Reality bites

I sat in the lobby, on a $5,000 mesh chair and watched a twentysomething in red high tops float across the marble floor on a skateboard. Minutes later I was on a tour. The lounge with the pool table. The server room packed with winking gear as chilled air blew from the floor. The employee cafe with the full-time chef. And then I went for a ride with the CEO, in his Viper to a lunch where he spent $1,400.

It was the Spring of 2000 and this company was burning its way through the latest $42 million it has just raised selling stock. It had no revenues. Little in the way of sales. No experienced management. But it did have a cool name with a dot-com on the end. And shares people some people couldn’t get enough of.

Sixteen months later, it was gone. The employees went home. The Viper went back. The stock went to zero.

This memory came back to me as I read the last Teranet-National Bank House Price Index. Yeah, it did register the first decline in Canadian national housing prices in 16 months. But bank spokesguys fell over themselves to explain that this was not the start of a US-style housing decline. “We do not think that a significant price correction looms in housing.”

You wish.

Speaking of the States, I hope you’ve noticed what’s going on at the moment. Sales of existing homes dumped 26% last month, while new homes also crashed. In swaths of the country it was the worst October in 20 years. And it dashed hopes anything is getting better or real estate is nearing a bottom, almost five years after the wheels came off.

Why? Because the only reasons the market was improving (in terms of sales, not prices) were government tax credits and lots of dirt-cheap foreclosed homes. Now the tax freebie is ended, and the supply of distressed properties has narrowed as banks hold them back. This has exposed a shocking reality: there’s hardly any demand.

Said a leading economist: “People aren’t buying houses – period.”

Meanwhile in Canada, it could hardly be more bizarrely different. For example, I told you two days ago about a new development in Oakville which had 9,000 registrants for pre-sales, and was mobbed with people wanting to drop a half million dollars.

Marco lives not far away and watched the insanity. Sent me this: “Detached homes were $670,000 in the morning and over $750,000 5 hours later because “sales were strong”. Yes, they raised prices on the same home (same model, sq.ft etc).  I simply can’t believe this is happening. One person from my office bought that model of home, and they make less money than me. WTF?”

Like the US, the GTA has a 10% unemployment rate. Like American families, Canadian ones owe $1.45 for every dollar they earn. Like them, we have household incomes which haven’t gained an inch in three years. Just like the Yanks, we live in a world in which Europe – a major trading partner – could be in financial crisis by Christmas.

Families in Ontario and Illinois make about the same incomes. Mortgage rates are roughly equal. The education systems are similar, just like life expectancy, literacy and car ownership levels. And yet houses on this side of the line cost twice what they do there, despite the fact Americans can deduct mortgage interest and property taxes while locking in borrowing costs for 30 years – all factors which should increase real estate values.

But demand is zero. While in Oakville nine thousand people were willing to spend a half million (or more) for unbuilt houses in a field on the ragged edge of town.

So, back to 2000. To dot-coms. To the chef and mesh chair. To a delusional, greedy herd of investors.

Despite what you read and are told, there is no economic underpinning for the Canadian real estate market. Current valuations are not supported by incomes, economic activity, household balance sheets or employment. Like profitless Internet start-ups with cool names and pimply executives, they survive on human emotion. When everybody wants something, everyone else does, too. When prices rise, we all want in. When demand exceeds supply, more demand is created.

Apparently the memory of wrecked RRSPs and lost fortunes a decade ago has been erased. Even the panic of two winters past is forgotten. People are busy being people. It’s why most of them fail.

You’ll never guess what that Viper went for in 2002.


#1 T.O. Bubble Boy on 11.24.10 at 11:56 pm

Those Oakville buyers are just Milton flippers who’ve moved south… they are taking the $50k that they made on a Mattamy home from a few years ago, and are doubling-down on a pricier Oakville property.
(apparently they’ve never seen the traffic on the QEW???)

Good to know that the wealthy Chinese will save us all:

Too bad the Vancouver experience is starting to sound like 1980’s-1990’s Hong Kong in reverse — the rich foreigner play in their multi-million dollar homes while the locals are pushed into slums (also known as the leaky condos). When you have that kind of extreme imbalance of wealth, you start to resemble a 3rd world country.

#2 HouseBuster on 11.25.10 at 12:09 am

Not only are those Oakville homes in a bad location, they have tiny lots.

It is simply ridiculous.

Remember Nortel @$124.50? It is zero today.

#3 Paolo on 11.25.10 at 12:25 am

I fondly remember those “dot-gone” days as I entered the IT field in 1997. By 2000 – 2001 it was a wasteland. I make a very good living but was out of work 13 months straight when it was over.

I worked for a company that threw dump truck loads of money at everything. One of their biggest customers was Nortel (remember them? remember how that ended)

At the time before the ‘Tech Bubble’ burst I could not help to think that this was all too easy – – just didn’t make sense.

Bubbles always burst. A home that starts out at an overpriced $670,000 and 5 hours later sells for $750,000 – – just doesn’t make any sense.

Human beings in an all out frenzy and at their worst. 9,000 strong by the sounds of it in Oakville a few days ago.

Someone on this blog remind me again how this ends well?

The equity?
The immigrants?
People want to live here?
It always goes up?
Our solid banking system?
Conservative lending rules and regulations?

Kaboom! Kaboom!

#4 Debtisforever on 11.25.10 at 12:41 am

Ah, the dot-com bubble. I was in my second year of university, studying business. As I watched the news at night, all I heard was “experts” telling us that this was a “New Paradigm”-hey, anyone remember that catchphrase? Apparently it was a “New Economy” and everything was “different.” Even as a 20 year old business student I figured out pretty quick that something was not right here. And soon after the market crashed. Which is exactly why whenever I see “experts” on tv telling me that “it’s different” here because of rich immigrants or whatever made-up reason they come up with, I’m more likely to throw something at the tv than to actually believe what they say. And why would you?

#5 Get Real on 11.25.10 at 12:41 am

Thanks. Very insightful and educational.

I am not someone who is impatiently waiting and hoping for the real estate to fall down 50 percent in order to buy a house. I will buy when it makes sense to me.

I moved to the Vancouver two years ago after selling my house in eastern Canada. I own a private business, do quite well and rent, simple because buying a house esp. in Vancouver at this time defies personal (and business) logic.

2+2 always equals 4. Not 4 and a half, not 5 and certainly not 6. Common sense is a misnomer, it does not seem to be common at all.

#6 Contrarian Canuck on 11.25.10 at 12:42 am

The Globe’s latest real estate pumping bit:

And an alternate view on the same article:

Keep telling it like it is, Garth. The veil will lift soon enough.

#7 Hovering on 11.25.10 at 12:42 am

I didn’t know you had a viper Garth

(but I know now how you got it)

#8 Jsan on 11.25.10 at 12:45 am

Not only are those Oakville homes in a bad location, they have tiny lots.

It is simply ridiculous.

Remember Nortel @$124.50? It is zero today.


I remember Nortel very well (I used to work for them). I can remember one analyst suggest that the stock would drop back to around 24 dollars per share. That’s when it was at it’s near peak of 120 dollars. He was the only person that I heard publicly suggest that the stock would come down hard and was for all intents and purposes dismissed as crazy, out of touch. All of the other analysts were suggesting ridiculous levels that they believed Nortel stock would one day go to. Many of the guys I worked with had very healthy company investment accounts worth a ton of money. I refused to get involved because i strongly believed that all of the Internet/ Tech stocks were way overvalued, irrationally valued. I convinced one co worker not to buy in because of this. I never heard the end of it as the stock kept climbing higher and higher. I was 100% confident that I was right but also knew that in a bubble, it sometimes takes longer for the bubble to run out of steam than most people think.

To make a long story short, nobody that I knew who held tons of stock ever cashed out. They rode it all the way down believing that it would eventually come back. The one guy I worked with hated going home. He told us how every single day his wife yelled at him for not selling at the top. But than none of these people ever believed that there would be a top. It would go up forever or so they thought. They now own piles of worthless paper.

When you see the mobs behaving irrationally like they do in bubbles, just stand back, relax and realize that when it ends, it will end very badly as it always does. And of course there will be the non stop declarations of “we never saw it coming”!

#9 Genghis on 11.25.10 at 12:45 am

It blows my mind to hear that this lunacy is *still* going on. This is something apparently no longer being reported by the mainstream media.

Speaking of which, here is more drivel from the Southam Inc newspaper chain, this time on the Montreal market.

A soft landing is expected for Montreal. The reason? The Montreal SFH average price of $418,000 (Q3 2010) is not expensive. Er, compared to Vancouver that is.

Ok then. Why not buy now. No need to worry.

#10 kevinsmith on 11.25.10 at 12:51 am

Garth I am so in agreement with all you say. I have been to Vegas and Phoenix recently and am currently in Miami. 3 of the hardest hit places in the world. I am just shocked at how busy everything is. Golfed this morning, people had no problem paying $150 green fee + $24 to park ( not a misprint ). Just got back from the Panthers game, probably 15,000 on hand mind you lots of Boston people in town with the Bruins. And the malls are packed along with the restaurants. We ate last night in a really cool place and the guy said he only opened 3 months ago. Are you kidding me – open a restaurant in the worst financial times in a generation. Hard working Cuban immigrant. Anyways, just stating that no matter how bad things are people always seem to have money to spend on themselves. Good to hear only 4% of builder inventory is left on condos in Fort Lauderdale which was the heart of the excess. Maybe life will go on?

#11 Another Albertan on 11.25.10 at 12:53 am

For what it’s worth…

I’ve been going through a ridiculously in-depth procurement process at work. We’re buying mid-8-figures worth of long-lead industrial items that take anywhere from 6 to 18 months to manufacture and deliver.

The amount of BS from the sales droids who are bidding is insane. There is no shortage of attempts to convince us emotionally. What’s ironic is that we’re a bunch of engineers evaluating on technical completeness and suitability. The bidders know that, but it doesn’t stop them from having their executives call our executives and use every dirty emotionally-laden trick to attempt to influence.

I’d be lying that there isn’t a huge amount of satisfaction involved in being unrelenting and grinding these sales people into dust.

We’re planning on repeating this procurement process ten times over in the next decade, so we keep iterating the need for strong, honest relationships with our vendors. We get back mostly lip-service. Only a couple have taken our words seriously, and even these ones need to be beaten severely when we suspect there’s an inkling of them taking advantage of us or if they are being insincere. It’s obvious that the satisfaction of sales quotas trumps all else.

The bottom line is that, from the few dozen major packages we have out for bid, vendors are having an extremely difficult time accepting that the business climate has changed (and continues to change). A lot still behave like it’s 2007. Cognitive dissonance abounds.

I’m not saying the same scenarios will play out in the near future in the commercial and consumer marketplaces, but if it does happen to pass, there’s going to be a metric ass-ton of very confused and very hurt people out there. Those who have liquid assets, who have done extensive research, and who are willing to pull the trigger may very well find themselves in a driver’s seat like they never could have imagined.

Everyone else’s mileage may vary.

#12 Dude on 11.25.10 at 1:02 am

Wealth can be an illusion..

#13 Mister Obvious on 11.25.10 at 1:05 am

Thanks T.O Bubble Boy for the link to the G&M article. Well written and informative. It answers some of the questions that have been bugging me for a while and neither pumps nor slags RE in Vancouver. Something very odd is happening here and this article provides some of the clearest yet non-sensational analysis I have read in quite a while.

#14 Kanata Squirrel on 11.25.10 at 1:06 am

Ha … the days where I would not owe a fun with stock that had Nortel. I was a contrarian then and still got sucked into some bad investments … arg.

Unfortunately, 911 happen help me get back on my feet.

I’m a contrarian and RE is going down … there is far too many people I know over their heads in debt or have “nicer” homes and make 1/2 I make. Of course they don’t have real wood holding their homes together … probably more glue than plywood or wood.

T-minus 4 days to move to a rental agri-land home – my next plan is a super ice rink for my kids and me.

And start investing a bunch of cash.

#15 604genX on 11.25.10 at 1:07 am

(Wrong) Information Cascade.

Here’s the classic article by Robert Shiller explaining why smart people do really dumb things like jumping into a late stage bubble. Warning: It is a bit wonkish/nerdy.

“The failure to recognize the housing bubble is the core reason for the collapsing house of cards we are seeing in financial markets in the United States and around the world. If people do not see any risk, and see only the prospect of outsized investment returns, they will pursue those returns with disregard for the risks.

Were all these people stupid? It can’t be. We have to consider the possibility that perfectly rational people can get caught up in a bubble. In this connection, it is helpful to refer to an important bit of economic theory about herd behavior. ”

#16 RE Bear on 11.25.10 at 1:11 am

I just bought a $7.99 McCain pizza for $3.33. (58% off)

500g of cheese, normally $8.50, 3/$10, $3.33 each. (61% off)

About 300 cartons of Florida OJ on sale (originally $8 or so I believe) for $3.50.

