Alarmist

A year ago I laced up my heated fox pelt undies and headed for Calgary. Once there a few media people asked me about local real estate. ‘Headed for a tumble,’ I said, as left for the hotel bar to clean my weapon.

Reaction was, er, predictable. “We view Mr. Turner’s speculation on Calgary’s housing being unaffordable as alarmist,” says Don Dessario, president of the Canadian Home Builders’ Association-Calgary Region.

Said the Calgary Herald: “All Garth Turner has done with his latest projections regarding housing in Calgary, is put a new cover on the same old bunk he was professing a couple of years ago. Turner, in town recently to chat up seminar-goers and to pitch his book, was saying housing here is unaffordable — that there is a major correction coming. Not gonna happen.”

Said real estate cartel president Diane Scott: “I don’t know where Garth Turner gets his information. We are a unique market, we have a young demographic, the economy is strong, jobs are available, and people are regaining their sense of optimism.”

So what happened to my forecast of tumbling sales and a price correction? And what does this mean for Vancouver and the godless GTA?

Well, there were fewer SFH sales in Cowtown in 2010 than at any other time in a decade, while condo deals were the lowest since 2001. Despite a strong spring market, by December house sales fell over 16% and condos crashed 18%. This is actually worse than it sounds. The sales plop came despite a shrinking number of listings (which kept average prices higher), and in an environment of declining five-year mortgage money.

Said Diane Scott yesterday: “Undoubtedly housing markets in Alberta and Calgary underperformed in 2010 as sales recoveries did not materialize as forecast.” Well, maybe her forecast.

As for prices, they were up slightly over 2009 levels, so I bombed there. However, as I mentioned, had worried sellers not yanked their houses off the market, supply would have swamped demand, taking values lower.

And this is how the Calgary Herald reported my comments this week:

“The second half of the year, particularly in all major markets Calgary included, was personified by continual year-over-year drops in sales volumes,” Turner said. “And although the real estate community put lipstick on a pig and suggested there were monthly improvements, the reality is that we still had a lousy year.”

One of the main reasons for the decline is that most families are “tapped out” financially and household debt has reached a historic high in the country.

“Mortgage financing has never been higher and yet wages aren’t going up and the unemployment scene, although slightly better, remains bad,” he said. “It’s not an environment in which a lot of people would actually be running out and buying houses. That’s despite the fact we’ve had these absurdly low interest rates.

“I think 2010 will go down as the year of lousy sales and 2011 is going to go down as the year of lousy prices … We’ve got a very strong trend line that has now been established wherein even in this environment of incredibly low interest rates we’ve had buyers on strike. Buyers I believe are convinced that prices are going to go lower. That’s why we’re seeing buyer resistance.”

Unreported was my comment that both Calgary and Edmonton are ahead of Toronto and Vancouver at the moment – the leading edges of a housing decline that will become apparent as the months unfold. I won’t repeat the reasons why. They bore even me.

Of course in places like Vancouver, housing’s been turned from shelter into a societal lottery and addictive obsession, where some homeowners and realtors openly deride those who think committing 70% of their income to a house is mental.

Says one nimrod real estate flogger: “Prices in Vancouver have gone up well over 100% in the last 10 years, with many neighbourhoods seeing values triple in the last 10 years. In the last two years alone, we have see 30% increases in prices. So that big crash, I mean now revised for 2011 mild decline, in prices will not even eat away two years of gains. Be sure to keep renting for a few more years boys and girls. Maybe you will see those 2008 prices again. Of course you will have wasted tens of thousands waiting for prices to drop to a level where you could have bought years ago. Lol – super smart decision.”

If there ever was a reason to stay as far away from this madness as possible, you just read it. Not only are the economic fundamentals of the Van market in tatters, with a local population bedazzled by narcotic property and massively indebted, but this casino mentality proves housing is now just a futures market. Interesting to note that this week active listings in the whole area took another plunge – like in Calgary – as the year-over-year sales numbers erode – just like Calgary.

All of this makes the GTA, with a population of six million, an actual economy plus average house prices 50% of those in the Lower Mainland, look affordable. Until you peel away the sheets and see 8.5% unemployment, stagnant incomes and houses selling for 4.6 times what the average family earns – identical to the point at which the US market toppled.

Add in a gush of spring listings in all three cities, plus higher five-year mortgage rates (knocking out more first-timers), F’s lending rule changes and Mark Carney’s pending moves, and I’d say, ‘We’re headed for a tumble.’

But look where that got me last time.

