joseph on 11.01.10 at 11:45 pm

Hard to imagine a time when rent was lower than condo fees and taxes?? I mean really? Not saying Garth is a liar, I wouldn’t know.

But today I think about my condo fees in my units and the taxes. My 2 bedroom condo that rents for $1500 has condo fees of $375 and taxes of about $125 a month. So $500 total. Now rents would have to fall like 75% to be in the situation Garth describes.

You’re assuming that that condo would be paid in full, mortgage-free. I’ll bet for most people, that assumption is wrong.

#125 Kate on 11.02.10 at 2:44 pm

#103 somejerk
My experience is that if you rent a condo from someone, the building and the flat;) are usually better but they can kick you out any time. In Toronto, my experience was month to month with 2 months notice. In Vancouver, common practice looks to be one year lease and month to month after it. You can negotiate this, of course.

#126 tony w. on 11.02.10 at 2:49 pm

to TO bubble boy: Toronto condos had solariums 20 years’ ago (as compared to today’s balconies) because their square footage could be sold as part of the suite and added to the end price (greater FSA and they made the suite “feel” larger).

#127 David B on 11.02.10 at 2:54 pm

#114 dd on 11.02.10 at 1:48 pm

In the short term it would be good for stocks on hand and staff kept on salary, but what the problem is there is no signs of steady growth or demands … what to do? The markets have the gitters up/down and rising but most are aware (and should be) another correction can happen in a flash.

We will see how things go …. interesting to note the recent bomb scares have not shaken the market like they would have a couple of years ago.

As far as to-days elections go …. they expect no changes. When all is said and done, one man holds the pen. So let the games begin.

Here in Canada our train is headed off the cliff.

http://www.debtclock.ca/

Was chatting on the phone this morning (long distance)….. it appears Mr. F’s deficit reduction prediction (s) are/is way off ….. WAY OFF!

Hello read this on the F-35’s that will do us in alone!

http://www.bloomberg.com/news/2010-11-01/pentagon-said-to-see-higher-f-35-costs-delays-up-to-three-years.html

Add to this and much, much more and in just over 4 short years with help of only 36% or less of short sighted voters! Sad.

#128 jess on 11.02.10 at 3:17 pm

126 David B

Cost of war clock
http://www.costofwar.com/

#129 Billy on 11.02.10 at 3:49 pm

Condo’s aren’t bad if you RENT. You can always leave when you tire of them and you want to buy your own house. Condo’s are very painful if you BUY.

I rent a condo and am very happy. It’s only while I have work in the area. Once that dry’s up, I’m off an gone. Very convenient to be ‘liquid’ in your living accomodations.

——————————————————-

I don’t understand the above logic. When you rent you almost always have to sign a 1 year lease. So how can you just leave whenever you feel like? If anything, you’re LESS mobile than someone who buys because it usually takes less than a year to sell.

#130 Debtfree on 11.02.10 at 4:06 pm

Nice to get on topic somewhat. On Mr. F watching him is like watching crystals grow . The dreaded income trust convergence to corps. nears . Garth might owe him for turning all that yield demand into homeless cash looking for yield. Might the little guy point the way by telegraphing an increase in rates ? If it turns out badly ie going for yield abroad . F could get a real slap in the chops as canadian bank aren’t that good yield wise .

#131 Vancouver_Bear on 11.02.10 at 4:15 pm

A Re/Max agent cold called me last night, offering his service. He sounded desparate and frustrated. He needs your listing, give him call – 604-782-1221.
I did not catch his name, I bet this is him – http://www.youtube.com/watch?v=b5hKhZKSYw8

#132 Mark on 11.02.10 at 4:16 pm

#79, Yo Momma:

“Well, here’s what he said. He’s never had so many drug tests ordered since in this last 30 days since his company began over 10 years ago. He is expecting a tremendous influx of jobs back into the U.S. economy early 2011.”

Ever consider that the drug tests might be used as tools to determine who to let go?