People can’t afford to eat anymore, LOL! I think my grocery store is going bankrupt. Sign of the times…

#17 Anon on 11.25.10 at 1:18 am

Anyone happen to catch Inside Toronto Real Estate on some Rogers channel?

The topic-du-jour was whether or not there was a TO housing bubble. Guests included Jason Mercer (TREB senior manager of market analysis/spinster), some CMHC guy of similar qualifications and the dude who runs a RE blog from BC. (Perhaps this guy is responsible for this site: I could be wrong.)

Although the spin was predictable, it was nice to see some measure of balance from the blogger. (I only caught the first and last 15 minutes on each end.)

Anyways, the host is such a pathetic, miserable excuse for a TV personality it was humorous.

He can barely read, struggles through the intro’s, questions and can not adequately paraphrase what was just said. In the final moments he posed the question to his guests about whether or not they read GT’s site and if they found it “entertaining”? Surprisingly, no one bit on the entertaining comment and all said it was informative in one way or another.

It astounded me how much of an a$$hole this host was. If anyone were to foolishly believe this guy had an ounce of expertise or credibility and was not completely biased, then they need to give their head a shake.

I am certain Rogers will re-broadcast it, if anyone wants to see it. A quick google search will likely get you the times and dates. (As well as an email link if you wish to remind this jerk-off that he is worthless.)

(Rant over.)

#18 TheBestPlaceOnEarth on 11.25.10 at 1:18 am

What is happening in the US real estate market is absurd. 300 million people and homes in many parts of the country going cheap. Sure there is unemployment but there are a lot of people with cash down there as well. You can live down there for a fraction of the price of Oakville. In places like Miami you would think offshore investors would snap up these condos. But they aren’t. However people are lining up around the block to buy Oakville? Vancouver has the Asia factor does Oakville?

#19 RE Bear on 11.25.10 at 1:32 am

“It’s partly a question of affordability. The average price of a single family home in Montreal was $418,026 during the third quarter of 2010, compared with more than $660,000 in Vancouver.

“The market here is still not expensive,” Pinsonneault said. “There is less need for this type of correction in Montreal.”

Still not expensive?!!?

A few points,

1) How on earth did prices increase in Montreal? NOBODY HAS MONEY IN MONTREAL!!!! The cost of living is way lower in Montreal than say Toronto or Vancouver, and coincidentally, wages are lower, too. Whereas you’d make 60k in Toronto, you’ll make perhaps 45-50k in Montreal. Taxes are higher, too.

2) There’s no massive immigration, definitely not any rich immigrants (unless you’re an immigrant from Sicily who has an affinity for nice suits…)

3) There is no shortage of housing, there are tons of places for rent, and tons of places to buy, so the supply is there

4) There isn’t any demand, really. Everyone I knew rented. A nice 900 sq ft apartment in the Plateau can be had for $1k or so, 800-900 if you get lucky.

5) There are no freaking jobs. Besides game studios and space engineering firms, there aren’t that many good paying jobs. 70k is considered a ridiculously high salary in Montreal.

6) By no exaggeration, Welfare is a national sport in Quebec. 1 in 7 are on welfare or something hilarious like that.

Seriously, 418k? WTF is this statistic from? That’s over 10x the average MTL salary! Probably 13x!

Perhaps it’s the Quebecois girls? Ahah! That solves it.

#20 Dirt Dog on 11.25.10 at 1:41 am

I have been a real estate agent on the North Shore (North & West Van) for 28 years. Values are ridiculous.unsuistainable. It’s all low end…first timers and high end…chinese. Nothing in between. The New Year should be very interesting.
Hang on real tight. No I mean ‘real tight’.


#21 Nebbio on 11.25.10 at 1:44 am

When you see what has happened in the USA, Spain, Ireland, etc…why are we different?

#22 Mister Obvious on 11.25.10 at 1:47 am

I have noticed on this site and others that is has not taken long to shred apart the G&M article about the Vancouver bubble I just finished commending in a post above.

But I still fail to see how this piece suggests that Asian investment is going to save Vancouver. The way I see it, there is certainly a huge-ass bubble here and I think the only direction for RE is downward. Soon. How fast and how far is now the only meaningful debate.

However, as a life long resident of Vancouver I cant help but confirm the general correctness of the G&M article. No I dont have hard evidence. But I’m observant and I’ve been watching the dynamic here a very long time.

#23 Painted Toenails on 11.25.10 at 1:51 am

Another Albertan – good post, interesting view from the other side of the table. I like your no nonsense approach. Win at any cost salespeople abound in my industry (tech). I come up against them for jobs all the time. The unfortunate part of all this is that the customer gets screwed – often and completely. I’ve seen customers buy a product only to be told later that unforeseen circumstances on site (certainly not the vendors fault!) necessitate another large expenditure. Actually, I’ve seen variations of that more times than I can count.

A good salesperson, with a good product to offer you, can and will save your company money, time and plenty of aggravation. They will know things about your competitors and how they have approached and solved problems. You know the old saying “nothing happens without a sale” Virtually nobody is employed unless the salesfolks are out there doing a good job of promoting and selling their product.

As a quick aside, let me assure you that I have a few customers who could teach a master class on tricks and dishonesty ;-)

On another note, like Dan in Victoria, I am out and about in this lovely city on a daily basis. Business is down, down, down. Not dead. But hurtin’ plenty.

#24 Ian on 11.25.10 at 1:56 am

Watch and listen to this!

#25 ekstso on 11.25.10 at 1:58 am


#26 Mark on 11.25.10 at 2:02 am

#8 Nortel, was that analyst a dude named “Paul Sagawa”, or, at Nortel, he was called “Paul Fagawa??

Those golf courses that another poster spoke of are basically untouched by the downturn because the retired/social security-collecting crowd hasn’t been affected. In fact, elderly bondowners have become fabulously wealthy during this downturn, at the expense of the young, and stockowners.

#27 realpaul on 11.25.10 at 2:18 am

When I read an article a few weeks ago about mass numbers of squatters occupying empty houses in Florida and the police failing to assist legal owners I thought ‘How interesting’….I see this phenomena has been taking place elsewhere …like in Bel Air and the LA area generally. Are those properties that Canadians have bought ‘on the cheap’ in the US now facing another challenge?

#28 Ghost of Tom Joad on 11.25.10 at 2:39 am

True story. Coworker’s daughter was given a Gardasil HPV shot for her daughter. Within one month she experienced muscle damage and is now permanently in a wheel chair. It’s now one year later. Perfectly healthy, but thanks to our loving government giving vaccines to kids, she won’t be walking again. Now they want our boys to have the shot too:

Another true story. My nephew has brittle bones and potentially is fighting bone cancer at age 15 thanks to 15 years of fluoride in his Ontario water supply. Most of the water in Canada is fluoridated. Why?

If you don’t know what the New World Order is, you had better learn and there is no-one better you can learn from than the most important man of planet Earth Alex Jones:

#29 Freaked in Vancouver on 11.25.10 at 3:19 am

To Contrarian Canuck #6
The Globe and Mail article wasn’t pumping, they got it right. I hated the article, but it described exactly what is happening in Vancouver, thanks to the rich Chinese taking over. The article tells you why prices are not going to go down and will probably keep rising, thanks to our government’s immigration policies. House prices in Vancouver have already gone up approximately 10-12% just in the last year. And interest rates don’t matter when you can pay cash. How depressing. But at least the G&B is telling it like it is. One realtor wrote in the local paper recently that to these buyers, 2.5 million for a house is “chump change”. What hope do the rest of us have?
Garth, time to change your tune.

#30 Pr on 11.25.10 at 4:54 am

Yes its redicul. With those variable 1 year 2.5% interest rate, 0 or minisule cash down (many time the bank will give back to you this cash down) so many will fail. ITs so simple, those extra low interestrate, for so many year, have create a huge probleme. And most pepole say nothing. You should do something about that. GOOD thing you have a blog like hear, SO we can spread the word.

#31 Mike on 11.25.10 at 5:26 am

What is the conversion rate between metric butt loads and metric ass-tons?

#32 amateur contrarian on 11.25.10 at 5:28 am

Few years ago a friend of mine told me the reason he quit nortel and cashed out everything was that he didn’t like how things were going. (Likely within 20% of the top). The exception that proves the rule?

Now I understand that we are a resource based economy and the US is an economy based on consumption, but the real estate values (?) here appear out of whack. Glad I cashed out in April.

A happy renter….

#33 Aussie Roy on 11.25.10 at 5:57 am

Ah the dot com bubble. My first brush with an investment advisor. By the mid late 90s I had been a currency and commodity price risk manager for more than 10 years. After doing my own investing (yes I owned properties, you know in the good old days when rental yields where >10%). After some great taxation advice my advisor suggested investing in dot coms. I laughed and told him that was too risky and I suspected these companies to be way overpriced, of course he disagreed. Within a year the bust happened and I returned to the advisor to complete my tax return. He asked how I could tell that dot coms where risky, I responded its the same in every market I hedge in whether its commodities or currencies you always must consider the emotions and the number of market participants. The more frequent and louder the screams that this is a sure thing in reality the more it isnt. He is still my taxation advisor and was very surprised when I sold all my investment properties in 2008, I’m not sure what influence I may have had on him but I do know he has been suggesting people consider selling their investment properties for atleast the last year, of course I suspect most think he is mad.

Aussie Update

#34 OttawaDaddy on 11.25.10 at 6:39 am = Rebel.bomb

#35 brunt on 11.25.10 at 6:43 am

Benjamin Graham, the great investor and mentor to Warren Buffett is credited with saying “… in the short term, the stock market behaves like a voting machine, but in the long term it acts like a weighing machine”.

This is a critically important fact to understand, for it relates to not only Nortel stock, but Beanie Babies, sports cards, collector plates, and yes, real estate.

In the short term a house will sell for what someone is willing to spend on it. This works both ways – people pay too much money in Canada now and the US before the bubble burst, and too little after the fall, such as now in the US or Ireland.

In the long term, however, a house will sell for what it costs to build, or the value given to the owner (real economic value, not some touchy feely pride of home ownership “worth”).

This is why metrics have been created to determine what stage of mania/depression a given market is in. Price to income and carrying cost to rent are two such metrics. That’s why people who have no vested interest in the lie that real estate cannot and will not reduce in price have been spouting these sorts of statistics.

These formulas do not care if mobs suddenly decide that housing is a guaranteed, no work required, path to riches. Nor do they care if these same mobs panic and think that owning a house is a sure fire way to ensure debt servitude for the rest of your life. Removing emotion from the scene is always a good thing when you are considering plunking down a significant chunk of your net worth on a purchase.

Ultimately, it matters not that house prices have increased steadily for much of the lives of first time buyers. Or that foreigners with pockets full of money are coming over to buy them.

Value is determined by accountants using dreary formulas which must be justified. Price is determined by buyers and sellers somewhere in the spectrum between a high tension bidding war, or a desperate measure to get an offer – any offer – on a house that simply must be sold.

Sometimes price is over value. Sometimes the opposite is true. But like the robins returning in spring, price is always drawn back toward value. On this, you can be certain.

Right now, rational people (like our good host) are looking at the numbers on Canadian real estate. And they don’t like what they see. Our numbers are not only out of whack, they are way out of line. And these types of numbers cannot continue to get worse. They can’t even remain this bad in the long term.

It’s inevitable – a sure thing. But don’t ask Garth or anyone else when it is going to happen. Greed and panic are funny things. They will be there one minute, and gone the next. Changing from one to the other may take in insignificant event or a huge story.

But it will come…

#36 Melissa on 11.25.10 at 6:59 am

An interesting article challenging the China growth story and examining the impact of China on the Australian economy. For the Aussies sake, I hope China keeps on growing…

#37 Europa on 11.25.10 at 7:25 am

Ah, I see we are back to the “New Crisis each Week” times again like we were a little less than a year ago.

Here is Europe, the riots and protests still continue on a DAILY basis. Just last night 8,000 students protested/rioted in downtown London, England. The riots lasted well into the night (20 hours worth).

In Ireland, more riots and protests (they tried to storm the gov’t again)… in Greece, Spain and even France the same.

You are getting this on TV in Canada right? Is the Canadian media covering ANY OF THIS?

Things are quickly getting out of control here in Europe. No country want to bail out another banks. Counties are cutting budgets, pensions, wages, benefits, jobs while raising taxes, tuitions, fees and fines… it’s austerity madness!!!

If things continue this way then it’s time to worry about general safety just traveling around.

There you go, 30 sec read on what’s happening over the pond.

#38 Inside Toronto Local Real Estate on 11.25.10 at 7:42 am

Hi Garth,

Yesterday I was watching the show Inside Toronto Local Real Estate on Rogers local channel.

I gotta admit I like the show. I think the host is great and it is as close to being balanced considering the real estate pumpers that talk for most of the show. It’s much better than that hot properties show in my opinion.

