Year of the Rabbit

Maybe we’re on to something after all.

As the old year deflated, it was fun to note the dissing this pathetic blog received.

Syndicated MSM columnist Jay Bryan held it responsible for single-handedly creating unhealthy and unpatriotic talk of a real estate bubble when (in his mind) it doesn’t exist. Bryan even called a Wall Street Journal piece “thin gruel” when it quoted me warning that the housing party will come to an end, as it did in the States.

“This kind of speculative bubble was allowed to form in the U.S. housing market through a combination of monetary policy that was too easy for too long and shockingly irresponsible regulation of banks, which enabled people to get mortgages they could never repay and allowed banks to package these bad mortgages into toxic securities that eventually shook the foundations of the banking industry in the U.S.,” he wrote. “In Canada, nothing remotely like this happened.

“In Canada, it was never possible to get a mortgage without any proof of income or assets. It was uncommon to get a sub-prime loan. As well, banks never adopted the practice of selling off most of their mortgages, so they had a strong incentive to lend only to those who were likely to repay.”

Ah, were that the case I might relax. But it ain’t.

As I’ve shown often, emergency interest rates inflated house prices here to the point of unaffordability, while our 5/35 culture allowed thousands of young couples without money to buy houses. Like the Yanks, we have teaser loans destined to reset much higher, cash-back mortgages allowing 0% down payments (both characterized US sub-primes) and our banks have gleefully sold off the risk for all high-stakes, high-ratio mortgages to CMHC – our equivalent of Fannie/Freddie. The result’s been twofold: a 70% increase in real estate values and the impoverishment of the newly-indebted middle class. Yeah, just like America. But, of course, there’s no comparison…

Hell, we even have liar loans, whereby no proof of income is required to get a mortgage.

But such talk earns this wretched site still more attention. This week a front-page article in the industry pub Canadian Mortgage Trends called me “a polarizing figure”, failing to even mention I like pictures of sexy, fat people and rude animals. The clever little editor called me up one day and, without identifying himself, asked questions about statements made here – then wrote a piece more or less defending those ‘stated income’ mortgages and disputing my claim that most new mortgages these days are high-ration (less than 20% down payment).

Then I heard the pumpers on Global TV in Calgary this week called me a fearmonger and a book-flogging, self-promoting, hysterical dipstick (I’m paraphrasing), who’s responsible for scaring poor potential homebuyers away from investing in a certain declining Alberta city. This was then echoed in Toronto, as one real estate professional actually published this advice, telling people – even older people with houses but little income – not to sell:

“Seniors will continue to “nest egg” their only primary asset that has a return on investment of approximately 4 – 5% annually. Liquidation of these assets into cash would create a taxable income stream with interest of less than 1.5% annually. Dipping into the principal amount of their nest egg every month for rent would erode their investment. My conclusion is that seniors are worse off by selling out. Garth’s recommendations to invest the money into stocks and mutual funds places the principal at risk.”

Interesting when a realtor claims housing will continue to rise forever, and no other places to put money exist – unless low-return or “at risk.” Sadly the asset at greatest risk right now is real estate. And, to be accurate (not that anyone seems to care), I sure don’t advocate either mutual funds (too expensive) or individual stocks (too much market risk).

So what does all this mean? That my views are misguided, my warnings fanatical and my motives besmirched by the millions I make weekly selling some books at Chapters?

Or, maybe, that – as a shiny new year dawns – there are powerful and coordinated forces who wish I’d just be shot by a cuckolded stud, and keel. It’s a message of contrarianism, caution and logic that they don’t want bothering the pretty heads of the homebuying public.

But here’s thing: In the Year of the Rabbit you must be quick and nimble to avoid being lunch.

The world faces a major deflationary threat, with governments in hock and confused, most of your neighbours up to their clavicles in credit card and mortgage debt, credit too easy and too cheap, and citizens floating on a sea of misinformation. The best defence is not clinging to the bricks and mortar which worked for your parents, trying to avoid risk by diving into the orange guy’s shorts, or thinking the world’s getting back to normal.

Normal’s gone. Your house and your salary will not inflate you out of mistakes. Excesses of the last few years will bring consequences similar to the ones bedevilling people in America or Britain. You’ve a few months left to diversify, down debt and prepare.

If words like that are polarizing, we’re bunny stew.

216 comments ↓

#1 Herb on 01.01.11 at 2:32 pm

“Year of the Rabbit” wouldn’t be too bad. Let’s just hope that it is not the “Year of the Garth” and Disasterville instead of Heart’s Desire. (An Ottawa burb actually bears the latter name.)

#2 Nostradamus jr. on 01.01.11 at 2:41 pm

Prediction for 2011

…Federal and Provincial Govt.’s Services will concentrate in Canada’s Major cities.

…Municipal Services will shrink.

…Major Cities will enjoy rising RE Values.

…Cities with Moderate Climates and Green Sustainable Values will, like any Olympic Champion, earn the Gold Medal.

Nostradamus jr.

#3 Nostradamus jr. on 01.01.11 at 2:43 pm

“”…Municipal Services will shrink.””

…Municipal Services in the outlying Hinterlands will shrink.

N j

#4 Bill Grable on 01.01.11 at 2:43 pm

To start the year off on the right foot – I was at a New Year’s bash last night, and one of my friends was so kind as to introduce me as ” the only guy I know that actually believes Real Estate is not where you should be…”.

The shocked couple looked at me and said “Don’t tell me you have been reading Garth Turner !!”.

I just about spit up my ginger ale.

The best part was – they are regular dawgies, and like yours truly, sold out.

While we are debt free and a couple mil up and are doing a wee “Turner Dance”- most of other guests were gushing over the Sub Zero Fridge and a stove that costs a staggering amount.

I found the sad embrace of “shiny things” has distracted a lot of folks, that are going to be “Bugs Bunny”, in short order.

Sad. Predictable.

Mr. Turner – you must have developed a very thick skin, as an MP and Cabinet Minister – so I hope the ‘fleas’ in the media, I use the word advisedly, because there are few newsrooms left; don’t divert your focus.

Because of YOU – I know that my Family won’t be in deep clam dip, and able to live a reasonable life.

Because of your absorption of insults and petty jabs, a lot of people will be s a v e d.

Take heart, sir. A lot of us GET IT. As we would say in the RCN – Bravo Zulu.

#5 wetcoaster on 01.01.11 at 2:43 pm

CMT is just another biased industry pump site out to try to justify the hoodwinking of dumb Canadians. The party is over or the government wouldn’t be even talking about it. They know the bloated tanker ship is taking on water and there is no way to stop the inevitable. The mania is over.

I find it funny that a bean counter website calls someone up and a claim of difference of opinion is met with legal threats via “defamatory” comments by you Garth. I think CMT missed their course on jounalism laws and misrepresenting oneself via the phone.

#6 dark sad person on 01.01.11 at 2:48 pm

#292 Junius on 01.01.11 at 2:04 pm

#234 DA,

One of Adam Smith’s most important works was his “Theory of Moral Sentiments.” You cannot understand Adam Smith without reading this book in conjunction with “Wealth of Nations.”

Moral Sentiments deals with human nature as it relates to economics and ethics. Anyone who thinks that Smith was a “caveat emptor” free marketer needs to read this book to understand he knew full well that human behaviour needed to be taken into account in economics.

The weakness of the Austrian school is its lack of appreciation for the role human psychology plays in human economics. Recent advances in neuropsychology are demonstrating every day just how significant these “animal spirits” play in our behaviour.

The point is that Smith grasped this more than 200 years ago in Moral Sentiments. However the Austrians such as Mises and their theortical followers including Ayn Rand did not.

This is their weakness and why posters here who pump the Austrian school present an incomplete and outdated analysis.
******************

You have no idea what you’re talking about-

Show me “one” instance where Austrians discount “Sentiment” (human behavior) as the driver all Economic phenomena-

#7 Chris no longer in England on 01.01.11 at 2:51 pm

Having escaped Britain in 2009 (and erasing at a stroke all the things that plagued and bedevilled me) I find myself running ahead of the flames with bags of cash. Thanks to reading this blog, even before leaving for Canada, the idea was to rent here and wait and see what happened. Thanks to all the information and discussion available here, my eyes were opened to the possibility of governing my money instead of what it might buy governing me. Thanks to prices here continuing to rise (while we had to sell English property low) and because of having some money still trapped in England that we couldn’t yet use – it was difficult, in fact well nigh impossible, to buy without a mortgage which we wouldn’t have been able to get anyway.

So thanks almost entirely to this blog, and to Garth, this family’s future is bright rather than uncertain. We have no debt, no drain on our resources, and can bide our time and grow our finances, thanks to Garth’s sage advice on spreading risk rather than dumping it all in one pile and hoping for the best. Also thanks to my brilliant brain in recognising the truth of it, way back when I first began reading this blog – but that’s another story!

We had to exile ourselves to create the kind of opportunity that was impossibly out of reach for us in the Old Country. In doing so, we have found a new country, financial security, and a way of life previously denied to us however hard we worked towards it.

It shouldn’t be difficult to prosper if willing to work hard and long towards a goal, but it is happening in the UK and it will happen here too. Anyone still sitting on the fence but able to make a change should do so. Indecision just leaves less time. Happy New Year to everyone that reads this blog. May 2011 see you in better financial shape than you were in 2010.

#8 rosie on 01.01.11 at 2:57 pm

You are calling for a “major deflationary threat,” while others are calling for modest inflation to hyperinflation. I wonder which it will be, or could it be 70’s style stagflation. I don’t pretend to know the future but all that Q.E. money sloshing around is having an inflationary impact in the emerging markets.

#9 Iori on 01.01.11 at 2:58 pm

btw, year of rabbit doesn’t start until February ;p

#10 go figure on 01.01.11 at 3:18 pm

I’m not getting why – at least a couple of times already – Garth refers to this as a “pathetic blog”. What’s pathetic about it, Garth? The format? The topic? The future? The contributors? The comments?

#11 Basil Fawlty on 01.01.11 at 3:19 pm

The linked article makes the case that without the US printing of $100B per month, the true rate of unemployment would be 25-30%. This is higher than the 25% unemployment rate reached in 1933 at the height of the great depression.
What the author does is take the U6 unemployment rate of 17%, as published by the US government, and add in the % of employment attributable to the printing of money (about 9%).

http://www.financialsense.com/contributors/daniel-amerman/hiding-a-depression-how-the-us-government-does-it

#12 Patz on 01.01.11 at 3:24 pm

With apologies I’m reposting this here from the tail end of Garth’s last post, “The greatest fool,” because I think it relates to what he’s saying.

There is a concept, ‘the hyperbolic discount function,’ which explains a lot about how we react to issues and threats to our well being. It is a way of understanding why people don’t respond to real estate bubbles, peak oil, or anything else which is a threat over the horizon.

The brain has evolved to handle immediate threat/rewards with the limbic system. The longer term thinking is done in the neo–cortex. What this means is that we respond to something, like a pit bull menacing us, immediately and urgently. For other, equally dangerous threats, for example not replacing balding tires on your car, we’re more leisurely in our response. I.e. we discount the threat because it appears less immediate and doesn’t call forth our limbic response. This may help explain why terrorism is so useful to governments because they make the threat seem so immediate.

So while RE appears to be within its ‘normal’ bounds the mass of people don’t respond to obvious signs of trouble—same deal for PO. But when a tipping point is reached the response will be much quicker because the threat has moved from the neo—cortex to the limbic system. You can tell the difference by whether you get a shot of adrenalin or not from the threat.

So pat yourself on the back as people on this blog are giving more weight to the farther reaching thinking, threat–assessment system in their brains.

I would say that in RE things are about to get a lot more immediate; PO will take a little longer.

For more on this see: http://www.paulchefurka.ca/Hyperbolic%20Discount%20Functions.html

#13 Jaymus (RealizedReturns) on 01.01.11 at 3:35 pm

@ Bill Grable:
I laughed when I read your comment. The new years party I was at also had plenty of real estate talk. Garth’s name came up in the debates as well.

I’m indifferent really. What was amazing to me is how passionate people are about their view on the state of the real estate market. It was a pretty heated debate and I think everyone involved walked away a little sour.

Happy new year! :)

#14 NameGoesThere on 01.01.11 at 3:44 pm

One of the Big Five banks does provide a certain type mortgage as described above “Hell, we even have liar loans, whereby no proof of income is required to get a mortgage.”
BUT they don’t provide this type of financing to High Ratio mortgages, the applicant must provide a substantial down payment, upwards of 35 to 40 % down in order to get approved
Therefore the borrower certainly has a lot of skin in the game and is unlikely to default

No no-doc mortgage is a no-doc mortgage. Hold the lipstick. — Garth

#15 WiseGuy on 01.01.11 at 3:44 pm

The Canadians that have been reading your blog for sometime, understand the serious situation that we have here when it comes to debt and real estate.

The toughest thing that you can tell someone, especially someone that has just bought a house is that their biggest asset will not be worth the same that it is today 5 years from now.

If people in Calgary had wised up and listened to you in the first place, they would not have over bought and would not be calling you a fear monger today.

The facts are all there and that is why Calgary has started to see their downturn. The same will happen in Toronto and the GTA. A year from now, there will be more so called journalists in Toronto and Vancouver calling you a fear monger that only wants to sell books.

Funny, because last night, just after new years, the video camera was on me and my friend asked me what my New Years Resolution would be and I said, “I will not buy a house in 2011”!

My friend on the other side of the camera then states how financially irresponsible I am for renting and not buying!

I love it, because that same friend is the same guy that just took his condo off the market here in Toronto, because he wasn’t getting any offers!

Now, who is the financially irresponsible one?

#16 Utopia on 01.01.11 at 3:55 pm

Indeed, Rabbits run…..and wolves pursue. The hunt and the carnage of the slaughter of the innocents has only just begun.

This will be a bitter year for the Hares. Bunny stew anyone?

#17 betamax on 01.01.11 at 4:05 pm

Bryan’s column was hilarious; I loved how he defined a bubble while denying Canada was in one:

“A bubble, unlike a normal price cycle, is a rare phenomenon that occurs when overoptimism and price excesses last so long and becomes so extreme that a large number of people begin to believe that prices can only go up, never down.”

Yah, that doesn’t sound like us at all….

#18 kc on 01.01.11 at 4:09 pm

“243 Gord In Vancouver on 12.31.10 at 9:45 pm

The Vancouver Pumpathon Continues…..

WARNING – do NOT read this while consuming a beverage.”

Interesting piece of crap… one question thou… can you see the future of journalism?? did you happen to read the by line? in case you missed it…..

Bob Ransford is a public affairs consultant with COUNTERPOINT Communications Inc. He is a former real estate developer who specializes in urban land-use issues.

We have become a society of “instant… 5 minute truths” how many people actually read this and caught the fact that this “article” was by-oped? Question everything and use your own brains…. cheers

#19 Devil's Advocate on 01.01.11 at 4:11 pm

Might want to check on the previous thread for some market statistics – 2010 REAL ESTATE RESULTS HOT OFF THE PRESS, RAW AND UNSPUN.

#20 Devil's Advocate on 01.01.11 at 4:14 pm

#6 dark sad person

Hey now dark, don’t be misunderstanding me. I am a BIG Austrian fan and avid subscriber of the Mises Institute.

#21 jess on 01.01.11 at 4:19 pm

… thick grey matter? correlation? lol .. scan your head before entry to make sure you are a true right winger!

“Neuroscientists are examining whether political allegiances are hard-wired into people after finding evidence that the brains of conservatives are a different shape to those of left-wingers.

Scans of 90 students’ brains at University College London (UCL) uncovered a “strong correlation” between the thickness of two particular areas of grey matter and an individual’s views.”
=========

Brain ‘link to political views’ | London Glossy Magazine
28 Dec 2010 … Scans of 90 students’ brains at University College London (UCL) uncovered a “strong correlation” between the thickness of two particular areas of grey matter and an individual’s views. Self-proclaimed right-wingers had a more pronounced amygdala – a primitive part of the brain associated with …

#22 Jeff Smith on 01.01.11 at 4:20 pm

Happy New Year everybody!

#23 Jeff Smith on 01.01.11 at 4:23 pm

Real Estate wish list from this guy, new year day joke!

http://www.moneyville.ca/article/914157–my-real-estate-wish-list-for-2011?bn=1

#24 T.O. Bubble Boy on 01.01.11 at 4:24 pm

2011:

>> I actually agree with Nostradamus Jr. on one thing – services will be cut. Rob Ford is doing it in Toronto, and Provincial and Federal Governments will need to do the same (or raise taxes even more).

>> This is the year that house prices will start their decline. Whether Flaherty changes CMHC mortgage rules or not, there are simply fewer and fewer buyers with the funds to keep the ponzi scheme going.

>> Other daily costs will continue to increase. In case you didn’t see it:

1) Highway 407 tolls are rising again

2) The average Canadian will see a 2% tax increase in 2011 – with the average Ontarian getting a 4.3 per cent tax hike between payroll taxes and a full year of HST.

3) Starbucks, Kraft, and others are raising coffee prices.

4) The Ontario Energy Board approved another Enbridge rate increase.

5) Gas prices across Canada are up 10-12 cents/litre over the past year (more in BC/Ontario thanks to the HST)

>> Currency and Precious Metals speculation will continue, and Gold/Silver prices will keep inflating as people try to protect themselves from uncertainty… 2012 “disaster hype” will be back in style, helped by those trying to position themselves for the 2012 the US Election. (Glenn Beck is still the spokesperson for Goldline, nuff said)

>> Canadian GDP growth will be NEGATIVE for at least 1-2 quarters of 2011… maybe the entire year if the housing market dies, the price of oil flattens a bit, and other commodities decline as China slows its growth.

>> Bond Yields keep rising (and mortgage rates along with them), but only a moderate amount… say +0.5% to +1% higher by January 1st 2012.

#25 betamax on 01.01.11 at 4:26 pm

Now that I think about it, is it too late to change my vote for greatest fool to Jay Bryan?

His article is similar to articles I read in the US a few years ago…they invariably make the same claim: “it’s different here, this time”, followed by the ‘drunk driver defense’: i.e. “the lack of a crash so far means it’s never going to happen.”

I’m going to send Jay an email when RE crashes and remind him of this stupid ‘Bagdad Bob’ article.

#26 Sue on 01.01.11 at 4:26 pm

We *love* rabbit stew!! Mmmm……

#27 T.O. Bubble Boy on 01.01.11 at 4:35 pm

oh, and, the international story of the day that won’t make it to Canadian MSM news:

Iran doesn’t like Stephen Harper, and blames the Conservative government for tensions with Gulf Countries.

#28 realpaul on 01.01.11 at 4:41 pm

The Year of the Rabbit is a year where we recover from the mauling of the Tiger……a well deserved rest I may add.

That the MSM is printing propaganda and outright lies regarding the financial state of affairs in Canada should come as no surprise. We have no objective media. The msm is so reliant on the miniscule pool of paying advertisers that editors have been reduced to copy boys running down to the print room with script from whomever has paid for the space. Everyone knows this. The rest of you should know that newspapers and radio stations are broke and will accept anything in return for cash. You should also know that the government is the country’s largest advertiser. If you aren’t awake…you could get fooled by people who don’t have your best intrests at heart.

The real estate cabal has a vested interest in keeping this scam running. There are political fingers deep in your pocket as well as the minions and whores you meet face to face. Why do you think ‘F’ left REIT’s out of the income trust gang rape? Did you think about that? Insidious isn’t it.

Of course there are liars loans and zero down deals in Canada……..what idiot would try to shout down the obvious. Banks are readily loaning FTB’s a downpayment for the 5%/35 deals that we take back down at the CMHC without question.

