The sure thing

Perhaps it’s best illustrated with a story.

Matthew and his wife, Gayle, have a rented apartment, and a cottage worth $300,000. He’s 63, retired, modest pension. She’s 56, retires in two years, also with a pension plus (thanks to being a government worker) a cash ‘retirement gratuity’ of $40,000.

They have a LOC with $46,000 borrowed, forty grand in cash and $170,000 in investments (RRSP and non-registered). The apartment rents for $2,400 a month and the cottage costs $6,000 a year to keep.

Scorecard: $464K net worth, of which $300K, or 65%, is in real estate, the rest liquid. No mortgage.

“In about a year,” Matthew writes me. “we’re planning getting out of the apt and buying a condo in the $250,000 range. After the down payment, and paying off the line we’d have no debt, no investments and have a mortgage and maintenance fees monthly payment of about $1,400. Are we sane here in our plans? i.e. using all of our investments plus some of our savings to pay off the line and ensure a manageable monthly condo cost? Are we OK if mortgage rates jump at renewal time 5 yrs later? Is the timing of our proposed condo purchase good?

“Like most, we have been bumbling along blindly…. only to be given a shot in the arm by your daily posts.”

So, after the condo purchase, Matt and Gayle would still have net worth of $464K, but now 100% in real estate and none liquid. Mortgage of about $100K. Living costs down $12,000 a year – but their cash flow is unimproved, since this is less than the income their investments earned. These guys have increased their risk dramatically. Naively.

What does this tell us?

Just how dangerous Ian Lee is.

On the weekend the Sprott School of Business professor, whom I dissed in my last post for fibbing in hyperbole to a numbnuts Toronto Star reporter, weighed in with about 5,000 pithy words in the comments section to justify his position. He was as articulate, verbose and referenced as you’d expect. I was so mesmerized I forgot to dock the pigs.

The prof’s point, argued well, is that no US-style housing collapse will befall Canada. He credits our system of banking, mortgage insurance and lending practices, as well as pointing out cultural differences and brushing off concerns about structural unemployment, house-bailing Boomers and an evaporating middle class. His positives include immigration, state manipulation of the housing market and affordable houses while be downplays higher mortgage rates, saying a 2% jump would change nothing.

And maybe he’s right. Perhaps there will be no US-style collapse. Wouldn’t surprise me.

In fact, I’ve tried for more than a year to suggest there will instead be a Canadian-style housing mess. In this scenario, no wave of foreclosures forcing families, their dogs and couches onto front lawns as news crews film. No 40 to 70% decline in property values in key markets which soared (Vancouver, Calgary, Saskatoon, Winnipeg, Toronto). No ubiquitous negative equity wave submerging more than a quarter of all homeowners, turning their homes into illiquid prisons. And no financial system collapse thanks to greedy, myopic bankers who securitized the poop out of mortgage loans with no actual skin in the real estate game.

Having said that, Canadians have screwed up housing just as intensely as Americans. We inflated values bizarrely until average families could not afford average homes. We turned the need for shelter into house porn, and got all horny for granite C tops and S/S appliances. We allowed couples without money to buy houses. Our government wiped away lender risk and heaped it on the taxpayers. Our central bank brought in emergency teaser rates in a deliberate attempt to encourage profligate borrowing. We turned privately-owned housing from an earned reward into a universal entitlement. And in a time of recession and unemployment, we morphed boom into bubble.

As a consequence, we have more debt and social uncertainty than at any time in several generations. If the wind shifts badly, how are we to escape the fate which befell the US middle class?

So my scenario for a Canadian real estate mess remains pretty much as I have articulated it here over past months. A correction of 15%-20% in prices (depending on the market), followed by a multi-year melt which could shave off another 5% annually, amid slumping sales, a sagging economy, higher taxes, increasing rates and a jump in listings. In the end, by 2015, houses sell for far less.

It’s not apocalyptic. But it’s bad enough. Enough to wipe out the equity and immediate futures of tens of thousands of recent 5/35 buyers. Enough to turn real estate into a disastrous investment for anyone with the bulk of their net worth in it. Certainly enough to sink Boomers who listen to Mr. Lee and tank, up like Matthew and Gayle. Enough to make fools of those people who lined up to buy pre-built condos in Toronto towers or from the pneumatic MissyBunny in Cowtown. Enough for me to continue saying this is the time to exit real assets, embrace financial ones, and love liquidity.

Ian Lee demonstrated he has enough courage and concern to post here and defend his position. Ballsy.  He personifies the mainstream belief houses constitute real wealth, are riskless and can only augment in price while being the best store of value. Most of your friends, colleagues and dodgy relatives (all of them, if you’re Italian) share this religion.

And that’s why a retired couple can put 100% of their wealth into one asset and call is conservative. Pray for them. They know not what they do.

Et tu, Ian.

By the way, Mr. Lee, in coming to this narcotic blog, did you know you’ve just joined a cult?

Here, dude, have some Kool-Aid.

197 comments ↓

#1 Jeff Smith on 11.21.10 at 6:13 pm

Great news! Housing market going strong!

http://www.thestar.com/news/article/894471–downsview-park-mulls-plans-for-650-housing-units?bn=1

#2 Ottawahouse on 11.21.10 at 6:14 pm

Thanks Garth
I been telling my wife we need to sell and sell now.
And now you say a possible 15-20% decline.
Even if markets fell 33% I still paid less than the collapse.
I am feeling better now, I will hold on for a few more years and then buy in Vancouver.
Personally in 1990 all over again and we will still be the same as ever.
Cheers

Be precise with her: a 15-20% decline followed by four years of further declines. — Garth

#3 Jeff Smith on 11.21.10 at 6:18 pm

I don’t know what to make of it. Woops! Maybe our situation here in North America is better than we think. Hopefully they can indeed find jobs here, I know its tough for a lot of local people right now.

http://www.theglobeandmail.com/report-on-business/economy/as-economy-falters-the-irish-scatter-again-to-australia-canada-britain/article1807651/

#4 Northern_dirt on 11.21.10 at 6:22 pm

#1 Jeff Smith
“Great news! Housing market going strong!”

In 10-15 years, that project, if it gets built the way they are describing and where its located, will be a ghetto..

#5 Kevin on 11.21.10 at 6:23 pm

Saskatoon? You mean Saskaboom.
Boom as in credit boom.
The wealth effect that housing has on Saskatoon’s economy
http://saskatoonhousingbubble.blogspot.com/2010/11/wealth-effect-that-housing-has-on.html

This is what TD said in 2008 about household spending.
“Households have been spending almost like drunken sailors over the past couple of years.”
In 2009 and 2010, households cranked up spending even more. Who spends more than a drunken sailor?

Some Saskatoon home owners, I’m sure!

#6 Mikey the Realtor on 11.21.10 at 6:36 pm

Garth, Garth, some of the pups and poodles are getting down right worried over your little blog in the rescent days. I’m here to tell them that I got Italians flooding our office as they know this is their last chance at cheap housing. Dont miss out folks!!

#7 GregW, Oakville on 11.21.10 at 6:36 pm

Hi Garth, fyi, still flying? Stuff to think about, fallow the money.

I hope Canadian’s are paying attention to our own Government? You say it can’t happen here, or again.
I hope not, but our vigilance is required to avoid repeating history!

artical with 3 short video links
“Left unchallenged, government invariably evolves into a tyrannical force at odds with the interest of the people.”

TSA Tactics Find Ominous Parallel in Nazi Germany
http://www.infowars.com/tsa-tactics-find-ominous-parallel-in-nazi-germany/

And
Geraldo expands his 9/11 comments: WTC7 collapse “reminiscent of controlled demolition”
Artical with 2 short video links
http://www.infowars.com/geraldo-expands-his-911-comments-wtc7-collapse-reminiscent-of-controlled-demolition/

#8 Devore on 11.21.10 at 6:36 pm

“Like most, we have been bumbling along blindly…. only to be given a shot in the arm by your daily posts.”

Well, they haven’t been reading very well. Perhaps they were too distracted by your pictures, Garth?

#9 Jes on 11.21.10 at 6:37 pm

Mr. Lee quoted a figure of 16% unemployment in the U.S.. I heard that figure on CNN as well if you can believe that. With 1 and 1/2 times the Canadian population unemployed(est. 50-60 mil), 48 out of 50 states and several major metros in serious financial difficulty, 1in 4 homes underwater and 80% of our exports going to this country does it even matter what we do up here to save our butts?
P.S. My cousin and her husband(Both well paid professionals)from Arizona walked away from their second home this summer. Its underwater and not worth paying the mort. on. Still happening down there.

#10 Boombust on 11.21.10 at 6:40 pm

What reasons are there for a “slow melt”, Garth?

#11 Alex on 11.21.10 at 6:41 pm

Garth though I completely agree with you on imminent housing correction based on your logic . I think it doesn’t make sense to talk
numbers. No one knows and can possibly predict what path of housing price depreciation will be in the 2011-15.
Main idea is housing will go down. It is so right in your face that I just can’t understand people who tries to argue. I personally would refuse to argue with them.
Would you? Would you try to argue with someone who says that Earth is flat?

#12 Jsan on 11.21.10 at 6:56 pm

The problem with Ian Lee and many like him is they are not looking closely enough at the facts that are set out before their very eyes in my opinion. His quote:

“I did agree with the US economist that predicts a housing collapse that interest rates will go up next year and that as Governor Carney noted in the MPC this spring, about 10% of mortgage borrowers will be “vulnerable” if interest rates increase by 3%.”

Yet CAAMP (Canadian Association of Mortgage Professionals) stated just last week in their annual report, which they tried to spin as positive, that a rate move of less than 1.5% would put potentially 675,000 mortgage holders in this country in trouble. This number should be screaming on every MSM front page. a 1.5% rate move up is nothing when you consider that we are at basement levels that we have not seen in pretty much everyone’s lifetime. Translation, rates have really nowhere to go but up.

In their own words:

– A rate move up of less than 1% would put 350,000 Canadian mortgage holders in a “challenging” position.

– A rate move up between 1 and 1.49% would put another 225,000 mortgage holders into trouble.

We are talking a rate move of less than 1.5% and we will see 675,000 mortgage holders in Canada get into financial trouble. We haven’t even hit 2, 2.5, 3% moves and the amount of mortgage holders who would be in serious trouble at these levels. You read stunning figures like these and you shake your head when a professor stands up and suggests that we are somehow insulated from the same sort of housing problems such as the US has seen??????

I don’t get it??? I’m not a professor but if you have almost 1 million mortgage holders in this country barely hanging on by their finger tips at these current rock bottom rate levels, the only conclusion my less educated mind can reach is Canada could meltdown to a degree far worse than even what was seen in the US. You can add to this meltdown a huge bill that will be owed by the tax payers as most likely these are all CMHC insured mortgages.

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

.

#13 Jsan on 11.21.10 at 7:05 pm

Again, when we have a government agency handing out mortgages to people who never should have qualified for even a 1/3rd of the amount they were given, than we are in serious trouble. It is complete and utter fallacy that so many seem to believe in this country that the CMHC is a careful, prudent government agency, this is utter crap. Let’s take the CMHC out of the picture, you tell me if the big banks would be handing out 700k, 800k, 1,000,000 dollar mortgages to middle income families even if they put down decent down payments let alone only 5%. HEiL NO they wouldn’t! They are not stupid, but when you consider that something in the order of 90-95% of all mortgages are through the CMHC, THAT IS AN AFFORDABILITY PROBLEM regardless of what the good professor seems to think! You take the CMHC out of the picture and house prices would drop by 50% overnight. That is what we call affordability Canadian style. CMHC has fueled The Great Canadian Social housing bubble!

“Canada’s sub-prime mortgage time bomb”

http://www.rabble.ca/news/2009/10/canadas-sub-prime-mortgage-time-bomb

“Pardon?”

http://whispersfromtheedgeoftherainforest.blogspot.com/2010/05/pardon.html

.

#14 freedom_2008 on 11.21.10 at 7:27 pm

If this couple do hold government pensions, say, 40K/yr, that is like 1M in safe asset that most others don’t have.

So although they have no liquid money, but are not 100% in real estate at all. And most important, their income is secure. With no debt, they are in pretty good shape thanks to government and tax payers.

#15 Unfooler on 11.21.10 at 7:29 pm

Tough times for RE Agents:

http://vancouver.en.craigslist.ca/van/tix/2071223051.html

#16 Martin on 11.21.10 at 7:30 pm

With the numerous comments on yesterdays post, i refrained from adding one thought that hadn’t (from what I saw) been mentioned. We’ve all heard of the effect that consumer confidence/spending has on the economy. We’ve also seen the numbers on occasion on the HELOC’s LOC’s etc all the means and methods that both us Canadians and Americans have utilized in pulling cash from these ever appreciating assets. That CASH by and large payed down consumer debt, financed vacations, new cars, dinners out and a trip to Home Depot. It some cases it paid for a lifestyle already LIVED. Now the effect (as I see it) if we see that ‘flat line” on housing appreciation will be an economy being dragged down. Indeed the ‘Piggy Bank’ will either be empty or the bank will have it.

#17 Nostradamus Le Mad Vlad on 11.21.10 at 7:31 pm


#231 Taxpayer like everyone else on 11.21.10 at 1:37 pm

“106 – Mad Vald – not sure if the “emma Maersk” is the ship you refer to.”

Good work. I did a follow-up (should have done it last night and posted it) on U-Tube via startpage.com, and came up with these: Emma Maersk One 2:34 clip. Plus — Emma Maersk Two Little more tech specs. So it is the Emma Maersk.
*
Wot an excellent selection of diverse opinions from the previous post. Kinda reminds me of this Sam Peckinpah sketch!
*
A very good column by Richard Gwyn in today’s OK Sunday, with the headline reading “America’s best days are past”.

In keeping with Garth’s current post, Gwyn states that Uncle Sam is a grumpy, overweight nearly-dead dinosaur whose best days are no more than a distant memory.

Cost-cutting (which eliminates unions), rich pension plans being wiped out, new technologies with lower-paid workers — these are all part of the new trend which are replacing the “jobs-for-life” mentality, which some of us old farts remember.

Now, the sure thing is that there is no such animal as a sure thing — the world has become far too unpredictable.

The couple mentioned? Basic common sense on the realities of life says continue to rent to keep outgoing costs low. I’m guessing they already knew that, but wanted reassurance.

Plug TFSA’s full of moolah in investments, and enjoy the benefits of not having to pay property taxes plus upkeep and maintenance.

#18 mark on 11.21.10 at 7:45 pm

http://www.time.com/time/photogallery/0,29307,1975397_2094498,00.html

hope no one’s relying on china!

#19 Devil's Advocate on 11.21.10 at 7:55 pm

Location, location, location ;-)

#20 walter safety on 11.21.10 at 7:57 pm

– “It’s not apocalyptic” and “maybe he’s right” . Garth are you getting soft ? Trying to show your reasonableness? This seems like a good time for me to post again.
I’ll say “financial assets, just like real estate do not have an endless upward bias and lack utility like a house” You say —

#21 Sean on 11.21.10 at 8:01 pm

To the twit who’ll be just fine with a 33% correction… Garth is keeping the discussion civilized here. Why in God’s name would Van RE not follow the path of Phoenix, SF and Miami… i.e. down 70%. The sad fact of the matter is that BC has a crap economy, always will. For the past few years (an anomaly) it has seemed rather vibrant… the answer is a credit bubble and a related wealth effect. The bumbling band of socialists that populate the “breadth” of the Canadian political spectrum will continue the brilliant policies of subsidizing resource extraction, taxing away investment and innovation, and cheerleading the Keynesian policies that are gutting our country. Ughh!

Good luck to you my 33% friend. Keep the faith!

#22 Utopia on 11.21.10 at 8:12 pm

Re: #96 Ian Lee on 11.20.10
————————-

Your response was appreciated Ian and I do think that the forum should always be open to the views of those we sometimes criticise (occassionaly unfairly).

Now if only Mark Carney will weigh in with a periodic rebuttal we would have quite a lively debate and maybe some of the harsher blawg-dog critics would be a little more respectful.

#23 Gord In Vancouver on 11.21.10 at 8:15 pm

Ireland today, Vancouver, BC tomorrow

Ireland swallows bitter pill, asks EU for loan

http://finance.yahoo.com/news/Ireland-swallows-bitter-pill-apf-729198363.html?x=0&sec=topStories&pos=1&asset=&ccode=

#24 connie on 11.21.10 at 8:16 pm

Dear Garth:

I would suggest that having thought too much about the demise of RE, you appear to be negotiating with yourself. Take a grip.

Housing prices in Canada are 50% more than (they were) in the US says Dean Baker, Center for Economic and Policy Research in Washington, D.C.; personal debt of Canadians is 150% of income vs 139% in the US at the zenith, and he adds, your economy is (a puny) 10% of ours!!!!!! ………..CASE CLOSED.

