The bullet-proof Hummer growled through the north-west corner of the GTA this week, and into a world of hurt.
There are some 450,000 people living in the City of Brampton, which makes it about the tenth biggest urban mess in the country. In fact, it’s been one of the fastest-growing, adding about 7% a year, which has made the fringes of the place look like one giant, creeping, voracious construction site. Until recently, of course.
Now nothing’s growing faster than For Sale signs. They kinda define the place, popping up on every deadeningly similar suburban street, in front of hundreds of houses with butt-ugly garages stuck on the front, and nailed into skinny yards sandwiched between endless minivans.
Check out the cartel’s web site at mls.ca, and see what I mean. Even on a December day, after a mass of listings expired with the old month, the map is awash in angry little red dots. Too many, I hear, have sad stories lurking behind them. So many powers of sale (Ontario’s term for foreclosures), in fact, that agents like this one have carved out a solid business in the burgeoning vulture trade.
Agents and mortgage brokers I know in the intensely multicultural city tell me sales continue to plunge. Seem house-horny hormonal young buyers have fallen out of love with the place. Many are now moving on to oases of cultural gratification, like Milton. But, of course, there are no ready statistics to verify what agents’ eyes and bank accounts tell them.
That’s because the Brampton Real Estate Board has not made public any numbers for about 100 days – since last summer. Internally, of course, there are some. Not pretty ones. In October, for example, only 540 deals went down, a decrease of 25.5% from a year earlier. The average price for a detached home in the teeming region west of Highway 410 actually declined over the past 12 months.
Now this is only a single city of about half a million people. But it’s one that has absorbed a huge amount of the annual immigration into the greater Toronto region, where development land is plentiful and local politicians get creamy whenever they see a backhoe. Brampton has an unemployment rate of just 6.6%, which is a full three points less than Toronto, and every strip mall has a mortgage broker ready to fill your trunk with cash at two per cent.
So, huh? Why’s real estate dying on the vine?
Well, you can figure it out. I think it has something to do with monumental household debt, flatlined salaries, tapped-out consumers and frayed household budgets as the cost of daily living rises while the value of an ugly semi withers. And save some credit for the Bank of Canada. Emergency mortgage rates created an orgy of buying, borrowed all the demand the future had to give, and delivered up a wasteland in its wake. Now rates can go to zero, and it’ll hardly matter.
Need I say it again? The most dangerous asset class in Canada has a door on the front.
And for further proof, come roll into The Peg with me for a minute. Sue sends this report: “Hi Garth, Thought you might like to know that a beautiful historic 6800 square foot mansion in Winnipeg just sold for $870K. It was originally listed for $1.5 million last summer. The house was in great shape and located in an excellent neighbourhood.
Lately we routinely see price drops on local real estate listings. Nothing as dramatic as 6 Ruskin Row but things are definitely shifting. My husband and I live not far from this beauty, in a house which we used to own. We sold it about a year ago and now rent it.”
Chester D. Stovel just rolled over. He built the place in 1910, complete with Tyndall stone above the windows, 20 rooms and 2,500 square feet of entertaining space on the main floor alone. The dining room features Circassian Walnut panelling and the original Scottish-made stained glass windows.
It’s now sold for $128 a square foot.
Sue looks out over her back garden at the mansion and shakes her head. These are the days of acuity.
157 comments ↓
bullet-proof Hummer? Talk about a depreciating asset in a world of rising energy prices…
I should start a blog on the cost savings of driving a four banger and what to do with the extra cash.
DA from his 20th or so post of the day
– This is the showstopper
…… “For example – I am a HUGE advocate of increasing the minimum qualifications in order to become a REALTOR to include a required relevant university undergraduate degree.”
Community college, one semester would be a stretch to keep even the village idiot engaged.
Just because you became a realtor after taking a university education does not change the education level required to mislead young hormone nesting families with significantly more market info and many motherhood homeowning statements.
Thanks for the belly laugh.
Hope you stick around. You are getting really funny.
A real estate board witholding sales data ( as you mentioned the Brampton board has done) should be dealt with in the same manner as a price fixing scheme would be….as a criminal act. This type of behaviour should be an affront to all Canadian consumers who have a right to know what the current prices are in every area. This ‘witholding’ is tantamount to a ‘bait and switch’ which is also punishable under the Consumer Protection Act. Sadly it is typical behaviour of real estate agents and their pimps….another attempt to mislead the public for their own ends. Shame on the Brampton board and all who sail her.
As you say ‘zero rates at this point won’t matter’. This is exactly the case…the system has almost wrung the system dry of suckers….like any Ponzi scheme.
I just hate when we have to watch those suckers line up on the six o’clock news crying “Why didn’t the government do anything” and bawl for taxpayer assistance.
The suckers who bought into the $600K pop corn shack on the fringes of civilization who are now stuck with $4000 a month soul sucking mortgages have been gut shot…they’re dying a slow death… These ‘kings of finance’ now look at the $100K gross pay numbers from their ‘good paying mortgage supporting job’ and see the egeregious amounts being raked off to stuff the stockings of the fat civil service pensions and they are getting desperate…this will turn to anger soon enough…then desperation.
It’ll start soon enough when they have to start turning the wife and kids down for simple things……The ‘austerity’ Canadians will suffer will begin at home first…..The very site of those granite counter tops will trigger depression.
Brampton is multicultural? It’s 99% Indian. How is that multicultural?
You could give me a 20,000 square foot mansion in Winnipeg for free and I wouldn’t take it. Hell… you could give me the whole province and I wouldn’t want to live there.
Good. Now two provinces don’t want you. — Garth
Bull Opinion – “Vancouver bears better realize that there has been, and continues to be, a demographic and cultural shift. If you don’t want to buy into this new normative order, time to leave.”
http://wp.me/pcq1o-1B5
“The spring should be revealing, yes, but, until then, bears such as us have to admit that the fall market is showing more resilience than we’d anticipated. Prices are rather flat, but sales have bounced more than we’d have guessed since the summer. Is this noise? We’re not sure.” -vreaa
Earlier this fall, when disproving the myth of the RE market being saved by immigrants, I had written that Brampton would be ground zero in the GTA just as Surrey would be in the GVA (and also Vancouver Eastside). The mainly Punjabi immigrants in Brampton are mostly employed in the taxi or trucking trades and must have at least 4 incomes per household just to make the minimum payments. They were all suckered by the unscrupulous mortgage brokers of their own ilk but now the transportation trades are not so hot, and the cost of everything that is needed has risen. And since there was margin for safety in their transactions, large tracts of Brampton will one day resemble Detroit. Next in line will be Mississauga to be followed by Markham, Oakville, Richmond Hill etc. All the mafia money in Woodbridge / Vaughan might protect it a while longer than the other parts but not for long. And pain, severe pain will be felt everywhere from Oshawa to Niagara Falls. 50% from to bottom is not at all out of the realm of possibility.
In other news…. The CIBC’s estimates notwithstanding the US housing market ain’t getting out of negative equity this half century let alone this decade.
Garth – Interesting post.
I have a different view of things. 878 properties for sale in Brampton is an exceptionally low number of angry red dots for a city of that size.
I see the same thing going on in Markham – listings continue to drop. Last May, Markham listings were just shy of 1600 properties – now down to 600 properties.
My view is that the only thing keeping prices from plummeting is the lack of new supply – sellers appear to be keeping their properties off the market.
I have spoken to many people, however, who have indicated they are looking to list in the spring. The prevailing sentiment is that the market is soft right now, so there is little point in listing when you can make more in a couple of months.
My view is that the spring market will bring the first significant wave of price depreciation, as months of listings flood back onto the market. TREBs charts on listings show the same trend for the GTA – with current year listings worse off than 2008.
http://www.torontorealestateboard.com/consumer_info/housing_charts/index.htm
Thoughts?
“….borrowed all the demand the future had to give…”
I think you’ve hit the nail on the head with that statement Mr. Turner.
Garth,
Here is one more interesting marketing strategy by River Front in down town Calgary:
LIVE EXPENSE FREE FOR A YEAR
No condo fees for a year
No taxes for a year
Free Downtown Entertainment Package
For the next 15 customers, Riverfront Pointe will pay the condo fees and the property taxes for 12 months up to a maximum of $5,000 for both.
The Downtown Entertainment Package; purchasers will receive a pre paid credit card with a value of $5,000 dollars
Each suite comes with 12 months Telus Digital TV and High Speed Internet, a wireless modem and PVR, a value of $1200.
Total package to be worth up to a value of $11,200.
http://www.riverfrontpointe.com/
And I checked Kijiji for rental property. There was one from Riverfront sitting in the rental market from October 18 2010. They are asking $1350/month only.
http://calgary.kijiji.ca/c-housing-apartments-for-rent-2-bedroom-Brand-new-downtown-condo-with-fabulous-views-W0QQAdIdZ236903371
Things are changing hard and fast in the Cowtown…
“the map is awash in angry little red dots.”
Garth, you are such a good writer. Do you ever get tired of writing about the same subject day in and day out?
What’s more pneumatic than money? — Garth
Kelowna has a 1/4 of the population as Brampton and there are over 1100 for sale.
Garth I love the writing and commentary. Keep up the good work.
So, huh? Why’s real estate dying on the vine?
Well, you can figure it out. I think it has something to do with monumental household debt, flatlined salaries, tapped-out consumers and frayed household budgets as the cost of daily living rises while the value of an ugly semi withers. And give save some credit for the Bank of Canada. Emergency mortgage rates created an orgy of buying, borrowed all the demand the future had to give, and delivered up a wasteland in its wake. Now rates can go to zero, and it’ll hardly matter.
*****************
That’s a good point and one that the Inflationist’s and Hyper-inflationists can’t seem to get past in their long drawn out weary arguments that
“IT IS HERE NOW”
BS–
If you actually believe that-do a 5-35 Mortgage and buy a house-in fact buy 10 houses-because Houses/RE are one of the best asset classes to hold in Inflation and even better in Hyper-inflation and the more debt you can put against it-the better-
My oh my, and all this is happening before the real party gets going…wait until we enter a long term period of rising rates…ought to happen no later than end of 2012…RE should be the worst asset to own through at least 2015, maybe longer.
All the while, most of the homeDEBTRENTERs, otherwise known as home”owners” to the average joe for the typical buyer of the last 5-6 yrs. will think they had it figured out all along…can anyone say mass delusion ?….most of these people used heavily subsidized debt (subsidized by taxpayers and savers) to enter into a wickedly leveraged deal on an asset that is illiquid and very poorly diversified…they are in fact paying INFLATED rent to the banks and lesser degree to governments..