232 comments ↓

#1 Boombust on 01.04.11 at 11:02 pm

“I’ll tumble for ya…”

#2 Kurt on 01.04.11 at 11:06 pm

Dude, I remember you forecasting $100 oil and the looney at parity by years’ end, but I forget which year. I notice that we’re at parity and oil’s past 90 with a bullet. Do *you* remember which year that forecast was for?

2010. — Garth

#3 Tim on 01.04.11 at 11:11 pm

Metro Van property prices jump 17 percent in 2010 in Richmond
http://www.vancouversun.com/business/real-estate/Metro+Vancouver+property+values+jump+especially+Richmond/4053541/story.html

So we won’t see the mother of all corrections. OK, how much of a correction? About 17 percent? lol

Who knows? But enjoy those property taxes (those are assessments, not prices). — Garth

#4 AxeHead on 01.04.11 at 11:13 pm

That guy…errr girl…whatever is representative of how attractive housing looks at this moment. Folks, you really don’t know what you’re getting. Stay away. Eeeiwwww.

#5 jess on 01.04.11 at 11:19 pm

gdp makers

…”Millions of dollars flowed through two B.C. casinos in the spring and summer of 2010 in what the RCMP believes may have been a sophisticated scheme to launder money from the drug trade, CBC News has learned.

Read more: http://www.cbc.ca/canada/british-columbia/story/2011/01/04/bc-casino-cash-documents.html#ixzz1A7tcSqWl

#6 Rosebery on 01.04.11 at 11:22 pm

http://www.greaterfool.ca/2008/05/26/albertans-scramble-to-list-homes/

Interesting. This was the first time I tuned in to Mr. Turner. Lets see where it goes from here.

#7 Jaymus on 01.04.11 at 11:35 pm

from animal porn to.. ahh.. not too sure what that is!

What? You dislike my rouge? — Garth

#8 T.O. Bubble Boy on 01.04.11 at 11:35 pm

Funny how no one in the background of the picture even looks at Ms. Pretty… kinda like real estate prices these days – we’re all so used to the insanity that we aren’t even shocked at things like:

this $800k dump in Toronto
or
this $1.1M tear-down in Vancouver
or
this $750k “solid building perfect for a hair salon”

#9 allisun on 01.04.11 at 11:44 pm

Caption could be, “When the baggage gets too heavy, drop it.” Or, how about, “Dump it while no-one’s looking.” (I’m not talking about the horny wife there).

#10 Medic on 01.04.11 at 11:51 pm

A little factoid about Garth Turner, based on five minutes of research:

Garth’s status as a former Privy Councillor of Canada qualifies him as “The Honourable” for life.

Pardon me if my facts are wrong.

That and three bucks will get a coffee at Starbucks. — Garth

#11 mel on 01.04.11 at 11:51 pm

At this point, it’s all a matter of time. We know one thing for sure from history, ” if it is a bubble-it will burst”.

Nothing more needs to be said. I don’t care if the bust comes today, tomorrow, or next year. It is coming folks! Be prepared. For all of you who will either not follow the herd-that’s me, or were thrown into the dog house for a long time, your turn will come. Have no mercy. Because of them, you were not able to purchase your basic roof over your head.

#12 BC Bring Cash on 01.04.11 at 11:54 pm

Today in the mail I received the B.C.
Property Assessments Notice for my house in Kelowna B.C. What a shocker. After steady increases year after year an approx. decline of 7.4%. in value from 2010 to 2011. The cartel gurus have been telling us this will never happen because THIS TIME IS DIFFERENT. Looks like the best place on earth is going to bite a lot of people in the ass.

#13 HouseBuster on 01.05.11 at 12:00 am

Was that picture taken in Vancouver?

#14 Min in Mission on 01.05.11 at 12:00 am

Alarmist – Alarming.

Don’t think it is being alarmist to try to show what is happening. However, that picture is definitely alarming!!

#15 Republic_of_Western_Canada on 01.05.11 at 12:04 am

Is it Toronto fashion week already?

#16 Dexter on 01.05.11 at 12:18 am

#11 – BC Bring Cash

You must live in the outskirts of Kelowna. My assesment actually increased by $20,000. That does not mean that my house is worth more if I sell right now but the City of Kelowna did state that some property values will fall and others will increase.

#17 Jeff Smith on 01.05.11 at 12:19 am

Garth, you have not put up a picture as scary, till now.

#18 grantmi on 01.05.11 at 12:24 am

Garth;

How were you able to find a picture of devil’s advocate????

