Depravity

Apparently this blog causes masturbation. At least in Edmonton. I’m not sure how unusual that is, but I’ll let Chris Davies explain that in a few paras from now. It also has me a little worried about the Blog Dog Summit tonight, at which a thousand readers of this site will be in the same room at the same time.

But let’s try to bury that thought for a minute, as intriguing as it might be. Instead it’s time for some straight talk on how this weird society of ours is in the process of tearing itself asunder. I mean, on one hand, the stock market has soared to a three-year high, oil and gold and other commodities are racing skyward, interest rates are plopping (mortgages, too) and bond prices ascending.

So people with financial assets are making out like bandits – less than two years after a crisis that had common people cursing their RRSPs and stuffing billions in the orange guys’ inadequate shorts.

But on the other hand, well, we have most folks. They don’t have gold. Or stocks. Or bonds. They have houses, where most family net worth is stashed. And how are we doing here?

Meet Peter. He reads this blog. That may make him a sex deviant in the eyes of Chris Davies (more on him soon), but it’s the least of his social flaws. He’s also an ethical realtor.

“I live in Vancouver,” he wrote me last night, “am a realtor of 7 years and have gone crazy with the media constantly pumping ‘the grass is greener and buy now, prices will always go up’ message.  Sales are falling apart due to financing and homes not meeting appraisal valuation.  Sales are none existent and there is very little of any action taking place with the growing mentality that things have changed.

“There is a disconnect between what the buyers believe properties are worth and can be approved for and what sellers WANT.  What I find most interesting is that every month for years and years we have been inundated with messages from the media every month once the last months sales numbers are released but very interestingly there has been no coverage at all of the previous months numbers for two months now.  I guess we as professional realtors can only service the public with good news and don’t want to bother people with the truth.”

Now, let me just reinforce Peter’s gush of veracity with a few points that have emerged in the last hours. Like a new report by BMO economists saying Canada’s housing market is overvalued by 11%. That’s a national number, and we all know houses are not overvalued in most of Atlantic Canada, in Montreal, the brown bits of the prairies, anything in Ontario downwind from Hamilton, pretty much anywhere that’s non-urban, and all of BC where grapes freeze. So it means Toronto, Vancouver, and the major cities in between are grossed up by something closer to 20%.

Second, this is a bank report. They are the guys who sell mortgages. So when it also says no US-style correction will happen here because, “a key and overriding difference is the quality of loan origination in the past decade, as well as other institutional factors such as mortgage insurance and recourse against defaulters,” you know why. This is the land of the 5% down where banks love giving 35-year loans to people without money at rates destined to reset because the government has sucked up all the risk.

There’s more. Housing starts have dumped again. It’s the fifth decline in six months, and the number of new homes being built in Ontario collapsed last month by 25%. When the guys who build houses for a living see a trainwreck coming, they get off.

And more.  We’ve just learned we all have $1 trillion in mortgage debt. So what? So, this is a gain of almost 8% in one year, when the economy staggered, unemployment was rampant, wages flatlined and house sales have been collapsing since July. Where did all that money go?

Guess what? Just like the Americans, we’ve been using our houses like ATMs. One in five people took equity out of their homes – an average of $46,000. Some of those people apparently pissed it away on stuff, while a third used it to pay off other debts. The amount of this borrowing is estimated to be $41 billion.

Don’t know about you, but when Canadians need to goose their mortgages to get new borrowed money to pay off debt, I worry a little. Are these the folks realtors tell us have pent-up demand for bigger houses? Is this the “normal, balanced” market we’ve been hearing about? Or are we  on the same path as the vanishing USA middle class?

Meanwhile an estimated $15 billion was borrowed against homes for renovations. That means people who didn’t have enough money to fix their houses borrowed it from their houses, increasing their exposure to one asset class – which is now at its highest valuation and (says BMO) will fall. Is this a good thing?

I’m suddenly feeling oddly horny.

Which brings me to Chris Davies. He’s a real estate investor in Edmonton, a blogger and a disciple of the cult known as REIN. I have not met this guy, but yesterday was pointed to his web site. I will let you read this for yourself:

“It’s easy to tell people when things are going to explode, or at least when you think it’s going to explode. It’s the instant way to sales…prey on people’s fear. Exploit their anxiety and uncertainty. Appeal to the mediocre and enhance the safety of inaction. Help them feel superior when there’s nothing to feel superior about.

“This is the world of bubble blogging, and it’s Canadian King is probably Garth Turner. Maybe we’d better call him the Chief Wank.

“His posts are a daily exercise in propaganda and self-promotion, aimed only at terrifying people, giving contradictory advice and selling his books. I suspect he became an MP just for the pension, avoiding a retirement of squirrel BBQ. He is a skilled blogger and finds some truly entertaining pictures for his posts, however there’s one big point about why his blog is 100% crap. It’s all about him. There’s not actual desire to help people. There’s nothing about how to move forwards. It’s all about fear, self promotion and selling his books.

“That’s essentially how it is with masturbation. It’s the definition of selfish, which is the opposite of loving, of relationship building, of growing.”

So there you have it. Nature hates wanks. It loves real estate. It wants you to marry and buy a fourplex instead of a book. All these words will just make your head hurt, scare, inform and deceive you. Worse, they might lead you to pleasure, without love. Like a condo, vacant.

I am so ashamed.

Hear Garth here

TONIGHT: Toronto, 7 pm, DoubleTree Hilton Hotel, 655 Dixon Road (airport strip)

208 comments ↓

#1 sell now on 11.08.10 at 10:13 pm

I should let you know, Garth you and your pessimistic self masturbating views have got me to sell my place…

But you know what I think you’re right :)

#2 Debtfree on 11.08.10 at 10:15 pm

Vulture or pirhana fish you decide .
http://www.foreclosurelistings.ca/

#3 Kitchener1 on 11.08.10 at 10:16 pm

Well lets see:
BMO is a little late to the game as the other banks have all already said that RE is overpriced in Canada.

Just so we are all clear again- home prices are based on:

buyers ability and desire to borrow
lenders ability and desire to extend credit

In Vancouver- banks are lowering their assement values for properties (meaning they dont want to extend to much credit) and buyers are offering less (meaning they do not want to borrow as much)

For now its a mexican standoff, but something always has to give and in economics its the market.

The market is always right!!! It was right on the ride up in RE prices and it will be right on the ride down.

Here is a question for all home owners on this blog who purchased in 2005-2006.

Would you buy your property today, at its fair market value? If not, then why?

#4 Ben on 11.08.10 at 10:16 pm

Looks like I have been banned for posting a foreclosure on http://edmontonrealestateblog. Maybe because it was listed on a competitive real estate agency website

Anyways here it is…

http://www.polarissells.com/view_listing.php?listing=sys&id=E3243374

#5 Jsan33 on 11.08.10 at 10:21 pm

Most people have probably read the news releases stating that Canadian mortgage amounts have now exceeded 1 trillion dollars. When you read the details however, it gets quite shocking. The quotes from the Canadian Association Of Accredited Mortgage Professional however take the cake.

“The report paints a positive picture of Canada’s mortgage market, saying Canadian homeowners are comfortable with their mortgage debt, have “significant equity” and could even handle an increase in their interest rate.

“Canadians are being smart and responsible with their mortgages,” said Jim Murphy, president and CEO of CAAMP, in a release.

“They are building equity in their homes and making informed, long-term mortgage decisions. The survey results speak to the strength of our mortgage market, especially when compared to the United States.”

The following is Jim’s idea of Canadians being “smart and responsible” with their mortgages.

“There is a sizable minority, about 350,000 out of 5.65 million, or about 6 per cent, who would be challenged by rate rises of less than 1 per cent, and a further 225,000 (5 per cent) have thresholds in the range of 1.00 per cent to 1.49 per cent. However, most of these have fixed-rate mortgages: by the time their mortgages are due for renewal, time will have increased their financial capacity and reduced the amount of mortgage debt being financed. There are about 100,000 borrowers who are susceptible to short-term moves of interest rates, which is a quite small share (less than 2 per cent) of the 5.65 million mortgage holders in Canada.”

Okay, do the math. According to CAAMP’s own numbers, if interest rates were to move higher by only 1.5%, 675,000, I repeat, 675,000 mortgage holders would be in serious trouble. This number is stunning, staggering yet this doesn’t even make the headline. A 1.5% move is nothing, we could see double or even triple that amount.

If you ever needed proof of how much in trouble our housing house of cards is the CAAMP annual report pretty much summed it up. The fact that they tried to spin it into a positive news story shows just how out of touch these people are. Is there anyone tied to Real Estate that has an ounce of common sense or a shred of integrity???

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/canadian-mortgage-debt-tops-1-trillion-for-first-time/article1789172/

http://edmonton.ctv.ca/servlet/an/local/CTVNews/20101108/mortgage-debt-101108/20101108/?hub=EdmontonHome

,

#6 Junius on 11.08.10 at 10:28 pm

The only good thing to come from the end of the Real Estate bubble will be that pricks like Chris will have to face up to reality. Who knows? Maybe he will even find a productive profession to pursue.

#7 concessionman on 11.08.10 at 10:28 pm

Wow..that guys quite the leader…blog post is 5 days old, and he’s got..just a sec…a whole 8 comments (of which 3 are his…)..how did you even find this guy?

Another re guy bashing Garth (aka re-ality) to stroke his own ego.

#8 Jsan33 on 11.08.10 at 10:32 pm

A day or two ago I posted a link (see below) which lays out a scenario that could see interest rates jump as much as 5-6% in just one day. It is all about the staggering amount of worldwide debt and the potential tough time that governments could have in the future funding that debt. It is quite shocking to see that Canada is right there very close on a per GDP basis with the PIGS ( Portugal, Ireland, Greece, Spain) as to the need to borrow to fund their debt. As it becomes more and more clear that governments may have a hard time paying back their debts, the cost of borrowing will go up and so will interest rates as governments will have no choice but to push rates higher to fight for needed lenders. Than, the real pain in housing begins.

http://blogs.wsj.com/economics/2010/11/06/number-of-the-week-102-trillion-in-global-borrowing/

http://www.youtube.com/watch?v=En-oJHyG-PY&feature=player_embedded

.

#9 Bigboy on 11.08.10 at 10:33 pm

Did you mean to say “have been using out houses?” if so very Vancourverite reference and funny!

#10 Prufrock on 11.08.10 at 10:35 pm

If I order a copy of Money Road will the pages be stuck together?

#11 BrianT on 11.08.10 at 10:41 pm

If Garth is fear mongering I can imagine what the guy thinks about Jesse Ventura-his latest episode of Conspiracy Theory shines a big light on the Goldman,JPM and Co. cockroaches for the info hungry viewers http://www.youtube.com/watch?v=n6jr2vkk6cA

#12 OttawaMike on 11.08.10 at 10:42 pm

Chris Davies brings an interesting subject to the table for future blog posts and your seminars. Garth, you have provided me with direct and indirect helpful advice over the years and recently and I Thank you again.

I don’t believe you need money or are in any danger of starving(you appear to be well fed), you’ve donated your MP’s pension away, you spend countless hours here moderating and composing every day, you volunteer for your charities.

What drives you to give, especially when you are forced to defend yourself on a seemingly continuous basis?
I’m in the process of asking myself the same question as I slowly realize that I could surely qualify as the Patron Saint of Lost Causes.

Perhaps insight from you would help reconcile some of my own reasons of why I like to be needed by those in need.

#13 Kevin on 11.08.10 at 10:43 pm

Canadian mortgage debt passes 1 trillion

The median household income has increased by 53% across Canada since 1998.(47k in 98 and 72k in 10 from statscan).
The average house price has increased about 150% since 1999.

Since 1999 mortgage debt has increased by over 150%
Since 1999 lines of credit have increased over 720%
Since 1999 credit card debt has increased over 358%

Wealth will erode, the debt will remain.

http://saskatoonhousingbubble.blogspot.com/

#14 john m on 11.08.10 at 10:45 pm

Hilarious :-)……hmmmmmmmm “Chris” seems to have done considerable research on the effects of masturbation —too much information Chris! :-)

#15 ralph on 11.08.10 at 10:46 pm

In 1987, when caught in a lie about the Iran-Contra affair, President Ronald Reagan infamously said: “My heart and my best intentions still tell me that’s true, but the facts and the evidence tell me it is not.”

Chris Davies must be speaking from experience.

#16 groundzeropat on 11.08.10 at 10:46 pm

Honesly, I don’t know what the hell masturbation has to do with real estate but at least we all know what this guy has on his mind 24/7. Maybe he can run some seminars and show us how its done. Just hope American Pie doesn’t blow his Wad all in one place.

#17 Debtfree on 11.08.10 at 10:47 pm

So there you have it. Nature hates wanks. It loves real estate. It wants you to marry and buy a fourplex instead of a book. All these words will just make your head hurt, scare, inform and deceive you. Worse, they might lead you to pleasure, without love. Like a condo, vacant.

If you read this carefully .It sounds like sara or that anti masterbation witch O’something or other crazy that just lost in the USA . BTW if she really was a witch .She would have made all our arms a lot shorter.

#18 The Apocalyptic One formerly Old is Gold on 11.08.10 at 10:49 pm

We don’t know exactly where the chips will fall when the Canadian RE Titanic hits the iceberg but there will be few if any survivors of this ‘Coming soon to a town near you’ Canadian RE apocalypse. Like Bush, Harper will fade into the sunset and Ignatieff or another cookie cutter PM will lay all the blame on the big bad conservatives even as he (or she) diverts billions more to Bay Street via CHMC etal at the expense of the taxpayers. The band will keep playing till the bow of the ship sinks to the bottom of the ocean, and Phil Sopher and Co. will keep singing ‘Happy days are here again’…

#19 Ayn Rand on 11.08.10 at 10:49 pm

It is November and less than 60 days until the New Year. Garth, will you be publishing another book soon? I would love to hear what the topic is about.

#20 dmc on 11.08.10 at 10:50 pm

What does the average Australian idiot do when faced with two years of interest savings on their mortgage? Take the opportunity to save and pay down debt? Nah, just get deeper in the hole.

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

#21 DM in Calgary on 11.08.10 at 10:55 pm

Check out any RE story in the Calgary Herald — number of comments have been going through the roof — people saying ‘wait’ are called doomers, and people saying ‘buy now’ are being ridiculed.

An email I received today shook me a little — from an acquaintance and realtor — announcing a ‘Foreclosure Tour’ in Calgary.

Who’da thunk.

#22 Hovering on 11.08.10 at 10:58 pm

I do always tend to read this blog in the nude..

You should see how I write it. — Garth

#23 Another Albertan on 11.08.10 at 11:06 pm

#22/Hovering:

“I do always tend to read this blog in the nude..

You should see how I write it. — Garth”

Wow. That’s nuts.

Everyone else’s mileage may vary.

#24 garthfan on 11.08.10 at 11:09 pm

Garth, your slip is showing…

Just like the Americans, we’ve been using out houses like ATMs.

and it’s the best laugh I have had all day!

Thanks

#25 Jake on 11.08.10 at 11:10 pm

I would say Chris is stupid, but it would be an insult to stupid people. I believe I saw him post on an Edmonton blog in the past (maybe the Edmontonhousingbust blog?). I didn’t realize he had his own blog. He doesn’t seem to be much of an expert in real estate, but who can question his expertise in the field of masturbation? I wouldn’t be surprised if he had a picture of his hand in his wallet.