Watch the rate of change in consumer and mtg debt folks..it is not looking pretty…China’s leading indicators are looking scary (big bust comes China’s way)..euro region is one step away from all out disaster..although I still think the US or Japan will blow first…
Life will be good again, but it will be a long time coming….enjoy the scotch while you can afford it.
JO
Even this issue of MoneySense mag has dire warnings about our new austerity in Canada. Reminds me of “After the Crash”
Garth, when is your new book due – February? I sure hope you can give us a title and a preview in advance on this site – I am so looking forward to reading your new book.
I agree VREAA, the Vancouver market is very strange, I would have thought it was going to go down by now, but sales is still looking strong.
What’s your opinion on this Garth?
Patience is not a strong point on this blog. — Garth
#7DSP-NO-only RE desired by those whose funds have not been destroyed by the hyperinflation (foreign interests or the minority not harmed by the hyperinflation)-the majority of NA RE would go down in value during a hyperinflationary collapse, as the cost of necessities skyrockets. I am not predicting hyperinflation, just pointing out that whoever told you that RE always performs well with very high inflation didn’t think it through at all.
I truly believe it’s beginning to happen all around me. Cowtown sales down big, Etown’s been down for a while, Winterpeg as mentioned here is starting to crack and then there is Saskaboom, smashing Mo-vember 2009 in both sales and price.. 12% and 13% respectively.
I’ve had lengthy discussions and am being told by people who have the same views on over valued RE as I do, that here (Saskatoon) well…it really is different.
I’m starting to believe them… someone please give me reason why I shouldn’t…
Garth,
I bit the bullet. Also, prices in Vancouver look to end the year on an upward tear.
What do you make of that?
junius
Don’t hold me responsible for delusion. I tried to warn ’em. — Garth
Here’s a reason why Brampton real estate is floundering on the shoulders of broke-ass buyers and struggling sellers.
http://finance.sympatico.ca/home/canadas_rich_getting_richer_faster/c60c9640
Canadian real estate is going south NO LATER than October 2012. They may seem like a long time but it will come soon enough. This shoe is gonna drop big time. 10/2012 – mark your calendars folks.
S.B. on 12.01.10 at 11:02 pm
Good news for DA! Granite and Stainless!
“Narcissistic personality disorder, characterized by an inflated sense of self-importance and the need for constant attention, has been eliminated from the upcoming manual of mental disorders, which psychiatrists use to diagnose mental illness.
As Charles Zanor reports in today’s Science Times, the fifth edition of the Diagnostic and Statistical Manual of Mental Disorders — due out in 2013 and known as D.S.M.-5 — has eliminated five of the 10 personality disorders that are listed in the current edition. The best known of these is narcissistic personality disorder.
– S.B. – I have thought this for a long time, but he really does behave like a serious alcoholic. The rage, the lying, the claiming of victim status when he said he was going to quit the blog, the cover up of his true identity.
Great post today, as always.
As I had to look it up, acuity is synonymous with insight, sharpness, keenness and acuteness.
Dictionary.com:
1. keenness or acuteness, esp in vision or thought
2. the capacity of the eye to see fine detail, measured by determining the finest detail that can just be detected
As for Brampton, it is surburbia hell but no better than Milton where people are lining up to sign horrific pre-construction deals. Is the high price of gas going to affect the desirability of these far-out suburban complexes? I couldn’t imagine commuting 1.5 hours each way to work to Toronto everyday.
Publius Enigma on 12.01.10 at 9:58 pm#201
Devil’s Advocate on 12.01.10 at 8:15 pm
“No, things are not nearly so bad as an uninformed visitor to this site might be led to believe… not at all.”
This is, unequivocally, the most moronic thing you’ve ever posted on this blog.
Your complete lack of understanding of what has happened, and indeed what continues to happen in your own industry in the United States is truly stunning.
Galactic stupidity. Truly epic stuff.
– Yes DA, you’re really popular, people love you!
Devil’s Advocate is loved by Garth too,
From 12.01.10 at 8:15 pm
The source you gave was for new homes only, not all homes and does not reflect resale conditions or the burden faced by existing homeowners. This post is appalling. — Garth
#19 fraudster,
Prices in Vancouver are down across the Board there bucko. They have no where to go but down. You have spent too much time on e-harmony.
It amazes me the time that desperate bulls spend on this site changing names to support their own postings and masking as others.
Tells you all you need to know about their integrity and credibility.
Oh, but Mr. Turner, here in Vancouver – this will NEVER happen because of all the Immigration!
The Rich from all over the world SALIVATE to move to Canada.
*Noted by Wikileaks as “Neurosis North”, this Country has a City in a Province that modestly calls itself “The Greatest Place On Earth”.
Suuuuuure.
Nice Bike lane!
Best place on earth?
Hell, I always thought it was Tuxedo.
Drat – foiled again.
“BS–
If you actually believe that-do a 5-35 Mortgage and buy a house-in fact buy 10 houses-because Houses/RE are one of the best asset classes to hold in Inflation and even better in Hyper-inflation and the more debt you can put against it-the better-”
Even as the biggest real estate bubble rolls over in Canada, it will still be a good asset class during currency induced cost push inflation?
When the immigrants in Brampton/Markham/etc find out their houses lost value and they’re bankrupt, they’ll just pack up and take what money they have left and go back to their own countries. Expect lots of empty houses in the GTA in a few years.
Garth et all,
I have been a long time supporter of the idea that RE has become laughably overvalued and due for a serious correction. My family lost everything we owned back in the 82 fiasco in Vancouver. I have many scars and understand all too well how a market can turn when overvalued. But alas I am losing faith in the fundamentals that should steer the market as history has shown us. We here are talking of maybe a 20-30% correction in Vancouver? Garth, thats only a spit in the bucket, it only represents the gains witnessed in the last 3 years. It’s no where near where the age old fundamentals tell us the market should be. With the average household income at 72K, the average SFH should be 216K. OK, I’ll buy the argument that it’s the west coast, it’s always been a little higher, lets tack on 30%, now we’re at 280K. I’m convinced we’re not going to see that, ever. Sadly, Shiller’s formulas are gone in this market. Really too bad. Yes, maybe a 20-30% correction, but not enough to make it affordable for the average family living in these areas. Sad.
I wouldn’t live in Brampton even if you gave me a house for free! Do I care that this is happening there? Not really. Who cares if the value of real estate in Brampton lowers in the coming years. Unless you’re Indian you’d never want to live there.
Garth I’m curious, is this happening in any other parts of the city?
“RBC predicts stability in housing market” G&B
“Canada’s largest bank is predicting a period of stability in the housing market next year as rising mortgage rates are offset by improvements in the job market and household income.
“We don’t see any kind of imbalances out there that need to be corrected or rectified over the next year or so, so we think that probably will translate into modest everything,” RBC senior economist Robert Hogue said.”
http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/rbc-predicts-stability-in-housing-market/article1818994/
http://www.rbc.com/economics/market/pdf/house.pdf
Garth, purly propaganda or…does the RBC really believe this?
propaganda as in – information, ideas, or rumors deliberately spread widely to help or harm a person, group, movement, institution, nation, etc.
thoughts,comments?
If the Brampon board does put out the numbers who will believe them now? Could they not “fix” the bad number so they don’t look so bad? I can not trust any realtors or their numbers. The government needs to over see these people who IMO are acting like criminals.
Brampton is one funny place.
It was 10 years ago, the cheapest place to buy a sfh. Back in 2000, brand new homes were going for 225k. A good buddy of mine brought one and joked about me buying a condo in Toronto at the time.
Brampton/Durham region (ajax-whitby-oshawa) seem to be ground zero in the GTA. Just to much supply with no buyers.
Things will get very interesting very soon, I dont even give it until spring, lat Feb the listings will start to pile on. Tons of expired listings in Durham as well and a lot of people will wait till after Christmas to relist.
No debt on the coast for Asians. Salaries are offshore with flat 10% tax. Luxury car sales are booming. You can find Lamborghini’s with N (new driver) stickers on the streets. Chinese restaurants overflowing with customers. Come down and visit the Richmond and Vancouver malls. Packed and overflowing with buyers. House after house being bulldozed with mega houses being built. Houses will close the year on an Up. 2011 looking to be the best year yet! It’s the BestPlaceOnEarth
{}{}{}
Well, you can figure it out. I think it has something to do with monumental household debt, flatlined salaries, tapped-out consumers and frayed household budgets as the cost of daily living rises while the value of an ugly semi withers.
#14 JO – said “Life will be good again, but it will be a long time coming….enjoy the scotch while you can afford it.”
Benzodiazepines. Got pharma? Cheaper too.
BC bud for Vancouverites.
“… and every strip mall has a mortgage broker ready to
fill your trunk with cash at two per cent….” – Garth
No Garth No! Did we learn nothing from Shawn the other day? There is no cash! Just “savings” on the asset side
and “debt” on the liability side……all that hard blogging
gone to waste…..sigh….
But it has been awhile since I’ve thanked you for what is a huge effort hosting this dawg house.
“Thank You”
16 BrianT on 12.02.10 at 12:11 am
#7DSP-NO-only RE desired by those whose funds have not been destroyed by the hyperinflation (foreign interests or the minority not harmed by the hyperinflation)-the majority of NA RE would go down in value during a hyperinflationary collapse, as the cost of necessities skyrockets. I am not predicting hyperinflation, just pointing out that whoever told you that RE always performs well with very high inflation didn’t think it through at all.
*******************
“No asset” goes down in Hyper-inflation-
Ever seen this picture of the Lady using Deutsche Marks (money) to burn for heat?
http://s2.hubimg.com/u/38177_f260.jpg
Do you suppose she might have put that money into paying off a 100% leveraged house instead?
A “home/shelter” is classified as a “necessity”-no?
As i said above-mortgage with nothing down and you have maximum leverage with RE-you cannot get that kind leverage with any other asset class-
It’s all in the timing-
Pay nothing down and as “quantities” of cash explode-
It’s buying power decreases at warp speed-but that matters not when you only owe a set price-
I think you missed my point-which was–Mortgage now-leveraged to the max and if Hyper-inflation was to occur-your “money supply” goes exponential-
You see things like this-
http://humorland.wordmess.net/files/2008/10/zw008.jpg
http://humorland.wordmess.net/files/2008/10/zw010.jpg
http://humorland.wordmess.net/files/2008/10/zw019.jpg
So for example-today you mortgage a home (nothing down) and later-when money supply explodes you drive to the bank with a truck load of easy available cash and hand it over and presto–a basically free house-
Gold would do better then anything-but you still need a home-
Likely no one would sell a house during Hyper-Inflation- that’s true and so prices would not go down or up-in fact cash could likely not buy a house-
You cannot buy Gold in Zimbabwe with their currency either-it’s priceless-
But no one would have a Mortgage or any debt that they couldn’t pay off either and that-was the set up I refereed to-
Leverage debt to the max “now”and easily pay back in devalued dollars–
#18 JB on 12.02.10 at 12:16 am
and then there is Saskaboom, smashing Mo-vember 2009 in both sales and price.. 12% and 13% respectively.
