Four kids, one income, no savings, two houses and a rented condo. Jennifer wrote me yesterday from BC asking for help (I get a lot of that lately). They bought a place for $550,000 a year ago, put $60,000 into renos, and are about to list for $800,000, with $600,000 in debt.

“We are getting ready to sell our house and have moved into a rental property that should work out long term for us if all goes well (if the house sells),” she says. “We also have a condo that we own outright and we wonder if we should borrow against that equity to diversify ourselves even further? We are definitely “contrarian thinkers” and most of our friends think that we are nuts for getting out of real estate. I have no doubts in my mind that we need to take our money and run…”

You bet, Jen. Run, run away from those friends. While you can.

I’m sure if you called Jen and Ron ‘speculators’ they’d be offended. If you accused them of helping make homes more unaffordable and families more stressed, they’d scold. And if you called them emblematic of a self-destructive societal herd mentality (even when they think they’re cooly contrarian), they’d protest. After all, somebody gave them all that money to dick around with, right? And what’s safer than a house?

Being totally unaware of Jennifer, but worried about her, Mark Carney pushed aside his untouched crusty bun and took the podium. This week’s speech to The Economic Club of Canada uncharacteristically attracted a bunch of reporters and cameras. After all, there’s a whiff of blood on the new snow.

Hours earlier Ottawa announced that families in Canada – the prudent, conservative, cautious, boy scout-weenie half of this continent – now have more debt than Americans. That might be okay if we were earning more, but forget that. Debts are rising far faster than incomes. In fact, our borrowings have jumped while disposable income’s dropped.

That alone may have economists birthing kittens, but there’s more:  A new survey by a big accounting firm shows, despite record debt, almost 70% of us are comfortable with what we owe. Incredibly 78% think they have the capacity (and the stones) to borrow more. Maybe to reno and flip a house with cheap money.

Cue Mark.

“Experience suggests that prolonged periods of unusually low rates can cloud assessments of financial risks. Low rates today do not necessarily mean low rates tomorrow. Risk reversals when they happen can be fierce: The greater the complacency, the more brutal the reckoning.”

Then the Bank of Canada governor said this:

“Owing to the declining affordability of housing and the increasingly stretched financial positions of households, the probability of a negative shock to property prices has risen as well. Don’t assume that things can go on forever.”

About this time, during a speech in Quebec, Stephen Harper was asked about the latest household debt numbers. It is, the prime minister said, “a matter of concern for the government” and Ottawa’s looking at ways to “encourage better decision-making.”

Also about this time bank economists Derek Holt and Gorica Djeric were issuing their own warning. Home ownership in Canada, at 70%, has surpassed that of the US before the real estate market collapse, they pointed out. Home prices are at a record high, and are overvalued (like in the States). The ratio of household debt to family assets is the highest in the G7. In fact our debt-to-income ratio is “not terribly lower” than pre-crash America. We may not exactly repeat the US crash, “but we still subscribe to the view that house prices face downside risk although the exact timing is uncertain.”

What’s not uncertain is the next federal budget, some 60 days off. It’s now an open secret that worried bankers watching the real estate gas bag inflate, even as it swells their profits, are stunned Canadians could borrow so much, so carelessly, so thoughtless to consequences. Kill the 35-year mortgage, they whisper. Raise down payments. For they know not what they do.

Indeed. They do not.

If there was a day it became more crystal what will happen, I have yet to live it. Rates will surely rise. Lending will tighten. Carney’s “negative shock” will hit indebted families living the HGTV high life like a rifle shot. Stunned and wounded they’ll stagger out and ask, where the hell did that come from?

Run Jen. Run.


#1 Paolo on 12.13.10 at 10:20 pm


And nothing will stop this train wreck.

#2 Alberta Ed on 12.13.10 at 10:25 pm

The waves of hypocrisy emanating from the commercial banks, the BoC and our federal politicians are making me dizzy.

#3 celine on 12.13.10 at 10:26 pm

Being totally unaware of Jennifer, but worried about her, Mark Carney pushed aside his untouched crusty bun and took the podium.

Oh, how I laughed when I read this Garth! As well your comment about the little size 8 brogues a few posts ago….
Since it was compassionately suggested by a fellow economic refugee of the collapsed Alberta film industry to read your book, Money Road, I have been on the road. It has been since June. My financial well being has already improved greatly. I tell my friends and family gently and with concern about your book. We have started a support network to help each other as we take action to get out of debt and build real wealth.
with Gratitude,

#4 Boombust on 12.13.10 at 10:27 pm

I have very little sympathy with people like “Jen” and her hubby.

It’s greedy people like them who helpred to fuel the rise in prices. I hope they learn a hard lesson.

Schaedenfreude? Hell, why not?

#5 brass monkey on 12.13.10 at 10:31 pm

Taking a break from reading this blog – I picked up a housing magazine and flipping through it real quickly – it finally struck me – the obvious but finally yelled out at me.

Our last bastion of economic growth is housing – not just what the price of a house cost – but all the jobs that are created..

This magazine was showing countless services and trades – and then I now realize why the government is stricken with fear with the pending Real Estate pop..what is there left.

I shake my head when friends who work on Bay Street – make 6 figure salaries and for what – selling “investments”- again – this is such a crock. People on this site ooze about a quick 20% return – but call home buyers scum and idoits.

We have built a society that builds wealth on the ignorance or stupidity of others..thats it..if I could market it right – I’ll try to sell those pet rocks – its all in creating the belief – pure genius for those who take something out of nothing and make millions.

And I final note people… you have been duped, we all look where the smoke is…but the real fire is elsewhere. Screaming at our governments, bankers – thats all smoke and mirrors people – those truly responsible are never mentioned… there are 7 families in this world who run most of what moves about – and I bet not one of you can name just one family (try the Rothchilds for starters).

Think about it – we in the western hemisphere have sold our soul and will be paying back for generations to come.

#6 Tim on 12.13.10 at 10:34 pm

Too late now, what will it do if they raise the minimum down payment and reduce the amortization period to a max of 25 years? Most of the people planning to buy have already bought and have pushed prices up. As to the woman who wants to sell a house in BC for 800K, who would want to buy in a play where it’s not safe to walk the streets when 10 people got shot last night in one of the wealthiest neighborhoods in the city?

#7 Jsan on 12.13.10 at 10:35 pm

Flipping madness! Is there anyone in this generation that has not purchased one or two extra houses to flip or try to become rich off? I think I am beginning to understand why Real Estate lost all levels of sanity over this last decade. Does anyone in this generation buy a house anymore just to live in? Just as this generation followed the herd believing that Real Estate was the road to riches, many will in the not to distant future painfully realize that it is also the road to rags.

It’s to bad for those people who bought their overpriced house with the intention to actually just live in with no concern about it’s “investment” value. They will be dragged down with all of the get rich quick fools who spent too much time listening to the Real Estate Industry propaganda and too much time watching “Flip This House” episodes on TV.

BTW, did they catch the last year or two of the “Flip This House” series before it ended? Did they happen to notice that every single persons flip would not sell and they all decided to rent their flip out until the market came back (which they were all confident was going to happen 3 years ago). Bubbles are fun on the way up but a b!tch on the way down.

#8 ken on 12.13.10 at 10:37 pm


For the past ten years interest rates were foolishly set at around 1%.This is the most probable cause of most of the crisis we are experiencing today.

#9 dd on 12.13.10 at 10:45 pm

… Mark and Stephen …
… dumb and dumber …

#10 A Guy in Oakville on 12.13.10 at 10:50 pm

Hi Garth,
I like our blog. I liked your talk in Toronto. I like to recommend you others too. But now I’m embarrassed when you post the gross and/or half-porn pics. It dis-credits you and makes contrarians look like whackos to the good ol’ public that has the ‘buy a house now’ mentality. We need a contrarian voice that’s going to be listened to. Don’t make us look dumb. Thanks.

I’ll leave that to you. — Garth

#11 dmc on 12.13.10 at 10:52 pm

flipping is a bad disease all over the world

#12 Bill Grable on 12.13.10 at 10:54 pm

“Moody’s warned Monday that it could move a step closer to cutting the U.S. Aaa rating if President Obama’s tax and unemployment benefit package becomes law.”

Our BIGGEST trading Partner – downgraded?

People are sleeping walking here in La La Land.

They had a story on ‘alley homes’ on TV last night – and I literally started to hyperventilate.


The Titanic has hit the ‘berg.
The Band has lost the sheet music for “Nearer My God to Thee”…

Holy Kondratieff, Batman.

#13 a prairie dawg on 12.13.10 at 10:54 pm

Great picture. Truly symbolic of the current debt euphoria.

#14 NorthOf49 on 12.13.10 at 10:57 pm

Garth, how will the next federal budget play into this? What’s the likely scenario in your opinion?

#15 HouseBuster on 12.13.10 at 10:57 pm

We’re a bit closer today to 2003 housing prices.

#16 BrianT on 12.13.10 at 10:57 pm

On the comedy front, this guy has broken down the US budget spending-check out what is necessary to balance their budget

#17 Billy on 12.13.10 at 11:00 pm

These guys sure are “contrarian”…

A BC couple with zero savings and three properties, one of which was bought a year ago with the intention of renovating and flipping it for a cool 200k profit after 1 year.

Yes, that’s contrarian alright. Never heard of anyone doing that around here, no sir. Where ever did they come up with such an original, never-before-tried idea like that? They should win some sort of “contrarian of the year” prize with that kind of outside the box thinking.

#18 Vanmasu on 12.13.10 at 11:00 pm

This (below) is what Flaherty said. He still wouldn’t do anything as slowing down RE will hurt the economy, then the Conservatives will not gain the majority they so covet. Nothing will happen until Harper calls the election.

But Ottawa is not about to take immediate steps to curb household borrowing, he said, based on discussions with banks about default rates. The government has recently tightened mortgage rules twice.

“There is no reason for extreme concern now. There is reason for concern, so I watch,” Flaherty said.

Read more:

#19 Denisa on 12.13.10 at 11:01 pm

Well, Jen wants to get on the money road and run, I hope she doesn’t become roadkill for Canadian vultures. She has hit a road block to the money road today. Hope it ends well for her.

#20 Ghost of Tom Joad on 12.13.10 at 11:05 pm

brass monkey

“– it finally struck me – the obvious but finally yelled out at me.

Our last bastion of economic growth is housing – not just what the price of a house cost – but all the jobs that are created..”

About time. I can’t believe how block-headed all my fellow-Canadians are. They can’t see all the factories disappear and can’t figure out why buying a KIA isn’t a good idea. They can’t figure out why buying crap from Walmart is a bad idea.

Well, it’ll seem pretty obvious to your children. When they open their cupboards and don’t have any food they’ll know their parents were a bunch of lazy buffoons who did nothing but watch NHL and Dancing With the Stars.

#21 Jon B on 12.13.10 at 11:08 pm

As we get closer to the day of reckoning, it seems there are stark differences of opinion out there. I’m surprised at the many “experts” who think the personal debt issue isn’t such a big deal.

Such as? — Garth

#22 kitchener1 on 12.13.10 at 11:12 pm

Read the news articles with a critical eye.

Lots of rumblings about the govt “ready to act”, will “not rule out further tightening of mortgage regs”

telling you folks, things are going to change in a huge way.

When these guys are worried, it really should say something.

With forecasting models, a tiny up tick in rates or defaults collapses this house of cards.

In 2011, either two things will go happen

the govt will bring in 25 or 30 year ammorts at a min


banks will do it defacto and when that happens, watch the RE market tank.

Note Carneys comments today about a “possible” swift and fierce interest rate rise.

#23 Elmer on 12.13.10 at 11:12 pm

Any chance they actually will raise the min dp and shorten the max am to something more reasonable any time soon?

#24 Devore on 12.13.10 at 11:13 pm

Oh my, overheard on Property Virgins… “you won’t win the lottery if you don’t buy a ticket” encouraging a pair of virgins to sign on the dotted line. That beats “if you don’t own something, you’re nothing” in my books.

#25 ExExpat on 12.13.10 at 11:17 pm

Maybe one more rush of sales in the coming months with buyers scrambling to get under the wire for 35 year terms and low interest rates, keeping the monthly payments low, before risking being priced out forever.

Jen, I think there will still be at least one last good crop of greater fools out there for you, especially just before any new rules some into effect.

#26 Kevin on 12.13.10 at 11:20 pm

“However, real incomes in Alberta fell 2.5% in 1981, rose by 1% in 1982 and then fell by a catastrophic 11% in 1983 as unemployment soared in the wake of a collapse in oil prices”

and Toronto in 1990 “But, as was the case in Alberta, real incomes in Toronto plunged by 9% in 1990 and kept falling until 1994. Once again the catalyst for the drop in houses prices appears to have been the economy. ”

The US experience and past history show us that real wages collapse when the housing bubble burst. But the debt remains, while wages fall, creating a debt to income that keeps climbing. Don’t be surprised to see a debt to income of 160% or more within 2 years.

#27 Mark on 12.13.10 at 11:21 pm

Seriously, how many Jens (or people like her) actually make it out alive from an investment bubble?

#28 Frank on 12.13.10 at 11:23 pm

Looks like your predictions are coming or have come true. Your blog stopped me from buying a condo in Toronto this past spring.
Our situation in Canada only postponed what has happened elsewhere.

#29 Valyrian Steel on 12.13.10 at 11:28 pm

I know that a great many Canadians will be hurt badly by higher interst rates… and yet I am excited by the prospect. Does this make me a bad person? The fact that GIC’s wouldn’t be quite the joke they are today is something to look forward to….

Our mortgage is almost paid off… and my wife and I have it etched in blood that we will never hold a mortgage again… RAISE THOSE RATES!

#30 45north on 12.13.10 at 11:30 pm

As a reader and contributor I really resent your stupid pictures Garth.

I don’t send the links to my children or anybody else.

I think I do get the comparison between the naked man in the picture and Mark Carney. Naked like the emperor who had no clothes.

Also confronting an organized and powerful force. In your dreams Garth.

Next time I’ll show a puppy playing with a basis point. — Garth

#31 Debt's Dark Embrace on 12.13.10 at 11:30 pm

#25 ExExpat on 12.13.10 at 11:17 pm

Yep. More inflation for the bubble.
Maybe one more rush of sales in the coming months with buyers scrambling to get under the wire for 35 year terms and low interest rates, keeping the monthly payments low, before risking being priced out forever.

Jen, I think there will still be at least one last good crop of greater fools out there for you, especially just before any new rules some into effect.

#32 Western Canadian on 12.13.10 at 11:31 pm

“I have very little sympathy with people like “Jen” and her hubby”

Who in the hell are you, and when did anyone ask you to feel bad for Jen and her hubby??

Second, how do you conclude they are greedy??

Another pathetic, renting, Garth reader resenting people who own property.

Sad really.

#33 Freedom 55r on 12.13.10 at 11:32 pm

I look forward to reading your blog every day – I almost enjoy the photos more than the blog itself!
A question for you Garth:
Where do you find these photos???

Actually, that was my last European vacation. — Garth

#34 Tonguestump on 12.13.10 at 11:32 pm

Aaaannnnd when do we vultch?

#35 Joe Q. on 12.13.10 at 11:33 pm

Based on the “affordability” factor and recent stats about down-payments among first-time buyers, even a modest increase in the minimum down-payment (say, to 10%) would mean a quick drop in the price of “starter homes”. It’d be interesting to watch that happen.

#36 Debt's Dark Embrace on 12.13.10 at 11:36 pm

#5 brass monkey

Taking a break from reading this blog – I picked up a housing magazine and flipping through it real quickly – it finally struck me – the obvious but finally yelled out at me.