And no, real estate has never and will never ‘go up forever at 5% p/a’ and be guaranteed as an investment class. This has simple NEVER been the case. And sadly for the bulls, this time it is differant, the rules have changed, we have zero down zero equity loans in a rising interest rate enviornment. Zero equity means zero chance to hold through a downturn of ten to twelve years. Its not as if the government can lower rates anymore to stabilize the market….they’ve shot the wad on that score. To wit…it’s not the seventies anymore guys…and the government has much bigger debt issues looming.

And still amusing is that there are big losers as well as little losers…the commonality….people keep losing in spite of the msm’s attempts to float a stinker

http://www.reuters.com/article/idUSTRE6BT3YI20101230

#29 JC on 01.01.11 at 4:47 pm

Rabbits are low-fat protein and are best served with Spanish rice and snails.

How cryptic is that?!

#30 Canayjun on 01.01.11 at 4:54 pm

Yesterday in BC, The Province newspaper had a big article about the housing market in Canada, with a focus on your book. It had a picture of your After the Crash book and a picture of you too. The headline says “How we ducked the housing bubble.”

Although it appears to mock your opinions, it really seems to unintentionally serve another purpose. It gives exposure to your books. Interesting to read, but really makes me uncomfortable knowing so many Canadians are in the dark when it comes to economic realities in our own country.

You are actually barely even mentioned in this article, which you can read at:

http://www.theprovince.com/business/Canada+ducked+housing+bubble/4044777/story.html

#31 Nemesis on 01.01.11 at 4:56 pm

“The only thing worse than being talked about is not being talked about.” – Oscar Wilde

Do keep writing… and thank you.

#32 dd on 01.01.11 at 4:56 pm

yes, deflation in assets like housing and government bonds and inflation in prices like food and heating.

#33 Nostradamus Le Mad Vlad on 01.01.11 at 5:09 pm


#267 Tony, #277 GregW, Oakville, #278 Jack — Thank y’all for your kind comments, but now mispronunciation news.

Onto other things, and one sentence in Garth’s latest post — “Year Of the Rabbit” — caught my eye — “You’ve a few months left to diversify, down debt and prepare.”

Prepare for what? Western civilization is already heated Shepherd’s Pie and we’re being regurgitated as we speak. Feb. 3, 2011 marks the year of the Metal (female) Rabbit (12 animals, five different elements so the last time this particular cycle appeared was Feb. 6, 1951 to Jan. 26, 1952 during the Korean War). Each part of the day — 24 hours — is divided by two — day and night — so there are twelve different parts to this cycle, depending on the time of birth. This is the fourth animal in the twelve-year cycle.

As most of you know, my significantly better half is Chinese (Canton) and I am a white neanderthal. A book she has is The Handbook Of Chinese Horoscopes, Theodora Lau (Revised Edition).

A little more scientific than western astrology (all astrological stuff is from the lower psychic regions, not from the higher pure spiritual realms), but it is good to have an overview of what may (or may not) happen; take into account the continuing cycle change from west to east, which plays a major role, whether sheeples are aware of it or not.

“This type of Rabbit could be sturdier physically and mentally than Rabbits belonging to other elements. He will not be as compromising either. He will be more cunning, but his ambitiousness will be carefully concealed with cool logic and intelligence.” Sounds like Harper and the CPC, no?

#34 Tim on 01.01.11 at 5:40 pm

In Vancouver the condo fees are typically $300 and up for a one or two bedroom. When you add property tax, heating and insurance, you end up paying over $450 per month, just in fees-none of this going to the mortgage! This is half my rent. Why would anyone buy a condo with these fees? Even if real estate stabilizes, it is a money-losing proposition…

#35 Kurt on 01.01.11 at 5:54 pm

Awesome picture – Lynx are rare enough, but to actually catch a shot of one in pursuit of a snowshoe – that’s a once-in-a-lifetime wildlife shot. Run rabbit run!

#36 Rob McLister, CMT on 01.01.11 at 6:06 pm

Hi Wetcoaster et al,

There are two sides to every story. Here is the other.

To begin with, it might be worthwhile to state our opinion on housing so you know where we’re coming from. Prices in certain parts of the country (not all) “have taken on water” as you put it, and are due to retrace at some point. I don’t argue against that, albeit it is just my opinion and the extent and timing are what matter most.

Secondly, whether housing goes up or down is inconsequential to us from a business standpoint at CMT. CMT is as much of a passion as it is a business. Our business interests are very well-diversified and our livelihoods are certainly not dependent on mortgage volumes.

So that brings us to our motivations and editorial policy at CMT. In that respect, CMT’s primary motivation is fact analysis and news dissemination. We’ve covered the gamut on housing analysis, with stories supporting certain overvaluation metrics to stories countering others. CMT is indeed fond of analyzing the data used to support arguments–which is why I don’t take offense to the “bean counter” label. :) We are not infallible, but we try our best to foster civil debates supported by real numbers.

Defamatory in the sense it was used means injurious to reputation. We are not litigation minded folks. It was a statement that we care about being portrayed accurately. Before arriving at a conclusion about our misrepresentation, have a look at our response to those claims on CMT. Then consider that perhaps we just might indeed have ample documented evidence to support the quotes in our story, the fact that our identity was crystal clear, and the fact that the nature of my call that fateful day was fully and unequivocally disclosed.

Despite the fracas, I want to wish all the very best for 2011. My gut feel is that will be a strong year for Canada, on both the domestic and international front. Regardless of which side of the housing debate we stand, the dialogue on sites like this serve a vital role in countering complacency.

Cheers,

Rob McLister
Editor, CMT

Your contribution is always welcome. But the next time you call me for an interview, say so. The words, “Canadian Mortgage Trends” or “for the record” never crossed your lips. You may well have told me your name, but I’m not that good. — Garth

#37 Crash Callaway on 01.01.11 at 6:07 pm

Mantracker: “Hey I love it when the prey leave clues by making phony bunny tracks. And I love it even more when they leave behind treats for me. Man these are real tasty!”

Sidekick: ” uhmm… Mantracker… those aren’t glossettes!

Any mortgage holding glossette eaters want more Kool Aid to wash the treat down with?

#38 JC on 01.01.11 at 6:34 pm

#33 NLMV

Harper isn’t a metal rabbit, he’s a wood boar… from the same astrological triene but since metal destroys wood I would view this year as mixed for him. Those born in 1983 should be in for a stellar year as metal supports the water in the water boar.

I’d say he scrapes by this year with an intact minority govt but takes alot of flak for the effects of consumer deleveraging.

#39 dark sad person on 01.01.11 at 6:42 pm

I sure don’t advocate either mutual funds (too expensive)

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

Also-too risky-

What most investors miss and the advisers/salesman don’t tell you about mutuals-is the fact that you have zero claim on the company’s that are held inside the fund-
You hold only certificates “of” the fund-

Mutuals hold very little cash-usually 1-5%-
The rest is all invested-all long with no hedge offs-

Here’s the risk-

In a severe market sell down people always panic and head for the exit gates at once-screaming sell as they run to safety (cash) which there is never enough of in the fund-
The mutuals would then be forced to sell into a crashing to no bid market?
No-they have the right to refuse open market sales-they can instead-issue you more shares “of” the fund-based on the cash value of your holdings on the day of the sell order-

So what good will it do you being issued more certificates of a fund that may be illiquid and can easily go to zero do?

Of course not all the companies inside the fund will go to zero-but the fund itself certainly can-

Invest in mutuals and you drink in the same dirty water hole as the herd-
Invest directly in the company’s yourself diversify and hedge your bets and you drink upstream where the water is clean-

btw-some funds have done well-but that is no guarantee it will continue-

#40 Carruthers on 01.01.11 at 6:51 pm

Devil’s Advocate wrote:

“Hey now dark, don’t be misunderstanding me. I am a BIG Austrian fan and avid subscriber of the Mises Institute.”

There it is again…spin spin spin. You did not respond to DSP’s challenge. Why not?

#41 TheBestPlaceOnEarth on 01.01.11 at 6:59 pm

Inflation folks NOT deflation
Gold going Higher
Rare Earth Metals going Higher
Junior Uraniums Going Higher
and with 300 people at the recent Richmond listing bidding war from 800k to 1.1 million Gosh Darn it folks Richmond and Vancouver is going much much higher. You think those 200 people at the Open House in the bidding war are now looking at the rental pages. Not a chance to rent for offshore investors is to shame yuor family – better to just fall on a sword and get it over with before renting in a Block\

Did you not notice you were voted off the island? — Garth

#42 bill on 01.01.11 at 7:00 pm

”Be vewy , vewy qwiet, I’m hunting wabbits”
thanks Garth for everything. they aint getting this little wabbit

oh and mclister….you are wrong about 2011 being a good year.
my bet is it will be a very bad year for the mortgage biz.

#43 noplused on 01.01.11 at 7:02 pm

More stuff that can’t happen here:

http://www.businessinsider.com/robert-shiller-if-house-prices-keep-falling-this-fast-the-economy-is-screwed-2010-12

#44 Mike on 01.01.11 at 7:07 pm

Keep giving ’em hell Garth.

#45 rosie on 01.01.11 at 7:09 pm

Predictions, did I hear predictions. TSX S&P 500 15500, Dow 13500, S&P 1500, Gold 1500+. Inflation is in the bag. The Fed has 3 choices. Default, never. Deflate, can’t be allowed. Inflate, the only viable option. The Fed and E.U. will print until inflation takes hold. With Interest rates at -1% they have lots of room to move. The sheeple will jump back into the market like it’s 1999. Any bets? Don’t ever discount the Fed.

#46 TD69 on 01.01.11 at 7:13 pm

Happy 2011 Garth and all. Hopefully fun and more interesting than any of us imagine. Wall Street part??

#47 squidly77 on 01.01.11 at 7:13 pm

As real estate sales/prices further decline those that peddle the commodity (housing) will never shoulder any of blame, they will blame you and me, they will blame the government once further restrictions are enforced, they will blame the economy and they will blame Mark Carney.

Recently many blogs, the MSM and the commodity peddlers have stepped up their attacks on you, that indicates to me that things are not well within their industry, we may now be, at the tipping point.

One question though – why do you refer to house salesman as being Professionals?

#48 TD69 on 01.01.11 at 7:16 pm

#45 Rosie just read yours after submission. I must agree. US stocks are undervalued some up to 50%, BRIC way overrated and risky. Safe and steady good old greed and capitalism for 2011 – at least.

#49 nonplused on 01.01.11 at 7:22 pm

Unfortunately, this is happening here too as Garth has pointed out more than once:

http://poorrichards-blog.blogspot.com/2011/01/in-2011-baby-boomers-start-to-turn-65.html

2011: Year of the Minsky Moment? Sooner or later we are going to have to stop pretending we can pay back any of our current debts, let alone all the fancy promises we made to ourselves to be paid to us in the future. The money isn’t there.

The money can be printed as helicopter Ben is doing, but that would eventually destroy the value of money. The debt could be defaulted, which might cause deflation and high interest rates at the same time. But the one thing it won’t be is paid back. That was never the intention. There could be some 4th way out but I don’t know what it is.

#50 dark sad person on 01.01.11 at 7:22 pm

Despite the fracas, I want to wish all the very best for 2011. My gut feel is that will be a strong year for Canada, on both the domestic and international front. Regardless of which side of the housing debate we stand, the dialogue on sites like this serve a vital role in countering complacency.

Cheers,

Rob McLister
Editor, CMT

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

I’ll wager that you’re gut feelings are dead wrong-

How can it be a strong year for Canada when 70% of GDP hinges on the consumer who faces falling asset prices (net worth) falling wages and increasing risk of unemployment?

How can it be a strong year for Canada when our largest trading partner is spiraling into deflation and our trade balance is looking like this?

http://research.stlouisfed.org/fred2/series/IMPCA

What do you see that will change the US consumers attitude about deleveraging and saving and not borrowing and spending?

http://research.stlouisfed.org/fred2/series/PSAVERT

http://research.stlouisfed.org/fred2/series/TOTALSL

http://research.stlouisfed.org/fred2/series/PIROA

http://research.stlouisfed.org/fred2/series/UNRATE

http://research.stlouisfed.org/fred2/series/UNRATE

I think you’re dreaming in technicolor –

#51 Devil's Advocate on 01.01.11 at 7:27 pm

oh and mclister….you are wrong about 2011 being a good year. my bet is it will be a very bad year for the mortgage biz. #40 bill

In Kelowna we will sell about 2,000 single family residences in this year 2011. Of those 500 will be to first time buyers of which 90% will be high ratio buyers. 1,000 will finance their home purchase with a combination of equity ported over from their previous home and a new conventional first mortgage. Approximately 500 will purchase their home with cash not needing financing of any kind.

Given that the average price of a single family home in Kelowna is $525,000 is might be completely logical to deduce that something to the tune of $656,250,000 in mortgage proceeds will be disbursed over the course of the year in Kelowna. And that is for the single family mortgage market alone not including condominiums.

Now the Kelowna market represents about 160,000 of Canada’s total 34,000,000 population so a little bit of rough simple math could logically lead one to believe that about $140,000,000,000 in mortgage moneys will be advanced over the course of the year in Canada. Now think about it… that is almost twice the economic stimulus the United States deployed to resurrect their economy at the peak of the financial crisis… the United States a country with ten times the population of our own.

Not infallible logic to be sure but I think you get my point. And, again, this is just the single family residential market.

I think the banks will do just fine Bill… just fine indeed.

Again, I see the margin of error in my mathematical assumptions… but we are dealing with some pretty big numbers here and my point is this is BIG business which has learned a lesson or two of late. They are not going to screw up. You might but trust me they’re not going to.

#52 squidly77 on 01.01.11 at 7:32 pm

Through this together for a good laugh.
http://albertabubbleblog.blogspot.com/2011/01/garth-turner-must-feel-like-peter.html

Got Crow.

#53 Tiffa on 01.01.11 at 7:56 pm

If past events (or photos) are any indication, that lynx will in short order be humping that rabbit.

#54 Ret on 01.01.11 at 7:57 pm

#14 Re: Liar Loans

This in quotes below looks like a no-doc mortgage to me but now the cab drivers, peelers, and other tax cheaters will only get mortgages for 90% instead of 95%. Liar loans, robo-approved by Canadian banks, fully insured by CMHC and backstopped by taxpayers.

“CMHC is reducing the maximum LTV (loan to value) for the Self-Employed Product Without Third-Party Validation of Income as follows:
For purchase and portability transactions, the maximum LTV is being reduced from 95% to 90%
For refinances, the maximum LTV is being reduced from 90% to 85%”

Here’s the link, April 9, 2010.

http://www.briefingwire.com/pr/cmhc-self-employed-policy-changes

Don’t forget, you can always lie about basement suite rental income too! For $25 bucks I’ll sign any of the paperwork you need with any name you want but mine.

#55 West End on 01.01.11 at 8:15 pm

“you are wrong about 2011 being a good year. my bet is it will be a very bad year for the mortgage biz.” Bill

I think you might be wrong Bill. It probably won’t be a great year but I doubt it will be a “very bad year.” Housing is driven mostly by employment and it’s unlikely the economy will be worse than 2010. As jobs come back and growth returns it could offset the effect of rising rates on mortgage demand. Home prices may fall but the correction would need to be calamitous to have a “very bad year.” Unless prices move a lot higher from here I just don’t see it.

#56 UrbanCowboy on 01.01.11 at 8:17 pm

Through this together for a good laugh.
http://albertabubbleblog.blogspot.com/2011/01/garth-turner-must-feel-like-peter.html

Got Crow.
———————————————————-
Thanks for the videos, I especially liked the second one with the lady admiting I have no numbers to support my claims blah blah blah…..yet still arguing based on fluff. Reminded me kinda of Miss Bunny for some reason.

#57 dark sad person on 01.01.11 at 8:18 pm

#11 Basil Fawlty on 01.01.11 at 3:19 pm

The linked article makes the case that without the US printing of $100B per month, the true rate of unemployment would be 25-30%. This is higher than the 25% unemployment rate reached in 1933 at the height of the great depression.
What the author does is take the U6 unemployment rate of 17%, as published by the US government, and add in the % of employment attributable to the printing of money (about 9%).

*****************
Yes and not to mention those who fall off UI benefits are no longer counted as unemployed (they simply don’t exist)
It also should be mentioned about those who do count as employed who are forced to work part time relying on SNAP supplements when they’re actually wanting full time work-
Unemployment numbers are in your % range already-if the truth were known-
If you were to count all the stimulus created jobs-which will eventually end-the figure is going to be much worse-

#58 goldenfox on 01.01.11 at 8:20 pm

One Trick Pony

Last year I mentioned that in 1999 I converted my rrsp 100% into junior gold & silver mining stocks and that my rrsp was up 770%. Garth called me a one trick pony and to be careful my pony didnt end up in the glue factory. Well forget that noise, in 2010 my pony won the derby and was up another 70%. For every $ in1999 I now have $14.80. This horse has a lot farther to run.

#59 Devil's Advocate on 01.01.11 at 8:20 pm

#47 squidly77 on 01.01.11 at 7:13 pm
As real estate sales/prices further decline those that peddle the commodity (housing) will never shoulder any of blame, they will blame you and me, they will blame the government once further restrictions are enforced, they will blame the economy and they will blame Mark Carney.
Recently many blogs, the MSM and the commodity peddlers have stepped up their attacks on you, that indicates to me that things are not well within their industry, we may now be, at the tipping point.
One question though – why do you refer to house salesman as being Professionals?

Now there ya go steppin’ on our toes again. Word of advice; before you go about criticizing someone walk a mile in their shoes. At least that way you’ll be a mile away from them and they won’t have any shoes to catch you.
People, people, people… tell me please what benefit there would be to the real estate industry in hyping and further inflating prices? Really what do you think that is going to do for us? Nothing, absolutely nothing. Just like you we most want a stable, reasonably predictable affordable market in which average Canadians can and do want to buy a home of their own.
Really… just think about it.
Is our industry pushing over a tipping point – absolutely! We are off the unwarranted highs of late 2007 early 2008 which, in addition to screwing over a lot of greater fools, attracted a lot of others to the seemingly easy money in the field of real estate. Well now they are finding out in a quick hurry that it isn’t that easy and many of them are going to be forced back to their day jobs. That ain’t a bad thing either.

“Professionalism it’s an act of being, not association.” D.A.

#60 dark sad person on 01.01.11 at 8:24 pm

Did you not notice you were voted off the island? — Garth

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

I was nominated for asshole of the year a couple times-but- was beaten out by a few others-
I’ll do my level best to win in 2011-

#61 Devil's Advocate on 01.01.11 at 8:38 pm

#52 squidly77 on 01.01.11 at 7:32 pmThrough this together for a good laugh.
http://albertabubbleblog.blogspot.com/2011/01/garth-turner-must-feel-like-peter.html
Got Crow.

You honestly don’t believe we have learned anything at all in four long years since that video? Come on now Squid… who is the fool? Four years Squid… four years… check my market stats on the yesterdays thread. Is there some stability there or are we just THAT out to lunch amid the blatant barrage of B.S. constantly dished up before us of the U.S. failings which quite frankly are NOT that bad but still a good long four year advance warning which, trust me, we have heard.
Squid… I remember watching that segment more than four years ago.. I remember being appalled at those who made fun of Schiff. I am a Schiff fan. I still can’t take any of those morons seriously. I can’t figure out why they still have jobs in the field. Those jerks who mocked him especially that smug smirk of that long haired freak really pissed me off at the time. But this is four years later Squid. Four long years… how many more before you admit it isn’t going to play out like you thought? It’s been four years… four. Don’t you think something more dramatic would have happened by now if it was going to.

Let’s talk in January 2012.

#62 hdnow on 01.01.11 at 9:04 pm

@ #51 Devil’s Advocate

Your math is inaccurate by an order of magnitude.

cheers,
B.