==========================
Saskatoon is a funny place. It’s not Vancouver, but people who want jobs are still moving there. A friend who builds lower cost SF homes, just sold out his development ,,,,,,,,,,pre-construction. That may be normal in TO, but not in S’toon. Low end still selling, higher end not so much.
I have been watching listings in Silverwood Heights daily since April. The inventory changes but few sold signs. Many can be found on Kijiji later as a FSBO.
Then sometimes they show up MLS again , reduced price.
I question how accurate monthly stats are. They don’t seem to reflect what I am Seeing. IMHO
#21 Chris in Langley
Chris the reason they’ve eliminated 5 of the 10 personality disorders from the DSM is that they couldn’t find anyone without them. Wait to see what happens to the remaining 5.
@Chris #21
If DA has been living in Kelowna for 28 +years ,I agree with your psych assessment, that town has had major social problems for many, many years. Couldn’t pay me to live there and raise a Family.
Now back to the Money Road!
Garth, you are at the top of your game! My wife and I are faithful followers of your blog and love your sense of humour and honesty. We sold in Vancouver in 2008 and have been renting ever since waiting for prices to correct. As my late Grandmother always said “Good things come to those who wait!” Looking forward to listening to you next time you are in “delusional” Vancouver.
Watched Garth when he came to Victoria recently. Have read his books. Particularily like it when he answered a questioner who stated “that everyone wants to move to Victoria”. Garth politely agreed but noted that while that may be true, “you cannot do that if your 4000 square foot home in Calgary or Mississauga does not sell for $x dollars. (I paraphrase.) Agree with most of what he writes. But believe that sometimes cash is king (with enough preferred’s, good dividend utility stocks , etc. to pay monthly expenses). Sold our Victoria home last week for essentially (after realty fees) for what we had into it. (about $1million). Will rent for two-three years in similar accomodation, split the proceeds between spouses, (invested in dividend stocks to provide rental requirements) and wait. Been reading and watching a long time; time to act. Garth is right.
Delusion behavior is catching.
Thank you all for your support you pups and poodles. I got so many e-mails of affirmation, I’m overwhelmed with joy and warm fuzzy thoughts. I was thinking about letting my wife read my posts, what do you guys think? I bet she’d be impressed with my writing!!!!
oooooooooooooooooooohhhh, I’m so fired up
Bull Opinion – “Vancouver bears better realize that there has been, and continues to be, a demographic and cultural shift. If you don’t want to buy into this new normative order, time to leave.”
Fancy way to say “its different here” the global laws of finance dont apply. – LOL
junius on 12.02.10 at 12:17 am
Could it be a sign of the level of delusion in that market.
Dont worry the global laws of finance and math still apply to Van. With the level of delusion so rife it wouldnt surprise me to see further rises there until one day a few start to think for themselves. “Asset bubbles only burst when the pool of greater fools runs out and not before.” I think there are still a few left to suck into the Van bubble.
Be patient
Until someone gives me a good reason that prices are supported by incomes or rental yields in Van and not just this “prices always go up because of (insert reasons – see above)” rubbish, I will reassess until then to coin an Aussie phrase “its just p%^s and wind” to keep the delusional sheeple of Van believing the nonsense.
Aussie Update
http://theage.domain.com.au/real-estate-news/house-prices-slump-near-city-20101201-18gn1.html
http://tasmanianrealestatetrouble.blogspot.com/2010/12/boil.html
–
“. . . growing faster than For Sale signs.” — World wide TSHTF, and the breakneck speed of time means things will happen at a faster and faster clip. This is the precursor to the main show.
BillyBobShakespeare once said something akin to “. . . all the world is a stage, and we are merely the players!” So take a bow before the audience, enter stage right. do yer thing and exit stage left!
“The most dangerous asset class in Canada has a door on the front.” — Unless it is fully paid for, and property taxes are paid monthly.
Other than that, you’re right.
*
The Emerald Isle’s debt servitude. Keep in mind the first EU referendum results clearly said NO WAY, and were then forced to have a second vote until they said yes, which leads to Harmonization A one-world govt.? Fat chance!
General Strike Shutting down the country would have intriguing results!
Who Is Causing This Trouble? Wikileaks seems to be Hillary’s favorite scapegoat, but as pointed out earlier, Wikileaks is funded by Soros – CIA – Zionists, and Soros bankrolled Obama who appointed Hillary as SoS. Oh what a tangled web of deceit we weave!
Record Cold First Norway (222 years); second Sweden (100 years plus they’ve run out of money); third Denmark (131 years). Also — UK shuts up shop.
Top 10 Lies about Bill S-510.
‘Quakes ‘n’ Quacks The Big Apple a little too flatulent?
HAARP Assimilate or die. Weren’t there 34 US warships on their way to the Gulf of Aden a few weeks ago?
Guess the same will eventually happen to CPP – OAS – GIS here.
Haircuts for Europe.
Synchronized Swimming — In yer dreams!
Four min. clip “Now is about the time a flood crashes over mankind.”
Wow! 450,000 when I moved into town (1954) the population was— ready for it? —- 9,500. Yup! Brampton has exploded.
Am I ever glad I joined the Air Force and got out of there.
Hey! Ausie Roy, Loved my trip to your country. Could have stayed a lot longer. (Didn’t like that October storm though.)
(The penguins are cute too)
Well at least I brought back a genuine “Akubra”. LOL
(beats the hell out of a “Been-there-done-that. got the T shirt to prove it” souvenir.)
“So many powers of sale (Ontario’s term for foreclosures)”
This statement is factually incorrect. Foreclosure action maybe be taken by a Bank when it can establish real equity exists. Power of sale is right of possession by the Bank if a default of the mortgage. They are not the same. Usually the uninformed use both terms thinking it is one and the same. Foreclosure is more likely to happen in the US while Power of Sales are more common in Canada.
If you are losing your home, it’s a moot point. — Garth
Wait until 2009… we’re 6 months behind the US
Wait until early 2010 … new mortage rules
Wait until 2010 … rates have gone higher
Wait until the fall… listings will explode
Wait until the winter…blah, blah, blah
Wait until the spring…listings will explode
Wait until 2012…the system is going to implode
Wait until 2015… when 5 yr mortgages reset
Wait until 2020 ..when boomers exit life
sound familiar??
What’s happening now is massive population growth that is heavily concentrated in the major cities. Add to that restrictive land use policies. That is why you have HIGH house prices! Quit analyzing things to death!!!!! It’s about supply (restricted) and demand (total population growth in cities) — more so than any time in our history. Things may change buy right now it’s full steam ahead for the pyschological momentum train.
@#16 – Sam:
Under what context do you think the vancouver market is strong? According to the Real Estate Board of Vancouver (google it), sales have been down year over year since March!
Hardly what i’d call “strong”.
In fact, sales figures arent that far off the sales figures we had just before the 2008 dip…
@#16 – Sam:
Under what context do you think the vancouver market is strong? According to the Real Estate Board of Vancouver (google it), sales have been down year over year since March!
Hardly what i’d call “strong”.
In fact, sales figures arent that far off the sales figures we had just before the 2008 dip…
Also, maybe you should tell the local government the market is strong here – that might actually finally shift some units in the olympic village.. Problem solved!
Junius #19 doesn’t sound like the real Junius.
As you’ve talked of Garth, sales fall off a cliff, listings explode and prices shoot off in wild directions on small amounts of sale data:
http://tasmanianrealestatetrouble.blogspot.com/2010/12/boil.html
Saskatoon still has many SFHs available in the mid $200k range. Still affordable in a city with jobs.
on blog #16
Patience is not a strong point on this blog. — Garth
Patience???? I gave up in 2009 i look but it’s no big deal. my rent is also paid for every year and I ‘m going to have to sell when i get too old to maintain. at the rate I going now I will be a millionaire before I retire …fully loaded on tax free savings and RRSP… I ‘ll be living off the dividends w/o touching the principal.
I doubt I ‘ll be living in vancouver though
oh yeah forget i have my company 401 k and whatever govt pension CPP/ OPP looking pretty :)
Is the “Gold Coast in Australia the Van of Australia with more sunshine and beach babes” ?. Of course just months ago the market just couldnt go down, all those wealthy asians only a couple of hours flight away, you know the story.
http://www.news.com.au/money/property/burnt-by-45m-coastal-sale-costs-investors/story-e6frfmd0-1225964563393
A LOSS of $4.5 million in only two years on a Gold Coast mansion tells the grim story of the diving property market on the Gold Coast glitter strip.
The house went to auction in January this year with bidding starting at $5m and quickly rising to $6.25m, at which time Mr Rice raised the selling price to $6.45m.
If he’d have taken the $6.25m on offer in January he would have been $1.25m better off (gee he would have only lost 3.25m), and probably saved himself the hassle of a year waiting expectantly for the market to recover at a time when it kept going down.
Sale price $5m.
There is that wishfull emotional thinking again. Prices MUST go up.
Hello Garth
I found this at Gold Eagle and I think it says it all when it comes diagnosing the problem with the economy. (see text below my statement for details) No pay raises in real or nominal terms and eventually your workers are working for nothing and your customers can not buy your product.
End result: Economic implosion and high unemployment and poverty.
Don’t expect the economy to bottom out and recover soon. It’s a long way down
and non income related costs have yet to fall far enough to raise the value of income with or without a pay raise. The big canadian and american reality check is just getting started and it can’t be avoided .
Steven
@ Gloom, re It’s going to be a long, long time before unemployment is reduced
(Mr. Copper) Nov 30, 14:36
At this point I don’t think it matters anymore. The system crashed already because the US masses were under paid due to competing with our trading “partners”?
Same thing as unemployed or under employed? The damage has been done already. No way left but up, after this transition.
The USA consumer was over fished, over hunted and over harvested since 1980. And there’s nothing left, because they can no longer qualify for a bank loan that will be paid back with paper profits on real estate.
The US Consumer was living off all those artificial loans. Its pay back time or “get real time”.
Like I have said before. The business man is in charge and he HATES giving pay raises.
That’s why he produces things over seas, and gives LOANS to the US subjects instead of raises to keep up with inflation.