#26 Erikson on 11.08.10 at 11:13 pm

This blog scares the – let’s say – confidence out of RE clergy.
It’s unbearable for them to hear that the king is naked.
I wonder how Mr. Chris Davies manages masturbation when plugging ears with fingers and crying out loud to bleep out the reality?

#27 Hosehead on 11.08.10 at 11:19 pm

Release the hounds

#28 Phillip on 11.08.10 at 11:21 pm

home prices, the only chart you need to know
https://sites.google.com/site/canadianhousingdemographics/

#29 Marcus Aurelius on 11.08.10 at 11:32 pm

Noah built an ark, but it didn’t rain right away, and everybody laughed at him. But the rain did come, and it washed them all away.

I don’t make it rain, but if I know the rain is coming, I can prepare my house.

The rain will wash away the laughing fools.

#30 Ruben on 11.08.10 at 11:38 pm

we’ve been using outhouses like ATMs

so true…in so many ways…

#31 Mean Gene on 11.08.10 at 11:39 pm

This blog appears to have two themes, don’t put all your eggs in one basket and something about choking the chicken??

#32 John on 11.08.10 at 11:47 pm

Per another interview with Ben Taj today on BNN, bank economists and other vested interests in this country love to tout that “we’re not nearly as bad as the US…..blah….blah….”. Maybe we’re not, but what the great unwashed don’t get is that this does not mean we are good – we are just less bad.

What it really means is that our shot to the head will be lighter, but its still going to give us all a black eye.

#33 MKUltra on 11.08.10 at 11:47 pm

Garth,
I wholeheartedly agree with you that Toronto & GTA real estate is way overpriced. You mention the American real estate experience as our pending future, but its important to compare apples to apples when making regional predictions.

In my ignorant opinion, I think Chicago (and the Greater Chicago Area) is probably our closest sister city in the USA. It’s not a perfect match but the best I could think of in terms of climate, geography, industry, temperament of the people, etc.

Florida, Arizona, California are not appropriate comparisons for Toronto and the GTA.

From the pathetic data I managed to scrounge up, it appears that Chicago real estate has done “exceptionally well” while average-ville USA has suffered. Suburban Chicago (the GCA) also appears to have done “okay”.

If the future of Toronto is Chicago’s recent past and present…then Toronto real estate will do quite well. If the future of the GTA is the GCA’s recent past and present….then GTA real estate will do okay.

I don’t expect to see Toronto real estate to continue upward but the American evidence I found doesn’t point to a decline either.

Home owners in Toronto may actually survive this economic weirdness intact. In addition, the decline of home owners in the GTA is not a forgone conclusion based on the pathetic data I unwittingly stuck my foot in.

#34 dark sad person on 11.08.10 at 11:48 pm

#18 The Apocalyptic One formerly Old is Gold on 11.08.10

Like Bush, Harper will fade into the sunset and Ignatieff or another cookie cutter PM will lay all the blame on the big bad conservatives even as he (or she) diverts billions more to Bay Street via CHMC etal at the expense of the taxpayers. The band will keep playing till the bow of the ship sinks to the bottom of the ocean, and Phil Sopher and Co. will keep singing ‘Happy days are here again’…

*******************
Yes-let’s keep it on subject here–Circle jerks-
Our Parliamentary system is nothing but endless years of Political Masturbation-
Blame the one who sat there before-for the mess-

#35 wicked as it seems on 11.08.10 at 11:54 pm

Chris obviously your not a Brit, because you can call me a tosser and all the assorted nasty thoughts you have of me surrounding that, but never call me a wanker dude! Fighting talk. Why not think about a new career as a bus conductor and leave the RE heavy lifting to ….well Real estate MEN!

#36 Kanata Squirrel on 11.08.10 at 11:54 pm

T-minus 20 days to closing and becoming a renter of a 3 acre AG zoned land to feed my kids natural vegies and fruit next summer. My kids don’t even change schools and it takes less time to get to/from school so that’s a plus!

Cash or a diversified portfolio is king!

#37 bill on 11.09.10 at 12:03 am

let us pause and reflect on the weird ,twisted and yes, shameful ways exhibited by that notorious pillow chewer/realestate agent
chris davies…
if those people knew what he was doing to that granite and stainless countertops

#38 Ian on 11.09.10 at 12:03 am

Our dropping standard of living.

I suggest that everyone in the real estate, mortgage, financial services and securities industry be forced to watch this video link below not less than ten times over with their eyes and ears held wide open.
http://www.youtube.com/watch?v=mA62qqiYZWU
All socio psyhcopaths should read the book ‘Without Conscience” as well.
I also believe the government and private industry need to get their houses in order as well. They are stealing from the ordinary citizen, shareholder and owner.
It is evident there is corruption at all levels.
Included is a note to one of my clients as I trying explaining this market volatility, answering their questions and concerns as to why I think, they think they are priced out of this current market.
I began studying this real estate industry in 2005
I am doing everything possible to gain a better understanding of what is really going on. It is very hard not to get angry.
I am also amazed as to how a 1% or less listing ratio of all available properties everywhere can control prices.
Note to Ja and Jo with 3 kids,
Based on my own past experience, I bought my $68,000 brand new single family home in Cloverdale BC in 1978, 32 years ago, my gross family income was $23,920, a 32% GDSR, 10% down, a mortgage amount was $60,250, 5 year lending rate was 10.5%, posted, 25 year amortisation, monthly payment of $559 and taxes of $50. $68,000 divided by $23,950 = 2.85 times my total gross family income. Both my wife and I were working, then she quit work to stay home with up to 3 kids, and did day care for several years at home for a few friends and their kids, I worked everyday and several nights a week.

Lot size was 60 x 120 = 7,200 sq ft $20,000
lot price today is $325,000
House size was 1,600 sq ft 3 bed 2 bath – $48,000 medium quality build today is $120 per sq ft = $192,000
You want a 1,800 sq ft home at $120 per sq ft medium quality it is $216,000 add $325,000 lot price
Total new purchase price today is $517,000 or $541,000 for a 1,800 sq ft home
Based on your combined incomes of $95,000
$517,000 divided by $95,000 = 5.44 times your total gross family income.
$541,000 divided by $95,000 = 5.69 times

You are actually priced out of this new single family home market. At your level of incomes!!!
Not only that, the standard of living of your generation has been eroded by 47.6% in this housing category. Notwithstanding, the lowest interest rates and longest amortisation periods ever.
Higher interest rates are needed to bring back ‘normal’ housing prices and ratios.

This proposed scenario is likely to play out in my opinion and sooner rather than later. I based this on new housing prices. My feelings are that leverage will drop to a minimum of 4.00 times incomes, if not lower, of your gross family income. That means that either wages will have to go up dramatically to support a 5.44 ratio of income to prices or prices will have to fall to meet minimum this 4.00 times or less ratio. Since it is totally unrealistic wages will rise, that means a potential drop in housing prices of 26.5% is likely.
My observations of the price difference between older homes in good condition and new comparable homes should be roughly 1% per year, depreciated. So that house at 4400 003 Street (hidden identity) you want to buy should really be only priced at $367,880. These older homes have been selling close to 100% of new in the recent past. ‘Theory price’ is one thing and the ‘market price’ is another. The income link vs perception and what someone is willing to pay.

Your purchase price should be $470,000 based on my similar situation. Believe it or not.
Your gross income of: $95,000, purchases a $470,000 home, at a 32% GDSR, 10% down, mortgage amount of $423,420, 5 year lending rate is 5.29% today, posted, 25 year amortisation, services a monthly payment of $2,533.00, taxes of $225.
$470,000 divided by $95,000 = 4.94 times your family income.
So if the housing market drops by my predicted 26.5%, a new home price should be $397,635.00 divided by $95,000 = 4.18 times your family income.
This, in my opinion should be happening fairly soon.

This opinion does not take into account interest rate risk, inflation risk, no wage growth, foreigners investing in Canada at a zero cap, etc, etc, etc, but just to the past and present facts given above.

I welcome anyones comments on this post.

#39 tran, Calgary on 11.09.10 at 12:06 am

Is it true that in Alberta when you’re in negative
equity, you can just simply leave the keys on the
kitchen table and walk out or mail the keys to the
bank?

#40 Ian on 11.09.10 at 12:06 am

Also look at these ratios.

1978 lot price was 20k now 325k = 16.25 times ratio

1978 house price was 48k now 216k = 4.5 times ratio

Land is clearly overvalued, an 8 to 12 times is what I would consider to be a fair value range. 160k to 240k range.

OK, so let’s go with 8 times on both: $68,000 x 8 times = $544,000

So maybe land is overpriced and housing is underpriced??

Serviced lots in Chilliwack are 160k.

#41 DaBull on 11.09.10 at 12:11 am

#4 Ben on 11.08.10 at 10:16 pm

It’s a grow-op. Buy it. It’s a steal….NOT. It’s also listed with Re-Max.

http://www.alledmontonhomes.com/list_properties_office.php

#42 z" on 11.09.10 at 12:15 am

I send everyone to your blog– it gives them a good wake up call. I sold my home in July 2009 and if hadn’t been for your blog I would have repurchased in Dec. 2009. I would look at the mls listings make appts with realtors -daily – got involved in bidding wars– then I go home exhausted and read your blog. It took 2-3 weeks of this exhausting routine until I finally had no desire to buy a shack for $800,000. All I can say to you- Garth is……Thank you- Thank you -and Thank you–no more Location- Location-Location. You saved my ass big time !!! Thanks Garth –you did it for me !!!!

#43 Alberta Ed on 11.09.10 at 12:17 am

When the MSM regurgitate the same song sheet from the likes of Chris Davies, banks, mortgage brokers and RE associations, you know someone is getting jerked off.

#44 45north on 11.09.10 at 12:32 am

JSAN33: I posted a link (see below) which lays out a scenario that could see interest rates jump as much as 5-6% in just one day.

5% jump in interest rates would put Toronto and Vancouver underwater

#45 Crash Callaway on 11.09.10 at 12:36 am

I think the houses becoming the ATM is the last option for many. Kinda like a comfort food binge.
Gone are the days (2007) when they could run up debt, buy the toys and then simply sell the house to make a fresh start.
Average Joe always had lateral movement but in 2010 he is trapped in real estate that won’t sell or bring his expected profits.

The equity binge, the ultimate bubble diet!

#46 Into The Sunset on 11.09.10 at 12:37 am

#13 Kevin

“Since 1999 mortgage debt has increased by over 150%
Since 1999 lines of credit have increased over 720%
Since 1999 credit card debt has increased over 358%”

I have for many, many years tried to figure how anybody or anything can go beyond 100% ????

#47 betamax on 11.09.10 at 12:40 am

#10 Prufrock: “If I order a copy of Money Road will the pages be stuck together?”

Just the ones with pictures.

#48 Nostradamus Le Mad Vlad on 11.09.10 at 12:44 am


“Depravity . . . a sex deviant in the eyes of Chris Davies . . . the stock market has soared to a three-year high, oil and gold and other commodities are racing skyward, interest rates are plopping (mortgages, too) and bond prices ascending.”

Hmmm. Bares a faint resemblance to Rome not too long ago, and that ended well, didn’t it?
*
#189 Timing is Everything on 11.08.10 at 9:27 pm — “Also, nature can be nasty, worse than humans sometimes….Best to be ready for ‘incidentals’. :-D ”

Ahhh yes. NN (Naughty Nature) is what FFs were invented for! Also — this.

Glenn Beck Not sure whether he is worth reading or following, but here he says 15 days of economic collapse. The ATM’s and / or Bank Holiday can be a part.

To Gold Or Not To Gold? That is the question.

China offers help, America bullies others.

Aspartame “Aspartame needs to be banned, period, but also with Codex.”

Retailers beginning to panic?

Colorful Chart About time a new excuse, other than GW was used for storms this size.

CERN was quite successful.

Roughly the same as Mexican illegals invading Arizona and California.

US – India Spongebob Square Pants ( or something similar).

#49 Kopaja_Avenger on 11.09.10 at 12:51 am

I was feeling quite randy the other day with the links to JenCarter’s Facebook page. Garth, you are patriot. It is up to each one of us to remain strong in times of uncertainty. You are teaching good lessons in prudence. I am highly liquid with Bonds and I have to admit, I’ve got my hands in with the guy with orange shorts.

#50 Hector's Corpse on 11.09.10 at 12:54 am

Received a flyer in the mail today from a realtor in Red Deer, Alberta. Flyer states there are 729 active listings in Red Deer, representing a 29% increase in listings over the same period last year (513). Article goes on to state sales are down 33% compared to last year and that it’s a great time to buy.

Also… although probably posted sometime in the past… here again is what 1 trillion dollars looks like:

http://www.pagetutor.com/trillion/index.html

#51 Brynn on 11.09.10 at 12:58 am

i’m touching myself….

Your “honest” vancouver real estate agent Peter, aint so honest.
Of course sellers are greedy and deluded, but they ARE getting the prices they want. I watch listing and selling prices very closely and they are NOT plummeting..
I think Peter is having trouble making sales and projecting that on the rest of his sleazy colleagues who are still happily driving around in their 7 series BMW…

#52 realpaul on 11.09.10 at 12:59 am

sssssssssshhhhhhhhhhhhhhhhhuuuuuuusssshhhhhh!! Garth…you’re scaring the straights.

“There’s not actual desire to help people. There’s nothing about how to move forwards. ”

I think what the guy means to say is that if people like you keep exposing the flaws in the narcissistic face paint of the cheerleaders…. more people might actually start seeing truth…..it could spread…become contagious…and discussed at the local Timmy’s for gosh sakes…….and that is obviously not what a ‘real estate investor’ from Edmonton wants to hear at this point….not with the six or seven properties he’s watching collapse around his ears…that he was convinced to buy by one of the porn stars because it was ‘cash flow positive’ as long as the market was rising…but is now sinking like an wooly mammoth in a tar pit.

Gartho……we need a vacumn…an absence of bad news….the truth is rather frightening….and some of us are going to regret becoming ‘real estate entrepeneurs’ with the money that Mommy lent us.

#53 Crash Callaway on 11.09.10 at 1:00 am

Chris Davies,

Stay focused. Don’t be afraid. You can do it!
One day you will singlehandedly beat that masturbation addiction.
Fear not the Garth,
Fear not the man who is unafraid to crank open a window amidst a room full of gassy realtors.

#54 dark sad person on 11.09.10 at 1:04 am

Canada says undecided on selling GM stake in IPO

Nov 2 (Reuters) – Canada has not yet decided whether to sell any shares in General Motors GM.UL in an initial public offering, but suggested on Tuesday it would take a long time to divest its stake in the troubled automaker.

“We’ll see what the final terms of the IPO are, but this will not be dealt with once and for all at this time,” Finance Minister Jim Flaherty told reporters.

GM plans to sell just over $13 billion of shares in its IPO, people familiar with the matter said on Monday, cutting the U.S. government’s stake while opening the door for investment by overseas state-backed investors.

GM will file the terms in an updated prospectus for the IPO, which is expected during the week of Nov. 15, with the U.S. Securities and Exchange Commission on Tuesday, the sources said.

Canada’s federal government and the provincial government of Ontario agreed in December 2008 to provide up to C$3 billion in repayable loans to General Motors.