#63 realpaul on 01.01.11 at 9:05 pm

So you think everythings just ‘rosy’ in Canada do you? You think that debt is under control and consumers are barking mad for more? I hate to issue a proclamation to the ether infused morons who continually plug ‘the blue sky’ propaganda….but c’mon people…enough of the wishful thinking. The recent CMT response was akin to something I’d expect from my teenagers…..vacuous and cute….but not something to plan around.

heres some figures,

“http://www.theglobeandmail.com/report-on-business/europes-debt-woes-could-be-harbinger/article1854721/”

OK , so you think we live on an island and Minister Flaherty is the smartest guy in the world? You think he’s got some smart people around him and that they’re on top of the situation. So don’t be distressed that they have underestimated the debt to GDP by half for domestic consumption and have been reminded of the trouble they’re facing by none other than the IMF.

Wake up call….Canada has the same debt levels as the US. The BOC says the ratio is 30% but the IMF says 80%.

As I have mentioned many times before the governments information/truth telling leaves much to be desired. As we have seen from the experiances of other countries when debt / gdp hits 100% the whole ponzi scam falls apart, intrest rates soar and taxes skyrocket.

Still want to buy a house based on the long term health of the economy….based on the unsound judgement of the real estate pimps?

God help the ignorant…..the rest of us should plan for a more uncertain future rather than having all our eggs in one basket.

Furthermore…read this article out of Switzerland if you think your dollar based valued real estate has made you rich or whether the money you’re playing with is depreciating faster than you can spend it.

Deniers and policy pimps are always looking at history to substantiate ‘facts’. The fact is that dollars are falling in value….your million dollar shack in 2010 dollars is barely ten percent of what it was in days of yore. Still feel rich?

http://goldswitzerland.com/index.php/hyperinflation-will-drive-gold-to-unthinkable-heights/

#64 Jeff Smith on 01.01.11 at 9:10 pm

>#29 JC on 01.01.11 at 4:47 pm
>Rabbits are low-fat protein and are best served with
>Spanish rice and snails.
>How cryptic is that?!

Anyone know of a good restaurant in the GTA area that serves rabbit dish ? I have always wanted to try the dish but don’t know how prepare it myself. I know you can get the packaged rabbit meat from the local grocery store. Hey only live once, might as well try something different. Next up has got to be venison and seal meat. How can I call myself Canadian without ever trying these things.

#65 wetcoaster on 01.01.11 at 9:11 pm

“Again, I see the margin of error in my mathematical assumptions… but we are dealing with some pretty big numbers here and my point is this is BIG business which has learned a lesson or two of late. They are not going to screw up. You might but trust me they’re not going to.”

—————————————————————-
How can they screw up when they pass the buck on to CMHC and the taxpayer ? DUH.

Hows the Kelowna employment scene to keep this bubble machine rolling ? Last time I looked the hospital is the largest employer with about 2000 people working for it, the mill has ancient equipment with a stop watch on it til it is shut down or blows up, and the government has a small amount of offices which leaves low paying service jobs at $8 an hour as the mainstay to Kelowna. Sounds like a recipe for disaster sooner than later.

I missed the vote for idiot pumper of the year but DA takes the cake. An agent with that much time on his hands spells bigtime trouble in K Town.

#66 Cats and Hogs on 01.01.11 at 9:29 pm

>#47 squidly77 on 01.01.11 at 7:13 pm
>One question though – why do you refer to house >salesman as being Professionals?

I think they are called professionals for the same reason streetwalkers are called professionals.

#67 An Cat Dubh on 01.01.11 at 9:33 pm

I was visiting my Dad in Chilliwack and saw a couple of foreclosure properties for sale. One in Hope (a house) and a condo in Chilliwack. This was advertised by a Realtor. Prices were quite reasonable, though I know there are more foreclosure properties for sale than what’s advertised.

#68 Live Within Your Means on 01.01.11 at 9:34 pm

#26 Sue on 01.01.11 at 4:26 pm
We *love* rabbit stew!! Mmmm……

Sue – were you joking? We got 2 wild rabbits before Xmas from someone who hunts or traps them on his huge property. Usually cook raised ones a la mutard. But, I’d like to do them differently. Thinking maybe in a crockpot. Any recipes you’d like to share?

#69 Mean Gene on 01.01.11 at 9:41 pm

What goes around comes around.

Ex-Treasury chief Paulson loses $1 million on DC home

http://www.reuters.com/article/idUSTRE6BT3YI20101230

#70 Min in Mission on 01.01.11 at 9:48 pm

Rabbit, done in the oven, or over an open fire.

#71 Amarillo on 01.01.11 at 9:56 pm

“Re: T.O. Bubble Boy on 01.01.11 at 4:35 pm
oh, and, the international story of the day that won’t make it to Canadian MSM news:

Iran doesn’t like Stephen Harper, and blames the Conservative government for tensions with Gulf Countries.”

Well, if Iran doesn’t like Stephen Harper, then I like Stephen Harper.

Of course, we’re talking about ‘Iran’ as the government of Iran, not the Green Movement Iranians who deserve our support.

How soon we forget that liberty is not free and ya hafta stand up to assholes.

The sanctions on Iran are really starting to bite and that’s how we’ll proceed without violence — think S Africa’s apartheid being defeated by sanction and world opinon.

#72 Ghost of Tom Joad on 01.01.11 at 10:05 pm

“Without a gold standard in place, there is little to prevent governments indulging in wild credit creation.
Deficit spending is simply a scheme for the confiscation of wealth.
Gold stands in the way of this insidious process.” Alan Greenspan : 1966

http://www.ft.com/cms/s/0/6c43927c-2456-11de-9a01-00144feabdc0.html#axzz19q3BHY9i

A 45-year-old quote from the architect of the US housing bubble. I wouldn’t get too excited. — Garth

#73 Debtisforever on 01.01.11 at 10:10 pm

#52 squidly 77

I love it! Hilarious! Those two other experts basically laughed Peter Schiff off the show….”hahaha this fool thinks housing prices are going to keep falling…hahaha…real estate always goes up…hahaha”
Looks who’s laughing now! :s

#74 Jon B on 01.01.11 at 10:20 pm

Hang in there GT. I think a lot of people appreciate your efforts in keeping this forum current and insightful.

#75 Mikey the Realtor on 01.01.11 at 10:22 pm

Hey DA, take it easy on the squidster, I can sense that he is very close to buying property and you might be able to get the sale, paid to fly out to Alberta and all by the man himself. Most of the pups and poodles will be buying this year, be ready to see a decline in views Garth, as the pups buy they will be heading off to sunnier places.

#76 Utopia on 01.01.11 at 10:22 pm

#21 jess wrote

“… thick grey matter? correlation? lol .. scan your head before entry to make sure you are a true right winger”!

Scans of brains at University College London (UCL) uncovered a “strong correlation” between the thickness of two particular areas of grey matter and an individual’s views. Self-proclaimed right-wingers had a more pronounced amygdala – a primitive part of the brain associated with ……….

———————————————————-

Oh,oh,wait..Can I finish that sentence for you? Let’s try this.

A primitive part of the brain that fails to fully understand or grasp Adam Smith? Yup. That will do.

#77 Patz on 01.01.11 at 10:29 pm

#71 Amarillo
Well, if Iran doesn’t like Stephen Harper, then I like Stephen Harper.

Gee, maybe you should get in touch with Harper and see if the foreign policy job is open.

#78 Live Within Your Means on 01.01.11 at 10:39 pm

#62 Jeff Smith on 01.01.11 at 9:10 pm

Checked in one of our local supermarkets before Xmas, a raised rabbit was $18+. Best one we ever ate was made by our elderly Polish neighbour (who is now in a seniors’ home and doesn’t recognize anyone:-(:. It was succulent and fell off the bone. Unfortunately, I don’t have the recipe.

Check out the net for lots of recipes. We’ve done Lapin a la Mutard a few times. We paid $5.00 ea just before Xmas for wild rabbits but have yet to cook them. Exchanged 2 for a couple of deer steaks and deer ‘hamburger’ which we’ve yet to cook. Personally, prefer a moose steak and better yet, a deer fillet mignon. Friends in France BBQ’d the fillets – absolutely delicious. I buy a beef filet at Costco, cut it & freeze it. Great with ‘shrooms and a red wine/cream sauce. I’m a small eater, so a little filet is the max that I can manage.

#79 Mr. Lee on 01.01.11 at 10:40 pm

Mr. Turner:

These so called market experts (realtors, speculators, MSM, et al) have a vested interest in compounding one lie after another. As your web blog suggests, Thegreaterfool.” In Calgary the head of the Real-estate Board came out with her crystal ball to declare that prices will not go down in Calgary, in fact they will go up and by the 2nd half of 2011, the doldrums will be a memory. Of course she forgot to mention what economic reality will contribute to this “upswing”.
With oil approaching $100 per barrel, Gold over $1400, food price inflation and government austerity budgets , the same voices that have espoused that we in Canada are part of a global economic environment of productivity are now saying that these same principles of globalization do not apply to the Canadian housing market. That is what I call having one’s cake and eating it too

#80 Utopia on 01.01.11 at 10:51 pm

#52 squidly77

“Through this together for a good laugh”.

http://albertabubbleblog.blogspot.com/2011/01/garth-turner-must-feel-like-peter.html
———————————————————

That was brilliant Squidly.

I watched it twice and was struck by how precient Peter Schiff really was. In that year the bubble had not really burst yet and it was still just conjecture to the media people as to what the outcome might be for US real estate.

Peter on the other hand had an absolutely clear unwavering vision of where the market was headed and has been proven correct. In spades. Who is laughing now.

Guys like Devils Advocate who continually repeat and rehash the same tired old lines are going to be eating some crow this year though. There is no way out anymore for many hundreds of thousands who bought in these past two years.

The sad part is that many of the real estate promoters actually believe what they are passing off as knowledge and wisdom. They have sold themselves on the same set of beliefs they would like us all to follow. They do not seem to grasp that they are deluding themselves too.

Course none of their arguments have anything to do with real unbiased information or logic or reason or historical records or data or cold hard facts. Just truisms that grandma passed down to us. Buy now sonny, real estate never goes down, don’t ya know!

“Location, location, location” indeed! As long as that location is in another country this year I might bite.

Unfortunately for Garth, the personal attacks that ridicule him and accuse him of inciting fear will only escalate as the market rolls over. Exactly as was experienced by Schiff who had a message that nobody was prepared to hear.

As if plugging your ears and shouting LALALALALALA!!!! might actually make it all go away.

#81 Devil's Advocate on 01.01.11 at 11:05 pm

#65 wetcoaster;

CMHC insures the shortfall in the event of a foreclosed sale where the sale price is less than the monies owed and costs to recover. For that CMHC is paid handsome premiums by the borrower.

First, there have not been so many sales were the shortfall has been so significant and second the minor portion of those mortgages which may are amply covered by the premiums paid by all including those who will make good on their obligations who far, far outweigh those who default.

This CMHC warning cry BS is just that BS. What do you think, all high ratio mortgages are precariously close to default and CMHC is required to pay out the FULL AMOUNT OF THE MORTGAGE to the bank when they do? Don’t be so stupid. It is nothing more than that shortfall which is insured.

Oh and by the way… in many a case CMHC will be all over those banks like Revenue Canada trying to prove the bank did not do its due diligence before granting the loan and if they find even the slightest hint of it will deny payment of the insured shortfall.

Man do I get sick and tired of the gross misunderstanding of the mechanics of this aspect of the banking business. It’s all so typical of the unfounded hysteria rampant in other area of the economy.

Think! Here is a real simple example. You get a mortgage for $95,000 on your $100,000 home purchase. It is high ratio so you pay a hefty CMHC insurance premium. Next year you lose your job, you can’t make payments and the house has dropped in value from $100,000 to $95,000. The bank forecloses and sells the house for $90,000 but the mortgage amount owed is still $95,000. Bank claims against the insurance for the $5,000 ($90,000 – $95,000 = -$3,000) shortfall.

There are other intricacies but we will not bother you with that lesson quite yet.

No CMHC does NOT pay out the full $90,000 mortgage.

No CMHC does NOT take possession of the house and put it up for sale.

Yes the bank must at all times be dilligent throughout the process and must strive to mitigate its losses or CMHC may deny the claim, in this case for the $5,000 shortfall.

#82 Utopia on 01.01.11 at 11:09 pm

#19 Devil’s Advocate

Might want to check on the previous thread for some market statistics – 2010 REAL ESTATE RESULTS HOT OFF THE PRESS, RAW AND UNSPUN.
——————————————————-

You really don’t have a clue what is coming do you Devil?

#83 Timing is Everything on 01.01.11 at 11:13 pm

#10 go figure

Garth means ‘pathetic’ but….in a good way. Ha!

#84 Devore on 01.01.11 at 11:14 pm

#6 dark sad person

This is their weakness and why posters here who pump the Austrian school present an incomplete and outdated analysis.
******************

You have no idea what you’re talking about-

Show me “one” instance where Austrians discount “Sentiment” (human behavior) as the driver all Economic phenomena-

Wow, indeed, it is beyond asinine to present Austrian school as ignoring sentiment, when it is just about the only school of economics which focuses almost solely on it, eschewing models, equations and aggregates as being far too simplistic to be useful. One of the founding volumes is called “Human Action”, which should be basic economics reading.

Sadly, the amount of economic ignorance in our society is very troubling, when people cannot even understand basic concepts.

#85 Utopia on 01.01.11 at 11:30 pm

#30 Canayjun

Yes I see Jay Bryan is up to spinning industry drivel in the Province now. I loved this line from his article:

“It’s hard to find a reputable analyst who predicts anything other than mild fluctuations in housing over the coming year or two”

Of course if that were really the case then we have a great deal to worry about. Excessive bullish sentiment is almost always a precursor to a change in market moods.

But did poor Jay not notice that some of the sternest warnings on indebtedness have actually been coming from none other than the Bank of Canada, from Finance Minister J.Flaherty and from Gluskin and Sheff’s David Rosenberg?

For a syndicated columnist Jay is not doing much in the way of homework to make the statements he has made in that sad new years piece. But what the hell, it’s only a paper we won’t pay to buy anyway and the editorial board was probably off at a party which is how that lopsided analysis slipped through the net in the first place.

Like I said before, is it any wonder we don’t subscribe to newspapers anymore in this country?

#86 Basil Fawlty on 01.01.11 at 11:39 pm

I almost forgot: Happy New Year Miss Bunny! Basil thinks you are swell.

#87 Tony on 01.01.11 at 11:54 pm

#48 TD69
Re: US stocks are undervalued some up to 50%
I think you’ve got that backwards. US stocks are at least 50 percent overvalued. In fact i’ve never seen stocks so overvalued dating back to and including the year 1929. By my recollection the DOW should drop to the 4,500 level by 2015 at the latest.

#88 throwstone on 01.01.11 at 11:54 pm

Garth, what may the future hold for this little rabbit?

http://www.thestar.com/living/article/913458–my-first-series-my-first-home?bn=1

#89 confused and a little crazed on 01.01.11 at 11:54 pm

hi blog dogs,

the end of the housing bubble will be a precursor to the end of this blog site. where everyone here will have wandered off…to other conspiracy websites …the next bubble whatever it may be. the name garth turner would be a name mumbled in reverence or disdain.

people will wonder…What website??? I don’t seem to recall and them Mr. Turner can ride off into the sunset or northern lights depending on where you are.

Brandishing the olympic 2010 pin Boldly stated ” Wish you here”( backdrop olympic Village)

bandit trotting by your side

then and only then will you say” Adios ” and with a heavy sigh you can retire this site…knowing that a few souls were saved from the cold 35-40 year embrace of DEBT
he’s the apparition wearing the T-shirt” It’s not how much you make but how much you owe”

that is my wish for you garth…happy new year 2011

#90 Carp Coyote on 01.01.11 at 11:58 pm

I fully agree that unemployment numbers are BS. I’m an entrepreneur and starting today I’m officially unemployed, contract-less. I can’t claim EI and I don’t show up in the numbers.

Time to work on my recurring revenue model.

#91 Utopia on 01.01.11 at 11:58 pm

#63 realpaul

Just when I thought I had posted quite enough for one day…….and then I read your post paul.

Great points about the IMF. Keep up the good work buddy. People in this country are asleep at the wheel. We are about to careen off a financial cliff along with everyone else and yet there are so many out there still blithering about how safe our banks are, how Canada magically evaded the worst effects of the debt crisis and how we are going to see growth in this coming year.

Poppycock and nonsense! You said it like it is. We are in exactly the same boat as the Americans now. We have just not seen the consequences of our actions yet. We are not special here. We are like everyone else and our debt is similarly and unsustainable and growing.

We could only wish that our deleveraging had coincided with the US.

Instead, we will find ourselves hamstrung in debt both personally and as a Nation while they are in recovery mode some years down the road.

Our turn to be living the American nightmare is almost here already. But we are going to be behind the curve while their economy begins bubbling back up.

Anyone who cannot recognize the danger now is a fool.

#92 Devil's Advocate on 01.02.11 at 12:02 am

“You really don’t have a clue what is coming do you Devil?” – #82 Utopia

In fact ‘topi’… no I do not. And… you… do?

It’s a game and that’s a big part of the entertainment value – not knowing. Hell I thought four years ago the whole thing was headed down the toilet. Did that happen? Was it just my timing? Is it just Garths timing? Is it a case of what ever the D.A. says the opposite is most likely to be? All these questions ‘topi’, all these questions…

Again, I cashed out of real estate in August of 2008, pretty much the peak of the market, thinking it was about to crack. Many would say my timing was perfect. Would I do it again if I could turn back the hands of time knowing what I know now? Not likely.

It’s – a – game, a game that is not about winning because when this one is over… well… hell I don’t have a clue about that either. And know one does know the answer to that one do they ‘topi’. THAT alone tells me we are not supposed to know, for if we did we sure as hell would be conducting ourselves differently than we are wouldn’t we? Think about it… you’ll figure it out.

#93 throwstone on 01.02.11 at 12:07 am

Did the editor’s ask for the “your first mortgage” piece?

http://www.thestar.com/living/article/914211–my-first-mortgage

#94 tran, Calgary on 01.02.11 at 12:12 am

Experts: Food and fuel shortages imminent as new Ice Age dawns

http://poorrichards-blog.blogspot.com/2011/01/experts-food-and-fuel-shortages.html

#95 dark sad person on 01.02.11 at 12:13 am

#63 realpaul on 01.01.11 at 9:05 pm

Furthermore…read this article out of Switzerland if you think your dollar based valued real estate has made you rich or whether the money you’re playing with is depreciating faster than you can spend it.

Deniers and policy pimps are always looking at history to substantiate ‘facts’. The fact is that dollars are falling in value….your million dollar shack in 2010 dollars is barely ten percent of what it was in days of yore. Still feel rich?

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

I read the link-
Agree with most of what he said except that high prices will cause hyper-inflation to occur-
If you don’t have a job and a rising wage-you cannot chase high prices-

High prices will out run buyers (just like what happened with high house prices)
Then prices will come down-just like house prices did-
Sure-food and oil can always be too high but they still have to have a buyer and a market clearing level-like anything else does-

You equate falling house prices to falling dollar value?