#19 Priced Out in Toronto on 01.05.11 at 12:24 am

I used to wonder how people could afford these house prices.
So I started asking around – for the past few months actually. Sort of like an informal survey of all the people I could talk to.
Here is my conclusion: Debt.
I cannot believe some of the stuff I’ve heard. Credit cards with 10’s of thousands, new leased/financed cars with upside down loans (to pay off the loan on their previous car), mortgages that take more than half the net income, consolidation loans as a lifestyle choice after binging for so long, etc…
This is the new normal. These young professionals (most of the people I spoke to) are living hand to mouth – barely. There was no shame, regret, or fear from them. I’m still stunned.
I don’t have many of the flashy stuff these people have but I’m actually on better financial footing than about 75% of them. It still amazes me.
One little wobble, and trust me, this house of cards is coming down hard.
I still fear when it does how many people are going to get hurt, but I’m still stunned. Until you talk to people, you just never realize how close it is to you. We’re surrounded by these people.
This is actually happening – these people you see with the fancy homes and cars aren’t really richer than you, they’ve just signed their names on the dotted line and borrowed the veneer of wealth.
God help us all if or when this turns ugly and comes down.

#20 dd on 01.05.11 at 12:31 am

Calgary is off a good 15% in prices from the highs of 2007 for a 1800 sq ft SFH out in the burbs. There is a least another 15% to go until the housing market is reasonably priced to income.

#21 Nostradamus Le Mad Vlad on 01.05.11 at 12:33 am


Alarmist. Mebbe. This may / may not play out, but what the hell . . .

While sheeple dance in a myopic trance, the state of joyous wonder around the fire which will soon consume them having surrounded themselves with materialistic wealth. By adding further, onerous debt, how has it helped them?

All the while engorging themselves through increasing unsustainable debt till their Masters (banks) call their number the piper must always be paid).

Only then, when they have been hung by their hindquarters will they realize all this self induced / orchestrated gluttony, propagated through the controlled m$m, along with their lack of self discipline was a played out to a T of their own demise.

This game has been played upon us for centuries; the only difference now is that it will be played in the fast forward speed (the karmic speed of time).

Sooner or later, oil will go over $140 / brl., the loonie is being minted by loonies and be above the US$ (tanking).

Gas prices may repeat a buck and a half a litre. Real hydro costs will go up another 25% (Fortis in BC has applied for a 6.6% hike). When VRMs double on sheeple, followed by fixed going up after, it will eradicate a large part of middle class.

“. . . the godless GTA?” — Have you (Garth) ever considered applying for the unpaid and thankless job of being God in the GTA? My understanding is the benefits are pretty nice!

“. . . that most families are “tapped out” financially and household debt has reached a historic high in the country.”

This is where the m$m shows how useful it is as birdcage lining material, but chances are they haven’t fully clued in to what is happening in the western world.

A few years of research should help them!

“. . . the economic fundamentals of the Van market in tatters, I’d say, ‘We’re headed for a tumble.’ But look where that got me last time.”

Well, your portfolio is 14% better off, give or take. Or, instead of applying for the position of God in the GTA, you may like to rent a nice home in the Okanagan or lower mainland!

There are Hells Angels, Hells Grannies, gang violence, lotsa things to keep Dorothy, Bandit and you riveted to the edge of your La-Z-Boy recliners!
*
How To become insolvent — spend like there’s no tomorrow!

Deep Freeze Apparently, we ain’t seen nuthin’ yet. 5:56 clip. GW? Take a reality pill.

The Elite are now fully covered and compensated by the FDIC (taxpayers); here, it’s CMHC (taxpayers). Plus — Elite Tightrope They have their Depends moments, too.

Gifts from the US Fed and WH to big biz.

NATO — “But Canadian General Rick Hillier, who commanded NATO forces in Afghanistan from February to August 2004 and was later chief of staff of the Canadian Armed Forces from 2005 to 2008, wrote in his memoir A Soldier First, published in 2009, that NATO was an unmitigated disaster in Afghanistan.” Question: Why are Cdn. soldiers still there? At Harper’s pleasure?

Case Shiller Chart Further drops likely.

Italians have it right. Use cash, not plastic. “Actually, the “cost” of using cash is the loss of processing fees the bank collects on every plastic transaction. Plus, if all commerce travels through the banks, then the banks and government have a perfect spying operation that watches every action of every citizen.” wrh.com.

Consumer Bankruptcies climbing.

War Causes Inflation and lotsa other nasties as well. Plus — The US Fed giveth and taketh away.

5:43 clip Vermont — More nazi checkpoints.

Coorn rationing beginning? What about all the fuel from corn and other veggies?