Anyways, they had three guests on the show one senior from CMHC and another affiliated (don’t remember the position) with the Toronto Real Estate board and one blogger from Vancouver.

The host asked him at the end if they read Garth Turner’s blog and they said yes amazingly. So the CMHC and Toronto Real Estate guys love you, lol.

I keep asking myself do these guys truly believe what they say on the show or are they just towing the company line. Would they actually give their children that advice. If not, they are actually doing Canadians a dis-service.

The host should invite you on the show to debate these guys!

I guess as that expression goes, it’s hard for someone to understand something when their job depends on them not understanding it.

#39 somecatchphrase on 11.25.10 at 8:22 am

#10 kevinsmith on 11.25.10 at 12:51 am

Some believe that a lot of the consumer spending in the US over the last year or two is a result of “shadow stimulus” from people who’ve stopped paying their mortgages. Imagine how much more money you could spend dining out and attending sporting events if you could just stop paying your mortgage without any immediate consequences. If I remember correctly, this shadow stimulus is estimated to be worth in the neighborhood of $8 billion per month to the consumer economy in the US.

#40 C on 11.25.10 at 8:31 am

Garth, great post today!!! If you are thinking of buying a house today, seriously wake up. Try doing 5 minutes of research. You would likely do more if you were buying a flatscreen, car, or even a coffee maker.

#41 Apsalar on 11.25.10 at 8:36 am

This is unreal. I simply don’t understand how people can’t see what is coming. There is no way that the current cheap price of credit and the low-low mortgage rates of interest can continue indefinitely.

When I bought my house, the advice I got from my mortgage broker when I decided to do a 5-year variable rate mortgage was to make sure that I could pay the current 5-year fixed rate amount. It was good advice. So while I am currently enjoying a ridiculously low 2.25% VRM, I am banking the difference in what I would have to pay as fixed. It’ll either go towards a paydown when the rates start to hike, or to other investments.

But then, my house is just a place to live to me. I’d dump it in a heartbeat if things got tough.

Keep on spreading the message, Garth. Some of us are hearing you. Better yet, some of us are actually *listening* :)

#42 Devore on 11.25.10 at 8:52 am

Elsewhere in the civilized world (because apparently Argentina is a backwater banana republic), another country is considering nationalizing private pensions as its buckling under tremendous fiscal strains. Hungary wants to defacto nationalize private pension accounts, in a last ditch effort to give its budget some semblance of balance.

Austerity coming soon to a “it’s different here” country near you. Hold on to your wallet.

#43 Moneta on 11.25.10 at 9:09 am

I keep on saying how amazed I am by the number of people with money who have no clue where it came from.

I shouldn’t be amazed. 80% of people think they have above average intelligence. For years, it was thought that depressed people underestimated their abilities. Actually, research has shown that depressed people are dead on. It’s the happy people who are deluded.

A friend of mine, a few years ago, joined a firm as a wheeler dealer. His job was to help sell it. After many trips, it was sold for $10 million to a European firm. Totally overpriced but understandable, we were in the heat of the private equity bubble where money was gushing out of every corner of the world. His cut was 15%. 1.5 million in 18 months!

Of course, he complained about the taxes he had to pay on his hard earned money. LOL. Then he and his wife went on a few expensive trips. He bought a 100K BMW. Did a 100K+ reno on the house. He was supposed to pay off all his debts including his mortgage but he never did…

When he got the money, I warned his wife that it was easy bubble money, that she should straight-jacket him for a year or two. She agreed.

Next thing, I know he was traveling to NYC back and forth on a weekly basis, working on a mega deal. He met 2 old school friends, a lawyer and accountant with whom he put his money in trust. They ran off with it.

The owners of the firm, spent their lives developing the concept that was sold. They bought gold with the proceeds for the 85%.

I’ll say it again, easy come easy go.

#44 The Apocalyptic One formerly Old is Gold on 11.25.10 at 9:10 am

I just finished reading the first dozen or so comments and must say that your readers seem to be getting more and more intelligent. Rather, more and more intelligent readers seem to be reading the blog, and commenting on it. Great all round comments that make a heck of a lot of sense. I bet that back in 2005 the Irish Tigers didn’t think that their income taxes would be jacked 20% and that pensions and pretty much all social programs would be gutted, so that the Irish Tiger now more closely resembles a declawed pussy cat, an anemic one at that. So the greater and ever greater fools in Canada indeed believe that it is different here!

This is all planned, AUSTERITY, meaning the Middle Class being converted to a Serf Class is happening in pretty much the whole Western world, and it ain’t happening by default; it is being done by design. Looks like Canada, and maybe Australia, will be the last to fall but their fall will be the hardest considering the lofty heights to which they are being allowed to rise. The greatest of the greater fools in Oakville being a perfect example. Pain, severe pain, apocalyptic pain is coming to Canada, and I venture to say that two years from now, none will be discussing RE prices but they will surely be discussing Food prices, and maybe exchanging squirrel prices. Is there any other possible outcome, I can’t see one?

#45 Haggis on 11.25.10 at 9:11 am

I’ve had a couple of experiences which resonate with some of the thoughts you’ve conveyed today.

I worked for a multi-national design firm handling the Nortel real estate account in the late 90’s. At that time NT was probably 20% of the global business and it was viewed as the path forward. No longer would we toil for individual clients-we would hitch our wagon to the nascent high tech industry and make our collective fortunes. The long and short was that many of those involved in that account piled personal fortunes into it with what could only be considered reckless abandon.

And as it went through it’s arc of dizzying price appreciation the bought more. And the end result, as always, was that they were so invested emotionally that they literally refused to see bad news as bad news. It was only a ‘temporary setback’ from which recovery was certain.

Many were junior or intermediate staff who lost enough to sting, but they had decades of work ahead with which to rebuild. What struck me, however, were the number of people a decade or so from retirement who lost it all. And those were the ‘wiser heads’ who should have had an inkling that what seems to good to be true may be suspect.

On a more recent note, I live in Hong Kong and have seen property crash by 65% between 1998 and 2003. I then saw my property (bought 2002) increase 400%. when I sold in 2008 I was told I was a fool-incidentally by the same people who chastised me for buying in 2002 (Hong Kong is dead don’t you know). We’re now again in the throes of an unbelievable property boom and those who thought property was a dead end in 2002 are now buying. I think, because everyone else is.

The basic premise I take away from this is that human ‘wetware’ is deeply illogical. If you want to prosper don’t look for validation of your decisions. Conversely, if all you decisions are validated by others – well, good if they’re a rich bunch of analytical geniuses. But if they’re no, which is typical, you need to be pretty thick skinned to hold your course.

Thankfully, I’ve got a hide like a rhino…….

Cheers and thanks for your entertaining blog.

#46 Moneta on 11.25.10 at 9:17 am

In my life, I can count on 1 hand the number of people who have been able to hold onto fast money.

For some reason, the easier money flows in, the faster it gets spent.

#47 dd on 11.25.10 at 9:22 am

#16 RE Bear

Funny. Last time i was in the bag got smalller and I pay more. 1 week of specials and you can’t conclude anything.

#48 Moneta on 11.25.10 at 9:32 am

I remember Nortel very well (I used to work for them). I can remember one analyst suggest that the stock would drop back to around 24 dollars per share. That’s when it was at it’s near peak of 120 dollars.
I remember going to an Nortel investor day where we were hundreds. I couldn’t help but wonder how we could beat eachother if we’re all doing the same thing… maybe I should have been visiting some other company, getting an real edge somewhere else! But hey, I was in my 20s, what did I know?

Presentation after presentation was about growth and expansions. On the back of an envelope I did a quick calculation of how much all the new employees would cost and quickly determined that earnings would never go up.

A couple of years later, when the stock was over 100$ and I was wondering how much longer this frenzy would go on, I decided to go to the root of the problem: look at its customers.

I went onto Bloomberg and looked at their balance sheets… nearly all clients had quintupled debt and equity over the previous 5 years. You’d think this expansion in capital would have generated revenue growth…. It did, a measly 5%. How much longer could they keep on increasing debt and doing new issues with that type of top line growth. Well not for long because soon after, the industry was imploding.

What I have learned over the last 2 decades is that most of the time, you don’t need fancy dancy models to proper assess situations. It’s not rocket science. An old envelop, a pencil and a few numbers will do the trick.

#49 BrianT on 11.25.10 at 9:33 am

#42Devore-Yes those measures will be here eventually. As Garth points out, the future appears to be a Canada full of broke old boomers-it will be very politically easy to stick it to those greedy pensioners with sizeable RRSP balances.

#50 Moneta on 11.25.10 at 9:37 am

Anyways, just stating that no matter how bad things are people always seem to have money to spend on themselves
During the real estate bubble in the US, 70% of people owned. Most probably did some kind of renos to their homes. That money does not get reported in consumer spending but goes into private fixed investments.

If you look at GDP numbers, you’ll see that private fixed investment is still in the dump but consumer spending is hilding up.

It’s normal because people are now putting that 5K in consumer stuff instead of their homes.

#51 S.B. on 11.25.10 at 9:39 am

#10 kevinsmith I think what you saw is the money class – as opposed to the broke class. These are the two classes now. I’ll bet you could visit certain areas of say India, and arrive at the same conclusion. But the slums are hidden from mainstream view.

Soon in USA gated communities and private police forces will be required for keeping the broke people away from the money class. Begging for alms? NIMBY!

#52 BrianT on 11.25.10 at 9:45 am

#33Aussie-Yes-currently you have many stating that interest rates can never again return to historical norms-“they just can’t”.

#53 ttyl on 11.25.10 at 9:57 am

I recently tried to sell 300 shares of Nortel for my mother. TD Price Waterhouse said they couldn’t handle the transaction cause there was still an over the counter market in the States. One or Two cents a share. So I’m just going to frame the certificate and hang it on the wall.

#54 The Apocalyptic One formerly Old is Gold on 11.25.10 at 9:59 am

#29 Freaked in Vancouver on 11.25.10 at 3:19 am
but it described exactly what is happening in Vancouver, thanks to the rich Chinese taking over. The article tells you why prices are not going to go down and will probably keep rising, thanks to our government’s immigration policies.

The immigration policies of all countries, including the US and most Western European countries allow anyone with cash to waltz right in. So for the ultra wealthy, Canada’s policies are not special in any way. The question then becomes why would the ‘Rich Chinese’ pick Vancouver over Seattle, San Francisco, Los Angeles, San Diego, Phoenix / Scottsdale, Miami / Tampa / Orlando, New York, Boston, Chicago or even Toronto? Why not get more bang for your buck, say in Shanghai or Beijing or Tokyo or Seoul or Mumbai or Delhi? Why not London, Paris or Frankfurt? How about Barcelona or Madrid or even Stockholm, Helsinki or Zurich or Geneva?
The small number of rich Chinese that may actually have the cash to buy in Vancouver, and do so will be proven to be the greatest fools of all! The rest of the rich Chinese are far too savvy as investors to look upon Vancouver as the centre of the universe. Comments like the one quoted above are products of the minds of people that have not ventured beyond Stanley Park or gone east of the Vancouver airport. Those people for whom 2.5 mil. is ‘chump change’ are well aware of the great big world out there where their investment will be a lot safer and provide a much greater return!!!

#55 Devil's Advocate on 11.25.10 at 10:02 am

#35 brunt on 11.25.10 at 6:43 am

In the long term, however, a house will sell for what it costs to build, or the value given to the owner (real economic value, not some touchy feely pride of home ownership “worth”).

It is my experience that a house always does sell for what it cost to build and I do have considerable experience in that regard. Yes the developer tends to take advantage of newly realized market exuberance from time to time. But that is only for a very short period of time before the trades wake-up and call for their fair share. The labour component of a typical house constitutes approximately half the cost of construction, materials the other half. Not accounting for taxes permits, utility hookups and such.

Would you rather the general contractor and sub-trades did the work for free?

In times of market exuberance everyone gets greedy. Trades push costs of construction up, municipalities push development cost charges up, suppliers demand more for the materials, and Greater Fools bid the price of the finished product up. Is it no wonder that eventually cooler heads prevail and withdraw from the market leaving the developers holding an unexpectedly large unsold inventory they must reduce the price of to get it sold sometimes before having paid the trades. And then the shit starts to hit the fan… unemployment amongst the trades and no paycheque for the last months work they did on up the food chain.

#56 torontorocks on 11.25.10 at 10:05 am

I too caught a bit of that inside real estate shitshow and have to sit there and listen to these guys talk about affordability and how we’re at a more balanced market and the host being a pumper, sitting there with that dazed look.

I can’t stand more than 2 minutes of it but at the end of the day, you do what you feel is right. Illinois and Chicago are to me proxies for Toronto and yet you benefit from incentives there such as writing off your mortgage interest. Why should we be more expensive? B/C our interest rates are lower and the pumpers are out there -if you don’t buy now, you’re shut out. This happened before in the 90’s or whenever and the BS about rates never rising to 18% again is moot. Rates only need to rise 2% (just like downpayments only need to rise to 10%) before this market is shut down.