Failing a drug test isn’t necessarily a firing offense, but refusing to take one is almost always grounds for a “for-cause” dismissal.

#133 Timing is Everything on 11.02.10 at 4:17 pm

#102 SwampLily

Agreed. Everyone gets old. Ya right, gross. Not.

http://www.youtube.com/watch?v=b09misjV1ek&feature=related

#134 Mark on 11.02.10 at 4:20 pm

#79, also, marihuana (cannabis) is about to be ‘legalized’ in California under a proposition before California voters today. Might this have something to do with the sales of drug tests? Since marihuana is still a Schedule I drug in the United States, employers can still discipline/dismiss a worker for using marihuana, in violation of federal law.

IMHO, sounds like California employers are gearing up for mass layoffs without severance. Or at least they want to keep tabs on the pot heads in their workforce.

#135 Devil's Advocate on 11.02.10 at 4:28 pm

Deborah Harry still looks good to me!

#136 Mickey the Realtor on 11.02.10 at 4:39 pm

it looks like the dawgs have scared off my idol DA, come on dawgs and pups, be fair and let DA speak without biting at his ankles, how is he going to go bike riding.

#137 Evangeline on 11.02.10 at 4:58 pm

#135 ((Deborah Harry still looks good to me!
))

you know, it’s soooo wrong to be superficial about ss and granite, but dissing great looking 65 year old women isn’t superficial, no, not at all….

#138 David B on 11.02.10 at 5:02 pm

127 jess on 11.02.10 at 3:17 pm

And the really sad sad news is Mr. Harper and Co ammended the our proud vets benifits to save money in payments to sick and injured as reported in our National and local papers.

Soon all Canadians will be requried to pay for most excerssive spending spree in Canadian history! The west is in and boys oh boys do they know how to spend money.

Couple this with a government who parked all their cars in one garage called Real Estate and guess just who will be the worst hit? A mear 10% on 500K home is a cool 50K plus service/closure fees!

But hey, what do I know, Canadians believe ( by the polls) this has been the greatest years of their life as their elected “King” is still #1 and would keep him forever.

#139 Dmiitri on 11.02.10 at 5:05 pm

I don’t understand the above logic. When you rent you almost always have to sign a 1 year lease. So how can you just leave whenever you feel like? If anything, you’re LESS mobile than someone who buys because it usually takes less than a year to sell.
——————————————————-
You are mentioning that, there is almost always a provision in the lease agreement that you will pay (usually 1-2mo. rent equivalent) some sort of a fee in case you break the lease agreement. Which is an immediate transfer of money (unlike selling the property with all the associated headaches). Employers cover this expense 99% of the time. Not so with your lost time and nerves when you have to get rid of own property.

#140 tell it like it is on 11.02.10 at 5:10 pm

Hey Garth,

a suggestion. How about putting in a “posting” rating system beside each post so we can just fast forward to the popularly voted posts and skip the nonesnse drivel coming out of some idiots. Your blog is getting more and more popular….need to adapt.

#141 Debtfree on 11.02.10 at 5:13 pm

@128 Do you really believe this ? “Ask yourself why our Universities were training foreign engineers from Asia in the 1970′ before a single factory was ever constructed in China ?” The Chinese were casting bells the size of mud huts when your ancestors were living in them. The Chinese have always and today had the largest market in the world …..China. The US helped to create their manufacturing by putting an embargo on them .

#142 timbo on 11.02.10 at 5:14 pm

#129 billy,

“When you rent you almost always have to sign a 1 year lease. So how can you just leave whenever you feel like?”

When markets turn like it has in Calgary, renters have the power to dictate lease terms. You can now get a 6 month lease and then go month to month because the vacancy rates are rising and they need tenants badly.

#143 Devil's Advocate on 11.02.10 at 5:18 pm

Thanks for putting a good word in for me Mickey. What do you think – is Deborah still as hot as ever or what?