A replay of Mr. Baker’s speech should soon be available on rabble.ca

There will be no 50% decline. But enough to make life tough on the ill-prepared. — Garth

#25 JO on 11.21.10 at 8:17 pm

I hope Mr. Lee read my rebutal of his post in the comments too. Not holding my breath. I do respect his courage – and I condemn those who launch personal attacks against anyone who disagrees with them.That said, the majority of homebuyers over the last several years have been engaging in delusional behaviour that violates every rule of prudent financial planning. Lets consider the typical buyer of recent years who puts maybe 5 % on the average GTA home of just over $ 400 K. They have entered into a massively leveraged purchase of an illiquid, very poorly diversified (subject to economic situation at community,city, provincial and national levels) and severely overvalued asset which has high maintenance costs.

Being leveraged at 20 – 1 (thanks to taxpayer and punishment of savers), they have committed 25 yrs of future income to the bank and are on the hook for all future interest rate increases,prop taxes, utilities etc. Most are effectively losing money the moment they move in as the inevitable reversion to the mean (ie., decline in house prices) and costs of selling wipe out the 5 % DP. They are stuck. Unable to move for any new jobs across town, and likely in a position to lose the home for any number of reasons (unemployment, losing the game of roullette with the bond market at renewal time,etc).

By 2015, most who bought since 03 or so will see the following picture: 1) House down at least 20 % and more likely 30 % from purchase price and worth less than the huge mortage, 2) monthly payments likely to be higher by 3-500/month, 3) Prop taxes, utilities and other monthly bills including food up anywhere from 30-50 %, 4) No ability to sell and absorb the coming losses which will affect their labour mobility.

It’s sad these people think they’re home”owners” when all they are in practice and legally is homeDEBTRENTERS. Heavily subsidized by the prudent savers, taxpayers, and contributing to elevated inflation which hurts all of the middle/working class and the vulnerable (disabled, low income seniors,etc).

Where will Mr. Lee and others be and what will they say if this likely scenario transpires ? By all means, I respect his opinions. But I think the media and experts need to do a better job of pointing out the risk and other possible outcomes of such an important decision.
JO

#26 tran, Calgary on 11.21.10 at 8:21 pm

Since we have non-recourse mortgage in Alberta,
we can buy as many houses as possible under
non-recourse mortgages. If price rallied, we are
forced into earlier retirements. If price collapsed,
just leave the house keys on the kitchen table, and walk
out.

Just like initial capital outlay of $8K for grow-op,
harvest $70K-$80K. With 1,000 plants, return
can exceed $1M. If caught, a warning or a fine.
Maybe a short jail term. No wonder, it’s B.C.’s
biggest industry.

#27 T.O. Bubble Boy on 11.21.10 at 8:26 pm

hahaha – Australia is looking to keep their bubble going bay introducing CMHC-style government insurance on mortgages.

http://www.abc.net.au/news/stories/2010/11/22/3072793.htm

I love that they make reference to CMHC’s reserves, without mentioning what kind of ratio that represents:

“In most years the body providing such insurance would make large surpluses. The Canada Mortgage and Housing Corporation’s most recent annual surplus was around $2 billion and it holds $9 billion in reserves.”

$9B in reserves… on $500B+ in insurance (that a whopping 1.8% of mortgages that they could cover).

#28 Marcus Aurelius on 11.21.10 at 8:35 pm

Finally! Yesterday’s blog was a breath of fresh air, with an exchange between Ian Lee (thanks again for your thoughts) and the transients on this site. Makes a nice change from monkeys screeching and flinging poo, which is often the case.

Our RE bubble situation is exactly the same here in Australia, ie mainstream media denying any sign of bubble. So I expect the correction to play out as Garth suggests: an initial drop followed by a downward grind. Our standard variable rate is a bit under 8%, quite a bit higher than Canada, and maximum LVR is now 90% and climbing. Add to this the sagging auction clearance rates, and an almost 20% rise in listings in recent months, and indications are that the wind has changed direction.

Only thing keeping our economy going is China. If their demand for our rocks softens, so will our economy. It’s a bit risky having only one major customer. Which is why all the jawboning by the RBA and RE industry, no point in spooking the hormonal horses.

#29 North Van Dude on 11.21.10 at 8:40 pm

Garth

First they ignore you, then they ridicule you, then they fight you, then you win.

I think you are now in the “fight” section of the spectrum. Prepare for the personal attacks and invitations to appear on BNN and be ridiculed by REIC clowns.

Check out youtube for videos of Peter Schiff getting yelled at and insulted by RE bozos on Fox, CNBC, CNN Money circa 2005. Entertaining stuff. It’s painful to watch a guy like Schiff try to explain basic bubble economics only to laughed at. Well, guess who got the last laugh there?

If they were not afraid they would not launch any rebuttals or attacks.

#30 T.O. Bubble Boy on 11.21.10 at 8:58 pm

Can someone explain to me why there would be -$10,000 price drops on $800,000+ houses?

http://guava.ca/?p=2460

You have a house on Sherwoord Ave that has gone from

$899,900 on October 8th
to
$889,000 on November 5th (-$10,000 after almost 1 month on the market)
to
$879,000 on November 21st (-$10,000 after another 16 days)

Are that people that are spending almost $900k really enticed by that 1% discount? If someone was willing to buy at $879,900, why wouldn’t they have just offered that price (98% of asking) when the place was priced at $899,900?

#31 Contrarian Canuck on 11.21.10 at 9:06 pm

Where are you, Ian?

You just got the flying elbow smash from Garth, while another blog just pinned you for the three count. That’s how it feels when you get your a$$ handed to you.

Back to the books for you, my good man!

http://financialinsights.wordpress.com/2010/11/21/john-vs-the-professor-more-on-the-soft-landing-thesis/

#32 Mark on 11.21.10 at 9:06 pm

I wonder how many Canadians are trying to rely on either GICs, or real estate, as a retirement plan? Most people I know basically look at me like I’m insane when I suggest that stocks are cheap, yet they cling to GICs/houses which won’t have any value if Canada’s economy (and our stock market) doesn’t perform in the future.

#33 bigrider on 11.21.10 at 9:07 pm

#20 Walter safety-“financial assets just like real estate do not have an endless upward bias and lack utility like a house”

Yes but financial assets pay you to own them, are liquid while houses cost you money to keep.

By the way your handle ‘Walter safety ‘would imply a diversified portfolio of assets not a “bet it all’ on RE.

Again you imply safety in RE.. insanely mis-placed.

#34 HouseBuster on 11.21.10 at 9:09 pm

Housing crashed in Ireland, Spain, and the US, just to name a few. And it can’t happen in Canada?

Yeah right, Ian Lee is an idiot.

It will happen here too because the one thing that all those countries have in common is human emotion. Greed created the bubble, reality will pop it, and fear will crash it.

This has been going on since the beginning of mankind.

Here’s a tulip for you.

#35 Mark on 11.21.10 at 9:10 pm

$9B in reserves… on $500B+ in insurance (that a whopping 1.8% of mortgages that they could cover).

2 ‘problems’ with this.

a) Its actually $900B+ in insurance and loan guarantees of NHA MBS;

b) CMHC has another roughly $8B available in equity on their balance sheet under the category of ‘unearned premiums’, which are premiums paid into CMHC, but not booked as income.

But either way you look at it, CMHC is a very highly leveraged entity in a ‘first loss’ position on many hundreds of billions worth of sub-prime loans.

BTW, I was just doing some digging last night on the Calgary commercial real estate market. Nortel built a complex in 2000-2001 for approximately $150 million, a campus in Calgary called the “Westwinds Innovation Complex” for their then-booming wireless operations. In 2009, the complex was sold for a little over $50M, and still isn’t even occupied by a new tenant. oops!

#36 Nostradamus Le Mad Vlad on 11.21.10 at 9:12 pm


#10 Boombust — Figure we’re a few years behind the US, so when 2014-15 comes along, there will be a whole bunch of boomers trying to sell to buyers that aren’t there.
*
30-Year chart of the US$. “The revaluation of the SDR should be occurring around the end of 2010.” This may go with a link from #210 miketheengineer on 11.21.10 at 8:44 am — “. . . it will take place at the end of 2011 to the tune of major geopolitical conflict and the collapse of the US dollar . . .”

Whether the US$ / financial system collapses or not really doesn’t matter. It’s dead anyway, and the old illusions have to be cleaned up, to make way for the new.

Hidden Agenda “QE2 has absolutely nothing to do with assisting the economy of the US, and everything to to with fattening up the already obscenely overfilled coffers of the banks and the Federal Reserve (which is, of course, no more “Federal” than Federal Express!)”. wrh.com.

The End Times Financial, that is.

0:53 clip IMF says a global govt. is underway.

1:24 clip Food Stamp usage up 60% since 2007; combined with food bank use here, that’s a lotta folks.

The US (and Cdn.) Train Wreck — By design or Accident? Ummm, by design, of course.

WW3 International banxters funded both sides from prior wars and, not surprisingly, it is very profitable for them.

Officially, it’s official. Ireland is taking payments from X-Boxes.

Goes with #251 S.B. on 11.21.10 at 6:03 pm — “Controlling us via fear: CBC says “Terrorists” could sneak in via Inuvik or somewhere . . .” Due to global freezing one’s naughty parts off, ‘terrorists’ will probably arrive via icebergs or swimming under the Arctic ice.

Call St. Boreacle of the Al-Nutbars! Remember — I’m A Billionaire and You’re Not!

Buffet gets billions in tax-free loans from the taxpayer.

TSA “BOYCOTT THE AIRLINES. DRIVE THEM OUT OF BUSINESS. IT IS THE ONLY NON-VIOLENT WAY TO END THIS INSANITY!

“Do you think George Washington and Thomas Jefferson would have been okay with British soldiers putting their hands down their wives’ panties?” wrh.com.

Arrogant US still dictates to other countries how to conduct their own internal business.

Unemployment “In eleven days, 800,000 people will lose all their benefits and by the end of the year, 2 million people will join their ranks, a Press TV correspondent reported on Saturday.” Combined with the TSA pat-downs, foreclosures and banxters getting obscenely rich, chances are there is not much longer to wait for a revolution!

#37 Moneta on 11.21.10 at 9:12 pm

I just can’t understand people who tries to argue. I personally would refuse to argue with them.
—-
The fact that they argue is proof that it will tank. because it is this belief that has led to the bubble.

#38 bigrider on 11.21.10 at 9:35 pm

Again the perception that a house is always a wise investment and stocks are something to avoid is etched in stone in people here in Canada.

Tell me anyone who is a proponent of RE as king, how does this womens house, that she has lived in for 30 years it seems, help her financially in anyway, unless she sells and starts renting. Remember whether it has doubled in value or tripled, it does not help to fund her expenses, it simply increases them.

I would argue that she would have been better off buying some common shares of TD Bank, CN Rail and a whole host of paying assets 30 years ago. She would have more than that value of the house today and be liquid.

http://www.moneyville.ca/article/893582–how-dancer-karen-kain-invests-her-money

#39 kitchener1 on 11.21.10 at 9:36 pm

30% min in Toronto and Van city. Check out listings and prices from march-april of 08. We are going was past those prices int terms of declines.

Nationally, ill say 22% down.

Assume that the discount rates that people get for mortgages goes to say 6% (meaning posted rates are approx 7.5%)

Irregardless if that is when you renew your mortgage, what impact to the RE bulls think that will have?

#40 jimboyyc on 11.21.10 at 9:42 pm

#26 Tran

Remember CMHC insured mortgages are recourse in Alberta just like every other province.

If you want a non-recourse mortgage you’re going to have to put down 20% on each purchase.

Does anyone understand why the Irish people aren’t rioting in the streets over their government agreeing to bail out their banks to the tune of $31,494 PER PERSON?
Garth’s correct about bank shares/bonds being a good investment when the goverment agrees to cover all the risk.

#41 DiGiacomo on 11.21.10 at 9:49 pm

#30 T.O. Bubble Boy on 11.21.10 at 8:58 pm

Can someone explain to me why there would be -$10,000 price drops on $800,000+ houses?

http://guava.ca/?p=2460

You have a house on Sherwoord Ave that has gone from

$899,900 on October 8th
to
$889,000 on November 5th (-$10,000 after almost 1 month on the market)
to
$879,000 on November 21st (-$10,000 after another 16 days)

Are that people that are spending almost $900k really enticed by that 1% discount? If someone was willing to buy at $879,900, why wouldn’t they have just offered that price (98% of asking) when the place was priced at $899,900?

————————-

from what I’ve heard, on what the realtors(r) see in the MLS system, when you adjust a house price downwards, it puts a down arrow next to the listing

so when the realtors(r) go flipping through the listings, they see that there’s been a change – it’s a reason to call clients, “hey! let’s go see this one – they just dropped the price!” and get some activity going.

#42 dark sad person on 11.21.10 at 9:55 pm

Having said that, Canadians have screwed up housing just as intensely as Americans. We inflated values bizarrely until average families could not afford average homes. We turned the need for shelter into house porn, and got all horny for granite C tops and S/S appliances. We allowed couples without money to buy houses. Our government wiped away lender risk and heaped it on the taxpayers. Our central bank brought in emergency teaser rates in a deliberate attempt to encourage profligate borrowing. We turned privately-owned housing from an earned reward into a universal entitlement. And in a time of recession and unemployment, we morphed boom into bubble.

As a consequence, we have more debt and social uncertainty than at any time in several generations. If the wind shifts badly, how are we to escape the fate which befell the US middle class?

So my scenario for a Canadian real estate mess remains pretty much as I have articulated it here over past months. A correction of 15%-20% in prices (depending on the market), followed by a multi-year melt which could shave off another 5% annually, amid slumping sales, a sagging economy, higher taxes, increasing rates and a jump in listings. In the end, by 2015, houses sell for far less.

****************
I think you’re way too optimistic by about 30%
I don’t see where you factor in Unemployment levels-that always have a trickle down effect on negative home values-based on purchasing power-
I think Unemployment levels are understated and forecasts of decreasing Unemployment is like trying to play Chess in 3-D–

I am somewhat in agreement of the initial price drop-but from there you lose me–
What is it from that point-that is favorable in the Economy that you see that will cushion the slide and ease it lower over that many years?
I suppose there will be the usual Government sucker ploys that will cause some temporary stickiness-but Sentiment is shifting in Canada and what will reverse that in 2-5 years-barring a War-which is likely or some right around the corner technological breakthrough which is unlikely–

A 60% decrease-from peak to trough over 5 years-with another 10-15% undershoot for 2-3 years–
We’ll see–

#43 Jake on 11.21.10 at 10:02 pm

Since no one has even referred to Bob Truman, I will. He has certainly become quite obsessed with Garth over the last couple of years. It is probably just another case of small blog syndrome (Chris Davies anyone?). The only way he can get some traffic is to make some extreme claims; ironically that is what he accuses Garth of doing. What a douche! Get a life Truman.

#44 bigrider on 11.21.10 at 10:06 pm

#32 Mark.

Bravo.!

A poor economy means lower housing prices and poorer prospects for all.

The stock market is simply a barometer for the economy.

So if people think that stocks are a bad investment, then they better run from everything, maybe learn how to grow their own food becuase one thing is for sure, if the stock markets go to zero your house wont be worth SHI..!

#45 T.O. Bubble Boy on 11.21.10 at 10:14 pm

Wow – a comparison to Jim Jones!

Garth, you really are striking a nerve with the RE Association crowd.

Now, when do those flights to Guyana leave?

#46 a prairie dawg on 11.21.10 at 10:19 pm

#5 Kevin

Who spends more than a drunken sailor?

That’s easy. A drunken Rider fan.

And we’re only sending 12 guys to Edmonton next week, just in case. ;)

Seriously though, lots of house porn here too. No one is immune it’s like a plague. Stainless and granite isn’t just for the cultured elites in Van and GTA anymore. But rentals are still not that easy to come by here so I wouldn’t say we’ve hit market saturation yet. (yet!)

But I count my blessings. I felt a tremor in the force and put my pension savings into bonds in late 2007.

I also bought a property well below my means and luckily right before the housing boom hit. Plus I raised my mortgage payment voluntarily 3 times as interest rates plummeted. (I’m a contrarian that way) Too many others used equity to buy houses/toys. My 25 year amortization is now cut down to 14 years, with only 4 years remaining. :)

To all those people saying double digit interest rates are a thing of the past, I say, “Wanna bet?”

Rising interest rates (long term) and increasing taxes will cut the legs out from under most of those drunken sailors. It’s just a question of when.

Time to invest in a peg leg factory. Arrrr!

#47 vomitingdog on 11.21.10 at 10:21 pm

I’m not sure a 15%-20% would be noticeable to anyone in Vancouver other than those who are priced out. In 2008, we sustained a 17% drop before the frenzied masses picked up the ball again… at record low interest rates. And rates look set to stay that way.

So maybe you’ll have to rethink your position, Garth. I thought Ian did a decent job setting out the reasons why not much will be happening here in Vancouver anytime soon.