Our last bastion of economic growth is housing – not just what the price of a house cost – but all the jobs that are created..

This magazine was showing countless services and trades – and then I now realize why the government is stricken with fear with the pending Real Estate pop..what is there left.

#37 Ben on 12.13.10 at 11:37 pm

Co-worker bought at house in Newmarket in 2007 for $460,000. Has had it listed for 100 days at $400,000 and no sale.

#38 your mom on 12.13.10 at 11:37 pm

Merry Christmas…For less than 5,000$ you can buy these 15 houses in Detroit

#39 20% er on 12.13.10 at 11:37 pm

Wanna see what the destruction of middle class wealth looks like?

Just head south.

#40 realpaul on 12.13.10 at 11:49 pm

Wow….148.1% debt and still have the ability to ‘handle ‘ more. Based on what… rates forever Marc?

I have been talking a friend of my wifes out of buying a condo in Manhattan where things are obviously getting worse. It seems that some people think that just because prices have gone down that they have become ‘deals’. I pointed out how inventory is up…bank owned inventory is growing and yet to be turned into the market..which won’t be good for prices. Taxes are outrageous and increasing……plus condo fees are like a second mortgage payment. I think I may have gotten through to her on time.

In researching I also found that Hawaii has fallen by half after people saying…it can’t happen here for the longest time. Prices there have taken that sudden breath taking drop that has shocked people.

But it can’t happen in Canada….we’re special.

#41 banjul on 12.13.10 at 11:51 pm

I enjoy your columns, but please think twice before using some pictures bordering on pornography. It cheapens the column.

How is a guy flashing the cops pornography? It’s one of my fav pastimes. — Garth

#42 Business Unusual Net - the BUN on 12.13.10 at 11:55 pm

The Canadian economy is like watching a helium balloon crash in slow motion…

…Painful but I can’t look away!

#36 Debt’s Dark Embrace to Brass Monkey

Great observation regarding the magazines.

Crash Observations

– At the peak of the market TECH magazines
polluted the shelves but were becoming noticably
thinner, shows and news segments were a plenty.

– As the US housing market crashed you couldn’t change the channel without running into real estate porn.

– A few Canadian ‘reno and redesign’ shows still remain
but are teetering.

– Now, even the mainstream media is struggling to find new ways to spin the crap numbers (Although I’m impressed with their brashness and creativity to continually spin)

#43 buylow on 12.13.10 at 11:59 pm

the head accountant where I work overheard me talking about a RE crash and he piped up telling me that now is the best time to buy because “the houses in our neighborhood are the same price they were when we bought 18 months ago” (in Langley, BC)

the more and more I want to sell….

#44 Business Unusual - the BUN on 12.14.10 at 12:00 am

#10 A Guy in Oakville

Worry less about what people think – sheep smell, sound and look funny (when shaved).

I for one love the pictures, Garth!

#45 JB on 12.14.10 at 12:01 am

I have a mortgage due in 2014. Interest rate @ 4.39%.

I want to get out of it to get a 10 year fixed mortgage @ 4.86% special at Royal Bank.

I only have 10 years left on my mortgage.

Royal Bank says discharge costs will be $8,300, plus legal and appraisal fees approx $1,000.

They told me flat out that they don’t want me to take this mortgage.

#46 Calgary_rip_Off on 12.14.10 at 12:06 am

There are some people on this blog that think houses will be worth in Canada what they are in Phoenix and Detroit. Get a clue line. That wont happen here. I wouldnt want house prices to fall to Phoenix levels. Medium prices keep the idiots, druggies, and low class out. Certain classes of people do work, but most of them have screwed up priorities. Lotto 649 is not a retirement plan, and looking forward to the weekend on monday is stupid. If I thought like this, I would be better off jumping off the Calgary tower headfirst. With no bungee cord.

What’s called for is balance. That isnt likely to happen, unless you have a fascist state, though. There is always some schmuck trying to rip off the other person. I guess that is capitalism. The only difference between the Viking raiders and now is that you dont get your head chopped off but instead get lied to, manipulated, and screwed financially so eventually you die with little money if you dont play the game that currently runs this planet. Forget about ethics and feel good warm fuzzies. Visualize dog eat dog.

In Calgary a news flash is that housing is still a rip off and most morons still think their homes are undervalued and try to rip further people off by renovating and then jacking up the price. All the people, yes all of them, that think their homes have real value=market value should be locked up in a mental institution. They’re all c-r-a-z-y. Can u visualize this you idiot mortgage owners?

So. I live in a city fueled by fossil fuel, conservatives and lunatics. For the most part it is nice, but the only thing is keeping me is my job. Otherwise, Calgary could kiss my @ss because I wouldnt be affording it and would leave.

Perhaps Carney and all the other idiots should stop yanking and actually do something. I dont have a degree in economics, so I dont know what to do. Does Carney?

The lights are burning bright and nobodies home. Perhaps Carney says he’s not responsible.

#47 Boombust on 12.14.10 at 12:07 am

“BTW, did they catch the last year or two of the “Flip This House” series before it ended?”

Probably not. They’re still catching up with Tom Vu from 1992.

#48 Boombust on 12.14.10 at 12:10 am

“Who in the hell are you, and when did anyone ask you to feel bad for Jen and her hubby??”

Boombust. The name is Boombust.

And yes, they’re as greedy as you are stupid. Of COURSE they want my sympathy.

Why else would Jen have written to Garth?

#49 InvestorsFriend (Shawn Allen) on 12.14.10 at 12:11 am

The average Canadian family probably has too much debt.

But that’s no excuse for you to have too much debt. And if you do, it’s your own fault. Not the government’s and not the Bank’s.

The average family also has something like 1.5 kids and has a main bread winner who is maybe 45 years old. If you don’t fit that profile then why should you have an average amount of debt?

And why would you be satisfied to have an average financial profile? Shouldn’t you be shooting to be in the top 10% of net worth for your age group?

#50 Jeff Smith on 12.14.10 at 12:13 am

>#64 T.O. Bubble Boy on 12.13.10 at 9:15 am
>@ #41 Jeff Smith
>RE: excahnge rates on buying $USD investments in a >RRSP…
>I believe that with most brokerage RRSP accounts,
>you can make a same-day purchase of a $USD money
>market fund (a “wash” trade) with the proceeds of
>the sale of another $USD investment.

Hi bubble boy, yes I do know about wash trade, and learnt about it the hard way after several hundred $ worth of my money disappaered into the brokerage’s pocket.

But as you said the problem with wash trade is that it has to be done the same day. Which doesn’t work out for a lot of people. What if there are nothing else worth buying that day? Whoops! too bad!

Garth, we are lucky to have your ears, cause little guys like us will never have a chance to put our views forward to policy makers. What’s the point of allowing RRSP to invest in foreign stocks such as US stocks, we can’t have US dollars in our account that we can use to trade US stocks with? Did you know that if we decide to make a purchase or sale of 1000 share of say a $5 stock, it would cost us several hundred dollars in exchange rate conversion. Don’t believe me? Try it. Next time you are an MP, I will write a big complain letter.

#51 [email protected] on 12.14.10 at 12:13 am

Brass Monkey #5 has a point when he says ‘… Our last bastion of economic growth is housing – not just what the price of a house cost – but all the jobs that are created…’

His phrase is eerily similar to that uttered last week in Ireland by Seamus the unemployed painter, pint in hand, as follows: “… Megan, all we was doon was building fookin’ houses an’ cheap credit! And we thought we wuz fookin’ geniuses! While America was producing I-Phones & Boeing airplanes, all we was doon is building fookin’ houses an’ cheap credit! And now the houses are worth rud ar bith (sweet nuthin’) and we owe the world a fortune! Megan, we’re bollixed!”

The only difference is that Canada has more natural resources and therefore the international bond dealers might not close us down as fast with higher interest rates. But we might be in as much danger as Seamus & Megan — only we don’t know it yet. Seriously, anyone seen any factories going up lately?

On a different note, I’ve got $5,000 to stick into a TFSA. I’m not a large enough client to afford an investment advisor. But I’ve opened an account with Questrade. I know zilch about the stock market except that Garth likes ETF’s and preferred’s. Where to go from here?

#52 Jeff Smith on 12.14.10 at 12:15 am

By the way, if the government does not wants us Canadian to retire into poverty, it should really seriously make it easier for Canadians to invest in profitable foreign stocks. I don’t think all Canadian companies are that health, remember Nortel & and Stelco? Yup, lost my RRSP money in those. They are canadian companies.

#53 The Original Dave on 12.14.10 at 12:15 am

so if home ownership is at 70% and the real unemployment numbers are roughly at 16%ish, there aren’t many employed people that are left to buy.

I’m not sure if homeowners and the unemployed have both been measured equally, but if they are, the 2 groups combined leaves us with only 14% of employed Canadians who haven’t purchased. It is safe to say that there is a small percentage of people who simply have no interest in purchasing a house or condo. If that number is 1 out of every 10 (10% of the population), then only 4% who haven’t purchased remain.

How can an asset keep going up in price when 70% of the people have already purchased, 16% of the remaining people are unemployed, 10% aren’t interested in purchasing (1 out of 10 people…this number is just an assumption)?

Only 4% of the population (which represents those who haven’t purchased, who are employed, and are interested in purchasing real estate) remain. Not good numbers if you want prices to rise.

#54 Junius on 12.14.10 at 12:17 am

I have to give Carney some credit. At least he is finally telling it like it is. Took him long enough but it is better than reading all the usual drivel and the MSM bull crap.

I found the phrase “brutal reckoning” about the strongest thing I have heard from the B of C in years.

#55 Tryingtobepatient on 12.14.10 at 12:19 am

Dear Garth,
Your time has come. Write an article for the Toronto Star, The Globe and Mail, The National Post. Get your message out there for the masses to read. If you want to make a difference, go beyond this little blog. The big newspapers (the ones that really count) are finally ready to listen to your message because you have the ability to attract an audience and what you are saying is no longer fear-mongering. The suits are saying it too.

#56 Priced Out in Toronto on 12.14.10 at 12:21 am

For all those people who think prices will not come down substantially – I have this one question: Where do you think the buyers will get all this money?
People are not making enough money to afford these prices long term.
I would honestly buy if I thought I could afford it and eat. And yeah, I’m debt free and salary is ok so far (Thank God).
In my opinion, Toronto housing is now living on money made elsewhere. Very few normal Canadians can afford an average home here – and I mean mortgage, taxes, utilities, any repairs, etc…
When this thing corrects, it’s gonna hurt. There are way too many investor/speculators out there.
The strange part is, now China is starting to get scared of their own housing bubble. There go the prices of raw materials if they decide all those empty cities they have are enough for now. And with that, there would go the other bubble keeping the Canadian economy afloat.
In my own limited experience, this thing will hurt all of us. That’s the sad part of it. When this thing does correct, we’re all gonna feel it. One way or another.
There is no winner and no loser. This thing is too big not to be felt by everyone.

#57 Junius on 12.14.10 at 12:22 am

Mick the pimp (from the previous post),

If you want some respect here Mick why not try something new? Why not try to put together 2 or 3 sentences that aren’t all about “Fear and Greed.”

C’mon Mick. You aren’t here to try and persuade or stand up for any principles. You are just hear to try and squeeze a bit more blood out of the last stone before the market crashes. Pardon me if your type make me ill.

Even DA puts together a good argument sometimes or makes a valuable contribution. Under any one of your names it is all “fear and greed” “it is different here” “buy now or be priced out forever.” Heard it all before.

#58 SophieZombie on 12.14.10 at 12:24 am

#38 your mom
What’s the difference between a newly sold house in Vancouver or Detroit ?
– Expect to vacuum and scrub the bathroom before you move in. No freeby.
– Expect junkies and shooting in da hood.

It is just 2000 times more expensive in Van.. and more taxed.

Still, the resemblance is striking !

#59 Patz on 12.14.10 at 12:25 am

Don’t make us look dumb. Thanks.

I’ll leave that to you. — Garth


#60 MP on 12.14.10 at 12:26 am

#38 your mom-

Outstanding link…especially when you should have typed $500.

#61 Chris on 12.14.10 at 12:27 am

But now I’m embarrassed when you post the gross and/or half-porn pics. It dis-credits you and makes contrarians look like whackos to the good ol’ public that has the ‘buy a house now’ mentality. We need a contrarian voice that’s going to be listened to. Don’t make us look dumb.

What are you talking about … my ten year old son thought the picture was hilarious.

#62 Junius on 12.14.10 at 12:28 am

Can all the people who complain about the pictures please get a life. What is this? The US bible belt?

#63 Jeff on 12.14.10 at 12:28 am

Where’s the crash? When is it arriving?
This blog has been running for years and housing has for the most part simply stopped increasing.
This is about as bad as it’ll get folks.
Interest rates could stay at 1% for years. Who cares if inflation jumps up to 4 or 5%?
It’ll just eat up debt.

You contrarions weren’t completely wrong, but you’re doomsday notions weren’t completely right either.

How many years are you going to keep waiting for this crash to happen?

#64 Aussie Roy on 12.14.10 at 12:28 am

I’ve noticed from the last post many people are confused when it comes to debt. My old saying about debt is this, “good debt pays for itself through yield or savings made”. Here in Australia the RE industry didnt like the yield bit, as most houses arent returning enough to cover interest payments. So here the RE pumpers have changed this old saying to Good debt is debt that pays for itself, meaning its ok if you dont get enough rent to cover interest payments because houses only ever go up and this price appreciation will cover the loss. Thats fine until the prices rises stop.

Aussie Update

Its a slow day – here is a wiki leaks story

#65 Basil Fawlty on 12.14.10 at 12:34 am

Regarding the complaints on Garth’s choice of pictures, I had no idea how many Canadians are so prudish.
For crying out loud, we are not living in 18th century England.
As for Carney, too little too late. The damage is done and he caused this fiasco. How could the Governor of the Bank of Canada not understand the consequences of reducing interest rates to below the rate of inflation, after observing the easy money meltdown in the USA?

#66 Junius on 12.14.10 at 12:38 am

15 Worst US cities for price reductions between now and 2012 according to Case-Shiller:

Vegas is #2. Miami #3. Prices down more than 60% with another 20% or more to go. Good times.

So glad it can’t happen here.

#67 Aussie Roy on 12.14.10 at 12:40 am

Western Canadian on 12.13.10 at 11:31 pm

Another pathetic, renting, Garth reader resenting people who own property.

Sad really.

LOL, some of us are actually property investors (well were) trying to enlighten the delusional. I see we havent been able to cure you yet, open your mind my friend. There are plenty here who have made lots from RE and sold, there will be plenty more who lose their wonderful MtoM profits by ignoring sound financial advice.

How to spot the delusional

Anyone negative on property must be scum renters.
Houses prices will go to the moon.
Its different where I live.
Price to income ratio is not important.
Price to rental income is not important.
The wealthy from Uranus will save the market.
Etc etc etc etc……….

#68 Dave on 12.14.10 at 12:40 am

Hey Garth, sitting here with my wife in Regina…we’ve made a decision to sell this week. We will sell our home for more than double what we paid. We will rent. Last week we looked at new homes in Harbor Landing. A nice little bungalow with a walkout to a storm drainage with a finished basement is going for $668,000…it would be nice, but we are not fools. Our friends are going to think we’re poor or lost our mind when we rent.
Our combined income is high and we have solid jobs with pensions and savings…
We can’t wait to pick up one of these nice spec homes in a few years for a discounted price…
Thanks to you and everyone here, you helped us(mostly my wife) see the light.

#69 Dave in Victoria on 12.14.10 at 12:42 am

People who think those pictures are porn should go to church less.