#144 Devil's Advocate on 11.02.10 at 5:20 pm

Well as long as my protege is filling my shoes with comments in my name, if ya’ll don’t mind, I’m gonna devote a little more time to work. I’ll just have to trust they don’t say something too stupid in my name and damage my sterling reputation around these parts. ;-)

One last repeat before I shove off for a spell…

“The only problem until this month was that CREA had built a wall around the MLS system, restricting how real estate could be bought and sold. In March, the group, which represents about 100 boards across the country, reversed course and changed its bylaws to allow all types of buying and selling models through the MLS.” –Garry Marr, Financial Post

read more
http://tinyurl.com/2fkyhew

Have fun with that one Pups & Poodles.

#145 DaBull on 11.02.10 at 5:20 pm

#121 Popeye the sailor man

“At the moment housing statistics are like a bunch of mopes furiously jacking off as they await their turn at a bukkake. Some are hard, some are soft, but overall it’s an odious circus of confusion and desperation. With the threat being, you might not get your chance to shine before the camera.”

What the hell… your now a Japanese porn star? I just hope Brutus and Olive Oil didn’t follow you into said profession.

#146 Another Albertan on 11.02.10 at 5:27 pm

Garth,

Your response to #104/Thetruth is more appropriately summed up in the first 30 seconds of the following video.

http://www.youtube.com/watch?v=72D2N6asZP8

Everyone else’s mileage may vary… before annihilation.

#147 Alex on 11.02.10 at 5:28 pm

October Fraser Valley stats are out. 40% decline over Oct 09. Of course, the head of the FVREB says housing demand remains “strong.” Will the baloney ever stop?

http://www.fvreb.bc.ca/statistics/Package%20201010.pdf

#148 Kitchener1 on 11.02.10 at 5:40 pm

Regarding getting out of a lease in Ontario.

Its quite simple actually. All you have to do is not pay your rent and they will move to evict very quick. Usually just tell the landlord you cannot pay them rent any longer due to job loss etc.. its their choice to let you out of the lease or go thru the eviction process, they will let you go as it will cost them much more to get you evicted, never mind the free rent you get while you live there, plus legal, plus sheriff etc..

Other way out of a lease is simple, you advertise you place for rent and you have them take over the lease, its not your job to screen the tenants, just pass them over to your landlord, if he refuses 2-3 people, you are off the hook, you, in good faith advertised the property and supplied potential leasers, if they for what ever reason are not acceptable to the landlord, too bad for him.

I have friends in the rental income biz, and trust, they are just happy to get rid of tenants and eat the 1 month loss their unit sits empty rather then go thru the housing tribunal-eviction route.

See, thats what these investors do not understand, as a landlord, you still assume all the risk, still have to do the repairs and if you get one or two bad tenants that know what they are doing in terms of the housing tribinual, you are out 6 months rent (3 months for each tenant) plus eviction costs, plus legal. Its not free money by any stretch.

#149 Yo Mamma on 11.02.10 at 5:44 pm

At #134: Mark, nonononono. This company is a national company, based in the Bay. These tests are not sold only to California-based companies. These are sold to fortune 500 companies, nationwide within the U.S. (try to think a little bigger than measly Canada and its population of only 34,000,000. Hell, California’s population alone is bigger than all of Canada). This isn’t a tactic being used to layoff work force. Drug testing within the work force has ALWAYS been a means of laying off people, and this means could have been used all the while if companies wanted to layoff more people. Also, to the point earlier, the companies are already exceeding capacity for sustainable production, so they aren’t going to be laying off even more people. There is a greater picture here to be seen, and it is simply that workers will be going back to work first quarter of 2011.

#150 Devil's Advocate on 11.02.10 at 6:36 pm

I’m back!!!! Did you guys miss me? That was quite a break. I’m feeling refreshed and ready to get back at it.

#151 Mickey the Realtor on 11.02.10 at 6:38 pm

Deborah is alright, but lets get serious guys, real estate is the topic here and I want to be the best agent I can be.