House prices really has little to do with a falling dollar value-except in something extreme-

Using Edmonton for a bizarre example-2006-07

http://edmontonhousingbust.com/files/101202-1.jpg

If you gauge (price inflation) over 1 year and deduct it from the increase in the value of house price-over 1 year then in order to have lost money (buying power) (say you sold at the top) (say you paid in cash a year before) Inflation would have to have been running at over 120% to have lost money because 120% was the increase price in SFH-

In fact today (if you believe house prices will fall) and you had no house today and cash only-your dollar is getting stronger weighed against house prices-

eg:
If a house today was worth 500K and you had 500K cash and house prices fell 50% over the year-you could buy that house next year for half the amount of dollars-

That sounds like a stronger dollar to me-

So no sure what time frame you’re using to come up with a 90% decrease in buying power in home value when weighed against (price inflation)

#96 Caron on 01.02.11 at 12:14 am

Take a look at the consequences of 30 years of financial deregulation.

http://www.guardian.co.uk/artanddesign/gallery/2011/jan/02/photography-detroit

#97 squidly77 on 01.02.11 at 12:20 am

Sorry Mikey, I bought my last home 15 years ago, I had my first mortgage when I was 28, however I do have kids that are presently renting. They won’t be buying anytime soon.

Now there ya go steppin’ on our toes again. Word of advice; before you go about criticizing someone walk a mile in their shoes

If that’s stepping on your toes you need to toughen up.
Seriously though, who gives your vocation professional status.

It wouldn’t be other realtors would it ?
I can’t even bring myself to use a capital R at the beginning of your industry invented name.

I know the vids are old, 48 months to be exact but true classics are worth watching and watching again.

Now heres a question for you, who will your industry blame when the industry craters ?

#98 dark sad person on 01.02.11 at 12:24 am

Wow, indeed, it is beyond asinine to present Austrian school as ignoring sentiment, when it is just about the only school of economics which focuses almost solely on it, eschewing models, equations and aggregates as being far too simplistic to be useful. One of the founding volumes is called “Human Action”, which should be basic economics reading.

Sadly, the amount of economic ignorance in our society is very troubling, when people cannot even understand basic concepts.

**************
Exactly-
Charts are nothing more than a map of “past” Sentiment in any given area and only offers probabilities of future direction-
Which can all go to hell in a heartbeat-should Sentiment reverse-

#99 TheBestPlaceOnEarth on 01.02.11 at 12:34 am

Kelowna and Okanagan real estate in general is fueled by Alberta oil money and retiring NHL players. Plus its a heck of a great place. From a real estate view the Okanagan has been fantastic these last few decades. At 8 bucks an hour you won’t be buying anything soon. Some neighbourhoods just have a few families actually living there while foreign investors jet set in to go skiing at the local hills, hang out in their house for a couple of weeks to not be seen til the next year. Does this make a neighbourhood or community? Nope but were talking real estate here folks and the issue is supply and demand period.
^^^^^^^^^^
Hows the Kelowna employment scene to keep this bubble machine rolling ? Last time I looked the hospital is the largest employer with about 2000 people working for it, the mill has ancient equipment with a stop watch on it til it is shut down or blows up, and the government has a small amount of offices which leaves low paying service jobs at $8 an hour as the mainstay to Kelowna. Sounds like a recipe for disaster sooner than later.

#100 The Original Dave on 01.02.11 at 12:35 am

Dark Sad Person,

I wanted some opinions from you if possible on ree’s, uranium, gold juniors. Email me at: [email protected]

#101 tmg on 01.02.11 at 12:52 am

I live in Vancouver, and I rent. I am currently looking to move my family to another house in Vancouver because this house is full of toxic mold. The owner lives in China and has hired a chinese owned management company to deal with the property. They have simply told us that it is our best interest to leave. However, we have nowhere to move to and they cashed our rent cheque. Our rental situation prior to this was not dissimilar. The only work that has been done on this place has been things covered by insurance. We’ve had a sewer backup (3 days after we moved in) and a flood in the basement shortly after. There has been only bare bones maintenance on the property. When anyone is called for repairs, they are always Chinese, with broken English, at best. They are not hiring caucasians. They hired a lawyer when they found that we were scheduling a hearing with the tenancy board. He is also Chinese. They are completely prejudice against Caucasians here. There is no attempt to assimilate. My husband and I tried to eat at a neighbourhood Chinses restaurant recently. After a long time, they reluctantly sat us, but would not serve us.We had to leave. We seem to just allow people from overseas to buy here and employ only their own countrymen. How does that help our economy?? They are not starting businesses here (God forbid they should contribute to our taxes!). Everyone here seems to worry about saying something that may be interpretted as being politically incorrect, but it seems an elephant in the room in Vancouver. I’m not referring to the Chinese people that have settled here prior. (My best friend is one of “those”). I’m talking about the influx of immigration that seems to suck more out of Vancouver than it puts in. I hate that I feel bitter about this.

#102 45north on 01.02.11 at 12:54 am

Kurt: Awesome picture – Lynx are rare enough, but to actually catch a shot of one in pursuit of a snowshoe – that’s a once-in-a-lifetime wildlife shot.

indeed it is unlike other “shots” that show imaginary events

(Garth I’m shooting at you!)

Devil’s Advocate: Oh and by the way… in many a case CMHC will be all over those banks like Revenue Canada trying to prove the bank did not do its due diligence before granting the loan and if they find even the slightest hint of it will deny payment of the insured shortfall.

rather what I thought

Photo looks real to me. — Garth

#103 Nostradamus Le Mad Vlad on 01.02.11 at 12:54 am


#38 JC — Appreciate the info. and thanks. Fortunately, most here are not members of Harper’s pathetically-tired Goon Squad — we live in and deal with the realities of life!

#21 jess — “… thick grey matter? correlation?” Not necessarily! Downsizing Brain Power!

#79 Mr. Lee — ” These so called market experts (realtors, speculators, MSM, et al) have a vested interest in compounding one lie after another.”

Yup. A handful (or thereabout) now almost fully control the m$m, but they cannot — YET — control the ‘net, but are working on that, too.
*
10:30 clip Soros calls for a one-world currency (again) — he admires the Chinese govt. and way of life.

This would be interesting because, as was posted earlier, WikiLeaks was created by Soros – CIA – Mossad.

Now I understand what Garth meant when he said “You’ve a few months left to diversify, down debt and prepare.” Euro Going. Plus — 3:15 clip.

Korea So, who is for war? It does not look like the North.

Google “This is apparently the infection that turned my netbook into a brick last week.” wrh.com.

2:34 clip “They had 8 guards for 500 prisoners, due to “austerity” measures. So the guards legged it.” Riots. Who wooda thunk it?

Denmark “In other words, another staged incident for the media to wag at us, to sell us yet another @#%$ing war!” wrh.com.

Obama’s Dictatorship “George Orwell was not only a superlative writer; in this part of the 21st century, he has proven himself a prophet.” wrh.com.

Property Taxes Everyone rent!

Abbas “World respect for the United States has vanished as our government continues to bow to Tel Aviv. The numerous nations recognizing Palestine are proof of the US fall from moral leadership.” wrh.com. Failed in South America and will fail here — Pakistan.

Stock Up “Not to be “chicken little” about this possibility, but please: do have storable drygoods and canned foods on hand.” wrh.com.

Pope St. Goracle of the Als The Goracle has rocks between his ears!

#104 Jeff Smith on 01.02.11 at 1:53 am

Boomers in retirement trouble. Look out, genx ain’t gonna be any better.

http://www.msnbc.msn.com/id/40821458/ns/business-your_retirement/?source=patrick.net#lead

#105 nonplused on 01.02.11 at 1:56 am

#52 squidly77

That video was actually hard to watch. Schiff got it right, 100%, but he was being laughed at by the bulls. Schiff was even more out on the ledge than Roubini or Taleb have been. I think R&T are acting like Garth, underplaying their comments so as to not seem a fool and loose the message. But Garth is talking about the market Schiff got right, and it’ll be right here too, but take just as long. But my fear is what if Roubini or Taleb gets the macro picture right, but don’t want to sound like fools any more than Garth does now?

There is no doubt that Garth has the macro Canadian housing / pension crisis nailed, but of course, timing is everything and he is wisely careful about that. He will be proved right save if we have hyperinflation, in which case we are all screwed. And yes, you are stills screwed if you own real estate, because property taxes will be one of the first things to hyperinflate, unless you are a farmer. And even then your fate lies with the idiot in charge.

But what if Roubini and Taleb are right? Even eventually? Garth’s predictions are pussy stuff, simply diversions from what is coming. Who cares what your house is worth, if simply nothing you are owed or think you are owed can be paid by anybody.

Please, Please, PLEASE folks consider this: Nothing you think you are owed out ten years can or will be paid. None of it. Not the government guaranteed pension (you just won’t get it), not CPP, not the bonds, not the MSB’s, nothing. You won’t even get the gold you think you have paper to. If it’s paper or a promise, 10 years from now, it isn’t worth anything. And by that I mean it’s worth nothing. A promise is a promise, costing nothing, worth nothing. And nothing is about what you will get.

#106 Jeff Smith on 01.02.11 at 1:56 am

>#78 Live Within Your Means on 01.01.11 at 10:39 pm

You are making me hungry!

#107 Aussie Roy on 01.02.11 at 2:03 am

Aussie Update

Australians sinking under debt burden

http://www.dailytelegraph.com.au/australians-sinking-under-debt-burden/story-fn6e1lzz-1225980088576

#108 Devore on 01.02.11 at 2:08 am

#20 Devil’s Advocate

Hey now dark, don’t be misunderstanding me. I am a BIG Austrian fan and avid subscriber of the Mises Institute.

If you really are, then you must stop writing immediately, and start reading, because apprently everything you know about Austrian economics is wrong.

Austrians understand that economic change (indeed, all change) occurs at the margin, not in aggregate. Marginal transactions are made by individual actors, and, unfortunately for all other economists, neither the transaction, the buyer nor the seller are average. This is why mainstream economists will continually fail, and why they keep coming up with, supporting and advocating policies that will be, at best, wasteful, and usually counterproductive (as virtually all government interference in markets ultimately produces outcome exactly opposite of that intended). To understand how the economy works, you must understand how individual actors behave and make decisions. They don’t look at standard charts, and don’t consult models. The trillions of daily economic decisions and interactions are far too complicated to model or predictably affect with policies, precisely because of the human element.

Austrians understand that the business cycle (ie the boom-bust cycle) is not an inevitable state of the economy, rather it is produced when interest rates are not set by the market, and money is created out of nothing (debt money, fiat money) which sends misleading signals to the market. While not impossible in a free market by any means, a boom runs out of money and bursts very quickly.

They understand that the damage of the boom-bust cycle is done in the boom phase, and thus not only is the bust inevitable, but so is the damage, which can only be postponed, never eliminated.

Where Austrians can fail is by misapplying their theories by making timing predictions. This inevitably blows up in their face, as the policy makers, regulators and politicians manage to prove them too clever by half. As the saying goes, markets can stay irrational longer than you can stay solvent. In other words, they analyze and then predict the economy based on how it SHOULD work, rather than in how it actually does. There is always more juice in the bubble, and there are many more wrong decisions to be made before the correct one is taken.

#109 nonplused on 01.02.11 at 2:27 am

PS I thought I would try a little magic. I am not a very good magician, being a scientist, but I do understand magic enough to know it’s about changing how people perceive things. So let me try a few incantations, to help you deal with the REAL road ahead:

There will be no brighter energy future.

Promises that cannot be kept won’t be kept. Promises that are inconvenient won’t be kept either. Like a marriage vow, a promise is only good so long as we’re screwing.

The debt cannot be repaid.

The government cannot be relied on save to make things worse.

The government is something you should fear, not trust.

Nothing the government has promised you will they give you, save war and taxes.

A house is a place to live, and the government will tax even that. You do not own it. They do.

There is no rule of law, save that the populace is well armed. A disarmed populace means both criminals and government, of like character, have equal freedom of movement.

A well armed populous means common law prevails.

That’s enough magic for tonight.

#110 wetcoaster on 01.02.11 at 3:23 am

DA,

I guess you missed the last decade, ever heard of Fannie and Freddie ? Yeah, them. Didn’t end well, did it.

#111 Debtfree on 01.02.11 at 3:26 am

@ nostradamus JR. months ago I pointed you to the USGA for seismic activity for LM …. well little did I know those pricks at the USGA do not include seismic activity in canada. You can just imagine how red my face is now but all is not lost we have the cheesiest site for seismic activity in canada …….

http://earthquakescanada.nrcan.gc.ca/index-eng.php

#112 confused and a little crazed on 01.02.11 at 4:03 am

#45 Rosie,

i agree with for the most part ; however, after Sept 2011 it will be hard to say because US housing is still going down. If it doesn’t p/u during the busy summer months then we are off to Quantitative Easing part 3 but thaat’s alright b/c we are different here

#113 realpaul on 01.02.11 at 4:50 am

The EU ‘credit crisis’ isn’t even close to being resolved…in fact Ireland and Greece were only the opening shot. Trillions in government issued bonds have to be rolled over soon as they are laddered and governments need constant replenishment.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8234231/European-debt-markets-face-second-credit-crisis.html

Deniers are starting to say that China will come to the rescue……naive and wishful desperation friends.

There is also 9 trillion in corporate bonds maturing at the same time….all this money will be aggressively seeking investors…..who’s in the cat bird seat? Certainly not the governments.

China only has 2 trillion in reserves…..seems like a lot in isolation…but its a mere dribble compared to the total debt overhang.

EU issues bonds…buys them back…Canada issues bonds…buys then back…..US issues bonds…buys them back…..until even at near zero rates is there enough tax revenue to pay back the debt. There is some disagreement but…..Canada and the US are already over the cliff at 100% debt to GDP. Japan is at 200%. EU ditto.

Ask yourself…wheres the money going to come from and are corporations going to stand back and go bankrupt and let governments take all the money off the table thats on offer…at what rates will these competing parties butt heads?

Those commercial lenders…….. want better rates to satisfy the growing risk.

Government has a couple of options

1) close all banks and issue script

2) borrow money for ongoing functions at market rates

3) declare insolvency

4) shine up the riot gear ’cause mama ….here it comes.

Private money is costing ten times what governments are currently funding themselves at…..What does that mean to your mortgage rate going forward.

Quick…..join the que to the bidding war.

#114 Ghost of Tom Joad on 01.02.11 at 5:06 am

“Without a gold standard in place, there is little to prevent governments indulging in wild credit creation.
Deficit spending is simply a scheme for the confiscation of wealth.
Gold stands in the way of this insidious process.” Alan Greenspan : 1966

A 45-year-old quote from the architect of the US housing bubble. I wouldn’t get too excited. — Garth

Here’s something a little more recent for you:
“Fiat money has no place to go but gold. Gold is the canary in the coal mine. It signals problems with respect to currency markets. ” Sept 2010

http://www.nysun.com/editorials/greenspans-warning-on-gold/87080

There you have it, straight from the lips of New World Order scum.

Speaking of New World Order scum, I can’t believe you worked for H.

#115 604genX on 01.02.11 at 5:25 am

DA is being fast and loose witt the characterization of CMHC as some sort of prudent stable organization. You gotta be doing too much Interior BC home-grown weed to believe that. CMHC has over $500-billion in insured loan exposure and over $300-billion in guarantees outstanding in debt securitizations (page 98 financial statements). As I recall these numbers doubled over the last four years. Thus all this new exposure is 5-35 crap with little amortization paydown. A 25% drop in property values means taxpayers are on the hook for $50-billion to $80-billion on the half underwritten in the last few years. CMHC has a lousy $150-million in loan loss reserves. So they’ll go to Ottawa for the rest (just as Fannie/Freddie went to Washington).

At least the Americans were smart enough to syndicate their loan loss exposure to foreigners around the world. The Feds/CMHC have concentrated this entire loss on one group: the Canadian taxpayer. As a percentage of GDP this ranks with the $700-billion bail-out of Wall Street in 2008.

#116 The American on 01.02.11 at 5:39 am

Canada is only about five years too late to the global party of deflationary prices of homes. The fact the Canadian government and banks alike called for emergency rates in 2008 is ration enough to support the notion that the real estate market in Canada was incredibly frail and inflated and still continues to be frail and inflated, only propped up by low rates and easy-to-obtain money via liar loans, sub-prime lending standards, and greater fools. Otherwise, there would be no need whatsoever to release emergency rates in a viable and healthy housing market. Period.

Basically, the housing market has been on life support for well over two years in Canada, but the media and government have done a stellar job of spinning the news as not to cause alarm, and the people have ate it up hook, line, and sinker. The fact the government is now making a tip-of-the-hat nod and admitting the indebtedness of its people, exceeding that of Americans, is certainly enough to take pause and understand what they’re REALLY saying – they’re really saying the party is over and people need to begin hedging as soon as possible because a shit-storm of negative economic impact is about to ensue.

What concerns me most, perhaps, is that Canadian home values have had an additional two to four year ADDITIONAL run up in prices over that of other major economies. I do tend to think the circumstances will not fare well for the Canadian economy and real estate market. After all, look what it did in the U.S., yet it has continued at a prolonged period of time in Canada. Why would anyone with common sense or an understanding of basic economics believe it will end with a soft landing and a leveling of home values? I tend to agree with Garth, however my take is probably more drastic as to where the effects of a housing collapse/melt/correction/bust will land Canada in the spectrum of a “healthy” economy and banking system. As rates reset and rise (and they will), people will default and the tax payers will be placed on the hook. Tax rates must and will rise to supplement the tremendous losses that will spread like a cancer from coast to coast. The CMHC is not leveraged enough to sustain a 15% correction. As tax rates rise, expendable income clearly will lower within each household. Those who could once afford the home he/she owned, will no longer afford to make payment. That house will become part of the mix that ultimately will default and add fuel to the fire. It is a downward spiral that NO government in the G20 has been able to avoid. If Americans cannot afford homes at what is clearly lower valuations than Canada, yet Americans have more expendable income and higher savings rates, then why would Canadians feel they can continue this madness? I’m utterly shocked this message is still yet to meet the masses in Canada. This message has echoed the globe over in every major economy. Canada is NOT different and has not acted differently than any other banking system (really, it has in many cases acted worse).

One thing that I remember as clearly as if it were just yesterday is that people in the U.S. increasingly became more vocal as to why their home values would continue to rise and were justified right before the collapse hit. When people, government, banks, and media become LOUDER AND LOUDER, you know the game is over. Otherwise, there would be no need or reason to have to justify itself. This kind of behavior lingered for about a year in the U.S. and then IT HAPPENED. By all measures, I honestly believe it will be noticeable in Canada beginning August/September timeframe with more citizens becoming concerned and a shifting effect will begin to take place with respect to what is true and what is justified. This will last for SEVERAL MONTHS, and perhaps even a year, all the while home values will decline, before a single media outlet or real estate official will state the obvious. This is how the game is played.

#117 Mike Turner on 01.02.11 at 7:47 am

Have you even seen some of the conditions of the houses that end up with CMHC? All the copper ripped out, basically anything that can be taken is taken. These are desperate people being thrown out in the street. You paint a very fake picture of how the repossession industry really is.

#118 Zoronqueen on 01.02.11 at 8:16 am

Happy New year to all. I have learnt a bit about money and real estate on this website, but still totally confused about how it works.

Yes, this is definately the year to pay down debt, as the show must go on.

Also anyone can explain about this? How is donating shares helps to save on taxes? Or refer me on to read more about this and how much income is needed for this?

Sell shares
without donation Donate shares
to charities

Selling Price
$8,000 $8,000
Original Cost ($5,000)
($5,000)

Capital gain
$3,000 $3,000

Taxes 50% 0%
Taxable amount $1500 $0
Tax rate (assume) 45% 45%
Tax payable amount $675 $0

Net cost of shares
Original cost $5000 $5000
Taxable amount $675 $0
Less tax credit ($3600) ($3600)
Net cost $2075 $1400

taken from: http://www.mustard.ab.ca/content.php?ID=88

#119 Mike Turner on 01.02.11 at 8:42 am

Directed to Devil’s Advocate

#120 BDG-YYC - Hey West End ... on 01.02.11 at 9:28 am

#55 West End on 01.01.11 at 8:15 pm
” As jobs come back and growth returns it could offset the effect of rising rates on mortgage demand.”