#70 Patz on 12.14.10 at 12:44 am

Before the global financial crisis of 2008, debt-dollar discipline was maintained by re-directing credit growth whenever a debt-induced recession occurred. Essentially, financial consumers would be disciplined (by the system and themselves) to leverage their stagnant real wealth into various different assets [like RE] for temporary returns. There are currently no asset classes or greater fools left to pick up credit growth where it left off, save for government leaders around the world, who will stop at no lengths to preserve the debt-dollar discipline keeping them in power.

If you understand that paragraph you’re closer to understanding what’s happening to you/us.

More at:

#71 OttawaMike on 12.14.10 at 12:50 am

Like another poster has already stated here, this latest revelation from Carney will only create more demand for real estate. The fence sitters will rush to buy before the rules or interest rates change.

The perversity of all this will be a further run up in prices.

Speaking to my mortgage broker buddy today he described the Ottawa market as slowing somewhat but also commented certain areas are seeing pricing volatility downwards.

I’m still not convinced it’s over yet. I expect the spring market to roar back into full swing with price increases.
The whole situation has gone beyond stupid.

#72 T.O. Bubble Boy on 12.14.10 at 12:50 am

“Jennifer” is kind of a contrarian: she thinks that most of her friends think she is nuts for “getting out of real estate”.

On the contrary Jen, they think you’re crazy for having 4 kids!!! How anyone “accomplishes” that while also piling up $1M-$2M of highly leveraged real estate with zero savings and 1 income is truly remarkable.

Garth — is Jen a drug dealer? There has to be some angle here that I’m not seeing.

#73 Bottoms_Up on 12.14.10 at 12:51 am

The financial post (in last Saturday’s copy of the Ottawa citizen) portrayed a couple in Toronto, currently in a modest home and looking to ‘buy big’. The decision? Buy big now, or wait 5 years and buy big then (i.e. there’s no alternative but to ‘buy big’).

Funny how in the calculation of their current monthly expenses for the couple the author conveniently left out expenses related to house maintenance/upgrades (~$800/mo), contingency/rainyday fund (~$200/mo), and even didn’t provide for common household expenses (I guess you don’t have to buy toilet paper eh?)! Yes, you CAN afford that large, luxury home, if you forget about paying for the current necessities of life!

#74 Heddok on 12.14.10 at 12:52 am

Love the photo’s but why does the naked guy still have one sock on? I mean what stopped him at that point?

#75 DM in Calgary on 12.14.10 at 12:53 am

Really? Really? We’re in over our heads in debt (Canadians as a whole), but people are struck with vapors when confronted with a couple of cheeks?

Pictures are worth a thousand words. The ones on Garth’s blog are worth more than that.

#76 OttawaMike on 12.14.10 at 12:54 am

This survey says the average freelance business journalist earns $25,000-$30,000 per year.

I guess that’s why Garth knows so many squirrel recipes and how tough it is to survive on $22,000 per year combined old age security.

#77 Fractional Reserve on 12.14.10 at 12:55 am

Garth I love your photos and the retorts you give the prudes who object to your “vacation pictures”. Keep the pictures and witty comments coming. You are very Churchillian in your responses. Bravo Garth!

#78 Prairie Drifter on 12.14.10 at 12:56 am

I thoroughly enjoy your pics, but here’s a link to one you might consider as less risque. (I think it’s Missy Bunny seducing another Property Pup.)

Now I’m totally shocked. — Garth

#79 Jim on 12.14.10 at 1:01 am

Brought a house for 550k one year ago and now on the Market for 800k ?? I have not seen any real price change In the past 3 years? I think this can’t be true? Has anybody got amy facts of figures of such price increases here in bc? Vancouver area or even better the Fraser valley?

#80 Crash Callaway on 12.14.10 at 1:18 am

in Quebec, Stephen Harper was asked about the latest household debt numbers. It is, the prime minister said, “a matter of concern for the government” and Ottawa’s looking at ways to “encourage better decision-making.”

Ottawa’s version of better decision making is to get the suckers to make choices between the 1.5 million condo with the garburator or the 1.5 million condo with the Elvis wall hanging.
Govt doesn’t give a loonie about the public.
Everything they’ve done in the past two years is pimp & prostitute themselves at our expense to keep the music playing and to ensure the banks, big business and realtors aren’t the one’s caught without a chair when the music stops.

Keep buying in suckers and be radical about it!
Be contrarian!
Be Morgan Be a Captain… Stand your ground in total pre approved rebellious unison.
Refuse to buy that condo unless they throw in a voucher for McDummie fries.
You’re SPECIAL and you DESERVE it.

#81 just sayin' on 12.14.10 at 1:25 am

In response to #10 A Guy in Oakville on 12.13.10 at 10:50 pm

Hey Guy I’m with you, your comment isn’t dumb and that’s another thing GT likes to do, criticize everyone.

In fact, since he posts the raunchy photoshopped pics and talks about “sexy” investments a lot, I wonder if he’s a bit deprived :)

Or maybe he just needs a bigger Hummer, since he’s always going on about that too.

I, like you, would prefer my advice served straight up….I am sure Garth could find other pics but it seems like his “thing” to titillate and offend….but there
still lots of great content and some astute bloggers running loose on this site so I just ignore the pics.

Hi Garth,
I like our blog. I liked your talk in Toronto. I like to recommend you others too. But now I’m embarrassed when you post the gross and/or half-porn pics. It dis-credits you and makes contrarians look like whackos to the good ol’ public that has the ‘buy a house now’ mentality. We need a contrarian voice that’s going to be listened to. Don’t make us look dumb. Thanks.

I’ll leave that to you. — Garth

#82 ams on 12.14.10 at 1:30 am

My sister just bough a house today in GTA and no amount of quoting Mark Craney would help, no one is going to take Craney seriously until he raises interest rates.

Today I truly got to witness how the housing market operates, my dear sister bid 430K on a house with an asking price of 425K, because they love the house, they are first home buyers … etc, horny young couples as Garth likes to call them.

My sister has been looking for a house since September and I have tried my best to educate her, I even built a spread sheet for her that factored in the total cost of ownership separating interest from principal adding in land transfer taxes, Toronto city property taxes, basically showed her that a house will cost her $1600-$1800 a month in interest and property tax and that her 35 year amortization was plain evil.

I had a long conversation with her on Sunday afternoon and she basically said, i don’t believe you that all these people buying houses are doomed, you are too pessimistic, it is okay if we loose up to 60K of our down payment we are not planing to move for a few years anyway and our mortgage is locked in for 5 years.

My please that she should calculate how much her monthly payment would be if when she went to renew the mortgage she would have a 7% interest rate, the facts about the housing crashes in the USA, Ireland and other places would not sway her. Her standard response, was but everyone i know is making good money, the economy is just fine, there are no problems.

Next time I am going to talk to her I am going to wish here good luck, she is going to need it.

#83 Kate on 12.14.10 at 1:34 am

Please keep the guy, I like him. We have already lost elephants…

#84 Crash Callaway on 12.14.10 at 1:37 am

#10 a guy in Oakville said

” Hi Garth, I’m embarrassed when you post the gross and/or half-porn pics. It dis-credits you and makes contrarians look like whackos to the good ol’ public that has the ‘buy a house now’ mentality. We need a contrarian voice that’s going to be listened to.
Don’t make us look dumb. ”

To me: Garth’s pic shows that those that bought in are going to lose more than their shirt. At least the guy in this pic has a sock & a shoe left. He can still hop away.
The Greater Fools who drank the funny freshie will be stark.
This is the coming new REALITY TV… a bunch of naked aholes in denial pretending they’re still dressed for the Ball.

Great pic Garth!

#85 moremiles on 12.14.10 at 1:37 am

The future for Canada?

#86 Peteschmete on 12.14.10 at 1:47 am

I hope one day this blog turns bullish on RE and Garth is screaming “buy you fools” but everyone is too scared or absolutely think that RE is a very poor investment…..can’t wait. Wash rinse repeat.

#87 bruce corell on 12.14.10 at 1:47 am

WOW…….I guess all this time they finally saw what Garth was saying. I got a feeling its too late. BOC covering their ass….Now they can say in january when defaults begin…WE TOLD YOU SO>>>>>>>>>Did we really believe we were different than the rest of the world. God help us now……….

#88 EJ on 12.14.10 at 1:53 am

I can’t believe how many prudes there still are out there who are offended by basic human anatomy. I thought these people went out with my grandparent’s generation.

#89 Devil's Advocate on 12.14.10 at 1:54 am

Gee willikers doncha think somebody oughta break out some popcorn and soda pops before the feature begins? I hear it’s gonna be a real horror. I can hardly wait. It’s sooooo exciting. Won’t it be so kewl to watch all those people suffer? I love mayhem. Oooooo I am so excited I can hardly wait. Think I have time for a pee break?

#90 EJ on 12.14.10 at 2:00 am

#32 Western Canadian on 12.13.10 at 11:31 pm

You don’t seem to grasp the concept of “public forum”, do you? It’s a place for people post their thoughts, opinions, and comments, which is exactly what Boombust did.

Do you also tell your significant other not to speak unless spoken to?

I can’t speak for Boombust, but as for “greedy”, oh, I dunno, maybe expecting $190k for doing pretty much nothing might just cover it.

#91 celine on 12.14.10 at 2:04 am

One more thing Garth,
love that you keep posting photos which offend some. (not that I’m happy that people are offended….just hate censorship) How nudity is considered porn boggles. I love the humor very much and you always capture the theme of the blog in the offending picture so eloquently.

#92 Nostradamus Le Mad Vlad on 12.14.10 at 2:04 am

If only these posts were mandatory reading requirements each morning for homeowners or would-be homeowners, then sheeples to get a short, sharp shock (dose) of the reality of life.

But whadda I know? Not much more than anyone else here.
#5 brass monkey — “. . . you have been duped, . . . (try the Rothchilds for starters).”

Or the Rockefellers, George Soros or Ted Turner (who advocated a global population of 350 mln. at one point, but now it’s set at one bln.).

Generally referred to as the elite or The Bilderbergers (not sure of the spelling), it’s been well known for some time by those who are curious to find out.

They are the ones pulling our strings, and yes, sheeples are being duped left, right and centre.

#12 Bill Grable — “The Titanic has hit the ‘berg.”

Indeed, and speeding up to sit at 90 degrees before we slip under the surface.

#41 banjul — “It cheapens the column.”

The column, picture and advice are freely given, so take it or leave it. Can’t get much cheaper than that!
Eruption “On August 1, 2010, an entire hemisphere of the sun erupted. It was so big, it may have shattered old ideas about solar activity.” — Could give a few hints to the GC / GW debate.

4:41 clip Outdoor winter tent (shelter) and a small stove to keep barely warm in.

Undertaker Not WWE, just the Eurozone.

Gouging Bailout of Ireland is strangling taxpayers to bail out Eurozone.

Compared to Cdn. household debts. Roughly the same — both in deep doo-doo!

Hyperinflation and the golden years. Probably won’t happen but if it does, then the elite are getting quite wealthy off our backs. Plus — Phase Two of the current depression.

Obituary The death of Mr. and Mrs. Common Sense.

Borrowing Another bubble in China, except they will export this one to TROTW to bankrupt everyone else.

Vitamin D and D3 Ignore the naysayers who claim Vitamin D has no benefits — just big pharma working overtime, that’s all.

Obviously, because the EU has said it may recognize the Palestinian state.

Russia vs. NATO Russia sneezes, NATO sidesteps.

‘Quakes “Doesn’t anyone have the power to stop the CERN Large Hadron Collider blasts that could be aggravating all of the vulnerable fault lines around the world?” HAARP may be involved somewhere along these lines, too.

#93 SRV ES339 on 12.14.10 at 2:07 am

Hi Garth,

I hope you broke the news gently to Jennifer… no way they get $800K… and I have very little sympathy for them… they are the problem.

Finally, morals are a personal thing… if you don’t like the pics, try getting your financial advice from your Pastor.

#94 whatif on 12.14.10 at 2:18 am

what if Jen sells the house at 800 large, good for her, make sure have us updated on the selling — I am sure she will keep buying after that …

#95 dd on 12.14.10 at 2:22 am

#10 A Guy in Oakville

…But now I’m embarrassed when you post the gross and/or half-porn pics….

So yesterdays pic was ok however?

#96 HouseBuster on 12.14.10 at 2:26 am

Why is he wearing one sock?

#97 Tim on 12.14.10 at 2:30 am

Man, haven’t any of these people complaining about a naked butt ever seen one before? They come one to a person folks, and it’s only pornography if you’ve got a nasty, narrow little mind that finds the worst in everything.

Nice blog today, by the way Garth. And the picture is _funny_.

#98 Cristian on 12.14.10 at 2:30 am

The blog is excellent, the only thing ruining it is the bunch of constipated puritans who forgot how to smile or laugh at life and who put on an air of self-righteousness at the sight of really funny pictures. Morons… you should all be embarassed with your righteous selves, and not with the pics.

#99 Thetruth on 12.14.10 at 2:32 am

Too much emotion in predictions…

The BoC and F are just trying to “TALK” down lending. To scare poeple. They don’t want to make policy changes to hurt RE at all…Don’t buy into the banks/gov bluff!


RBC raises their best 5 year mortgage rates by 0.2% BUT they don’t raise the posted qualifying rate that CMHC uses to qualify buyers by an equal amount. In fact they left it unchanged. You figure out what that means.

And, the most that will happen in the next year regarding mortgage changes is MAYBE we go to 30 yr amortizations.

#100 SquareNinja on 12.14.10 at 2:37 am

Jen and her family are not contrarians… they are fools who are fortunate enough to be holding a basket that has not yet dropped. But, it could’ve and they would have been holding it. I bet that they’ll still be holding the basket when it does drop.

#101 Tonguestump on 12.14.10 at 2:41 am

Ok, i’ll tell the story of me on a few glasses of merlot. I lived in L.A. through the housing meltdown. I was the kid with the violin coming from piano lessons in a small town where the cool dudes played hockey. I now sequence tones and rhythms usually for tight action flows in films, so that a director can intercut and sew in original music from soundtrack artists and everything manages to make sense. So I have been fortunate to hang with the privileged. Lots of realtors, mortgage brokers and turbo equity extractors. I have watched dudes who are now hoisting Christmas trees on top of cars at Home Depot pay 20K for ceramic flaccid penis art originals at the hard meets soft exhibit in Malibu. Stuff that is complete shit but it was kinda cool to do in front of the third wife. I have seen guys buy limos off of equity so that they could legally drink while they drive and have a good story to laugh about to buddies. These are dudes that look like “peak achievement” is counter boy for 7-11. Leverage made them Gods. Got them trophy women, good times and delusinal power for a brief moment in time. Now they know what a decaf half calf mocha latte is. Housing in Canada is crispy burnt toast and then some. Bring Marshmallows.

#102 ralph on 12.14.10 at 2:52 am

Harper better hurry up and start building all these new jails that he is planning. You know… for unreported crimes. Costing taxpayers billions.

They may get filled sooner than he thinks. Sad…..very sad, indeed.

#103 Timing is Everything on 12.14.10 at 2:54 am

Well, that didn’t take long….

#104 tran, Calgary on 12.14.10 at 2:57 am

Listen to Marc Faber, he is good.

#105 604genX on 12.14.10 at 3:10 am

Carney and F are simply trying to talk-down the market. Huffing and puffing, but not doing anything meaningful about it. Like your crack dealer telling you its bad for you and you should cut back. To be followed by an “I told you so” when crap hits fan.

As multiple other people point out here: a minority government can’t mess too much with the bubble. Whoever pops it loses the next election. And both parties would happily sell out these crazy borrowers/speculators to get in power.