DA, any suggestions for a new comer in the game of RE? When I was doing my courses, the teacher said that in my first year I should be able to pull in $150k without much effort, does this sound about right?

#152 45north on 11.02.10 at 6:40 pm

Vinny: 7 min. walk to work; so no parking spot to pay interest on, and no car to maintain, repair, gas-up, etc.

car purchase, maintenance is a big deal, you’re saving a bundle

South of the Gardiner? Too many — Disaster.
West of the 427. Disaster.
East of the DVP? Disaster.
North of the 401 and off the subway line? Borderline.
More than 15 minutes walk from the subway? Disaster.

that’s what I think and by the same measure Brampton is toast. Toast.

Cousin Vinny:
http://www.youtube.com/watch?v=Y-L_bJAJA-E&feature=related

#153 The Little Timmy on 11.02.10 at 6:41 pm

Devil’s Advocate,

Did I hear you correctly? Are you shoving off for a while? I love what you have to say and you comments give me so much comfort in this difficult economic time we be in. On behalf of all the other people who have mercifully slagged you, I apologize.

#154 dd on 11.02.10 at 6:44 pm

#126 David B

”’correction can happen in a flash.”””

Sure it can. However there is the Bernanke put that investors have come to trust.

…As far as to-days elections go …. they expect no changes…

Yes true. Money printing will keep on.

DD

#155 Hiteclowtec on 11.02.10 at 6:46 pm

Inflationistas – deflationistas

CPI – excludes everything that goes up

employment – excludes those who cannot find jobs and give up

Debt – is invisible except on kijiji

Cash- earns nothing except in Australia

F and Carney have everything under control.
don`t worry be happy !

#156 Milhous Plumbers on 11.02.10 at 6:49 pm

Bedbugs love multi-dwelling units. careful with that hotel stay in NYC. This isn’t entertainment serious or otherwise…

#157 Behavioral Finance on 11.02.10 at 6:58 pm

Obviously the point related to first-time buyers. Pay more attention. — Garth

Ok, lets try this again. I would say that most first time buyers you are referring to in the Boston market would be looking at West Roxbury, Brighton/Allston, South Boston where prices are still high, maybe North End. Obviously the sales activity is anemic as the banks have restricted lending.I would say the markets that you were referring were largely impacted by the subprime lending.

http://news.bostonherald.com/business/real_estate/view/20101029condo_sales_but_not_prices_drop/srvc=home&position=also

#158 Tom on 11.02.10 at 7:01 pm

#85
((It was suppose to replace a backyard psychologically.
))

I wonder if the 23 mice that were trapped by a couple I know in their hip downtown condo were to give a country barn feel, psychologically.

Downtown condo replacement for squirrels. Did they freeze them?

#159 Behavioral Finance on 11.02.10 at 7:14 pm

Jamaica Plain is holding its own, but Mattapan and Dorchester are in a tank from 2005.

http://www.trulia.com/real_estate/Jamaica_Plain-Massachusetts/market-trends/

http://www.trulia.com/real_estate/Dorchester-Massachusetts/market-trends/

http://www.trulia.com/real_estate/Mattapan-Massachusetts/market-trends/

#160 Behavioral Finance on 11.02.10 at 7:18 pm

You can add Charlestown to the mix.

#161 Bottoms_Up on 11.02.10 at 7:20 pm

Garth, it may just be different this time (for condos). Interest rates are sky-low, every retiring boomer I talk to has at least considered the idea of downsizing to a condo in a major city, and young professionals definitely like the idea of not having to own a car to live.

I’m not a real estate agent, just telling it like I see it, and I realize you are telling it because you lived it.

#162 Nostradamus Le Mad Vlad on 11.02.10 at 7:22 pm


#23 Popeye the sailor man — Great clip. Thanks — something to brighten my day up with!

#47 Jody — “I wish he’d choke on a Dorito.”

Ditto! That liar doesn’t even deserve a Dorito!

#50 Future Expatriate — “Expect a surprise. I do.”