ANd besides, I want this facebook generation who source the internet for relationships and advice on life and who never faced a financial responsibility to suck a little wang for a while.

#57 Canucklhead on 11.25.10 at 10:07 am

#18 TheBestPlaceOnEarth on 11.25.10 at 1:18 am
Vancouver has the Asia factor does Oakville?

Actually, Oakville has the 2nd highest per capita income in the country (behind Wood buffalo a.k.a Fort McMurray). So Oakville has a better chance of withstanding this thing than Vancouver does.

Bottom line, Both are in trouble. Vancouver more so.

Thanks for coming out though.

Per capita income levels in that community are misleading. Millionaires along the lake, and the indebted classes in their McMansions in the distant fields. — Garth

#58 Nancy on 11.25.10 at 10:14 am

I edit university textbooks for a living, and every now and then I get to update an economics textbook – i.e, take the 2001 edition and work in the author’s changes for the 2011 edition.

In the last econ text I worked on, there was one sentence in the 2001 edition to the effect of “Stock market crashes are extremely rare. There have been just three in this century: 1929, 1989, and 2000.” The author had edited it by changing “three” to “four” and inserting “2008”.

Well, um, no, that won’t do, unless you want to look like an idiot. We also have to delete the part about “extremely rare.” Because stock market crashes are now occurring once per decade. That’s not extremely rare. That’s not rare at all. It’s actually alarmingly frequent. And predictable. It means we can expect the next one in about 2020 or so.

It also means that the stock market isn’t functioning well anymore. There should be no illusion about market efficiency. It ain’t out there. So maybe we should delete the rest of the chapter, hm?

Why is this happening? I blame the sudden rise in amateur investors (due to the advent of RSPs and 401k’s) and the herd motivation of mutual fund managers (due to their need to keep their stock looking pretty all the way to the top of a bubble).

But it’s probably more complicated than that.

#59 Apsalar on 11.25.10 at 10:21 am

@#35 brunt

That was one of the most incisive, clear and helpful comments I’ve seen on this blog. Thanks brunt!

#60 Devil's Advocate on 11.25.10 at 10:24 am

#20 Dirt Dog on 11.25.10 at 1:41 am
I have been a real estate agent on the North Shore (North & West Van) for 28 years. Values are ridiculous.unsuistainable. It’s all low end…first timers and high end…chinese. Nothing in between. The New Year should be very interesting.
Hang on real tight. No I mean ‘real tight’.

Funny thing, I am in real estate too and I don’t see it that way. Yesterday though a colleague came into my office lamenting about the state of the market and how they were having a tough time meeting expenses. No the markets are not as frenzied as they were a couple of years ago. If you were a fool and didn’t manage your R/E business like a business and spent money like a drunken sailor this is going to be a tough time. A lot of agents will find it too difficult to adapt to the SHIFT in the market and be forced out. This is now a business once again in which you have to do more than submit a listing to MLS, plunk a sign in the front lawn and wait for offers. If that has been your business model these last years you are on your way out because it simply will not work going ahead. Nor will FSBO be a viable option so much. Let’s face it houses practically sold themselves these last few years. That is over – Thank God.

And as for real estate on the North Shore of Vancouver (North & West) I have a good friend who is an agent there who tells me quite a different story. Let’s face it Dirt Dog… you have grown fat and lazy and unaccustomed to work. Either rise to the challenge of the new market realities or leave the business to us serious folk.

Sales (such as R/E is considered) can be the worst paying easy job there is – it can also be the best paying hard work there is.

#61 fancy_pants on 11.25.10 at 10:26 am

Bad time to house hunt… unless, tongue in cheek… you are in the front of the line for a new development in Oakville. Well, I suppose those who paid more still got the euphoria of signing the dotted line .

“It will all keep going up, right Dad?… Dad, you have to co-sign here. Well, I’m glad we weren’t near the back of the line b/c I still have to do my paper route plus they ran out of free coffee mid way. Boy, with all these people, how can it not be a good deal?”

For me, I’d rather be a spectator than a speculator.

What a joke, a freakin game really. Who is the bigger joke though; the greater fools (buyers) or the greater tools (those who set the RE game rules and playing field – giveaway rates, minimal qualifications etc.)

#62 Apsalar on 11.25.10 at 10:27 am

@ #42 Devore

Now that is truly scary…..

#63 Another Albertan on 11.25.10 at 10:27 am


More correctly, it’s “tonne”. I used the Imperial standard. The ratio is 1:1, within a measurement system.

I find the phrase “ass-tonne” is a little more socially-appropriate than “$h!t-tonne”. It also has the dual use of being able to quantify the combined mass of people who are asses, rather than just the portion of them which is their posterior. But along those lines, you can also use “piss-tonne” and “fart-tonne” to cover off all combos of solids, liquids, and gases.

Everyone else’s mileage may vary.

#64 Devil's Advocate on 11.25.10 at 10:42 am

#12 Dude on 11.25.10 at 1:02 am

Wealth can be an illusion..

What a load of fear mongering crap. Could it happen that way; … could a meteor whip out the planet..? could China and India engage in a nuclear war that wipes out the planet..? could criminals invade your home tonight rape and kill your family..? Could you get hit by a bus on your way to work today..? Could you get hit by a falling piano..?

Who knows what the future brings. Certainly this supposed financial Armageddon the pups and poodles are waiting for like a treat of Kibbles and Bits has been, at least, postponed to another day from that they earnestly anticipated. I think many are growing impatient and starting to bark at Garth to feed them the real thing instead of promise of it.

Dude that video is of no more worth than watching the latest “end of the world” Hollywood production. Throw in Angelina Jolie and it might have at least some entertainment value… nah no it won’t.

#65 Devil's Advocate on 11.25.10 at 10:53 am

#10 kevinsmith on 11.25.10 at 12:51 am
… Maybe life will go on?

Indeed it will Kevin, indeed it will. And if it doesn’t… chances are there isn’t a damned thing we could do about it. We are but an exponentially growing viral blight on the face of this planet. Of course we are supposed to enjoy our short time here. That we have a thinking brain and opposable thumbs only complicates the simplicity of life.

#66 David on 11.25.10 at 11:08 am

Today’s blog brings back memories of those heady and boundless future dreams that so clouded thinking. There would no longer be any need for the dirty fingernail economy that was already in the process of dying. Pension managers, mutual fund trustees and plain old speculators simply could not wait for the next new tech IPO. It became worrisome when new fangled terms like cash burn crept into polite discussion and troublesome questions regarding the viability of selling dog food online started to scare more sensible souls out of big trading positions.
With tech stocks, the argument went to the effect, that fundamentals did not matter, since the old classic business model paradigms did not apply.
Reality does bite. The celtic tiger is now officially a lame kitten. There are lessons to be learned, but I remain unconvinced that people want to learn them.

#67 Devil's Advocate on 11.25.10 at 11:12 am


Charlie Harpers girlfriend “Oh you’re just using sex to get what you want”

Charlie Harper “How can that be. Sex IS what I want!”

We are no different than the Humpback Whale or any other species on this planet facing possible extinction. Whales continue to propagate oblivious to the peril their offspring face. So to do humans… continue to propagate and face threat of extinction or at least a severe culling.

Men buy houses for women and women reward men with their favour. Sure it is deeper and more meaningful than that – we think. Really we are no different from any other species on this planet. The only reason we are at the top of the food chain, for now, is that we have a thinking reasoning mind and opposable thumbs which complicate the otherwise simplicity of life.
It really is just that simple.

Oh and BTW; it is far, far from a man’s world for a woman who uses her thinking reasoning mind. I’ve met a few housewives throughout my career; they have a house they took from their EX here and another from another EX there and so one and so on.

#68 BrianT on 11.25.10 at 11:16 am

#64DA-on this one you are sadly ignorant. Fear mongering is strip searching some 5 yr old kid or 90 yr old grandmother to protect you from some 7 ft tall guy living in a cave halfway around the world. That video is one of many possible outcomes, but if you think it is as unlikely as a meteor strike you don’t know anything about this subject at all.

#69 45north on 11.25.10 at 11:28 am

Inside Toronto: it’s hard for someone to understand something when their job depends on them not understanding it.

from the CMHC website:
Serving the Public Interest
As stewards of the public trust we serve with fairness, impartiality and objectivity.All of our activities, including those that are commercial in nature, are carried out in support of our public policy objectives. Our actions are inspired by a respect for human dignity and the value of every person.

well I agree that keeping the Canadian economy going is a public policy objective. On the other hand we are at the point where large numbers of Canadians have bought houses they cannot afford. This situation is not in the public interest.

Which quickly brings us to the dismay that many Canadians feel. That in buying houses they feel that they were dealing with “the stewards of public trust”. That the banks gave them mortgages and that CMHC guaranteed them.

The loss of public trust is an extremely serious situation which threatens the fabric of out country. The best we can do right now is to mitigate the loss.

#70 Incubus on 11.25.10 at 11:31 am

@#19 RE Bear on 11.25.10 at 1:32 am

Pinsonneault is simply a liar like Finance Minister Jim Flaherty . Real estate in Montreal is a large bubble. The condos are probably overvalued by at least 50% while small plexes are overvalued by 40%.

It is easy to assess the value of a property. You use the price to rent ratio.

#71 Devil's Advocate on 11.25.10 at 11:39 am

#68 BrianT on 11.25.10 at 11:16 am

That video is one of many possible outcomes,

Nough said… good luck trying to cover all the bases Brian. What will be will be and this too shall pass. If you are not a part of the solution your are the problem unfortunately the problem is bigger than the both of us.

C’est la vie… live it.

#72 Bottoms_Up on 11.25.10 at 11:48 am

9000 people able to drop 500g+ for a new build….these people are not likely all renters….that’s a lot of supply that may come to market….must be happening all over the place.

That’s more like 9,000 people with $50,000 to drop. The rest is debt. Remember the average down payment in Canada is 7% of the value of the property. — Garth

#73 Devil's Advocate on 11.25.10 at 11:59 am

#70 Incubus on 11.25.10 at 11:31 am
@#19 RE Bear on 11.25.10 at 1:32 am
… The condos are probably overvalued by at least 50% while small plexes are overvalued by 40%.
It is easy to assess the value of a property. You use the price to rent ratio.

What the market will bear Incubus, what the market will bear.

On the price/rent ratio… couldn’t agree with you more. That day will come.. whether it is of prices dropping or rents increasing is a matter of debate.

Most likely though, it will be a combination of the two which is one of the reasons property values will not drop so much as the pups and poodles think as rents rise to meet the point of equilibrium while prices journey down to that point is shortened by the two working toward one another.

#74 Dan T on 11.25.10 at 12:16 pm

Maybe I’ll try to selll my 26000 options in to a sucker in oakville. Give it a visit and rollup the visit ticker … now @ 934

Available to anyone on this site for the low price of a Big mac combo – supersized … or I’ll straightup trade for the Viper.

#75 nelson in ktown on 11.25.10 at 12:18 pm Yea just what I thought left the lower mainland for Calowna years ago.

#76 Devil's Advocate on 11.25.10 at 12:22 pm

That’s more like 9,000 people with $50,000 to drop. The rest is debt. Remember the average down payment in Canada is 7% of the value of the property.Garth

Are you talking the average downpayment amongst the high ratio CMHC insured crowd? Or maybe the first time buyer crowd in general? Because I have numbers which quite markedly dispute that Garth. Please, if you wouldn’t mind, qualify such an inflamatory statement as that for us would you?

#77 BDG-YYC on 11.25.10 at 12:24 pm

Meanwhile in Canada, it could hardly be more bizarrely different. For example, I told you two days ago about a new development in Oakville which had 9,000 registrants for pre-sales, and was mobbed with people wanting to drop a half million dollars.


I’m sure that if you were to conduct a survey of that line-up you’d find the only affordability metrics that matter are … can I make the payments … and … will I be approved. “Common sense” is price doesn’t matter beyond its effect on payments.

I’m sure you’d also find that most in line had no clue where “Net Worth” is :-)

I’m sure you’d also find that most in the line would be shocked to know that … yes … that poor unfortunate fellow digging through the dumpster across the street actually does have a higher net worth than they do … yup … everything he has is paid for … no debt … $20 bucks worth of bottles five bucks in cash and a half a mickey. Yup … he’s richer than he thinks :-)

#78 househunter on 11.25.10 at 12:31 pm

#1 T.O. Bubble Boy – thanks for that link. I’m from Vancouver and I can tell you the content on demographics is somewhat accurate. But its hard to speculate total number of people from Mainland China coming and buying up property. Most info is anecdotal and unless we get definitive data, all we can say is, yes, there is an influx of $ from China and the area of interest for the $ is Vancouver West Side. Garth is predicting a possible 20% correction in Vancouver. That is probably based on sound economic reasoning. Unfortunatley, this money from Mainland China is a factor we cannot incorporate in our analysis because the data is not available. All bets are off in terms of corrections. Pay attention to what is happening now and what has happened. What else can you do? Predictions are over rated. Live a balanced life.