Could you kindly elaborate ? Which jobs do you expect will be coming back and in which sectors are you expecting growth to return ? Why ?

#121 bridgepigeon on 01.02.11 at 11:06 am

64 Jeff Smith
YouTube: Shish Ka Bugs
bunny stew

#122 blog dogs over 10 posts per day on 01.02.11 at 11:36 am

To Dark Sad person over 12 posts today
Get a life buddy? Or do you have a life?

It has come to my conclusion that you have way to much time on your hands.

New Year Resolution(s)

1. Cut your posts to less than 5 per day, Once you have achieved that quota
2. move down to one a day.
Can you do it?
If you do I might actually read them.

#123 Herb on 01.02.11 at 12:11 pm

Caron @ #96,

thanks for the link and the Detroit pics. What a dose of relity!

I have fond memories of the impressive Detroit in which my older brother used to live in the ’60s and ’70s(albeit in the last all-white suburb.) Got the Cook’s Tour of the 1967 riot areas (with locked car doors and closed windows!)

The black population was not all bad. About 1975 I had my last visit to the City. A buddy and I were on a business trip to Windsor and, after things closed there, crossed the river and went on a pub crawl in downtown Detroit until about 3 AM. We were the only white faces we saw, and had no problem walking around or in any of the pubs we hit. In fact, we encountered nothing but friendly chatter and courtesy. Perhaps blacks, too, react in the manner they are treated.

There has been a lot of water down the Detroit River since then, as well as a lot of economic history. What a tragedy!

#124 Daisy Mae on 01.02.11 at 12:12 pm

DA — “Given that the average price of a single family home in Kelowna is $525,000”

This is incorrect.

#125 Nostradamus jr. on 01.02.11 at 12:18 pm

2011 Quiz…Who Am I?

Over the last 30 years, immigration has played a huge part in city growth. As a result its residents have become been ethnically and linguistically diverse; 52% do not speak English as their first language and almost a third of the city’s inhabitants are of Chinese origin, with a large number of immigrants from Hong Kong.

Port Metro ___ is the new name for the Port of ___, which is now the busiest and largest in Canada, as well as the fourth largest port (by tonnage) in North America. While forestry remains its largest industry, ___ is well known as an urban centre surrounded by nature, making tourism its second largest industry. It also is the third largest film production centre in North America after Los Angeles and New York City, earning its film industry the nickname Hollywood North.

___has ranked highly in worldwide “livable city” rankings for more than a decade according to business magazine assessments.

Am I…

a/…Halifax, Nova Scotia?

b/…Montreal, Quebec?

c/…Toronto, Ontario?
or
d/…Vancouver, BC?

First Western Canadian to email the correct answer will win a two week luxury vacation to Eastern Canada, hosted by Bobby Orr and Jean Beliveau.

Each morning will begin with a short 30 minute video of Residential Condominium Time Share Projects now currently under construction and For Sale in both Montreal and Toronto.

Nostradamus jr.

#126 Keith in Calgary on 01.02.11 at 12:23 pm

From the City of Calgary website……

1 – The 2010 median single residential assessment (excluding condominiums) is $374,000 compared to $427,500 in 2009. The 2010 median residential condominium assessment is $233,000 compared to $278,500 in 2009.

2 – The total value of the 2010 Property Assessment Roll is $218 billion, a decrease of $27 billion from last year.

3 – As a result of the 2010 Assessment, the typical assessment change between the 2009 and 2010 Property Assessment Rolls is -13% for residential properties and -15% for non-residential properties.

Lower property values means higher municipal taxes (Calgary is going up around 5% +/-) which means less cash in your pocket which means less money to spend which means less economic benefit…….etc…..etc……etc……which mean slower property values…….rinse and repeat.

Now factor in the 5-10% discount you’ll have to give to sell a property, as well as the 7/3% realtor fees which may be involved, and you’ll see that real estate is a really, really, great investment.

#127 Devil's Advocate on 01.02.11 at 12:24 pm

#97 squidly77 on 01.02.11 at 12:20 am
Seriously though, who gives your vocation professional status.

Who gives any? But I would ask you this; are you better trained and experienced than I in the field of real estate? And even if you are would it be wise for you to manage such an emotionally charged transaction as the purchase and sale of your own real estate? The “professional” status is a misnomer only within the context of the publics misunderstanding of the term. “Professional” is derived more from an act of being than it is by association. On the other hand, a professional is someone who is paid for that which they do with more skill than others ie: hockey players. Profession, professional, professionalism…

#97 squidly77 on 01.02.11 at 12:20 am
I can’t even bring myself to use a capital R at the beginning of your industry invented name..

And you don’t have to. REALTOR® is a registered trademark of the Canadian Real Estate Association CREA in Canada and National Association of REALTORS in the U.S.. Like XEROX and Kleenex we endeavor to retain the brand quality associated with the term. Believe it or not, not every agent you encounter is a REALTOR® and I would venture to say that many of those you have and left with a feeling of disgust and mistrust of the real estate “profession” were not. Missy Bunny is not a REALTOR® she is an employee of the developer and owes no fiduciary duty to the purchasers of those condos.

#97 squidly77 on 01.02.11 at 12:20 am
Now here’s a question for you, who will your industry blame when the industry craters ?

The industry will blame no one Squid. At most many a REALTOR® will kick themselves in the ass for not realizing it wasn’t going to last forever and having fallen prey like so many others in our economy to the crack cocaine mentality spending, spending, spending and not saving for that inevitable rainy day. This might be a time where we do show people like you our “professionalism” as going forward our services will be more needed than they have in the recent past where houses sold easily because of the lax monetary policies of late. In that, as I have repeatedly stated, I welcome this correction. What was should never have been. Volumes were half again what they should have been and that resulted in higher prices putting home ownership beyond the capacity of many Canadian households including those who recently bought who should never have been able to.

While I digress from your question I would like at this time to point out, again, that this is little more than a “correction” as we return to “normal” real estate sales volumes which drags prices closer to where they should be. This process will unfortunately wreak havoc upon many a recent first time buyer who bought and should never have been able to as their obligations rise to reflect the risk and their equities fall to reflect the reality. Who is to blame for that? The answer to that question is the same as the answer to the question “who reset the ground rules such that these buyers who otherwise could not buy were able to buy in the first place?”

The market between 2004 and 2008 was an anomaly… most REALTORS® realize that. Those who didn’t will soon find employment with Missy Bunny.

#108 Devore

What’s your point? What have I written that goes against the Austrian doctrine?

#110 wetcoaster on 01.02.11 at 3:23 am
DA,
I guess you missed the last decade, ever heard of Fannie and Freddie ? Yeah, them. Didn’t end well, did it.

That is a different story wet. Can’t really compare the two.

#115 604genX on 01.02.11 at 5:25 am
DA is being fast and loose witt the characterization of CMHC as some sort of prudent stable organization.

What I am saying is as a business model CMHC has a lot more strength and merit than posters here understand. As a government agency, such as they are, I am sure they are fraught with inefficiency in many another area if only the revenues generated through premiums might have found their way into some other government fund as opposed to were is a private insurance enterprise which would have invested those monies in good returning investments.

Should a worst case scenario evolve and CMHC called upon to payout so many insured mortgage shortfalls yes I believe there would be a story there, but not nearly so dramatic as the MSM would paint it. And even if it were, the Canadian taxpayer has benefited by the reallocation of those insurance premium proceeds in some other area of government operations as that opportunity cost justified. It is that inefficiency of the bureaucracy of government that is to blame not the CMHC business model which were it run as any other insurance business would not so much as flinch by the capitulation and may well, in fact, not.

#116 The American on 01.02.11 at 5:39 am
Canada is only about five years too late to the global party of deflationary prices of homes.

And may well thereby not participate in anything but the recovery.

#117 Mike Turner on 01.02.11 at 7:47 am
Have you even seen some of the conditions of the houses that end up with CMHC?

Again, they do not “end up with CMHC” Mike. CMHC insures the shortfall incurred upon sale by the bank, if there is a shortfall. It is “sale by the bank” through the foreclosure process… which can take up to a year by the way. Those who default on their mortgage tend by and large to be of less moral fiber than those who do not. The consequences of which you speak do come at the expense of the Taxpayer by the way as it is reflected in the sale price and that becomes a contributor to the “shortfall” which CMHC indemnifies the bank against. ;-)

#128 Liquid One on 01.02.11 at 1:19 pm

Hey just thought I would add to the fray with my first post, I’ve been viewing for a couple of months now.
I sold my property in Victoria BC at the end of May of this year and my wife and I have been enjoying our rental house in a cool part of town since then. It seems that every friend and family member had an opinion on our owner to renter transition, although not all negative as I expected. One major opponent however was my father-in-law, who basically said he thought I was an idiot.
If there is any city in Canada that thinks “it’s different here” Victoria BC would be on the top of the list
– government jobs
– natural beauty
– not making anymore land (it’s even on an island)
– retirement capital of Canada
– tourist mecca attracting foreign buyers
– mild climate
– low crime rate
It’s now been 7 months since we “checked out” and even at the in-laws for Christmas dinner I could sense the opinion on real estate “soften” as the RE market here softens. After I post this I will be excitedly planning on how much to contribute to our seriously underfunded RRSP’s and what to do with the huge tax refund cheques.

#129 Live Within Your Means on 01.02.11 at 1:41 pm

#90 Carp Coyote on 01.01.11 at 11:58 pm
I fully agree that unemployment numbers are BS. I’m an entrepreneur and starting today I’m officially unemployed, contract-less. I can’t claim EI and I don’t show up in the numbers.

Time to work on my recurring revenue model.

……………………….

Sorry to hear that Carp. My best wishes that things will work out for you. Agree to that employment numbers are BS, as are inflation numbers.

#130 Kaganovich on 01.02.11 at 1:42 pm

Dan in Victoria from previous thread

Thanks for including me in your list of provocateurs, I appreciate that! Like many others, I too enjoy your posts as I am a building contractor/carpenter myself. Keep posting, you are being read.

#131 Crazy Brian on 01.02.11 at 1:43 pm

I have thankfully convinced my immediate family and some very close friends to heed Garth’s advice that he puts forth every day. To the rest of you, that keep buying more and more and using your house as an ATM, I GIVE UP. When you have to sell your house when the bank comes knocking for their money, I’ll be the first one putting in a low bid at the auction when they sell it. Don’t worry though, I’ll be happy to rent it back to you so long as you meet my requirements.

Cheers and Happy New Year

#132 Mark on 01.02.11 at 1:43 pm

#81, true, that’s basically how CMHC works. Except the banks have a ‘weapon’ against the CMHC if they choose to excessively and abusively deny claims, and that is, the banks can (and will) tighten credit such that, the housing market crashes in Canada completely, forcing [i]all[/i] CMHC-insured loans into default.

Alternatively, banks could simply decide to not recognize the CMHC guarantee, or require a higher interest rate for someone who is using CMHC insurance, versus someone who has a large downpayment. This, also, would crash the housing market and destroy CMHC.

#133 Re-diculous on 01.02.11 at 1:46 pm

The American @116

Thanks for your excellent post!

You made me think of the potential negative feedback loop that might occur – i.e. as interest rates rise, more people default and consequently taxes rise to cover CMHC’s exposure. Interesting….and scary.

#134 Anotherlowlyrenter on 01.02.11 at 1:48 pm

A couple of thoughts/questions – perhaps Garth knows the answer:

At #115 – I might be wrong here, but I think you’re double counting on the CMHC obligations. I had read in the same report that guarantees are only made on mortgages that have already been insured. (The potential losses are still massive enough even on my own estimates).

I know the CMHC is a crown corporation but legally does that guarantee that the federal government will come to their rescue in the event of massive losses?

Any idea how large the no-proof-of income loans are relative to the total pie?

I am new to Canada and not politically minded. Are there any prominent politicians who are anti-CMHC?

Happy New Year

#135 Sue on 01.02.11 at 1:51 pm

@ Live Within Your Means:

We haven’t made it in years. A neighbour of ours used to raise rabbit, but stopped; the local coyote mafia were taking too much of a cut.

Joy of Cooking, pg 632 has a recipe for braised marinated rabbit which is probably pretty close to what we did (minus the prunes). I remember a bottle of dark beer went in. If I can find our recipe, I’ll post!

HNY to all!

#136 dandy on 01.02.11 at 2:16 pm

I used to be a renter and read this blog to justify my decision to wait for better times. Then when I finally bought a house after years of waiting something odd happened! I no longer looked for all the negative signs of impending doom and disaster to be heaped on us all. I went about making my house into a home a comfortable, happy place for me and my family. It is liberating to no longer have to wait for people to do what I want them to do (realise their house is worth less and sell it to me for less)

Most of what Garth is saying is live within your means, if you do that it’s one less thing to worry about. Sure you might be able to buy a house cheaper one day but if you can’t afford one now don’t hope for a miserable world where you can buy a cheaper house, but we have record unemployment and the TSX sits at 5,000 surely it’s better to knuckle down, work/study your butt off so you can be in the top percentile of earners.

I did it just by working my butt off, I believe anyone can!

It’s a new year time to take charge of your life!

There is little more satisfying than self-justification. Enjoy the house. — Garth

#137 cellar dweller on 01.02.11 at 2:26 pm

@ #34 Tim
Your statement about condo fees is bang on ! I have a friend that has an $1800/month mortgage( you dont “own” anything til the last payment). His condo fees are $450/month on top of his taxes , heat ,etc…
You can rent one hell of a place for way less than that.

@#101 tmg
yes I have also experienced the ‘asian backlash” as far as reverse discrimination goes. Move if you can and report the address to the City Health Dept. I have had numerous asian tenants that insists on using all asian “contractors” to work in their office spaces.
I allow them to work in the building when they ( as well as ANY other contractor) show proof of Liability insurance, WCB insurance, Business license and their tradesman Red Seal card…. Usually has a few of them running away. The amount of “under the table” workers is increasing and Im sure Revenue Canada would love to hear about them :)…just sayin…
That is YOUR RIGHT as a tenant or as a landlord ! Demand proof of insurance and qualifications. Otherwise, dont let them in. If the landlord tries to evict you, just keep a logbook of dates, names, vehicles, license plates, times . etc.
see ya and good luck.

#138 dark sad person on 01.02.11 at 2:39 pm

#122 blog dogs over 10 posts per day on 01.02.11 at 11:36 am

To Dark Sad person over 12 posts today
Get a life buddy? Or do you have a life?

***************
Someone actually took the time to “count” lol
Speaking of a life-

You’ve obviously mistaken me for someone who cares-
Big mistake-
I’m a shameless goldbug-

Obviously you’ve been bent over and spanked by the dark sad person and are too cowardly to come back under the same name-

You can read my posts all you want or don’t want-

So happy new year and with that-I’ll leave you down on your knees where you can continue to suck it up-

#139 miketheengineer on 01.02.11 at 3:02 pm

Happy New Year All:

Mike’s Predictions…not really, we kinda know this already.

1) Spring – has a bounty full of listings, buyers still buying, RE agents have a grand old time.
2) Summer – by now something has happened globally to even slow the Canadian RE market. (Banking issues, War, etc, you all know what may/can happen)
3) Fall – Desparation selling from people leveraged to far out (ie 0% down group) Defaults start to happen.
4) Winter – Defaults will be the talk of the town, ie How many, where. The Vultures come out on Garth’s site, and swoop up the deals.

Or —alternate thinking on the positive side

RE has their best year ever!

#140 Mike Turner on 01.02.11 at 3:04 pm

DA I know how it works. You actually proved my point. The banks know full well that if they can’t sell the home and recoup their money CMHC will step in and pick up the tab. It may take some time but the bank doesn’t care knowing that they won’t have to take the loss.

This is fine in a normal market as the defaults are low but when things head south (pardon the pun) the system can easily become overwhelmed look at the US they didn’t have a massive foreclosure problem until they had a massive foreclosure problem.

I think that if the banks want to socialize the losses ie put them on the taxpayer, they should also be forced to socialize the profits.

#141 Nostradamus jr. on 01.02.11 at 3:06 pm

..If 52% of its resident’s speak Asian languages as their 1st languages perhaps we should rename the our city “Richmond”, be done with it…then all homewoners can become even richer.

Richmond(aka Hongcouver aka Vancouver) is coming on five years late to the Real Estate Crash Party.

…Thank you Mr. & Mrs. Asia…

Nostradamus jr.

#142 Dark Sad Monster Bunny on 01.02.11 at 3:12 pm

90 Carp – if you are truly an entrepreneur you are never un-employed. Working under contract does not make you an entrepreneur. I am a self-employed professional, and
rely to a great extent on those who are the true
entrepreneurs, those with vision, skills and tenacity that see opportunities where others see nothing. Best of luck to you in the new year.

Garth – can you please declare rabbit season over. Sue and LWYM are making me nervous with the stew recipes.

#143 Contrarian Canuck on 01.02.11 at 3:18 pm

Jay Bryan is an idiot. Period.

http://financialinsights.wordpress.com/2011/01/02/whos-the-hare-brained-one-more-hot-air-from-perma-bull-jay-bryan/

#144 Lorne on 01.02.11 at 3:21 pm

Ah…..F is getting recognition for a job well done!

at 10:00 on January 02, 2011, EST.

Finance Minister Jim Flaherty voted Canadian Press’s business newsmaker of 2010

Craig Wong, The Canadian Press

OTTAWA – As the sovereign debt crisis rocked Europe and the U.S. economy spun its wheels with a jobless recovery, Finance Minister Jim Flaherty remained the steady hand at the tiller in 2010 on his way to being voted The Canadian Press business newsmaker of the year.

With the loonie near parity with the U.S. dollar and signs of the economy recovery taking hold, Flaherty could boast of a record better than most of his peers around the world in 2010.

“I think what we saw not only in Canada, but around the globe was a very aggressive policy response,” said Paul Ferley, assistant chief economist at the Royal Bank.

“And certainly the infrastructure program, as well as various tax cuts in hindsight, look like they have been very successful in terms of helping to sustain the recovery.”

But despite his success in helping keep the Canadian economy on track, the coming year brings even more challenges for the finance minister as the vast majority of the stimulus spending comes to an end and he faces the task of balancing the budget to meet his target of 2015-16.

“I think the government did well in terms of identifying just how deep the economic hit was and opted to respond in kind,” Ferley said.

“Now the fallout from that are a fairly large debt and deficit, numbers not as bad as what we are looking at south of the border or in Europe, but still, imbalances that at some point will need to be addressed.”

Flaherty has said there will be no major new spending in his 2011 plan, but also there will be no major new cuts either.

“In 2010, it became clear that Canada had emerged from the deepest worldwide economic crisis since the 1930s in relatively good shape,” Flaherty said.

“But we are mindful that the recovery is fragile and there are still too many people out of work. So we are sticking to our plan.”

After a record deficit of $55.6 billion last year and a shortfall of $45 billion expected this year, Flaherty is expected to start erasing the red ink as the government’s two-year $47-billion stimulus package comes to an end.

But with the economic recovery still finding its feet and the Liberals making noise about trying to force an election in 2011, the budget will be key when the minister rises in the House of Commons to deliver his plan this spring.

“Canada has an excellent reputation for its fiscal performance internationally and I want to maintain that,” Flaherty said.

“At this point, the way we will do that is getting back on a firm track to a balanced budget. We will demonstrate our commitment to that again in the budget we will introduce in the next few months.”

And as the Bank of Canada is expected to resume increasing its key interest rate, Flaherty and central bank governor Mark Carney have started raising concerns about Canadian household debt.

Though Ottawa moved to stiffen mortgage rules in 2010, the second time Flaherty has made such a change, many have suggested even more restrictive rules may be needed.