#48 45north on 11.21.10 at 10:24 pm

Jsan: if you have almost 1 million mortgage holders in this country barely hanging on by their finger tips at these current rock bottom rate levels, the only conclusion my less educated mind can reach is Canada could meltdown to a degree far worse than even what was seen in the US.

Jsan for me it’s not a math problem. Knowledge, reason and logic do apply but above all is intuition. My intuition says that the meltdown will be bad. Bad.

take the CMHC out of the picture

take CMHC out of the picture and the real estate market would stop dead. Dead.

Connie talking about Garth you appear to be negotiating with yourself.

he does

JO: edited: Lets consider the typical buyer who puts maybe 5 % on the average GTA home of just over $ 400 K. He has entered into a highly leveraged purchase of an illiquid, poorly diversified and severely overvalued asset which has high maintenance costs.

I do remember having to sell my house in a normal market with the cushion of a secure job and substantial backing from my father. The typical buyer you described has no idea what’s in store. I really think the typical buyer supposes that the government will come to his rescue and up to now it has!

He’ll pretend if the government will pretend.

#49 bby88 on 11.21.10 at 10:25 pm

Garth,
Let the fools keep on buying real estate, autos, electronics, etc.
You can lead a horse to water, but you can’t make it drink.
Canadians believe that we are insulated from the global meltdown.
Article attached is about the US being bankrupt.
Canada may end up like the PIIGS countries.
You will have the last laugh.

#50 BrianT on 11.21.10 at 10:33 pm

More video from the Gulag-here they are strip searching a 5 yr old kid http://www.youtube.com/watch?v=XSQTz1bccL4

#51 Jsan on 11.21.10 at 10:49 pm

Again, it cannot be said enough times on here. All of you people who listen to the generally biased academics, the Real Estate industry, the mortgage and banking industry and the Main Stream Media, if history has not shown over and over and over again that all booms end in a bust, than you deserve buying at the top and losing your shirts in the process.

Let us recap for those who still believe that we are NOT in a bubble.

Housing in Canada is ONLY affordable based on:

– Century low, temporarily low, interest rates
– THE CMHC.

That’s it, PERIOD. Take only one of those away and housing crumbles, take both away and housing gets crushed. Take none away and housing still takes a substantial price dive because as all bubbles have shown again and again, they always inevitably collapse!!!

Here was the thought in Ireland only 4 years ago.

“Housing boom ‘set to continue until 2010”

http://www.thepost.ie/archives/2006/0212/housing-boom-set-to-continue-until-2010-11769.html

Here is the reality only 2 years later, and of course the blame and finger pointing of all of the fools who didn’t see the obvious bubble as usually is the case!!! We will be reading very similar headlines about Canada in the years to come.

“Careless banks blamed for Ireland’s housing crash”

http://www.mortgagestrategy.co.uk/channels/lending-strategy/careless-banks-blamed-for-irelands-housing-crash/168328.article

“No end in sight for Irish house price falls”

http://www.globalpropertyguide.com/Europe/Ireland/Price-History

.

#52 Leanne on 11.21.10 at 10:58 pm

“For the easily-influenced who are anxiously awaiting real estate Armageddon, they have glommed onto Garth Turner as their messiah (or more accurately, their “Jim Jones”).” ~ Bob Truman

That’s not right. Garth has never once told us to drink the koolaid. Let’s just ignore the negative press, join hands in a circle and sing Kum ba yah while we wait for the spaceship.

#53 Kanata Squirrel on 11.21.10 at 11:07 pm

In one week, I go from a suburban castle on a cul-de-sac and will miss my pool and forest/parkland to a rented home on a 3 acres where I can grow 2 acres of veges and fruits and 1 acre for fun including an awesome ice rink this winter.

And I’m very liquid … for a much more diversified portfolio….

#54 BearClaw on 11.21.10 at 11:15 pm

jsan,

According to the survey a rate move 1.5% or less would put 575,000 in a position of “being concerned with their ability to make monthly payments”. Most of these borrowers have fixed rate payments. The average rate in the survey is 4.22%.

 The average amount of room is $1,056 per month on top of their current costs.
 Just 2% indicated that they have no room (the affordable increase is $0).
 A further 2% indicated their room is $1 to $99.
 5% indicated that their room is $100 to $199.
 6% reported room in the range of $200 to $299.
 This leaves 84% whose capacity is $300 per month or more.

#55 mid-Ontario on 11.21.10 at 11:24 pm

Are you part of a cult if you are only in cyber contact?

Meanwhile, the MSM fails us badly by not showing everyone that RE is in bed with the banksters and the MSM. The life is about to be sucked out of our youth.

One question…where are the other Garth’s in this semi-mad RE world? Garth, we need links to your fellow well known and respected Canadian cohorts.

The Irish children are now in servitude to the Euro banksters for generations. Watch how they next turn their eyes on Portugal with Spain and Italty later.

Off to get more PM’s tomorrow. If only I felt better about burying them in the backyard. Does a metal detector react to buried gold?

#56 Behavioral Finance on 11.21.10 at 11:29 pm

That comment by Ian Lee saying that the mortgage housing crisis was due to government failure and Ninja Loans is just absurd. The major element is excessive borrowing by individuals and not understanding the terms.

Ian Lee lets not forget that from 1980s until now people saw decrease in rates, now mostly likely they will see increasing rates. There will be higher squeeze on people’s income.

Obviously the banks in Canada have not had to be bailed out or CMHC had to be bailed out as the deliquencies rates are pretty law.

Bottom line the mortgage crisis in US can be attributed to these key elements:
1. The want for a house
2. Lack of understanding how different mortgage products work.
3. Excessive borrowing by people no matter what the income ratio is period.
4. Lowest savings rates in history.

#57 Behavioral Finance on 11.21.10 at 11:31 pm

Ian Lee,

Didn’t CMHC go bankrupt in 1980s?

#58 bby88 on 11.21.10 at 11:32 pm

Oops forgot to attach the link.
Here’s the link
http://www.theglobeandmail.com/report-on-business/commentary/neil-reynolds/the-scary-actual-us-government-debt/article1773879/

#59 Behavioral Finance on 11.21.10 at 11:33 pm

Interesting

http://www.globalresearch.ca/index.php?context=va&aid=16170

#60 virginhomebuyer on 11.21.10 at 11:42 pm

I guess the real fool here is the landlord who is receiving 28K plus in annual rental income from the above couple. The fool must be Italian Garth.

#61 Coho on 11.21.10 at 11:45 pm

More video from the Gulag-here they are strip searching a 5 yr old kid
=================================

Welcome to the New World Order.

– Everyone is a terrorist suspect
– Houses are no longer homes, but a ball and chain of debt
– GW Bush declared that Bin laden and his cohorts hated our freedoms — fast forward 9 years — OBL must be laughing in his cave receiving reports that even children and the elderly are being searched and groped at airports. Quite the choice. Would we like indignity AND radiation, or indignity and humiliation?

Looks like soon we’ll no longer have any freedoms left for OBL to hate. Guess the freedom hater is winning the war against freedom…oops, I mean the war on terror. Terrorizing innocent families to prevent terror makes about as much sense as waging war so there can be peace.

Debt is good — war brings peace — everyone is a suspect — land of the free, home of the brave. Who are they kidding? Too many of us, unfortunately. But hey, the shackles and the senselessness is to be expected as the New World Dis-Order is ushered in.

#62 Behavioral Finance on 11.21.10 at 11:48 pm

Final point Ian Lee. CMHC has given the ability for the Canadian banks to run wild with their lending as a result of backing up the mortgages. Time will tell but real estate around the world is not the wisest investment short term especially when average family holds a mortgage for around 7 years.

#63 Utopia on 11.21.10 at 11:50 pm

@ #36 Nostradamus Le Mad Vlad wrote:

“Whether the US$ / financial system collapses or not really doesn’t matter. It’s dead anyway, and the old illusions have to be cleaned up, to make way for the new”.

—————————————————-

Got to disagree with you Nost. It matters a great deal whether the US Dollar and the US financial system collapses or not (which in any event is extremely unlikely). You have no idea, do you, what that event might actually mean for the Canadian economy?

Perhaps you live in cave in Kelowna (or North Van or wherever) but you obviously have no idea what a supply chain is, nor how raw energy is transported from Canada to be refined in the US only to be returned as gasoline and jet fuel, or how we can have strawberries, fresh cukes and tomatoes year round in this cold country of ours.

So it does not matter if the dollar and the US financial system fails? Perhaps you have the idea that everything would continue to function normally after a catastrophic financial failure. Sorry buddy. You are mistaken.

That a breakdown in the society South of us would have an immediate, serious and possibly devastating impact on Canada is not even it question. It would.

The consequences would be dramatic and if you are not fully stocked up on that bad day that the whole network comes apart at the seams you will likely face starvation or become a sad beggar at your neigbors door.

I bite my tongue every single day when reading your comments because they are so out of touch with reality.

You shop don’t you? You enjoy all the great stuff in the isles too, right? Where do you think most of it comes from smart guy? And how are you going to get it if the American economy fails and is on the skids? How will you get it if the system breaks down?

Maybe rethink your cerebral incoherance and wonder what is really keeping the whole system together before shooting off the same tripe and conspiracy nonsense every third day.

Or stock your larder and pray your silly wish for a US Dollar failure does not come true in your lifetime. You clearly know not of what you speculate.

#64 Whistler Dude on 11.21.10 at 11:54 pm

Near where i live , on the side of a mountain, there’s an intersection where in the line of sight there are 5 homes for sale. This town is rotten with RE signs (in New Yorks Hamptons area they allow only discreet signage- I now know why). The “Reduced” stickers” scream both desperation- the owners situation, and that of a realistic RE agent. During ski season, a home will get “foot traffic” in the retail parlance (and expect a price 30% higher than in November). Trouble is that we’re not getting destination travellers (Whis gets 10% of Canada’s international tourists). The improved Sea to Sky highway mainly makes it easier for Vancouver rubber traffic to visit for a few hours and return home(they make up 70% of the home ownership too!). Sure they save money on day tripping, but this town was built on catering to them.Who have been the major buyers in Vancouver according to RE mythology- the rich Asian buyers. With apologies to Francis Ford Coppola- “Charlie don’t ski”! -Wait a generation for that to happen.
That’s the town I live in. Stress all you want, even if you’re losing money on a luxury. No one needs a home in a world class resort. It’s a toy, and the toys are the first to go.
If you’re going downhill, why ski? Cause there’s more to life than RE!

#65 S.B. on 11.21.10 at 11:55 pm

This is not a cult! We are Blog Dogs, and Garth is our Alpha Dog. 8)
Although, the saying goes: The view never changes unless you are the lead dog.

(Think about this for a sec…) :D

#66 GregW, Oakville on 11.22.10 at 12:07 am

Hi Garth, fyi if your in Oakville Thur, and interested…

Special Oakvillegreen 10th Anniversary Celebration and AGM with special guest Environmental defender and Author Rick Smith
Thursday, November 25th 7:30pm

Rick Smith of Environmental Defence recently met with American speaker of the House Nancy Pelosi to talk about the tar sands; a few years ago he shocked us with a study of the dangerous chemicals found in the bodies of prominent Canadians and he recently released a new book “Slow Death by Rubber Duck”. Smith leads an environmental organization that is constantly making headlines and pushing politicians to get serious about the human health impacts of environmental degradation.

On Thursday, November 25, Oakvillegreen will be hosting him at a special event to celebrate our 10 year anniversary. The event will take place in the Atrium at Town Hall, 1225 Trafalgar Road, starting at 7:30 p.m. The event will be open to the public and we encourage you to come out and invite your friends and neighbours.

#67 nonplused on 11.22.10 at 12:09 am

I do appreciate that Ian had the time to come and defend his views. However I do not agree with him that more overt interference from the government can make things better. The fact that Fannie and Freddie started out sort of private and ended up public does not mean the fate of CMHC, just for starting out public will be different. We are, in essence, insuring ourselves here. It would be like putting your automobile insurance premium in a seperate account instead of buying insurance, and then hoping you’ll have enough when a big crash occurs. It can’t work. You need the capital to underlie the insurance and the government has no capital. They are deeply in debt.

#68 Kilby on 11.22.10 at 12:11 am

Had our lakeview Okanagan house appraised (professionally)at $619K in June. Have had it at $597K, $569K, $539K and soon to be $519K. Lots of lookers but not one offer. Three years ago we had people driving down this street looking for a house, didn’t even need a sign…….

#69 Utopia on 11.22.10 at 12:13 am

Just as an afterthought Nost, why don’t you tell us all how a US system Financial collapse is beneficial for Canadians or Americans.

Tell us too how the “illusions of the past” will make way for your delusions of the future and how those changes will be more positive and make our sytem work better.

You clearly do not understand how we are connected to our neighbors to the South nor how the fate they suffer is also our faith. But I am patient with fools.

So indulge me.

We are waiting. There are thousands of daily readers of this blog on both sides of the border who also await your brilliance, your rationalizations and all your best ideas. Give it to us buddy.

Try to do it without “links” to conspiracy sites if you can.

#70 LB on 11.22.10 at 12:17 am

#jimboyyce

Re: your premise that buying bank shares is a good investment. Not when deficit governments and financial institutions are now talking about forcing bank shareholders to take a “haircut” across the board,as we are now seeing in PIIG, attempting to offload their risk and losses, yet again, onto others.

Next will be bank shareholders/investors in the US and Canada.

Citizens taking to the streets,as we are already witnessing in Europe, or taking on financial institutions in world courts seems the only recourse to effectively stem these questionable and unprecedented actions by these corporate entities’ in their ruthless quest to maximize their own profits while socializing their losses by any and all means, and regardless of the consequences for the wider society. Truly a perversion of Capitalism.

It may be that it is all quite intentional, as a prerequisite to laying the groundwork for establishing a singular global economy.

In which case we must beware, prepare,withdraw and circumvent in order to protect ourselves and our assets in the days ahead.

#71 Debt's Dark Embrace on 11.22.10 at 12:25 am

Garth, your scenario from now to 2015 is quite probable but you forgot to mention what happens after that. From 2015 onwards the boomers will be retiring en masse and a lot of real estate will be on the market because the boomers will need to cash in their real estate and scale down to finance their retirements. There will be a huge supply of houses for sale and interest rates will be higher and there will be fewer buyers out there. The scenario you posted above is just the beginning………..Real estate will continue to decline beyond 2015 and the search for sustainable yields to finance retirements will drive equity prices up and yields down. It’s gonna be tough out there for a lot of people.

#72 Brad on 11.22.10 at 12:33 am

Well I may not have as many intials after my name as Ian Lee or am I a proffesor but common sense tells me someting smells when for what:

$409000 will buy you in beautiful East Vancouver B.C.

http://www.realtylink.org/prop_search/Detail.cfm?areatitle=&ARPK=&ComID=&agentid=&MLS=V850717&rowc=4&rowp=1&BCD=GV&imdp=10&RSPP=5&AIDL=233,234,236,235,237,238,239,240,241,242,243,244,245,246,247,855,432&SRTB=P_Price&ERTA=True&MNAGE=0&MXAGE=200&MNBT=0&MNBD=0&PTYTID=5&MNPRC=200000&MXPRC=900000&SCTP=RS

and what $412000 gets you in Pheonix Arizona

http://www.phoenixhomes.com/property-listings/beautiful-diamond-creek-home-with-upgrades

Try not to step in the bullshizy

#73 Dan in Victoria on 11.22.10 at 12:36 am

Jsan @ 51
Good links.
I posted a name here a week or so ago. No links. How many bothered to investigate?
Apparently this fellow was warning of problems in Ireland a long time ago.
Sound familiar with anyone / anything we know.
http://www.irishtimes.com/newspaper/opinion/2010/1108/1224282865400.html

#74 betamax on 11.22.10 at 1:13 am

#16 Martin: “Now the effect (as I see it) if we see that ‘flat line” on housing appreciation will be an economy being dragged down.”

Correct. That’s precisely why there’ll be no soft landing.

Ian Lee yesterday made claims about fiscally responsible Canadians who always pay their mortgage and never default, and how the economy drives housing — well, that’s all in the past. We used to be great savers too, but no more. Now, people not only spend all they make, they spend more.

Now, the tail wags the dog and constant rapid housing appreciation drives everything else. When appreciation dies, a huge percentage of consumer spending is going to die with it, and the result of that will be further layoffs, precipitating further price drops, etc. in a slow-mo process of cascade failure.

#75 Nostradamus Le Mad Vlad on 11.22.10 at 1:23 am


‘I don’t feel old. I don’t feel anything until noon. Then it’s time for my nap.’ — Bob Hope
*
Fair? Not really, but then I’m not a legal beagle.

Tax Evasion Wot does Credit Suisse have to hide?

EU-IMF now have complete control of Ireland. Did the elite really expect citizens to bow to their masters? I think not.

Death / Debt Don’t get mad, get even!