Garth: How do you feel about US equities, including US REITs? What sectors of US prefs or ETFs would you suggest? The banks down there still look too dodgy.

BTW, I can’t decide if wearing only one sock and taunting European police gets you in jail or the cops just drive around you with a wide berth. What happened? Make any new friends in jail Garth?

#106 Peter Pan on 12.14.10 at 3:13 am

What I can’t get over is how bankers such as Ed Clark and Gord Nixon are begging the government to do something to rein in out of control retail lending… “Please, Please Mr. Carney save us from ourselves!”

These dolts get paid millions to protect shareholders’ interests and all they can do is plead helplessness in supplying credit crackhead with more hits. The big steering wheel and gas pedal come with responsibilities. Man up!

Why don’t they tighten up their own standards instead of begging for government intervention? Sure they’ll take 2 or 3 quarters of lower profits in exchange for their shareholders’ future appreciation. Let the Evel Knievel of the Canadian banking industry, CIBC, supply all those fools with as much credit as they want and let Gerry McCaughey take the inevitable hit…

#107 Coldlazarus on 12.14.10 at 3:26 am

It’s not always greed – vast numbers of the financially ignorant are given cheap money, credit, and mesmerized by a 24/7 400 channel universe that says they must and will have everything they need to live like a Saudi prince – sooner, never later.
Our educational sausage factories pump out vast hordes of people who have not the foggiest idea what it costs to own a car in after tax dollars, let alone a house or condo. Compound interest effect you say? The irreducibility of arithmetic? that could hurt ones head, you know, if one had to give it some thought.

Why else would people buy lottery tickets or leave balances on a credit card at 28% if they were not financially lobotomized?
I’m afraid that Garth and his peers cannot re-orient this dismal swathe of Canuckistan citizens – WalMart shall have no shortage of greeter and clean up on aisle 97 types for several decades….

#108 Brynn on 12.14.10 at 3:52 am

Deluded again huh?

We are getting evicted from our stupid rental house ( according to Garth I didnt rent correctly- as if he is omnipotent and can read minds of landlords) the 33 foot lot sold for 1.6 million and didnt even go on the market it got scooped up so do you really really think that the chinese builder ( who is much smarter then you or me) is willing to just throw his $$$ away? No he’s not.. real estate is hot as hell here and is going to the stratosphere…you poor guys must get sick of the same line dont you? wait till spring maybe you will retreat then when you see your dreams of home ownership continuing to ebb farther and farther away from you….

#109 Edmontonian Guy Here on 12.14.10 at 4:02 am

I loved the one post that said ” Debt is the money of the peopel completely inslaved”. SO true. The main thing for everybody is to cash out of the real estate market -yesterday! Unless you are a multi millionaire who can afford to lose 20% of their net worth?
Or in a case like the in City Of Edmonton, who can afford to owe 30% more than your house is worth? We had such a massive amount of sales during the peak of the market in 2007 there must be 20,000+ condo and homes that are underwater. I have a feeling we may see a lot of people starting to walk away soon, or declare Bankcruptcy however it works. Or wait! We do have the highest rates of personal Bankcrupties & foreclosured in Canada here ( In Alberta).

#110 VIVA the LIFE in Fort MAC on 12.14.10 at 4:22 am

Why don’t people get a REAL JOB… People like Jen disguss me. I can’t feel sorry for them. I’m an electrical engineer with respectable credentials and can’t afford a place like Vancouver… Actually the bank tells me I apparently qualify for one of these packaged up time bombs called a mortage. The wages are piss poor with affordability at record highs. I lived in vancouver my whole life and instead i’m forced to work in Fort Mac. there at least the oil companies understand the situation and compensate accordingly. Living Allowance, retention bonus, 150% stock matching, 10% relocation allowance, performance bonuses… must i go on. Before the time i reach 30 i’ll be able to buy a house in vancouver in straight up cash… and i’m not talking about one of those crack mansions. People need to learn to ‘to cut the cloth to suit the need’. To bad they didn’t learn those lessons in school. Instead people cling to their piece of vancouver while chained up to it like the medieval serfs. BEST place on EARTH. You bet if you are barron.

#111 David on 12.14.10 at 4:50 am

People should read these laughable bankers’ comments through the prism of their self-interest, not as a blatant hypocrisy. All they are doing is going on the record that they warned us…truth is, all the while Flaherty has globetrotted around praising what fantastic banks we have, those jokers knew for the past 5 years that this train was coming. But their 0/45 mortgage books come with a free ‘Put’ option to the CMHC.

So why are they even BOTHERING to sound the debt alarm now? For their own corporate reputations, image protection. The bank CEOs fully know that their companys (and themselves as the overpaid figureheads of the month) will certainly get a good roasting of blame for this housing debacle when the time comes….and it will. So they get out in front, go on the record with a few worthless warnings (which come hundreds of thousands of dollars too late for many folks). If the public ever wakes up and looks for something to blame, and if it even gets so bad that there’s ever a Commission of Enquiry into the Great Canadian Housing Collapse, they can point to their warnings and show they did try to warn us all.

#112 jane54 on 12.14.10 at 5:05 am

More of these real life stories please Garth as it puts faces onto your advice. Makes the advice a lot more powerful.

I like the pics, boring Canadians are so politically correct. Loosen up guys. Have a laugh – nice buns on this one.

#113 Paolo on 12.14.10 at 6:06 am

Negative shock to property prices?

Then the Bank of Canada governor said this:

“Owing to the declining affordability of housing and the increasingly stretched financial positions of households, the probability of a negative shock to property prices has risen as well. Don’t assume that things can go on forever.”

Yes, the near future should be ‘sparkling, crystal clear’.

#114 Pr on 12.14.10 at 6:31 am

In a speech Bank of Canada Governor Mark Carney said:
“the crisis is not over, but has merely entered a new phase… when interest rates begin to rise again, the repercussions may be swift, fierce and have the potential to catch many …” Jen, dont listen to this guy, what does he know! Ask the REAL PRO, like your real eastate agent and R/MAX are your morgage broker across the street, they know (they make$$ $$$…every transaction, so they are impartial, guaranty!)

#115 Tess on 12.14.10 at 7:16 am

“I enjoy your columns, but please think twice before using some pictures bordering on pornography. It cheapens the column.”

What’s with all the prudes today? I love Garth’s funny pictures.

And as a woman, I particularly approve of this picture. :) It’s nice to have some fun while we’re entering House-Aggeddon.

#116 vreaa on 12.14.10 at 8:37 am

Buy Or Rent In Fort Nelson?
Reader Request For Opinion

#117 Mtl RE Observations on 12.14.10 at 8:38 am

I don’t get why people are so upset about the photos Garth uses in his blogs. Don’t we all read his blogs because of his contrarian views and biting commentary? Well, you need images that compliment the tone of the messages.

#118 Mikey the Realtor on 12.14.10 at 8:49 am

The Harper and Carney show!!!! welcome folks!!!

The never ending babble, take no action just yap till yer blue in the face, that my friends is the H&C show, tickets are free and can be watched on any bobble head newscast of your choice.

#119 NOBODY on 12.14.10 at 8:53 am

I have a nasty feeling that Garth does not post comments that disagree with him…. Why? Fear of being wrong?

#63: Bang on, dude.
This website is a front to sell books… and fear.

Ooops… I’ll get deleted & not posted.

#120 McSteve on 12.14.10 at 8:55 am

Today on Sesame Street:

The 0/40 mortgage was brought to you by the letter “F”

#121 Mikey the Realtor on 12.14.10 at 8:58 am

Hey Junius,

nice to see you back early this morning, hope your online law course is doing well, did you get a chance to think about helping out or friend CTO and Van_bear with their RE purchase coming up? As I told them, I wasn’t sure if you made it that far in your course so they may have to find a real lawyer to get that portion of the transaction done. Hope all is well, no need to be so nasty, the sun is shining and everything is ok, even RE.

#122 Mtl RE Observations on 12.14.10 at 9:03 am

#116 Tess

And as a woman, I particularly approve of this picture.


Agreed. We need more balanced reporting from Garth.

#123 sue on 12.14.10 at 9:05 am

OK, I haven’t read all of the above posts so forgive me if I’m redundant.
Garth, the word “Crystal”…are you referring to the fact that Canadians are on Crystal Meth and delusuional?
I’m a pharmacist so that’s what I

#124 sue on 12.14.10 at 9:12 am

“try getting financial advice from your pastor”…lol My thoughts exactly. Garth is making economics fun. I love this blog and I approve of the picture. He’s a hot mess. :)

#125 Carol on 12.14.10 at 9:19 am

I don’t understand why people freak out so much over the pictures – good lord. Let the man post whatever picture he wants to post.

Great post, Garth. As soon as I saw the news about Carney’s comments, I knew you would be talking about it and I am glad you did.

#126 Moneta on 12.14.10 at 9:21 am

Seriously, how many Jens (or people like her) actually make it out alive from an investment bubble?
What people fail to realize is that those Jens aren’t the ones who really suffer.

Had there been no bubble, they would probably have zero net worth anyway. They’ll just default and start over. All in all, the bubbles are good for these speculators because throughout their lives they end up living in more luxury than if if there had been no bubbles.

Our system should be dsigned to stop these people from taking on credit. They are destroyers of wealth and over time will be the death of us.

Oh wait a minute… we used to have controls, but we took them all away, one by one, in the name of growth.

#127 David B on 12.14.10 at 9:25 am

It may even be a little late for Jen, although her fall will be soft and recovery not so difficult or imposible as those who wait for “F’s” budget to solve all.

I sit here longing for the days when Dion had the balls to let Garth stand in our H of C and set Real Estate straight in question period …. for those new here and our spinless MSM, had taxpayers not funded the political war on Turner many (100’s) lives just might have been saved. Such is life …. it’s called History … just like a fool looking for WMD’s but I digress.

We the bunch of know it alls and early morning risers to view and read this sad useless site know this, “To thy own self be true” so I as many others just KISS it, pay down debt, live within our means and enjoy life.

Not sure how it will end for Real Estate speculators such as Jennifer but I suspect not well. Years ago a friend I knew bought and rented four duplexes, in the end he was lucky to keep his shirt and he said never again! The more things change the more they remain the same.

Why to I say sad and useless? Because to-days big business and government want y’all to spend even more money using Credit Cards … where the real interest rates and service charges are . And we here say .. NO to dat! NO!

#128 O on 12.14.10 at 9:26 am

Guess Canadian Banks are not as stable as many thought. And RBC is one of the biggest too.

Royal Bank downgraded over market exposure

Royal Bank of Canada’s deposit rating has been lowered to Aa1 from Aaa by Moody’s Investors Service.

The rating agency said the downgrade was primarily a result of the bank’s commitment to its capital markets business, “which potentially exposes bondholders to increased earnings volatility and poses significant risk management challenges.”

RBC’s unsupported bank financial strength rating was also lowered to B- from B+, while the rating outlook is stable.

#129 T.O. Bubble Boy on 12.14.10 at 9:30 am

@ #50 Jeff Smith:

Did you read the link I posted? They propose buying a $USD money market fund (i.e. you aren’t forced to actually buy another investment) in the wash trade — this keeps your cash in USD and avoids the currency exchange loss to the bank.

#130 luketheduke on 12.14.10 at 9:32 am

All this talk about tightening mortgage rules will cause another rush into RE ,you watch…

#131 T.O. Bubble Boy on 12.14.10 at 9:39 am

ok ok ok

*** I think I’ve figured out the scam now!

So — remember how Goldman Sachs was playing both sides of the CDO market before the subprime crisis?

I’m 99% sure that the captial markets teams at all of the big banks have placed big bets on the Canadian Housing Market tanking. This is why CEOs like Ed Clark are coming out NOW instead of 2-3 years ago with the push to tighten mortgage restrictions.

Here’s my theory… they’ve placed MAJOR bets against any/all of:
– Canada Mortgage Bonds
– Mortgage specialist companies like Equitable Group, Home Capital Group, MCAN, HOMEQ, etc.
– etc.

Can anyone confirm/refute this theory???

#132 Steven Rowlandson on 12.14.10 at 9:50 am

Garth I don’t know if Canadians can be easily cured of their insanity particularly when it comes to real estate and their faith in government.
If it ever happens it will be a long drawn out and painfull process of punishment and learning the hard way.
My opinion FWIW.


#133 CTO on 12.14.10 at 9:53 am

#26 Kevin

“The US experience and past history show us that real wages collapse when the housing bubble burst. But the debt remains, while wages fall, creating a debt to income that keeps climbing. Don’t be surprised to see a debt to income of 160% or more within 2 years.”

Kevin…not only wages, land taxes as well, leaving a strangle hold on municipal goverments.

If you look at the official mls site for the states, they show a history of the tax bases for each house they advertise, it’s astounding how the taxes have dropped of the last 2 years reflecting the NEW house prices.

#134 dd on 12.14.10 at 9:59 am

Oh, look at the US bond yields going up! Inflation on the way?

#135 tangocash on 12.14.10 at 10:00 am

Before I retired, I was a stock broker and I remember back in the dot-com days I would get the dumbest calls ever from sheep telling me all the fundementals are different now and it is a “new econmony ” ….companies were not to be valued on earnings and cashflows, but on sales and potential. The most predictable thing happened…..the market collapsed and people went back to valuing companies based on roughly the same multiples they have in the past….

#136 Renting in Rosedale on 12.14.10 at 10:00 am

I’ll submit that the single black sock on his right foot represents what’s left of his housing equity! At least he’s got some left — not underwater (yet at least!)

#137 CTO on 12.14.10 at 10:05 am

#99 Thetruth

Umm, I hope your not considering that a lack of action (be it regulatory or not) is a positive for the house market…cause that would be very foolish.

#138 rower on 12.14.10 at 10:08 am

Thank-you, Garth!!!!!!!

My husband is finally reading Money Road and getting it.Your post yesterday laying out the investing vehicles with their positives/negatives was exactly what he needed.
We are now on the same page and it is such a relief!

Please, keep the pictures coming. If people can’t handle these pictures, what in the world are they going to do when the naked truth is revealed in real life?

Today’s picture is particularly good.

#139 S.B. on 12.14.10 at 10:17 am

Garth! Today’s picture is not very workplace friendly – doesn’t matter if pic is male or female.

Keep in mind many of us work HR-driven soul-less conditions of white collar ghettos (to extract maximum productivity!), and view this blog at work.
Rules upon rules…keep us in line.

#140 Alex on 12.14.10 at 10:23 am

WikiLeaks: Stop the crackdown – incredible response!

#141 Junius on 12.14.10 at 10:27 am

#98 Cristian,

Exactly. It is not as if the Elephant in yesterday’s pic had his legs up on this guy’s shoulders. Give us a break.

#142 bigrider on 12.14.10 at 10:27 am

#34 Tonguestump- And when do we vulch”

Stop looking at RE as the place to invest you obsessive nitwit and look at the financial markets that are screaming at you right now.

The RE vulchers are just as bad as the herd that are buying RE right now. Obsessed with houses..RE religious zealots all of them !

#143 Junius on 12.14.10 at 10:32 am

#108 Brynn,

Don’t you guys ever get tired of writing these ridiculous fake posts?

“Oh, I suffer because I took Garth’s advice and rented. Now my girlfriend left me for a rich Chinese owner.” Blah, blah, blah. Such utter BS.

This is what Country Music is for. Buy a guitar, learn how to play and belt out tunes about this crap. A street corner in Vancouver needs you.