#22 dark sad person on 01.05.11 at 12:35 am

We’ve got a very strong trend line that has now been established wherein even in this environment of incredibly low interest rates we’ve had buyers on strike. Buyers I believe are convinced that prices are going to go lower. That’s why we’re seeing buyer resistance.”

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

Thee numero uno problem of all inflationists big and small-
Sentiment has ate your lunch-

#23 dd on 01.05.11 at 12:35 am

#3 Tim

…those are assessments, not prices. — Garth…

Tim … how else will you pay for the Olypic party? Have fun with the hangover.

#24 squidly77 on 01.05.11 at 12:37 am

Alberta’s in a world of hurt.

#25 TheBestPlaceOnEarth on 01.05.11 at 12:38 am

The GREATEST Sport in the world is not the NHL, NBA, NFL, World Cup Soccer or Olympic competition. The greatest sport in the world is Vancouver Real Estate. Vancouver real estate is a sport a trophy to be won, a brass ring to reach for and the spoils going to the victor, the bragging rights to say “yes I do own in the best place on earth”. Do the math and pro renters tell me how this guys statements are wrong. I’m all ears. This guys points below are bang on to not listen is at your own financial peril. In fact its more than that what you read below is the God’s honest truth, totally and completely undeniable. Now how did those bonds fair for you from 2000 – 2010? That’s what i thought
$$$$$$
“Prices in Vancouver have gone up well over 100% in the last 10 years, with many neighbourhoods seeing values triple in the last 10 years. In the last two years alone, we have see 30% increases in prices. So that big crash, I mean now revised for 2011 mild decline, in prices will not even eat away two years of gains. Be sure to keep renting for a few more years boys and girls. Maybe you will see those 2008 prices again. Of course you will have wasted tens of thousands waiting for prices to drop to a level where you could have bought years ago. Lol – super smart decision.”

#26 InvestorsFriend (Shawn Allen) on 01.05.11 at 12:40 am

My house property assessment in St. Albert, Alberta.

(And these assessments are supposed to represent market prices)

2007, up 24%
2008 up 58% (hey look my house made $150k!!)
2009 down 12%
2010 down 5%

I am not sure the market is really down some 17% from the peak, but anyhow that is what the assessment was…

Does not matter to me as I have zero interest in selling but the variation is of passing interest.

#27 ha ha ha ha ouch my ribs on 01.05.11 at 12:40 am

Thanks T.O. Bubble Boy for those listings. Gotta love that dump in the stockyards for $799. Fishing expedition I think….I wouldn’t pay anything to live there. Not even if it was $200K…..I bet it was worth less than that 10 years ago.

Time for some sanity and price retraction. This is getting past ridiculous.

#28 Seeker on 01.05.11 at 12:43 am

Wow, Calgary is doing so well…or so we are told…perhaps a little more smoke and mirrors to keep us in the myth of buying a house as an investment, to be deeply indebted…just for a house.

“For a personal wealth thing, it’s always comforting to know that your investment is at least remaining static or – in the case of Calgary – improving,” says Councillor Gord Lowe.

The city says an average house is now worth about $410,000. Last year, the average was $374, 000. The average condo is worth $250,000 compared to $233,000 the previous year.

http://calgary.ctv.ca/servlet/an/local/CTVNews/20110104/CGY_Assessment_Property_110104/20110104/?hub=CalgaryHome

#29 InvestorsFriend (Shawn Allen) on 01.05.11 at 12:44 am

Hey, I see the Canadian dollar is at parity with the U.S….

Should we take the opportunity to buy U.S. investments with out high dollar? (I vote yes) or gamble that our dollar goes even higher and buy U.S. investments when we hit $1.10 or whatever?

#30 Corey on 01.05.11 at 12:48 am

I do agree with most of your thoughts and have been putting off buying in Calgary for a while waiting for “the big sale”.

My question to you is… All these flooding sales come spring 2011, who’s selling and where are they moving to?

They gotta live somewhere and even if their house value drops 10%… 30%…. 90%… cardboard is cold in the winter.

#31 bridgepigeon on 01.05.11 at 12:49 am

joke deleted…before I submitted it

#32 Dan in Victoria on 01.05.11 at 12:54 am

From yesterday.
Sam @ 135
[email protected]
.Start Here.
Louis T. McFadden Congressional record House pages 1295/1296 June 10 1932.
No link, you have to do it on your own,
See where it takes you.
LOL

#33 InvestorsFriend (Shawn Allen) on 01.05.11 at 12:54 am

Ya know, when our Canadain peso was worth 70 cents U.S. it sort of made sense that our houses were worth say 1/0.7 or 43% more than U.S. houses.