The name of the game is to inflate away the pay roll checks. Governments like to inflate away debts. They even inflated away the minimum wage minimum tax laws. They inflated away the Soc Sec checks too. They should be double what they are today.
I figured it out back around 1965. One business man would give me a raise, and another business man would take it away. So I went to self employment by 1975.
Can’t beat them? Join them. :) Now I’m doing THIS stupid thing, playing stocks.
#178 Dazed and Confused ” Are people really that naive or am I just lost in a world that makes little to no sense. Every time I think things can’t get worse (Insolvent banks, GOM oil spill, Greece, Ireland, N.Korea,10% unemployment, etc.), they do. However, no matter what, the stock market goes up, up and away (up 256 points as of right now). Insanity has become the new norm.”
Hi DC,
I read your post last night and wanted to say that you are not alone in your thinking. The wife and I have thought the same way over here too.
I guess if the markets never go back down the lesson I would take away is…
“Ignore your gut and buy when others are selling”
Sadly, I think that could apply to the RE market now and that means we are all wrong about the direction of RE prices.
I read that you Garth are writing a new book. I’m in. I like your comment about this blog being about money. It reminds me of the main reason I’m here.
Apparently rich fearful Asians are buying up near Kelowna. Better to lose half their wealth than all, they figure, if China fails.
JB on 12.02.10 at 12:16 am
I am thinking the same thing. How does Saskatoon keep it up? According to some, it should have crashed a long time ago. Others say that prices are going up next year.
I follow this blog, Norms blog, and the Saskatoon bubble blog and I don’t know what to think. Do I keep renting and possibly watch prices climb or buy and maybe lose my shorts?
Interesting little video, sums it up nicely
http://financialinsights.wordpress.com/2010/12/01/video-primer-does-canada-have-a-housing-bubble/
What’s more pneumatic than money? — Garth
Sex, but then 85% of the pics that accompany the money articels cover this nicely:)
Roial1 on 12.02.10 at 2:11 am
Hey! Ausie Roy, Loved my trip to your country. Could have stayed a lot longer. (Didn’t like that October storm though.)
(The penguins are cute too)
Well at least I brought back a genuine “Akubra”. LOL
(beats the hell out of a “Been-there-done-that. got the T shirt to prove it” souvenir.)
Great hope we where friendly….
Yeah you could spend months here and still not get around to everything. Tropics up north wilderness down south the arid outback inland. Do visit again but you will have to excuse the house delusion…..
I’m around 75kms outside of Adelaide in a region called the Barossa Valley a major wine area… If you are ever in SA, here and Kangaroo Island are really worth seeing.
http://www.barossa.com/
http://www.tourkangarooisland.com.au/mustseeanddo/default.aspx
Patience is not a strong point on this blog. — Garth
——-
LOL! A couple of years ago I was forced to take a personality test to make sure I would fit with the team. Although I believe in the concept, I don’t believe we have the knowledge to really determine the best combos. Anyhoo, I got curious and read some psychology books.
I found out that less than 5% of people are wired to think long term such as more than 5 years down the road.
I guess the big difference between humans and other animals is that we can think a little longer term than them. The irony is that we keep on fighting nature such as building ourselves a system where individuals need to think for more than 65 and then we condemn when when they get it wrong.
#28 Fool me once…
Yeah, right. Fool us once or even twice is not going to happen.
Yet another example of the desperate bull crowd. Instead of posting valuable information or even trying to make a cogent argument all we get it “I give up.”
This is about the 10th post in the past month I have seen like this…….”I have been waiting forever..but know I realize I am wrong…..it is different this time.”
Give it up. No one is buying it.
#33 Personwhoiscertainlyoncrack,
You become even more delusional by the day.
I have been to Richmond recently. Lots of great liquidation sales these days. Sadly, more coming in the New Year. Aberdeen Mall was half empty on a Sunday.
At least you can give fiction writing an attempt after your current career goes South.
“Good things come to those who wait!”
——–
What about the early bird getting the worm?
The house sounds amazing. I dug up this article with photos
http://homes.winnipegfreepress.com/winnipeg-real-estate-articles/resale-homes/Exquisite-elegance/id-982/
—-
“borrowed all the demand the future had to give”
There is a little hyperbole in the “all” here. Some % of people in any given year simply have to move. Circumstances take over their lives and they have to go. For the underwater (or underwater-after-transaction-costs, which is an even bigger set of people) this is just more pain. On the other hand, what we saw in the U.S. was former renters and zero-mortgage holders seeing a “bargain” in their new place of residence, or closer to their current job, jumping into the market. Unfortunately, what they got was perhaps not a bargain and many of them were incentivized by tax breaks to jump when maybe they might not have otherwise. But jump they did, and a few desperate homeowners got out, but they successfully got out because they wised up, made their price attractive, and took their losses.
Its important to drill into sellers that carrying costs are murder and finding some way to cover the loss so they can get out is paramount. Telling them it is totally hopeless is not going to help convince them of this. It’s never totally hopeless. Extremely bleak maybe.
Just my 2¢ on an otherwise entertaining post.
Foreclosure is more likely to happen in the US while Power of Sales are more common in Canada.
———
You know you’re onto something when semantics take over.
#59 harry,
You asked, “Do I keep renting and possibly watch prices climb or buy and maybe lose my shorts?”
How can you ask such a question? Prices can’t keep rising. Certainly they will not outpace other asset classes.
Meanwhile the alternative is to “lose your shorts.” Modest potential gains versus significant losses. How can this even be seen as a dilemma? Invest your money and wait.
Remember Keynes. The market can stay irrational longer than it can stay solvent.
#33 BPOE says Asians hqave no debt. If a rich Asian buys a property I doubt he will take a mortgage. So yes, it is possible that rich Asians are buying up to escape China. It would depend upon the ratio of mortgages compared to house sales. I don’t know them but it would be in BPOE’s interest to provide them.
However the Vancover prices will still fall soon.
#47 HappeningNow (formerly thetruth)
You have the wisdom of a 15 yera old.
With that said, I agree that most larger metro cores will grow in population as it is a sustainable way of living, but you are NOT considering the cost of living and the ability of the masses to produce enough earnings to pay for it.
As a whole, the masses, in time will accept bitter realities and manage their lifestyles in a more BUGETED fashion, but until then there is going to be huge pain in Canada (next 5 years likey), until we reach capitulation.
To think that there will be this never ending realestate wealth generator in our metro areas is extreemly unrealistic. Clean that sunshine out of your ass.
If I remember my sociology class from some 10 years ago, there is a ‘circle’ model for immigrants’ housing patterns within a city: as time progresses the new immigrants settle further and further away from the downtown core.
Using Toronto as an example I think this holds true: the 1st wave of European working class immigrants lived in downtown row houses (close to their factories) maybe 80-100 yrs ago. These old working class rowhouses are now selling as $1/2 million semis in Leslieville…musty basements and all.
The next generation post WW2 settled slightly farther away from the downtown core (Leaside, and Italian/Portugese areas near Dufferin and St. Clair?)
My immigrant parents in the early 1970’s settled closer to Steeles Ave. to the north.
After that the next waves filled up Markham and points north of Steeles.
And then the next wave filled up Brampton.
Now it looks like even further afield (no pun?) is the destination: the fields of Milton and onwards.
( And the downtown core is now a yuppie/DINK enclave, more for young condo dwellers)
Comments, thoughts?
BTW
Wait until 2009… we’re 6 months behind the US
Wait until early 2010 … new mortage rules
Wait until 2010 … rates have gone higher
Wait until the fall… listings will explode
Wait until the winter…blah, blah, blah
Wait until the spring…listings will explode
Wait until 2012…the system is going to implode
Wait until 2015… when 5 yr mortgages reset
Wait until 2020 ..when boomers exit life
Considering the points above, it is extremely childish of you to just say…it hasn’t happened yet…so…it isn’t going to happen dam it!
When it happens many are going to go running to the nearest savior, maybe family or friend and plead innocence? Many did in America, after the fact even when the future was obvious. Canada? We have a world premier in front of us, how could any here use the innocence plea!?
Just a matter of time before it makes its way to the West Coast.
man thank god things are getting back to normal in the london area here at least. The local cartel is sighing relief that things are going to be rosy in 2011. Well all is well according to london free press and the local real estate denizens :
http://www.lfpress.com/news/london/2010/12/02/16399091.html
#68 Junius: I thought the quote was “the market can remain irrational longer than YOU can stay solvent.”
#69 Brian1
“#33 BPOE says Asians hqave no debt”
The Chinese shadow banking system has not been properly documented, so no one really knows what the debt load is. If a loan club pools their money and loans it to you for a 20% down payment on a house, and you buy the house from Mr. Wu, and Mr. Wu takes that 20k and thinks, hey, maybe I’ll join this loan club with this new money, and the loan club says, hey, let’s loan this to someone else now for another downpayment, wa la, your 20k has just become part of an ad hoc fractional reserve system. And only the deity really knows how much leverage it all adds up too.
The average loan club rate is 5% per month, and the majority of ordinary citizens have their money wrapped up in it. The unwind is not going to be pretty. Whatever triggers it, property will be sold in a hurry to cover these loans since face is everything. That includes homes in Canada, unless you can convince enough of them to simply resettle in Canada and hold that property instead.
BoC Inflation Calculator
Punch in the numbers for what you paid for your house in 19??/20?? and see what the value would be today using government inflation numbers.
It is not hard to see a 30-40% or more pull back in prices just like in the US. My home purchased in Hamilton in 1985 for $80000, currently worth $300-325,000, would only be worth $145-155,000 if yearly inflation numbers determined its value.
Anyone not selling a rental or vacation property is missing a huge opportunity to ring the register.
But if they really want to hold on… all the better for those who have kept their powder dry.
http://www.bankofcanada.ca/en/rates/inflation_calc.html
http://www.wxyz.com/dpp/news/region/detroit/a-bizarre-home-invasion-and-carjacking-in-detroit-leaves-a-woman-hog-tied-with-duct-tape
I am enjoying my pay cheque because as of Jan 1 2011 I will along with many others will be taking home less pay….EI premiums on the rise, power going up close to 10%, union dues going up and by the looks of it no raise in sight…..I don’t know how some people are going to manage who carry a huge debt load….or seniors who are on a fixed income……Is it evolution: Only the strongest of the financially secure will survive…???? and with Nova Scotia having such a small population with more seniors then working people I am just waiting for our taxes to go up……..
Hi Garth,
You rock. Speakin’ of Rocks….do you have any insight into the Newfoundland real estate scene? I have friends in a flurry to buy outrageously expensive homes that won’t listen to a word I say because, ‘it’s different here’.