#79 Devil's Advocate on 11.25.10 at 12:34 pm

In our own area in October of this year of 111 sales and we can not be that much different than Toronto. Or are you going to conceed that it is, in fact, really different here Garth?

47.75% bought with a conventional mortgage (20% or more down payment)

25.23% bought with all cash (no mortgage home owned free and clear)

27.03% bought with a high ratio mortgage (less than 20% down payment)

Those numbers dispute any possibility that “the average down payment in Canada is 7% of the value of the property”.

#80 Europa on 11.25.10 at 12:34 pm

I have a GREAT IDEA to fix the Canadian housing market.

Make mortgages like so:

If you have 5% down, your mortgage rate is going to be higher than if you had 10%, 25%, 50% etc.

Thus, the more money you have saved up, the more you are rewarded for being a proven responsible saver/borrower.

There is absolutely no reason that a person who puts down 5% should get the SAME RATE mortgage as a person who puts down 25% or 50%.

#81 Aussie Roy on 11.25.10 at 12:36 pm

73 Devil’s Advocate on 11.25.10 at 11:59 am

On the price/rent ratio… couldn’t agree with you more. That day will come.. whether it is of prices dropping or rents increasing is a matter of debate.

Most likely though, it will be a combination of the two which is one of the reasons property values will not drop so much as the pups and poodles think as rents rise to meet the point of equilibrium while prices journey down to that point is shortened by the two working toward one another.

Look at the holding costs.

For example 500k loan on property its rental return is 5% current interest rate 5%.
25k per year interest, it increases by 1%, interest payment now 30K.
To maintain the same yield owner would have to increase rent from 25k to 30k, put another way they would have to raise the rent by 20%.

Sure these 2 can get closer together but when you start with such low interest rates and BIG mortgages they are likely to actually spread further apart as interest rates rise. Ah the pitfalls of leverage.

You see that is the problem with leverage combined with low yield and rising rates. The ability for owners to pass on interest cost increases just cant be done. Or perhaps you believe we are in a period of time where the economy could handle strong rental yield growth, meaning incomes are rising.

Maybe you should sit down with a calculator and run through what I’ve described above.

#82 wetcoaster on 11.25.10 at 1:01 pm

I would bet bigtime that a high percentage of that 9000 actually has no frigging clue how bankruptcy works in Canada and truly believes if they lose that they bought CMHC insurance just like they do for their car. The US style thinking of handing in the keys, trash the place and just walking away is imprinted in their uneducated minds by the US media they watch 24/7.

Canadians are not all “conservative” like the banks and economists want you to think we all are. Otherwise why did so many lose 50% value in the 80’s crash and 90’s major correction of 30% ?

Banks were far more conservative and stringent with lending back then by a massive long shot and their was roadkill from one end of this country to the other.

#83 OttawaMike on 11.25.10 at 1:10 pm

Fast cars and dot com.
My little side biz back in that era was curbing vehicles from the local dealer’s auction. In 2000 I was attending an auction of salvage vehicles when the Govt. of Canada had a red ’85 Porsche 928 go through on a tow truck. The Porsche was seized under the proceeds of crime act, if I recall correctly, and had 2 small caliber bullet holes in the front passenger fender.

The car actually looked good besides the interior that had been chewed up by a dog. It appeared the dog had been left in the car.

I was pretty new at the auction game and my two pals laughed at me for paying $1800 as there were few bids.

After the auction I got a battery and installed it and bonus, the car ran quite well. Still this 928 needed some serious TLC.

I drove the car home and parked it then went about immediately advertising it on the intertubes. Within two days a very interested buyer who turned out to be a self employed dot com techie, raking in from the boom that was going on in our town and everywhere else.
He came to my place and handed over a certified cheque for 4800$ without even inspecting or driving the car. I waved good by as they drove off thinking that transaction said it all about how the easily money was flowing from that short lived dot com boom.

Housing now is the same. Want new appliances, granite,windows or paint?
Just fold it into the mortgage right away. It’s only a few dollars per month more.

#84 Live within your means on 11.25.10 at 1:26 pm

About Nortel – I have a BIL who bought Nortel and lost lots of money. Back in the mid 80’s he had opened a co. with his GF out of their new home. Business was doing well, but to be more professional, rented office space near their home. Hired a few programmers, went to all the IT shows in Cal. and overseas, etc. They were living high off the hog. Bought a piece of land for $60K and had architectural diagrams drawn up for a new home. Then the contracts dried up, mostly because of mistakes made by his GF, who was a major BITCH – sorry, but couldn’t stand her from day one. They paid taxes on the land for several years and eventually sold it for far less than they paid. GF had left her 3 children & husband to be w/BIL, but was still in touch with them. She took care of the household accts. Turned out she was giving money to children behind BIL’s back. He would have understood if she had been honest with him. When they split, after 18 yrs, she bought a condo near him & bought an apt bldg. in a remote area – duh (inheritance from Mom) overseas. Went into bankruptcy (AFAIK) because she wasn’t paying taxes, hydro, etc. on the apt. bldg.

Unfortunately, my BIL & his wife of 10 yrs are also spend thrifts. When they were here at TGiving, said they would never invest again. He’s got a good job at Hydro Quebec – $65K+ a yr. She used to have a similar salary – long story – now earns half. PIL’s overseas put money in each of their 3 children’s accounts for b’days, etc. But, for my BIL, they put minimal amount into their chequing acct. as they know they’ll deplete it ASAP. The rest goes into another account where they can only touch it when they visit.

Sorry for the rant. It just pisses me of when I see so many people spending ‘beyond their means’. We’ll never be ‘well to do’ but at least we can sleep at night without worrying about how to pay the bills.

BTW, the guys were here for 4 hours installing our ETS system today and just went for a ‘lunch break’. Did not realize it took so long as my husband had put in the required wiring. (He has a certificate to do that.).

#85 BrianT on 11.25.10 at 1:27 pm

#71Devil-the video was attempting to inform viewers of potential problems so that the viewer could take steps to protect themselves financially-if you cannot even comprehend simple matters like that, how are sellers or buyers of RE supposed to respect your judgement? Part of the solution? You type an awful lot of characters but IMO your desire to learn or even convey useful info is sorely lacking.

#86 UrbanCowboy on 11.25.10 at 1:31 pm

The fact no foreign investors are buying up cheap real estate in places like Miami, even after further decline, could mean the sentiment is the US could be sinking into the abyss and never coming back. Who wants a condo in a 3rd world country. However could it also mean Canada is turning into the alternative safe haven?

#87 confused and a little crazed on 11.25.10 at 2:01 pm

Well… I FIGURE I ‘ll put my 2 cents in. Whether or not lower mainland crashes or a slow trickle down 30 % is based on a lot of factors. ie the west end is perceived as the golden goose while east van/ burn/ coquitlam as poor status .

we can’t live under the illusion of DEbt is good.
i sold 2006 again…sorry for recap. and every year my returns pay for most of my rent almost 90 %

so instead of $1300 mortgage / month plus utilities etc.
i pay about $150 / month so i keep most of my money and utilise all the relevant tax avoidance methods rrsp/ tfsa/ 50 % Capital gain exemptions.

over the last 2 years i’ve been getting better at it. YEs I read portions of your book garth…but been busy . I’ll read the rest later. however I was not a novice investor to begin with. I lost ,money in the dot com era and I wasn’t even buying dot coms but it just goes to shows you …everything was swept up in the craziness of fundatmentals don’t matter …it’ s different here and now.
But my fundamentals came back and I continue in buying value. It’s slow and it’s boring . but it’s true.
Course …if you’re good enough buy on spec obviously some one made alot of money … maybe you? :)

#88 confused and a little crazed on 11.25.10 at 2:07 pm

pS… cont

I did buy about 4K Nortel as well . lost it all obviously. I bought it at 60 / share

why is devil advocate on this blog so much …so many postings. Does he have that much time on his hands?

i wish my free time is that easy

#89 Renting in Rosedale on 11.25.10 at 2:14 pm

nancy 58

…There have been just three in this century: 1929, 1989, and 2000.” The author had edited it by changing “three” to “four” and inserting “2008″….

I hope none of our young future leaders reads that book, since it omits the panic of 1907 (50% drop) and considers 1929 and 2008 to be in the same century, which they obviously are not

#90 pjwlk on 11.25.10 at 2:20 pm

#10 kevinsmith: “people had no problem paying $150 green fee + $24 to park ( not a misprint ).”

I’ve heard that a lot of people in the US have stopped paying their mortgages. For most people that would make an awful lot of money available for other things.
For the new people to this blog:
Glossary of Acronyms, Terms, References & Abbreviations

#91 Lonely Limey on 11.25.10 at 2:31 pm

Interesting debate at another forum (Canadian Capitalist) started by a young fella posing the question below. ($500K starter home…. WTF!)

What is a young couple starting a family supposed to do to begin there lives?


We were taught at a young age to get an education and finish school. My wife is a university graduate after 8 years and I am a College Graduate after 5 years, check.

We were taught at a young age not to go into debt, so we both worked and went to school at same time to not have student loans, school has cost over $70,000k combined, check.

We were taught at a young age not to go out buy expensive things on credit, ok, both cars paid for (not attractive, yes they are older but run) no credit card debt and luxury items such as tvs, trips furniture are paid for with cash, check.

We were taught at a young age to save as much money while living at home, We are now few years away from 30 need our own space for our family and have saved almost $100,000 in cash together.

We were taught at a young age to always own your own home and not make your landlord rich by paying his mortgage. So we did, no we could not afford a 4 bedroom home in Toronto (2 children) we bough new up in vaughn, even though we commute to Toronto for work, the savings in a 4 bedroom in toronto vs vaughn is worth an hour in traffic.

So we bought new detached at an amazing price of $499k, yes alot, but in comparason to Toronto, Etobicoke, Mississauga, it was all we could afford on paper, that is a good area for children and within driving distance of Toronto.

Now doing everything we were taught in life, facing the fact of a $400,000 mortgage and children, when rates rise to 8-10%, we will not be able to afford our house, the math is simple. We are now locked into an agreement to purchase, our life savings invested, and a huge bubble burst on the horizon that nobody told us about, niave young couple trying to get a head start in life, hah we were fooled, not our family not our teachers not our banker, they told us we were doing great! THEY LIED!

We will go bankrupt.

We failed.

This economy is not forgiving on the younger generation.

You guys smile as your children and grandchildren pay the price.

#92 bigrider on 11.25.10 at 2:31 pm

#79-Devils advocate.

I always suspected that the 5% down crowd was a gross exaggeration in terms of the quantity of such buyers. Everyone I know in my neighborhood, people I associate with and in the older neighborhoods in general here in TO and the suburbs have there homes paid for, or at least, very small mortgaes(10 -20%) max.

Now I would be interested in knowing how many buyers/owners have say, 50-75% of there homes mortgaged. I suspect that group is very large. I Have no stats to prove but my point is these people would hurt bigtime as well should RE correct a relatively small 20-25% as equity would essentially be wiped out and assuming no other financial assets, net worth seriously damaged.

“I Have no stats to prove but my point.” Then you have no point. — Garth

#93 GregW, Oakville on 11.25.10 at 2:47 pm

Hi Garth, fyi, still flying? feeling safe, lied to, abused? Paying attention. artical

TSA turns off naked body scanners to avoid opt-out day protests

“Shutting down the “National Opt-Out Day” by turning off the machines is the only logical move for the TSA, of course: The agency needed a way to defuse the growing grassroots resistance to its criminal violations of Americans’ Fourth Amendment rights. So instead of facing what was sure to be widespread protest, the agency simply decided to turn off the machines for a day.

This action tells us all sorts of fascinating things about the TSA and its fabricated security excuses. Perhaps most importantly, it proves that the naked body scanners are not needed for air travel security in the first place. When it wants to, the TSA can just turn the machines off and resort to baggage X-rays and metal detectors. That’s worked for years, and it apparently worked today, too.

And yet, up until today, the TSA has insisted that the naked body scanners are absolutely essential to detecting hidden bombs, and that “travelers won’t be safe” unless they use the naked body scanners. So all of a sudden today it’s okay for the TSA to put air travelers at risk of being blown up?…”

#94 dark sad person on 11.25.10 at 2:57 pm

200 Utopia on 11.25.10 at 3:05 am

#130 dark sad person on 11.24.10 wrote:

“Anyone who thinks China is stupid enough to discard the $ and destroy the value of their own 2.6 Trillion USD’s in reserves and make themselves the biggest bag holders in history-doesn’t understand a lot”


You are a smart cookie many days Mr Dark and perhaps I have underestimated you. The reserves in China incidentally are not anywhere near 2.6 Trillion in US Dollars. This is often misunderstood. Those exchange reserve numbers apply to all of the countries that China does trade with and so some of that figure represents Can $, some is in Euro etcetera. The value of direct US trade as represented in dollars is less than 1 trillion by some recent estimates.