If you will remember, a lot of prices for everything from Big Macs to Hotel rooms to minimum wages to government wages were higher in Canada in our loonie peso currency…

Now our dollar is at parity and our houses are still more expensive as are big Macs and wages and hotel rooms and government wages and auto worker wages…

Guess how competitive we are now? Well about 30% less competitive than before…

Imagine a Canadian manufacturer selling into the U.S… at 70 cents he got $1.43 Canadaian for every dollar sold in the U.S…. Now it’s just a dollar. But his wages and costs are the same… Unless he was making an absolute ton of profit before he is bankrupt now.

But not to worry if he was not bankrupt he could buy a cool machine cheap from the U.S. to replace those Costly Canadian workers… Well maybe the guy who buys his factory out of bankruptcy can do that.

Ontario manufacturing is so sr*wed by this high dollar…

Big opportunity to vultch on bankrupt factories however…

To the brave will go the spoils…

#34 Lexie on 01.05.11 at 12:56 am

CALGARY HAS LOST IT…

Checked my city assessment today and the value of my house has gone up 16%, a whopping $65,000 in one year. I think those people at city hall are delusional. We are not inner city or outlying new area, just an average 1200 sq ft house. How did it gain 16% in one year? They said the average gain is 8%. I couldn’t have sold my house at last years assessment value since 2008. I’d love to know how they make these decisions. Anyone know?

#35 Leanne on 01.05.11 at 1:00 am

So that’s what Tina Turner’s up to these days.

#36 604genX on 01.05.11 at 1:06 am

Let’s get the party started.

Listings jump in first day of 2011 for Vancouver:

New Listings 267
Price Changes 63
Sold Listings 88

#37 No crystal ball... on 01.05.11 at 1:14 am

We decided to sell a year and a half ago and rent. I was hesitant to get out of property ownership thinking that this somehow made us inferior to the rest of the property tax payers (and yes we still get the sneers because we are lowly renters).

But I trusted my husband’s insight about the eventual downturn in real estate, and I am happy to say that we have done tremendously well investing that money. I honestly think it was the best thing we could have done. In fact we are FAR better off than if we had kept our money in real estate. Plus if we had stayed we would have had a lot of big expense replacing things in our 23 year-old money pit.

I have to admit there are many people (family included) who thought we were totally out to lunch when we made this decision but it is amazing how many people are looking at us differently now. We are solvent and free and it really feels good to be out from under the bank’s thumb. We have a relative who lives in Florida – bought a monster home about six years ago – with very little down.

He now owes the bank about double what his home is worth. Will that come close to happening here? Who knows, but it is interesting seeing the polarized views in the media. And at least we can sleep at night not worrying about being screwed if it does happen here.

One day we will probably purchase a home again but we are not in a hurry. In the mean time, I am happy to be out of that unrealistic and spoiled mentality of keeping up with the Jones’s. It’s very interesting to be a spectator watching so many dig their own financial graves and I have learned a valuable lesson – you don’t have to own a home to be happy.

No crystal ball … only common sense!

#38 Aussie Roy on 01.05.11 at 1:18 am

11 mel on 01.04.11 at 11:51 pm

Your comment is spot on. All the pumpers cant see the bubble because they dont want to. Anyone with a calculator and the long term house price, rental return and wage data can see it a mile away. Timing the correction IMHO is a fools game but thinking prices will forever appreciate is a game for the grestest fools.

Aussie Update

Australian floods will wipe 0.8% from our GDP this year, coal mines are under water and crops have been destroyed . We can only hope that the El Nina influence will soon pass.

http://www.boston.com/bigpicture/2011/01/australian_flooding.html

http://www.publicbroadcasting.net/wnti/news.newsmain/article/0/3/1744219/World/Australian.floods.submerge.towns

Four respected rate watchers have made their 2011 predictions for banks’ housing loan interest rates

http://www.news.com.au/money/interest-rates/four-respected-rate-watchers-have-made-their-2011-predictions-for-banks-housing-loan-interest-rates/comments-e6frfmn0-1225982168373

Property experts say 2011 outlook soft as prices stabilise

http://www.smartcompany.com.au/property/20110104-property-experts-say-2011-outlook-soft-as-prices-stabilise.html

US debates “SAFE” % of money down to buy a home.
30% ?.

http://video.foxbusiness.com/v/4484183/30-mortgage-downpayment

#39 Tim on 01.05.11 at 1:32 am

US will soon be more unequal than Brazil
http://opinionator.blogs.nytimes.com/2011/01/03/to-beat-back-poverty-pay-the-poor/?emc=patrick.net#entry-75577
In the last 25 years over 80% of the increase in income went to the richest one percent of its citizens. Is this a place you want to buy a winter home in?