Flaherty defended the move and said he expected taxpayers to recoup the money, but not necessarily any time soon. “This is not a short-term issue,” he said.

http://www.reuters.com/article/idUSN0216886620101102

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

Wow– F finally nails one–

“not anytime soon”

So this bloated rotting corpse gets reinvigorated after months of intensive Taxpayer dollar care-
This “thing” should be shorted right out of the gate-but we need to remember-this dog has a “legacy” it’s now a Canadian Government “Icon” a symbol of how H-F-C saved Canada and that “little glitch” will not allow the Market to kill and bury it-

Big Pension and Mutual Funds are lining up for the IPO-
Why not-
How can they lose when Governments are in the market and all they need to do when reality sets in and this dog continues on its natural path to “zero”-is print and hit the bid-and allow the losses to sit on the BOC balance sheet and from there-not to worry-your kids will take care of it-

#55 rentin on 11.09.10 at 1:13 am

“Don’t know about you, but when Canadians need to goose their mortgages to get new borrowed money to pay off debt.”

Shhhhh! The US governments thinks it will work for them, don’t wreck it for them.

#56 SquareNinja on 11.09.10 at 1:21 am

It’s the instant way to sales…prey on people’s fear. Exploit their anxiety and uncertainty. Appeal to the mediocre and enhance the safety of inaction. Help them feel superior when there’s nothing to feel superior about.

Hmmm… that is a good strategy for sales… but hey, Garth is telling everyone to take action; that action must not be too much involved real estate, that’s all.

I actually read a book by that REIN guy… pretty good stuff, actually! It would be good advice to take… after the bubble bursts…

#57 Jojo on 11.09.10 at 1:38 am

well,I’m suprised that you now saying assets in “Silver bars” are crap and you prefer more “stocks”.
Lets say silver in 2008/Nov was just
$8/oz and today is $28. And Gold from $700 just jumped up to $1,400.
You mentioned last year in January/2009 about RE crash in GTA? And from $330k avg.price jumped to May/2010 $450K. ANd after so high jump up must be correction.
However about Canadian RE you need to know much more about IMMIGRATION quotes for every year. Currently IMMIGRATION politics is completly different than last 20 years. SO now is comming RE crash in GTA,Vancouver,Edmonton, etc.
WATCH THE PARADOX from May/2010, I couldn’t find mortgage 5year/closed bellow 3.75% when from Bank of Canada interest was 0.25%,and today everywhere you have 3.39%-3.49% interest when the BofC interest is 1% (or 0.75% higher prime rate and lower 5 years closed mortgages?).
I’ve seen in Milton new houses from Mattamy in September/2010 closing Nov/2011 – Beautiful new semi detach 2150/sqf for 367K and the same model of house (two years old) was sold in May/2010 for $449K.
Well,something you can feel about 2011.
What is the priority of the goverment just masive hiring in Goverment institutions for paychecks (biweekly $700-$1250).
BUT, unemployment will going higher next 3 years in Canada and USA,taxes and living standard much lower (poor Health Care/Public Education) untill complete colapse of the currency sistems in the Western Countries.

http://www.marketwatch.com/story/world-bank-chief-calls-for-new-gold-standard-2010-11-07

How much money supply we had till 2009:
http://www.articlesnatch.com/Article/Ancient-Wealth-Secrets-Of-The-Founding-Fathers/565614

#58 The Original Dave on 11.09.10 at 1:44 am

This site is very pro-renter. You refuse to see ANY positives for owning a beautiful property.
Very sad indeed.
Are you all going to rent until you die!
Life expectancy grows…
Still paying rent when you`re 80!!!
Imagine STILL paying rent when you`re 80!!!
——————————————————-

How about being 27, newly-wed with a baby and recently unemployed with a huge mortgage. Imagine STILL paying for the big mortgage with a baby and wife at home looking after her without a big income?

Works both ways. Unfortunately for your argument, the people in the situation I describe are more desperate

#59 Jon B on 11.09.10 at 1:56 am

“So people with financial assets are making out like bandits”. Ah yes, the wealth effect – stock market edition. No “real” money has been made unless the chips are cashed in.

#60 Gerry on 11.09.10 at 2:05 am

Great blog, but who is the “orange guy” who keeps getting mentioned in this blog? This week folks are “stuffing billions in the orange guys’ inadequate shorts”.

#61 bcweatherman on 11.09.10 at 2:09 am

Hey Garth…. thanks for the late night chuckle

#62 Tony La on 11.09.10 at 2:09 am

Let’s boil it down so no one is confused by the FUD.
1) Implication is Garth makes his money via selling fear(aka books) to his readers. So it’s in his interest to constantly sensationalize things to the point of being disingenuous.
2) Vancouver and many parts of Toronto are most likely overpriced and will see substandard price movements in the coming months/years. Vancouver/Toronto numbers can not be projected onto the rest of Canada. Similarly National numbers can’t be projected to individual local markets.
3) Fear is as bad as irrational exuberance. Become educated not by reading this blog but by seeking out the truth and coming to your own conclusions.

#63 Canuck DownUnder on 11.09.10 at 2:23 am

As a shrink, I’d expect the vitriol towards Garth to increase over the coming months, as those with a vested interest in the real estate game look for a scapegoat to deflect taking any personal responsibility for the collapsing market.

The problem for people like Chris Davies, is that they know that the herd’s mentality toward housing is changing, and that once that shift is made, the momentum is hard to swing back in the opposite direction. Unfortunately Mr Davies believes this was the result of the growing legion’s hypnotic gaze at the bearded naked bare-backed rider galloping across these web pages, and not the saddle bags filled with unsustainable debt.

By the way, this is what happens in a housing bubble in a city with 4.1% unemployment and a $15 p/hr minimum wage:

http://au.news.yahoo.com/thewest/a/-/newshome/8282557/three-homes-repossessed-a-day/

#64 Taking Stock on 11.09.10 at 2:28 am

If I had a CMHC insured mortgage for $450,000 and then was forced into foreclosure and managed to sell the house for $350,000, the bank would get the difference from the insurance, right? Would I then still be on the hook for $100,000?

If so , why?

#65 Bilbo Bloggins on 11.09.10 at 2:33 am

Hilarious…
Garth: diversify and get liquid now or perish
Realtards: buy now or be priced out forever

Who’s fear-mongering now?
Pot… meet kettle…
Except Garth’s message actually make sense.

#66 Dean on 11.09.10 at 2:34 am

Today I found out the empty house across the street went into foreclosure. The guy doing the nasty deed said there were three more in my neighborhood and had a half inch thick stack of other ones to do. Right here in Sherwood Park and Edmonton.

#67 Captain Jack on 11.09.10 at 2:37 am

#22 Hovering/Garth…HILARIOUS!

#68 Utopia on 11.09.10 at 3:06 am

Chris Davies is hysterical.

Get him to do a few guest articles Garth, you know, just for offering the opposing view on your Greater fool and “house lust” theory.

The guy has a lot of pent-up tostesterone induced housing energy despite the fact that even Bank-of -Canada-style-interest-rate-Viagra cannot stiffen Canadian real estate sufficiently to make it truly loveable for every lonely heart and open pocket book anymore.

Got to feel for the guys sincere sour-grapes complaint.

Sad isn’t it. So lonely. He has no real hope of true love anymore now that you busted his bubble and busted his balls.

#69 Popeye the sailor man on 11.09.10 at 3:10 am

Housing In the New Millennium:
A Home Without Equity Is Just a Rental With Debt
June 29, 2001

Wow there was someone warning about what can happen if ……….. way back in 2001 and it looks like they laid out perfectly how it will unfold.

PORTFOLIO MANAGER’S SUMMARY
This report assesses the prospects of the U.S. housing/mortgage sector over the
next several years. Based on our analysis, we believe there are elements in place
for the housing sector to continue to experience growth well above GDP.
However, we believe there are risks that can materially distort the growth
prospects of the sector. Specifically, it appears that a large portion of the
housing sector’s growth in the 1990’s came from the easing of the credit
underwriting process. Such easing includes:
· The drastic reduction of minimum down payment levels from 20% to 0%
· A focused effort to target the “low income” borrower
· The reduction in private mortgage insurance requirements on high loan to
value mortgages
· The increasing use of software to streamline the origination process and
modify/recast delinquent loans in order to keep them classified as ‘current’
· Changes in the appraisal process which has led to widespread overappraisal/
over-valuation problems
If these trends remain in place, it is likely that the home purchase boom of the
past decade will continue unabated. Despite the increasingly more difficult
economic environment, it may be possible for lenders to further ease credit
standards and more fully exploit less penetrated markets. Recently targeted
populations that have historically been denied homeownership opportunities
have offered the mortgage industry novel hurdles to overcome. Industry
participants in combination with eased regulatory standards and the support of
the GSEs (Government Sponsored Enterprises) have overcome many of them.
If there is an economic disruption that causes a marked rise in unemployment,
the negative impact on the housing market could be quite large. These impacts
come in several forms. They include a reduction in the demand for
homeownership, a decline in real estate prices and increased foreclosure expenses.

http://www.institutmontaigne.org/medias/documents/06-29-01%20Home%20Without%20Equity%20is%20a%20Rental%20.pdf

#70 UK lurker on 11.09.10 at 3:16 am

I’ve been following your blog from the UK for a while…mainly because I have a Canadian visa and will be moving over there once I get a job (which may be never at the rate things are going!).

Anyway, I love your blog, although I don’t find myself masturbating when I read it…maybe the odd scratch, but that’s about as far as it goes. I read a similar site in the UK called housepricecrash.co.uk…guess what it’s about! We’ve been waiting a long time. There was a massive fall in 2008/9, but the government threw money at the banks and stopped the slide and caused a 10-15% rebound. Similar in many ways to your market. Now though, the market is really starting to enter the end game, just like in Canada, and I think the falls in the UK will be even greater as your market (outside of Vancouver) is a lot cheaper than the UK.

Anyway, I just want to say thank you for your excellent blog. Not only is it entertaining, but in spite of what Chris Davies says, it is genuinely helpful and educational for all the financially illiterate people out there who would normally only have the biased media and their banker/property developer paymasters to listen to. Realtors are largely speaking vermin who feed off the hard-earned cash of house buyers and sellers, they are not people who are even remotely qualified to pass moral judgements on cockroaches, let alone human beings. You’ve obviously got him, and a lot of his ilk, rattled…keep up the good work, and hopefully by the time I arrive in Canada I will be able to afford a decent home.

#71 Utopia on 11.09.10 at 4:14 am

Said World Bank President Martin Zoellick yesterday:

“Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today.”

Interesting stuff for sure.

You don’t need to be a Gold “nut” anymore to be part of the mainstream ideology when even the World Bank is calling for reform that includes Gold in it’s portfolio.

But what, pray tell, does the IMF think since they have been a major seller of the stuff that all other Central Banks seem to desire and covet?

Makes you wonder.

#72 Aussie Roy on 11.09.10 at 4:57 am

Garth, I’m sure you take his comments “like water off a ducks back”. Very predicable response from someone with a vested interest, really what else would you expect him to say. Its the same here, its all rosey, no problem, no bubble just buy get rich, no risk, houses only ever go up.

Perhaps this link might be relevent.
http://smh.domain.com.au/blogs/property-values/sweeping-risk-under-the-carpet/20101109-17l6q.html

Auction of Aussie mega homes a FLOP.
http://www.businessweek.com/news/2010-11-08/sydney-opera-house-luxury-home-auction-misses-target.html

How can this be we are told the economy is booming.
Too much debt maybe.
http://www.theage.com.au/business/business-conditions-drop-as-retail-flounders-20101109-17l7y.html

Perhaps Chris should also read this, an oldie but a goodie, some comments are as good as the story.
http://blogs.news.com.au/jackmarxlive/index.php/news/comments/own_a_few_houses_youre_a/

#73 Behind the Numbers on 11.09.10 at 5:03 am

Last night, the wife and I were chatting about the stock market hitting new highs in 2 years.

Our guts said in March 2009 to stay out of the market, it made perfect sense. Then the market goes ballistic on bad debt, bad unemployment and corruption.

Well, we could have made a bundle if we invested, but we didn’t and still won’t… why?

Well, we concluded that if there isn’t any real logical reasons for the market to go up this much then therefore there isn’t any logic in investing in it at all. The market could easily bust or boom based on nothing. The market is the market and irrational logic and chaos rules the day there.

We don’t mind waiting for reality to hit the markets.

Somehow we feel we are not alone that too many things are getting way out of hand.

P.S. I heard on CNBC that Hong Kong RE has gone up 40% in the last year and (some bank) is saying it will go up another 30% next year. Amazing bubble.

#74 Brian1 on 11.09.10 at 6:02 am

I’ve just read Financial Insights Crazy Days and in it some guy named Ben talks about preferred shares maturing. I thought only bonds mature.

#75 Contrarian Canuck on 11.09.10 at 6:02 am

It all makes me horny.

Garth….I mean Chief Wanker….you referenced a CAAMP report in your post. The post below calculated that home equity withdrawals added 8.5% to the income of the average family. Can that possibly make sense? You thoughts?

That seems down right scary. What happens when people stop tapping using their home ATM?

http://financialinsights.wordpress.com/2010/11/08/shocking-report-by-caamp-part-1/

#76 Brian1 on 11.09.10 at 6:03 am

Harry Dent should ask you how to be a man and run a blog himself.

#77 Mel on 11.09.10 at 6:38 am

A very interesting article on the housing bubble debate in Australia and the role that their banks have played in inflating the housing market.

http://www.unconventionaleconomist.com/2010/11/australian-banks-delusion-meets.html

Also, it appears that Australia will go down the Canada route (i.e. shoot themselves in the foot) and establish a CMHC-type institution:

http://www.theaustralian.com.au/business/industry-sectors/securitisation-boost-to-help-small-banks-win-greater-share-of-mortgage-market/story-e6frg96f-1225950123078

#78 David on 11.09.10 at 6:40 am

‘There is none as blind as he who will not see’… the role of masturbation into this truism should definitely be investigated.

#79 blase on 11.09.10 at 7:03 am

Calgary:

median condo price dropped again; now it’s $247,500.

However, the median house price has been ever so slowly going up. It hit $400,000 today.

#80 Danforth on 11.09.10 at 7:22 am

The closing line is written like a great Haiku !!

Pleasure, without love
Like a condo, vacant
I am so ashamed

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

不動産は俳句です。— Garth

#81 Brian1 on 11.09.10 at 7:25 am

I should remember to google my questions first.

#82 Billy in Nobleton on 11.09.10 at 7:28 am

See you tonight.
I’ll let you sign my book if your hands are clean!!!

#83 Moneta on 11.09.10 at 8:02 am

Where to start….
======
“We’ve just learned we all have $1 trillion in mortgage debt. So what?”

US peaked at 10 trillion and now coming down. It should come down by 30% but they are barely writing anything off. Imagine that, they’re 10X more!

I find it so grating when people say we’ve been more disciplined.
———-
“Instead it’s time for some straight talk on how this weird society of ours is in the process of tearing itself asunder”

This is what the right, self-righteous Ford movement is going to bring us:

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/carl-mortished/uk-welfare-plan-saves-money-but-morally-bankrupt/article1790653/

As if those who still have their jobs are so morally outstanding vs. the ones who lose them. Just think banker.

That’s where we are going.

#84 Moneta on 11.09.10 at 8:11 am

There is a sizable minority, about 350,000 out of 5.65 million, or about 6 per cent, who would be challenged by rate rises of less than 1 per cent, and a further 225,000 (5 per cent) have thresholds in the range of 1.00 per cent to 1.49 per cent
——-
86% would be OK if mortgage payments increased by 300$.

That means 14% would not. In my book, 14% is huge.
300$ is a 2% change on 180K. 2% is peanuts and the average home is over 300K!