European and American Dream — not that different, both have come to a shuddering halt.

Ireland – China? Well, why not? Politics make strange bedfellows / bugs.

China Leaving US behind with new technology.

Russia – Iran So much for the western m$m feeding us spoon-fed garbage.

Everywhere is Madness.

Mirage – Illusion or Coke – Pepsi. Take your pick.

Pyramid (upside down). Shows different levels of income, etc.

#76 jaksun on 11.22.10 at 1:31 am

Re #18

http://gizmodo.com/5444592/the-ghost-city-of-ordos

All bought as investments….

#77 obert on 11.22.10 at 1:50 am

What does it mean that CMHC has only 9 B in reserves? Won’t this agency be bailed out immediately by the government/taxpayers if the losses increased?
Also, those who “own” houses will be able to refinance to the whole original mortage even if in negative equity – see recent TD’s innovations.

The prices may well go down – but the greater fools will continue paying their mortgages, .. as long as they have jobs (you cannot walk away from mortgage in Canada). The system may actualy remain stable – without a collapse. The banks are already insulated from the losses.

The big question is: is the Candian economy insulated from a housing prices declines? It is already known and anticipated that the housing sector will not be the economic engine in the years to come.

However, if CMHC were to collapse now – then we will be worse than Ireland, Spain or USA. Question, can CMHC become insolvent???????????

#78 Vancouver_Bear on 11.22.10 at 2:13 am

#6 Mikey the Realtor on 11.21.10 at 6:36 pm

Ha-ha the story changes now…..rich asians got plastic surgery and became rich Italians. Nice turn for the RE buble opera. Nobody saw this coming…..

#79 SquareNinja on 11.22.10 at 2:32 am

Attack on Ian Lee

I enjoyed the comments, although the ad hominem attacks do not illuminate.

Personal attacks are always funny!

Allow me to respond with some factual background.

1. I was 9 years in financial services as a Consumer Loan Manager, Mortgage Manager and Commercial Loan Officer in Ottawa and Eastern Ontario. During that time, I lent millions and millions- mostly residential – but some commercial mortgages.
2. I have been tenured since 1995
3. from 1991 to 2004, I taught over 100 times around the developing world in Canadian and American MBA programs in China, Russia, Cuba, Iran, Poland, Ukraine, Mexico, Romania – and witnessed many corrupt countries with poor public policies.
4. I do not consult and have no investments of any kind in any industry
5. I lived and taught in California from 2001-2004 where I studied the US mortgage industry

Blah, blah, blah… whatever credentials you have, others throughout history who had more and better credentials were certainly as wrong as you are right now.

Concerning forecast housing collapse, in my 1 hour conversation with the journalist, I said, in my judgment, a housing collapse is much less likely in Canada for a series of reasons that I laid out – not all of which were published, presumably due to space constraints. I provide the full exegesis and then you can reject each or all of them

Using words like “exegesis” isn’t going to impress me, when you don’t even know that numbers under “ten” should be spelled out…

1. we have only 6 banks in Canada – not the approximate 6,000 as in US – and which are regulated by a single authority (OSFI) and not the hodge podge of alphabet soup agencies in the US AND at state level

Only six banks? Bank of Montreal, Scotiabank, Royal Bank, TD Canada Trust, National Bank of Canada, CIBC, HSBC, Laurentian Bank, ING Direct, ICICICICICICICIC Bank?!?! Or perhaps you mean only six banks loan mortgages? Oh wait, no, that’s not true, either.

2. the Canadian Bank Act mandates that a bank may NOT make a mortgage with less than 20% down payment UNLESS insured by CMHC (please go look it up) – hence the “illegal” comment

It’s not “illegal,” but preferred by the banks who want to pass the liability onto the Canadian government, and in turn, the taxpayer.

3. CMHC required a minimum of 10% down payment throughout the 1960s, 70s, 80s and 90s. It was reduced to 5% in the late 1990s. In 2006, it was reduced to zero and when then Governor David Dodge learned of the change – as reported on the front page of the Globe and Mail in July or August of 2006, he went to CMHC Head office in person and objected very strongly. The policy was reversed shortly thereafter.

Here, do some reading.

4. the 6 banks and CMHC have adopted common income standard ratios – called the Gross Debt Service Ratio (GDSR) and the Total Debt Service Ratio (TDSR). The monthly mortgage payment (GDSR) may NOT exceed 32% of the person or family’s gross monthly income and the TDSR (mortgage payment and all other debt payments including alimony) may NOT exceed 40% of gross monthly income. I noted that these equity and income standards did not prevail in the USA – indeed NINJA mortgages (no income, no job, no assets) were the norm in the US

Then, uhhh… how come in Vancouver, people spend more than 70 percent of their income on shelter? Duh?

5. in 1980-81 I was Mortgage Manager at Ottawa Main Office (opposite West Block, Parliament Hill and beside National Press Club), 4th largest branch of BMO at that time, when then Fed Gov Paul Volker ran interest rates from 10% through 20% and induced a deep recession. The housing market certainly dried up – but it did NOT collapse. Indeed, it was a remarkable time for any person willing to observe and learn about consumer behaviour by watching real Canadians struggle with very difficult decisions concerning tough choices – e.g. do I pay my car loan? do I pay my credit card? The 1980-81 recession was far more devastating than the recent 2008 recession – for Canadians. However, there was not a housing collapse nor a foreclosure crisis.

It did collapse for Vancouver and Calgary in 1981.

6. the national household balance sheet data provided by Bank of Canada reveals Canadians owe almost $1.5 Trillion – and many analysts have become become deeply concerned. However, they fail to focus in the same report on the data that Canadians OWN over $6 trillion in assets or a coverage ratio of 4:1 (see recent excellent analysis by BMO Economics of this data and they concluded a housing collapse is unlikely)
Given that the lion’s share of the $1.5 trillion owed (75% I recall) is mortgage debt, we should be less concerned. Why? Because 1. mortgage debt is amortized over long periods of 25,30,35 years and 2. is offset by a hard asset called a home, which can be sold and the debt liquidated.

Yeah, the home can be sold for pennies on the dollar when the prices collapse! Also, pension funds and corporate assets aren’t going to help the homeowner who has 65% of his assets in his house.

7. the unemployment rate is substantially lower in Canada than the US (if the US calculated their unemployment rate the way we do, the US rate would be around 17% vs our 8%

Japan’s unemployment hasn’t gone above 5.5% (with a much lower average) since 1990… and we all know what happened with their real estate since then!

8. IF – IF there were a substantial number of defaults and foreclosures in Canada, the banks would be immunized – because CMHC insures approximately 75% of all high ratio mortgages. CMHC is a 100% Govt of Canada owned corporation and the NO Minister of Finance would allow CMHC to dump all the foreclosures onto the market at once – thereby causing a housing crash – as did occur in the US with multiple independent agencies.

Yeah, but the taxpayers wouldn’t be “immunized.”

9. demographics – yes I did discuss it in the interview but it was cut out – I noted that we bring in over 300,000 immigrants annually and is scheduled to increase to 350,000 – the highest in the world as a percentage of pop. I also noted that our birth rate – well below breakeven at 1.6 – is not as low as e.g. Japan or Italy. In conjunction with our very high immigration, this produces a steady annual increase in demand for housing

Everywhere on Earth has population, birth rates, and immigration! It’s not like real estate in the back-waters of the world’s most populous (and politically/economically stable) country is rising at double-digits every year.

Also, why would a foreign person choose Canada over America? Because our real estate is more unaffordable? And our average wages are lower?

10. aging of boomers – boomers are about 1/3 Cdn population. It is an extreme fantasy to believe that Canada is going to build seniors and nursing homes for most of these boomers. The vast majority of elders remain in their own home and will continue to do – as did my 91 year old mother who passed away in her own home last year.

Using the ‘ol “availability heuristic” again, eh? When Mr. Turner speaks of the coming boomer issue… he’s not talking about people wanting to sell their houses. He’s talking about them having to sell, because most of their assets are locked away in all that drywall, and they need income supplements!!!

Concerning my comment that the US housing crisis was caused – NOT by market failure or by government failure – but by what I called “Congressional failure”, I can provide the approximately 60 slides of a paper that I presented at a conference called “Financial Armageddon” at Carleton University in 2009. EVERY slide I presented was publicly sourced from the Federal Reserve or the US Treasury or from Fanny or Freddie or HUD or the US Census Bureau or quotes from the Congressional Record of Barney Franks or Chris Dodds. These slides are remarkably illuminating and demonstrate my hypothesis that Congressional policy caused the housing bubble and then the housing collapse.

Write a book, then. As if Canadian politicians are any better…

John Meynard Keynes famously noted that wages are sticky downward – no one wants a pay cut and indeed strongly resist – which is why wages do not go down much if at all, during recessions.

Yeah, people just live off of EI and go unemployed for two years… and then are eventually not counted as unemployed, because they give up looking and started going to the food bank.

Miguel de Cervantes famously noted that “Facts are the enemy of truth.”

My “insight” is that house prices are sticky downward as well. Setting aside deaths, marriage breakups and job relocation, most housing sales are discretionary within a city. Thus, the owner can always take the house off the market if he does not like the price offered.

Yeah, that’s what happens at the beginning… but when they go to put it back on the market, and find out that nobody’s ever gonna buy it at their sticky price… and they need the money for their new house that just closed… what are they gonna do?! Drop the price, of course. One price drop in a neighbourhood is all it takes to start an avalanche.

I concluded that, going forward, we will experience what we experienced in the past with housing prices that overshoot. In the early 1980s, house prices went flat line for several years as they did again in the early 1990s.

So… wages are going to catch up to house prices, instead of the other way around? It sounds twilight-zone logical.

I did agree with the US economist that predicts a housing collapse that interest rates will go up next year and that as Governor Carney noted in the MPC this spring, about 10% of mortgage borrowers will be “vulnerable” if interest rates increase by 3%.

Psch! How about every single first-time buyer will be soiling their pants?

However, I did not agree with the American economist from a Washington think tank that this will result in a housing collapse – for all the reasons provided above.

Famous last words.

#80 TryingToGetOutAlive on 11.22.10 at 2:43 am

http://www.yourhome.ca/homes/realestate/article/893485–at-home-in-a-rental-unit-in-forest-hill

wow, surprised to find this linked in the toronto star!
this is rare as it talks about the other side of RE.
still so many people are all in with RE. so much emotion and biased information that people in forums are talking about making unconditional offers on homes in leaside like it’s normal.

#81 TheBestPlaceonEarth on 11.22.10 at 3:06 am

Things are looking great. Even Garth is looking at a 15 – 20% haircut***DEPENDING ON THE MARKET***
No one dare argue with the fact that Asians love home ownership and love Vancouver. This is an unstoppable train folks. That half duplex on the West Side for 1 million so worse case it drops 20% at 800k how many Canadians could afford 800k with higher interest rates? The answer of course is zero. The problem is people are looking at Vancouver with logic and past history and future projections and employment etcetcetc. WHO CARES!!! Asia is banging on the door and the more likely scenario over the next 10 years is a 100% increase in values. Vancouver will make Tokoyo look like Weyburn Sask price wise in the near future. I feel sorry for Canadians, poor, renting and dealing with bed bugs. It’s a tough pill to swallow but nobody trusts or likes a renter we all consider them druggies.
*****A correction of 15%-20% in prices (depending on the market), followed by a multi-year melt which could shave off another 5% annually, amid slumping sales, a sagging economy, higher taxes, increasing rates and a jump in listings. In the end, by 2015, houses sell for far less.

#82 Outside the Box on 11.22.10 at 3:14 am

Garth, I would argue that there already has been a drop of 25% in Calgary RE prices in the past 6 months. You won’t find the 25% cut in the “official” CREB median and average posted prices, you will find it in the asking prices on the MLS.

6 months ago, for example, it was rare to see a home in the NW under $400k. 3 months ago, NW homes started to come in around the $360k mark, today, you can find them in the $310k area. In the SE, you can find homes now in the low $200k vs $260’s 6 months ago.

The asking prices are dropping.

The Average and Median is the past indicator, the asking prices are the future indicators.


IRELAND – $34,000 per person for a bank bailout the people voted no to. Amazing. Anyone else noticing that the politians are no longer listening to their voters? (Anyone remember the 97% NO vote on the 1st US bailout or the 80+% NO vote on US health care?). Good to hear the banks are getting more and more taxpayer money, I hear the casino stock market table is HOT HOT HOT!

#83 edmontonian on 11.22.10 at 3:31 am

You talk about all the individuals that won’t have any equity in there properties that bough a piece of property at 5/35 soon. It’s already happened here in Edmonton, and I am worried it will really affect consumer spending to the point of a depression-like consumer contraction in the city where the standard of living has plunged over the past 4 years .
Prices in Edmonton never recovered from the highs of the summer of 2007 in this city. For example we are down about $45,000 less per unit for the average condo compared with the summer of 2007. WE are actually slipping back to 2006 levels already and we have th lowest interest rates in almost 60 years! Very scary. The only saving grace in this city is if people declare bankcruptcy and have to rent, rent is down almost 35% since there is such a massive glut of thousands of houses and probably 5000+ condos , sitting empty, or still brand new from 3-4 years ago, unsellable and unrentable-people are gettting desperate.
Wanna live in a $500,000 condo or house with every option from air conditioning to granite 3 baths etc. come to Edmonton! You can rent a half million dollar property for about $1500 a month now, and hey that’s been on Kijiji for awhile now, amybe $1400 or less for that 1/2 million dollar property as owners get more desperate for assistance…
I hope this doesn’t end to terribly badly here in Alberta, but we are leading the country in Bankcruptcies & foreclosures… American-style!

#84 The Original Dave on 11.22.10 at 3:46 am

I’m not sure a 15%-20% would be noticeable to anyone in Vancouver other than those who are priced out. In 2008, we sustained a 17% drop before the frenzied masses picked up the ball again… at record low interest rates. And rates look set to stay that way.
====================================

20% in Vancouver with a few years of 5% declines is way too conservative, sorry. I’m the bubble guy. I love them. Seeing them expand and watching the party and then seeing them retract and watching the panic.

Vancouver is way too unaffordable…it’s not even worth debating. Serious declines will happen there and a phenomenon will occur called panic selling. After the panic selling, there will be so much over head resistence (so many people that bought at higher prices) that prices will stay down for years. When a bubble bursts, they overshoot to the downside. Please point out a bubble that burst that didn’t over shoot. If the value of an average home is 3.5 times income, then Vancouver has a huge drop coming. The thing is: bubbles over shoot their true value.

Try telling someone in 2007 that oil was going to hit $30 a barrel (while it was at $130 a barrel at the time). They would said you were nuts.

Try telling someone that uranium would be $30 a pound in 2008 while it was $150 in early 2007…same thing “you’re nuts, it’s going to keep going up”

potash, u.s real estate, etc

You can even look at the move in U.S dollars. Everyone bet against it going into 2008. Hyperinflation was “just around the corner” all the pundits told us. What happened next shocked the world. Everything crashed and in the dust stood the U.S dollar (the contrary bet), that clobbered every single asset you could possibly think of at the time (yes, even gold).

Markets have a way of shocking you. They can make your jaw drop when the party goers are too excessive and are too certain.

Now tell me again how Vancouver real estate will be the first ever bubble to have a mild correction. The emotions in markets are always the same. It’s just the asset that changes faces. People’s reactions are the same. Why would we expect a different outcome? We’ve seen invincible assets get clobbered before. The story ends the same.

#85 Thetruth on 11.22.10 at 3:47 am

Garth states nooo 50% decline in RE market. Only 15-20% then maybe 5% a year after that (slow melt) for a few years…

Sounds plausible if government policies remain static. However, this won’t be the case. comments censored after this…

#86 Thetruth on 11.22.10 at 3:55 am

One such policy change: allow homeowners to take advantage of once in a lifetime low rates by having 15 and 30 year mortgage terms available. This would stabilize the housing market in an instant with a penstroke!

#87 Outside the Box on 11.22.10 at 4:31 am

WARNING: DO NOT DRINK WHILE READING THIS HEADLINE (you might damage your computer)

Who write this #[email protected]? How much in RE advertising (or kick backs) did the Vancouver Sun get because they sure lost readers.

—–

Olympic village receivership brings stability, benefits taxpayers

– First, we have stability. No more negative rumours about financial difficulties or payment deadlines.
– Second, both the city and Millennium avoid going to court.
– And finally, the city has an agreement from Millennium on the transfer of their assets to the city as part of a plan to meet their debt obligations

Many people have asked, ‘Why doesn’t Millennium have to pay for everything? Why should the city step in?’ The reason is that the city carries the financial risk for the Olympic village.

It’s important to recognize the work that Millennium did in completing the project on time for the Olympics. It is a great asset for the city and one that, no doubt, will be a jewel for Vancouver.