#40 VMT on 01.05.11 at 1:33 am

at “TheBestPlaceOnEarth”:

Do you know that in the 60’s and 70’s people used to say:

“Buying a house is the worse investment you’ll ever make, but a necessary one”.

Could you please illuminate me as what has changed since then? Thanks.

#41 Unfooler on 01.05.11 at 1:42 am

How did the cute guy get ahold of your Harley riding gear?

#42 Fool me once... on 01.05.11 at 1:42 am

#3 Tim,
“”””Metro Van property prices jump 17 percent in 2010 in Richmond
http://www.vancouversun.com/business/real-estate/Metro+Vancouver+property+values+jump+especially+Richmond/4053541/story.html

So we won’t see the mother of all corrections. OK, how much of a correction? About 17 percent? lol

Who knows? But enjoy those property taxes (those are assessments, not prices). — Garth”””

I’m confused too. My thoughts are reflected in much of Garth’s comments. However, if indeed we see the much toted 15% correction on the west coast, investors would only be seeing a loss of the gains made over the last 17 months. It’s publicly stated that the assessments are based on the previous year’s average home sale prices in the July to June time frame. The prices don’t make sense, conservatively RE is overvalued by at least 40%. A correction by definition should reflect this. Is this going to happen? Highly unlikely. Will we see a 15% decline? Very probable. But not a big loss for anyone.

#43 Sasquatch on 01.05.11 at 1:52 am

So the title “THE HONORABLE” knocks off two bucks a coffee at Star Bucks. That is the best reason ever to get a title, or is that for the itty bitty tar flavored sludge?

#44 Skeptic on 01.05.11 at 2:01 am

Yes, however lower sales volumes mean nothing if you’re waiting for lower prices. We’ve been here before, at least in Vancouver. Don’t get me wrong, I buy all the arguments, and I’m renting. However, with every month and year that goes by in which the logical arguments fail yet again to pan out, it is very difficult not to get discouraged. I don’t think our bearish certainty is warranted any longer. And most of us, Garth included, have revised our proclamations from “crash” to “slide” (or something similar).

The most balanced picture of the Vancouver market I’ve found is Rob Chipman’s. No spin (well, maybe until you get to the comments), just the numbers. No hyperbole in his brief assessments, either–despite the fact that he’s a realtor. For example, this week he writes, “As expected, high numbers all around, indicative of a seller’s market, but we need some seasonal gut check adjustment. Prices are high, high, high, and interest rates are low. The high sell/list will effect great listings, but as the over 90 numbers indicate, buyers are discriminating.”

I wish that people on both sides would be just a little less passionate and intolerant of opposing arguments. As usual, the truth is probably somewhere in the middle.

#45 In Phoenix on 01.05.11 at 2:03 am

You should see the assessments down here.
Walked past a condo development (1 of 3 towers got built) where prices have fallen from the original $620K-$1.2M to the current listed prices of $160K-$620K.
There’s some smokin’ views in the mid-range and you start thinking, maybe it’s not so crazy.
Until you look at the assessments: On a $319K list price, taxes are $400 a month and HOA (condo) fees $700 a month.
You can rent in the same building for less than $1100.

#46 Nostradamus Le Mad Vlad on 01.05.11 at 2:04 am


2:04 clip Satire. Take two pills in the morning, But Do Not Take Seriously.

Economic Storm may be closer than anyone realizes.

Balance Sheet “One question, when the Fed wants to sell MBS and other securities, who’s gonna buy?”

Closing in Texas — Macy’s.

MacIntosh Steve Jobs and Bill Gates may be in bed together. Speaking of Bill Gates, here is the man himself.

MySpace Dying FOX (Rupert Murdoch) bought it, screwed up royally and it’s now a shell of its’ former self.

Iran “Is this the action of a government which believes that it has something to hide?” wrh.com.

Iceland “The Icelanders know that it was Wall Street fraud that killed their economy.” wrh.com. Who controls Wall St.?

‘Quake Time First para. is good; the NMF is twenty times bigger than the SAF.

Tax Serfs Again, this is how the elite stay rich.

Pakistan Guess who is causing all the instability?

Population Exodus If there are no jobs in cities, what is the point of staying there?

Science fiction no longer; now science fact.

French Toast with butter, money whipped cream and blueberries all piled on top!

Unions Going As a former union member, all I can say is their greed has led to their own downfall.