“I expect the banks to show prudence in their lending practices without me having to tell them to do it, but if they insist, we’ve done it before and we’ll do it again.”

The veteran finance minister edged out Saskatchewan Premier Brad Wall for top choice in the survey of 108 print and online business news editors and broadcast news directors, garnering 21 votes. Wall, who led a successful campaign against a hostile foreign takeover bid for PotashCorp., received 19 votes.

Wall was the loudest voice against the nearly $40-billion deal, which would have been the largest corporate takeover in Canadian history but was ultimately blocked by federal Industry Minister Tony

#145 bruce corell on 01.02.11 at 3:26 pm

real estate indexs have had a huge increase in buying short. WHY???
Because they new this 6 months before you all did.
http://www.thestar.com/business/tools/economy/article/914737–canada-s-economy-is-struggling-to-keep-up-with-resurgent-g7?bn=1

ITS HERE……….good luck if your investment is all in real estate. It will be a decade before you will break even…If that……

#146 confused and a little crazed on 01.02.11 at 3:27 pm

101 # tmg

Unfortunately, I agree with pretty much everything you said. The immediate chinese people who immigrate here rarely even try to assimilate into the Canadian culture and its people …they just hang around with their own kind and speak mandarin.

Some don’t even consider their kids dating non- chinese people here …if dating is even allowed until they are accepted/ finish university . Only in situations which imposed mixed contact like drop in basketball/ soccer will they mix and that’s the kids right?

pretty pathetic…they come here hoping to change this place to what is was back home….then why leave???

some of their kids will rebel …and choose their own path. because they recognise how stupid it is but overall this situation will only get worst ( one Richmond restaurant only have chinese on the menu..I ordered things from memory aand just left immediately after…not going there again. I would tell you the rest name but I cant read Chinese)

marginally i am accepted because i was raised here and understand the ” old ways” though most of my friends are asian english speaking…our parents have accepted the canadian culture they left HK/ taiwan because they did not like it over there.

the new group move here b/c it’s the “newer ” place like its some sorta of GUCCI bag…but once there is trouble legal/ business wise they are outta here without paying penalties etc but their kids will still go to school here though.

Remember they have businesses elsewhere where their gains are not taxed by Canadian laws.

take this message as a generalisation not everyone is like this but some are and that is enuff

i recommend going to more western rest like Hon’s or get one of your chinese friends to take you. I gladly taake my caucasian friends but the rest needs to be in english or at least some french

however the japanese have much more appreciation of the western culture…much more acceoting in black/ white. I guess they are more civilized that way at least here.

i am sadden but this bullshit politically correct crap…it;s gotten to a point of ” Make No sense”

#147 sam on 01.02.11 at 3:31 pm

does anyone know when the 2011 budget gets released?

wonder if f is going to make a change to mortgage regulations.

#148 tom in edmonton on 01.02.11 at 3:44 pm

Im a little confused and afraid in Edmonton.
We are seeing some scary decreases in price. Our blogs are full of notes like this.

“Pop goes the house price bubble, fueled by reckless increases in mortgage debt.
We’re more in debt compared to income than the Americans at the peak of their housing bubble.
House prices down $30,000 in the last month — How long can the media ignore this story?”
Read more: Edmonton Real Estate Market Weekly Update – Dec. 31/10

#149 henry G on 01.02.11 at 3:52 pm

Could CHMC bankrupt Canada? hmmmmmm

http://fishyre.blogspot.com/2010/03/could-chmc-bankrupt-us.html

#150 Patz on 01.02.11 at 4:01 pm

You may have noticed that the term “green shoots” has returned to the vocabulary of gardening and we’re hearing less and less about recovery, especially from our southern neighbors. Speaking of…

Housing is going south again, or is continuing that trend depending on who you listen to. TAE has a major review of US housing and it focuses on one major point with implications for their economy and ours: the economy must begin to recover before housing can bottom and rebound. Think about that. People looking for housing to lead them out of the woods have got it backwards. But the catch is that the dismal housing market will continue to be a drag on recovery. And as many have said, their economy will take ours down with them. Coming to a country near you!

http://theautomaticearth.blogspot.com/

#151 Patz on 01.02.11 at 4:17 pm

#101 tmg
If a middle–aged white guy cuts you off in traffic he’s an a’hole. But if it’s a Chinese guy, he’s an ‘effin crappy Chinese driver. My point, duh, is that you notice the ethnicity and generalize the bad behavior. We recently got ripped by a tradesman from a well respected company–he was white. No one has a corner on unethical behavior.

As for the bit about being unwelcome in a Chinese restaurant, in the 20 or so years off and on of living in Vancouver I’ve never felt unwelcome in a Chinese restaurant. Maybe you should look in the mirror as you enter the restaurant—people do notice your attitude.

#152 jess on 01.02.11 at 4:44 pm

Minsky moments and the “Art Departments ”

According to the analysis:

At least 21 of the top 25 subprime lenders were financed by banks that received bailout money — through direct ownership, credit agreements, or huge purchases of loans for securitization.
Nine of the top 10 lenders were based in California, including all of the top five — Countrywide Financial Corp., Ameriquest Mortgage Co., New Century Financial Corp., First Franklin Corp., and Long Beach Mortgage Co.
Twenty of the top 25 subprime lenders have closed, stopped lending, or been sold to avoid bankruptcy. Most were non-bank lenders.
Eleven of the lenders on the list, including four recipients of bank bailout funds, have made payments to settle claims of widespread lending abuses.

http://www.publicintegrity.org/investigations/economic_meltdown/the_subprime_25/
These top 25 lenders were responsible for nearly $1 trillion of subprime loans, according to a Center for Public Integrity analysis of 7.2 million “high interest” loans made from 2005 through 2007. Together, the companies account for about 72 percent of high-priced loans reported to the government at the peak of the subprime market. Securities created from subprime loans have been blamed for the economic collapse from which the world’s economies have yet to recover.

1.Countrywide Financial Corp.
Amount of Subprime Loans: At least $97.2 billion

2.Ameriquest Mortgage Co./ACC Capital Holdings Corp.
Amount of Subprime Loans: At least $80.6 billion

3.New Century Financial Corp.
Amount of Subprime Loans: At least $75.9 billion

4.First Franklin Corp./National City Corp./Merrill Lynch & Co.
Amount of Subprime Loans: At least $68 billion

5.Long Beach Mortgage Co./Washington Mutual
Amount of Subprime Loans: At least $65.2 billion

6.Option One Mortgage Corp./H&R Block Inc.
Amount of Subprime Loans: At least $64.7 billion

7.Fremont Investment & Loan/Fremont General Corp.
Amount of Subprime Loans: At least $61.7 billion

8.Wells Fargo Financial/Wells Fargo & Co.
Amount of Subprime Loans: At least $51.8 billion

9.HSBC Finance Corp./HSBC Holdings plc
Amount of Subprime Loans: At least $50.3 billion ***

10.WMC Mortgage Corp./General Electric Co.
Amount of Subprime Loans: At least $49.6 billion

11.BNC Mortgage Inc./Lehman Brothers
Amount of Subprime Loans: At least $47.6 billion ***

12.Chase Home Finance/JPMorgan Chase & Co.
Amount of Subprime Loans: At least $30 billion

13.Accredited Home Lenders Inc./Lone Star Funds V
Amount of Subprime Loans: At least $29.0 billion

14.IndyMac Bancorp, Inc.
Amount of Subprime Loans: At least $26.4 billion

15.CitiFinancial / Citigroup Inc.
Amount of Subprime Loans: At least $26.3 billion

16.EquiFirst Corp./Regions Financial Corp./Barclays Bank plc
Amount of Subprime Loans: At least $24.4 billion

17.Encore Credit Corp./ ECC Capital Corp./Bear Stearns Cos. Inc.
Amount of Subprime Loans: At least $22.3 billion

18.American General Finance Inc./American International Group Inc. (AIG)
Amount of Subprime Loans: At least $21.8 billion ***

19.Wachovia Corp.
Amount of Subprime Loans: At least $17.6 billion.

20.GMAC LLC/Cerberus Capital Management
Amount of Subprime Loans: At least $17.2 billion ***

21.NovaStar Financial Inc.
Amount of Subprime Loans: At least $16 billion

22.American Home Mortgage Investment Corp.
Amount of Subprime Loans: At least $15.3 billion

23.GreenPoint Mortgage Funding Inc./Capital One Financial Corp.
Amount of Subprime Loans: At least $13.1 billion

24.ResMAE Mortgage Corp./Citadel Investment Group
Amount of Subprime Loans: At least $13 billion

25.Aegis Mortgage Corp./Cerberus Capital Management
Amount of Subprime Loans: At least $11.5 billion

These 25 lenders were responsible for 997.5 billion in subprime lending from 2005-2007

#153 pessimisticprof on 01.02.11 at 5:03 pm

#101, 145

It hurts when “we” are no longer at the top of the economic food chain. Any old timer looking around Richmond BC can’t help noticing how the Chinese immigrants are reshaping the place in the image of “their” world. I have been called “Lao Wai” and “Gwei Lo” (foreigner, specifically a caucasian foreigner) by people in stores here – they are not being malicious, and their use of the term is just habitual and a reflection of the fact that in many places in Richmond I am the “outsider”. If this irritates some people, we have to remember that this is a situation of our own creation. We have created immigration rules that encourage people to take advantage of Canada. Where else can someone buy an appreciating asset (house) in a politically stable and environmentally sound area, set up the wife and kids for free healthcare and education (including ESL classes), all for the cost of 5-6K in property taxes every year. And of course, the breadwinner continues to work in a low-tax economy in China, HK, or Taiwan, without declaring any of that income for Canadian tax purposes (yeah, I know, CRA says they are supposed to, but get real – they can’t even track down undeclared rental and grow-op income in BC!). Putting the kids through an international school in Shanghai (so they get an English education and easier access to a Canadian university) would cost $28,000 USD per kid per year – get the family into Canada and they get that education for FREE! Quality health care? In China (PRC) that costs big bucks, but in Canada it’s FREE! University? HUGE SAVINGS if your kids are Permanent Residents or citizens instead of international students! And if you make 10% capital appreciation on your Canadian house every year, that is just icing on the cake! But wait – don’t immigration rules revoke your Permanent Resident status if you don’t actually live in Canada? Doesn’t the breadwinner risk losing his PR status if they continue to work in Asia? Technically yes, but if the wive and kids maintain residency and apply for citizenship as soon as they have their 4 years in, then who cares – the government will not revoke the PR status of a man if his wife and kids are all Canadian citizens! Perfect – the husband makes his money in a low-or-no tax economy while his family enjoys all the perks paid for by our high tax system. Hell, if I was Chinese I would do the same thing! Can’t blame someone for taking advantage of our gullibility.

Feel better now? We are all immigrants, dude. — Garth

#154 Best place on meth on 01.02.11 at 5:26 pm

Jay Bryan is such a cheerleading hack, I wonder if he actually plagiarized this article from 6 years ago from the Cato institute.
They’re both written in the same style, condescending and full of inaccuracies. Basically all they’re doing is accusing anyone who talks of a crash of being a lunatic. It is writing at its absolute worst.

http://www.cato.org/pub_display.php?pub_id=4243

As for that weasel McLister from Canadian Mortgage Trends, he is also a complete fraud filled with plenty of bluster but little else of value.

I questioned him publicly on his blog about his double standards, accusing him of hypocrisy in regards to the way he edits posts. Instead of answering me directly on the blog he sent me a private e-mail playing dumb and accusing me of sullying his good name. “What hypocrisy, what are you talking about?”. Well you deaf jackass, I clearly spelled it out for you.

That seems to be his go to line “sir, how dare you drag my good name through the mud!”.

You can’t criticize creeps like this, they just avoid the subject.

It seems that these two clowns along with many others are going into shrillness overdrive defending their property values.

The desperation is reaching a peak, just like the market.

#155 pessimisticprof on 01.02.11 at 5:38 pm

Feel better now? We are all immigrants, dude. — Garth

Right as usual Garth – ranting on the blogosphere creates the illusion of empowerment and provides a harmless venting outlet for individuals who might otherwise be tempted to go “postal” come tax time! We are all immigrants – the only difference is that most of us continue to pay our fair share (and then some!) in taxes for the standard of living we all enjoy. As you have so often pointed out, this country is full of hard-working immigrants who take advantage of the opportunities that exist here to make something of themselves, and they repay Canada through taxes, job creation, and loyalty born out of gratitude. These are the people who have made Canada what it is today, and these are the types of immigrants who will continue to make this a great country in the future. The fact that 100 years ago most of these people came from Europe while today they come from South, Southeast, and East Asia is irrelevant. Here endeth the sermon – I’m going out for dim sum. Xin Nian Kuai Le!

#156 Behavioral Finance on 01.02.11 at 6:10 pm

“History does not repeat itself but it rhymes.” – Mark Twain

#157 Mike Turner on 01.02.11 at 6:15 pm

pessimisticprof

We all come from the same common ancestor you’d think someone as prehistoric as yourself would have been around to know this.

#158 pessimistic prof on 01.02.11 at 6:49 pm

#155 Mike Turner

Who said anything about race? Your comments about everyone coming from a common ancestor seem to imply that my earlier comments are racist. Perhaps you have made the all too common mistake of assuming that race, ethnicity, and nationality are interchangeable terms. I only mentioned “Chinese”, which refers to people who call Greater China home (just as Canadians call Canada home). “Chinese” is not a race, it is a nationality, and even then it is a controversial term – many from Taiwan would challenge my use of the term “Greater China” and “Chinese” with respect to them since it implies they are citizens of the People’s Republic, which they quite clearly are not. If you read my remarks closely (as opposed to getting all worked up over my imaginary racism and replying with ad hominem attacks), you would see that I am only suggesting that the government needs to ensure that all immigrants play by the same rules that apply to other Canadians, regardless of when they arrived, or where they arrived from. No free rides, thank you. Does that pass the sniff test for political correctness, or do I need to drag my prehistoric butt off to the dogpound for a time-out?

#159 tmg on 01.02.11 at 6:54 pm

Thanks Pessimisticprof. That’s what I was trying to say. My parents are also hard working immigrants who came and assimilated.

#160 Nostradamus jr. on 01.02.11 at 7:00 pm

pessimisticprof…It is an excellent system attracting elite and wealthy Asian families to North America’s only true international city.

There are petitions in City Hall to change our city’s name to Richmond….eg: North Richmon, West Richmond, Richmond West, Richmond South, South Richmond.

Everyone ends up richer.

Nostradamus jr.

#161 GregW, Oakville on 01.02.11 at 7:02 pm

Hi Garth, fyi links to 4 articles

TrimTabs: “No Amount Of QE Will Be Able To Keep The Current Stock Market Bubble From Bursting”
“Zero Hedge | If the money to boost stock prices by almost $9 trillion from the March 2009 lows did not come from the traditional players, it had to have come from somewhere else. We believe that place is the Fed.”
http://www.infowars.com/trimtabs-%e2%80%9cno-amount-of-qe-will-be-able-to-keep-the-current-stock-market-bubble-from-bursting%e2%80%9d/

2010 in review: Here’s what happened in the world of natural health and health freedom
“Mike Adams | Still, 2010 was mostly a year of expanded censorship, attacks on health freedom and expansions of government tyranny.”
http://www.infowars.com/2010-in-review-here%e2%80%99s-what-happened-in-the-world-of-natural-health-and-health-freedom/

(Will PM H be bring this to Canada very very soon with his Corporate trade deal? So you’ll be safe, not!)

Big Sis Photocopies Credit Cards, Confiscates Christmas Calendars
“Paul Joseph Watson | The agency is now instructing its airport security screeners to make photocopies of people’s credit cards, while Big Sis is also busy fighting terrorism and protecting America by confiscating chocolate Christmas advent calendars.”
http://www.infowars.com/big-sis-photocopies-credit-cards-confiscates-advent-calendars/

Gerald Celente: What’s in store for 2011
“RT | “Were going to see more and more cyber attacks, just like we saw with WikiLeaks,” explained Celente.”
http://www.infowars.com/gerald-celente-what%e2%80%99s-in-store-for-2011/

#162 Mike Turner on 01.02.11 at 7:05 pm

DA there is only so much cake to go around so why do the banks get to eat it all and leave everyone else to clean up the mess? Riddle me that…

#163 GregW, Oakville on 01.02.11 at 7:19 pm

Hi Garth, fyi 4 min video
(It’s on FOX news so I’m not sure if it’s ment to inform or confuse. But it’s surtainly a different view than we’re use to hearing.)

ICE Age Is Here Says Geophysicist
http://www.infowars.com/ice-age-is-here-says-geophysicist/

#164 Mike Turner on 01.02.11 at 7:22 pm

pessimistic prof

hide behind the political correctness mask lots of people do it. I know exactly what you meant.

#165 GregW, Oakville on 01.02.11 at 7:23 pm

Hi Garth, article

Next Year’s Wars
The 16 brewing conflicts to watch for in 2011.
http://www.foreignpolicy.com/articles/2010/12/28/next_years_wars?page=full

#166 Mike Turner on 01.02.11 at 7:23 pm

Xenophobia is as Xenophobia does

#167 Mike Turner on 01.02.11 at 7:27 pm

I never said you were racist

#168 Dorf on 01.02.11 at 7:28 pm

Garth, I read Bryan’s article and laughed. He barely glossed over things that you have already talked about in great depth, and defended with clear explanations.

He’s just another farmhand quieting the chickens while the farmer sharpens the axe. I guess he had to find SOMETHING to write about.

Tell Bobo it’s all OK, but don’t go into great detail about it because Bobo has a short attention span and is easily confused. All Bobo wants to know is that he’s going to be laughing and scratching.

#169 walter safety on 01.02.11 at 7:35 pm

pessimisticprof /Garth

None of us are paying the true cost of Government. However we are all free to be jealous and complain about those who have figured out how to get more of the benefits without paying their share. However when Canada is a 9 out of 10 on the opportunity scale why bother?

#170 Mike Turner on 01.02.11 at 7:41 pm

DA being in Florence and having a great time unlocking the mysteries of the universe, I will leave you with what Dante thought about banks and usury:

Dante puts the usurers in the lowest sub-circle of the seventh circle of hell, with others whose sins are regarded as doing violence against nature and nature’s God; many people have noted that usurers are placed deeper into hell than violent murderers, violent suicides, blasphemers, and sodomites. Dante regards usurers as perverting art, i.e., productive skill, by means of which we are supposed to produce and create and thereby imitate the goodness of God. Usury is the anti-art: it produces nothing substantial, being just a set of multiplication games with money, and therefore does not really contribute anything to ‘earning one’s way and furthering humankind’. It merely gives the illusion of doing so, and is therefore a sort of mockery of both human reason and divine providence — indeed, a sort of universal violence against neighbor, God, and one’s own reason, an extraordinarily efficient form of violence by which you do the most damage with the least effort.

The Violent in Dante’s hell suffer violent punishments; the punishment of the usurers is to sit while futilely and wearily trying to ward off with their hands the violent, whipping winds that sometimes shower them with burning sand and sometimes cover them with flaming fire.

I don’t particularly believe it but I’d like to.

#171 bright happy person on 01.02.11 at 7:44 pm

2010 was a fantastic year for people invested in real estate and stocks. In fact, stocks had a second year of double digit returns:

2010
Nasdaq +16.9%
S&P/TSX +14.5%
S&P500 +12.8%
DOW +11.0%

And that doesn’t even include dividends! All the people who were warning me about a double dip recession/depression and told me to stay in cash missed out. It’s a shame. It’s even more shocking that people are still calling for another leg down when the next year looks to be better than 2009/2010 combined!