We need to be patient. The units will not all sell at once, and we’re not going to rush into a fire sale. It is important to take a long-term view and recognize that we are in still in challenging economic times.

http://www.vancouversun.com/business/Olympic+village+receivership+brings+stability+benefits+taxpayers/3864934/story.html

#88 Gerry B on 11.22.10 at 4:46 am

A rarely stated long-term positive for the Canadian real estate market is global climate change. In a world that will be getting progressively hotter, and with access to fresh water increasingly difficult in some regions (e.g. US west, northern China), the attractiveness of a large, (currently) cold country with vast amounts of fresh water resources will gradually increase. Just avoid Richmond BC. With 1-2m of sea level rise now expected by 2100, Richmond will be rather flood-prone…

That’s very long term though. In the short term, it’s hard to see how Canadian RE will avoid a correction.

#89 Moneta on 11.22.10 at 7:55 am

Ian Lee yesterday made claims about fiscally responsible Canadians who always pay their mortgage and never default, and how the economy drives housing — well, that’s all in the past.
———–
All US bank CEOs said the same thing at the Goldman Sachs conference in 2003-2004.

The problem is that they were basing their ideology on historical data where homeowners still had to put 20% down payments. Past experience showed that in such circumstances homeowners would do everything to save their homes. But in the last decade, past experience became irrelevant because the rules changed along the way and most homeowners no longer had much skin in the game.

In Canada today, the 20% down payment rule is long gone. We have no historical data showing us what happens to homeowner mentality when prices collapse and they put 0 down. Actually, we do! The US experience.

#90 David B on 11.22.10 at 8:14 am

Please explain, across the pond Ireland has accepted a very large bailout from the EU. Stocks have risen and continue to rise the same as they have done here from America’s QE2. Nothing new as just a year or so ago it was called Stimulus. Same game … printing money and giving it away to selected governments and busineses who failed in one or more respects to keep their house in order. Sound about right?

Q. Can those smart people (G-20) people who attend
$ one billion week end parties save the world by just printing money?

A.

Q. Can these same very smart and special people just continue to do the same as bad business appears?

A.

Q. If taxes, service fees rise coupled to less health care paid expenses will the working class be called into the office to receive a 5-10% annual raise? “Plus” election promises (no need to spelll them out eh)

A.

If you answered “NO” to all of the above go to the front of the Bus …. if you answered “Yes” to the last question …you work on Wall Street, Big Bank or you are a CEO.

So what will happen when payback time comes?

Easy! Sell your house and turn a 100% profit and take the 1-2 $Million profit and live the good life.

How far $2m invested will go I am not sure. In any rate no need to count on the sale.

#91 TS on 11.22.10 at 8:18 am

The FDIC in the US recently announced that there are now 903 financial institutions on their ‘watch list’…meaning that they are in danger of failing. This is up significantly from the roughly 750 that were on the list about a year ago. The US economy recovering?….NOT!

#92 Utopia on 11.22.10 at 8:37 am

55 mid-Ontario on 11.21.10

“Off to get more PM’s tomorrow. If only I felt better about burying them in the backyard. Does a metal detector react to buried gold”?
——————————————————

Does a metal detector react to buried Gold? You better believe it does. Really well too. Don’t even think about burying gold in your back yard if you know neighbors who are into detection equipment. You won’t stand a chance.

On the other hand, gold is not magnetic. That might give a clue to hiding it.

#93 Chris L. on 11.22.10 at 8:51 am

I think the real point of this blog and position at large is that even if real estate doesn’t crash (which it will), it’s foolish to buy on that premise alone. You shouldn’t buy overpriced real estate, or any real estate on the likelihood, or lack of likelihood of it crashing.

Real estate investing should be left to the experts who plan to do whatever possible to turn it into an asset. When the layman gets involved (which happens during massive run ups) they always get burned.

What Mr. Lee fails to see is this very thing. Not everyone should be plowing into real estate. Especially when you can rent for half the price.

I’ve owned real estate for almost 10 years now as an investment since I was 20. It’s not an easy deal and most of my capital comes from and goes to maintaining real estate. If it’s not your job, run away and let it be someone else’s. Enjoy your life.

When stuff was half price, it was time to buy. The crash argument is moot.

#94 Sean on 11.22.10 at 8:53 am

This is a copy of my post on the Calgary RE agents blog that Garth linked us to today.

Disclaimer: I read Garth’s blog but I am not a, how do you put it, a gullible zealot.

Everything Mr. Lee says about the rules are correct.

However, the last home I purchased about 6 yrs ago, the bank approved and lent me a ‘cashback mortgage’. The numbers of my debt load worked into the 32% calculation but I was short a downpayment. No problem the bank said (one of the big 6), we can give you a ‘cashback’ mortgage. They gave me the 5% downpayment and tacked it onto my mortgage.

As soon as we moved in the bank was constantly bombarding us with pre-approvals for additional credit based on the rising value of my home. I eventually ended up with over $130,000.00 worth of LOC, HELOC, CC’s tied to my house. All of which was pre-approved without my even having to apply or even ask for. Now if I had actually racked that up, money the bank said I could have, was entitled to, and , according to them, was able to afford, my total debt obligation monthly just to them would be over 70% of my income.

They can hide all of this because it is after the fact lending, meaning that this is money lent after the mortgage approval process. How is this prudent lending?

My wife is now a financial planner and is helping middle class try to get to a better place financially and this is the same situation she is finding with people over and over again. The problem is that most people think that if the bank says they can afford it they believe it. On the surface us Canadians may appear to be a financially superior race but the truth is that we are better at hiding it and suffer in silence. Ireland has also been claiming that they were ok as well. Look at them now, not so smug are they.

Maybe Garth seems a little out there sometimes, but at least he is out mingling with the common folk, not analysing data from a glass tower. Ever hear the one about the tree full of monkeys? The ones at the top look down and see smiling faces, and the ones at the bottom they look up and see.. well you get it, I suppose.

It would appear Mr. Truman has blocked comments on his blog. Telling. — Garth

#95 pjwlk on 11.22.10 at 9:00 am

Driving along Dundas street in Oakville, on my way home Sunday from the great (soon to be) white north, I noticed that the sales office of the new development at Neyagawa was totally jammed packed with people looking to buy! Two large parking lots full, and tons of people waiting inside a big tent.

Lots of people driving around the freshly laid roadways with lamp standards (sans the lamps) and looking at empty lots…lol. Not much of a decline in sales here it seems. Ignorance is bliss I suppose…

#96 Anotherlowlyrenter on 11.22.10 at 9:11 am

I wish politicians could understand that bubbles are only good till they’re bad.

Not all renters are poor – I could buy for cash tomorrow. But I’m competing with hair dressers who have nothing to lose by borrowing 100% and going broke if it all goes bad.

In a system where banks pass on the risk, prices will always become overvalued.

Hong Kong has a lot of experience (and a lot of problems) from hot money from China. Their latest counter measures:

Under the new measures, properties resold within 6 months to 12 months will incur a 10 percent stamp duty, while those resold between 12 months and 24 months will be charged 5 percent, Tsang said. The levy will be split between buyers and sellers.

Down payments for homes costing HK$12 million or more will be increased from 40 percent and for those between HK$8 million and HK$12 million from 30 percent, Hong Kong Monetary Authority Chief Executive Norman Chan said Nov. 19. The maximum loan to value for non owner-occupied residential properties will be lowered to 50 percent, Chan said.

http://www.bloomberg.com/news/2010-11-21/hong-kong-property-sales-slide-83-as-higher-tax-deters-weekend-homebuyers.html

#97 icarus on 11.22.10 at 9:17 am

this is interesting:

http://www.boingboing.net/2010/11/21/floridas-dirty-rocke.html

http://www.boingboing.net/2010/11/21/who-owns-your-mortga.html

#98 Live within your means on 11.22.10 at 9:24 am

#14 freedom_2008 on 11.21.10 at 7:27 pm
If this couple do hold government pensions, say, 40K/yr, that is like 1M in safe asset that most others don’t have.

……………..

Even govt. pensions aren’t as secure now. My govt. pension was indexed, but I rec’d notice this year that “No indexing in 2010 and depending on the province’s finances indexing of 1.25% for each of the next 5 years will be guaranteed. After that time, the trustees will follow a comprehensive process to determine the level of indexing the Plan can afford in the future.” My husband works in IT for a munipality but his pension will be small and non-indexed. As he’s non-unionized, he rec’d 1% pay increase while unionized members rec’d 2.5 or 3%. But, he doesn’t want to be part of a union.

I doubt our prov. debt will decrease much in the next 5 years so I’m anticipating they may kill the indexing. Even though people say we’re in a deflationary period, if I read that right, basic necessities (food, etc.) have increased. We’re looking at a min 7.5% increase in hydro come Jan. On Thursday we’re having a Steffes’ electrical storage system installed to take advantage of TOD rates. Will require a few changes in our lifestyle to take advantage of off peak rates. Our eco energy rebate more than paid for it.

#99 Got A Watch on 11.22.10 at 9:24 am

Events are moving very rapidly in Europe today, confirmed black swan landings.

Even I, Mr Cynical, am amazed at how fast the Irish “bailout” unraveled. Crazy fast.

This is a black swan right here, most people would have been thinking last night that while the Irish problem has not really been resolved, a bit of time had been bought, probably a few months at least, like Greece.

Not this time, Banksters!

This is actually a good thing, though it will be bad for risk assets near term. A huge step forward towards the end of this crisis, as the world is no longer buying the “bailout” kool-aid.

Can-kickers everywhere have been served notice that the times, they are a-changing.

Zero Hedge: “Failed Bailout Contagion: Portugal CDS 40 bps Wider On The Day, EURUSD Now Worse Than Friday Close”

“Although since Ireland is now also wider on the day, it is not really contagion. It is more failed bailout. And the EURUSD is now below Friday close. The market now believes the Irish bailout has failed.”

Spain is the elephant in the room here, when they start sliding over the cliff, it will be game over man, game over for the Euro project.

breaking hard now:

headlines: “11-22 08:30: Irish Independent govt. MP says highly unlikely that he will support the 2011 budget”

“11-22 08:32: Second Irish Independent government MP says will not support the government”

Zero Hedge: From earlier today, before the above 2 headlines:

ZH: “Moody’s Expects Multi-Notch Downgrade Of Ireland, As Green Party Abdication Sends Irish CDS Wider On Day”

“Earlier today Moody’s finally woke up from its slumber, threatening it would do a “multi-notch downgrade, albeit one that would leave the country still with an investment grade rating”, which the people who have made a business model of being behind the curve said is now the most likely outcome of the review of Ireland’s sovereign credit rating. Moody’s (which rates Ireland Aa2 and has the country on review for downgrade) said that an aid package from the European Union and the International Monetary Fund would shift the burden of supporting Ireland’s banks onto the Irish sovereign, and would therefore be “a credit negative for Ireland.” Apparently bankruptcy is not covered under the “credit negatives” for Ireland. And while what Moody’s does or thinks is completely irrelevant, what the Irish Green party (whose prior opinion we presented in a very distinct clip last night) has announced it will quit the Irish government in January, leaving PM Brian Cowen without a majority in the government, and leaving the door open for elections, and thus a complete undoing of the bailout. Looks like yesterday’s announcement will be the shortest rescue in history. CDS is already seeing that, as Irish CDS was last seen lifting offers of 520 and wider, after a 507 close on Friday. And Futures already following the action. It will be another busy day for Brian Sack.” (PPT and yes they do actually exist, they have trading desks at the Federal Bank of NY)

humor: “11-22 08:45: Irish Labour Party says 2011 budget can still pass” they’re now around 8 votes short, and sinking fast, of course it will pass, sure, uh-huh, yeah, OK!

#100 Drake on 11.22.10 at 9:29 am

If you’re talking 20% collapse in markets like Vancouver and Toronto, I’m guessing I should have little fear in smaller markets like Kingsville Ontario? Housing is relatively cheap here to start, and didn’t have as far to climb as did TO or Van.

#101 C on 11.22.10 at 9:33 am

Looks like listings just plunged over the weekend in Burlington, Ontario on MLS.

House, $300,000-$400,000 listings:

November 8th, 2010 405
November 15th, 2010 412
November 22nd, 2010 373

Probably highly seasonal, but maybe sellers aren’t getting any action and are doing the old “maybe I’ll delist and relist in the spring”?

#102 DaBull on 11.22.10 at 9:41 am

#83 edmontonian

And what color is the sky in your Edmonton.

Rent a $500k condo for 1500!!! Gimma a break. Average Condo price in Edmonton is $225K. Average rent for said condo $1500. If you gonna make shit up, try and at least make it believable.

PS: there is only 54 condos (from Realtor.ca) for sale over $500k in Edmonton and your looking at $2500+ (from Kijiji) to rent one of those monsters.

#103 BrianT on 11.22.10 at 9:51 am

#55Mid-the funny thing is that the simple mention of this obvious reality is still considered to be a “conspiracy theory” by most. The whole thing is wild-Merkel mentioned that “maybe” the lenders shouldn’t get bailed out 100 cents on the dollar and the MSM made her out to be Karl Marx. I have said it before but IMO most still don’t realize that THE MONEY ISN’T THERE for all these past, present and future bailouts-which means that the future impoverishment caused by these is being dramatically understated.

#104 Live within your means on 11.22.10 at 9:54 am

About 19+ yrs ago we bought our current house. We were approved for a much larger loan, but we chose to buy a house based on the possibility of one of us losing our job and still being able to sleep at night. We looked at a new build a few streets away, in a new development. But, the furnace was a lease and put the price above our max. monthly costs. We bought another, with 25% down, and paid it off in 7 years, partly due to my PIL’s (in another country) inheriting money and sharing it with their children (to avoid tax inheritance) a little at a time. One of BIL’s lost lots of $$$ with Nortel and, in our opinion, they still live above their means. Guess what, they put in new hardwood flooring & redid their kitchen 1 yr+ with SS appliances, etc. Give him credit that he did most of the work & its well done. They are both great ‘consumers’ :-)

#105 BrianT on 11.22.10 at 10:00 am

#88Gerry-currently 80% of all energy to run the global economy comes from fossil fuels (oil, NG,coal). If you do a little research, you will be amazed at how little fossil fuels will be available in 2100 to run the global economy.

#106 Devil's Advocate on 11.22.10 at 10:08 am

Ian Lee

Glad to see you took my advice. Now just in case you are scanning through the rhetoric on this blog, again I say Ian, “turn away and run” DO NOT LOOK BACK! You will not change their minds in any way. I know you are oh so tempted to reiterate that you know all is NOT so rosy and that there will be some difficulties but they will hear no such thing from your words no matter how hard you try. I thought it was my poor writing skills which caused them to paint me so Bullish, but after watching them fillet your words with erroneous interpretation to suit their closed minds best it is clear that they have thicker skulls than one could imagine. Don’t even think about clarifying yourself you will only dig yourself into a deeper hole with these people – pups and poodles. They hear you once and make up their collective closed mind and you are forever typecast in that roll. You will never convince them Ian. Don’t even try.

Go now. GO!

#107 Devil's Advocate on 11.22.10 at 10:12 am

Incessantly yapping pups and poodles chasing their tails. A puppy mill this place is indeed.

#108 dark sad person on 11.22.10 at 10:14 am

#70 LB on 11.22.10 at 12:17 am

#jimboyyce

Re: your premise that buying bank shares is a good investment. Not when deficit governments and financial institutions are now talking about forcing bank shareholders to take a “haircut” across the board,as we are now seeing in PIIG, attempting to offload their risk and losses, yet again, onto others.

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

Forcing investors-share and bond holders to take a loss is what should have happened in Ireland-in fact everywhere but it didn’t happen-
Rich risk taking investors were bailed out at the expense of taxpayers and have sold out the future generations chances of a fair and decent life-
So where are the men in this and what are they saying?
Well it’s just like you see on this blog-one or two speak out and the rest warn that you’ll be put on a no fly list-or thrown into one of Stockwell Day’s new billion $ prisons-so the “men” remain silent and watch their wives and kids being felt up by some convicted pervert-but better that-then to take a “chance” and speak out-

#109 Devil's Advocate on 11.22.10 at 10:18 am

And you all seemed so polite and thoughtful of Prof. Lee’s comments for a time there. Must be that the open minded, quicker thinkers as they could be expected to be, were first to respond while the pups and poodles had to think long and hard to find what ever debate they could to put forward. They, after all, could not possibly agree with anything less than Armageddon.

#110 45north on 11.22.10 at 10:22 am

Moneta: In Canada today, the 20% down payment rule is long gone. We have no historical data showing what happens when prices collapse and they put 0 down. Actually, we do!

The US.

we do

#111 Throwstone on 11.22.10 at 10:30 am

What will be the TIPPING POINT?….

#112 lonely limey on 11.22.10 at 10:42 am

“For those who fear the economic downturn has permanently crushed the U.S. consumer’s appetite for consumption – have no fear. The sight of adults crying their eyes out and screaming hysterically over cashmere sweaters and $55 scented candles should reassure you that capitalism is alive and well in the American heartland.”