#52 Hobbitt – Anything in the 220/270k range is on the Dub, the forgotten half of our city… 85% of the crime in Saskatoon happens within a 30 block radius on the West side… no thanks.
I have friends that bought in 2005/2006, starter homes on the west side, most of them for under 100K. Sure most of them are happy with their homes worth 200k+ now, but every one of them says ” I need to get out of this neighborhood “…
You have two options in this city when it comes to SFH’s, “affordable ghetto”, or OSB, Granite and S/S….
Honestly I’d rather lose 100K on the McMansion and still live in a decent neighborhood than lose 100k on those rattle trap dumps you speak of in the mid 200k range here. It was no more than four years ago when those houses could be picked up for 80-95k…
Hi #1 hobbygirl, re:bullet-proof Hummer
You should write a ‘blog on the cost savings of driving a four banger and what to do with the extra cash.’
Don’t forget about the PM new bullet-proff transport.
I wonder why he felt he need it???
Great blog. It’s my first stop every morning.
Very telling that the Brampton REB is holding back data; typical of all corrupt entities. This is a classic sign that the cracks are coming. I also get this sense listening to the whining on the radio today about gas prices up 4 cents a litre. If the pain is baing felt with such low interest rates and small increases in gas prices then things are likely to get really ugly. The real blow-out will be when interest rates have gone up a bit; 2012 I’d guess.
We sold all of our real estate except our cemetary plot and I’m feeling great about it. My only concern is making sure we have suitable rental accomodations, and that has been somewhat tougher, so far, than I expected.
JJ
#219 Oasis on 12.01.10 at 11:19 pm
#177 dark sad person on 12.01.10 at 4:53 pm
Prove your case-or disprove mine with more then just BS-
_________________________________________
1. your “case” is easily disproved. you claim that the velocity of money needs to increase to get hyperinflation. that’s false. the fed tomorrow can print as many trillions an monetize every debt the US gov’t and banks owe, and instantly the dollar collapses and you get hyperinflation. there ends your discussion on velocity of money, and why it’s not relevant to have hyperinflation.
2. money supply has never collapsed. if you exclude goverment “credit”, M3 is down a wopping 2% from it’s peak. shock. that’s not deflation. factor in government “credit” and M3 is now up 10%.
3. Japan never experienced a deflation. they experienced stable price levels. anyone looking at the data can clearly see that.
yet again. deflation is not possible with fiat currencies. only after they completely hyperinflate themselves away, and are destroyed, and new currencies are created… otherwise, you’ll just have perpetual inflation. only with a gold standard can you have deflation.
****************************
You speak of events and monetary data that you know nothing about–
1–Tokyo: Average Nationwide Land Price Falls 4.6% . The average nationwide land price as of Jan. 1 was down 4.6% on the year, for the second straight annual drop
The average residential land price fell 4.2% on the year, while the average commercial property value dropped 6.1%. The residential land price fell to the 1983 level, while the commercial property price plummeted to roughly 30% of the peak value recorded in 1991, the lowest since the survey began
http://www.finchannel.com/news_flash/R-Estate/60590_Tokyo:_Average_Nationwide_Land_Price_Falls_4.6%25/
2– Why would you use M3 to Gage Money Supply?
It is a useless measurement for tracking money supply-
There are many components to M3–such as MZM which is nothing more then MMMF’s-in other words-how do you know whether M3 is expanding or contracting as huge Mutual Funds move Money transfers in or out of MZM?
So tell me how-taking “existing” money out of Bank account’s and putting it into MMMF’s-or doing the reverse effects the “Money supply”?
All that does is transfers “existing” Money from one place to another-
Here are “some” of your M3 Components-
Institutional Money Funds
Large Time Deposits at Commercial Banks
Total Time and Savings Deposits at Commercial Banks
Also M3 includes Traveler checks and a myriad of other useless data–have a look-
http://research.stlouisfed.org/fred2/categories/28
3–Refer to 1 again-
Here’s the facts for you–You can have Inflation in Fiat/Credit based currencies and you can have Deflation-Japan is proof–The US is proof and soon you’ll see it here-
Well–maybe you wont–
You do not understand that Credit “is” Money and it expands and contracts-ie: Inflation and Deflation-
Deny it all you want-the facts stare you in the face-
Honestly I’d rather lose 100K on the McMansion and still live in a decent neighborhood than lose 100k on those rattle trap dumps you speak of in the mid 200k range here.
———-
In 2001, in Montreal’s West Island you could get an older house for 200-225K. The McMansions about the same size were going for 275-350K. That’s a price difference in the range of 50 to 150K.
Today the older homes are going from 375-450K and those same McMansions are going for 500-800K. That’s now a difference in the range of 50K to 425K.
In 2001, the average household income in the areas of the older homes was 100K. In the McMansion area it was 120K. So basically that extra income was supporting the extra 1000$ per month in mortgage and the luxury car payments.
Taxes in the McMansion areas were in the $3500 to $4500 range. Today, it’s at over $8000 per year. And houshold income is still at 120K. So we can assume that many selling are getting squeezed out of these homes but still making a good profit.
All McMansions are not created equal and something tells many of them will drop by more than 100K.
Gestapo style search and seizure at US bus terminals.
I think I`ll pass on that cheap Florida condo.
Don`t worry they are keeping us safe is the propaganda.
http://www.youtube.com/watch?v=3VGz7VJs3u0&feature=player_embedded
Patience is not a strong point on this blog. — Garth
Ha! Nailed that one.
Of course, I bought my own sno-cone maker. Sit back have a sno-cone and enjoy the show, folks.
#64 Junius,
I don’t believe your criticism is an accurate reflection of my post. I am not a swirling vulture waiting for the inevitable crash where we all protect our gold and hunt for squirrels. I am on this blog because my beliefs are much like those that GT tries to pass on every day on this blog. I went through the pain of a bubble burst, it’s not nice. This market looked ripe for a bubble of some degree, to what degree was the nature of my post.
Oasis–
About the Fed destroying the $-
Think about this-
If they did destroy the $ what would be their purpose in it?
First of all-the Fed would cease to exist-along wuth the $ and for what gain?
2nd–This would put the Bankers with all the Money they’ve stolen-on the same level as the rest of us Peasants-
Do you think they’re that stupid?
#15 Ayn Rand wrote:
“Garth, when is your new book due – February? I sure hope you can give us a title and a preview in advance on this site…”
He IS giving us a preview – read his blog entries.
Hi #44 Nostradamus, thanks for the links.
The one about Wikileaks is worth the read. ;)
Hi Garth, re: retirement age, robots computing power, jobs, money, material riches, ‘the corporation’ and human beings?
Garth or Anyone, I’d be interested to read;
What thoughts do you have about how the new robot technology is going to affect the labor market and the ability of the so-called average person being able to make enough income to afford good food and shelter/heating to stay healthy and somewhat happy?
Is anyone going to make sure the global ‘corporation’ doesn’t have more rights than individuals human beings, and pay a far price to extract the countries material wealth, so all the people can live with dignity?
Just wondered what other were thinking and if they had any ideas that might be helpful to humanity.
Hi #88 Macrath, thanks for that.
I feel safer already, not!
#91DSP-your basic premise is that hyperinflation is caused by hyper credit expansion, not a drop in the value of the currency. IMO that isn’t accurate at all-a RE bull market is caused by hyper credit expansion, but that isn’t the cause of rising energy and food prices or rising taxes of all kinds.
#32 George:
“The government needs to over see these people who IMO are acting like criminals.”
George… really… where do think they learned this stuff? (Hint: F (Hon.) and H (Right Hon… hoping for a Left Hon. soon).
82 Lisa on 12.02.10 at 11:08 am
Get them to watch the video.
at 61 Love this Blog on 12.02.10 at 7:45 am
Unless they are completely devoid of any common sense you should atleast get them thinking.
Good luck, just remember you can take a horse to water but you cant make them drink.
What do the realtors think about supporting this so their clients are fully informed. How about a nation campain like “the truth in housing” . You know, actually use some logic and math not just sunshine and lolly pops to promote your industry. Ethics anyone?.
Sorry I might have got a bit delusional myself there. lol
#94 GregW, Oakville
Read –THE LIGHTS IN THE TUNNEL free PDF e-book
http://www.thelightsinthetunnel.com/
Real estate agents will be next on the automation hit-list, with other so called professionals next in line.
Structural unemployment here to stay . DA condemned to eternity in the blogosphere !
#73 S.B
I do agree with your thesis that immigrants tend to move outside suburban areas. Many reasons for it, number 1 being price point.
Marginal buyers will move out to the burbs to buy but these are the buyers who are very much at risk to economic conditions.
Just by looking at MLS, the areas that in the past had the lowest priced homes and have been large centers for immigration are the ones that have seen the largest drops in prices. Brampton-Durham-Barrie are hurting and we have not even experienced a real decline.
#73 S.B.
Sounds like price theory to me, but praise-(and paycheck)-hungry academics are always coming up with “new” theories, diseases and disorders.
banks had more respect circa 1934 to 1974…the economic golden years–when the bank of canada created its own money, and didn’t borrow millions and millions from banks.
the greatest power of state IS THE POWER TO CREATE INTEREST-FREE MONEY.
history is rife with bloody wars about this struggle: the struggle for monetary control, between people and banks.
in both canada and the US, we need to remember history, and take back control of our country’s money supply.
if canada really does create its own money, then to whom do we owe our “national” interest-laden debt?
Hi Garth, what’s in your wallet?
Computer meltdown leaves millions of Aussies without cash
http://www.infowars.com/computer-meltdown-leaves-millions-of-aussies-without-cash/
Dark Sad Person:
About the Fed destroying the $-
If they did destroy the $ what would be their purpose in it?
First – the Fed would cease to exist-along wuth the $ and for what gain?
2nd – This would put the Bankers on the same level as the rest of us Peasants
Do you think they’re that stupid?
no
#90 Fooled Me Once…
If I was wrong I do apologize. I am just so tired of the “it is different this time” and “it is different here” stuff. There has been a stream of posers come on to the Blog lately (one using my handle pretending to be me) who have recanted fundamentals and pretended to convert to the “dark side.”
When you say,”I’m convinced we’re not going to see that, ever. Sadly, Shiller’s formulas are gone in this market.” It makes you sound like them.
There has always been a premium for living in certain cities over others. However that premium is not enough to throw fundamentals to the wind.
It is just a matter of time in Vancouver. And it will be much uglier than the early 80s this time. Sad, but true.
#72 cto
You need to get your head out of the sand you lost puppy. GT has stated that there will be no crisis or catastrophe in housing like the USA. I’m sorry but Vancouver will not go down 50% and Toronto will not go down 40%!!!!!!! Are you going against garth’s views??? Garth, can you ban people like cto since their views are ludicrous?