I don’t think it’s a matter of being smart at all-it’s about reading all the hype and then finding out if it’s true or even possible which most people don’t do and that is why most people are wrong-because they don’t research facts-

China does hold 2.6 Trill. in reserves and yes- not all of it is USD and not all of it belongs to China and not all of it is in USD’s but instead USD Cash equivalents-such as Treasuries etc. which earn interest-

The actual USD/EUR/JPY etc. that are held is to allow for China to handle hot money flows-mainly because the CNY is not easily convertible on international trade exchanges because China’s banking system is still not completely modernized-which is another reason that all the talk about China being the next reserve currency is complete BS-

The US runs the biggest trade deficit in the world (borrowing from foreigners)and whoever runs the largest trade deficit will see their Currency/Treasuries being held in the greatest amount of reserves–
Also China by law-requires Businesses that invest in China to hold the investment money in the PBOC–
So China holds those USD/EUR/JPY or whatever-in reserves without converting to CNY/Bonds-because of the fact that hot money can and does flow both ways-

During the crash of 07–China did use those actual Currencies held in reserve-to handle the hot money outflows as investors panicked and withdrew hundreds of Billions in a matter of a few days and had China not held them-who knows what sort of kayos it would have caused in the Currency markets as China would have been forced to print CNY’s and buy up those Currencies in vast amounts-

Another thing that most people miss-when talking about China dumping USD’s is that in order to do that-China must first auction/sell off their cash equivalents to convert them to actual USD’s-which would cause huge USD “demand”
The exact opposite of what most believe-

#95 Devil's Advocate on 11.25.10 at 3:05 pm

#81 Aussie Roy

On your rnet ratio rationalizations I don’t disagree with you Roy. But the fact is the metrics must return to a reasonable return being offered owners to entice them into the rental busines or to retain them in that business.

I not long ago sold a revenue property we bought cheap. It did not cap out at todays property values. Every day you don’t sell it for what you can you bought it for what it is then worth. So we effectively bought that property the day before we sold it and the rent did not provide a reasonable cap rate on the then value despite that we originally bought it at a quarter the current value.

So you get landlords leaving the business and none enticed into entering the business and pups and poodles looking for rentals in the face of a dwindling supply. Supply and demand Roy… it all comes down to supply and demand.

Of course this takes time… but it happens quicker than not even though not so quick as your arguement suggest it must or mine be a false one. Supply and demand… It’s just that simple.

Watch… it will happen just as I warned our city fathers that their cry for more rentals would soon be taken care of and they need not push the matter. Supply and demand takes care of all market imbalances given time. And that is just it… we are all too impatient

#96 Bottoms_Up on 11.25.10 at 3:08 pm

#80 Europa on 11.25.10 at 12:34 pm
why not the same rate? Should someone who only spends $1000 on a credit card be ‘rewarded’ with a lower rate relative to the fool who spends $10000?

In essence, borrowing from the bank is borrowing from the bank is borrowing from the bank.

Should someone who puts down 10% on a small 50k mortgage pay more than someone who puts down 20% on 600k?

Really, it should all come down to credit rating. Not how much ‘skin’ you have in the game (although I realize that this is how it use to be).

#97 GregW, Oakville on 11.25.10 at 3:09 pm

Hi Garth, fyi artical link below.
Were will your families food come from?
Will it have the required nutrients you need for good health? Have Canadian already lost the choice through trade agreements? Can we ever take them back?

Endgame Legislation: Lame Duck Session Ushers in Tyranny

“• Even direct sales of food between individuals could be defined as smuggling under the language of the bill.

• Codex Alimentarius, a global system of control over food and food supplements, would control all U.S. food and supplements. Access to nat ural food supplements would be removed under Codex rules.

• Control of all seeds would transfer to Monsanto and other global multinationals.

#98 Bottoms_Up on 11.25.10 at 3:10 pm

#79 Devil’s Advocate on 11.25.10 at 12:34 pm
There’s probably a disclaimer behind that 7% number. (i.e. of mortgages requiring greater than 80% financing, the average downpayment is 7%).

No. — Garth

#99 HouseBuster on 11.25.10 at 3:19 pm

This is how that Oavkille thing works… you sign up for a set appointment time, you get there and there are several others in the same appointment group. Then it is their time to arouse you and create a bidding war for you to sign. Better sign today, the price is going up in a few hours.

It reminds me of those marketers of knives, water filtration devices, and timeshares.

Get a group together play on their emotions and seal the deal!

Oh and they call them ‘statement’ homes! Huh? So you’re making a statement buying one of these homes?
And what statement would that be? That you are crazy and love leverage? Better rush and tell your friends.

5% down on 700k..that’s like playing the options game in stocks.

#100 Coraline on 11.25.10 at 3:34 pm

Devil’s Advocate: How on earth can your sample of 111 refute “any possibility” of Garth’s statistic holding true? Garth has given the citation for this stat more than once. Sometimes, I swear you drink before you post here.

#101 David B on 11.25.10 at 3:35 pm

And this on Thanksgiving Day in the USA: WSJ

The European Commission is pushing to double the size of Europe’s €440 billion ($586.52 billion) bailout fund for indebted euro-zone countries, according to people familiar with the situation.

But the proposal by the Commission, the European Union’s executive arm, has run up against opposition from Germany, the EU’s biggest economy, which is unwilling to expand the size of the fund

#1 Is it that simple countries can just print money and pass it around and all will be well “OR”

#2 Will governments be required to suck every last penny out of the working class to cover the costs while the rich and powerful pocketed the bailout funds?

Think, Think, Think just who stands to loose the most and in which G -20 country do they live in?

Which country is so rich it can spend over one billion dollars hosting a week-end party, laugh at those who have problems, tout their finance minister as one the smartest people on the face of earth “AND” have their Prime Minister tell the UAE to take their airport and shove it will be the next to fall on hard times as result of overpriced Real Estate?

Yup just wondering?


Oh well the rest of the world will be there willing to help us back up on top of the Canadian Shield after the fall.

#102 Hell in a Hand Basket on 11.25.10 at 3:35 pm

@ TO Bubble Boy # 1

You’ve hit the nail on the head. This wealth gap you speak of is the root cause of most social problems. Inequality is the main factor in crime, drug use, poor education.

#103 Bottoms_Up on 11.25.10 at 3:36 pm

It’s not all doom and gloom out there.

In a small neighbourhood in Ottawa there’s a 3 bedroom endunit town (with garage) that could be had for ~$310,000. 15 minute walk to U of O (40,000 students), 30 minute walk downtown, 5 minute walk to major bus hub, river.

Rental potential is $1800; more if the basement is converted to a room ($2200).

After paying property taxes, that’s 5.8% on your money (7.4% with an extra basement room rented at $400/mo). However paying utilities/maintenance could knock down those returns a percentage point or two.

(12*1800 – 3600) / 310000

Although I know Garth will argue you can make 5.8% in preferreds, and you don’t have to interview, keep or get sued by tenants, and you won’t be exposed to the impending decline in real estate.

For a billion shares in nortel, I’ll send you the link to the property. ; )

#104 Hell in a Hand Basket on 11.25.10 at 3:43 pm

@#11 Another Albertan

I hear what you are saying, and I also would like to add, what do you expect? We live in a profit driven system and sales are king. We can’t have honest interactions with people when profit is involved. So we either have to accept that or find another way of conducting ourselves and our economy.

So that is the question, how do we have an economy without profit?

#105 qqq on 11.25.10 at 3:43 pm

“The Financial Post carried a story on Monday wherein Finance Minister Jim Flaherty dismisses the idea that our country might face the same kind of property crisis as Ireland.

“The evidence is not there that Canada has a housing bubble. In fact, the evidence with respect to affordability of mortgages in Canada is solid and we have a stable market,”

#106 Vancouver_Bear on 11.25.10 at 3:44 pm

#18 TheBestPlaceOnEarth on 11.25.10 at 1:18 am

Tell us how Crapcouver is better than Seattle?
Seattle has same climate, everything is cheaper (food, clothing, furniture, homes), higher wages, lower taxes. Crapcouver sucks big time!

#107 Timing is Everything on 11.25.10 at 3:55 pm

“Emerging nations justifiably believe that excess U.S. dollars will flood into their local economies and cause real estate and other asset prices to increase even faster. Their response has been a mix of higher bank reserve requirements, raising interest rates and capital inflow restrictions.
Canada now has to be added to the list of nations that will be monitoring inflation for a too-rapid advance. With third quarter growth in Canada expected to be weaker than in the U.S. (revised to +2.5% from +2.0%), the Bank of Canada will be uncomfortable with the thought that it may have to resume hiking interest rates.”

#108 kitchener1 on 11.25.10 at 4:04 pm

Regarding the 7% downpayment average in Canada. My mortgage buddies as well as an RE agent all tell me roughly the same stat. They said that by far the average downpayment is 10% or under.

This is just a tiny dot of the pie but is in term of Toronto and GTA west.

Regarding Montreal:

Huge bubble, on par with Toronto, in the perception of local population. I travelled to Montreal quite often years ago and still do a few times a year. 50-60K a year is considered an awesome salary there by most people. That city lives on tourism for the most part, Just driving on the 40 last time I was there, I say a lot of closed offices and tons of for lease signs all over the place.

When the bubble goes, Montreals will probely take the biggest hit in terms of percentage points.

If you think that Toronto has bad fundamentals regarding RE, Montreal is much worse. Much lower wages, less demand, less immigration, higher taxes.

#109 Seen this in the States, but the government and MSM housing malarkey in Canada is only making it worse. on 11.25.10 at 4:07 pm

I’ve given up waiting, decided not to buy in Canada. I’m headed off to the US to buy a house there. Done it before, it’s no big deal. There is just no value in owning a house in Canada, unless you purchased it decades ago. There are too many greater fools in the Canadian housing market. At least I can miss the great Canadian winter and relax on some beaches.

#110 ALE on 11.25.10 at 4:13 pm

#80 Europa

Agree 100%.

However you don’t have to get gimicky with setting interest rates based on down payments. Abolish the CMHC (and in turn remove government interference and moral hazard) and the markets will take care of that all on their own.


#111 Seen this in the States, but the government and MSM housing malarkey in Canada is only making it worse. on 11.25.10 at 4:14 pm

… And the funny thing is that what all realtors I’ve dealt with in Kelowna are doing. Selling their homes here and buying in the US. It’s their industry and they are the experts; so I think I’m making the right decision in passing on Canadian real estate.

#112 why so glum? on 11.25.10 at 4:14 pm

re #90 Lonely Limey

I think you answered your own question “($500K starter home…. WTF!)”

This poor entitled couple played by all the rules and now they face ruin. Their biggest issue is that they’re whiners and have no imagination. They bought into the RE myth hook line and sinker.

Kids can be perfectly happy growing up in apartments, co-ops etc. It’s the parents who feel the need to show that they have “arrived” by buying the 2,500 s.f. house and taking on $400K of debt. Looks pretty smart when the market’s rising… don’t whine if you get caught on the turn.

Not much of a debate

#113 Macrath on 11.25.10 at 4:17 pm

The guy running the lottery pool at work had a simple method to dissuade the rational thought process.

Do you want to be the only guy left working here after we win ?
Answer: I`m in. How much do you want ?

#114 tran, Calgary on 11.25.10 at 4:18 pm

Is this the start of an avalanche?

#115 David B on 11.25.10 at 4:19 pm

Germany Rejects Plan to Boost Bailout Fund

Ha ah ….. perhaps that is why they build such great cars.

#116 Devil's Advocate on 11.25.10 at 4:27 pm

#88 confused and a little crazed on 11.25.10 at 2:07 pm

why is devil advocate on this blog so much …so many postings. Does he have that much time on his hands?

Like Garth I am being but a humble servant of the people. I just don’t have as much time as he does to write such editorials and moderate the postings of the pups and poodles. It’s the least I can do for a country that has given so much to me. ;-)

#117 Vancouver_Bear on 11.25.10 at 4:28 pm

#29 Freaked in Vancouver on 11.25.10 at 3:19 am

Crapcouver soon will be likea a 3rd world country, and ppl will start fleeing this city tired crime wars and worrying about their safety. Mark my words.

#118 Devil's Advocate on 11.25.10 at 4:31 pm

#100 Coraline on 11.25.10 at 3:34 pm
Devil’s Advocate: How on earth can your sample of 111 refute “any possibility” of Garth’s statistic holding true? Garth has given the citation for this stat more than once. Sometimes, I swear you drink before you post here.

Well then Caraline, let’s just agree that it is indeed different out here and that we don’t have nearly the debt service ratio you do out East. ;-) Do the friggin math Babe.