Where do they find these morons?

http://tinyurl.com/27hoaej

#113 Alberta Ed on 11.22.10 at 10:47 am

Condo prices have crashed in Canmore, and there are empty units all over the place. Several condo developments under construction appear to be stalled. The infamous Three Sisters development is still in bankruptcy. Unhappy-looking realtors hang out in food stores, handing out brochures. One development in Cochrane, on the outskirts of Calgary, is still bare lots and (frozen) mud after its much-heralded lot sale last summer.

#114 househunter on 11.22.10 at 10:51 am

I agree with #47 vomitingdog. BoC WILL NOT raise rates in a way that is going to create a 20% decrease in real estate in the near term. They will keep it low until the economy picks up down south. That will take years. This bubble will keep growing for a while yet. A minimum 2 more years of buying at basement rates. The correction will come MUCH later than we think.

Pure conjecture. The BoC rate will be higher than today one year from now. — Garth

#115 GregW, Oakville on 11.22.10 at 11:02 am

Hi Garth, fyi Still flying? Paying attention???

Might more be going on. Is/has money ever been used to corrupt and take control and deny human beings there basic rights and freedoms. It’s happened before, are you/we going to just let it happen again and say and do nothing this time? If they can do it to them, you and your family will be next. History has told us that remaining silent will not protect you and your family.

Fox TV video 10min
Beck: Obama Will Blame Terror Attack On TSA Resistance
http://www.infowars.com/beck-obama-will-blame-terror-attack-on-tsa-resistance/

TSA needs false flag security incident to convince Americans to accept obscene pat-downs (artical)
http://www.infowars.com/tsa-needs-false-flag-security-incident-to-convince-americans-to-accept-obscene-pat-downs/

Crisis of Fiat Currencies: US Dollar Surpluses Converted into Gold (artical)
http://www.infowars.com/crisis-of-fiat-currencies-us-dollar-surpluses-converted-into-gold/

Still not sure what is happening behind the curtain and whom is pulling the strings.
Reflections And Warnings – An Interview With Aaron Russo {Full Film}
http://www.youtube.com/watch?v=YGAaPjqdbgQ
and see his movie to learn more about the Federal Reserve, a private Bank!
Movie: ‘America: Freedom to Fascism’ by Aaron Russo’s Director’s Cut. It’s free to see on the net, like YouTube. Just look, fyi

#116 Sean on 11.22.10 at 11:06 am

It appears that Bob Truman at dailystats.ca does not let any comments that are contrary to his make his blog site rendering it totally useless as far as information is concerned.

He has absolutely no credibility as far as I can see and his advice should be considered suspect as it is self serving for his chosen profession. Typical of the RE sales industry in general.

#117 ChrisG on 11.22.10 at 11:12 am

#102 DaBull:
“Average Condo price in Edmonton is $225K. Average rent for said condo $1500.”

Well, I live in Edmonton and I rent a 700 sq. ft. apartment for $910/month, right in the downtown core. Virtually identical units in a condo building next door are listed on MLS for $225-$250K.

Also, according to Boardwalk’s Q3 financials released on Nov. 10, their average market rent is $1007. Considering that Boardwalk’s units are obviously in the average price range, may I suggest…

“If you gonna make shit up, try and at least make it believable.”

Although I suppose grossly misquoting rental price data is one viable way to justify “investing” in real estate.

#118 William on 11.22.10 at 11:13 am

Garth,

I’ve always been a big fan. Right now, I am able to buy a GTA home and put 75% down, but I decided to rent and wait for prices to drop…but I’m hoping for more than a 15-20% decline and then a slow burn at 5%. GTA prices have increased by 13% since you started this blog in 2008. Are you saying that we are going to drop to the same level as when you started this blog? I don’t want prices to drop to 2008 levels. I want them to drop to 2003 levels!!!

#119 ChrisG on 11.22.10 at 11:13 am

#102 DaBull:
“Average Condo price in Edmonton is $225K. Average rent for said condo $1500.”

Well, I live in Edmonton and I rent a 700 sq. ft. apartment for $910/month, right in the downtown core. Virtually identical units in a condo building next door are listed on MLS for $225-$250K.

Also, according to Boardwalk’s Q3 financials released on Nov. 10, their average market rent is $1007 (http://www.boardwalkreit.com/PressReleases/p2010/pr111110.pdf)

Considering that Boardwalk’s units are obviously in the average price range, may I suggest…

“If you gonna make shit up, try and at least make it believable.”

Although I suppose grossly misquoting rental price data is one viable way to justify “investing” in real estate.

#120 DJ on 11.22.10 at 11:29 am

On the contrary, DA, I thought that Prof. Lee provided a lot of useful stats, which Garth probably didn’t have access to. A lot of Garth’s arguments are anecdotal, and he probably sees a skewed spectrum of people (’til debt do us part candidates).
I think what can be taken from this exchange is that there will be no house growth, and your best bet is still to follow Garth’s advice of: Reduce RE exposure, reduce debt, be liquid.
Curious, I don’t recall Prof. Lee commenting on the demographic trend and it’s effect on the housing market.
I think mid-range homes will take a bigger hit as middle-class retirees will need to “right-size”.

#121 Got A Watch on 11.22.10 at 11:33 am

DA – after your idiotic comment of yesterday, I will repeat some facts which I have stated several times before here, since your reading comprehension seems poor:

-I don’t work, I’m 48, cashed my last paycheck in ’03, you do the math
-I own 3 pieces of real estate at the present time, all bought more than 7 years ago, 2 are fully paid for (vacant land, you can’t get a mortgage on those, 1 is for sale now) and my house mortgage is currently at about 35% or so of what I would estimate the current market value is
-I am not short of funds in any way
-my lower back is shot, I can’t do much in the way of work anyway, even if I wanted to
-I have 2 college degrees (general business, and later Mechanical Engineering Technologist), and have attended at least 4 different post-high school institutions, more if you count one off part-time courses
-in my life, I have been: a certified A+, N+, MCSE in IT; a real estate broker (not an agent) I passed all the courses but never went for the final certification as a broker because I exited the “business” due to my feeling that the whole “industry” was a distasteful cesspool of ethical violations and rampant over-charging for dubious services rendered and the fact I realized that it was really my Father’s dream not mine; a property manager; a commercial contractor; a project manager on large scale commercial glass/aluminum construction for some bigger companies; a salesman of various types; a truck owner/operator in the rush airfreight delivery business (age 19); and several other positions in the construction industry; bar bouncer (college job), and probably a few more I can’t remember

-your comments are the most vacuous on this Blog, since Nostradamus left (and his clone arrived, ‘Best Place on Earth’) – funny how all the assholes here seem to be from BC, you think that is a coincidence?

-you keep telling us you are going away, but you never do. Much like a crack head who always comes back to “borrow”more money.

-when you post a comment like “Incessantly yapping pups and poodles chasing their tails. A puppy mill this place is indeed.” it reveals much more about you than it says about others.

-I will admit I was a bit harsh in my response to Ian Lee, but I think Garth has summarized the case quite well. When “economists” utter bullshit that is printed in MSM outlets, ordinary citizens can be fooled, as they may lack the sophistication to read between the lines and conclude that the “professional economist” does not know in fact what the hell they are babbling about.

#122 wetcoaster on 11.22.10 at 11:42 am

Minus 8 degrees coming in Victoria for the next couple of nights. With the ocean dampness it feels like minus 20 with a mild breeze.
All the seniors and homeless people are moving here from back east for the balmy weather. Not to mention all the new Asian homeowners walking around saying ” WTF ? “. ;)

#123 Makeorbreak on 11.22.10 at 11:50 am

http://theeconomiccollapseblog.com/archives/tent-cities-homelessness-and-soul-crushing-despair-the-legacy-of-decades-of-government-debt-and-mismanagement-of-the-economy

#124 Claudius Emperor on 11.22.10 at 12:01 pm

Mr. Ian, Lee,

I work for many years in the Insurance Business. I have never seen a case when an Insurer or Re-Insurer (CHMC acting

as reinsurer for the banks) would take such enormous risk – to insure overvalued assets with minimum coverage (as

you correctly pointed out everything with less than 20 percents down payment is insured by CHMC) for a minimum

premium.

As everyone knows, CHMC is insuring over 600 billion of mortgages for the premium of 10 billion paid by the home

owners. Who is on the hook for the eventual losses? The taxpayers Mr. Lee.
Not you or the banks. So when you or the banks put their hands in my pocket you/they will surely get a kick.

All we saw what happened in 2008 – ‘unofficial’ but real reduction of 20 percents for the house prices in GTA.
In just 3 months. Dead market, really dead like US for few months.

All your points about the immigrants, Martians etc. coming to Canada are Real Estate b..ls..t and propaganda.
Where were these immigrants when the Real Estate market practically crashed in 2008?

Do you have any idea how many of the newly coming immigrants can afford to buy houses in Canada?
If you an Asian immigrant with a million dollars you must be really crazy to come to Canada instead of getting Green

Card as an investor in US and live in San Diego instead of Vancouver or GTA.

Most – probably 95 percents of the coming immigrants are poor, will work on minimum wages and won’t be able to

afford a house at prices that are 50 % of the current prices. Everyone in their right mind would prefer to be a

doctor in India instead of driving taxi in Canada.

BTW, Do you know how many of the new immigrants move to US/other countries or go back to their own countries not

being able to adapt in Canada?
We have 8 percents ‘official’ unemployment, in fact at least 12 percents real unemployment,
60 percents of the people work on minimal wages. You live in your own world my friend.

I am tired and sick of the endless pile of lies by ‘educated’ financial experts and officials.

The simple fact is that the crash in 2008 was reversed by the intervention of CHMC, by getting an additional

enormous amount of debt putting on the hook the taxpayers and releasing the banks from any obligations allowing them

to collect thee nice profits that they were not entitled to.

What you forgot to say Mr. Lee is that the Canadian ‘stable’ banks that have 1:30 capital to attracted capital/loan

ratio would have been effectively bankrupt by just 10-15 percents reduction in the home prices in 2008. Did we all

forget that bank of Canada bought 50 billion dollars of crappy mortgages from the banks in 2008 to prevent them from

going into bankruptcy?
Now all the crap loans were bought or insured by the government.

It is crystal clear that the fuel on the housing market in Canada these days is the easy and irresponsibly credit

given by irresponsible people. I would say that we have responsible government when Mr. Harper guarantees the loans

of CHMS with his own assets and the assets of his ministers.
Would you Mr. Lee give someone that makes 100 k a year credit for 900 k from your own money to buy a house taking

the risk yourself?
When you do that then you will be talking to me about prudent landing practices propaganda.

If I had time to loose with all your nonsense I would invite you to a public debate. In just 2 years your posting

here will be laughable as are laughable the interviews that Peter Shiff had with all the Real Estate bozos in US in

2006/2007. You just acknowledged that we are in deep trouble as the pile of debt and at the same time you are saying

we should not worry about that as we have 6 trillion of savings? This statement is a complete fraud and manipulation

by itself and I do challenge you to provide evidence of how the imaginary ‘6 trillions’ and to prove how they would

fuel the housing market.
Where were these ‘6 trillions’ in 2008 when the market crashed? Why do we need CHMC if our market is stable in first

place? And please give me something more than the ‘affordable housing’ propaganda about CHMC.

#125 dark sad person on 11.22.10 at 12:03 pm

Pure conjecture. The BoC rate will be higher than today one year from now. — Garth

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

I wouldn’t bet on it–
ZIRP–for years to come-it’s always about the $
Devaluation is the game-
Want a template-look to Japan-0% for 20 years-

http://3.bp.blogspot.com/_nSTO-vZpSgc/STN_8i8356I/AAAAAAAAD5M/X1DQbLRUNCw/s1600-h/Nomura-5.png

http://1.bp.blogspot.com/_nSTO-vZpSgc/TOjIIPjyKfI/AAAAAAAAJzA/LRdUpUr5wxw/s1600/CPI%2BUS%2Bvs.%2BJapan.png

Want to see which currency is benefiting from all the devaluation?

http://3.bp.blogspot.com/_nSTO-vZpSgc/TLXe1TR2caI/AAAAAAAAJgk/q6UUUySJxgQ/s1600/Gold+Weekly.png

#126 Outside the Box on 11.22.10 at 12:06 pm

#116 Sean “It appears that Bob Truman at dailystats.ca does not let any comments that are contrary to his make his blog site rendering it totally useless as far as information is concerned.

He has absolutely no credibility as far as I can see and his advice should be considered suspect as it is self serving for his chosen profession. Typical of the RE sales industry in general.”

Well said man. Well said.

#127 Got A Watch on 11.22.10 at 12:07 pm

btw no disrespect to most of the commenters here from BC, I meant that the a-holes seem to come from the place with the biggest real estate bubbles, and that seems rather a glaring non-coincidence. If real estate were to decline a lot in value, egos would be damaged, as well as wallets.

The exact same pattern as was seen on US housing bubble blogs around ’06/’07, like patrick.net and Dr Housing Bubble Blog. The biggest deniers were from California, the most bubblicious State, and their main “argument” was variations of “It’s Really Different Here This Time!”.

But it never is, of course.

#128 Keith in Calgary on 11.22.10 at 12:07 pm

#119 ChrisG…….

I dealt with the same crap from realtors and RE bulls when I told them I paid 1/3 in rent versus ownership costs for my last DT rental condo here in Calgary, versus what it would have cost for me to buy it. I even ran the numbers here and on other sites, and received not one logical rebuttal, because the numbers don’t lie…….

You’re going to see a lot of people frozen in place on the streets this winter with FOR SALE signs stuck in their hands. All the sh*t that comes out of their mouths can accumulate around their feet pretty fast.

#129 bridgepigeon on 11.22.10 at 12:21 pm

utopia
Gen. modified, pesti/herbi/fungi etc. sprayed veggies corporate farmed, picked by illegals, devoid of almost all nutrition, trucked thousands of miles, wiping out almost all the family farms on both sides of the border, is an example of the economic system that should be changed for so many reasons and I look forward to it. It simply is not sustainable on so many levels. This is a bad example you gave.
Everything outside of the increasingly limited mainstream media is a conspiracy now, even this blog for instance.
Just over 50% of every dollar spent by the US gov. goes towards the military, funding never ending wars, killing over 90% civilians, targeting who the hell even knows anymore. I would suggest that this also is unsustainable. After all, it is all borrowed money, and should we really be killing all these innocent people?
There are a multitude of changes coming as the empire to the south slowly goes bankrupt. Many of these will cause hardship, as we’re witnessing now, many however will be for the better.
We don’t have to agree with everything we read here. The main thing is, we can receive information, if we choose, from a multitude of sources, as this blog and the dawgs here, and make better decisions in these rapidly changing times.

#130 Sean on 11.22.10 at 12:33 pm

#116

I ahve to take back what I said about Bob Truman and not posting my reply. He has posted it and commented on it as well. Here is my response to his comment, just to keep everyone honest as I know Garth will post this.

“I would agree with you Bob, the part about the irresponsible borrowers part. But would you not think that with debt to disposable income ratio at 146% and climbing that this may be a problem?

Where do you think they are getting this money to put themselves into debt?”

#131 Debt's Dark Embrace on 11.22.10 at 12:34 pm

#86 Thetruth on 11.22.10 at 3:55 am

One such policy change: allow homeowners to take advantage of once in a lifetime low rates by having 15 and 30 year mortgage terms available. This would stabilize the housing market in an instant with a penstroke!
………………………………………………………………………

That is the next bullet in the gun.

#132 anonymousAA on 11.22.10 at 12:42 pm

#84. Agreed. My boyfriend’s parents’ East Vancouver house (newer, but still ugly) has gone from a value of $300k to $800k in the past ten years. He laughs when he says “I can’t believe anyone would buy that house for $800k! The quality of it is crap! It’s falling apart!” (yes, and it’s only ten years old). And did I mention it’s a “great” area, there are prostitutes on the corner? Definitely the best place for a millionaire! I told him I’d rather rent for the rest of my life than live in that neighborhood. People in Vancouver are delusional.

#133 BrianT on 11.22.10 at 12:43 pm

Gonzalo Lira sums it up-like Raymond Chandler put it 60 yrs ago-the USA is the dirty side of the dollar bill http://gonzalolira.blogspot.com/2010/11/full-body-scan-of-american-corruption.html

#134 Mr. Plow on 11.22.10 at 12:59 pm

#48 Taking Stock from yesterday…

Not sure if anyone answered you or not, but the insurance is paid by you for the bank’s coverage not for your own.

If you default you are still liable. It is just CMHC, or whomever insured the loan, that will go after you not the bank.