We discuss why real estate is expensive and the different reasons, er views, for it. But, you’re too worried about things like the world ending in 2012
Bottom for real estate, 2032?
http://jsmineset.com/2010/12/02/careful-people-says-the-trend-in-home-prices/
Hi Garth, fyi article
Is Wikileaks Really the Enemy?
http://www.infowars.com/is-wikileaks-really-the-enemy/
“yet we they are not attacking the actual deeds spoke of in the releases! Mainstream media does not even take on the fact that America has committed war crimes in these countries. Last time I checked, the outright killing of unarmed civilians is a war crime. We may have never known that American attack helicopters were engaged in the murder of journalist who was unarmed, had this leak never occurred. Why is it that Mr. Scarborough is not standing in outright indignation that American troops are openly killing unarmed Iraq civilians?…”
Supposedly consumer spending was up but not due to Americans, it was Canadians. No TSA was detected at our border. We were rushed through.
D.A. I am sorry for my dirty trick. I sent all those E mails.
hobbit,
re: Saskatoon
Not every American city rose at the same time or same rate. And not every American city fell at the same time.
LA’s bubble started in 1998. Places like Portland started their bubble in 2003.
LA peaked June 1, 2006 at 603k by July 1, 2008 it collapsed to 446k. Now at 401k.
Portland peaked Aug 1, 2007 at 299k, at July 1, 2008 the average price was 286k. Now at 232k.
In July 2008, the US bust was in full swing but Portland was hanging in there, with only 13k down from the peak. It eventually busted with the bottom still nowhere to be found.
Canadian housing bubble party: Saskatoon will turn off the lights
http://saskatoonhousingbubble.blogspot.com/2010/12/canadian-housing-bubble-party-saskatoon.html
#106Truth-Vancouver going down 50% would be the easiest thing possible-it wouldn’t even break the long term uptrend.
As mortgage brokers, our firm has recently seen an increase in requests for private money for the purposes of power of sale, tax and mortgage arrears, and astute investors looking for opportunities through judicial sales.
Recently, we lent to a couple who picked up a vaca property through a judical sale.
Something is going down…
A.G.Sage What you are referring to takes place in China itself and with poor people. I am talking about rich Asians in Vancouver. They don’t bother with mortgages but pay the whole shot at once.
People of Vancouver, What are we thinking? –
Frank Lloyd Wright Californian Home on 80 Acres compared with more expensive Dunbar Box on 0.15 Acres
(yes, 536 times the plot size)
http://wp.me/pcq1o-1Bj
#106 thetruth,
Quite your whining. Vancouver could easily go down 50% over the next 5 years. If interest rates were to rise beyond 7% they easily could.
Historically house prices are 3-4 times average income. Do the math. The current household income is just under 70K. Average should be under $250K.
If other costs rise and wages remain stagnant this is believable.
Remember that prices in Phoenix, Miami and Vegas are down more than 50% WITH record low interest rates. They are still not done going down. Wait until rates finally rise a bit – watch them go down more.
#96 BrianT on 12.02.10 at 1:13 pm
#91DSP-your basic premise is that hyperinflation is caused by hyper credit expansion, not a drop in the value of the currency. IMO that isn’t accurate at all-a RE bull market is caused by hyper credit expansion, but that isn’t the cause of rising energy and food prices or rising taxes of all kinds.
**********************
We need to understand-there are 2 types of money in circulation-
Credit and Cash-
Both can be Inflated and both can be Hyper-Inflated-
Credit was Hyper-inflated and they are busy Inflating the Cash supply-but-the problem is-
Credit is Deflating much faster and in much greater amounts then Cash is being created and the Cash is not making its way into the Economy-like Credit did-
The newly printed Money is making its way-from the Fed to Investment Banks and from there-into Commodities and that-along with China’s ongoing Credit mania-is what’s driving up prices-
Excess Credit can and does drive prices-
(more paper chasing the same amount of goods)
But it is not the only thing that drives prices-
Until Credit starts to flow positive-forget about Monetary Inflation-
Credit “must” flow first-otherwise they will have to just give us Money to spur Inflation-
Cash Money is in high demand and short supply-
Credit Money is not in demand and the supply side is even freezing up-credit lines are being cut-debt is being paid down (defaults)
That is not Inflationary at all-
People covet cash now-they’re not losing “faith” in it-
The exact opposite of what the Inflationist’s believe-
I’m not sticking up for the $ or any other Fiat-they are all garbage imo-but-we have to play the hand we’re dealt today-
Firsthand report from Brampton,
The situation on my street (Steeles/Mississauga road), has been as follows;
purchased in 2008 for 420,000
a sale end of the summer 510,000
recent sale (last week) 490,000
highest price achieved 540,000 (spring 2010)
Overall prices are dropping, peak was observed in the spring but it will take a lot more to cross the negative equity boundary for the 10% down crowds (10% was the down requirement as per builder).
As per demographics, this area is about 30% Indian and remainder a mix of other races, predominantly second generation European.
Hi Blobby #50,
I still believe the market has to come back down.
But from I’ve seen in homes, there’s still people over bidding the asking price on prices of homes here in Vancouver.
#91 dark sad person on 12.02.10 at 12:04 pm
Here’s the facts for you–You can have Inflation in Fiat/Credit based currencies and you can have Deflation-Japan is proof–The US is proof and soon you’ll see it here-
Well–maybe you wont–
You do not understand that Credit “is” Money and it expands and contracts-ie: Inflation and Deflation-
_____________________________________________
1. Japan is proof of nothing. Japan has had price stability for 20 years. not deflation.
2. i hate to break the news to you, but, according to YOUR chart, (http://research.stlouisfed.org/fred2/series/TOTBKCR) “Bank credit for all Commercial Banks” , CREDIT IS RISING AGAIN> NOT FALLING>
3. as for the US$. the FED has been doing a FANTASTIC job of DESTROYING THE PURCHASING POWER of the dollar for 100 YEARS NOW.
IF we saw the US$ skyrocketing in value, i would agree that we would be having deflation. BUT THE DOLLAR HAS BEEN AND CONTINUES TO COLLAPSE IN VALUE ..
so, your deflation argument is for the birds. the US$ will continue to fall. soon, it will be hitting all time lows against majour currencies, and against gold silver and other commodities.
along with increased GOVERNMENT CREDIT SKYROCKETING, there is only one thing that will happen.
MASSIVE INFLATION.
YOUR whole argument revovles around the Dollar rising. it’s not. it’s falling. oh well. that’s the only evidence you need to understand and see.
Housing Bubble, Whats the Trouble … Theme Song
http://www.youtube.com/watch?v=Ivp4YqGCI-s&playnext=1&list=PL6C38CD2FE470D655&index=18
This will be my new ring tone.
#106 Thetruth
Sorry I struck a nerve there Truthboy!!!
Don’t shoot the messanger for telling only the facts…
I think GT has basicly said that there isn’t going to be any more money made on housing for likely a decade which, to most of us seems a reasonable forecast.
Over the next 5 years, I wouldn’t take a 35-50% decline out of the cards,…it quite possible.
You sound like one of those guys that take all the risks,…and then fail…and then say “I didn’t see it comin!!!”
Get over it, boy!!!!!
BTW Truthboy
“Garth, can you ban people like cto since their views are ludicrous?”
Are my views ludicrous Garth? Any blog dogs, am out on cloud 9?….
@ 88 macrath thanks for the laugh .. The land of the free and home of the brave .. ya sure . reminds me of Swiftcurrant sask. I was there years ago and I noticed that there was really nothing swift or currant about the place. Lets hope for the yanks that the bad guys don’t use a c4suppository . Cavity search anyone?
>#114 Brian1
They are paying cash IN Vancouver, and a few of them might actually have that much personal liquidity and somehow slipped more than the 50k legal limit per year China allows out of the country, but some percent (and no one knows really) are pooling money from friends and relatives. The pattern within China would be reasonably expected to be repeated outside of China, I’m assuming. I guess you could call that my key assumption in this. How about, given the supposed difficulty of moving money, seems almost more likely.
Perhaps all 10,000 incoming wealthy qualifying foreigners to Canada every year really have that much money to burn. But even if they all do, the excess liquidity train will run off the track at some point and when it does, better hope the Chinese really do like the long hold, because the next wealthy buyer may not be there for the people who are not interested in the long hold.
Mark Hart (you can google him if you like) has some horrifying estimates for China’s debt to GDP ratio for the year (109-200%) If true, the other assumption everyone is making, that the Chinese government will simply keep paying to keep everything afloat, may not be a safe one.
#103 GregW, Oakville on 12.02.10 at 2:40 pm
Hi Garth, what’s in your wallet?
Computer meltdown leaves millions of Aussies without cash
http://www.infowars.com/computer-meltdown-leaves-millions-of-aussies-without-cash/
***************************************
Had it not been for reading Garth’s books, only a matter of a few weeks ago, I would not have had money on hand. I know others that struggled that week.
I also stocked up on a bad day box, you know, just in case the power goes out (a problem in our notorious heat-waves ).
Thanks Garth.
#123 CTO,
I do not read your posts (or anyones) religiously but I don’t recall anything being too out of whack.
Put it this way. If you had predicted the incredible gains of the housing market over the past decade people in 2000 would have said you were nuts. No one saw the credit bubble coming because there was no historical precedent for it.
As it recedes it could get very ugly. We just don’t know what will happen. Deflation for another year or longer. Inflation and higher interest rates starting in the Spring. We just don’t know because we are in unchartered territory on a Global basis.
One thing we do know is that the world can’t take on a whole lot more debt. As credit contracts the economy will slow. A drop in Real Estate prices is a certainty. It is only about when and how much.
AG Sage
“Mark Hart (you can google him if you like) has some horrifying estimates for China’s debt to GDP ratio for the year (109-200%) If true, the other assumption everyone is making, that the Chinese government will simply keep paying to keep everything afloat, may not be a safe one.”
China isn’t in as bad a position as people think. The world owes China trillions of dollars. Millions of transactions in China are done with cash only.
The Chinese are great savers.
The truth is, we’ll never know for sure. Even the Chinese Government is probably fudging their stats as much as we do.
As for the Chinese population in Vancouver, probably close to 1/3 of Vancouver’s population, many are second generation “Canadians”. They’re spreading from Richmond and Vancouver to Burnaby, Coquitlam, Port Coquitlam and into Pitt Meadows and Maple Ridge. The bulk of their money is more likely Canadian. Again a lot of cash deals and a lot of savings.