Dynamic China. However — Inflation in China.

Greedy banxters suck — Saving Banxters while discarding society.

#47 Crash Callaway on 01.05.11 at 2:05 am

Hey don’t you guys be dissing that Babe in the above pic.
She was Calgary’s top Real Estate seller for 2010.
I believe her name is Tina Turneround

And Garth don’t ever stop visiting Calgary.
You’re the only fresh air this twisted city gets

#48 Crash Callaway on 01.05.11 at 2:13 am

Oil is on the way out in Calgary
Mushrooms are on the way in.
Might just as well…
they’ve been keeping us in the dark and feeding us Bullsh*t for years.

#49 Roial1 on 01.05.11 at 2:27 am

“but this casino mentality proves” —–I love this line in your post tonight.
It goes well with the news story from CBC tonight about the casinos of “Snafuver” “Looking the other way as drug money to the tune of $8 million was laundered through them over the past two years.

Yup! seems those “well trained” casino guys ( the ones trained to guard our “Provincial” lottos) watched as card board boxs of cash came in through the doors and went out as chips to be redeemed at other casinos for “Clean” cash.

So, du yuz wanna know how to buy a “drug house” for cool million?????? NAhhhhhhaaaaa.

#50 TaxHaven on 01.05.11 at 2:32 am

Garth, I think you might be losing perspective here:

“…although the real estate community put lipstick on a pig and suggested there were monthly improvements, the reality is that we still had a lousy year.”

Lousy for who? I think that 2010’s price declines were wonderful. 2011 will likely feature an even better market.

You have spent a lot of time telling people that housing is not an “investment” anyway, haven’t you?

Thomas Sowell writes that

“We hear all sorts of sad stories about people whose homes are “under water” or who are facing foreclosure. But why should our attention be arbitrarily focused on these particular people, rather than on the many other people who would benefit from being able to buy those same houses, if the prices came down? The government is artificially keeping the prices up with subsidies and with pressures on lenders to accommodate the current occupants.”

http://www.lewrockwell.com/sowell/sowell32.1.html

So let’s cheer AFFORDABLE HOUSING, OK?

#51 realpaul on 01.05.11 at 2:36 am

Beverley Hills for $500K………..and some of you may think that real estate in Vancouver can sustain its value?

http://www.doctorhousingbubble.com/beverly-hills-reo-real-estate-tipping-point-90210-bank-owned-2011-california-housing/

As the article says…these prove to be the ‘tipping point’ values where the lead up to the crash finally lurches over the cliff and suddenly tumbles.

Remember this is 90210….not some bung hole in Western Canada. This is truly a location that attracts really big dough.

I’ve got my lawn chair all primed up for the viewing of the manic collapse.

#52 race against time on 01.05.11 at 2:42 am

First comment:

I’ve been reading this blog for about 8 months as I try to steer my folks and in-laws in the right direction, and sell their current homes, (richmond and Northern BC).

Last night, after reading the last entry, I had a restless sleep and dreamt that the family had all come together and built a bunker on a shared piece of rural land.

We got a care package in the mail from Garth. It was chicken soup and hot tea, in recycled detergent jugs.

There was a note that said, “Here’s a little something to help you out, but I can’t guarantee it’s not contaminated.”

#53 Cookie Monster on 01.05.11 at 2:51 am

Now THAT’s offensive!
Nice Gothic cross embroidered on his chest, he must have grown up a good Christian and living proof religion has no adverse effects on one’s mind for perceiving and coping with reality. Nope, no problems here! Move along…

#54 pablo on 01.05.11 at 2:52 am

Garth, that pic is just fugly, but I think I saw that guy’s brother wearing the same outfit standing on yonge st 15 years ago, handing out flyers in front of an s&m leather shop. Geez clean it up man, people are watching.

#55 Cookie Monster on 01.05.11 at 2:58 am

At least he’s not carrying any guns like the Survivor woman. Now if he was wouldn’t that be scary?! None the less, I suppose he’s packing some heat elsewhere that she wasn’t.

#56 Gord In Vancouver on 01.05.11 at 2:58 am

Add in a gush of spring listings in all three cities, plus higher five-year mortgage rates (knocking out more first-timers), F’s lending rule changes and Mark Carney’s pending moves, and I’d say, ‘We’re headed for a tumble.’
_________________________________

Another excellent post, Garth!

Once the dust settles, overextended Canadians will be begging for a tumble.