#135 Vancouver_Bear on 11.22.10 at 1:14 pm

#79 SquareNinja on 11.22.10 at 2:32 am

Pls tell Mr. Lee to stop smoking crap, here are numbers for permanent residents who arrived in Canada from 1860-2009……

http://www.cic.gc.ca/english/resources/statistics/facts2009/permanent/index.asp#permanent_percentage

where did he see numbers 300k…..350k…..it has always been around 200k-250k…only in 1910 it was 400k….this was 100 years ago….now it’s only 250k…..or may be extra 100k are those rich asians which impersonate now as rich italians after plastic surgery…One way or another what he says is a myth, praised by different news agencies around the world…..giving false hope to ppl promising that their stupidity will be saved by even more stupid rich investors…….aka greater fools.

#136 Vancouver_Bear on 11.22.10 at 1:18 pm

#81 TheBestPlaceonEarth on 11.22.10 at 3:06 am

Did you get MRI scan? Looks like the remains of you brain were already consumed by the bed bug in your now empty scull……cause you keep talking about it….Feel sorry for ya.

#137 Gideon Sword on 11.22.10 at 1:37 pm

Yep here is the stats for Brampton, sales fell 64%
A regional breakdown:

Low rise sales

Durham -43%

Halton -29%

Peel -64.2%

Toronto -2.5%

York -1.5%

GTA -32%

#138 karen on 11.22.10 at 1:43 pm

To humor you all, here is a cartoon. ( at the bottom of the page.)….ha ha ha….

http://ampedstatus.com/wtf-are-progressives-seriously-defending-the-federal-reserve

#139 Poor Decision Bears on 11.22.10 at 1:44 pm

No 40 to 70% decline in property values in key markets which soared (Vancouver, Calgary, Saskatoon, Winnipeg, Toronto).
****************************
I have to laugh at all the bears in Vancouver.

2008 hit, and it looked like their little views might have been validated. RE dropped what, 15%, in six months? But after those on the sidelines saw a 15% drop, they swooped in. Prices went up 20% beyond 2008 prices, and hit all time highs.

If there is no 40% drop in Vancouver, and only a little 20% drop as Garth now “predicts”, then prices will be right back to the “unaffordable” and “unreasonable” leves of 2007/2008. Lol. They will be at levels that bears complained about back then. Lol.

Take a hard long look at the REBGV graph people – Vancouver goes up and up and up. Good thing you sat out this great run, and listened to doomsdayers, just to end up back to the 2007/2008 prices! Good thing you were so smart, and wasted all that rent money, listening to doomsday advocates.

Pretty pathetic thinking that you are smarter than the herd, and the political, financial and social structure that supports homeowners over renters.

A 20% correction in Vancouver is the start, not the end. I fully expect a further melt in prices over several years following, rendering residential real estate a very poor investment. — Garth

#140 Dan in Victoria on 11.22.10 at 1:54 pm

Got A Watch @ 127
“ego’s would be damaged”
No truer words have been spoken regarding real estate mentatility here in Victoria.

#141 Devil's Advocate on 11.22.10 at 2:01 pm

“Don’t ever become a pessimist; a pessimist is correct oftener than an optimist, but an optimist has more fun–and neither can stop the march of events.” – Robert A. Heinlein

“Pessimism never won any battle.” – Dwight David Eisenhower

“Pessimist: The optimist who didn’t arrive” – Mark Twain

“Pessimism is an excuse for not trying and a guarantee to a personal failure.”
Bill Clinton

#142 Dan in Victoria on 11.22.10 at 2:11 pm

A report from some of my customers /friends. Here in Victoria.
Dropped into a little cafe that I have breakfast at once in awhile.
“Dan business is terrible, bad… bad … bad its down 30% from last year and falling.”Good location and great food.
From a retired house builder friend from up island.
“You have to be nuts to be even thinking of buying in this market, I only have one piece of dirt and a commercial building that I built years ago, I’m out till it corrects.”
From a gravel truck driver friend “Man i’m at part weeks here, the girl friend and me are hurting bad.”
Another friend who does reno’s “Its drying up nobody wants to pay that stupid tax” They all want to do it for cash.
Plumber buddy on the weekend, new house big mortgage, wife works in the hospitatily industry.
Holy crap Dan , work is slowing down and prices are dropping like a stone we bid two jobs at cost, lost both of them.
Girl friends tips have dryed right up and business is slowing daily, I think her hours are going to be cut.
And me? The phone is dead worst i’ve seen it in sometime, time to get some of my projects done.
The big boss is rubbing her hands together………LOL

#143 George on 11.22.10 at 2:17 pm

Driving along Dundas street in Oakville, on my way home Sunday from the great (soon to be) white north, I noticed that the sales office of the new development at Neyagawa was totally empty.

Also word is Brampton sales for September are down 64% and October was just as bad. The realtors in Brampton are worried the housing crash will only get worse if the numbers are made public. Anyone buying a home in Brampton and not asking for a 25% drop in price is stupid. Power of sales being made in Brampton is also up .

#144 Claudius Emperor on 11.22.10 at 2:22 pm

DA, Explain that to the homeless people South or in Europe.

#145 Nostradamus Le Mad Vlad on 11.22.10 at 2:43 pm


#63 Utopia — “I bite my tongue every single day when reading your comments because they are so out of touch with reality.”

Fair enough. Our realities can always agree to disagree — that is expected on a public forum — and I am well aware that when, not if, the US falls, so will Canada and a host of other western countries.

It has happened before and will happen again, when it is least expected as change is one of the many constants there are, such as ‘quakes or volcanoes.

Have you read about the tulips in Amsterdam? Those people lived through a major downturn just as we are today. History rhymes and repeats, but using different outlets and methods.

Read #51 Jsan — “Careless banks blamed for Ireland’s housing crash” Followed by this link. Don’t look at the stuff to buy or sell — just read the headline. Add to that retiring boomers, both here and the US, mfg. / industrial / IT and others heading east — it is straightforward enough to realize that change is happening much more quickly than any of us even think about.

Be careful not to bite your tongue too hard — it’s mighty painful. Just as painful as crashes anywhere.

We don’t live in a cave. Our home and RRSPs are paid for. We live an adequate, simple and basic lifestyle.

#69 Utopia — ” Just as an afterthought Nost, why don’t you tell us all how a US system Financial collapse is beneficial for Canadians or Americans.”

It would be beneficial in the sense that individuals would stop wasting their hard-earned money on temporary material things.

Have you not learned the basics of living within your means, going without something that looks really good, but breaks down after a few years and is thrown into the garage collecting dust?

What purpose does that serve? A quick high, like cocaine or heroin? Is that what you like?

#70 LB — “It may be that it is all quite intentional, as a prerequisite to laying the groundwork for establishing a singular global economy.”

Good post, and you have (unintentionally) answered Utopia’s points above.

#113 Alberta Ed — “Condo prices have crashed in Canmore, and there are empty units all over the place.”

Harbinger of what is almost here, esp. with commercial RE tanking in the US.

#122 wetcoaster — “Minus 8 degrees coming in Victoria for the next couple of nights.”

Here, it’s supposed to be windy and a high of -14C. Wchill feels like -30C. Care to swop?!

#129 bridgepigeon — Excellent post.

#146 Brett Wilde on 11.22.10 at 3:09 pm

Here is my post on Truman’s blog and his response.

Me:
—-“First off Bob, you wouldn’t be posting about Garth if you didn’t have a serious concern about where the housing market is going. By mentioning him and his blog and trying to refute his points, shows me that you are not as confident in the market as you portray. Also, the entire point of Garth’s blog isn’t about a housing collapse. Its about a retirement/middle class collapse. The reason that the blog focuses on real estate is because that is where most people have the majority of their money. Which is a terrible financial strategy. Anyone who takes a simple Finiance 100 class learns right away that you better be damn sure you diversify your assets.

Bob:
I don’t care which way the housing market is going and I have no control over it. What I wish to expose are hypocrites – people who make bad predictions but continue to act like they are some kind of authority.

To use your criteria, does the fact that Garth mentions my blog so much mean something significant? -Bob”:—-

Notice how he gets quite defensive and angry? He also doesn’t even mention most of the topics in my post. Also, did he just describe himself in the first paragraph?

#147 ChrisG on 11.22.10 at 3:24 pm

#141 Devil’s Advocate :

Wow, you know, your logic is truly flawless. I wasn’t going to set fire to my wallet last night, but then I realized it’s ever so important to always be an optimist, regardless of the reality of the situation!

Here’s a quote for you from someone with a little bit better investment track record than your authors and politicians:

“It is more important to say ‘no’ to an opportunity, than to say ‘yes’.”
-Warren Buffett

#148 Ret on 11.22.10 at 3:25 pm

#95 pjwlk We saw the same Oakville project.

We also saw the “pre register” sign. It looked like a special event for those pre-registered. Were they real cops directing parking or the more plebian rent-a-cops? An exclusive event for sure.

Went to another project across the street. $830,000 plus upgrades for 3000 sf home on a walkout lot.

I had no idea that people would pay that much money for rather sketchy construction just to live close to a Walmart on Hwy. #5 (Dundas).

#149 jess on 11.22.10 at 3:28 pm

mad vlad
rich pension ? Read Cuomo’s investigation regarding “pensionpadding”
How about this misuse of overtime

“pension padding” – the manipulation
of salary and overtime payments near retirement. This type of manipulation, which inflates the
ultimate pension benefits paid to a retiree, can exponentially increase the cost to the State
taxpayers over the long term.
http://www.nypensionpadding.com/pdfs/preliminary_data_analysis_summary.pdf

#150 Debtfree on 11.22.10 at 3:33 pm

DA if this is a puppy mill .It makes you a tapeworm dripping segments with every burp.

#151 Vancouver_Bear on 11.22.10 at 3:45 pm

#139 Poor Decision Bears on 11.22.10 at 1:44 pm

Bestcraponearth stop hiding behind different nicks. Your pumping does nothing but reveals the fact that you have absolutely no knowledge or understanding of economic fundamentals. A government in any country has a limited control over economics, the only thing our government does is delaying the inevitable. It’s the same as let’s say anybody would be killing tooth pain but not removing the cause of it…..with time the decay goes deeper and a seriuos surgery will be required. Same is here, it happened all over the world, and is coming to the neighborhood near you. And beleive me no government and no greater fools will come to save you….instead the very same government who wanted YOU to spend will start blaming YOU the irresponsible buyer and socialize YOUR losses. At that point many ppl weill start leaving Canada for good same as it happened in Ireland. CANADA IS NOT A PROMISED LAND. NEVER WAS AND NEVER WILL BE. Mark my words.

#152 Vancouver_Bear on 11.22.10 at 3:54 pm

#122 wetcoaster on 11.22.10 at 11:42 am

Yes….WTF?
BESTCRAPONEARTH promised us the best world class weather. How come we got these ass freezing low temps?
I thought rich asian-italian investors were supposed to fix this and ensure nice mild weather in this best myth on earth.

#153 goldenfox on 11.22.10 at 3:55 pm

Fighting back against the banks going viral

http://www.financialsense.com/contributors/rob-kirby/driving-the-news-agenda-jones-and-keiser

#154 EB on 11.22.10 at 3:57 pm

#139 – “Pretty pathetic thinking that you are smarter than the herd”

Definitely – and this is the source of the infallible investment advice “always follow the crowd”. 100% guaranteed returns, I tells ya.

#155 Vancouver_Bear on 11.22.10 at 4:01 pm

#121 Got A Watch on 11.22.10 at 11:33 am

Don’t pay much attention to DA, he is losing his business and most likely his assets, like this guy – http://www.youtube.com/watch?v=b5hKhZKSYw8

That’s why he comes to this blog to ventilate his anger and blame us for destroying his life. He has nothing better to do in his life…..actually no realtor have done in their lifetime or their career anything useful, they all are just blood sucking parasites.

#156 Mister Obvious on 11.22.10 at 4:09 pm

I’ve been driving around the Greater Vancouver area a lot in the last couple of weeks. It astounds me how much condominium development construction is underway. The number of half finished developments littering the landscape is mind boggling. I haven’t the slightest idea who will be buying all of these units.

I’m aware there is a long time lag between the planning stage and the actual start of construction. However, I thought that by now some kind of slowdown might be under way. Not so in these parts. There are still lots of old motels and strip malls being torn down and great new holes being dug in their place. The horizon is dotted with dozens of cranes in every direction. This is definitely not the season of bankruptcy-shy developers. Again I say WTF??

I think there is a new breed of fool out there. Today, I coin the phrase “inertial fool”. That would be a person lacking math or logical skills with a crippled historical view extending back perhaps only a decade or so who makes decisions based on the frozen belief system of the mass of uncritical thinkers that surround them.

They are vaguely aware that the market may fall in the year’s ahead but remained unconcerned as they site the single historical data point they have to work with, to wit, the short lived mini crash of 2008. Therefore, buying into a falling market is not to be feared but embraced since all will work out in the long run.

#157 Two-thirds on 11.22.10 at 4:09 pm

#83 edmontonian on 11.22.10 at 3:31 am

Just for fun, I checked the availability of housing on Kijiji Edmonton. Here’s a partial breakdown:

apartments for rent (3988)
commercial (977)
house rental (3537)
housing for sale (3728)

Total rental inventory is 7,525 (as of 3:48 PM EST today). This means that for every unit for sale in the city, there are two rental units available. Thus this seems to be a great time to be a renter in this market.

The real interesting question here is: how many of the 7525 rentals are investment properties that are unsaleable (without a haircut) at current market prices?

Can you say “accidental landlords en masse”?

#158 ChrisG on 11.22.10 at 4:15 pm

#128 Keith in Calgary:

Agreed, I don’t think there is any logical basis for being bullish on Albertan (and most Canadian) real estate.

If bulls are doing their rent vs buy calculations and plugging in large price appreciation expectations, well that’s their business and that’s fine with me. I wholly disagree, but they have a right to their opinion; that’s how markets work.

It just stupefies me when they use absurdly false numbers in attempt to justify buying. It’s akin to the whole, “Stop wasting your money on rent,” and “At least I’m not paying somebody else’s mortage,” ridiculous rationalizations.

#159 DaBull on 11.22.10 at 4:16 pm

Chris

First; I’m sorry I did’t realize that all of greater Edmonton just meant Chris. I think I’m going to have to notify the media of this little known fact…

Second: A purpose built rental is not a condo, for starters they are registered differently.

Third: Boardwalk is selling condo’s now?

And one final thing: Actually measure your 700 sq/ft apartment whiched is painted flat white and has no in-suite laundry. Bet you it’s only 575 sq/ft. LOL

#160 JC on 11.22.10 at 4:22 pm

#141 DA.

What if you are optimistic that prices will drop? I am now more than ever… bouyed by overwhelming optimism that Mr. Turner’s professionally-optimistic projections regarding a real-estate downturn will come to pass… however, I’m also optimistic that home-ownership will likely not be a mode of wealth building in my future (if ever unless you count REITs).

Call me crazy but if property taxes average 2% of the appraised value that means every 30 yrs you are paying the equivalent of the appraised value in taxes alone. I don’t see how that lost tax $ has any chance of padding the portfolio.

#161 bigrider on 11.22.10 at 4:46 pm

Hey Garth-First time I have ever visited Bob Truman’s Blog. He really is taking a swipe at your predictive accuracy.

Any thoughts or defence?

Bob who? — Garth

#162 Devil's Advocate on 11.22.10 at 4:48 pm

#160 JC on 11.22.10 at 4:22 pm

#141 DA.

What if you are optimistic that prices will drop? I am now more than ever… bouyed by overwhelming optimism that Mr. Turner’s professionally-optimistic projections regarding a real-estate downturn will come to pass… however, I’m also optimistic that home-ownership will likely not be a mode of wealth building in my future (if ever unless you count REITs).

Call me crazy but if property taxes average 2% of the appraised value that means every 30 yrs you are paying the equivalent of the appraised value in taxes alone. I don’t see how that lost tax $ has any chance of padding the portfolio.

There ya go, see a positive spin on what others are calling a negative. It’s all in YOUR head JC all in your head. What you think is 90% of the battle.

If it works for you run with it.

#163 bigrider on 11.22.10 at 4:54 pm

In regard to the Oakville project Dundas road.

I know all about it. 500 units for sale by one builder. 500 more by a combination of other builders. There were 9000(nine thousand!) pre registered interested parties. On news of pre registration, said builder hiked prices an average of 30k and still sold 220 first weekend !!

Im all for the argument for falling prices for next few years adn am keeping my exposure to less than 40% but as for what is going on right now the predictions of a cooling market are way, way to premature.

It could be the last cresciendo in a peaking frenzy that is to bust, but this still remains to be seen.

Garth, you predictions so far do look very early.

#164 Paolo on 11.22.10 at 5:00 pm

The only sure thing out there is Real Estate and in Canada it always goes up!

I was wrong – – Rejoice! Rejoice!

Hot Off the Press:

New home sales up in GTA!

See for yourself:

http://www.moneyville.ca/article/894950–new-home-sales-up-in-gta?bn=1

Go Go Condo Power! Condos, the saviours of Real Estate! Saviours of the GTA!