Warren Buffett employs 60,000 and has repeatedly questioned why the media publishes double dip articles when every business he owns is showing top line revenue growth and increased profitability.

Buffett has also debunked talk about deflation. Where is it? No where. So not only is it pointless to be pessimisstic, but it can cost you a lot of money too!

It was tough, but I ignored all the sad people talking about Canadian real estate downturns and stock market crashes and rushed in. I’m glad I did!

#172 45north on 01.02.11 at 7:48 pm

604genX: DA is being fast and loose with the characterization of CMHC as some sort of prudent stable organization.

well I don’t know how CMHC handles claims from the banks

I would be willing to do a one year assignment with CMHC and report back

#173 realpaul on 01.02.11 at 7:49 pm

While ‘Big labour’ was supporting the status quo on wage concessions for the big unions in exchange for labour peace in Ontario they also turned a blind to the flood of manufacturing business out of the country due to astronomical wages, benefits and taxes. But the mantra was ‘sustainable development for the third world and globalization to raise the living standards of the poor’. Of course those catch phrases were just political bafflegab and meant nothing…all just a facade.

Now ‘Big Labour’ wakes up and realizes that all the jobs are gone? NOW?

The Liberals mandate was for a minimum 7% unemployment to build up the Cuban style civil service we have today. It was based on increasing revenues from ever increasing taxation. That model worked until debt/gdp and taxes hit 100%. They had a good thirty year run to destroy the country….the Russian communists took 75.

Now labour is bemoaning the Conservative power base in the west…as if the oil revenue will upset the cozy balance of between the effete labour icons and the ploticians who live like kings in a land of fools and sheep.

Heres a bad example of flawed Liberal math. We are not creating the 300 thousand jobs we need to break even so we advocate raising taxes to stifle enterprise and keep the civil service fat and greasy with perks and pensions….but we fight to the death to continue to import 300 thousand new immigrants and their families ( so make that a million hungry mouths a year) every year who are all prepared to work for lower wages. Doesn’t this cycle seem to trending south?

http://www.thestar.com/business/recession/article/914737–canada-s-economy-is-struggling-to-keep-up-with-resurgent-g7

#174 dark sad person on 01.02.11 at 7:49 pm

#150 jess on 01.02.11 at 4:44 pm

Minsky moments and the “Art Departments ”

According to the analysis:

At least 21 of the top 25 subprime lenders were financed by banks that received bailout money

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

Same old names keep surfacing and always connected-even when these smaller ones get “saved” during bankruptcy-whereby the Major lender is allowed to sift through the assets-take out the good stuff and hand the garbage over to the taxpayer through the Fed balance sheet/Maiden Lane transfer scam-not to mention the rest of the toxic crap they’ve already handed the taxpayer through FNM-

Same will happen here in a similar although sneakier route as usual-
This will be when the BOC starts buying down the newly arrived bulging CMHC “assets” at 100 cents on the dollar-
This will leave the Banks with good assets-it will leave CMHC “looking” whole and of course the BOC/Government will “absorb” the rest and of course Canadians will stand to make Hundreds of Billions as soon as our “fragile” recovery gets some legs-like F is promising-

Those that think CMHC is going to be fussy about what crap they take in and how much they will pressure these darling “world envy” Banks about lax lending?
Pul-eeeze-

#175 Mike Turner on 01.02.11 at 7:52 pm

pessimistic prof

I did call you Xenophobic it’s late here in Italy so I might be sound asleep when you mount your comeback. I just want to make myself clear. KKK? sorry couldn’t resist… I’m assuming you’re white? I know I got that much right…

#176 Sue on 01.02.11 at 7:55 pm

Ok, so back to bunnies! Found the recipe. At the risk of hijacking Garth’s work and turning this into a temporary food blog, here goes:

Serves 4
Roll meat pieces in seasoned flour and brown in 10” skillet. Save skillet and drippings for making gravy at end.
1.5-2# rabbit cut up
seasoned flour
oil for frying
Brown nicely then transfer to larger skillet or pot w/ lid. (works well in crock pot)

Add veggies.
4 pots cut in half
3-4 cups carrots cut in 1” pieces
1-2 onions in wedges
lots of garlic chopped

Combine well then add to rabbit.
2 bottles beer
1/3 cup chili sauce
1 T. brown sugar
seasoning salt, pepper

Bring to a boil; cover and reduce heat to simmer for @ 45 minutes.
When meat is done, pour off liquid into original skillet. Keep meat and veggies warm. Thicken stock w/ 1/3 cup water, 3T flour, stir til bubbly then simmer 1-2 minutes more.

Would probably also work well with squirrel…?

Here in the Okanagan, there are often LARGE bunnies roaming around urban areas; I’ve often thought that they should be considered as a food source for soup kitchens, etc….

#177 Mike Turner on 01.02.11 at 7:59 pm

sorry not white, Caucasian I won’t want to be politically incorrect. I wouldn’t want to offend anyone… So how were the dinosaurs? I’ve always been fascinated by them. Did Jesus really ride one like I saw in the painting?

#178 dd on 01.02.11 at 8:11 pm

#158 Nostradamus jr.

…There are petitions in City Hall to change our city’s name to Richmond…

Stop with the bull shit. You are a person that doesn’t live up to your spoken word. Vancouver real estate prices have not increased 50% this year. Be off with you or at least say something challenging or intelligent for once.

#179 Nostradamus Le Mad Vlad on 01.02.11 at 8:15 pm


#104 Jeff Smith — A good reason why TFSAs can be better if one has a relatively good idea of how to invest. People can increase their wealth quite rapidly.

#138 miketheengineer — “Happy New Year All”

And to you as well, Mike! Good to see you’re still around!

#147 henry G — “Could CHMC bankrupt Canada?”

That is precisely why the Harpocrats put CMHC on the backs of the taxpayers so as to put all their debts on to taxpayers’ backs, just as Soros and Obama are in the process of bankrupting the US. The CPC following orders to do the same here.

Then bring in the NAU / SPP and, with Mexico we’ll be CANAMEX!

#180 Jeff Smith on 01.02.11 at 8:16 pm

>#109 nonplused on 01.02.11 at 2:27 am
>
dude, you sound like a guerilla leader trying to incite violence, suversion and the over throw of the government.

#181 Devil's Advocate on 01.02.11 at 8:22 pm

#115 604genX on 01.02.11 at 5:25 am
DA is being fast and loose witt the characterization of CMHC as some sort of prudent stable organization. You gotta be doing too much Interior BC home-grown weed to believe that. CMHC has over $500-billion in insured loan exposure and over $300-billion in guarantees outstanding in debt securitizations (page 98 financial statements). As I recall these numbers doubled over the last four years. Thus all this new exposure is 5-35 crap with little amortization paydown. A 25% drop in property values means taxpayers are on the hook for $50-billion to $80-billion on the half underwritten in the last few years. CMHC has a lousy $150-million in loan loss reserves. So they’ll go to Ottawa for the rest (just as Fannie/Freddie went to Washington).

At least the Americans were smart enough to syndicate their loan loss exposure to foreigners around the world. The Feds/CMHC have concentrated this entire loss on one group: the Canadian taxpayer. As a percentage of GDP this ranks with the $700-billion bail-out of Wall Street in 2008.

Have you actually read and understand the 160 page CMHC 2009 Annual Report?
http://www.cmhc-schl.gc.ca/en/corp/about/anrecopl/upload/CMHC_AR2009.pdf

I must admit I have only perused it quickly and like most such publicly scrutinized annual reports find it quite a tangled web. But thank you for drawing my attention to it as I do want to spend more time with it as a document which I do consider to have a significant influence on my business. A thorough reading of it by me is long overdue.

What I can say is that from my quick perusal thus far I actually have a greater respect for the organization than I did before. And I am by no means a fan of CMHC.

However lets do some math; With 34,000,000 Canadians, averaging say 2 per household, of which say 70% are owned and based on recent surveys a quarter of purchases are high ratio financed the simple all-be-it crude math would suggest that roughly just under 3,000,000 homes in Canada might be high ratio financed. Now assuming an average value over the portfolio life of say 10 years of those insured, (many would have come off the books long before) homes of say $200,000, which I do believe would be a high side average estimate for no other reason than these are generally first time buyer homes, most of which would be lower end and not at all inclusive of those higher end homes which tend to crank the Canadian average home value. The simple math (34,000,000 / 2 * .7 = 3,000,000 * $200,000 = $600Billion) results in a total insured home portfolio value of $600Billion, not far off the $500Billion you quote from page 98 of those financial statements I can not find. I think you must now get where I am going with this 604genX. That figure is the total of the value of the insured properties not most probable insured shortfall they may have to payout to the banks in the event of total financial calamity – such calamity as we do not want to think about much less discuss. Just not going to happen.

But I will read those CMHC and other documents in more detail. If you come up with proof of my misunderstanding or math, understanding the caveat of its rough and crudeness, I’d sure appreciate if you would please let me know.

#124 Daisy Mae on 01.02.11 at 12:12 pm
DA — “Given that the average price of a single family home in Kelowna is $525,000″
This is incorrect.

It is absolutely correct Daisy Mae. Average price of the 1,949 homes sold in Kelowna in 2010; $525,829.00

#131 Mark on 01.02.11 at 1:43 pm

#81, true, that’s basically how CMHC works. Except the banks have a ‘weapon’ against the CMHC if they choose to excessively and abusively deny claims, and that is, the banks can (and will) tighten credit such that, the housing market crashes in Canada completely, forcing [i]all[/i] CMHC-insured loans into default.

Alternatively, banks could simply decide to not recognize the CMHC guarantee, or require a higher interest rate for someone who is using CMHC insurance, versus someone who has a large downpayment. This, also, would crash the housing market and destroy CMHC.

PERFECT!!! Well put! This is reality the way it should be!

And so what is your point?

#135 dandy on 01.02.11 at 2:16 pm

I used to be a renter and read this blog to justify my decision to wait for better times. Then when I finally bought a house after years of waiting something odd happened! I no longer looked for all the negative signs of impending doom and disaster to be heaped on us all. I went about making my house into a home a comfortable, happy place for me and my family. It is liberating to no longer have to wait for people to do what I want them to do (realise their house is worth less and sell it to me for less)

Most of what Garth is saying is live within your means, if you do that it’s one less thing to worry about. Sure you might be able to buy a house cheaper one day but if you can’t afford one now don’t hope for a miserable world where you can buy a cheaper house, but we have record unemployment and the TSX sits at 5,000 surely it’s better to knuckle down, work/study your butt off so you can be in the top percentile of earners.

I did it just by working my butt off, I believe anyone can!

It’s a new year time to take charge of your life!
There is little more satisfying than self-justification. Enjoy the house. — Garth

Good attitude dandy.

Garth… I am sure you meant that in the best way and would agree a better choice of words might have been “there is little more satisfying than a feeling of accomplishment. Enjoy your home.”

#139 Mike Turner on 01.02.11 at 3:04 pm

DA I know how it works. You actually proved my point. The banks know full well that if they can’t sell the home and recoup their money CMHC will step in and pick up the tab. It may take some time but the bank doesn’t care knowing that they won’t have to take the loss.

I think that if the banks want to socialize the losses ie put them on the taxpayer, they should also be forced to socialize the profits.

You could say the same of anything government guaranteed… like student loans. Doctors, lawyers, engineers, teachers, commerce grads, the lot of university grads should socialize their higher earnings. Wait a minute… THEY DO…. Through their higher tax brackets. The reason CMHC exist is it is deemed a benefit to the Canadian public… and generally speaking it may well be. But when it becomes an instrument of monetary policy then it is doomed to fail it’s original intent.

#182 Timing is Everything on 01.02.11 at 8:24 pm

Garth said – “The best defence is not clinging to the bricks and mortar…You’ve a few months left to diversify, down debt and prepare.”

Bricks and mortar are fine (Average 3 bedroom bung and a basement with attached garage.)…just make sure you have a reasonable amount of land for it to sit on minimum 1 acre. Also, get off the grid as much as you are capable. Be self sufficient as much as you are capable. Get out of the city proper. Just ‘out of reach’. Take advantage of the city, but do not live within its ‘tax base’. Marry a prairie girl. Get a gun permit and hunting license. Practice.
Two incomes – make sure you can ‘get-buy’ on only one, though. Treat any pension income, when the time comes, as a bonus…do not count on it.

Water well, septic system, genset, irrigation system, veggie garden, wood heat (lots of trees ie heat fuel), even some chickens etc…if you have the time.

Oh, buy property pre-2002 (Awww, you missed it.) Sucks to be you. Oh well, wait another 3-7 years to buy a ‘home’ aka bunker.

In the meantime….

http://www.cmhc-schl.gc.ca/en/co/reho/reho_001.cfm
http://www.mouldfacts.ca/index.html

Ya I know…’smug’ as bug in a rug – highly self-satisfied

This is survival, quality of life, living, for the love of God (whatever that is) get on with it. You only have one life.
Get off your friggin’ asses already…Do something. Anything….

…but do not buy RE at this moment in time.
If you bought in the last three years or so…good luck, you’re gonna need it.

Deal….

Works for me. Damn, that felt good. Thanks Garth.

“Today’s mighty oak
is just yesterday’s nut that held its ground.”
– Anonymous

http://www.youtube.com/watch?v=KOqk_q4NLLI

#183 Devil's Advocate on 01.02.11 at 8:24 pm

#115 604genX on 01.02.11 at 5:25 am
DA is being fast and loose witt the characterization of CMHC as some sort of prudent stable organization. You gotta be doing too much Interior BC home-grown weed to believe that. CMHC has over $500-billion in insured loan exposure and over $300-billion in guarantees outstanding in debt securitizations (page 98 financial statements). As I recall these numbers doubled over the last four years. Thus all this new exposure is 5-35 crap with little amortization paydown. A 25% drop in property values means taxpayers are on the hook for $50-billion to $80-billion on the half underwritten in the last few years. CMHC has a lousy $150-million in loan loss reserves. So they’ll go to Ottawa for the rest (just as Fannie/Freddie went to Washington).

At least the Americans were smart enough to syndicate their loan loss exposure to foreigners around the world. The Feds/CMHC have concentrated this entire loss on one group: the Canadian taxpayer. As a percentage of GDP this ranks with the $700-billion bail-out of Wall Street in 2008.

Have you actually read and understand the 160 page CMHC 2009 Annual Report?
http://www.cmhc-schl.gc.ca/en/corp/about/anrecopl/upload/CMHC_AR2009.pdf

I must admit I have only perused it quickly and like most such publicly scrutinized annual reports find it quite a tangled web. But thank you for drawing my attention to it as I do want to spend more time with it as a document which I do consider to have a significant influence on my business. A thorough reading of it by me is long overdue.

What I can say is that from my quick perusal thus far I actually have a greater respect for the organization than I did before.

However lets do some math; With 34,000,000 Canadians, averaging say 2 per household, of which say 70% are owned and based on recent surveys a quarter of purchases are high ratio financed the simple all-be-it crude math would suggest that roughly just under 3,000,000 homes in Canada might be high ratio financed. Now assuming an average value over the portfolio life of say 10 years of those insured, (many would have come off the books long before) homes of say $200,000, which I do believe would be a high side average estimate for no other reason than these are generally first time buyer homes, most of which would be lower end and not at all inclusive of those higher end homes which tend to crank the Canadian average home value. The simple math (34,000,000 / 2 * .7 = 3,000,000 * $200,000 = $600Billion) results in a total insured home portfolio value of $600Billion, not far off the $500Billion you quote from page 98 of those financial statements I can not find. I think you must now get where I am going with this 604genX. That figure is the total of the value of the insured properties not most probable insured shortfall they may have to payout to the banks in the event of total financial calamity – such calamity as we do not want to think about much less discuss. Just not going to happen.

But I will read those CMHC and other documents in more detail. If you come up with proof of my misunderstanding or math, understanding the caveat of its rough and crudeness, I’d sure appreciate if you would please let me know.

#124 Daisy Mae on 01.02.11 at 12:12 pm
DA — “Given that the average price of a single family home in Kelowna is $525,000″
This is incorrect.

It is absolutely correct Daisy Mae. Average price of the 1,949 homes sold in 2010; $525,829.00

#131 Mark on 01.02.11 at 1:43 pm
#81, true, that’s basically how CMHC works. Except the banks have a ‘weapon’ against the CMHC if they choose to excessively and abusively deny claims, and that is, the banks can (and will) tighten credit such that, the housing market crashes in Canada completely, forcing [i]all[/i] CMHC-insured loans into default.

Alternatively, banks could simply decide to not recognize the CMHC guarantee, or require a higher interest rate for someone who is using CMHC insurance, versus someone who has a large downpayment. This, also, would crash the housing market and destroy CMHC.

PERFECT!!! Well put! This is reality the way it should be!
And so what is your point?

#135 dandy on 01.02.11 at 2:16 pm
I used to be a renter and read this blog to justify my decision to wait for better times. Then when I finally bought a house after years of waiting something odd happened! I no longer looked for all the negative signs of impending doom and disaster to be heaped on us all. I went about making my house into a home a comfortable, happy place for me and my family. It is liberating to no longer have to wait for people to do what I want them to do (realise their house is worth less and sell it to me for less)
Most of what Garth is saying is live within your means, if you do that it’s one less thing to worry about. Sure you might be able to buy a house cheaper one day but if you can’t afford one now don’t hope for a miserable world where you can buy a cheaper house, but we have record unemployment and the TSX sits at 5,000 surely it’s better to knuckle down, work/study your butt off so you can be in the top percentile of earners.
I did it just by working my butt off, I believe anyone can!
It’s a new year time to take charge of your life!
There is little more satisfying than self-justification. Enjoy the house. — Garth

Good attitude dandy.
Garth… I am sure you meant that in the best way and would agree a better choice of words might have been “there is little more satisfying than a feeling of accomplishment. Enjoy your home

#139 Mike Turner on 01.02.11 at 3:04 pm
DA I know how it works. You actually proved my point. The banks know full well that if they can’t sell the home and recoup their money CMHC will step in and pick up the tab. It may take some time but the bank doesn’t care knowing that they won’t have to take the loss.

I think that if the banks want to socialize the losses ie put them on the taxpayer, they should also be forced to socialize the profits.

You could say the same of anything government guaranteed… like student loans. Doctors, lawyers, engineers, teachers, commerce grads, the lot of university grads should socialize their higher earnings. Wait a minute… THEY DO…. Through their higher tax brackets. The reason CMHC exist is it is deemed a benefit to the Canadian public… and generally speaking it may well be. But when it becomes an instrument of monetary policy then it is doomed to fail it’s original intent.

#184 Devil's Advocate on 01.02.11 at 8:33 pm

#160 Mike Turner on 01.02.11 at 7:05 pm

DA there is only so much cake to go around so why do the banks get to eat it all and leave everyone else to clean up the mess? Riddle me that…

Just to set the record straight Mike… I am no fan of the banks, not one bit. I hold in great admiration everything Thomas Jefferson warned us of what might come with respect to banking institutions. What a man of vision he was.

That being said… where would we be without them? And that being said, I remember the day when banks were where business did what today consumers do. I think THAT is when the real failing commenced when consumers opted for lines of credit. Or maybe more appropriately stated when banks offered them that lure and they bit the hook.

#185 VICTORIA TEA PARTY on 01.02.11 at 8:40 pm

#152 Best Place…

Looking into that article you posted, from the CATO Institute is most enlightening.

Written in 2005, ahead of the US housing disaster, and the later stock market melt, I decided to isolate a few sentences from the piece.

The piece is entirely instructive, given its utter bombasity, silliness, and slavishness to “known” factors, all the while assuming there is no such thing as a Black Swan, in other words, the possibility that something “bad” could ever happen to upset the US Empire and its drive to create “freedom” and “democracy” everywhere, whether folks wanted them or not.