Canada has bought more of USA’s debt than other countries …. perhaps we have more money to burn than any of the others?
http://www.ustreas.gov/tic/mfh.txt
#124 Debtfree on 12.02.10 at 5:07 pm
@ 88 macrath thanks for the laugh .. The land of the free and home of the brave .. ya sure . reminds me of Swiftcurrant sask. I was there years ago and I noticed that there was really nothing swift or currant about the place. Lets hope for the yanks that the bad guys don’t use a c4suppository . Cavity search anyone?
Speaking of Swift Current Sask.; I suggest anyone with out of province licence plates avoid that place like the plague. I had the chance to drive through there to tend to a dying father this past month and was stopped BOTH ways, and the reason for stopping me, because I had out of town plates and therefore, a money pit. Funny thing is, they couldn’t find anything wrong with my vehicle (even thought they spent over an hour both times trying to find something).
Nothing but money grubbing cops trying to add notches on their fencepost.
When the cop first came to my vehicle, he was holding his ticket book just hoping to find something wrong to boost their coffers.
Like I said before, AVOID SWIFT CURRENT SASK like the plague !!!! Unless you like paying fines. They’re watching for you.
sales might slow down but it is not realistic to expect a significant drop in prices when it comes to well located properties here in calgary (significant = more than 5% per year for the next two years; calculating in inflation and the advantage that comes with low interest rates one can conclude that it is still a good time to buy a residential property).
The IMF report illustrates exactly that. Onshore economies are massively interconnected with each other, via tax havens, and, as the IMF notes:
“The vast majority of global finance is intermediated by a handful of large, complex financial institutions (LCFIs), which transact on a few payments and settlements systems and operate out of a small set of countries that serve as global common lenders and borrowers. . . . pervasive interconnections can result in a rapid transmission of adverse shocks across the global financial system . . . The transmission of shocks and the spillover of policies and financial conditions occur largely through these core economies.”
The paper looks at both banks and “non-banks” – the strange creatures that roam that largely offshore zoo that is known as the Shadow Banking System. The non-bank sector, as the IMF explains, is very offshore-like:
“The nonbank entities [exhibit behaviour that] has been fueled in part by the desire to avoid regulations”
=======
Tuesday, November 23, 2010
PWC and World Bank highlight falling corporate tax rates
PriceWaterhouseCoopers, a global accountancy and tax advisory business, in conjunction with the World Bank, has published a new report which highlights – amongst other things – that corporate tax rates have fallen in over 90 countries since 2006. And for good measure they claim that this will contribute to economic growth.
==================
Economic Crisis + Offshore
http://www.taxjustice.net/cms/front_content.php?idcat=136
Well, what a surprise. In the much-publicised fraud case involving a lawsuit filed by the Securities and Exchange Commission against Goldman Sachs, it is absolutely no surprise to us to find that this deal, known as Abacus 2007-AC1, involves:
Issuer: Abacus 2007-AC1, Ltd., Incorporated with limited liability in the Cayman Islands
Co-Issuer: Abacus 2007-AC1, Ltd., Incorporated with limited liability in Delaware
http://taxjustice.blogspot.com/2010/04/goldman-deal-went-through-cayman.html
=====
http://www.mcclatchydc.com/2009/12/30/81465/goldmans-offshore-deals-deepened.html
=
secrecy jurisdictions claim that they are committed to fighting criminality
The problem with criminals who operate their finances via offshore is that usually the criminality cannot be proved until authorities have access to their accounts. Yet the offshore centres in which the criminals stuff their stolen wealth will refuse to release any accounts until their client is proved to have engaged in criminality. See the problem? You can’t prove criminality until you have the accounts, but can’t get the accounts until you have proved criminality. ”
(TJN)
#120 Oasis on 12.02.10 at 4:36 pm
2. i hate to break the news to you, but, according to YOUR chart, (http://research.stlouisfed.org/fred2/series/TOTBKCR) “Bank credit for all Commercial Banks” , CREDIT IS RISING AGAIN> NOT FALLING>
****************
lol–one tiny uptick that hasn’t even brought it back onto a 40 year trend–
You deny that house prices in Japan have fallen-in spite of the provided evidence–
You deny the collapse in Velocity-
You deny or ignore or simply do not know how to interpret any of the data i have provided–
You write LIKE THIS to try and make your lame duck case-sound like it has some merit-which it doesn’t-
Here’s your collapsing dollar-
http://upload.wikimedia.org/wikipedia/commons/1/12/Reserve_currencies.svg
You fail to understand the weighting of Fiat currencies and what they consist of-which is a “basket” of world currencies–
Same for “all” of them-
Here’s the EUR a whole 15 cents higher then 10 years ago-when it was once 150-1
http://upload.wikimedia.org/wikipedia/commons/e/ea/Euro_exchange_rate_to_USD.svg
With all the problems in Europe-do you think the EUR will continue to gain against the USD?
I see very savvy Currency traders calling for par within the next year-
Hell–will the EUR even survive a year?
I understand you WANT to be right-fact is you are not-
http://upload.wikimedia.org/wikipedia/commons/e/ea/Euro_exchange_rate_to_USD.svg
http://barchart.com/chart.php?sym=MMZ10&style=technical&p=WN&d=M&x=35&y=6&sd=&ed=&size=M&log=0&t=CANDLE&v=1&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump
I don’t see whatever it is you’re seeing-unless you measure against Gold-then yes-they are “all” collapsing
Brampton builders have not reduced any inventory. You still need $400.000 for a semi detached.
http://www.newinhomes.com/condoshouses/sale-listings.jsp?regionID=1&cityid=4&pg=4
The end is nigh! The is end is nigh!
By the sounds of it Brampton will be ground zero for Armageddon. I don’t know about you guys but I’m buying my Mad Max leather pants and spiked jackets now. From the comments here real estate in Brampton will spurn the beginning of a barren wasteland, where we all cannabolize each other and scavenge the charred remains of $500,000 homes looking for scraps of roti and curry (as one post posits that Brampton is 99% Indian when the actual number is between 25-35%). There is no hope folks, invest in companies making punk rock leather clothing as we are headed for post-apocalyptic wasteland! The end is nigh! The end is nigh! (and some the sky is falling mixed in for good measure).
#117DSP-I think you missed the point-IMO no one is claiming that hyperinflation exists right now in North America. When hyperinflation has occurred, it is a result of a currency collapse, not a ramping up of available credit. Using your logic, all you have to do to make imported goods dirt cheap is to restrict domestic credit supply-it doesn’t work like that.
#133DSP-I think you answered your own question-if currencies could simply be strengthened by a declining credit supply, these same currencies wouldn’t have been declining against gold and silver.
AJ; Thank you for your patience and insight. I think that I can assume that there is no significant movement among Asians to buy up property in Vancouver after all since they are limited to how much they can take out of China. But if 10 of them take out 50,000 each then they can buy. I assume that is what you meant. By the way it is professor Mark Hart for anyone else who is interested.
#119 sam— and all the other airheads posting that all they see are prices going up with people bidding over asking price etc etc. Please give your head a shake!!!
If you want to make dumb statements like that, back it up with numbers– not CREA numbers–not month to month or year to year percentage numbers,(we all know how they get screwed) but the MLS# of any property you are referring to.
This will tell everything you need to know–original list date and price, any price changes and the final selling price, and yes you’ll need a good realtor/friend to send you all this info but it can be done.
Once you have this info you’ll know in a short time just how the markets doing in any particular area you wish to analyze or potentially buy in
Granted, some areas are doing better than others but the tri-cities,which i follow has been dropping since last Mar/Apr. Many condo owners underwater
No i won’t post any numbers today,but sam,go back to Garths post of “OLD PEOPLE”–post #165 BDG YYC… it tells you what to do
australia
Wednesday’s ruling specifically targets private equity firms that are domiciled in international tax havens. The tax office, which is aggressive in tackling offshore tax avoidance, said it would crack down on offshore company structures it believed were being used to reduce their tax bills.
===============
First, when a corporation borrows money then pays interest on the loan, it can generally deduct the interest payments against tax. In addition, if the subsidiary or financing partner records those interest payments in a zero-tax haven, it cuts its tax bill that way. The distortion is that if the corporation, by contrast, funds itself through equity finance, it gets no comparable deduction. The distortion gives corporations powerful incentives to load up with debt, rather than to seek financing through equity markets.
Leveraged buy-outs are a case in point. Private equity firms and others routinely borrow to buy profitable companies, then deduct the interest costs in the high-tax country, and realise the interest income tax-free, offshore. At a corporation tax rate of 30 percent, the taxpayer gives a 30 cent subsidy to the private equity company for every $1 of interest paid.
This engineering does nothing to promote higher productivity or real value creation – it merely transfers wealth directly from taxpayers to private equity firms, and indirectly transfers wealth by boosting leverage in the financial system, which has led to taxpayer bailouts.
–
#14 JO — “. . . China’s leading indicators are looking scary (big bust comes China’s way)..euro region is one step away from all out disaster . . .”
What makes all of this (somewhat) amusing, from a detached POV, is that Soros (Obama’s bankroller) really likes China’s way of doing business.
With Soros now having approx. 1100 tonnes of gold (I posted the link a few nights ago), one can see the west is on it’s last legs and the cycles are shifting east, so who will end up being the beneficiary?
The elite routinely fund all sides in a world war, as it is to their best fiscal advantage, so they are well taken care of.
The unknown quantity — things that no one ever bothers to think of — come into view here, and I have no doubt the planet is in store for plenty of unexpected surprises in the not-too distant future.
#26 Bill Grable — “The Rich from all over the world SALIVATE to move to Canada.”
Curious that Gerald Celente chose to move his entire portfolio — all 100% of it, lock, stock and barrel — to this country. There isn’t much other than land and snow here, but there has to be a reason.
Guess we will all find out one way or the other shortly!
#93 GregW, Oakville — G’day Greg. These reports are quite interesting and truthful, which is why they won’t ever be in the m$m. Cheers!
#102 !!~~take back control~~!! — “. . . take back control of our country’s money supply.”
Which is why JFK and RFK were killed, then Richard Nixon resigned in disgrace. If Nixon had been charged and testify, he would have revealed numerous secrets and also answer plenty of embarrassing questions about the Kennedys.
Creating the US Fed, and letting a private bank issue and hold the public’s money, was the worst possible outcome. Both Kennedys were intent on ending the Fed.
Good post.
#117 dark sad person — “. . . but-we have to play the hand we’re dealt today-”
Correct, and it is not now, nor will be in the near term a good hand. Lots of folks (silently) hurting out there.
#123 CTO — “Are my views ludicrous Garth? Any blog dogs, am out on cloud 9?….”