My favourite quote:

“Strong condominium sales in October have kept the Greater Toronto Area new home market on par with last year’s near record pace… October numbers are the best such result for the month since 2000… seven out of ten homes sold in October being a condo”

We are the New Ireland!

#165 Gord In Vancouver on 11.22.10 at 5:00 pm

#87 Outside the Box

We need to be patient.
______________________________

…but will debt ratings agencies (e.g Moody’s) be patient?

Overall, a pathetic article that doesn’t even reveal an author.

#166 Incubus on 11.22.10 at 5:02 pm

In Montréal it took 5 hours Saturday to sell 117 condo units !

Prices between 163K to 450k, that gives around 380 to 520 sq foot.

http://lapresseaffaires.cyberpresse.ca/economie/immobilier/201011/22/01-4345192-le-seville-100-vendu-en-5-heures.php

http://www.leseville.ca/en/index.php

#167 TheBestPlaceOnEarth on 11.22.10 at 5:07 pm

Vancouver Bear you got the exterminators coming over to clean up your bed bugs. Renters all the same all bitter.

#168 Macrath (formerly HitecLowtec) on 11.22.10 at 5:16 pm

#153 goldenfox

Great article, I`m going out tomorrow to buy a couple of silver maple leafs.

Last week I bought Novell because I`m a big fan of Free software. This morning the news that Microsoft (the evil empire) is staging a takeover.

Fight the tyranny !

#169 MKUltra on 11.22.10 at 5:17 pm

Garth,

The era of squirrel-based delicacies is ‘almost’ upon us. As your readers (SWMJ) bring their cooking pots to a boil, may I suggest a little background music appropriate for the cuisine and mood – called the “Squirrel Song”. See link: http://www.youtube.com/watch?v=xb5W9Zl_7aQ

Legend:
S = squirrel
M = munch
W = whacking
J = jobs

#170 Business Unusual - the BUN on 11.22.10 at 5:25 pm

FBI start their crackdown on insider trading. It’s about time, isn’t it?

Anyone know about any studies that show a correlation between an increase in corporate corruption, fraud, securities crime and market tops?

#171 tran, Calgary on 11.22.10 at 5:32 pm

http://blog.kw.com/2010/11/11/how-rising-interest-rates-will-impact-affordability/?sms_ss=facebook&at_xt=4ce1d19edd63adcd%2C0

Is it a valid reason to buy now?

#172 Mikey the Realtor on 11.22.10 at 5:37 pm

Vancouver_Bear

My clientele mainly consists of rich Italians and Asians (thanks to DA’s advice). It sounds like you may need a realtor shortly, don’t hesitate to contact me but if you are not either of these cultures than my fees are a bit more as you probably will not spend as much.

#173 Jimbo on 11.22.10 at 5:41 pm

#137 Gideon Sword on 11.22.10 at 1:37 pm

where did you get the brampton stats, the brampton real estate board still has not published stats since Aug.

http://www.bramptonandarearealestate.com/2010_Residential.html

I sold my castle in Castlemore back in the spring, and wana know whats going on in the old hood.

Bought a tiny bugalow by the lake at long branch. I know its going to take a hit, but demand for property form 1st street to 42 street south of lakeshore is insane.

#174 Devore on 11.22.10 at 5:44 pm

#91 TS

The FDIC in the US recently announced that there are now 903 financial institutions on their ‘watch list’…meaning that they are in danger of failing. This is up significantly from the roughly 750 that were on the list about a year ago. The US economy recovering?….NOT!

Watch list? Don’t forget the 150+ banks closed this year alone.

http://www.fdic.gov/bank/individual/failed/banklist.html

#175 Vancouver_Bear on 11.22.10 at 6:20 pm

#167 TheBestPlaceOnEarth on 11.22.10 at 5:07 pm

Hah-ha…. you finally got my message. Since you started the bed bug talk it’s you who are dealing with them. I’ve never seen them in my life and hope I never will, but because reincarnated Nostri is spereading bugs around I am getting worried.

#176 Love this Blog on 11.22.10 at 6:31 pm

Need a laugh?

http://www.youtube.com/watch?v=GVT4ymGSoNE

#177 Love this Blog on 11.22.10 at 6:32 pm

And another

http://www.youtube.com/watch?v=b5hKhZKSYw8&feature=fvw

#178 Vancouver_Bear on 11.22.10 at 6:52 pm

#167 TheBestPlaceOnEarth on 11.22.10 at 5:07 pm

Only shortsighted individuals such as TheBestPlaceOnEarth would ignore this – http://www.youtube.com/watch?v=HALzrqE7l4k

The number of poor children in this the best told lie on earth is 174000 and equal to the populations of Victoria, Nanaimo and Comox combined.

Only stupid and arrogant individuals such as TheBestPlaceOnEarth will not be able to understand that child poverty numbers will turn into crime numbers as kids grow and no police or non-existent army will save you even on the north shore. Cause the size of the police force in BC is not even close to the mentioned above number. So think about it, how it can be the best place? We have ass freezing cold, rain over 180 days a year, 1 mil crack-shacks and dreadful HST.

#179 jess on 11.22.10 at 6:54 pm

Governor Sarah Bloom Raskin
At the National Consumer Law Center’s Consumer Rights Litigation Conference, Boston, Massachusetts
November 12, 2010
Problems in the Mortgage Servicing Industry

…………… Until a better business model is developed that eliminates the business incentives that can potentially harm consumers, there will be a need for close regulatory scrutiny of these issues and for appropriate enforcement action that addresses them.

#180 DiGiacomo on 11.22.10 at 7:10 pm

Garth,

maybe your friend missybunny is onto something….

http://www.youtube.com/watch?v=Uhe5yj2oF-E&feature=related

#181 Vancouver_Bear on 11.22.10 at 7:10 pm

#172 Mikey the Realtor on 11.22.10 at 5:37 pm

I see that you are doing even worse then DA and losing it. Scooping up clients on anti RE blog…..not a smart idea. Try cold calling this may work better.

Also refresh RE ethics code in your memory or you will end up as this lady – http://www.youtube.com/watch?v=2ekB70IzxpQ&NR=1

Good luck finding a listing….count me out I will not pay even a penny to any realtor as this is total waste of money.

#182 squidly77 on 11.22.10 at 7:15 pm

DA.

Since when is realism pessimism.

Having your head in the clouds and wearing rose coloured glasses may work for you, but it has cost many everything.

http://corpserun.files.wordpress.com/2010/04/rose_colored_glasses.jpg

#183 Behavioral Finance on 11.22.10 at 7:23 pm

How can you tell there is a real estate bubble?

Extended valuation
Over-ownership
Excessive leverage
Supply Surge
Complacency
Speculation

#184 Nostradamus Le Mad Vlad on 11.22.10 at 7:46 pm


#149 jess — “. . . New York State (the “State”) has among the highest pension costs in the nation. In 2008, the State public pension systems paid out more than $20 billion . . .”

Thus the wealthy become even wealthier at citizens’ expense, so it is no surprise that California and NY have gone after or voted to eliminate public pensions, which leaves workers dependent on the fed. and state govts. Thanks for the link. Also — Sour Economy good for some!

#164 Paolo — “My favourite quote: We are the New Ireland!”

Leprechauns on 2-fer-1 specials, and with each 4-leaf clover an extra dozen are tossed in free!

You sure nailed that one.
*
Re: the DOW going up and down — “It’s the Euro. It’s China! It’s Iran!! It’s everyone who refuses to max out their credit cards for holiday shopping!!! It’s anybody but us!!!!!!!” — Official White Horse Souse. wrh.com.

Body Scanners “Basically if you do not wish to have your genitals molested by a LOW IQ TSA goon than you will be thrown into jail. Welcome to the new world order.”

2:12 clip A new dollar? Anything is possible.

5:01 clip The EU-IMF bailout of the Irish could strangle the EU, thereby leaving the elite in charge. Some rioting has been reported in Ireland. North and Central America are following suit.

Big Brother in Space “A huge unmanned rocket carrying a secret new spy satellite for the United States roared into space Sunday (Nov. 21) to deliver what one reconnaissance official has touted as “the largest satellite in the world” into orbit.”

TSA“They don’t give a flying fuck about your safety. If they did, they would give you universal health care. They want your obedience.”

Full Spectrum Dominance Total control, and not by us.

Money “Crisis of Fiat Currencies: US Dollar Surpluses Converted into Gold — China, Russia, Iran are Dumping the Dollar.” What is China doing with its IOUs from the US?

1892 — The Bankers’ Manifesto. “People without homes will not quarrel with their leaders. History repeats itself in regular cycles. This truth is well known among our principal men who are engaged in forming an imperialism of the world.”

China “Looking at what Bernanke and the Fed have been doing to debase the value of the US dollar, one can hardly blame China for taking these fiscally defensive steps.” wrh.com.

Basel III “Folks, please pay very close attention here. And it is always good policy to have no more in the bank than absolutely necessary to pay your bills.” wrh.com.

Hmmm. Where have I heard of GS and the Rothschilds before?

0:55 clip Hitler speech. “TSA chief THREATENS AMERICANS “opt-out” boycott ON NOVEMBER 24 would be a mistake”

NATO + US “One has to wonder, given how horrendously NATO and the US’s military misadventure in Afghanistan is going, just what NATO’s “Globocop Military Force” will target as its next disaster?” wrh.com.

10:03 clip Being prepped for a FF? The CPC did this a few weeks ago to us.

#185 wetcoaster on 11.22.10 at 7:46 pm

No to mention the 10 cm of snow to hit Victoria today, only in November ? Global warming has effected the brains of the minions with too much credit as they still overpay the piper.

http://www.timescolonist.com/Snow+temperatures+result+accidents+school+closures+packed+buses/3867457/story.html

Mikey the Realtor only caters to Italians and Asians ? Sounds like BS to me. Kind of like saying I like to eat spaghetti with my egg rolls. The two don’t gel dude. Rich Asians use other rich asian realtors, not some guy named Mikey.

#186 $froma$ia on 11.22.10 at 7:54 pm

Uh, Garth….

These RE lovers only have a leg to stand on as long as the banks can still lend some Joe making $75K a year, a $600K Mortgage!!!

Without loose lending with stimulous, this game is over. We’d enjoy a 50% haircut.

$

#187 Debt Free in the U.S. on 11.22.10 at 8:48 pm

Everybody’s wondering how FAR prices might decline….WHY? WHAT does it matter, if you can afford your home (no more than 25% of monthly take home) and you need a place to dust your butt, and keep yourself warm? Enjoy the barn, pay it off, make improvements when you can. IF you didn’t buy too much house iut will be ok even if prices fall 20-30-?? what will it matter??

Bought too much house? Too BIG a mortgage? Worried about rates adjusting upward?? Then SELL foolish one, before you are caught as many of my dim-witted countrymen were. Selling while you CAN beats not being able to get out when you must.

Renting is NOT a crime, nor is buying what you can afford. People forget prices ARE negotiable.

I just bought a 2010 Ford Fusion Hybrid (program car) read: leased car. Used, for myself for $17,900 30K miles. Balance of warranty remaining 3.4% financing for 24 months. I’s called negotiating the price….

Works just as well for a house.

#188 Debt's Dark Embrace on 11.22.10 at 9:24 pm

#186 $froma$ia on 11.22.10 at 7:54 pm
………………………………………………………………………

BINGO !!!
………………………………………………………………………
Uh, Garth….

These RE lovers only have a leg to stand on as long as the banks can still lend some Joe making $75K a year, a $600K Mortgage!!!

Without loose lending with stimulous, this game is over. We’d enjoy a 50% haircut.

$

#189 Devil's Advocate on 11.22.10 at 9:42 pm

#254 Devore on 11.21.10 at 8:16 pm

#239 Ian Lee

And we need to increase the down payment requirement to 10% of purchase price – AND every bank should be required to verify that the down payment was not borrowed.

Ah, now we are hitting the nail on the head.

Banks (business in general) will do what they are allowed to do (through regulations, laws, consumer preferences) that increases profits. When they are restrained by regulation, in our case, then it is clearly a failure of regulation.

BINGO!!!

#190 conf in T.O on 11.22.10 at 9:43 pm

#156 Mister Obvious

Love your comments on the “inertial fool”!

I know a few of those here in T.O.

They are exactly as you described, basing their ideology on 5-10years worth of experience. Who knows… in this mixed up land of OZ, they may actually succeed!!!

#191 Devil's Advocate on 11.22.10 at 9:47 pm

#182 squidly77 on 11.22.10 at 7:15 pmDA.

Since when is realism pessimism.

Having your head in the clouds and wearing rose coloured glasses may work for you, but it has cost many everything.

Was it they who had things or the idea of things which had them?

#192 Timing is Everything on 11.23.10 at 2:21 am

#142 Dan in Victoria

Too many folks doing those jobs in Victoria, Dan.
I feel for them, but they gotta cut back or move on…
to where the work is. Supply and demand. It is that simple.

http://www.jobbank.gc.ca/res-eng.aspx?ProvId=08&Keyword=Plumber&Category=7*&OfferpPage=50&Student=No

#193 Timing is Everything on 11.23.10 at 2:25 am

#192 Timing is Everything
#142 Dan in Victoria

Try this link http://tiny.cc/xi0jd

#194 Utopia on 11.23.10 at 3:10 am

#69 Utopia — ” Just as an afterthought Nost, why don’t you tell us all how a US system Financial collapse is beneficial for Canadians or Americans.”
———————————————–
Nostradamus Response:

“It would be beneficial in the sense that individuals would stop wasting their hard-earned money on temporary material things”.
———————————————–

Rebuttal from Utopia:

WTF!!!! You endorse the crash of the financial system because other people make poor buying decisions and don’t choose quality? You want to take down a way of life because they don’t recycle maybe or because their garages are messy with unused stuff?

Holy crap Nost. I actually expected more from you but that was just piddle. Hey, I can appreciate that YOUR house is paid off and all your RRSP’s are funded to the max but you are cheerleading for everyone else.

So there you are nice and comfortable, doing nothing more than blogging here for a living and determining the futures of others with extremely negative thoughts.

Did you ever hear the term “a self fulfilling prophecy”?
Did it ever occur to you that your boostering for a crash might actually rub off on weak minds and become reality?

So what right? You have your little paid off house and RRSP’s and a clean garage where junk production from overseas is not permitted to see the light of day. You are safe, right?

So why not shake up the rest of the world. Because you are a selfish person with very litttle else going on and this little blog is your life perhaps? So why not mess with the other people.

I am very dissapointed with your poorly thought out response Nost. You are just one more in a long line of people here who know only what they read, copy and paste onto this site every day. A News Rehasher. And not even real news to which you attach inane commentary (bite my tongue).

You are not thoughtful at all.

#195 Kiss me I'm Irish on 11.23.10 at 4:01 am

#141 Devil’s Advocate “Pessimism is an excuse for not trying and a guarantee to a personal failure.”
Bill Clinton

Bill Clinton… that’s a good one. So Bill was optimistic he wasn’t going to get caught with Monika L?

#196 ChrisG on 11.23.10 at 1:18 pm

#159 DaBull
I’m not sure if your comments are intended to be serious, or if you’re just taking the piss. Assuming you’re actually serious…

1. No rational person would take my comment to mean my apartment was representative of the entire city. Obviously there is a wide range of housing available for consumption. But if my apartment rents for $900 all-in, and it is quite reasonably spacious and located, it certainly is anecdotal evidence against your claim that the “average” unit rents for 50% more (at $1500/month). Don’t you agree?

2. Right. But does that difference in registration equate to a 50% difference in price? Is the market for housing consumption really that inefficient? I don’t think it is. If you do, that’s fine, but just be aware of the claim you are making.

3. Obviously, Boardwalk’s rental units are in the average price range of available rental units. And since there is not a *material* price difference in apples to apples comparisons of rented condos and apartment rentals, this is further factual evidence against your claim that the average rent in Edmonton is $1500.

4. You lost the bet, my unit is 700sq ft. Although I don’t have in-suite laundry, I doubt having a washer/dryer in my suite instead in my hallway is worth an extra $600/month, as you implicitly claimed.

Here is an example of a typical mid-range apartment building renting similar-sized units to mine for ~$900/month: http://www.rentmidwest.com/index.php?a=details&id=23&param=buildings

And here are virtually identical units in the same area for sale in the $200-$250K price range:
http://www.realtor.ca/propertyDetails.aspx?propertyId=10101606&PidKey=-1890557812

http://www.realtor.ca/propertyDetails.aspx?propertyId=10051858&PidKey=-176095817

Given these baseline numbers, even the most optimistic inputs for real estate expenses and price expectations do not return a rent vs buy calculation in favor of buying.

So, “If you (sic) gonna make shit up, try and at least make it believable.”

#197 Timing is Everything on 11.23.10 at 1:25 pm

#122 wetcoaster

Calm down…

http://www.theweathernetwork.com/fourteenday/cabc0313?ref=qlink_lt_14day