#144 The American on 12.14.10 at 10:33 am

#38 and #60: Your Mom and MP, yes, those deals are all over Detroit, inclusive of trustee sales and distressed sales. Heck, I’ve seen them for as low as $1. There’ a few problems, however. First, the liens run with the land, meaning all encumbrances follow when you buy one of these pieces of sh*t, which typically makes it cost-prohibititve. Second, it is in DETROIT and the weather is horrible – who would want to subject themselves to that?! Third, the money needed to make these homes inhabitable is pretty high. Fourth, what are you going to do if/when you live in Detroit? You certainly aren’t going to be working, because there are no jobs whatsoever. Basically, it is quickly turning into a ghost town and it would be difficult to even literally GIVE one of these homes away. Nobody will take it.

#145 The American on 12.14.10 at 10:36 am

#62: Junius, no, it isn’t the U.S. Bible Belt. It is merely testament we’re not all that different after all. You’re right, these people need to get over it and understand that a naked man’s rear is NOT porn. It is just an ASS, much like the people who are making such a fuss over it.

#146 bigrider on 12.14.10 at 10:44 am

Garth- Does your wife know about your inclination toward naked men? LOL

#147 alf on 12.14.10 at 10:44 am

I am offended by the fact that he has no upper gluteal
development. I expect a full refund.

thank you

#148 MikeT on 12.14.10 at 10:47 am

@107 Coldlazarus: you’re so right!

Just think: if you’re in the 35% tax bracket and buy something that costs 100$ and have to pay HST on it, it costs you ~167$ in pre-tax dollars!!!
Now, how many people realize that?

Calculation: you have to earn 153.84$ to get 100$ after-tax, then you pay 13$ in HST (13% of the 100$ price tag) = 166.84$, rounded is 167$.

We are taxed to death and that alone should slow down spending, but add the costs of borrowing if you buy on debt and I don’t know how to describe that level of taxing and interest costs you pay to the government and the bank.

#149 T.O. Bubble Boy on 12.14.10 at 10:49 am

WOW – the commentary on Canadians’ debt just keeps coming:

Personal Debt not as bad as it looks

Nobody want to crash this debt party

For that Globe & Mail “not as bad as it looks” article, they are completing missing the point… the argument that Canadian household debt isn’t that bad because assets are also rising is ridiculous: ASSETS ARE ONLY RISING BECAUSE OF THE DEBTS!

– Cheap Mortgage Debt is pushing housing “assets” higher
– Higher energy prices are pushing the Oil & Gas areas of the TSX
– QE1 and QE2 are raising all commodity prices (also helping many areas of the TSX)

So, if PAPER GAINS are apparently going to save all of us, I guess the Globe & Mail is right — we’re all in great shape! But, I really don’t think this is an accurate assessment: when the DEBT is fixed (and actually getting more expensive as rates rise), and the assets are variable (i.e. house prices can easily fall), this does not make for a balanced equation.

#150 A Different Guy from Oakville on 12.14.10 at 10:55 am

Levity doesn’t cheapen the message of this blog. If Joey-with-an-“i” Public can tear herself away from the Life section of The Star to venture into this blog after waking up to a cold feeling in the pit of her stomach this morning, she can deal with an amusing picture as she takes in the real news.

#151 Junius on 12.14.10 at 11:01 am

More info on the Chinese situation. This release from the Chinese gov’t:

“China began experiencing a period of stagflation in the second half of this year with high inflation and unemployment, the Guangzhou Daily reported today, citing He Keng, deputy director of the finance and economic affairs committee of the National People’s Congress.

The nation will also face the possibility of an economic double dip next year, the newspaper cited He as saying at a meeting yesterday.”

Fortunately we know that this gov’t report must be incorrect. We know from yesterday that the Wing-Wong loan circle of friends ponzi scheme will sustain China through anything.

#152 Got A Watch on 12.14.10 at 11:05 am

No kidding – “porn” – what are you, Mennonite? Geez, get a life, already. I do have to ask, as several others have, why he has still 1 sock on though. I suspect liquor was involved.

btw, I posted some good links to Canadian oriented retirement planning/trading/wealth building/tax tip sites yesterday, everyone should have a look at those.

nonplused – There are different types of ‘TFSA’. If you don’t ask for it, the Bank will just give you a “regular TSFA account” (name be a bit different depending on which Bank), which is like a savings account, more or less, just pays (some low amount) of interest. They also have an “investing TSFA” where they will “recommend” you into probably some of their crap internal “Mutual Funds” or a GIC or their Bank Bond etc.

The one you want, and you have to ask directly for it, is a “Self-directed TFSA trading account” – this is just a “brokerage” account for your TFSA. You decide what to buy, and when – any stock, Bond, option, gold/silver (not physical metal, they can’t hold a bar of gold for you in there, but shares of GLD or SLV or Bank certificates etc are allowed) – anything that a regular “trading account” is allowed to hold. With a balance of under $25K now, you probably won’t be doing advanced option trading, but most other trades should be possible plus buying puts, selling covered calls – I would recommend an online Broker there, like TradeStation for instance, the regular “Bank brokerage” commissions are high, trade execution not that great.

There is a book called “TFSA Guide” or something similar, IIRC by Gordon Pape, well known financial author, I have seen it at a book store, you should get a copy, I’m going to be buying one soon, to make sure I have all the angles covered. Mine is over $17K now, and will see an added $5K in January – I’m shooting for $30K by next Jan 1, and $50K in the TFSA in 2 years. I expect within 5 years it will be my only trading account and possibly only major source of (tax free!) income

Jeff Smith – I think you are just with the wrong Bank. RBC offers me free currency exchange and the ability to hold 2 ca$h balances in my trading account (US & CAD) and also to hold any stock and most other “investments” on either side of the border in my choice of currency. Thus I could hold an American stock listed in NY in CAD if I wanted to. I keep it simpler for myself by just. using US $ to play US investments, and CAD for the Canadian side. You choose at the time of purchase or sale which currency you want it in, or to settle it in.

Of course, it’s not really “free” but nothing in ForEx is – there is always a “spread” between the bid and ask, and the Bank will get you a less than optimal final price, they are making about 1 cent more or less on the number you see quoted in the paper for the “exchange rate”. But bear in mind, nobody gets or pays the “Bank of Canada” rate, unless you are doing some very huge transactions, maybe, in the league that the Banks are on a daily basis.

You always get ripped a bit on the ‘bid/ask spread’ in every transaction, to some extent, depending on the Broker/Bank you are using, and the market you are dealing in. That’s just a fact of life in business and investing. If you are really bothered by it, just keep all your investments in CAD $ and you won’t be affected.

These days, anyone with a stock or any kind of an investment, is also a currency trader, by default. You can make a “profit” on the “price” but lose it all and more on the final “exchange rate” back to your home currency. Not much you can do about that but try to work around it, it’s always a risk.

Life is risky, then you die. A bigger risk is facing retirement with no money.

#153 Ritenote on 12.14.10 at 11:10 am

“Personal Debt Not As Bad As it Looks”…
For every warning issued on this blog, there’s some contradictory advice (in the National newspaper no less) to soothe the hopelessly indebted…

#154 Kaganovich on 12.14.10 at 11:16 am

Of interest to DSP and Jess perhaps(?):

How is Wikileaks being handled?

#155 Scott on 12.14.10 at 11:17 am

I like the pictures too, however, some are pretty NSFW (not safe for work). Which is a shame because I like reading this on and off while working.

#156 The American on 12.14.10 at 11:17 am

I have to be honest here and say I find it a tough pill to swallow to think that Canadians REALLY don’t believe it is going to happen in Canada. What is also shocking is that after witnessing all that has happened in the U.S. with respect to Real Estate, why on Earth would Canadians feel impervious at all to a forthcoming crash? Here’s the recipe for the RE crash in the U.S.

1. Cheap credit to both buyers and developers
2. Aggressive marketing efforts and buying frensy
3. Continued pumping of the market buy RE Agents, even if they were speaking falsities (entitlement of buyers grew significantly in this step)
4. Under rumblings of a potential crash from “nobodies” (this was coming from people much like Garth)
5. Denial of the under rumblings and continued yet slowed purchasing
6. A final “greater fool” buys a home (trust me, there WILL BE ONE FINAL GREATER FOOL – SOMEONE HAS TO BE THE LAST NOT TO GET THE MESSAGE)
7. Realization by developers and marketers the market has changed, so they begin “cherry picking” facts to pump the market and effectively LIE to the public
8. Buyers are either tapped out of credit and leveraged to the hilt, or they now are believing the market could crash, yet they rarely if ever “talk” about it (hope still abounds here)
9. Senior officials not directly associated with RE firms speak to the masses, warning of a potential collapse if debt is not reduced and controlled (hope rapidly diminishes here)
10. A few months more of slow to level to declining sales, and a realization by buyers the market has indeed turned. More talk ensues among buyers with “what if” scenarios and realization of potential doom. (this is the “stand off”)
11. CRASH, melt, dead cat bounce, melt some more, dead cat bounce

From what I’m seeing, it LOOKS like Canada as a whole is somewhere around step 9. What is unfortunate is even after witnessing it happening to us here in the U.S. that Canadians have a propensity to believe the situation is different there. In fact, it has been following suit to the “T” We’ve known, in fact, for some time that Canadian house holds have exceeded Americans in consumer indebtedness and Canadians have a negative savings rate, so yesterday’s news from Carney should not have been any kind of a surprise to anyone. If anything, it should only be confirmation. I suspect a surge in listings to be forthcoming now, which only compresses prices with the laws of supply/demand.

I’m confused still why oh why some still would believe IT won’t happen there. It already is and ALL factors that took down the U.S. are in place in Canada, including predatory lending standards and sub-prime lending and it has been going for quite some time. You say tomato, I say FRAUD. Emergency rates “saved” Canada from declining alongside the U.S. The only thing those rates did is further pump the Canadian market even higher, meaning the prices must now come down that much lower. The ONLY way the decline will end is when prices are actually around 3 to 4 times a household’s income, amortized over 30 years. This is where the market truly stabilizes.

I am not sure how many have leveraged their homes to tap into their “equity” and spend spend spend, but from the sounds of this new, it appears Canadians have spent even more than Americans. This is exceedingly problematic as Canada produces “recourse” loans to protect the BANKS (the f*ckers that certainly helped to create this mess. I, for one, hold them more accountable than anyone as they are the “experts” in credit lending), which will certainly wipe out consumers for an indefinite matter of time. This definitely will not end well.

It is all fun and games…. until it isn’t anymore.

#157 MikeT on 12.14.10 at 11:20 am

Self correction:
100$ purchase costs you 174 pre-tax dollars. I missed the point that you pay HST with after-tax money, so 13$ of HST is actually 20 pre-tax dollars, so 153.84$ + 20$ = ~174$. Even better!

P.S. Paying sales taxes with money that was already taxed (by income tax) I consider worse than highway robbery. And the funny thing: it’s done legally by the government that “takes care” of us.

#158 Al on 12.14.10 at 11:27 am

Average Price in Vancouver is 53% higher than the average for Toronto. There may be a problem in Vancouver, BC but not in Toronto

#159 HST sucks on 12.14.10 at 11:29 am

I was a first time home buyer 4 years ago and purchased a 2500 square foot rural home and acerage (42) for 389000 in ontario. The idea was to get out of Toronto, avoid the crowds, raise my two kids and prepare for the coming apocalypse. I had a 10% down, 25 year mortgage, and a combined income of 200k which I thought would give me sufficient wiggle room to plan to save for my kids education and put away some extra cash to augment my defined pension plan. Then all of a sudden that thief Mcguinty comes along and puts HST on my home heating oil. (Extra 100$ a month) HST on my gasoline. (Extra 30$ per fill up on two vehicles) HST on my hydro (Extra 30$) and now tells me that his hydro plan will double my monthly bill to 500$ (per month) within 5 years! This province and government is out of control. But where can you go?

#160 Macrath on 12.14.10 at 11:32 am

The good news.
I predict excellent job growth in the following sector-

Debt Collection Jobs
Qualifications, Skills & Experience:

Debt collectors must have good oral and written communication skills. They need to have good computer skills. They should have good organizational and decision-making ability.
There are no specific educational requirements to become a debt collector;
Multilingual, multicultural, team player, with a propensity for verbal abuse, would be an asset.

No heavy lifting required.

As your experience and knowledge grows, it is easy to progress into ‘Credit Control’ or senior ‘Collections Management’ positions. Company “REPOMAN” personalized plates provided.

#161 Cassandra on 12.14.10 at 11:39 am

Bubble Case Studies – Ireland and Canada

#162 BrianT on 12.14.10 at 11:39 am

#55Trying-Those “big” newspapers that you are impressed with are having less influence daily, which is why such a high % are being given away for free.

#163 househunter on 12.14.10 at 11:46 am

#63 Jeff – I’m with you. No one has a set at the BoC to raise rates where it will impact real estate at this point. Is there anyone who thinks its going to be some massive jump? They are gonna do this slower than slow. I no longer think (as a lot of bears now think) this is going to be some big correction. This blog is interesting but the predictions fizzled out when the frost came and went.

#164 househunter on 12.14.10 at 11:49 am

157 The American – “11. CRASH, melt, dead cat bounce, melt some more, dead cat bounce
“. Pure conjecture. That will not happen here. Lending practice may be loose here but it was not reckless like in the US. There is not going to be some US Style Correction.

#165 Moneta on 12.14.10 at 11:49 am

I have to be honest here and say I find it a tough pill to swallow to think that Canadians REALLY don’t believe it is going to happen in Canada
I swear the meme that keeps coming up in my cirlce is that we’ve got it made. We’ve got resources and the ROW need them. And this is coming from Quebeckers and Ontarians!

If Canadians actually believe this out East, imagine the delusion out West!

#166 GrimWeeper on 12.14.10 at 11:50 am

For those of you who are so deeply offended by Garth’s photos, please do not link to the following Irish rant. It’s gone viral and you might catch something ~ i.e., a sense of humour that could result in the loosening of your sphincter.

#167 Moneta on 12.14.10 at 11:55 am

I am not sure how many have leveraged their homes to tap into their “equity” and spend spend spend, but from the sounds of this new, it appears Canadians have spent even more than Americans
Canadians are convinced that speculation did not occur here. People buying condos and 2nd or 3rd and 4th properties are not speculators because they are not looking to flip like in the US… they are in for the long term.

That’s the other meme here in Canada.

#168 Moneta on 12.14.10 at 12:03 pm

I swear the meme that keeps coming up in my cirlce is that we’ve got it made. We’ve got resources and the ROW need them. And this is coming from Quebeckers and Ontarians!

If Canadians actually believe this out East, imagine the delusion out West!
The sad part about this delusion is that Canadians did learn in school that resources are part of the primary sector. That if you want added value and increased wealth over the long-term, you need to produce end products not inputs. Resources are inputs so margins will always get squeezed at some point.

If you look at the resource sectors over entire cycles, you will notice that they are capital intensice and cash flow break even… Periods of profit netting out periods of losses.

Resources are good to have and can save your butt but they won’t make you rich over the long term.

Canadians consume more energy per capital than any other nation. More than Americans. It’s amazing how self-righteous we can be.

#169 Andy Capp on 12.14.10 at 12:06 pm

Reminds me of F. Scott Fitzgerald’s answer to the question; “So…how did you go broke?”
“Two ways. A little at a time, then all at once.”