#119 Joe Q. on 11.25.10 at 4:36 pm

I believe that Garth’s 7% average down-payment number refers to 2010 (or 2009).

I.e. among all mortgages taken out in 2010, the average downpayment was 7% (meaning the minimum 5% down-payment is extraordinarily common).

Garth, correct me if I am wrong.

#120 Steven Rowlandson on 11.25.10 at 4:42 pm

I must concurr with posting #1.
Given the low pay, political correctness and the astronomical price of a roof over ones head it would not surprise me to see Canada join the ranks of failed states and third world countries. Shut off the flow of refugees and immigrants and Canada dies off and or goes broke. Some group of people made a big mistake long ago and now its starting to bite.


#121 kitchener1 on 11.25.10 at 4:48 pm

#95 Devils Advocate

regarding supply/demand for rental properties.

I can only speak to the ontario market as I have a few friends that are investors in the rental side.

Right now, in the GTA, there is a huge oversupply of rental properties on the market- condo’s, houses, townhomes etc..

A lot of good tenants have already purchased homes, a ton of people purchased 2nd homes as an investment, disregarding posistive cash flow and thinking about apprecitation. In the GTA, right now there is a lot of downword pressure on rents. These new property investors are going to get slaughtered. Tons of people brought homes with the intent of renting out basements and its a race to to bottom for basement rents right now.

Once again more downword pressure.

So, what we have in GTA right now is a short supply of good long term tenants with an oversupply of rental properties. Word from my buddies is that the housing tribinual in Ontario is crazy swamped right now with landlords serving eviction notices.

The big if to investors is when home prices drop– and they will- they will have to adjust rent downwords, which is impossible as they dont have posisitive cash flow now or if so, very little.

RE is the new Nortel or Bre x in terms of investment. When the smart money leaves, its the fools left. Every cab driver, waitress/waiter, blue collar worker/middle mangement type is screaming the virtues of RE and how its a money maker.

Ive seen this movie before and it did not end well. Sorry, but when the cab driver is telling me that REis the way to get rich, its game over.

Just like equity markets the world over, those that buy on margin are the first to be wiped out when the market turns against them, same will be true of RE.

#122 Aussie Roy on 11.25.10 at 4:52 pm

Of course this takes time… but it happens quicker than not even though not so quick as your arguement suggest it must or mine be a false one. Supply and demand… It’s just that simple.

Yes supply and demand. Supply of properties “on market” versus ABLE willing buyers.

Why is it so hard to understand as interest rates rise, investors have higher yield expectations but as displayed in my numbers without solid rises in income/rental yield, yields just wont keep up.

I still think you should blow the dust of your calculator and punch in some interest rate/rental yield scenarios, it will either make you cry or laugh.

Im not suggesting for a moment 10% interest rates but to give yo a start what if they were.
At what rental yield would you be a happy investor, then price one of your houses based on its current cashflow.

Your theory works with low multiple of household annual income as debt but look at what happens when you have 5,6,7,8 times income as a mortgage. Do you get it now.

This little pup/poodle says, you need a new theory.

#123 Crash Callaway on 11.25.10 at 4:55 pm

Boy I bet Garth’s recount of the tale about that 5,000 dollar Titanic deck chair & the extermination of that Viper had the yuppies that read this blog running for a diaper change!

Emotion will only keep your ship afloat for so long, eventually everything must be backed up by reality and you either have to bail or paddle like hell.

No free ride or lunch.

#124 Dirt Dog on 11.25.10 at 5:06 pm

#60 Devil’s Advocate

Dude get real, a monkey could have sold real estate in the last 10 years. Time for an enema in the industry. I started in 1982 a great training ground.

See you in the trenches.


#125 Scott on 11.25.10 at 5:18 pm

So how much time do you guys think we have left until a crash?

Spring 2011? Or do you think things can hold until 2012 …

#126 Aussie Roy on 11.25.10 at 5:34 pm

DA Here you go maybe no batteries in your calculator

Scenaro 1 prices 3 times annual income
Income 30k
Interest rates 5%
Mortgage 90k
Rental return (based on 33% of average income paid in rent) 9.9k a heathly 11%
Interest rates rise by 1% (an extra $900)
Rent is increased by 9%

Scenaro 2 prices 6 times annual income
Income 30k
Interest rates 5%
Mortgage 180k
Rental return (based on 33% of average income paid in rent) 9.9k thats 5%
Interest rates rise by 1% (an extra $1800)
Rent is increased by 20% ?

Its the leverage measured in terms of actual income you have overlooked.

#127 jess on 11.25.10 at 5:48 pm

Dean Baker, Monday 22 November 2010

“Ireland should ‘do an Argentina’The Irish people expected to pay in austerity cuts for their banks’ sins have another option. Reject the ECB and IMF, ditch the euro”

…”It is worth remembering that Ireland’s government was a model of fiscal probity prior to the economic meltdown. It had run large budget surpluses for the 5 years prior to the onset of the crisis. Ireland’s problem was certainly not out of control government spending; it was a reckless banking system that fueled an enormous housing bubble. The economic wizards at the ECB and the IMF either couldn’t see the bubble or didn’t think it was worth mentioning….”

For Immediate Release: April 4, 2007
New Report Raises Doubts about IMF Growth Projections
Questions of Flawed Analysis, Political Bias in Repeated Large Errors for Argentina, Venezuela


#128 jess on 11.25.10 at 5:50 pm

Nov. 25 (Bloomberg) — The number of foreclosed homes for sale in Spain may triple next year as new accounting rules prompt lenders to dump their depreciating assets, according to the co-founder of a website that advertises repossessed properties.

About 100,000 houses and apartments owned by banks are now on the market, Fernando Acuna said in an interview. A quarter of them are listed on the website operated by his Madrid-based company, Pisos Embargados de Bancos, on behalf of 25 banks.

#129 northern_dirt on 11.25.10 at 5:56 pm

#18 TheBestPlaceOnEarth

The Majority of Asian immigrants come to Ontario..

#130 Debt's Dark Embrace on 11.25.10 at 6:00 pm

#106 Vancouver_Bear on 11.25.10 at 3:44 pm

#18 TheBestPlaceOnEarth on 11.25.10 at 1:18 am

Tell us how Crapcouver is better than Seattle?
Seattle has same climate, everything is cheaper (food, clothing, furniture, homes), higher wages, lower taxes. Crapcouver sucks big time!
And don’t forget that you can write off your 30 year mortgage and use that to purchase top notch health insurance.

#131 TheBestPlaceOnEarth on 11.25.10 at 6:10 pm


Let’s start with Traffic and because this is a housing forum, there is more demand from Asia for Vancouver than Seattle. Seatlle’s a great place and still very expensive place to live. Vancouver is an incredible success story, for some reason this gets under your skin
Tell us how Crapcouver is better than Seattle?
Seattle has same climate, everything is cheaper (food, clothing, furniture, homes), higher wages, lower taxes. Crapcouver sucks big time!

#132 april on 11.25.10 at 6:11 pm

#105 qqq
What do you expect Flaherty to say.He needs to keep up with the rosy picture so we keep spending. How can anyone with half a mind believe these politicians. Their are out and out liers. They played it down in Ireland too. [It won’t happen here. Safe banking etc] Now look at the state of the country. The collapse in Ireland was predicted back as far as 1998. Check it out. There are people who saw it coming in the US long before it started and people here including Garth see it coming to Canada or has started already. Scared people who don’t want to see their asset decline need to believe in the delusion touted by the RE pumpers.

#133 TheBestPlaceOnEarth on 11.25.10 at 6:13 pm

Every economist in the land could write the same story and people on this forum would claim it lunacy. People need to come down and see what’s happening. Richmond, BC over 50% Asian with whole neighbourhoods being bulldozed with monster homes being erected. Garth has yet to address how Canada is going to force Asians to stop buying homes when only a small percentage of their net worth is invested in a house
Freaked in Vancouver on 11.25.10 at 3:19 amTo Contrarian Canuck #6
The Globe and Mail article wasn’t pumping, they got it right. I hated the article, but it described exactly what is happening in Vancouver, thanks to the rich Chinese taking over. The article tells you why prices are not going to go down and will probably keep rising, thanks to our government’s immigration policies. House prices in Vancouver have already gone up approximately 10-12% just in the last year. And interest rates don’t matter when you can pay cash. How depressing. But at least the G&B is telling it like it is. One realtor wrote in the local paper recently that to these buyers, 2.5 million for a house is “chump change”. What hope do the rest of us have?
Garth, time to change your tune.

#134 tkid on 11.25.10 at 6:41 pm

#91 Lonely Limey, I have no sympathy for anyone purchasing a $500,000 house who won’t be able to afford it at an 8% mortgage. The older generation lied? The older generation had mortgages of 22%! Those with 8% or 9% mortgages at the time thought they were damn lucky to have them!

You get a mortgage for 4% = you’ve been given the incredible good fortune to have been given the deal of the century. Only the most egocentric, self-absorbed, narcissist doofus would then complain they’d been lied to only because they BOUGHT TOO EXPENSIVE A HOUSE!

#135 Another Albertan on 11.25.10 at 6:51 pm


Honest interactions are completely and totally possible in a profit-driven economy. Any serious businessperson will have no problem paying a vendor margin (and serious margin, in some cases) if there is a significant and quantifiable added-value that occurs through the use of said products and services. We’re willing to pay for intellectual property and creativity. We’re unwilling to pay for outright margin padding.

You have open discussions when you are perceived as being an honest and fair broker. Anyone not willing to come to the table or who shies away from dealing in a forthright manner will have an allergic reaction and will run away. The self-culling of the herd suits me just fine. It saves me a swing of the bludgeon.

Your mileage has apparently varied.

#136 Alan on 11.25.10 at 7:09 pm

One of the things people fail to realize is that Canada as a whole, has a very open imigration policy and property purchase freedom. In many countries, true imigration is not possible. Property rights and ownership are not possible in many countries for foreigners. Canada has both and for those people that have wealth, purchasing property is the best way to move your money into Canada.
Lastly, Canada has infrastructure, social policy, education, medical care and rule of law. Canada represents wealth and prosperity. The USA represents a dieing civilization to outsiders (arguably) Increased crime and taxation.

#137 JB on 11.25.10 at 7:16 pm

Someone bought a condo for over $1,000,000 today in Saskatoon… It was -27C this morning…. I don’t know which one of these facts made me more sick to my stomach.

#138 Kevin on 11.25.10 at 7:23 pm

You are at a party, and you get bored. You say “This isn’t doing it for me anymore. I’d rather be someplace else. I’d rather be home asleep. The people I wanted to talk to aren’t here.” Whatever. The party fails to meet some threshold of interest. And then a really remarkable thing happens: You don’t leave. You make a decision “I don’t like this.” If you were in a bookstore and you said “I’m done,” you’d walk out. If you were in a coffee shop and said “This is boring,” you’d walk out.

You’re sitting at a party, you decide “I don’t like this; I don’t want to be here.” And then you don’t leave. That kind of social stickiness is what Bion is talking about.

And then, another really remarkable thing happens. Twenty minutes later, one person stands up and gets their coat, and what happens? Suddenly everyone is getting their coats on, all at the same time. Which means that everyone had decided that the party was not for them, and no one had done anything about it, until finally this triggering event let the air out of the group, and everyone kind of felt okay about leaving.

— A group is its own worst enemy,

(Sums up the real estate market fairly well, IMO.)

#139 Utopia on 11.25.10 at 7:27 pm

#100 Coraline on 11.25.10 at 3:34 pm

“Devil’s Advocate: Sometimes, I swear you drink before you post here”.

Too funny Coraline. I was thinking the same thing.

#94 Mr Dark…. You made some good points.

#140 Crash Callaway on 11.25.10 at 7:34 pm

#136 Alan

I’m in Alberta and I want move to the country you just describe.
Have you tried accessing health care in the last decade?
You must be healthy (not needing it) or
Wealthy (able to buy it elsewhere)

The social policy is there if you build cars or run a bank.
Tried talking to a grad recently… oops I mean’t texting.
but don tex any ting mor dan tree let er’s dud e

Canada sounds like a nice place.
Is there a Disney World up there?

#141 conf in T.O on 11.25.10 at 7:45 pm

#136 Alan

Alan, can you please show us all factual data that proves immigrants actally have money to buy real estate with greater than 5% down?
Bringing in the immigarnts isn’t going to endlessly prop up this house of cards in real estate. It has already been discussed in this blog and no less than a score of factual reasons why it’s not the savior.
As for the US, Canada has beeen a follower of the US for 100 yrs of history so…be carefull what you predict for them as we will follow in their shoes as we are presently doing.

#142 conf in T.O on 11.25.10 at 7:47 pm


Why do you even argue with that “best place on earth” kwak!!!!

#143 Sail1 on 11.25.10 at 7:51 pm

#79 Devil’s Advocate

Thanks for the info, good to see these numbers.