#85 Moneta on 11.09.10 at 8:24 am

From the pathetic data I managed to scrounge up, it appears that Chicago real estate has done “exceptionally well” while average-ville USA has suffered. Suburban Chicago (the GCA) also appears to have done “okay”.
———

Hard to believe:
http://2.bp.blogspot.com/_pMscxxELHEg/So1s7Wj1imI/AAAAAAAAGJQ/6Bn_lA3akSk/s1600-h/MBAQ220093.jpg

Illinois has been issuing bonds like crazy, ahead of other states, to try and shore up its underfunded pension funds. But debt is debt.

http://www.suntimes.com/business/currency/1397127,CST-FIN-terry26.savagearticle

#86 Moneta on 11.09.10 at 8:36 am

Your purchase price should be $470,000 based on my similar situation. Believe it or not.
Your gross income of: $95,000, purchases a $470,000 home, at a 32% GDSR, 10% down, mortgage amount of $423,420, 5 year lending rate is 5.29% today, posted, 25 year amortisation, services a monthly payment of $2,533.00, taxes of $225
————–
But the situation is not like yours:

1. You benefitted from 2 decades of abnormally low input prices (oil at 18$ per barrel due to governement involvement) permitting houses to get larger and larger.

2. Materials deteriorate faster on newer houses than on older ones. So maintaining big houses will be costlier for today’s buyers.

So they should actually be paying much less than 470K to be able to afford future maintenance.

#87 BrianT on 11.09.10 at 8:45 am

Scenes from the unfolding class war: the broke Ontario guv can’t give 2% to the lowest workers ($17/hr)-meanwhile some fat wanker sitting in an office reading this blog when he isn’t in the golf club bar is being paid $830000 a yr to be a government hospital CEO? What exactly does a government hospital CEO do anyway? Compete to get customers? Innovate? I forgot-he hits the links.

#88 canali on 11.09.10 at 8:51 am

c’mon…all the wankers are really on this site ;)
it’s not bad out there at all, you bunch of doomsdayers naysaying wankers…look at these stories:
Vancouver Sun: ‘Housing starts not so bad in BC’
http://communities.canada.com/vancouversun/blogs/businesseditor/archive/2010/11/08/housing-starts-not-so-bad-in-b-c.aspx
(email the editor Fiona Anderson with your thoughts…am sure she’d love to hear from you)

…or this from the Globe and Mail in their ‘Household Finances’ section written yesterday:
“Record Debt comes with rise in wealth”
http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/record-debt-comes-with-rise-in-wealth/article1786945/

C’mon, folks, it’s not really that bad out there…so lighten up a bit…paying $300-500k for a shoebox in Toronto or Vancouver is a good thing: think less carbon footprint …and you’re forced to live on a budget and can now go back to homecooking (there are lots of good links to revving up K Dinner in many ways)…plus many good free youtube and online links to meditation and stress relief to help you get a good nights sleep, since you can’t afford a therapist given, again, you’re on a tight budget.

It’s all good …
;)

#89 Incubus on 11.09.10 at 8:56 am

Garth you arde doing a good job, but are wrong about Montreal, the bubble here is real and at least 40%. Prices have more tahn double since 2000.

http://bulle-immo-quebec.hautetfort.com/media/01/02/570861875.jpg

http://bulle-immo-quebec.hautetfort.com/

#90 T.O. Bubble Boy on 11.09.10 at 9:03 am

Canadian Mortgage Trends with their highlights of the CAAMP survey:

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/11/caamps-mortgage-market-report-2010.html

Amortizations:

22%: Percentage of Canadian mortgages with amortizations over 25 years.
>> Two years ago it was 16%.

So, in just 2 years, the percentage of mortgages with over 25 year amortizations rose 38%? (+17% per year)

How is that even possible, when only 20% of the market would be new mortgages each year?

If you look at those 2 stats alone, it implies that 85% (17/20) of new mortgages are over 25 year amortizations!!!

#91 luketheduke on 11.09.10 at 9:04 am

the problem with people like you Garth is that you will never admit IF you are wrong.Should’ve stayed in politics

Wrong is relative, dude. — Garth

#92 pbrasseur on 11.09.10 at 9:10 am

…we all know houses are not overvalued in most of Atlantic Canada, in Montreal, the brown bits of the prairies… – Garth

Houses not overvalued in Montreal??? You must be kidding!!!!

http://www.montrealgazette.com/business/Housing+bubble+accident+waiting+happen/3461689/story.html

According to http://www.policyalternatives.ca/publications/reports/canadas-housing-bubble

Canada is experiencing for the first time in the last 30 years, a synchronized housing bubble across the six largest residential real-estate markets in Canada.

#93 TorontoBull on 11.09.10 at 9:29 am

@ 33
I don’t know where you got your research from, but accroding to the 6th Annual Demographia International Housing Affordability Survey, which tracks housing affordability by using Median Multiple (Median House Price/Median Household Income), as of 2009 – 3rd Quarter, Chicago has 3.4 median multiple. Compare that to Toronto at 5.2 and you’ll see that Toronto has a long way to go…

#94 Buyright on 11.09.10 at 9:37 am

Re #89
Most of us wish Garth stayed in politics.
Then we would have some common sense in Gov and we wouldn’t be in this mess.
Looking forward to tonight !
Maybe we can convince you to run for PM ?
:)

#95 Herb on 11.09.10 at 9:44 am

Er, Chris, wank off!!!

#96 Got A Watch on 11.09.10 at 9:50 am

While Realt(ho)rs(TM) fiddle, the global economy is burning. I keep telling you real estate focused navel gazers to lift your eyes and see what is going on beyond our borders. Real estate in Canada is irrelevant in a global context, it’s a minor local issue.

Right now, the end of the US $ as a “global reserve currency” is fully under way, and the implications won’t be good for North Americans, to understate the case.

I’m not talking theoretically here, not “next year” or in “five years”, but right now, today:

World Bank Says Asia May Need Capital Controls to Curb Bubbles

“Asian economies may need to turn to capital controls as quantitative easing by the U.S. threatens to spur asset bubbles in the region’s stock, currency and property markets, the World Bank said.

Any curbs should be “targeted,” temporary and tailored to address specific problems, Sri Mulyani Indrawati, a World Bank managing director, said in an interview. This could include countries tying up funds for as long as a year to help limit hot-money, she said…..”

Headlines today: (hat tip Market Ticker Blog)

“13:13 09Nov10 RTRS-CHINA FX REGULATOR PUBLISHES RULES TO CURB SPECULATIVE CAPITAL INFLOWS
13:14 09Nov10 RTRS-CHINA FX REGULATOR SAYS IT WILL STRICTLY MANAGE COMPANIES’ SHORT-TERM FOREIGN DEBT QUOTAS”

Currency World War has erupted.

Gold Trades North Of $1,420 After China’s PBOC Advisor Li Says “Absurd” Dollar Is Reserve Currency

“Precious metals have now entered their parabolic phase. The latest catalyst for gold having traded north of $1,420 is not only the ongoing collapse of Europe via surging spreads and accelerating ECB bond monetization, which in tried and true bizarro fashion have lead to a more than 100 pip move higher in the EURUSD, but the latest speech by PBOC academic advisor Li Daokui, who said that it is “absurd” that the dollar is still the reserve currency of the world. We are confident that pretty much everyone in China agrees. The likelihood that China is about to do something big in FX land was also confirmed by the biggest move higher in the CNY which rose by 0.51%, the most since the revaluation period, and also by the high yield in the one week auction, which has led some to believe that China may be willing to hike rates once again, and further weaken the dollar peg.”

I can see a scenario where Europe has major PIIGS issues etc, Asia moves to a “foreign exchange mechanism” that does not use the US $ – and the US $ just freefalls…the world is running away from it now. QE2 was the straw that did break the camels back – Zimbabwe (Bubbles) Bernanke tried to inflate the USA, but blew up the global economy and the FED itself.

For global equities, that have been partying on “QE” for many months, last call was just announced. Next the lights come on…. it will be “risk aversion” that will make ’08 look like a blip, as back then everyone assumed “The FED is in charge” and “authorities will act” – well they “acted” all right, but totally improperly, and we are about to see the end game.

“Party like there’s no tomorrow, cus you know there probably isn’t” – The Godfathers

#97 TheBestPlaceonEarth on 11.09.10 at 10:08 am

Imagine one day in the near future where there are no listings for sale in Vancouver. Far fetched? I don’t think so. I forsee a time in the near future where people realize the true intrinsic value of Vancouver Real Estate and just stop selling period. That will make todays prices look like the bargain of the Century. Vancouver is like Fort Knox a storehouse of wealth. It will NEVER falter NEVER.

#98 Devil's Advocate on 11.09.10 at 10:19 am

Wrong is relative, dude. — Garth

Yes, yes it is.

#99 Investor on 11.09.10 at 10:44 am

ahaha Chief Wank. Gotta admit that is funny.

#100 MadMan on 11.09.10 at 10:44 am

Great blog as always Garth! I do somewhat disagree with you on one point however: here in boom-and-bust Northern Ontario, home prices in the larger communities have also nearly doubled over the last 10 years. Sure precious metals are doing great these days but forestry is in the basement. IMHO, there is nothing driving this decade-long price surge other than low interest rates and (sl)easy lending standards. Well, that and the new perception that there’s nothing wrong with spending 250k on a 1000 sqft home 8 hours north of T.O.
I should add that there is change in the wind here also – luxury homes aren’t moving anymore. And to think our neighbour Sudbury was leading Canada in the sale of luxury homes recently. Bad news…

#101 Jason on 11.09.10 at 10:45 am

If you spend any length of time reading the kinds of posts by the so-called experts at REIN, you’ll quickly realize REIN appeals directly to mediocre, average to lower IQ so-called real-estate investors with a propensity for the quick gain. I was told Don Campbell didn’t make his millions buying and selling real-estate as much as selling memberships to REIN (about $8-9MM/yr, over 4000 members at $200/mo membership fee) – go figure. An you know the advice they give to investors, sell JVs to friends and family – yeah that’s right go blow your brains out buying overvalued real-estate and take your friends and family with you. I have a friend in Calgary who joined REIN, purchased a number of multifamily properties during the peak in 2007-2008 sucking-in friends at work and they’re now starring at huge losses (purchased at $225,000/door, lucky if you get $150,000/door today). At the time REIN were pushing the idea to buy-buy-buy (just like the nut at Mad Money – James Cramer). Needless to say, the guy I’m referring to is now a pariah at work. And to top it all off, the President of REIN (R. Westcott) I was told is telling members to continue to buy while he himself is selling. I think that’s all you need to know.

#102 tre on 11.09.10 at 10:47 am

Garth the end is near with real estate. How do I know when all the Johnny come lately cats start hitting the radio, tv and internet it’s just about over. Banks always contradict themselves due to conflicts of interest. The media is uncanny in calling the tops when they report just do the opposite and most times you will be fine. This trainwreck is going to be a sight to see and I’ll have my popcorn ready. The stories will be spectacular, I’ll have to read the national post for some juicy stories and keep an eye on the political fallout when people lash out at the government in elections.

#103 Dorf on 11.09.10 at 10:57 am

OK, so Garth is a skilled blogger and the other is a self-proclaimed skilled masturbator, who believes that masturbation is a cardinal sin against the order of nature, so although he doesn’t deny himself “the act”, he pretends he didn’t like it.

The rest is a bunch of filler words, similar to an auctioneer, that makes sense only to someone who is high on meth.

#104 Junius on 11.09.10 at 11:02 am

#95 BPOE,

Do you have another message other than “it is different here”. While it is nice to see contrary opinions here you are already tired and repetitive.

BTW – 2 realtor friends of mine are desperate to sell their investment properties. They think the market is going to crash.

My guess is you are one of them hoping to cash out before you crash out.

Why not give us a break and take the comedy routine some where else. We see through you.

#105 Dorf on 11.09.10 at 11:04 am

“It’s easy to tell people when things are going to explode…All these words will just make your head hurt, scare, inform and deceive you. Worse, they might lead you to pleasure, without love. Like a condo, vacant.”

Direct Translation To English:

Pay no attention to that man behind the curtain, the great and powerful REIN has spoken.

OR

Real Estate is worth a LOT of money. Buy my real estate.
Bring a LOT of money.

#106 Jack N. Offalott on 11.09.10 at 11:05 am

Hi Chris, what are you doing right now ?

#107 The Original Dave on 11.09.10 at 11:05 am

Let’s boil it down so no one is confused by the FUD.
1) Implication is Garth makes his money via selling fear(aka books) to his readers. So it’s in his interest to constantly sensationalize things to the point of being disingenuous.
2) Vancouver and many parts of Toronto are most likely overpriced and will see substandard price movements in the coming months/years. Vancouver/Toronto numbers can not be projected onto the rest of Canada. Similarly National numbers can’t be projected to individual local markets.
3) Fear is as bad as irrational exuberance. Become educated not by reading this blog but by seeking out the truth and coming to your own conclusions.
——————————————————-

ah, so everyone should just close their eyes and buy real estate like everyone else?

#108 Junius on 11.09.10 at 11:06 am

#38 Ian,

Thanks for posting the link to the John C. Bogle interview. I don’t particularly care for the interviewer’s style but Bogle is a gem and someone who needs to be listened to. As a mutual fund giant he speaks from experience and offers a valuable perspective. I read his book, “Enough” and really enjoyed it.

I agree. I highly recommend the video and I am going to get his book.

#109 GregW, Oakville on 11.09.10 at 11:10 am

Hi Garth, All the low cost stuff we buy from places like china, or closer to home, can end up costing the locals quit a bit more!

China: Most northern plain groundwater unsafe to drink
“Only 24 percent of groundwater in the North China Plain is safe to drink, a recent study by the China Geological Survey shows.

The four-year study found groundwater in the area has been tainted by heavy metals, chemical fertilizers and surface water pollution caused by leaks from garbage dumps and sewage water irrigation.”
http://www2.fluoridealert.org/Alert/China/China-Most-northern-plain-groundwater-unsafe-to-drink

#110 Fred on 11.09.10 at 11:22 am

> That’s a national number, and we all know houses are not overvalued in most of Atlantic Canada, in Montreal, …

I can’t figure out whether you are joking about this or not. Prices in Montreal and other places are also seem insane to me.

#111 David B on 11.09.10 at 11:23 am

CTV …. last evening interviewed some dude who borrowed $400K for some home reno’s some where in old Toronto! Cool eh? nuff said …

#112 Devil's Advocate on 11.09.10 at 11:26 am

New home prices rise slightly
Statistics Canada reported Tuesday that its New Housing Price Index increased 0.2 per cent in September after a 0.1 per cent increase in August. – CBC

Read more: http://tinyurl.com/2b728ym

#113 Behind the Numbers on 11.09.10 at 11:33 am

The Canadian dollar IS a gold backed currency.

I just heard on Alex Jones that the Canadian dollar is a gold backed currency and 30% of the TSX is commodities like Gold.

So there is little reason to invest in Gold if you hold Canadian Dollars.

Unless you disagree with Alex Jones’ analysis.

#114 Behind the Numbers on 11.09.10 at 11:35 am

I forget to add… when the gold and commodity bubbles bursts, the Canadian dollar’s value by a little as well, but not as much as Gold will fall*.

*See above %ages.

#115 Paolo on 11.09.10 at 11:40 am

Maybe Chris Davies is right – – here is some good news today (fresh off the press) about RE rising in value:

“OTTAWA — The New Housing Price Index increased 0.2 per cent in September after a 0.1 per cent increase in August.