#170 Rich Renter on 12.14.10 at 12:07 pm

It’s amazing how Canadians in general feel so smug about their debt. As if what happened in the US and Ireland will not happen here. Ireland went bankrupt when it had to bail out it’s banks who had previously lent millions of euros to now bankrupt real estate developers. Here in Canada we have most mortages backed by the tax payer in the form of CMHC, thus removing the bank from any trouble down the road. The sad part is that the average Joe will end up paying for people like Jen and that other guy from Edmointon featured here last week. A nice rant from a fellow ex pat can be found here

#171 Stevermt on 12.14.10 at 12:09 pm

#20 Ghost…
now now are you a you buy all Canadian made goods (doesn’t exist) ..give us a break and look in the’ll see the same reflection as all the blockheads you put down…

#172 C on 12.14.10 at 12:12 pm

Regarding Carney’s dire warnings, enough with the talk, start raising rates. He is going to go down just like bubbles Greenspan went down as a bubble blower. We are basically at record low rates. Start raising!!! Reward savers and loose the banker mentality of rewarding lenders.
It really is too late though. If the economy does weaken futher look for the debt to income ratios to increase further. I believe the bank rate is 1.25%. Raise it to 2% Carney…unless you truly think Canada can’t handle it. If that’s the case, things are really really precarious!

As for those complaining about Garth’s pictures, get a life. If you don’t like it leave.

#173 Bottoms_Up on 12.14.10 at 12:16 pm

This out yesterday: bullish for the Canadian economy, bullish for housing (industrial capacity utilization trending up):

#174 john m on 12.14.10 at 12:18 pm

#157 The American on 12.14.10 at 11:17 am………….how very true.

#175 Bottoms_Up on 12.14.10 at 12:20 pm

#82 ams on 12.14.10 at 1:30 am
I have a mortgage 2/3’rds the size of your sister’s….Sept ’09 we put 8% down, 32 year amortization…and it’ll take us almost 2 years of minimum payments just to pay off the CMHC fee (~$8000)!!!!

#176 T.O. Bubble Boy on 12.14.10 at 12:23 pm

Another $600,000+ tear-down in Toronto:

Seriously, are the developers/flippers making ANY money on these?

$600K land value + $300K-$400K to build a new McMansion + carrying costs = well over $1M to make any profit.

#177 Bottoms_Up on 12.14.10 at 12:24 pm

#56 Priced Out in Toronto on 12.14.10 at 12:21 am
People without jobs are getting approved for $400,000 mortgages. Families with 2 incomes, a mortgage and no equity are getting 100% financing for a 2nd mortgage.

I do think Garth’s overall message is accurate (‘this won’t end well’). Well, to be more precise, it won’t ever ‘end’, there will just be a prolonged period of time where people don’t want to buy houses.

#178 ralph on 12.14.10 at 12:32 pm

Excerpt from news report of the snow storm.

“Many drivers stuck on Hwy. 402 had themselves to blame, heading out long after the squalls hit late Sunday, some even skirting roadblocks, Western Region OPP Sgt. Dave Rektor said.

“When you hit a wall of snow, why do you go through it? Get off the road,” he said. “But . . . we’ve got people driving around closed road signs desperate to get themselves into peril.””

Doesn’t that sound familiar? Kind’a like this debt problem.

#179 canali on 12.14.10 at 12:40 pm

but again you get the naysayers ie vancouver sun business editor quoting Douglas Porter of BMO:
“Douglas Porter of BMO (who Kwantes quoted yesterday) believes it’s much ado about nothing, or at least too much ado about not much. And federal finance minister Jim Flaherty jumping in and suggesting mortgage-lending rules may be tightened again to offset high debt levels is just adding fuel to the hysteria fire.”

for rest of article read below:

#180 O on 12.14.10 at 12:44 pm

#157 The American on “I have to be honest here and say I find it a tough pill to swallow to think that Canadians REALLY don’t believe it is going to happen in Canada. ”

Excellent post, well said. Hopefully Garth does a follow up on:

“An American’s view of the great Canadian RE Denial”

#181 Aussie Roy on 12.14.10 at 12:46 pm

Al on 12.14.10 at 11:27 am

Average Price in Vancouver is 53% higher than the average for Toronto. There may be a problem in Vancouver, BC but not in Toronto

You might be right, you can tell by looking at prices as a ratio of annual income or price versus annual rental return. This is a valuation, prices are what people will pay, during bubbles prices exceed their valuation. Rental yields get compressed and annual yearly income to price ratios rise well above their long term average. Many say you cant see a bubble, thats just rubbish. The hard bit about bubbles is knowing what and when will happen next. One thing you can be sure of is they all burst.

Assest bubbles only burst when the number of greater fools runs out and not before. Judging on some of the comments here, there might still be a few left.

Aussie update

Australias biggest MBS marketer.
Aussie Home Loans founder John Symond has labelled the government’s moves to create a fifth pillar of banking as a joke.

He labelled as “chicken feed” the government’s announcement on Sunday that another $4 billion would be spent on residential mortgage-backed securities.

This takes to $20 billion the funds spent on non-bank securities since 2008.

Mr Symond suggested another $30 billion to $40 billion would have been a more appropriate figure.

“If the government wants to make a difference and promote competition they would have to invest something like at least $30 billion a year, $40 billion a year,” he said.

South Australian Labor senator Annette Hurley got into a heated exchange with Mr Symond.

“That’s a lot of money to pay for competition so that you can get 30 per cent off CBA and pocket it,” she said, with reference to the Commonwealth Bank’s one-third holding in Aussie Home Loans.

In short this clown thinks it would be a peachy idea for the tax payers to risk $40B a year on Aussie mortgages.

#182 Jojo on 12.14.10 at 12:48 pm

Well,Garth did you see TSX index over 13,350 points?
Next bubble is comming TSX -20,000 points and houses in Toronto priced like Vancouver?
Did I say inflate or die?

#183 The Other Dave on 12.14.10 at 12:50 pm


Canadians earn significantly less than Americans for the same job.
Canadians cannot claim mortgage interest
Toronto ain’t New York by any stretch of the imagination
Vancouver ain’t, well it just ain’t
Canadians pay more for consumer junk than the Americans do

..can this justify having more debt than Americans?

..are we borrowing more to spend on crap because we have an inferiority complex?

#184 kitchener1 on 12.14.10 at 12:55 pm

#157 The American

Its going to happen and its going to be swift.

forecast models along with mathamatical formulas say it must.

Law of mean revision states that we MUST revert back to mean, meaning we must go back to approx 3.5 times income for a home in GTA. For us to make 3.5 times, we have to go down to and remain at 2.5 times income for as long as we have been at 5.1 times income. That means we will replay the US/Ireland/Spain housing market crashes.

Its going to be ugly but it must happen for our economy to be healthy.

Think long term, take our current data for households and push it forward in a chart for the next 5-10-15 years etc… our economy is not sustainable with current debtloads and incomes. It just cannot continue, the math says it cant and the thing with math is that it never lies

#185 Kevin on 12.14.10 at 12:59 pm

true, government revenues collapse when housing markets bust. I’m working on a post about that.

What does an average housing bust look like?

“We find that asset market collapses are deep and prolonged. On a peak-to-trough basis, real housing price declines average 35 percent stretched out over six years,”

It is possible that the US experiences a housing bust that last 15 years and real average prices declines of 50%. A Canadian housing bust lasting 6 years and real average price declines of 35% would be conservative.

#186 Maureen on 12.14.10 at 1:08 pm

I find the chartered bank’s concern about our ballooning debt a little disingenuous considering that TD in October decided to start registering collateral mortgages at 125% of property value to facilitate refinancing in the future when the property value increases.

#187 Pat on 12.14.10 at 1:20 pm

#69 Dave in Victoria:
“People who think those pictures are porn should go to church less.”

And travel abroad more.

#188 CTO on 12.14.10 at 1:25 pm

#122 Mikey the Realtor

Mikey, Mikey , Mikey…

Lets make something clear!…After looking at Florida ads,…I sure as hell am not going to invest in any OVER PRICED RE in Canada! That would be completely insane, seeing the difference in value!
As well, I didn’t ask Junious to help me, I asked if you sell American Real estate. Simple question…Easy answer!

#189 Moneta on 12.14.10 at 1:27 pm

As Canada drills and mines an increasingly larger amount of its non-renewable resources, it should be reinvesting its profits into added value sectors that will bring us future wealth and cutting its per capita use of non-renewable resources.

We should not be heating our pools in October. We should not even have heated pools. For Canada’s future well being, we probably should not even have pools! From pools, arenas, size of houses, number of cars, these excesses are huge and we don’t even question them.

Instead, we keep on throwing our profits into a forever larger road network, non sustainable infrastructure projects that do not respect our geography and climate and larger homes which will just require a growing amount of resources which we will have depleted.

Our current consumeristic ways are guaranteeing Canada future poverty. But who cares? That’s probably not for another 50 years.

#190 borrowedcarbon on 12.14.10 at 1:31 pm

Hi Garth,

The University of Toronto pension plan has $2 billion in unfunded liabilities. How many other pension plans are underwater? A lot of people rely on these un-sustainable pension systems, and in their absence, people will have to hope they can fund their retirement by selling their real estate.

As all of these boomers retire they’re going to bankrupt the system.

Thanks for the blog, I started reading your stuff in the nick of time.

#191 Crash Callaway on 12.14.10 at 1:32 pm

The most offensive thing in the picture is the litter on the streets of that filthy city.

#192 april on 12.14.10 at 1:39 pm

Junius #62
Right on!

#193 realpaul on 12.14.10 at 1:40 pm

Thosw Cdn’s who feel underappreciated by the US should be happy that you’re in the news as being the biggest dumbasses in history for piling on debt.

Carney is telling Canadians not to eat the pie…but leaving it within easy reach at every corner bank. Hes going to position himself as having said ‘I told you so’ and try to avoid the political damage when the shit hits the fan.

The attempt at ‘talking down the debt’ while leaving the tap open full is ludicrous. No one thinks this government is being anything close to being responsible.

After they have watched nation after nation plunge into chaos from debt spending from bothe government and consumer the Conservatives have apparently learned nothing and will gut the country to get Haper his majority by attempting to please everyone.

The inflation and the death grip of mortgages , escalting taxation and fat union settlements will be the ugly legacy of all this.

#194 Roial1 on 12.14.10 at 1:42 pm

Garth, How do you handle it??
Here we are discussing the greatest “pornographic” disaster in economic history unfolding before our eyes and these— I realy do not know what to call thems are worried about the sight of a mans backside.


Thousands maybe millions will die if this plays out as I think it may. Especially if as is already happening with thw world price of food.

Get your priorities straight. Bare ass is nothing compaired to starvation!

P.S. everybody has one.

#195 GregW, Oakville on 12.14.10 at 2:02 pm

Hi #92 Nostradamus, Thanks for the link to article on vitamin-D.
I personally take D 4,000-5,000 IU units each day.
Have placed all my silver (mercury off-gassing) tooth filings, don’t get the mercury containing flu shots, and don’t drink fluoridated water! Some common drugs have fluoride, need to check.
I haven’t felt this good in years!

FYI, Here’s another D link, and for science based info on fluorides effects on your brain and soft tissue of your body

#196 Soylent Green is People on 12.14.10 at 2:07 pm

And Christmas came early.

#197 Edmontonian Guy Here on 12.14.10 at 2:12 pm

Too funny listening to people’s comments about the picture. It’s just someone’s rear end! If you could see a hairy scrotum hanging down there then I would consider the picture to be indecent.
I don’t understand how our government officals can say this is no problem with credit debt in this country 6 months ago, and now it is a concern. Wasn’t there already over 1.1 trillion in mortgages alone in march when they said there were no concerns?
Now they announce there is a concern after the credit bubble already starts to pop and (the housing market here in Edmonton anyways) starts to plunge in sales and prices.
Glad to have taken your advice a year ago and sell & rent. My partner & I can rent in almost any condo or neighbourhood in the city of Edmonton for under $1200. Those who have sucked all their equity out of there house for an “investment” property are happy to get even half their Heloc payments back in rent-it’s better than nothing right?

#198 Macrath on 12.14.10 at 2:14 pm

Suggestions for the puritans and cubicle dwellers !

Browser settings > preferences > no images (check)

#199 Junius on 12.14.10 at 2:17 pm

#157 The American,

Well said. Garth has been saying this for many years and most of us hear for a year or more.

Most people operate under the “Recency Effect”. It is the firm conviction that the best indicator of tomorrow is what happened yesterday and today. Our ability to look forward into the future despite the warnings of others is severly impaired. Our belief in the present coupled with our hope that the dire warnings are not true prevail.

#200 Junius on 12.14.10 at 2:21 pm

#122 Mikey,

I would worry about yourself. I have a career and a great job.

However you, my friend, are in trouble whether you realize it or not.

#201 eaglebay on 12.14.10 at 2:26 pm

China is in good shape.
1 million Chinese moving to the cities every week.
RE under control as a lot of it is bought with cash.

#202 Devore on 12.14.10 at 2:30 pm

#66 Junius

I’ve posted the numbers some time ago for the terrible US markets:

Las Vegas: 81% mortgages underwater, nominal prices may not recover for 20 years

Merced: 72% negative equity, prices down to 1998 levels (!!!)

Modesto: 70% negative equity

#203 BrianT on 12.14.10 at 2:35 pm

#164House-Yes, the rates will go up a lot higher than you can imagine. All that money sitting in bond investments is just asking to be taken and it will be taken-pensions are going to be absolutely shredded IMO.

#204 GregW, Oakville on 12.14.10 at 2:45 pm

Hi #92 Nostradamus, fyi, I’ve also been taking this to get some of my D & Omegas 6 & 3 are Essential Fatty Acids. Apparently fish omega oil is not exactly the same as manual omega oils.

#205 Macrath on 12.14.10 at 2:46 pm

#160 HST sucks

Those are the some of the reasons why I bailed on real estate. (thanks again Garth). Wait till the broke municipality doubles your assessment on that millionaire estate and your insurance premium doubles. Your going to blow a gasket. ( did I mention the price of gas, oil, food and everything else?)

#206 Larry on 12.14.10 at 2:51 pm

Another mention of the Canadian Housing Bubble in the Globe and Mail today.

“Canada’s overheated housing market caused debate about whether the foreclosure crisis that has caused so much grief for homeowners south of the border could happen in Canada. However, most Canadian real estate experts dismissed the notion of a Canadian housing bubble.

“It shouldn’t have gotten the kind of attention it did,” said Phil Soper, president and CEO of Royal LePage.

The CEO of LePage only has the interests of real estate agents at heart. These experts who dismiss the notion of a property bubble are short-sighted. The Canadian people will have to bail out the banks when this housing bubble busts! Everyone’s taxes will increase, and we will all feel the pinch when cutbacks happen in health care, education and social services.

#207 dark sad person on 12.14.10 at 2:54 pm

#54 Junius on 12.14.10 at 12:17 am

I have to give Carney some credit. At least he is finally telling it like it is. Took him long enough but it is better than reading all the usual drivel and the MSM bull crap.


Carney has successfully blown the biggest credit bubble in Canadian history and has in broad daylight transferred from the pockets of Canadians 280 Billion dollars into Banks and that’s only so far and you’re all hot to pat him on the back as if he’s done something wonderful after 3 bloody years of pimping low priced loans to fools-when the outcome of “this” was never in doubt to anyone that had half a brain-

Carney sinks a knife in your back-phones the Police and you confess to carrying a concealed weapon-

#208 GregW, Oakville on 12.14.10 at 2:58 pm

Hi #92 Nostradamus, fyi, Did you see this in the news today CBC news,
Children’s vitamins made false claims

I personaly use this band of vitamins. for what ever that is worth?

#209 dark sad person on 12.14.10 at 3:06 pm

#155 Kaganovich on 12.14.10 at 11:16 am

Thnx for the link-the more you read the more unanswered questions there is-
That’s what you get when searching for the truth and discovering it’s cloaked in a layer of lies-

#210 Junius on 12.14.10 at 3:09 pm

#199 Old Dark Sad One,

I said, “some” credit. I know that makes him the best of a bad bunch of mushroom makers.