You are in perfect symmetry with other nutbars here. Please continue to be one of us, as we enjoy your company!
Can’t anybody here spell?
Swift Currant??? Sheesh.
Long time reader, first time poster. Like reading your daily blog, keep up the great work.
I don’t agree with poster #76 – Expand your means. From the trends, data available [and in some cases as mentioned in today’s post data unavailable =)… ] we are due for more than just a “slow down”). Garth hasn’t called for a catastrophe has called for a Canadian RE crisis. His definition of crisis however has been clear and consistent.
From Garth’s Feb 5th 2009 posting: “The financial crisis has levelled trillions in wealth and had its zenith last fall. The real estate crisis will destroy trillions more, in a process which is just starting in this country.” http://replay.waybackmachine.org/20090206010344/http://www.greaterfool.ca/
Sorry to contradict you Garth but we’ve gotta keep you honest. =)
Thanks, but learn to parse a sentence a tad better. There has indeed been a real estate crisis in much of the western world and the acceleration of it in the US, Spain, the UK, Ireland, Portugal since the financial crisis has erased trillions. We have yet to feel the force of it in most parts of the country. Whether it’s a crisis here or a simple swamp remains to be seen. But the status quo will not survive. — Garth
I’m with you, as much as i want and expected Vancouver to fall off a cliff I’m doubting it’s going to happen. I keep seeing sold stickers put on for sale signs. At this point the only people that are going to feel any pain in the downturn that Garth is now predicting are maybe the few that bought in 2009…big deal
————————————————————-
Fool Me Once:
Garth et all,
I have been a long time supporter of the idea that RE has become laughably overvalued and due for a serious correction. My family lost everything we owned back in the 82 fiasco in Vancouver. I have many scars and understand all too well how a market can turn when overvalued. But alas I am losing faith in the fundamentals that should steer the market as history has shown us. We here are talking of maybe a 20-30% correction in Vancouver? Garth, thats only a spit in the bucket, it only represents the gains witnessed in the last 3 years. It’s no where near where the age old fundamentals tell us the market should be. With the average household income at 72K, the average SFH should be 216K. OK, I’ll buy the argument that it’s the west coast, it’s always been a little higher, lets tack on 30%, now we’re at 280K. I’m convinced we’re not going to see that, ever. Sadly, Shiller’s formulas are gone in this market. Really too bad. Yes, maybe a 20-30% correction, but not enough to make it affordable for the average family living in these areas. Sad.
#136 BrianT on 12.02.10 at 7:21 pm
#117DSP-I think you missed the point-IMO no one is claiming that hyperinflation exists right now in North America. When hyperinflation has occurred, it is a result of a currency collapse, not a ramping up of available credit. Using your logic, all you have to do to make imported goods dirt cheap is to restrict domestic credit supply-it doesn’t work like that.
#137 BrianT on 12.02.10 at 7:25 pm
#133DSP-I think you answered your own question-if currencies could simply be strengthened by a declining credit supply, these same currencies wouldn’t have been declining against gold and silver.
********************
I think you miss the point–
“How” are people supposed to get “Money” if not through credit?
Is unemployment low?
Are wages rising?
Is the value of assets rising?
Are consumers spending more or less?
People have to spend-in order to create Inflation-even mild Inflation-
Is the USD crashing against other Currencies?
Show me which one-
When have I ever said Currencies “must” strengthen because of a lack of Credit?
I’ve repeatedly said-Currencies float and compete-
So–show me where the USD is weakening-other then micro moves against any Currency-other then Gold and I’ve shown countless times–they are “all” weakening against Gold-
You people are too Canadian and US centric-
Look around the World–
Where are conditions “better” then in the US-when in fact the US has been in Deflation for 3 years–
For Christ sakes-the others have barley tipped into Deflation-if at all and they’re blowing up already-wtf are they gonna look like in 2 years?
The Fed is bailing them out as it is-
What other Currency could stand that pressure?
I’ll tell you right now–we’ll all blow up before the US does-
You have no idea of the deep capital markets they have-
That is what gives them the strength-
What would the USD do if they pulled back their Military or if they endorsed Austerity ?
It would probably go to the moon-
It would probably collapse half the Currencies on the Planet as their would be a rush into the $
“If” we get a double dip in the Market-expect me to ask you “why” the USD is soaring–
Watch it happen-
Watch US Bonds sky rocket-
I have a feeling that a lot of People “wish” the US would blow up–
Dream on People-you have no idea-
Brampton is doing really bad. How bad? The RE in brampton is so bad that the Brampton RE board has yet to put out September sales numbers. People in Brampton are going bankrupt in record numbers which would explain the record numbers of power of sales. Anyone thinking of buying in Brampton should offer anywhere from 25%-50% of the asking price. People in Brampton need to sell or else they will be going bankrupt.
@ #191 poco
If you were to venture out of this blog and see what’s happening with some prices on Vancouver maybe you would understand what I’m saying. Yes there’s a decrease in sales from last year to this year.
But before you think you’re smarter or better then anyone else go visit some open houses and you’ll see what’s going on.
Like I said, I’m not a bull by any means. But you need to get out of the internet a bit more and see what’s happening in reality.
#138 Brian1,
The 50k limit is almost certainly being flaunted. But again, no one knows by how much. The assumption inside China is that property (and luxury goods) are being purchased with unreported earnings.
Anecdotal reports from realtors in Vancouver put new construction orders at roughly 40-50% and high end home resales at 80% Chinese buyers. Whatever the precise numbers, that is far more than is needed to set the price at the margin. Other evidence of their influence is a $10k price bonus for sales with “lucky” addresses over those with “unlucky” ones.
“Mark Hart China” will also work for searching. “Chanos China” will pull up another interesting set of reads and videos.
I’ve been trying to figure out how this is all going to fall out. Interesting Times and all that.
#133 dark sad person on 12.02.10 at 7:01 pm
____________________________________________
you’re not clueless, just a liar.
here is the purchasing power of the dollar over the last 200 years. seems pretty clear what has happened.
http://goldprice.org/bob/uploaded_images/dollar_USD_Purchasing_Power-753629.gif
here is the USD index for the last 25 years…. up or down?
http://www.mrci.com/pdf/dx.pdf
the EURO will survive. Parity with the USD is talk by morons. i can easily place a wager with you if you like.
the Euro will exist this year, next year, and 10 years from now. it won’t disappear, unless there is world wide hyperinflation.
the direction of the USD is nowhere but down. down down.
here’s the wager. The USD index (currently at 80), makes a new all time low, below 70. how about that. should that happen… you can publicly admit you’re clueless.. i’ll disappear should the USD index go above 90.
interested … ??
Very funny… But very true for many…
http://www.youtube.com/watch?v=E2IjktYtwwo&feature=related
#142 Brass Balls
Swift Currant is the same as California Raison
#142 Brass Balls
Speedy Creek
#144DSP-your funniest line was imagining what the USA could accomplish if they “pulled back their military”-jeez nice fantasy you have going there-why not just have them take back the keys to the piggy bank from the connected banks-that might free up a few scheckels-high speed rail and world peace here we come (your fantasizing is kinda fun).
I apologize for my verbal diarrhea in my debut post. I’m glad you didn’t censor it but disappointed you deleted both post #76 by “Expand your means” & your response to it. Just to recap he had called for a flatline while claiming GT had predicted a Canadian RE crisis and catastrophe. GT responded by saying he had never called for either.
Didn’t want it on the record that even you make a mistake once in a while? Only seems fair you should let posters edit/delete their comments as well. The least you could have done is correct my grammatical errors while editing what once was post #76 =)
The earlier post was removed since it was made by an individual who was spanked previously for bad behaviour. You just alerted me to it. My only mistake was being so incredibly generous. — Garth
CTO, did i say ludicrous?
A fact about this blog:
Very difficult, if not impossible, for others to change peoples views, whether bears or bulls. Bear will remain a bear and a bull a bull. Yet time marches on…
Enjoy your holidays!
You too CTO, Junius, GT
Will be back to post in the spring….
One of the girls I work with has a condo she rents out near downtown Calgary. No worries for her as she bought long ago and actually turns a bit of a profit rather than feeding the beast. She won’t sell, but I don’t see her at extreme risk unless the rental market collapses or rates go way up. Or parking rates collapse. She probably makes most of her profit off the parking spot.
Side note, I was in Denver the other day, right down town, and there was a parkade with an “early bird special” for $4. My early bird special close to downtown Calgary? $16. Full day rate Denver? $5. Calgary? $21. And I park in a cheap lot!
Anyhow, here is the story she told me. When the cold snap hit, a water pipe broke and damaged 3 floors. Why did the water pipe break? A bank had foreclosed on one of the apartments, and the owner opened all the windows and tore out the thermostat when he left, as well as various other damage. Get this: that was in April. The bank hasn’t even sent anyone in to the place to assess it since April and they certainly didn’t list it. 7 months vacant and the bank has taken no action. I wonder how many other stories there are like this out there.
The condo board only found out when they had to contact the owner (a-wall) and finally the bank to deal with the leak. Of course they will be petitioning the bank for the damages but I don’t think the bank will be too cooperative, and I don’t know that the damages would be worth enough to do anything but throw a contingency lawyer at it.
But in Canada that’s not always a good idea unless you are broke because the judge usually awards legal costs to the victor. Not saying that’s a bad thing, it eliminates a lot of the frivolous lawsuits that you get state side. We should fear the rise of the contingency lawyer, because they will sue anyone for anything. Although paying the winner’s legal fees is potentially a big deterrent to seeking recourse, the alternative is worse, and if you are pretty sure you are right you can go ahead and potentially force a settlement or if you win the judge will cover your costs too. Even in divorce the tendency to award costs keeps a lot of frivolous cases out of the courts and encourages settlement or arbitration. Although the lawyers can make plenty on that too.
Lol, I actually haven’t been here in weeks, being busy with new job, new business etc.. Tonight I got really bored since the wife had to fly out to Mexico for business so like an idiot I typed garth’s url into my ipad.
Of course, it’s like ground hog day in here, so I’m not going to read the rest because it’s deja vu.
I guess I came too late for ‘Calgary bash night’ as this was yesterday. Damn. Oh well. Calgary still rocks, low taxes, great skiing/snowboarding and healthy looking sportive chicks. Not like those donut swallowing fattties from TO. Anyways, you got a conservative mayor now so stop it with your constant penis envy.
So yes, I’m still having a great time. The house is about to be paid off only 8 years after we bought it and we also did some major renos (and paid cash). But I understand that not everyone can make it in Alberta. Some people are better suited for the welfare states of which Canada has plenty.