That’s why the WH is letting illegals in and shipping their own off to do war with other countries. When they run out of their own, they will ship the illegals to keep the wars going.

#61 pbrasseur — “I suppose this is the last legs of this bubble, I wonder how long it’s going to last and how much damage it will do…”

Along with the UK, European and US meltdowns, it will cripple the west. Just like the tackle by Lawrence Taylor on Joe Theismann which ended his NFL career (it was a fair tackle, just his shinbone snapped).

#72 Moneta — “What’s their goal?” — Depopulation.

#87 mid-Ontario — If those foreclosed homes cannot be re-sold again, then cities and towns will be demolished, as per Detroit.

Then FEMA camps will replace those old subdivisions.

#113 jess — “What tax base and they want to lower taxes?”

Good post and link. Interesting to see how politicos still try to spin things their way.

If unemployment soars, the last thing people will be concerned with is paying property taxes. So, no tax money coming in for cities to spend on projects needing to be done, no money to pay city employees (more layoffs / job cuts and less gets done); it’s a vicious cycle which keeps perpetuating itself.

Could be a major reason why the US needs another WW. GD1 did its job well, now it’s time for GD2 and the after effects.

If Obama takes a bath today, look for Pelosi or Clinton to replace him, although he has provided an excellent front for Soros to replace the world’s policeman. Happened in Oz recently, so it can happen here.

#116 Datz — Same here. Nice, isn’t it?!

#126 David B — “Here in Canada our train is headed off the cliff. … it appears Mr. F’s deficit reduction prediction (s) are/is way off ….. WAY OFF! Hello read this on the F-35′s that will do us in alone!

— and —

#128 TheBigLebowski — “The final stages of this transfer of wealth is in motion.”

Both of you sum the situation up well!

It’s tough living in Kelowna. So beautiful, sunny and nice. Still, someone’s gotta do it!

#163 bill on 11.02.10 at 7:30 pm

for brother lebowski

http://www.youtube.com/watch?v=-hJQ18S6aag&feature=player_embedded#!

#164 BrianT on 11.02.10 at 7:40 pm

#128Big-Yes, but the average person doesn’t want to hear any of that, so you could make the argument they are getting their due. Like Jimmy Swaggart said-if God didn’t want them sheared he wouldn’t have made them sheep.

#165 Devore on 11.02.10 at 8:02 pm

#155 Hiteclowtec

CPI – excludes everything that goes up

Excludes everything that is “volatile”, which recently means “going up”.

Cash- earns nothing except in Australia

And Hungary! They’re keeping their interest rates high, and for now the ECB is cooperating by not gobbling up every tippy asset in sight unlike the FED.

dark-sad-person

Nice chart. Does that mean the deflation already happened?

#166 dark sad person on 11.02.10 at 10:43 pm

#165 Devore on 11.02.10 at 8:02 pm

Nice chart. Does that mean the deflation already happened?

******************
I think you and i have been through this at least 100 times-

The chart was for the poster who looked at Oil going up a few bucks today (because of new Mid-east tensions) as an indicator of Inflation and i pointed out with the chart-that the price is lower then a year ago-

Oil prices are “prices” nothing more-

Was new money or Credit created because the price of “Oil” went up?
If so-using Inflationista logic-then a lot more money and Credit had to have been destroyed-when the Oil price fell from 145-35?

#167 a prairie dawg on 11.03.10 at 7:00 am

“And, yeah, way too much Re/Max.” -Garth

You must have missed their new ad campaign…

At Ream Max, we’ve got your back. ;)

#168 Valyrian Steel on 11.03.10 at 6:15 pm

Sittin’ down here in Cabo (many fellow Canadians here), realizing that “Raincouver” aint the be all and end all… although I own a condo there and it would kinda suck if it lost 30% of its value or more. Anyway, its 30 degrees every day down here and I’m reading “Money Road”, enjoying it immensely, even though the glue of the binding is liquifying in the hot sun and pages are falling out… but I will persevere….