Your knife metaphor is stupid. As usual.

#211 Leanne on 12.14.10 at 3:11 pm

Like all fine art, this limited edition photo must be interpreted correctly.

The subject is not merely a naked man to be ogled at. He represents a society which has put itself in a position wherein it is ill-equipped for the consequences of its own actions.

Goodness, people – get your minds out of the gutter.

p.s. Can’t wait for tomorrow’s Sunshine Boy.

#212 kitchener1 on 12.14.10 at 3:14 pm

In this case, I do give Carney and F the benefit of the doubt.

Rates were lowered in unision across the board to show that the G8 were all working together to contain the economic fallout.

I do beleive that Canadians appetite for debt has shocked even the BoC and Ministry of Finance, i think that Canadians splurged more then even the various forecast models showed.

Folks, we are talking about grade 5 or 6 math here, and with the internet anyone can just plug in the numbers and see the diff between 25-35 year ammorts and even plug in the numbers for 5-6-7-8% interest rates.

Basically, the BoC and F are saying that if people are stupid, thats there problem.

When people start to lose their shirts due to the coming housing correction, I will not shed a tear, I dont begrudge anyone a profit the same way I dont cry when they lose.

The other point that is really important about what Carney and F and Harper are saying is:

Dont expect a bailout or any sort of help from the Feds when it goes bad, Canada will not implement anything like the US did to try and save the market. They dont have the will to do it nor the capital.

#213 Coho on 12.14.10 at 3:16 pm

Regarding the complaints on Garth’s choice of pictures, I had no idea how many Canadians are so prudish. For crying out loud, we are not living in 18th century England.

As for Carney, too little too late. The damage is done and he caused this fiasco. How could the Governor of the Bank of Canada not understand the consequences of reducing interest rates to below the rate of inflation, after observing the easy money meltdown in the USA?

Regarding the comments of the pic: Probably a misrepresentation of how most people feel. Most of these comments surely are attacks on Garth…then again I’m sure many of us have experienced the hard feelings caused by those that ooze the pretence of purity, whose actions are often very different to those trying to be of pure heart. I guess that is the difference between paying lip service and actually doing some good for Its sake.

About Carney: Well put. I wonder if C really knows who or what the source from where the policies put forth for him to expedite is. In other words, does he know who his dictator is? I’ll bet not, and it is a given that this source is not answerable to the citizens of Canada and I’ll double bet that the best interests of this source are too often diametrically opposed to the best interests of Canadians. I hope more people are realizing this.

Whether C, F and others in their position actually knew what the outcome of the dictates they’ve been following would be, is questionable. I imagine a lot depends on how much they really understand current bizarro world economics or the ultimate intent behind cheap money. Either way they have their jobs to do whether they are confused and do it under duress knowing full well the pain it will cause many, or actually believe they are doing what is best for the people.

At any rate, they are the front men following the dictates of the hidden string pullers and sometimes have to stand in front of the people looking like incompetent fools and hypocrites. Who’s your “dictator?” Perhaps in some sense we should feel sorry for them.

#214 Live within your means on 12.14.10 at 3:17 pm

.#65 Basil Fawlty on 12.14.10 at 12:34 am
Regarding the complaints on Garth’s choice of pictures, I had no idea how many Canadians are so prudish.

Agree. One can see far more nudity on day/early evening time shows.

#215 The American on 12.14.10 at 3:32 pm

Most people on this site seem overly fixated on whether rates will be “allowed” to rise or reamain low in order to thwart a crash. The fact of the matter is rates staying the same as where they are today will have little to no effect on a forthcoming crash. Case in point, the U.S. Rates are actually LOWER today than at the peak of when everyone was drinking krazy Kool-Aid and buying like mad. What will cause a crash, more than likely, will be forthcoming stricter lending standards in Canada and the credit faucets tighten. This action takes several out of the game of RE. This, mixed with already tapped out home owners is where it actually begins. Rates have hardly anything to do with the crash.

Also, please do not use the argument that Americans were buying and flipping and Canadians weren’t. Most transactions in Canada today are for “investment” purposes only.

#216 jess on 12.14.10 at 3:38 pm

191 borrowedcarbon

cozy (trust)relationships?

Investment risk-taking has jeopardized the security of endowment income.
For the past two centuries, endowment management has centered on protecting the principal of endowed gifts and generating reliable income. Investments were traditionally made in relatively transparent, liquid securities such as publicly traded equities, bonds, and money-market instruments.But in the last 25 years, many universities have followed the path of schools such as Harvard and Yale and embraced a new model of investing that relies on radical diversification of endowment portfolios into illiquid, riskier asset classes: private equity and venture capital, hedge funds, andvarious “real assets,” such as oil, gas, and other commodities, private real estate and timberland.

Tax-Deductible Endowment Gifts and Gains
Gifts to endowment are tax-deductible to donors, and investment gains and income that
endowments generate are tax-exempt. Endowment managers can therefore rapidly trade without considering the potential tax consequences of their investment decisions.

Indirect Arbitrage Using Tax-Exempt DebtTax-exempt bonds have allowed colleges to borrow at low interest rates while keeping their endowment assets fully invested in high-risk, high-return investments. Endowments pocket the difference in yields tax free, while investors in tax-exempt bonds also receive favorable taxtreatment on income. Congressional leaders and the Congressional Budget Office are exploring how colleges benefit from this indirect tax arbitrage when they use tax-exempt bond proceeds for operating expenses in order to use other investments to chase higher rates of return. Because of the excessive levels of illiquidity in their investment portfolios, colleges have increasingly turned to the bond markets for cash.

By engaging in speculative trading tactics, using exotic derivatives, deploying leverage, andinvesting in opaque, illiquid, over-crowded asset classes such as commodities, hedge funds andprivate equity, endowments played a role in magnifying certain systemic risks in the capital markets.Illiquidity in particular forced endowments to sell what few liquid holdings they had into tumbling markets, magnifying volatile price declines even further. The widespread use of borrowed money amplified endowment losses just as it had magnified gains in the past. The seeming success and sophistication of the Endowment Model also encouraged other institutional investors and their advisers—smaller endowments, pension funds, foundations,investment consultants, and asset managers—to imitate these high-risk strategies and place more assets into the shadow banking system.;col1
In December, the university sold $2.5 billion worth of bonds, increasing its total debt to just over $6 billion. Servicing that debt alone will cost Harvard an average of $517 million a year through 2038, according to Standard & Poor’s.
Why University Endowment Policies Are Broken
By Lynn O’Shaughnessy | May 21, 2010
Quadrangle’s Hedge Fund Blows Up, Closes
13 Nov 2008 … Also: Citi may boot chairman, CALPERS real-estate smashed, retirees hosed by market collapse.
====================…/quadrangle-s-hedge-fund-blows-up-closes – Cached

#217 freedom_2008 on 12.14.10 at 3:40 pm

Cool, we finally got a naked man today! Knew these pictures are just tools for people to see/understand more of the texts, so naked men are just as good as naked women. Well done Garth!

#218 AM on 12.14.10 at 3:49 pm

#108 Brynn on 12.14.10 at 3:52 am

“Deluded again huh?

We are getting evicted from our stupid rental house ( according to Garth I didnt rent correctly-”

Well, if you don’t know how to rent, go buy a freakin house already

#219 prollywrong on 12.14.10 at 4:05 pm

What I don’t understand is this: nearly everyone who is certain of a real estate bubble pop in Canada seems to advocate getting out of real estate and moving into equities. Fair enough. But didn’t equities also get slaughtered during the US meltdown? Wouldn’t a real estate bubble pop in Canada infect other sectors as well? How could it not?

Further, I don’t think a rapid pop as occured in the US is really the worst case scenario for Canadians. At least in that scenario people get out with a loss but before they’re completely broke.

More damaging to net worth, I think, would be a slow decline in prices and incremental rises in interest rates. This would allow people to hold on to their massive mortgages long enough to completely drain any other assets. Then, when mortgage renewal time comes along in five or so years, after they’ve been scrimping just to make payments under historic lows, they will be faced with:

a) a house worth less than their mortgage debt
b) no other assets
c) unaffordable refinancing due to rate increases.

So, a Canadian-style meltdown: a long term whimper instead of a short-term bang, which may ultimately prove more damaging.

Finally, one for the pent-up demand theorists: I personally know at least ten couples, working professionals all, who were priced out of Vancouver over five years ago. They’ve spent the last half-decade saving, and now have potential downs well into six figures. Should there be 20-30% price reductions, you can bet they’ll be buying.

But, I thought the same would be true for US cities, notably San Francisco, but that doesn’t seem to be the case…

#220 GregW, Oakville on 12.14.10 at 4:07 pm

Hi Garth, fyi still flying?
Is this coming to Canada soon dew to the PM’s corporate trade deals in the name of keeping you safe?
If ‘they’ can do it to ‘them’ you and your family are not safe! Are you paying attention? What are you going to do today to stop it? If ‘them’ are not safe you will be next!

Boy Asks TSA ‘Why Pat Down Mom And Not Me?’, TSA Replies ‘You Don’t Have Boobs’

#221 Mark on 12.14.10 at 4:09 pm

#183, Jojo, TSX=20k wouldn’t be a bubble, just a continuation of the long-term trend line. If housing had only matched its long-term trendline in terms of pricing, I doubt we’d be sitting here talking about a Canadian RE bubble, and Garth would likely still be a MP.

#222 prollywrong on 12.14.10 at 4:09 pm

oh, and the moral may be: if you look around a room and don’t know who the fool is, it’s you.

#223 Ceramic Bull on 12.14.10 at 4:15 pm

I like the photos. Please don’t stop putting them up, they are funny.

that is all.

#224 Mikey the Realtor on 12.14.10 at 4:16 pm

#201 Junius

Great, give DA or I a call and we will set you up with a nice property. I’ll even set you up with a real lawyer to do the transaction, now who else would do that for their fellow blog pup. I’ll be back a bit later to discuss, DA and I have a yoga session booked and we can’t be late or we lose our deposit.

#225 GregW, Oakville on 12.14.10 at 4:18 pm

Hi Garth, fyi a case of fallow the money, maybe?

Wik-Bee Leaks: EPA Document Shows It Knowingly Allowed Pesticide That Kills Honey Bees

#226 TS on 12.14.10 at 4:22 pm

If you are offended by the photos on Garth’s blog then don’t bother visiting.

Keep up the great work Garth! I love the information, creativity and irreverence of your blog.

#227 BDG-YYC on 12.14.10 at 4:40 pm

It really is quite amazing how people holler “rape” after screwing themselves isn’t it ?

#228 BrianT on 12.14.10 at 4:48 pm

#221Greg-TPTB are on a mission to destroy commercial air travel in North America

#229 realpaul on 12.14.10 at 4:59 pm

I know people don’t like to think about the growing poverty in canada…it can’t be true …right? Wrong….do you think that seniors poverty, kids going hungry and families in the food bank lines is some one elses issue from another city…look closer to home. Mortgages are forcing issues like family dentistry to allow serious health issues. Seniors can’t afford teeth….kids can’t get root canals….all because Flaherty wants ZIRP to juice the economy while Harper trys to set up a majority. Shame on you Canada.

Think it ain’t happening here? Yer blind son.

#230 Fu_Ming_xia on 12.14.10 at 5:00 pm

He’s not wearing one sock…. He’s wearing two!!!! Use ur imagination people!!!

#231 Dragula on 12.14.10 at 5:38 pm

Wow! Does Global News ever stop pimping the RE industry?

#232 tran, Calgary on 12.14.10 at 5:45 pm

Wealthy Chinese to the rescue.

#233 Crash Callaway on 12.14.10 at 6:13 pm

Hey come on now!
if Garth stops posting pictures.
There goes 50% of the visitors.
The Greater Fools who can’t read.

#234 Bill Grable on 12.14.10 at 6:20 pm

How many Provincial Pension plans have the majority invested in RE and SIV’s and their ilk?

Did you see what happened to MUNIS, in the US, today?

I wonder how many folks are depending on a Pension, that some ‘yield chasing’ manager has plunged into deep negative territory?

In BC – “The greatest place on Earth” (*please) – the Civil Service Pension has, I am told, 75% of the pension fund in RE based assets and other swell stuff.

If true = ugly.

#235 Mike Hunt on 12.14.10 at 6:20 pm

With the release of Craney’s acknowledgement and warning of Canada’s situation, we can all agree that Canada is now officially going down. If you cannot see that, perhaps you should seek professional help in consideration of your fits of delusionment.

#236 Vancouver_Bear on 12.14.10 at 6:20 pm

Prudent canadians now owe more then reckless americans….LOL…LOL

#237 Jan Etter on 12.14.10 at 6:26 pm

Hi Garth, not sure if you’ve seen this but you’ve been slandered – this blogger claims you were equally bullish on real estate as…Brad Lamb!

The post is false. I have appeared on “Inside Toronto Real Estate”. I am not a developer. And whoever wrote the post (from Britain) is a weenie. — Garth

#238 Oasis on 12.14.10 at 6:35 pm

oh no. the bond market got massacred.. again. oops.

#239 jess on 12.14.10 at 6:40 pm

anyone see this : china’s ghost cities
ghost estates, malls , and subdivisions but how about cities.

Read more:

#240 Moneta on 12.14.10 at 6:50 pm

Prollywrong says: More damaging to net worth, I think, would be a slow decline in prices and incremental rises in interest rates

So, a Canadian-style meltdown: a long term whimper instead of a short-term bang, which may ultimately prove more damaging

How did you go bankrupt? Two ways. Gradually, then suddenly.’ –Ernest Hemingway

#241 Jason in Calgary on 12.14.10 at 7:04 pm

People need to concern themselves less with the actual images and more with the irony that the images represent… the images are harmless, and a lot less than what someone could find by typing innocent words into google….

#242 prollywrong on 12.14.10 at 7:22 pm

I am now fully bear converted! Thank god for this and other websites!

I’ve watched almost a dozen homes listed in the 450-600,000 range in Chilliwack, BC (that’s pretty much upper end around here) drop substantially since August 2010. Total reductions were in the 40-150,000 range. As far as I can tell, none of them sold and they’re off the market.

Sellers hoping for some spring frenzy? Screw that, we’ve got a great rental, I’m sitting this one out long term.

And today, the BCREA tells me home sales are forecast to climb 6 percent in 2011? Uh-huh.

For the record, here’s the kind of reduction I’m talking about. This home sat at 539,000 since August and was relisted a week ago at 499,000. It’s in one of the most upscale neighbourhoods in Chilliwack:

#243 K on 12.14.10 at 7:22 pm

Nice ass. I still prefer the cowboy! ;)

#244 Mr. Lee on 12.14.10 at 7:24 pm

Mr. Carney is an old Goldman Sachs man. What do all of you think he is going to do, tell you truth about the large ponzi scheme. Give him some credit, at least he is for shadowing what is going to happen unlike that joke of a central banker down south.

#245 It's Time on 12.14.10 at 7:25 pm

Watch Carney spell it out. Never seen a governer say it so openly…looks like soemthing is cooking… (Video)

#246 BrianT on 12.14.10 at 7:45 pm

#235Bill-This very long bull market in bonds has convinced many shiny shoed idiot pension managers that this is where the returns are-IMO this will be the bloodbath of all bloodbaths. Re Carney-he is connected-he knows the dump has started and he wants to be on record as having predicted it. As a bonus, maybe his comments will help the train pick up momentum.

#247 Junius on 12.14.10 at 7:50 pm

#233 Tran, Calgary,

On my last trip to Beijing I was with a large group of professionals from the US and Canada. We were all paraded around to a new condo development who was one of the sponsors of the event I was attending. The development was quite spectacular with really amazing finishings.