Statistics Canada reports Montreal, with a 1.6 per cent rise, and Calgary (0.3) were the largest contributors to the index’s upward movement between August and September”

http://www.cbc.ca/money/story/2010/11/09/september-new-house-prices-canada.html

Yes Canada, this will all end so well over the next 10 years. We are not like the USA. We are solid…

#116 Barbmul on 11.09.10 at 11:44 am

Re #33

Chicago real estate has fallen 30% from it’s high of $265,000 in Aug. 2006 to $186,400 in Aug. 2010. Is that what you consider doing “exceptionally well”? I left Chicago in May 2005. Sales were down, realtors were painting a bright shiny picture, the housing bears were grumbling and prices continued to climb gradually until they peaked the following summer. I moved to Seattle and watched the exact same picture unfold as their real estate didn’t peak until 2007. Now I live in Kelowna and it feels exactly like Chicago did in 2005 and Seattle did in 2007. We are not different here.

#117 mab on 11.09.10 at 11:51 am

Tuesday, November 09, 2010 10:08:03 AM

(CH) Chinese rating agency Dagong Global Credit downgrades US credit rating due to QE program (update) – Chinese press

– Cut long term US sovereign rating one notch to A+ from AA, with a negative outlook.
– “The serious defects in the U.S. economy will lead to long-term recession and fundamentally lower the national solvency. The credit crisis is far from over in the United States and the U.S. economy will be in a long-term recession.” Weaker dollar will hurt US ability to attract dollar capital reflow. “In essence, the U.S. government’s move to devalue the dollar indicates its solvency is on the brink of collapse”

#118 SM on 11.09.10 at 11:52 am

Another hysterical post. I think Chris Davies ‘doth protest too much’. I was wondering if I was the only one getting turned on by this blog…

I guess you can just count your readers as depraved groupies.

#119 dark sad person on 11.09.10 at 11:55 am

‘JPMorgan traders bragged about manipulating the silver market’, informant says

The JPMorgan traders would brag to the Informant about how much money they were making as a result of such manipulation.

Both this lawsuit, and the past lawsuit, claim JPMorgan and HSBC, two firms which they say controlled 96% of all precious metals derivative contracts, conspired to depress the price of silver around “key” dates, like when unemployment data was released.

Read more: http://www.financialpost.com/news/business-insider/JPMorgan+traders+bragged+about+manipulating+silver+market+informant+says/3799661/story.html#ixzz14ntqcj81

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

Those Goldbugs just cannot connect the dots-
someone here recently said-
btw-
If there’s anyone who hasn’t seen a short squeeze in progress-have a look at Silver-

http://www.barchart.com/chart.php?sym=SIZ10&style=technical&p=I&d=X&x=59&y=9&im=15&sd=&ed=&size=M&log=0&t=CANDLE&v=2&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

#120 Be A Man on 11.09.10 at 12:04 pm

Hey guys the price of my house is up (again)!

http://www.moneyville.ca/article/887855–montreal-calgary-lead-as-new-house-prices-rise

It won’t end well? I guess sometimes we all need to tell ourselves something to make us feel better :)

Thank you to all the renters who pay their rent on time! Keep renting! I love you all!

Don’t look at prices, but sales, for an indication of the future. Ontario housing starts just dropped 25%. Guess what the builders know? — Garth

#121 Zaza on 11.09.10 at 12:04 pm

I’ve done MLS search for 2 bdr, 2wrm houses/condos in GTA and noticed that there are MUCH MORE houses and condos for sale below $300K. I’ve also noticed that there are MUCH MORE condos for rent on Yonge between Sheppard and Finch.

#122 np on 11.09.10 at 12:11 pm

you know, i find it hilarious people talking about deflation. here we have gold and silver, palladium and platinum, going through the roof. copper near an all time HISTORIC high. soybeans, wheat and corn skyrocketing. cotton at a 150+ year HISTORIC high. sugar nearly 40 cents, highest since 1980, and that too will soon be surpassed…

this is out right inflation. plain and simple. yes. canadian home prices will fall. so what. this is the 70’s all over again. only it will be far more vicious. especially since all governments are now going to print and print and print. …

#123 Another Opinion on 11.09.10 at 12:14 pm

When they can’t argue with your words they turn to slander. What a retarded/childish world we live in sometimes.
Keep charging Garth. People need to hear all opinions then be adult enough to make up their own mind.

#124 Lorne on 11.09.10 at 12:17 pm

MSM keeps pumping!! No mention of averages, medians etc

http://www.theprovince.com/business/Montreal+Calgary+push+house+prices+higher/3799342/story.html?cid=megadrop_story

#125 BrianT on 11.09.10 at 12:22 pm

Things are getting pretty bad when a grifter like Greenspan says the fraud is out of control http://www.youtube.com/watch?v=731G71Sahok

#126 dark sad person on 11.09.10 at 12:23 pm

#111 Behind the Numbers on 11.09.10 at 11:33 am

The Canadian dollar IS a gold backed currency.

I just heard on Alex Jones that the Canadian dollar is a gold backed currency and 30% of the TSX is commodities like Gold.

So there is little reason to invest in Gold if you hold Canadian Dollars.

Unless you disagree with Alex Jones’ analysis.

*********************
And then you say this–
*********************

I forget to add… when the gold and commodity bubbles bursts,

*****************
What the hell good is a CAD “backed by gold” as you say-if gold is gonna crash?

Can you explain how PM mining company’s listed on the Cndn exchanges “backs the CAD with Gold?

Feeling a little “Nationalistic” are ya Hugo?
Typical Canadian Socialistic centric view-

#127 BrianT on 11.09.10 at 12:28 pm

#120NP-this is nothing like the 1970s-in the late 1970s you had the majority of employees getting steady double digit wage increases-those days are gone. The thing is, the CPI is a relatively arbitrary number-the calculation basis can be altered at will to derive the desired result. This wasn’t done in the 1970s because the rot of institutional corruption didn’t approach current levels.

#128 Timing is Everything on 11.09.10 at 12:31 pm

Quite interesting…esp the forecast (Outlook) to the end of 2012….

CAAMP’s Mortgage Market Report – 2010

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/11/caamps-mortgage-market-report-2010.html

Full report…

http://www.caamp.org/meloncms/media/Fall%20Consumer%20Report%20WEB.pdf

#129 Coraline on 11.09.10 at 12:37 pm

MKUltra and Moneta, re Chicago. MKUltra, obviously you fell for Chicago Magazine’s attempt to compare 1994 values with 2010 values to make it seem as though things aren’t all that bad. What you want to do is compare 2005 values with 2010 values. Conveniently, the magazine still has that info online. All Chicago areas have experienced a considerable decline since 2004/05, with the exception of one or two areas (that sell a very small # of properties, permitting great variation in averages depending on what sells).

See: http://tinyurl.com/2845wq8 for 2005 data
and http://tinyurl.com/22usrzm for the 2010 data. I would love to spend the day calculating the total decline in each neighbourhood (I used to live there). But I can’t.

Note that these charts exclude the suburbs, which have experienced even greater declines.

I’ve noticed that very few sources want to show the total price decline from the start of the U.S. housing crisis to today, in any city or region. You have to do the work yourself.

#130 Keith in Calgary on 11.09.10 at 12:39 pm

It everyone holding those pieces of paper that say they own XXX ounces of either gold and/or silver went to their dealer at the same time to try and get physical delivery of their metal, I’d hasten to say that the results of their attempts would be very interesting indeed.

Heh.

It’s a market manipulated bubble……..just like real estate.

#131 torontorocks on 11.09.10 at 12:43 pm

#33 MKUltra – sorry to tell you this but from personal experience in Chicago, their prices dropped significantly from their peak. In fantastic areas as well, such as Edgebrook. Did the GOlden Mile drop down big bucks? I’m not sure as I didn’t ever look in that area but I know that excellent sized condos (not 500 sq foot shoebox like up here) but in excess of 950 sq ft in the downtown loop area came down a bunch as well. So as a comparable city, yes Chicago had a meaningful price adjustment. An Arizona price adjustment? no. but a meaningful one. Toronto is no Chicago, by the way. And a $740.000 vinyl sided semi at Runnymede and Bloor is NOT an 1920’s detached Colonial home in Edgebrook. NEver Never NEVER.

#132 dark sad person on 11.09.10 at 12:50 pm

#120 np on 11.09.10 at 12:11 pm

you know, i find it hilarious people talking about deflation. here we have gold and silver, palladium and platinum, going through the roof.

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

All of those you list were flat during the 80’s and 90’s-
Were we in “Deflation”during those years?
We must have been-if you say the price rise is because of “Inflation” now–
Can you explain please–

http://www.barchart.com/chart.php?sym=NGZ10&style=technical&p=MN&d=M&x=53&y=6&sd=&ed=&size=M&log=0&t=CANDLE&v=1&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

Copper–i see we’re almost back to 2008 levels-
Beware the triple top-

http://www.barchart.com/chart.php?sym=HGZ10&style=technical&p=MN&d=X&x=54&y=7&sd=&ed=&size=M&log=0&t=HLWCDL&v=1&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

http://www.barchart.com/chart.php?sym=LSX10&style=technical&p=MN&d=X&x=57&y=7&sd=&ed=&size=M&log=0&t=CANDLE&v=1&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

http://www.barchart.com/chart.php?sym=PLF11&style=technical&p=MN&d=X&x=49&y=7&sd=&ed=&size=M&log=0&t=CANDLE&v=1&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

http://www.barchart.com/chart.php?sym=PAZ10&style=technical&p=MN&d=X&x=42&y=10&sd=&ed=&size=M&log=0&t=CANDLE&v=1&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

#133 robert in london on 11.09.10 at 12:52 pm

#111 Behind the Numbers

Is this a recent phenomenon? The Loonie was a buck ten in November 2007 when gold was $800. Unless the commodities percentages on the TSX have changed I would take what Alex has to say with a large grain of salt.

#115 mab

Why do pot, kettle and black come to mind?

#120 np

And yet we seem to have a little ongoing problem with the quality of jobs and stagnating incomes. While this environment might represent commodity trader nirvana it does not accurately reflect true economic health. Let’s see what happens when producers try to pass on these costs to consumers whose pay just isn’t keeping up. Can you say margin compression?

#134 Frank on 11.09.10 at 12:54 pm

MKUltra #33

” I think Chicago (and the Greater Chicago Area) is probably our closest sister city in the USA.”

I would agree with you 100%. My uncle lives in what would be considered equal to north york area C6 type area. The only difference is that the similar homes in Chicago sell for $225,000 vs $500,000 plus that homes sell for here. Toronto and almost everywhere else in Canada is in a MONSTER HOUSING BUBBLE and would need to drop 50% just to equal our sister city in the US.

#135 Money Thrower on 11.09.10 at 12:57 pm

#33 MKUltra Re: Chicago

Try Zillow – Chicago has dropped from $265K to $186K.

So, is it the available data that’s pathetic, or just your argument? REALTOR, by any chance?

http://www.zillow.com/local-info/IL-Chicago-home-value/r_17426/

#136 realpaul on 11.09.10 at 12:57 pm

Canadian buyers in Florida beware….legions of squatters are now taking possesion of vacant houses. If this was your ‘foreclosure gem…what would you do….especially when the law doesn’t automatically grant you the support of the authorities.

http://www.nytimes.com/2010/11/09/us/09foreclosure.html?_r=1&ref=global-home

#137 BrianT on 11.09.10 at 1:07 pm

#132Frank-Chicago has one of the largest, most dangerous urban ghettos on the planet. There are at least 1200 properties for sale right now under $50000 for this reason. Toronto isn’t anything at all like Chicago-TO is more like a smaller NYC with some LA sprawl and cold weather.

#138 morfeus44 on 11.09.10 at 1:07 pm

Vlad, did you miss this one? Love your posts!

http://www.space.com/news/mystery-missile-launches-over-pacific-ocean-101109.html

somethings brewing and it’s not Timmy’s Dbl/Dbl.

#139 DaBull on 11.09.10 at 1:12 pm

#4 Ben on 11.08.10 at 10:16 pm

That’s a former grow-op. Great deal… NOT!!!

It’s also listed with this Realtor

http://www.alledmontonhomes.com/list_properties_office.php

3 down.

#140 Kitchener1 on 11.09.10 at 1:16 pm

Regarding the gains in gold/oil/silver/wheat/corn etc…

Its all good to cheer abiut this stuff but it means that the input costs of all things are going to be going up soon. contracts are purchased on a 30-60-90-120 day basis. If this rally holds and for now, it looks like it still has some very strong support. Watch for inflation showing up very fast and hard.

At Sept/Oct prices we were trending at 1.9% inflation according to the BoC. Well, if this rally continues we will be well over 3% very soon. If that happens month over month watch for some very drastic interest rate rises. Im talking .5 or 50 basis point moves up and more at consequtive meetings.

What will that do to RE? to the tapped out canadians at 150% income to debt? to all the people who are carrying 300K plus mortgages in toronto and van city.

Look at it this way, every 1% increase in rate is = to $100 on 100K mortgage debt (approx) so, 300K mortgage debt with 1% increase = a $300 a month increase. Factor in rising price of gas, ($15/week extra for $60 a month) factor another $20/month for increase in heating/hydro costs, factor another $50 a month for increase in food costs. and that means that a person with a 300K mortgage has to come up with $420 a month, just to sustain their current lifestyle should rates go up approx 1%. Thats a lot of $$

#141 Halifaxed on 11.09.10 at 1:25 pm

“…we all know houses are not overvalued in most of Atlantic Canada.”

Garth, we missed you when you were out this way (Halifax, NS). I would love to hear some informed opinion about the housing market in the Halifax area.

We’re seeing prices slip thousands of dollars below asking in many of the suburban markets, especially the country/urban neighborhoods in fringes such as Sackville.

Yet, most of the mainstream thinking here holds that the market has only “stabilized” or “cooled” and that prices will continue to rise. After all, according to CMHC our starts were up in October (as was economic growth – go figure), bucking the national trend.

I know most of the economic and real estate “meat” is in the GTA and BC, but again, it would be great to hear some insightful commentary for our neck of the woods.

Not to be a kissyass, but your blog and books are excellent. Please keep up the good work.

Kissyass is better than today’s topic. — Garth

#142 Paolo on 11.09.10 at 1:25 pm

# 118 Be A Man

Question: Are you serious?

This news story is more hype from the MSM. That is why I posted it up on #113.

Tiny increase in places like Montreal 1.2 or a whopping 0.3% in Calgary don’t mean much. 25% drop in housing starts in the GTA. Too many condos coming to market in 2011 – this will wipe out the 3% increase in Toronto and then some, basically overnight.

I was in the US a few years ago while I watched this train wreck unfold. It wasn’t sub primes alone. It was the middle class that took the hit once they were underwater. It spirals downward. Very quickly. Very slippery slope indeed.

Garth is right. 25% drop. 9 million house ‘rich’ boomers ready to cash in their RE in a country of 34 million. 20 and 30 somethings with at most 5% down and 35 to 40 year mortgages.

I just don’t see how this will end well. And today the Canadian dollar surpassed the US Dollar.

#143 Jason on 11.09.10 at 1:39 pm

Garth, another thing to keep in mind about REIN is that they’re in the pockets of the realtors. Don Campbell and REIN were the only people outside of the CREA that defending restricted access to the MLS. If you go onto their forum and post anything that’s perceived not to be in the interest of the realtors, the post will likely be deleted. For example, one guy posted a request for a list of Low Cost Realtors in the Calgary area (e.g., 0.5% Commissions or $500 service to list on the MLS) and the post was promptly deleted and the poor guy was viciously attacked. The poster hung in there and here’s the new link:

http://www.myreinspace.com/forums/index.php?showtopic=19669

This is what you’re dealing with when it comes to REIN.