#144 Freaked in Vancouver on 11.25.10 at 7:52 pm

#133 TheBestPlaceOnEarth
#136 Alan

Thank you for supporting what I wrote in item #29.
The Chinese (not Asians…CHINESE) are almost singlehandedly responsible for the incredibly high RE prices in the greater Vancouver area. And it’s because of Canada’s lenient immigration policies. Who can blame the Chinese? If somebody offered you their country on a silver platter for a few bucks, wouldn’t you take it? I blame our short-sighted, brain-dead politicians who should be held accountable for this mess which has left our citizens out in the cold as far as owning a decent home for a reasonable price, at least in the BC lower mainland.
Why would these immigrants want to move anywhere else in Canada? Everywhere else has 6 months of winter, and a longer flying time to get back “home” where they make and keep their money safe from the Canadian taxman. Why would they want to move to the US when we have essentially free universal health care, and our cities are safer, etc. etc. Canada is seen as a much better choice for some very good reasons which are obvious to anyone who looks beyond the MSM.

You’d make a good Nazi. — Garth

#145 jess on 11.25.10 at 7:54 pm

…”Louis Berger agreed Nov. 5 to pay $69.3 million in civil and criminal penalties and accept a “deferred prosecution,” which means federal charges would be dropped only if the firm complies with its court agreement with the government. The deal, however, allows the firm to continue competing for U.S. government contracts.
Louis Berger is among the U.S. Agency for International Development’s largest contractors in Afghanistan.

#146 Moneta on 11.25.10 at 8:05 pm

We will go bankrupt.

We failed.

This economy is not forgiving on the younger generation.

You guys smile as your children and grandchildren pay the price
It sucks but that is life.

Why did the Vikings have to work their butts off in the cold while the French sipped their wine?

Why do we only get 1 or 2 harvest while Many American farmers get 3-4?

Why should the Bengladeshi suffer floods while Canadians keep on drinking margaritas in Florida?

Since the beginnign of times, life has been unfair and people have fought ro improve their lot. Canadians have forgotten their roots and more importantly that there are billions ready to pull the carpet from under their feet.

An entitled bunch, that’s what we are.

#147 Moneta on 11.25.10 at 8:18 pm

I’m in Alberta and I want move to the country you just describe.
Have you tried accessing health care in the last decade?
You must be healthy (not needing it) or
Wealthy (able to buy it elsewhere)
Firstly, you’re in Alberta. Don’t most Albertans want little government?

Secondly this will not be a Canadian problem but one generalized in the develped world.

20 years ago, Canada knew it would have an ageing problem. It could have invested in everything that was health care related and become the premier health care center in the world. But it didn’t because health care is a *cost*.

Ironically, every sector is a cost in our country because we barely produce any final product.

But boomers preferred to put their money in McMansions and Nortel… all cost centers by the way.

#148 doctore on 11.25.10 at 8:26 pm

What we need to have happen is for the bond vigilantes to look toward Ontario and Canada give a wake up call, that debt financing might be a problem. Fortunately though, the odds of Canada defaulting on debt payments is extremely low.

#149 dark sad person on 11.25.10 at 8:29 pm

A tune for Devils Advocate–

#150 Alister on 11.25.10 at 8:34 pm

Us Canadians are so smug – yeah we are a power house – yeah the rest of the world is in sick shape but not us right?

All it will take is one investigative reporter from a world financial mag to reveal how indebted Ontario and Ottawa and qwasy government organizations, like Ont Hydro are and bang – we can be Ireland overnight. You know 10% bonds.

Do what Garth says – get liquid and debt free before something hits the fan.

#151 Freaked in Vancouver on 11.25.10 at 8:36 pm

Re: item 144 to Garth
Please read my posting again. I am criticizing our government and how their policies have made home ownership for those born here an impossibility, or nearly so. Does that make me a Nazi???

When you blame ‘foreigners’ for your own problems, it’s a good start. — Garth

#152 ballingsford on 11.25.10 at 8:38 pm

The stock market is supposed to be a sign of stability and an indication that things are improving. Why is it that all the movers and shakers lately have been stocks that are selling for under $1.

Something strange and manipulative going on here to make the impression that things are getting better.

Do you wonder “”who”” ‘would have an interest’ in playing around with large amounts of cash to distort the markets by buying and selling these penny stocks and pretending this is one of the indications of recovery?

I do!!!

#153 Ret on 11.25.10 at 9:00 pm

#1 Globe & Mail link

So if I invest in the US, my income or gain from that investment is basically fully taxable at Canadian rates. I can’t really lie because many US banks share their records with Canadian authorities. If I am caught, I can expect to be heavily fined, or worse.

The revenuers here even have the unmitigated gall to ask Canadians to declare on their income tax forms any property owned out of the country that is worth more than $100000.

Meanwhile, my new Canadian neighbours do not declare to CRA business empires, millions of dollars of income, and multiple properties around the world. All the while they are hoovering up all the Canadian benefits that they can.

The fact that our current politicians continually suck up to people who have yet to make a real contribution to the country is difficult to take. To roll out the red carpet to tax cheaters is enough to make one hurl.

Thank you Canada!

I hear the Chinese are also responsible for your inadequacies. — Garth

#154 Nostradamus Le Mad Vlad on 11.25.10 at 9:04 pm

#84 Live within your means — “. . . they would never invest again.”

Hi LWYM — from what I know, a TFSA should be called a TFIA — Tax Free Investment Account, as the net proceeds can be withdrawn on a tax-free basis, or the amount can be reinvested in other companies plus an individual can choose their own investments.

By avoiding CSBs, GICs and Money Market Funds, my choice would be junior mines (some selling for under $1 a share, but with proven reserves), health services (we’re all getting older), utilities and gold / silver companies.

Maybe Garth could give some examples.
3:30 clip The Euro is dead! Where are politicians like this when the populace needs them? Plus — Memo to Ireland “Tell the EU and IMF to Shove It!”

There it is. Bad Guinness caused Ireland to break up, along with the Koreas getting all antsy with one another via a small FF.

Electricity and gas bills heading up. We’re slowly emerging from a block of ice — GW my ass! Plus — Winter Woes

7:05 clip Civil War #2?

The best teacher is history, but how little we learn.

#155 pablo on 11.25.10 at 9:25 pm

I saw an interesting documentary via youtube last night regarding the economic collapse of Argentina. The salient points that I gathered were; 1/ the country was opened up to the imf fraudsters, international banksters, multinational corporations, gun runners, dope peddlers, and money launderers because of a corrupt government
that towed the line of the globalist elite. 2. these players all took their share in the rape and pillage of this country that at one time had negligible foreign debt, produced 95% of what it consumed and exported finished manufactured product to the rest of the world.

It would appear that the same process is being implemented against north america and Europe by the same gang of globalist elite that have plundered this planet for centuries.

Google; “economic collapse of Argentina” if you want an explanation or preview of what’s happening to us and how it’s being done right in front of our eyes.
OR “don’t worry, everything is fine, please continue on to your next shopping experience.”

#156 T.O. Bubble Boy on 11.25.10 at 9:29 pm

The Globe & Mail article is not stating that the wealthy Chinese RE buyers will save the market… not even close.

It is simply saying that there are a lot of Chinese businessmen with a LOT of cash, and for political reasons, some of these individuals want to buy property outside of China to get some money out — just in case the government decides to keep more of it.

“A common scenario for an investor immigrant from mainland China unfolds like this, explains immigration lawyer Steven Meurrens: One member of the household qualifies under a category of the Business Immigration Program and posts a $120,000 bond in lieu of making the $400,000 investment stipulated under the program. (Some qualify instead as “provincial nominees,” and follow a somewhat different scenario involving an actual investment.) Portions of the money are divvied out to various immigration advisers and service providers, while the interest accrues to the federal government, which in turn spreads it around to provincial governments—about a half billion dollars annually of late. Essentially, the money is treated as the cost of Canadian entry—although in a further wrinkle, many breadwinners never move to Canada, instead retaining their offshore jobs or businesses as well as Chinese citizenship, to maintain their income stream and taxpayer status in China, which helps shelter income from higher Canadian taxes.”

How this even ties into the “bubble” debate is confusing to me… having one pocket of a city (Dunbar, in West Vancouver) where $2M homes are sold to offshore interests on a regular basis doesn’t mean that the entire city’s RE market is risk-free.

That’s like saying “well, Toronto has the Bridle Path neighbourhood, and rich celebrities like Prince and Celine Dion (plus a bunch of rich businessmen) own multi-million dollar houses there, so everywhere in Toronto is a safe real estate investment”.

#157 S.B. on 11.25.10 at 9:49 pm

Of interest:

The Financial Post reports in its Wednesday, Nov. 24, edition that demand for preferred shares should rise in 2011. The Post’s Jonathan Chevreau writes that demand may spike with the arrival this week of two new exchange traded funds. Preferred shares are hybrid investments with bond-like yields and offer safety while providing stock ownership. The dividend tax credit makes Canadian issues attractive in taxable portfolios. A handful of mutual funds focus on them but fees eat up almost half the yield. ETF fees are a fifth as high, but until this week, the only entry was Claymore S&P/TSX CDN Preferred Share ETF, launched in 2007. Its annual fee is 0.48 per cent and $600-million is invested in it. It “provides access to a pretty difficult and illiquid marketplace.” The Canadian preferred market is $32-billion: a fraction of the bond market. On Monday, BlackRock Canada’s iShares unveiled the S&P/TSX North American Preferred Stock Index Fund (CAD-Hedged). Then on Tuesday, AlphaPro Management debuted its actively managed Horizons AlphaPro Preferred Share ETF. That sets it apart from the passive approach of the other two, which track preferred share indexes.
� 2010 Canjex Publishing Ltd.

#158 S.B. on 11.25.10 at 10:52 pm

A low-income Sydney, N.S., family fed up with renting says they bought a home at a tax auction for roughly $1,000 and are now working to fix it up.

“It may not be a castle, but it’s mine,” said Cheryl McGrady, standing in the kitchen of her 100-year-old home.

There is a hole in one of the kitchen’s walls, exposing new copper pipes that replace the ones that were stolen before McGrady and her fiancé bought the house for their family of six.

“That’s where the water pipes were taken out of the house,” McGrady told CBC News. “Somebody had come in at some point and snipped every piece of copper that they could get to.”

Read more:

#159 jwkimba on 11.25.10 at 10:53 pm

#10 I just got back on Sunday from a week in Phoenix and Vegas. I lived in LA from 2000-2005 so visited veags frequently. Haven’t been since 2008. I was stunned/amazed by two things
1) the new bridge near the hoover dam. Wow.
2) the empty feeling of vegas. Half the tables at bellagio were closed on friday night at 1am. The strat had 3 of 12 poker tables running all weekend, and those weren’t full. The lineup for the main street buffet – sometimes *hours* was about ten minutes, and we got ten % off just for having players club cards. I’ve never seen vegas that empty. we were, literally, playing football on the strip at 2am sat morning No cars, no people, clubs closed.

We were helping a friend unpack in phoenix. He bought a house with a credit card and moved from philly. He got no interest until June 1 2011 offers. So he has 9 months to pay off the 18,500 he spent on his 3/2 house. He figures he’ll get another offer on a different card by then, but if not he’ll use his overdraft and some cash from this IRA to pay it off….

I don’t know where you were, but everywhere we turned were closed business and one that looked like they were about to. The used furniture store in phoenix was just insane – they had stuff stacked to the ceiling from ‘the walkers’ We bought a $50 dining set and they threw in a 60″ projection TV (the rear projection type, but it’s freakin huge!) for free just to get rid of it.

#160 Taxpayer like everyone else on 11.25.10 at 11:21 pm

49 Brian T – So I’m being greedy by saving in my RRSP?
Please explain how that works.

#161 Alan on 11.25.10 at 11:55 pm

Crash, Conf et al,

I don’t have to prove that immigrants have more than 5% to put down because I never suggested it in the first place. Wake up and see what’s happening. Chinese have been buying in Vancouver/Canada since the mid nineties in increasing numbers. Maybe you can come up with your own reasons.

Crash, I appreciate your sense of humor. I never suggested our health care was good. I just said it was free or provided by the tax base. Optics are what’s selling Canada. You know it’s a different story when you get here. right?

#162 Timing is Everything on 11.26.10 at 12:04 am

#124 Dirt Dog said – “Dude get real, a monkey could have sold real estate in the last 10 years.”

Come on….Give him (DA) a break..

…at least a trained monkey.

#163 45north on 11.26.10 at 10:32 pm

Lonely Limey: facing the fact of a $400,000 mortgage and children, when rates rise to 8-10%, we will not be able to afford our house, the math is simple.

well you have my sympathy. You said you signed an agreement to purchase? What if you renege?

I tell my children not to buy a house. My youngest son is moving into a rented apartment. It is déclassé