What was fascinating was they seriously believed that a number of us would be interested in investing in Beijing condos. There was a real surprise when no one arrived with a check book ready to purchase a unit.

Afterall, we Westerners fly around with suitcases of money to invest. Didn’t you know?

#248 TheBestPlaceOnEarth on 12.14.10 at 7:57 pm

Great news for offshore investors waiting on the sidelines with boatloads of cash. The weak bids (Canadians) are going to be washed away. Just like a stock the tree will be shaken, and the weak bids mopped up. This is great news

#249 Devore on 12.14.10 at 7:59 pm

#200 Junius

Most people operate under the “Recency Effect”. It is the firm conviction that the best indicator of tomorrow is what happened yesterday and today. Our ability to look forward into the future despite the warnings of others is severly impaired. Our belief in the present coupled with our hope that the dire warnings are not true prevail.

Not only that, but also our brains are wired for linear projections, and have difficulty for dealing with exponential (compounding) or logarithmic (diminishing returns) projections. In effect, people take today, and draw a straight line into next year.

For example, earlier in the year, when market was heating up a bit (in Vancouver) everyone was again excited and bubbly about real estate, and good times were here again to stay. Now that the market has basically flattened, everyone is projecting a flat market. Next year, when declines can no longer be denied with statistics tricks, everyone will be projecting a sagging market (a soft landing). Maybe later, 2011H2 or 2012, when declines are steeper, everyone will be projecting a crash. When in fact, it is always some kind of a curve, and we are just traveling along it, so it is never a straight projection.

But people being people have difficulty grasping that tomorrow will not be just more of today.

#250 john m on 12.14.10 at 8:18 pm

Surprisingly our wonderful powers that be have managed to find and accumulate enough caviar swilling senators to hold a vote on our penny :-)….All purchases are to be rounded out to even money..hmmmmmm think they will round them down ha,ha.So if wallmart for example has an item for sale for $1.98 who gets the extra 2 cents?… bet is the government :-)–very sneaky …but amounts to a hell of a lot of money when you multiply it by 32 million people and if so–so much for Harpers GST reduction!

#251 VICTORIA TEA PARTY on 12.14.10 at 8:29 pm


BoC boss Mark Carney, who helped to get to where he is by mixing it up with some of Wall Street’s biggest players and a whole lot of education, is preparing his “I Told You So” autobiography, it seems to me.

First off, remember that the Bank of Canada functions independently of the federal government. It reports only to Parliament. It sets monetary policy (interest rates and the like), while the government of the day sets fiscal policy (taxing and spending).

So, when I mention Mr. Carney, I do so with the assumption that he is NOT some federal government lackey doing its bidding.

While he is his own boss to that extent, he is also influenced by the same forces that shove the rest of us about, mostly US monetary/fiscal/foreign policies. That’s the way it is when you’re a colony of the American Empire.

With that in mind, for the past few years Mr Carney has dutifully followed his American central banker master Ben Bernanke and collapsed interest rates, here. That resulted in this historic Made in Canada debt-binge. It’s worth noting that this monetary policy FOLLOWED the Too Big To Fail 2008 world market meltdown debacle.

In other words, Mr. Carney had, and continues to have, little control over anything regarding interest rates these days. He’s the metaphorical gnat on the back of the wounded, angry, bellowing elephant of US imperialism. If you think his ride is rough, how about the rest of us who are clinging to Carney’s boney gnat-like backside?

So, for him to offer economic storm warnings and cautions, at this time, redeems his monetary actions in my books. I must sympathise with him because, in the end, he is not responsible for so many Canadians’ outragous financial bad manners and failures. He is not Mr. Nanny State! Therefore his warnings for Canadians to straighten up makes me a fan. He’s right to speak out like this, and that makes him indisputably unique amongst other central bankers, whose muffled tones mean nothing to anyone as the horrific winds of financial distress swirl about.

Between him and Garth, I really hope folks are listening, because looking forward, I wouldn’t be surprised at a sudden surge in interest rates, soon. Why?

Because, today, the US 10-year bond yield roared up to 3.47 %! That’s huge. And it is not a sign of future prosperity. It is a sign that mortgage rates in the US, and soon here, are set to blast into the troposhere.

That is a fact not an omen of things to come.

So, for your reading pleasure, an omen from Bloomberg news:

“U.S. Credit Swaps Fall for 10th Day, Longest Drop in Four Years

Dec. 14 (Bloomberg) — The cost of protecting bonds from default in the U.S. fell for a 10th straight trading day, the longest streak since OCTOBER 2006, as the Federal Reserve kept its plan to buy $600 billion of Treasuries through June.

The credit swaps index, which typically falls as investor confidence improves and rises as it deteriorates, has dropped from 99.4 at the end of November as Fed Chairman Ben S. Bernanke said the central bank may boost purchases of government debt. The central bank is bucking the most intense disapproval of monetary policy in three decades by sticking with efforts to boost growth.”

These sentences say it all. While some financial mavens still believe that prosperity can be regained by going deep into debt, and thus “benefit” from low cost default insurance, history says otherwise.

HERE’S THE OMEN PART: The article mentions OCTOBER 2006. That was just months before the trip-wire unleashed the US real estate market plunge and all the rest of it afterwards. Remember the Too Big To Fail bank bailouts? Credit default swaps had a big role in this, and it’s a major force today! So watch it!

Credit default swaps are nasty customers, because they help to skew otherwise “legitimate” market outcomes.
To further research this matter, I cannot recommend highly enough, at this time, the following book:

“The Big Short–Inside the Doomsday Machine” by Michael Lewis. It’s a good one.

Mr. Carney has probably already read it. He knows what’s cooking on Wall Street. And what he says here and now portends a hell-on-wheels economic future for Canada, as Garth keeps saying.

The gentleman is not kidding, folks. Carney will be more than a significant footnote in Canadian economic history. He will be a shining light, accompanied by a handful of other lesser lights; and an army of dim bulbs, of course. The dim bulbs are so…DIM!

#252 NFN_NLN on 12.14.10 at 8:40 pm

“As a reader and contributor I really resent your stupid pictures Garth.”

Next time I’ll show a puppy playing with a basis point. — Garth


Is this going to be a naked puppy? If so he won’t be satisfied!

#253 Jimbo on 12.14.10 at 9:03 pm

I am one of those Canadians with massive debt on my property.

Mortgaged to the max on purpose.

However I have three times the value of my property invested and generating about 9% a year, in a liquid and fairly safe balanced investments, I used to work for the banks. But I know nothing is a slam dunk and there is always risk.

Can you blame me, I pay just under 3% on a home equity line. In return I get 9%, after property taxes lets call it a clean 5% for doing nothing.

Most people I know in my age group are doing the same thing.. and why not money is almost free.

Thank you Carney and banks.

#254 Cowboy on 12.14.10 at 9:30 pm

Greg W, Oakville,
re:posting #196

How the hell do you drink water that does not
have floride in it?
Do you have a really good water filter?
Kind of getting freaked out about all this,
certainly do not trust those in power,
supposed to protect us…

Any info greatly appreciated for the family!

#255 Timing is Everything on 12.14.10 at 9:37 pm

“negative shock” – Ha!…just getting ‘warmed’ up.

“The [pension] plan reported a funding deficiency of $799 million at the end of last year based on the actuarial value of assets of $1.68 billion and total liabilities of $2.47 billion.
It has also lost millions of dollars in questionable investments including struggling Caribbean hotels and resorts during the last decade.”–changes-hit-workers-hard-in-big-pension-plan

#256 Bottoms_Up on 12.14.10 at 9:46 pm

#196 GregW, Oakville on 12.14.10 at 2:02 pm
Hey Mr. Anti-fluoride,

Try this vitamin D toxicity information on for size (you’re only taking 10% of the toxic dose! Up it man!!!):

Hypervitaminosis D is a potentially serious problem as it can cause permanent kidney damage, growth retardation, calcification of soft tissues and death. Mild symptoms of intoxication are nausea, weakness, constipation and irritability. In general, the toxic dose for adults is around 1.25 mg (50,000 IU) per day. However, certain individuals have an increased sensitivity to vitamin D and present with toxic symptoms after 50 µg (2,000 IU) per day.

#257 AG Sage on 12.14.10 at 9:47 pm

#177 T.O. Bubble Boy on 12.14.10 at 12:23 pm

I have to wonder if the realtor put a matching white plastic chair on the porch of the tear-down neighbor to the left too, just to make the neighborhood look welcoming.

#258 Nostradamus Le Mad Vlad on 12.14.10 at 9:53 pm

Well that was exciting! Greg W., thanks for the links and info. Now back to reality . . .

Eek-onomy “The United States is rapidly becoming the very first “post-industrial” nation on the globe.”

GS Leads to a new question: When JPM takes a major hit on silver / copper, will they be given a free pass (bailout money) to continue screwing taxpayers?

Gold Sleeper Trend Junior mining cos. look good for TFSAs.

Global Elitists want to starve us via Monsanto.

Look inside the US Treasury auction room.


1:59 clip Berlusconi still runs Italy, but not for long.

Russian forces on high alert over North Korea. Plus China and the US.

Prosecuting Wall St. — “In fact, top economists and financial experts agree that — unless fraud is prosecuted — the economy cannot recover.”

Cereals (Monsanto) “This is yet another example of a corporation appearing to be making huge changes to allegedly make their products appear more healthy, but not changing the fundamentals of actually making the product more healthy.”

Think we’re bad here? Try this.

9:47 clip When is simply a question.

Quietest solar magnetic period in history. May go with the link (#92) about the sun’s latest blowout. Which leads to this.

Numbers growing between rich and poor (food stamps, etc.).

The New America consists of tents made in China.

US Treasuries not doing so well.

JPM Guilty as charged, no conspiracy theories.

#259 Bill Grable on 12.14.10 at 10:34 pm

From >>>>

Not long ago it looked like the housing market was on the mend in most major U.S. metropolitan areas. But now prices are falling fast again in many. Foreclosures and vacant homes lingering on the market are depressing prices, and the home buyer tax credit that expired in July is sorely missed.

In September home prices fell in 18 of the 20 metro areas tracked by Standard & Poor’s Case-Shiller composite home price index. That was worse than August, when 15 of the top 20 cities were down month-over-month.

Canada? Hellllllllo?

#260 Bill Grable on 12.14.10 at 10:42 pm

Best place on earth – what is THIS supposed to mean?

“Great news for offshore investors waiting on the sidelines with boatloads of cash. The weak bids (Canadians) are going to be washed away. Just like a stock the tree will be shaken, and the weak bids mopped up. This is great news”

>>HUH>? Where do you live, Beijing? Incredibly callous.
This is great that people, stupid though they may be, are suffering?

I apologize for taking up Mr. Turner’s , and the blog dawgs time here – but I think this kind of attitude is unacceptable.

#261 Keith in Calgary on 12.14.10 at 11:00 pm

The bankers, politicians, economists abnd MSM always sound the alarm when it is all too obvious to everyone around them that it is far too late to do anything about it.

#262 Junius on 12.14.10 at 11:03 pm

#250 Devore,

Good post!

#263 TheBestPlaceonEarth on 12.14.10 at 11:04 pm

Carney got Canadians into this mess with his policies. Now he says the day of reckoning is coming and the Government isn’t responsible for persons debts. Good for a chuckle. Hold on a second had to stop typing from the noise, another house being bulldozed one after another making way for big time offshore money. Beautiful sound just beautiful. VanBachBeethovenCouver the music of money progress and Vancouver’s unsatiable appeal to the few, the chosen. God Bless it’s hallowed soil

#264 mr mike on 12.14.10 at 11:21 pm

The Global elite…

-The Vatican.
-The Queen of England.
-The US Federal reserve.

#265 domain on 12.14.10 at 11:22 pm

House prices will need to come down by ~15% just to keep the payments the same on a principal that sees an amortization go from 35 to 25 years. So the math says if the Gov’t tightens the amortization requirements, that alone will have a massive impact on housing prices. This is even before one factors in rising interest rates, or higher down-payment requirements.

That is one thing that is fairly constant in house hold budgets, is the amount a family can part with to afford shelter, unless incomes rise. This means that payments are the fixed number, while the principal is the big variable that will be affected by Amortization or Interest Rates.

The math is easy, but apparently a lot of people forgot how to do it.

#266 eaglebay on 12.14.10 at 11:40 pm

#240 Jess

You’re full of it.
These are brand new cities ready to accept Chinese migrations to the cities. 1 million peoples moving to the cities every week.
The problems are not empty buildings but overpopulation.
How to provide food for that many people?
Additionally, China is building power plants and other infrastructure by the thousands. They need our natural resources and then some.
Invest in agriculture, natural resources and financial services.
China is the next super power, economically and militarily.
Look around you, your I phones, your computers, many parts in your cars and most goods in your houses are from China.
Don’t forget India, invest in India at 12% and 13%. That is their official bank rate and it comes with a controlled economy. So much for democracy.

#267 domain on 12.14.10 at 11:41 pm

I told my wife that we will buy a house in about 5 years, and hopefully by then, the interest rates will be around 10%, or at least drastically higher than they are today.

At first she did not understand, but after a very quick explanation, she agreed. Now she tells co-workers the same thing when they harass her to buy a house, or wonder why she rents. They look confused at first as well, but after she explains to them that higher interest rates will naturally force the prices of houses drastically lower, and we will pay cash, they don’t ask her when she is going to buy a house anymore.

For those who use the argument “when hyper-inflation happens, it will make my house debt go away”, all I can say, is the day your house debt gets inflated away with hyper-inflation, is the day you pay $200 for a loaf of bread. So good luck with that.

#268 Wildroseblogger on 12.14.10 at 11:52 pm

To all those who don’t like Garth’s pictures- grow up, lighten up, and go watch the Disney Channel if you don’t like it. Drunkenly facing off with the cops is occasionally neccesary in defense of our basic freedoms, but I’m usually holding up fewer fingers than this guy

#269 domain on 12.15.10 at 2:37 am

#267 eaglebay

You need to do a bit more reading if you think those emtpy cities in China are just sitting empty for the reason that the migrant workers haven’t gotten there yet. Do some research and extricate your head from your orifice.

China is in a consumption bubble with most of its GDP coming from internal consumption for empty cities and over-capacity in nearly everything, including manufacturing. Just because they have billions of people, and an army of migrant workers doesn’t mean they are willing, let alone economically capable of moving into these Western-style cities with Western-style prices.

When China cools again, drastically, commodities will go for another downward cycle. That is when I suspect you will soil your pants as it will be your last thread of hope vanishing in your justifications for current economic illusions.

Here is one chart you should look at, and probably the most important chart for the near-future. Peak credit:

#270 domain on 12.15.10 at 2:39 am

Sorry, I just had to share this for China pumpers:

#271 David B on 12.15.10 at 9:24 am

From this morning G&M …. not much more needs to stated other than what city next bye?

Toronto is becoming a city of stark economic extremes as its middle class is hollowed out and replaced by a bipolar city of the rich and poor – one whose lines are drawn neighbourhood by neighbourhood.

New numbers indicate a 35-year trend toward economic polarization is growing more pronounced: The country’s economic engine, which has long claimed to be one of the most diverse cities in the world, is increasingly comprised of downtown-centred high-income residents – most living near subway lines – and a concentration of low-income families in less dense, service- and transit-starved inner suburbs

#272 Mouldy Basement Renter on 12.15.10 at 5:10 pm

#261 The bestplaceon Erf
Remember old Chinese proverb.
“Man who go to bed with itchy bum wake up with stinky finger”
….Well at least it makes more sense than your non stop drivel…..