#144 BrianT on 11.09.10 at 1:51 pm

The Chicago carbon trading exchange pushed by scammer Al Gore is going down in flames http://pajamasmedia.com/blog/if-al-gores-chicago-climate-exchange-suffers-total-failure-does-the-msm-make-a-sound/?singlepage=true

#145 MikeT on 11.09.10 at 1:59 pm

@99 Jason:
I think 4000 x 200$ = 800,000$ and not 8MM.
But a big number nevertheless.

Nostradamus:
you should consider slapping a web site together, where you would post your links. Too much good stuff, but too spread over the comments on this “sorry blog” as per Garth’s words.

All:
just watch Chris Martenson’s video on bubbles (from his Crash Course) and you’ll understand how prophetic daddy Garth is…
http://www.chrismartenson.com/crashcourse/chapter-15-bubbles

#146 canali on 11.09.10 at 2:04 pm

Don’t you love it…seems that we’re NOT in a housing bubble afterall, so says BMO Capital Markets (except if you’re in BC perhaps)…(can’t believe it.)
http://communities.canada.com/vancouversun/blogs/businesseditor/archive/2010/11/09/housing-not-in-a-bubble-except-maybe-in-b-c.aspx

#147 leaside_girl on 11.09.10 at 2:28 pm

I send two of my friends from work about 6 month ago to read your blog. Result both both houses within 3 month. One is single, 40 the other just got engaged.
Another friend of mine after reading this blog decided to put a second floor and completely redo his bungalow. Showed me a pictures the other day of his stainless steel appliances and …yes marble tops in the kitchen. Yes, I am jealous. Renting two bedroom apartment with two kids is not fun but our affordability level is zero to none. Apparently 130K income a year can not buy anything in the decent neighborhood in Toronto. Prices are still well above 600K and are moving quickly.
I do however have a question. How come real estate in New Yorke didn’t drop down at all when half of the USA is drowning. Dopes it mean that Canada will be the same, meaning Toronto (good areas prices go up) but Mac mansions out side of it will drop.

#148 torontorocks on 11.09.10 at 2:32 pm

Brian T #133. Toronto has its own share of ghettos. Chicago is a first rate city that puts TO in its pocket and for God’s sake STOP with the New York north comparisons. My friend comes from Geneva and tells me “HOLY SHIT Toronto is expensive when he goes and buys a sammich and a coffee from starbucks for $12. We’re not a gateway city like London or Moscow or Zurich or New York or Chicago. We’re not even in the back pocket of montreal. We’re a small town made famous by a bunch of hillbillies moving in from Owen Sound, Kenora, Colombo, Punjab b/c its better than living in Owen Sound, Kenora, Colombo and Punjab. Its what it is – driven by interest rates, LAX lending standards (inclduing 100% down mortgages with the cash back) and its gonna be funded by taxpayers ultimately. You can’t tell me that these over leveraged fools are gonna suddenly pull out an extra $1500 that they’ve been hoarding to pay down mortgages when rates edge up. And I used the word edge b/c that’s all they have to do. Creep is a better word.

Lastly, this model was somewhat tried in the US where there is an incentive to own property. There, use an interest only mortage to reduce your taxable income, use the refund to pay down the principal usually resulting in an equivalent of higher payment to the principal. And repeat. And repeat. but instead, the money went to a TV or SUV or vacation or whatever. Its gonna go. Good luck to all.

#149 Jason on 11.09.10 at 2:55 pm

@142 MikeT
Read my post carefully, $200/mo equates to about $9M/yr.

#150 Jeff Smith on 11.09.10 at 2:59 pm

I heard the PM will be very frugal next budget? Scary time ahead.

http://www.theglobeandmail.com/news/politics/ottawa-notebook/pm-plans-cross-country-listening-tour-ahead-of-tough-love-budget/article1791727/

#151 Jacen on 11.09.10 at 3:22 pm

#70 AussieRoy.
As a fellow expat (I assume?) in Melbourne, I love your posts. I find it even harder to find any negative press here than Canada, even after the 60% overpriced comment by Economist.
Australia’s real estate obsession is as bad as Vancouver’s, but country-wide.

Keep up the good work!

#152 np on 11.09.10 at 3:31 pm

#125 BrianT on 11.09.10 at 12:28 pm

i agree 100% … the average person is going to get severly squeezed. all his food and energy costs will go through the roof, and his wages will stay the same. it’s going to be uglier than the 70’s

#131 robert in london on 11.09.10 at 12:52 pm

consumer goods will rise. there is no question about it. the final goods prices can only go up. producers may try and hold back increases, but, good luck. at some point, what do they do? price of oil goes to $100+, you don’t think transports become more expensive?

in the end, with all the money printing that is going on, we’re going to see some stunning price rises along all goods and services. some people may be able to keep pace, but not everyone.

this is just going to add to the misery of people with mortgages that can’t make ends meet even now.

#153 Reasonfirst on 11.09.10 at 3:33 pm

#144 leaside_girl

see this: http://www.trulia.com/real_estate/New_York-New_York/market-trends/#qma_median_sales_price_chart_container

Looks to me about a 20% drop that has largely recovered but not completely – 20% aint no joke.

#154 Weeping in Windsor on 11.09.10 at 3:40 pm

Garth —just wanted you to know that I will continue reading your blog— at least until I need stronger glasses.

#155 Junius on 11.09.10 at 3:40 pm

#141 BrianT,

You have the nerve to call Al Gore a scammer?

Whose ass has your head been up?

#156 Junius on 11.09.10 at 3:44 pm

#132 Frank,

Thanks for pointing this out Toronto v. Chicago. Prices are way, way cheaper in Chicago.

Same arguments made here in Vancouver about us being the same as Seattle. Except we are not. Seattle is way, way cheaper than Vancouver.

A million dollar home in Seattle is 3000+ or larger and in a great neighbourhood. In Vancouver, as has been demonstrated, it is a crackshack. However the Re pumpers still insist it is a comparable.

#157 VICTORIA TEA PARTY on 11.09.10 at 3:46 pm

“Will work for PICTURES of food…”

Farfetched? Hold on. Let’s wait for the outcome of this week’s G- 20 conflab in South Korea. This will be an extremely important evident as far as I can figure.

The theme: Begger thy Neighbour, or my currency over the next guy’s.

And as President Obama sticks another irritant into the Chinese Tiger’s toughening hide, in pressing for India to have a permanent seat on the UN Security Council, China unloads this whopper, as noted by Bloomberg. And I mean it; this is a really BIG deal…

Nov. 9 (Bloomberg) — China will force banks to hold more foreign exchange and strengthen auditing of overseas fund raising, stepping up efforts to curb hot-money inflows that may inflate asset bubbles and add pressure for a stronger yuan.

The State Administration of Foreign Exchange will…also regulate Chinese special-purpose vehicles overseas and tighten controls on equity investments by foreign companies in China.

The measures underscore concern around the world that the U.S. Federal Reserve’s expanded monetary stimulus will cause capital to flood into emerging markets. The yuan rose today…as global leaders prepare to discuss currency tensions and the impact of the Fed’s easing at the Group of 20 summit…

“Some international funds will flee from dollar assets because of the Fed’s easing, and (China) is trying all means to plug loopholes in possible channels for hot-money inflows,” said a Chinese apparatchik.

CHANGE OF COMMAND CEREMONY…

So, the fix is in: The emerging industrial giants, led by China, are OFFICIALLY squaring off against the ageing, demographically and financially-challenged industrial West and Japan for supremacy over the world.

Bolstering the emerging markets will be increasing commodities prices and a big thirst for emerging economies’ money by the cash-starve West that includes Canada inspite of our commodities.

Look at gold at $1,400.00 plus an ounce US. For crying out loud! That says that principal fiat currencies are headed for the dumpster of economic history; all of them! They will join many other former currencies.

ALSO, Robert Zoellick, the president of the World Bank in Washington DC yesterday, talked about the need to return to some sort of gold standard!

How much more of a storm warning do we need? Cratering currencies, bubble bond market, unrepayable debts, bad demographics. Hello out there!!

BACK TO MUDDLED MIDDLE CLASSERS

Phoney wooden floors, granite and steel bought with borrowed money by crainially challenged, arrogant middle-classers across this great land won’t feel the effects of this “East Wind” otherwise known in Japanese as “Kamikaze” for some time yet.

Theoretically, this’ll give ’em time to pay down the LOC, the lease payments and some credit cards. But knowing some of these idiots, as I do, they will keep on spending anyhow.

And then they’ll be dining out on pictures of food bought with pictures of credit cards. “Pass that Grey Poupon picture, Garcon!”

#158 brainsail on 11.09.10 at 3:59 pm

Blame Canada no more.
November 9, 2010 12:53 pm

The Great White North shakes off its historical politesse and starts kicking ass, financial-style. Will the rest of the world listen?

“So it is with a sense of patriotic pride that I watch Canadian banking CEOs stride across the detritus of the global collapse, offering to any and all comers a lecture on just how one runs a prudent mortgage industry. Toronto real estate is still on a tear, for God’s sake, while the U.S. is stuck in foreclosure hell.”

http://finance.fortune.cnn.com/2010/11/09/blame-canada-no-more/

#159 robert in london on 11.09.10 at 4:12 pm

#149 np

If your predictions on commodities and energy are correct I predict we will have a much healthier population. More people walking, riding a bike and fewer people consuming all that expensive fat, sugar and salt in fast food or glued to power consuming big screens and game systems.

#160 leaside_girl on 11.09.10 at 4:24 pm

#150 Reasonfirst
Thanks for the link. But to my point if $1,000000 drops by 20% and that’s an average price it’s not even close to cheap real estate in the rest of States. Their are not even $300000 apartments for sale in New York area.
Thats why I am saying that in Toronto in good areas price will rise, maybe not as fast but it will not decline by more then 10% which really is not making them more affordable. In order for a big bubble burst to happen something really big needs to happen to economy and then we are all f…….

#161 Two-thirds on 11.09.10 at 4:27 pm

Interesting study about boomers and mortgages:

http://www.everydaymoney.ca/2010/11/mortgage-burden-crimps-retirement-plans-study.html

An excerpt:

“Tired of rising property taxes and empty rooms, 86 per cent of boomers are planning on moving to a smaller home when they retire.

However, even though they agree it’s important to pay off the mortgage long before then, only 43 per cent have actually done so, according to recent research from TD Canada Trust.

In fact, 54 per cent admit to having paid off less than half of the debt on their house, meaning they have a ways to go before thinking about retirement.

Truth is, pre-retirees today are carrying unprecedented levels of debt, which could become a big problem for them when they’re ready to stop working – which is why many financial planners caution homeowners against carrying mortgage debt into retirement.”

Here’s a link to the original report:

http://smr.donovangroup.ca/TDBank/BoomerBuyers.html

#162 PTDBD on 11.09.10 at 4:29 pm

“A globalized financial system cries out in my view for a global currency.”… Who said this today? Goat goes to first correct reply.

No, it wasn’t TheBigLebowski.

Will never happen. — Garth

#163 Pat on 11.09.10 at 4:34 pm

@ #138 Halifaxed,

Have a look at the houses for rent here:

http://www.halifaxqualityhomes.com/

Or even better – check the rentals on kijiji.

Do you think you can purchase them for less than 15 times the annual rent? What about the condos?

You see, you’ve been reading this blog and you still can’t make your own conclusion; you are asking Garth to spell things for you. What do you expect then from the “mainstream thinking”?

#164 vreaa on 11.09.10 at 4:37 pm

Ian Watt, Vancouver Realtor, Logician & Mathematician – “If you’ve ever been to Winnipeg, you realize that Vancouver is ten times better. Our average price should be 2.5 million dollars for an average house in Vancouver.”

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

#165 Tony La on 11.09.10 at 5:07 pm

Let’s boil it down so no one is confused by the FUD.
1) Implication is Garth makes his money via selling fear(aka books) to his readers. So it’s in his interest to constantly sensationalize things to the point of being disingenuous.
2) Vancouver and many parts of Toronto are most likely overpriced and will see substandard price movements in the coming months/years. Vancouver/Toronto numbers can not be projected onto the rest of Canada. Similarly National numbers can’t be projected to individual local markets.
3) Fear is as bad as irrational exuberance. Become educated not by reading this blog but by seeking out the truth and coming to your own conclusions.
——————————————————-

ah, so everyone should just close their eyes and buy real estate like everyone else?

—————————————-

This is exactly what Chris Davies is talking about. Readers of bubble blogs don’t actually read anything. They just visit bubble blogs to reaffirm their already preconceived notions about the real estate market.

I never hinted to what you should do, positive or negative. You should do you own research and be open to it’s conclusions (positive or negative). You can always make money in an up or down market. A very simple example would be in a bear market, shorting stocks will make you alot of money.

#166 Nostradamus Le Mad Vlad on 11.09.10 at 5:20 pm


#29 Marcus Aurelius — Good post. Prepare beforehand.

#36 Kanata Squirrel — “Cash or a diversified portfolio is king!”

Almost right — Cash AND a diversified portfolio are kings! Other than that, right on the money.

#41 z” — “. . . no more Location- Location-Location.” — Point noted. With public transportation being fairly accessible to most, location is just pie in the sky mumbo-jumbo.

#44 Crash Callaway — “I think the houses becoming the ATM is the last option for many.”

Just recalling the link from the past weekend, when a lot of ATMs failed in the US.

Those who rely too heavily on ATMs may eventually have to start tapping into their LOC or HELOCs, to replace the cash from the non-working ATMs. Thus, they put themselves further in the hole, mainly because they don’t know what self-discipline requires.

#63 Bilbo Bloggins — “Except Garth’s message actually make sense.”

Not hard to see who the liars are here, that’s for sure!

#75 Mel — “. . . the role that their banks have played in inflating the housing market.”

If banks played a major part in inflating the RE bubble worldwide (they did, and knew full well what they were doing), and this info. is now public knowledge then those banks are complicit in what happened, so why aren’t they being prosecuted? Any lawyers (good ones) here care to expand?

#85 BrianT — “Scenes from the unfolding class war: the broke Ontario guv can’t give 2% to the lowest workers ($17/hr) . . .”

Pretty much what Nostradamus Jr. was saying — Ont. & Quebec will suffer a lot more than other provinces, because they have so much population with little to no mfg. and industrial base left.

#94 Got A Watch — “Real estate in Canada is irrelevant in a global context, it’s a minor local issue. Right now, the end of the US $ as a “global reserve currency” is fully under way, and the implications won’t be good for North Americans, to understate the case.”

It will probably be a combination of the Euro & Yen or the Yuan-Renmibi-Rouble taking over. All things in good time, of which there is plenty of that.

#120 np — “. . . highest since 1980, and that too will soon be surpassed…”

The elite’s plan(s) are going well, as they have the vast majority of sheeple fooled into paying exorbitant prices for things they don’t necessarily need, while at the same time basics (food, necessities, etc.) are going through the roof in cost.

#128 Keith in Calgary — “Heh. It’s a market manipulated bubble……..just like real estate.”

So true, and it confirms that, although the cycles are changing fairly quickly now, this whole mess that the west finds itself in was a deliberate takedown, to rid the elite of the middleclass and have serfs remain.

#134 realpaul — “. . . legions of squatters are now taking possesion of vacant houses.”