As you so wisely write “The desperation is reaching a peak, just like the market.” So very true.

HEREWITH SOME SNIPPETS:

“No Housing Bubble Trouble
by Alan Reynolds

Alan Reynolds is a senior fellow with the Cato Institute and a nationally syndicated columnist.

Added to cato.org on January 9, 2005

This article originally appeared in the Washington Times on January 9, 2005.

…At the national level, what could possibly kick national home prices downstairs? There is nothing to suggest massive job loss ahead or a huge oversupply of new homes. That leaves only the dubious assumption of a big increase in mortgage interest rates as the trigger for any nationwide decline in home prices. But national housing prices did not fall in the past when mortgage rates rose to twice their current level.

Those who postulate a nationwide collapse in home prices comparable to the drop in tech stocks claim interest rates will soar because the dollar will fall. Or (quite inconsistently) they say interest rates must rise to keep the dollar from falling. Or they say foreigners will “demand” higher interest rates (try demanding a higher interest rate from your local bank).

The only half-plausible reason to forecast a big boost in mortgage rates would be the expectation of a large rise in inflation. But inflation would certainly not discourage speculation in housing. Inflation is terrific for tangible assets such as real estate, yet horrible for stocks and bonds.

In short, we are asked to worry about something that has never happened for reasons still to be coherently explained. “Housing bubble” worrywarts have long been hopelessly confused. It would have been financially foolhardy to listen to them in 2002. It still is.”

The writer could not believe that a housing bubble could occur WITHOUT HIGH MORTAGE RATES!!

It did, of course.

So the pumpers, pimpers, hookers and high-priests dining out on the entrails of the current economic miasma extant should be careful what they write. They may one day have to eat those words! Pass the ketchup.

I still think this new year will be one of generally not good wrenching surprises.

I’m keeping my eye on interest rates, and commodity prices. The former because of continued degradation of the US dollar (the reserve currency), and the latter a refuge from the aforementioned USD.

For average folks, eliminating debt is the key to survival, and I mean that.

Prosperity left town a while back and that’s about that.

#186 Jeff Smith on 01.02.11 at 8:43 pm

>#125 Nostradamus jr. on 01.02.11 at 12:18 pm
>2011 QuizàWho Am I?
>
>Over the last 30 years, immigration has played a huge part in city growth. As a
result its residents have become been ethnically and linguistically diverse; 52
% do not speak English as their first language and almost a third of the cityÆs
inhabitants are of Chinese origin, with a large number of immigrants from Hong K
ong.
>
>Port Metro ___ is the new name for the Port of ___, which is now the busiest an
d largest in Canada, as well as the fourth largest port (by tonnage) in North Am
erica. While forestry remains its largest industry, ___ is well known as an urba
n centre surrounded by nature, making tourism its second largest industry. It al
so is the third largest film production centre in North America after Los Angele
s and New York City, earning its film industry the nickname Hollywood North.
>
>___has ranked highly in worldwide ôlivable cityö rankings for more than a decad
e according to business magazine assessments.
>
>Am Ià
>
>a/àHalifax, Nova Scotia?
>
>b/àMontreal, Quebec?
>
>c/àToronto, Ontario?
>or
>d/àVancouver, BC?
>
>First Western Canadian to email the correct answer will win a two week luxury v
acation to Eastern Canada, hosted by Bobby Orr and Jean Beliveau.
>
>Each morning will begin with a short 30 minute video of Residential Condominium
Time Share Projects now currently under construction and For Sale in both Montr
eal and Toronto.
>
>Nostradamus jr.
>.

Well alright, you piqued my trivial pursuit interest. Let me see. hmmm…
Is it that world renowned space port; Mos Eisley ?

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

#187 Triplenet on 01.02.11 at 8:50 pm

DA #81
CMHC certainly DOES take possession of property Through the default process if it determines it should or are contractually/legally obligated to do so.
You must have misremembered.

#188 timbo on 01.02.11 at 8:50 pm

“Within a 12 month period they will seduce, romance, marry and then divorce these developer’s wives, thereby recovering at least half the assets for the Irish taxpayer.

:)

http://www.huffingtonpost.com/rory-fitzgerald/ireland-to-recover-proper_b_799438.html

#189 jwkimba on 01.02.11 at 8:55 pm

#151

Yes is is true that some wealthy chinese do that. But at what cost? My wife is chinese (shanghai). we have friends who see their kids for 12 days a year. *twelve*. The offsite parent (it can be the wife of the husband) takes a two week vacation each year to canada. With a day of travel each way, they see their own children for 12 days. The onsite parent also works to create cdn income (less suspicion). Kids are raised by nannies.

No thanks. If they want to do that, fine. But as my 10mo old boy crawls around the floor beside me, it sounds like an awful, awful way to get ahead.

#190 Mike Turner on 01.02.11 at 8:57 pm

Sorry Garth I don’t mean to be such a prick it’s just that these people bring it out of me. You can understand I’m sure.

I’ll just say this I know this won’t make the blog so it’s all good. I think you see a recurring pattern. Steve Harper sucks. He will do anything to stay in power. He had his picture taken with my portrait that makes me want to vomit on myself. Here we have the one person who cut the heart of out the art funding standing in front of a portrait of me paid for by federal tax dollars and he’s smiling. I’m not one to want any harm to anyone but I look forward to the day that he’s brought to his knees. All the best with the blog the attacks give you all the more reason to push ahead. The message is getting out there. Buy the ticket take the ride… All the best for the new year.

Mike

#191 Mike Turner on 01.02.11 at 9:03 pm

portrait of me I mean a portrait of me portraying a WWII pilot I’m not that big of an egomaniac.

#192 TheBestPlaceOnEarth on 01.02.11 at 9:11 pm

Feel better now? We are all immigrants, dude. — Garth
()()()()()
Ahhhh the crux of misunderstanding the power of Vancouver from housing bust proponents. Because when we talk of immigration and real estate it really is different this time. This is the new reality. 200 people at an Open House in Richmond with bidding wars from 800k to 1.1 million. Flat 10% tax rate and paying with cash. Paying with cash, bidding from 800k to 1.1 million, the absolute shame of renting. HUGE demand from China for properties. Bargain basement prices here folks. Don’t make the mistake of having another lost decade renting from 2000 -2010 because I can guarnatee you the next 10 years will come and go and when we hit 2020 you can sell that Richmond 1.1million home on the flood plain for an easy 2.5 million tax free, now ain’t that sweet

#193 Mike Turner on 01.02.11 at 9:23 pm

redacted but get it out there it’s all good. We’re about to see a major change in Canada this year if people get their head out of their ass

#194 Mike Turner on 01.02.11 at 9:28 pm

DA you are a wolf in sheep clothing. You say on thing but you live on the blood of helpless sheep

#195 Mike Turner on 01.02.11 at 9:32 pm

DA higher learning benefits society higher house prices doesn’t. Big Difference

#196 Mike Turner on 01.02.11 at 9:34 pm

Steven Harper is a *#^$ Smoker I want that on the record

#197 Mike Turner on 01.02.11 at 9:35 pm

His blue sweater doesn’t fool me

#198 Nostradamus Le Mad Vlad on 01.02.11 at 9:47 pm


India This is what Sadaam was going to do prior to the illegal Iraq invasion. Apparently, Sadaam is still alive and living in Russia. Also here.

AfPak 2011 will indeed be a bloody year. Plus — China – US Could be this is why the US has upped the (war) rhetoric toward China.

Bogus Science (a.k.a. BS). “It’s ‘the hottest year on record’, as long as you don’t take its temperature.” Plus — GW? “Rescue efforts are under way to evacuate more than 600 crew on 10 ships trapped in ice in the Sea of Okhotsk. The ice is up to 30cm (12 inches) thick in some places, according to the Russian news agency Itar-Tass.”

Screwing Workers Reasons why jobs are disappearing.

China New stealth fighter plus a new aircraft carrier. Do they know something we don’t?

Assange “Assange lives pretty damned good for a supposed nemesis of the government and the corporate media, doesn’t he?” wrh.com.

Comment by wrh.com is far better: “The reason the year 2014 is being touted as the year for the beginning of US/NATO withdrawal is that this is the year that the TAP (Turkmenistan/Afghanistan/Pakistan) Pipeline, bringing natural gas from Turkmenistan into Pakistan, is supposed to be completed.”

Food Emergency “As middle class family budgets are getting pushed to the breaking point, pressure on food banks is building.”

6:41 clip IMF’s plan for 2011. It has a plan?

US losing influence and power in Latin America.

Chinaflation; Abolishing Cash; Trillion dollar memories!

Gold is SPAM backwards; Raise Debt ceiling.

Eurozone Second credit crunch; Two min. clip US students close in on a trillion debt. Do they care about RE?

#199 Devil's Advocate on 01.02.11 at 9:51 pm

#185 Triplenet on 01.02.11 at 8:50 pm
DA #81
CMHC certainly DOES take possession of property Through the default process if it determines it should or are contractually/legally obligated to do so.
You must have misremembered.

Oh yes but of course it would… “if it determines it should or are contractually/legally obligated to do so” I’ve just never seen one, in the many many foreclosures I have seen, where it determined it should or was contractually/legally obligated to do so. Why don’t you show me one?

#200 Mike Turner on 01.02.11 at 10:02 pm

Anyone want to say Harper is pro art??? We’ve had it for 40,000 years as a species, and we’ll have it forever go read a book. Maybe try visiting Italy where you might understand that which you hate. Anyway I’m off to the Uffizi tomorrow to see some of the best mankind has to offer. Go trade your stocks… and bonds sorry Garth but you miss the point of life. No one can live on artistic achievements but we can all enjoy it. Be thankful people thought of more than money.

Canada is but a pimple on the ass of life, we should try to learn from the ass from which we came. ;)

#201 Utopia on 01.02.11 at 10:02 pm

To Mike Turner:

Are you certified yet? Get the paperwork buddy. Time.

#202 Mike Turner on 01.02.11 at 10:14 pm

off to bed I’m sure tomorrow will be interesting. I only had a bit to drink…

#203 Captain Jack on 01.02.11 at 10:35 pm

Pessimistic prof and tmg make obvious points… If you live in Vancouver you would understand. My relatives came from Europe and worked hard to assimilate in north America. There are a lot of new immigrants that use Canada. Not all of them but there are a lot and I do agree it is screwed up. The immigration model needs to be changed. I never felt this way before until living in Vancouver and dealing with the abuse of our system first hand. I also hate to feel this way but it’s BS.

#204 pessimisticprof on 01.02.11 at 10:45 pm

#162, 164, 165 Mike Turner

I should just let it go, but then again maybe I shouldn’t – the finer points of my comments seem lost on you, so let me be blunt. Your attack on my views is indicative of the problem Canadians have discussing immigration policy in any objective fashion. I work in academia, where the currents of political correctness run strongest, and one must walk on eggshells when discussing immigration reform. If one dares to press ahead and discuss the very real problems we have with current immigration policies, one runs the risk of being shouted down and marginalized – the self-appointed political correctness police resort to the same sort of name-calling you seem prone to: Xenophobe! Prehistoric relic! Racist! White Supremacist! Apologist for imperialism! Monoculturalist! etc, etc (and those are the polite labels!) I am confident that the vast majority of immigrants to this country are hardworking (and tax paying!) individuals, and I have the greatest respect for their efforts and the hardships they undergo in settling into a new home. I have NO beef with them, and acknowledge that Canada needs these people – their individual contributions make us collectively stronger, both culturally and economically. My issue is with the immigration and taxation loopholes that turn Canadian citizenship into little more than a passport of convenience for people who feed off our services without contributing their fair share of taxes. I used the example of wealthy Chinese immigrants simply because I was talking about Richmond BC – it might be Russians, Iranians, Germans, Columbians or Americans in other parts of the country. Complicating the issue is the fact that only a tiny minority of immigrants engage in this sort of behavior – but this is all the more reason to close the loopholes so all are not tarred with the same brush.

Selling passports and houses to wealthy foreigners is not going to save the Canadian economy (notwithstanding BestPlaceOnEarth and Nosti Jr’s protests to the contrary), and it is a poor substitute for proper long-term economic and immigration planning.

#205 Devil's Advocate on 01.02.11 at 11:03 pm

#194 Mike Turner on 01.02.11 at 9:28 pm

DA you are a wolf in sheep clothing. You say on thing but you live on the blood of helpless sheep

#195 Mike Turner on 01.02.11 at 9:32 pm

DA higher learning benefits society higher house prices doesn’t. Big Difference

You are wanting to shoot the messengers. We deliver the news we don’t create it. The Fed lowered the bar and consumers bought into it. Had ABC bank not granted the mortgage the borrower would have gone to XYZ bank which would have. Had Joe Schmoe REALTOR not written the contract the buyer would have gone to Sheila Savage REALTOR who would have.

Besides the intent was to improve the economy and by lowering interest rates, increasing amortizations making home ownership affordable to more. It was a well intentioned government policy maneuver. Yes it was ignorantly short sighted on their part which is precisely why your anger is misdirected.

#206 pessimisticprof on 01.02.11 at 11:03 pm

#175 Mike Turner – “I did call you Xenophobic it’s late here in Italy so I might be sound asleep when you mount your comeback. I just want to make myself clear. KKK? sorry couldn’t resist… I’m assuming you’re white? I know I got that much right…”

Garth – you are slipping on your moderating duties. I don’t object to being called an a**hole or a SOB in the course of a heated exchange, but I do take great offense to being called a white supremacist and a member of the KKK. I thought you had strict rules on ad hominem attacks like those launched by this guy – perhaps a time out is in order.

#207 Devil's Advocate on 01.02.11 at 11:06 pm

#202 Mike Turner on 01.02.11 at 10:14 pm
off to bed I’m sure tomorrow will be interesting. I only had a bit to drink…

Ah yes… does explain a lot… g’night Mike

#208 Aussie Roy on 01.02.11 at 11:09 pm

Australia Heads For Economic Crunch; Similarities Between Australian and Chinese Stock Markets; Global Property Bubble Cycles.

http://globaleconomicanalysis.blogspot.com/2011/01/australia-heads-for-economic-crunch.html

The difference so far is the US, Ireland, and Spain property bubble have popped, while those in Australia, Canada, and China are just now facing the pressure.

#209 Devil's Advocate on 01.02.11 at 11:19 pm

You all give far more credit to the real estate community than it deserves. The real estate community is little more than a rag tag band of 100,000 individuals with but one common bond – we are in co-operative competition with one another. To get a consensus of opinion among a group of more than two of the lot is a rarity indeed, let alone the capacity of the lot to influence interest rates, lending criteria and real estate prices.

#210 vancouverite on 01.02.11 at 11:40 pm

“Feel better now? We are all immigrants, dude.”

Oh please, what weaselly, self-congratulatory, PC nonsense.
Garth, your grasp of Vancouver and Vancouver real estate is profoundly slim.
Vancouver is undergoing a massive tsunami of business investor “quasi-immigrants” (as one poster put it) from Mainland China.
I can’t really see anything positive about it.
Property prices in many areas of Vancouver will continue to go up as more properties are sold off to people who are completely unaffected by “fundamentals.”

You’ve been watching Global Vancouver too much. — Garth

#211 S on 01.02.11 at 11:41 pm

In a country where you needed proof of income (and income) to get loans, how did someone I know (self-employed) get a $470,000 mortgage on a house in Toronto without having filed a tax return in years, so having no proof of income?

And yes, he ended up losing the house, and the $50,000 of his mother’s savings she gave him for a downpayment in the process. The $2600 a month mortgage payments ended up being too much for him. And I’m sure CMHC paid the tab. A part of me hopes though that they didn’t after doing some investigating and learning there was no proof of income. But who knows if they bothered to look?

#212 Sean on 01.03.11 at 12:05 am

I wish you a happy new year and look forward to your blogs for 2011 keep up the good work
To everyone else get out of debt fast.

#213 GregW, Oakville on 01.03.11 at 1:46 am

Hi #198 Nostradamus, re: the first link you gave, oil pegged to the USA dallar, or maybe not anymore?

Have you watch his take on history yet?

“Robert Newman’s History of Oil”
http://www.evworld.com/article.cfm?storyid=1195
If the video link doesn’t work you can find the show at youtube http://www.youtube.com/watch?v=kQhhrzHKMhI

“Did you know that World War One actually started because of Iraqi oil?

That’s right… or at least that’s comedian Robert Newman’s take on history, which would appear to be supported by the oft-ignored footnotes of history. In fact, some of the first British troops to see battle was during the campaign to capture Basra, Iraq in November, 1914…”

#214 604genX on 01.03.11 at 3:52 am

#181 DA, yes you have the right link for the CMHC f/s. See line “Insurance in force” for the $472.5 growing to $519….billion. That’s CMHC insurance exposure. About half of this was issued over the last 4 years and that is what is at risk for the Canadian taxpayer since it was 35-5 subprime-style crap with a high likelihood of write-down/loss in the near future. Pre-2006 insurance might be okay if LTV was reasonable and some paydown has been achieved by the borrower. As Garth points out, the Boomers will have their equity wiped out, not their CMHC insurance.

I’m a bit shocked you believe the CMHC business model is good. The entity was created to help rural Canadians buy/build real estate 50 years ago. It has somehow been twisted into a politically motivated entity that insures young families when they want to pay 5-9 times income for over-priced real estate across the country in urban centres. CMHC has accumulated insurance liabilities that would make Fannie/Freddie/AIG blush. When the crap hits the fan the Canadian tax payer is going to wear this. All because of CMHC. It really is the biggest moral hazard business model on the planet. Canadian banks have completely offloaded their liability to residential mortgages to CMHC – you and I.

BTW, don’t spend too much time curled up with the 160 page CMHC audited financial statements. The document is an exercise in misinformation and spin. Lots of red herrings and jive about unimportant crap. The only thing that matters is insurance outstanding and guarantees outstanding and you’ll find that info on page 98.

#215 Steven Rowlandson on 01.03.11 at 10:47 am

Hello Garth .
I to had a just got attacked for being the prophet of doom moment. This happened in my dreams this morning.
The attackers were my employer and his wife who happened to be friends of the family. They just lost their house through unemployment due to the real estate and construction depression. Thats what happened in my dream world. In the real world we have a real estate and construction depression and they still have their house for now.
I am out of work and my friends stair sales are between slow and zero.

One should not be surprised if people turn on those who identify the the problem instead of those who caused it.
It’s a tradition as old as the hills. The thing is fiat currency and real estate is more than a means to an end and its more than just business. It is an economic mass movement and cult/ religion that most participants believe in and depend on for their emotional and economic survival. Attack it or point out its short comings and you are a heretic and economic thought criminal. Example: The Hunt Brothers and soon it will be Garth Turner as well as others who critisize high real estate prices and government debt.
As rates rise and creditors particularly foriegn creditors stop lending you will see desparate debtors start to look for scape goats. Some truth teller who isn’t the government and can be persecuted.
This is because most people can not bear to accept the fact that their peers ( government, banks, realtors and media) sucked them into doing high risk behavior and then hang them out to twist in the wind through rate and rules changes. They don’t want to believe it, it’s just too diabolical a plot to take seriously.
You know the routine Garth.
First they ridicule you, then they attack you and finally after facing too much evidence and hardship they accept the message because it’s too obvious to deny.

When are you getting fitted for an asbestos suit Garth?

Steven

#216 604genX on 01.03.11 at 1:22 pm

#215 Steven – yes, real estate has become some kind of weird cult that people are dependent on for emotional and economic survival. I agree completely – when this things blows it will be very ugly mob rule with scape-goating. But I bet CMHC will take it on the chin and have to modify loan terms, forgive debt and extend maturities on negative equity loans. CMHC will be blamed (as it should be) which means all of us will end up paying the price for this mess through taxes.