Desperate times call for desperate measures. As winter sets in, watch this pattern repeated thruout the continent.

Could be that’s why city workers are razing ‘burbs and foreclosed homes, to prevent squatters taking over. Then FEMA camps come into play, as that is where the homeless will live.

#136 morfeus44 — Great link and I missed that one! Wonder if it has anything to do with NKorea? The only thing America has left is to create FFs then declare war on someone else — that keeps the war mongers in place.

Glad you enjoy the links!

#142 MikeT — If I had spare cash to run a site, I would do it but we’re both retired now and spend way less to keep ourselves relatively stable.

But who knows? Maybe an unexpected financial inheritance will come our way some day. If it does, I certainly would investigate the possibility!

#144 leaside_girl — “. . . but our affordability level is zero to none.” Yet another excellent reason to rent vs. owning. A lot of people in Europe rent their entire lives — that’s a normal lifestyle for them. Something that may soon be considered here as well.

Couple of very good columns in the KDC over the past two days. David Bond says that “Hiking deficit Campbell’s parting gift”; Bond further states that BC has the highest child poverty (welfare) rate in the country, and the Olympics, the failing HST, dying lumber industry etc. have simply exploded this province’s problems into unreasonable levels.

Yesterday, David Crane wrote “A rich, open China can help world”, and this may coincide with #136 morfeus44’s link about the missile testing off California’s coast.

China isn’t going to help the west out anytime soon. Buy us out, yes. Russia and Iran are their main friends, so it’s easy to see where alliances are forming.

#167 john on 11.09.10 at 5:47 pm

We all expect this real estate correction to come soon but it does not appear to be happening in Vaughan.

Is it possible Garth has it wrong? He began writing his Greater Fool Book in 2007.

#168 rory on 11.09.10 at 5:57 pm

And the winner is: Aussie Roy and his mates …

Top 10 overpriced housing markets …

http://money.ca.msn.com/banking/homebuyersguide/gallery/gallery.aspx?cp-documentid=26264793

Sorry if previously posted …

#169 dark sad person on 11.09.10 at 6:05 pm

So lots of long calls here about prices rising over the long haul-being caused by Inflation-
I don’t get it and no one has been able to explain it-

Inflation is dead in the water-
Speculation by taxpayer gifted Bankers GS/JPM select Hedge Funds et al is why you’re seeing commodities on a tear-

Affordability is becoming a big factor in consumption demand all across the globe as purchasing power from the consumer falls away because of increasingly high unemployment levels on top of falling wages and diminishing credit availability and debt piling up-as the prices of assets/real-estate/net worth decline-
This rising price situation simply cannot continue-because at some point “all” of those commodities have to be “consumed”

In deflation-prices always lag-when Governments give money to pet institutions to play in the market-with no fear of loss because they’ve been assured that any losses will be covered by taxpayer dollars-so prices are artificially propped and speculation is currently running rampant in the futures markets by these sociopath Bankers-gambling with tax dollars that will be charged to future generations (our kids) and when the commodity prices eventually collapse-hundreds of billions of taxpayer dollars will be lost and our Politicians will tell us the world will end if we don’t stuff the banks full of dollars again-but that’s not for us to worry about-because the next batch of debt slaves will pick up the tab for that one (our grand-kids)
Sweet huh
“Something” will change this-prices will find a ceiling-just like credit found a ceiling and prices will fall sharply-just like credit did–

#170 Future Expatriate on 11.09.10 at 6:21 pm

Don’t be ashamed, Garth. It’s always the envious repressed sexless drones who haven’t had sex in decades who not only decry those who have it regularly, but seek to enforce the same dire sexless situation on everybody.

Two words: Christine O’Donnell

#171 ballingsford on 11.09.10 at 6:29 pm

Chris Davies – what a idiot is he!!! Period!

#172 Jason in Calgary on 11.09.10 at 6:36 pm

Well… Have been happily renting and counting my pennies and getting nice returns from liquid investments… and the condo I rent I find out is being foreclosed… How much time do I have….. To me it looks like Calgary is getting hit hard!

#173 Bigboy on 11.09.10 at 6:40 pm

One of my teachers once said that there is no such thing as a stupid question. So given that here is my “not a stupid question”. What does it mean to “short the USD” or “short”a stock? I’m trying to understand some of the termanology used on this blog. Thanks

#174 ralph on 11.09.10 at 7:12 pm

Pretty much all of the information that Don R. Campbell peddles for hundreds of dollars can be found at your local library.

I wonder if he is related to that other shyster Russ Whitney.

#175 jess on 11.09.10 at 7:12 pm

“Western competitors, especially members of the 32-nation Organization for Economic Cooperation and Development (OECD), which long ago agreed not to use financing as a competitive tool.

China has handed out billions of dollars at less than 1 percent interest; under OECD rules, the United States must lend at market rates.”

t r u t h o u t | China Looks South: Problematic Investments in …
8 Nov 2010 … In March, Ecuadorean President Rafael Correa “compared China to the worst imperialist corporation … and refused to bend on terms for …
http://www.truth-out.org/china-looks-south-problematic-investments-latin-america64953
===================
Ecuadoran President Rafael Correa returned to the presidential palace late on Thursday after being rescued from the hospital in the face of police and soldiers’ rebellion against a law that cut their pay bonuses.
http://www.smh.com.au/world/ecuadors-president-rescued-from-hospital-20101001-16015.html

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

Brazil’s outgoing President Luiz Inácio Lula da Silva :
“the truth is that sometimes they win a mine contract and they bring all these Chinese to work, and this doesn’t generate opportunity for work in that country
============
So tax cuts weren’t needed for the reason Mr Bush stated?

http://www.roubini.com/us-monitor/259955/the__misoverestimated__surpluses_and_the_tax-cuts_debate

Bush writes:
“Much of the surplus was an illusion, based on the mistaken assumption that the 1990s boom would continue. Once the recession and 9/11 hit, there was little surplus left.”
http://modelsagents.blogspot.com/2010/11/misoverestimated-surpluses-and-tax-cuts.html

#176 Sam on 11.09.10 at 7:14 pm

#29 Marcus Aurelius on 11.08.10 at 11:32 pm

The rain will wash away the laughing fools.
______________________________
You’re going a little overboard with the revenge fantasies dude.

#177 Milhous Plumbers on 11.09.10 at 7:34 pm

We went into Mr Davies office to plant some wires and I swear it was a replay of Larry O’Brien’s place. There were bottles of scotch & vodka choking all the desk drawers along with countless elasticated lids of tins of weed & snort. But what really stood out were the tubes of live bed bugs with YVR area addresses…

#178 jess on 11.09.10 at 7:50 pm

Fake Docs

“In February 2007, officials with Citizenship and Immigration Canada (CIC) requested an investigation into “the high number of potential fraud cases related to possible marriages of convenience” in the Punjab region in India, according to internal documents obtained under the Access to Information Act.
The investigation produced shocking revelations about the number and nature of the marriages, including ties to the sex trade, narcotics trafficking, embezzlement and human smuggling.

Read more: http://www.cbc.ca/politics/story/2010/11/07/david-mckie-marriages-of-convenience.html#ixzz14p2ysgzJ

=

8 November 2010
Roma rights campaigner jailed for £2.9m benefits scam
Lavinia Olmazu admitted a fraud charge in July A woman who helped more than 170 Romanians illegally claim £2.9m in benefits has been jailed for two years and three months.

Lavinia Olmazu, a leading campaigner for the rights of Roma (Gypsies), helped mastermind the scam involving 172 members of the Romanian community.

Olmazu, of north-east London, gained access to them through her work with Haringey and Waltham Forest councils.

The 31-year-old admitted a fraud charge at Southwark Crown Court in July….
Immigrants from Romania are not entitled to a National Insurance number, and therefore a number of benefits, unless they can prove to the authorities they have been employed.

The court heard Olmazu and her partner, unemployed Alin Enachi, would offer false documents for money to the migrants purporting to be from their employers, and also provided them with fake references.
Olmazu’s partner Alin Enachi was also jailed Migrants would pay in cash for help with their applications before going on to receive benefits, such as child tax credits, working tax credits and child benefit, if their applications were successful.

http://www.bbc.co.uk/news/uk-england-london-11347134

Read more: http://www.cbc.ca/politics/story/2010/11/07/david-mckie-marriages-of-convenience.html#ixzz14p2Q3uUL

#179 Nostradamus Le Mad Vlad on 11.09.10 at 8:12 pm


1:37 clip Fire Bernanke. Along with all the lying politicos.

Obama in Jakarta Isn’t this where all the volcanoes are blowing their tops?

Monsanto Gets Dirty “To believe that this mob wasn’t indirectly hired by Monsanto to prevent this conference from happening is stretching the long arm of coincidence into a dislocation.” wrh.com.

1:51 clip Inflation on Jekyll Island.

Computer Banks “All THREE banking systems went down at the same time? I have a hard time believing that one!” wrh.com.

$10.2 Trillion for borrowing in 2011 for govts. all over.

10:55 clip Heading is correct: “US Black Debt Hole: ‘We want you all bankrupt!’ “US is starting a war with China – by asking China to go bankrupt to save the US.” wrh.com. Plus — Novel concept.

0:50 clip “From the FED celebration at Jekyll Island over the weekend. Bernanke looks uncomfortable as Greenspan admits the truth. Runs 50 seconds.” wrh.com.

This is why Canada lost a seat at the UN. Not that it matters.

Missile Further to #136 morfeus44’s post: “Now there is a good reason for Obama to fire off an ICBM in the general direction of China!” wrh.com.

Panic Attack Oh dear. This (along with the missile and volcanoes) makes for a potent mix. “* ICE Starts Accepting Gold As Initial Margin Collateral For All Energy And CDS Trades.” Plus Real Unemployment.

Author poses the question: Is it time for a revolution? Duh. Plus — Really annoyed.

Depression “Alcoholism was rampant in the USSR just prior to the collapse.” wrh.com.

Ireland “When a private banks issues the public currency at interest, the eventual doom of all those within that bank’s reach is sealed.” wrh.com.

G-20 Collision Course with the US. Chindia / Russia / Iran etc. will be the big winners.

Globalism Oct. 4, 2010 Newsweek. Better than Sarah Palin!

#180 dd on 11.09.10 at 8:41 pm

.#159 PTDBD on 11.09.10 at 4:29 pm
“A globalized financial system cries out in my view for a global currency.”

Will never happen. — Garth

We have one. It is called gold. The President of the World Bank says it could be part of the solution.

#181 Timing is Everything on 11.09.10 at 8:58 pm

Garth said – “Will never happen.”….

…in your life time. Maybe in mine…probably my kids…for sure their kids. Na..will never happen.

#182 Sean on 11.09.10 at 9:05 pm

just a quick note re: the Montreal dude and the doubling of prices in 10 years… ya know what compound interest rate causes principal to double in 10 years?? the answer is 7%… not that high… now look at money supply over those same 10 years… my point is not the MTL real estate is not overvalued… just that appropriate measures would be multiples of income, rent vs buy, etc… i think many have a tendency to worry that things are expensive just because they “seem” to have risen a lot in price.. that perspective will kill you (investment wise) eventually… it’s all about relative value… remember also that currently money is bullshit, and therefore prices are bullshit, and so the game becomes seeking value, and shifting between asset classes accordingly

#183 Jeff Smith on 11.09.10 at 9:06 pm

Oh come on, the Economist is full of Crap. Canada with its sound banking system, managed by the world’s finest politicians (HCF) does not have a overvalued real estates. Now ef-off! stupid Economist!

http://money.ca.msn.com/banking/homebuyersguide/gallery/gallery.aspx?cp-documentid=26264793

#184 Moneta on 11.09.10 at 9:10 pm

Pretty much what Nostradamus Jr. was saying — Ont. & Quebec will suffer a lot more than other provinces, because they have so much population with little to no mfg. and industrial base left.
———-
Considering Quebec has the largest percentage of workers in the construction/real estate complex in all of North America: Ouch.

And wait and see the impact on Ontario when Canadians can’t use their houses to buy cars anymore and boomers go from 2-3 cars to 1-2: Ouch.

#185 Timing is Everything on 11.09.10 at 9:27 pm

#166 dark sad person said – “In deflation-prices always lag-when Governments give money to pet institutions to play in the market-with no fear of loss because they’ve been assured that any losses will be covered by taxpayer dollars”…

…until there is a tax revolt.

#186 blobby on 11.09.10 at 9:36 pm

Judging by his picture – this chris davies guy is a little young to be talking about such things isnt he?

http://www.chrisdavies.ca/about/

Explains the nonsense he’s posting pumping real estate though on the rest of his blog.

“Oh NO!!! Garth is pumping a $20 book – i’m MUCH MORE credible than that, i’m only pumping $700k property in a falling market!”

#187 shane on 11.09.10 at 9:40 pm

Garth, great show tonight… do you ever think our world would use one world currency?

Shane

#188 Devore on 11.09.10 at 9:42 pm

#170 Bigboy

One of my teachers once said that there is no such thing as a stupid question. So given that here is my “not a stupid question”. What does it mean to “short the USD” or “short”a stock? I’m trying to understand some of the termanology used on this blog. Thanks

There isn’t, that’s why man invented Google.

http://www.investopedia.com/university/shortselling/

Basically, you short something when you expect it to decline in price. How can you profit from it? Simple!

You sell the “something”, say a stock, on the open market, by first borrowing it from someone, say your broker. You borrowed it, so you will have to return it at some point. When the price of the stock drops, you buy it back on the open market, and return it to your broker. The difference between the price you sold at, and the price you bought back at, is your profit.

This transaction opens you to many interesting and exiting risks you’ve never considered before, and your broker will limit you greatly in your ability to carry it out in order to cover their back; he did loan you the stock to begin with.

#189 dark sad person on 11.09.10 at 9:46 pm

#170 Bigboy on 11.09.10 at 6:40 pm

One of my teachers once said that there is no such thing as a stupid question. So given that here is my “not a stupid question”. What does it mean to “short the USD” or “short”a stock? I’m trying to understand some of the termanology used on this blog. Thanks

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

Shorting is the exact opposite of buying a stock or commodity long-
Instead of buying first (long) and hoping the price goes up and that you can sell at a higher price for a profit–if your right-
You instead “borrow” stocks and sell them immediately-hoping that the price goes down and that you can “buy” at a lower price–and profit from the difference-if your right–
Shorting carries higher risk then buying long-because if your wrong and long-a stock can only go as low a zero-but-
If your short and wrong-there is no limit to how high the price can go and if your short and the price starts running away and you cannot catch an asking price-
Some say-it’s similar to having a religious experience-

Of course you have protection with stop losses (preselected electronic buys or sells) but none of it is foolproof-

This is a good site for explaining terminology and gives examples in simple terms–

http://www.investopedia.com/

#190 Mikey the Realtor on 11.09.10 at 9:47 pm

#162 Tony La La land

You sound like a potential buyer, do you need an agent, sir? please let me know, I am now accepting clients.

#191 Willy H on 11.09.10 at 10:00 pm

Excellent presentation in the Big Smoke tonight Garth!

Your one charming fellow and your unique sense of humour extracted many deserved chuckles from the all the Squirrel-Meat-Loving-Folk in attendance.

Had a good laugh listening to few sceptics in the back row. As the your world famous picture of the $100 Pennsylvania house magically appeared I heard one of them say “I’ll bet the place is completely trashed inside”*. They went all quiet for some reason when you listed the myths regarding Canada’s perceived RE invincibility!

*the lot alone on the property must be worth at least $100 for God’s Sake!

#192 dark sad person on 11.09.10 at 10:11 pm

#185 Devore on 11.09.10 at 9:42 pm

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

Great minds think alike–or-
Fools seldom differ–
Your choice-

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

182 Timing is Everything on 11.09.10 at 9:27 pm

…until there is a tax revolt.

******************
Yes and there is a good possibility of that happening and not to mention how higher taxes kill business starts and drives an underground tax free economy-
Whether there’s a tax revolt or not-eventually Governments will find out that the tax pool is not bottomless-
These are the sort of misguided Government strategies that cause Depressions–

#193 Bigboy on 11.09.10 at 10:32 pm

86 DSP, thanks. I will read and learn I hope.

#194 Patz on 11.09.10 at 10:39 pm

#28 Phillip. Home prices the only chart you need to know? Not quite Phillip. Have a look at some of these charts and ask yourself where you’re going to get the oil to drive to work in a couple of years.
http://www.durangobill.com/Rollover.html

#195 Marquee on 11.09.10 at 10:43 pm

Here are a couple of “gems”.

From the National Post quoting The president of the Canadian Home Builders’ Association “the boom in the condominium market has been fuelled by investors and not speculators” (there’s a difference?) see – http://www.financialpost.com/news/Surprise+drop+condos+hits+housing+starts/3796764/story.html#ixzz14qXAeTcQ

From Investment Executive quoting Scotia Economics “Concerns that rising consumer debt could trigger a collapse in the housing market are overblown” (I’ll bet they let their children play with loaded guns too) – see http://www.investmentexecutive.com/client/en/News/DetailNews.asp?id=55632&idsection=3&cat=3

#196 realpaul on 11.09.10 at 10:49 pm

Think the seniors and fixed income are in a tough spot now? Wait till the food costa have gone another few hundred percent. The local Food Bank currently feeds some 50,000 ‘clients’ a week in the GVRD…mostly single Mom’s and seniors.

The ZIRP has and Flaherty killing trust income has raped the income of retiree’s…the real unemployment rate at triple whats reported is sending young families to the streets….we ain’t seen the worst of this. The market is a ‘leading indicator’ and may be 2 years ahead of any recovery….a lot of misery can happen between now and then. Food costs are going to rise permanently. Stock up on dry goods before they get priced out of the affordablility of the average CDN.

http://www.ft.com/cms/s/0/249211fc-ec1d-11df-9e11-00144feab49a.html#axzz14qZAbg9S

If you’re among the few that actually has any cash you can think about buying commodities and agriculture stocks.

Road kill pie…….coming to a senior’s home near you.

#197 BrianT on 11.09.10 at 11:07 pm

Rogue missiles lighting up those Hollywood Hills http://www.youtube.com/watch?v=U2qKMchcgzk

#198 Bill Gable on 11.09.10 at 11:10 pm

I am getting increasingly irritated at morons like Chris that take gratuitous cheap shots at Mr. Turner, and then acts like someone actually gives a darn what he has to say.
Easy to snipe.
Mr. Turner, as pointed out earlier, could be basking under the sunlamp at the Bunker, or changing the Oil in the Harley – but no, he’s trying to avert a tragedy that will visit many homes and impact Families for years.

The RE zealots and wanna bes are going to find out what LEVERAGE MEANS, and your Facebook buddies or your Twitter heads won’t have a clue, either- if they think Chris has the answer.

Oy Gevalt – six Sigma, Help me RHONDA.

#199 Leanne on 11.09.10 at 11:15 pm

Ironically, at the seminar tonight I was sitting near a realtor who spent most of the evening trying to convince me and another girl that now is a good time to buy. Duh.

#200 nonplused on 11.09.10 at 11:45 pm

#95 TheBestPlaceOnEarth

Wow. That was stunning.

We learned something about what a bubble can do to common sense here people! There has never been a market where people just stop selling for long. The three D’s make sure of it. (Death, Divorce, Default)

But high prices can make people stop buying. They’ve done about all they can on the interest rate side, amortizations are so long now that most people will pay off their mortgage the day they retire (just in time for a reverse mortgage since they didn’t get any mortgage free years to save), and wages are stagnant, and the cost of living is spiraling out of control despite what the wanks (real wanks by the way) at StatsCan say. House prices may not go down much from here but if the top isn’t in, it’s nearby.

Not to seem a gold bug here, but compared to other things you can buy with your money like agricultural products and companies, mining products and companies, yes gold and gold producers, silver, and the like houses in Canada have been depreciating heavily for over 5 years. The only practical advantage to owning a house has been the tax treatment as opposed to say a resource ETF.

Oil & gas have lagged behind other commodities but are ahead of housing.

So I guess the best place on earth is actually, wait for it….

The Yukon!

Speaking of wanks, I wonder if HoweStreet is going to carry this post?

#111 Behind the Numbers

Alex Jones is an entertainer, not an analyst. The Canadian dollar is backed by US Treasuries and restraint on the part of Mark Carney (sic) and almost nothing else. However the Canadian economy has a large resource sector, which is good, but the only role that has in propping up the Canadian dollar has to do with flow of funds and the fact that the Canadian government should have a solid tax base. Although you wouldn’t know it from the deficit.

You cannot, and you will not, ever be able to exchange Canadian money for gold or silver in the future. Neither will China be able to do so. The only reserves the BoC has are US Treasuries. And a few Eurobonds. Hopefully not from Greece.

#115 mab

Leave it to the Chinese to be a day late and a dollar short. Everyone who has studied the issue has known that the US (and Canada and most of Western Europe and Japan) were all on the long road to insolvency. This has been common knowledge since at least the early 1990’s, and known to the educated since well before then. It’s because we spend more than we make, both personally and at all levels of government. The clearest sign of impending bankruptcy is exponential debt growth. We are now past the point of no return. Take mandatory spending and add to it debt servicing and there is already not enough income, and no way to generate it via taxes, to balance the budget. So we must borrow in perpetuity and demographics imply at increasing rates. Then throw a 3% increase in bond yields and see what happens! It’s show time!

That Greece and Ireland are up to bat first does not exempt the rest of us from the roster.

There are only 2 ways out. Default, or Inflate (which the Chinese rightly see as a slow default). We cannot support the level of consumption we have with the amount of production we have. There aren’t enough dollars being generated by the private sector to fund the public sector. Hence all the borrowing. And it cannot get any better, because the public sector is consuming all of the capital the private sector needs to grow. It’s like a carpenter selling his hammer to pay for a message.

#147 Jeff Smith

It’s all talk. Most of the spending is structural. They could cut a bit of road construction but that’s about it. And maybe cancel those F35’s on order now that the Russians already have the plans, but that’s just a drop in the bucket.

#152 Junius

Al Gore is a scammer and the CXX has officially closed now that he and the other original investors sold it to ICE or a bazillion dollars. The climate is warming, and it seems loosely correlated to CO2 (but not correlated enough to make a decission based on the math), but cap and trade is a scam and always was. Tax the carbon at the source if you want the money. The market will react and the profits go to the broke public sector rather than Al Gore and his bankers.

Have you seen this guys houses? His private jet? He is not worried about CO2 emissions. He simply wanted you to pay him for yours. But that gig is up now.

Now, if you track sunspots with a lag you get a correlation you can work with!

Garth on #159 PTDBD,

Agreed. One needs only look at Europe to see that a unified currency system cannot work without unified fiscal and monetary policy, which one only needs to look to Europe to see is not human nature. Someone will always scam the system.

Unless we are talking about tradable goods and services, in which case we’ve always had a global currency and always will, even if it’s somewhat erratic in nature and has multiple paper currencies in play with it.

#170 Bigboy

Your teacher was right, there are no stupid questions, only stupid people. (I know, old joke.)

These sorts of questions can be solved in a minute either by googling or search Wikipedia these days.

The “short” answer is that shorting is selling something you don’t have in the hopes of buying it back later for less. And if you can’t buy it back later for less, you go to prison.

Well, you used to. Now they cover it up in something called a “failure to deliver” and let a sizable false inventory run around the markets, always trying to stay one step ahead of the margin calls and scamming the accounting records.

#186 dark sad person

Your shorting explanation is good, except that only retail investors have to borrow the shares now and depending on the broker that might not even get done. A percentage of the short positions out there generally are not backed by anything but margin and represent “phantom shares”. Which is why it was under scrutiny before being swept under the rug with everything else.

How to avoid buying phantom shares? Well you never know but a good dividend is the best protection. It’s expensive to carry a large short position in a dividend paying stock because you have to match the dividends yourself until the position is closed.

I can’t remember, I think it was Overstock.com, some company, filed a complaint with the SEC because the founder had taken the company private again, bought back all existing shares (the entire float on record with the company) and had possession (or should have), and there ware still tons of shares trading. All of those shares had to be “naked shorts”.

#201 Sam on 11.10.10 at 12:01 am

THIS WILL NOT END WELL

#33 MKUltra on 11.08.10 at 11:47 pm
If the future of Toronto is Chicago’s recent past and present…then Toronto real estate will do quite well. If the future of the GTA is the GCA’s recent past and present….then GTA real estate will do okay.
____________
This does not comport with what I’ve been reading from US commentators like Janet Tavakoli.

“not as bad as the worst” may still be pretty bad

++++++++++++++++++
61 Canuck DownUnder on 11.09.10 at 2:23 am

As a shrink, I’d expect the vitriol towards Garth to increase over the coming months, as those with a vested interest in the real estate game look for a scapegoat to deflect taking any personal responsibility for the collapsing market.
________
Heh .. buddy, you don’t have to have a REASON to have a hate-on for Garth. Just ask Steven Prorogue-er

Maybe it’s the beard.

++++++++++
#85 BrianT on 11.09.10 at 8:45 am

paid $830000 a yr to be a government hospital CEO? What exactly does a government hospital CEO do anyway? Compete to get customers? Innovate?
______
jeez … he can’t even ogle the nurses? Even the garbage collectors do tha. Makes me question his manhood. Must be in the wife’s purse.

++++++++++++++++++
86 canali on 11.09.10 at 8:51 am#
…or this from the Globe and Mail in their ‘Household Finances’ section written yesterday:
“Record Debt comes with rise in wealth”
_______
Somebody (let’s call them clueless buffoons, because that’s what they are) missed the Schiff vs laffer videos / smackdowns

+++++++++++++
#99 Jason on 11.09.10 at 10:45 am

REIN appeals directly to mediocre, average to lower IQ so-called real-estate investors with a propensity for the quick gain. I was told
______
Don’t tell me, you thought all of these people vanished with Ed Begley, Tom Vu, Ron LeGrand, Carlton Sheets & Russ Whitney?

You thought they all went up to Hale-Bopp with Marshall Applewhite? It’s actually the reverse: Whitney et al existed BECAUSE these folks want to throw money at Whitney et al

#99 Jason
Don Campbell didn’t make his millions buying and selling real-estate as much as selling memberships to REIN
_______
Damn, really? Campbell is not Russ Whitney reincarnated?

#99 Jason
sell JVs to friends and family – yeah that’s right go blow your brains out buying overvalued real-estate and take your friends and family with you.
____________
The more things change, the more they stay the same. Next thing you know, Campbell will be doing exercise equipment infomercials & late night phone sex lines.

Did I mention, THIS WILL NOT END WELL ?

#202 Captain Jack on 11.10.10 at 12:38 am

#78 Danforth…不動産は俳句です- Garth
Translation…”Real estate is Haiku”…cool what our google translator does for us :)

#203 dark sad person on 11.10.10 at 1:32 am

#200 nonplused on 11.09.10 at 11:45 pm

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

Agree with your explanation of naked shorts and yes it was Overstock (Patrick Byrne) that went to the SEC with proof of naked shorts using the FTD contracts that never get eliminated and float around–
There’s only 2 ways to stop or at least make it harder for them-
One-is your way through dividend paying stocks or the other is to take delivery of your certificates-but that is almost useless and dangerous-if you have to sell-because the mode of transfer is through snail mail both ways-with no guarantee that they will not get lost and if the do-your SOOL-
I’ve written to the TSX and Venture security exchanges several years ago-but-you can forget about any action from them-
Lawlessness with the blessing of Government-

#204 Ghost of Tom Joad on 11.10.10 at 2:03 am

Gold Sets New Record as QE2 Devalues Fiat Currencies http://www.infowars.com/gold-sets-new-record-as-qe2-devalues-fiat-currencies/

Wake up with the most important man on planet Earth, Alex Jones:
http//www.infowars.com

#205 stanley on 11.10.10 at 2:13 am

@111
Well yeah, Canada does have gold reserves… and is ranked 79 out of 109 nations that have gold reserves. Just behind Tajikistan.

Canada has a measily 3.4 tonnes of gold, and also has $56 billion in outstanding bank notes. To have the bank notes fully backed by gold the price of gold would have to rise to $466,000 per ounce.

That is just to cover the bank notes, the price of gold would need to be higher to also cover the T-bill and bond liabilities of the bank of Canada.

#206 Behind the Numbers on 11.10.10 at 8:22 am

@111 – “Canadian dollar is indeed a commodity currency”

Not that anyone is going to read this as its the last post here, but here you go… The IMF says so:

A handy crystal ball

Our study found evidence in support of the comovement of national real exchange rates and real commodity prices in a group of commodity-exporting countries. For these commodity-currency countries, the world price of their commodity exports has a stable and important effect on their real exchange rate

How large an impact do real commodity price movements have on the real exchange rates of commodity-currency countries? We found that the elasticity typically ranged between 0.2 and 0.4, with a median of 0.38. Thus, a 10 percent drop in the real price of the commodity exports of countries with commodity currencies is typically associated with a 3.8 percent depreciation of their real exchange rate.

http://www.imf.org/external/pubs/ft/fandd/2003/03/cash.htm

#207 leaside_girl on 11.10.10 at 4:18 pm

#166 Nostradamus Le Mad Vlad
#144 leaside_girl — “. . . but our affordability level is zero to none.” Yet another excellent reason to rent vs. owning. A lot of people in Europe rent their entire lives — that’s a normal lifestyle for them. Something that may soon be considered here as well.
———————————————————–
Well, Toronto desn’t have 3 bedroom apartments for rent ( I am not talking condos or homes) for less then 2,500 a month (location, location) which brings me back to my point. House market will not drop to the normal affordability levels unless you want to move to getos (no good schools, etc). So my question is are all these people that I see buying the houses now have income of 200K and more. How one get the job like that? I am professional with 15 years of experience and absolutely can’t past the mark of 65K?

#208 BankerToronto on 11.10.10 at 9:52 pm

This Chris Davies is a clown. It took me all of 5 minutes to extract the following from his website.

Chris Davies writes on his ‘About’ page:

I also write about my experiences from almost 15 years of working in the property management field and share tips and tools for investors.

The, as a response to a comment November 8, 2010 at 10:05 pm, he writes:

I’ll be turning 30 shortly, so it sounds like we’re not that far apart. But like I said above, I have several generations to draw on and I’ve spent a lot of time with smarter and more experienced investors than myself. It’s one of the advantages of having worked in property management, you meet smart investors and also see all the mistakes.

So, he has been ‘working’ in property management since age 14 or 15? Seriously. Maybe he was exposed to it vis a vis his family but to have been working in ernest, I for one am skeptical. Regardless, he’s an idiot. Canadians are in the hole. My bank keeps pumping CMHC-insured mortgages but deny loans for cars or anything else for that matter. Hmmm. Nothing is wrong?