#57 Vancouver_Bear on 01.05.11 at 3:05 am

#25 TheBestPlaceOnEarth on 01.05.11 at 12:38 am

Nostri, you were allowed to post under your orginal nick….you don’t have to post under this name anymore….it’s ok…just come down and take that green pill.

Ditch Canadian, buy from US and live happily:
http://www.ctv.ca/generic/generated/static/business/article1857816.html

#58 The Original Dave on 01.05.11 at 3:16 am

Fyi GregW FYI. I too come from bizzaro world.

Greg, Garth has thousands of visitors a day on this blog. He writes books. People write shit and talk shit about him in the media. He travels around the country speaking in front of crowds. He does financial planning and meets with clients…………..Here’s my question.

Do you think he clicks on all 5 or 6 of the FYI articles you post a day? You’re like one of those guys that just discovered the internet or you’ve been enlightened by information you got from the internet. It’s either that or you’re a bot.

The real Greg W must be quite the character in real life.

#59 arctodus on 01.05.11 at 3:19 am

The kool aid flows here at least as well as on msn.

We are in the middle of the single greatest economic debacle in world history. This is the type of phenomena that usually (it really does) end in massed warfare.

The faith that most people place in “the market” and god forbid, in government managment is shocking and in my eyes infantile.

Doomerism does not even do what is happening justice. We are seeing QE on a scale that is awe inspiring. We will see the US raise their debt ceiling yet again and justify it to the masses as “necessary” for being fiscally responsible (when the exact opposite is true).

We are seeing massive rises across the board in all classic commodities (food and fuel) at the same time that world money printing is beyond the pale.

Of course the real estate market will collapse in canada…..have any of you in Alberta noticed how oil at 92.00 per barrel is not having the same effect as it did in say 2007 (or was it 2008?).

The oil price will pass 120 per barrel this year and it will matter not one single ounce to Canadas economy. As our dollar heads north (I predict 1.15-1.20 US to Can exchange rate late this year) our export based economy will stagnate…while many parts of the world will start to tear themselves apart…social unrest is rising now).

The commercial real estate collapse will advance now rapidly in the US as the residential market tumbles even further (90 % fall will turn out prophetic in the end).

Despite Mr. Turners protestation, gold, silver, palladium etc will make large advances (but it only reflects devaluation in fiat world wide).

We will begin to see the first wide spread attempts to convert the us motor vehicle fleet to natural gas as liquid gas prices pass 4.00 at the pumps stateside.

We are in a worldwide greatest depression and it was initiated in 2005 with the peak oil event.
The effect of the gulf oil disaster was a pivotal one…it marked the year that EROEI rose past what any industrial economy can withstand……analysis of EROEI makes the future obvious……it is medieval…….quite literally medieval.

But I am sure that belief in “market forces” and long term cyclical economics will help most thinking people shy away from the brutal truth…..that their world is over. We will now see a steady brutal decline in our living standards and our western way of life will pass into extinction as our oil floated privileged craft sinks under the out going tide of oil decline.

#60 Utopia on 01.05.11 at 3:45 am

.
OK I get it Garth.

You dislike Flaherty. I don’t know what he did to you and it is not my business. That is between you and him. It has very little to do with this site of yours that many of us Dawgs have always appreciated though.

So cut the bonds of the past.

We all lose a little sometimes. The past is over and gone now. Time to move on buddy. You will feel more positive in the long run and you have a great deal going for you in the here and now. So live it.

You are a great success in your own right already.

A bigger success in many ways actually because you did this all on your own; just like a high wire walker with no safety net to save your sorry ass if you fell.

Nobody owns you anymore; only you call the shots here and that is the kind of freedom that very few people ever really get to experience.

Gee, psychoanalysis. But where did I diss F? — Garth

#61 The truth on 01.05.11 at 3:46 am

Why wouldn’t RE rise in Canada when 10,000 people arrive in Canada each week?

Foreign money, yes, not a myth! Met a temporary student at a local temple this past weekend and he spends all his weekends at the casino! Parents also paying his 15,000 tuition and Says he is waiting for his program to finish so he can get permanent resident status so he can also sponsor his parents and siblings. Beats immigrating via the immigrant investor program!

Why spend hundreds of thousands to immigrate through the investor program when you can do it much cheaper via the temporary worker and students programs.

10,000 people a week and most do have money… That’s why RE continues to rise. Demand and supply restriction!

#62 betamax on 01.05.11 at 3:48 am

#3 Tim: “So we won’t see the mother of all corrections. OK, how much of a correction? About 17 percent? lol”

Percentages up and percentages down are asymmetrical, but no matter.

I love how the terminally myopic keep pointing to further irrational price increases as evidence of sustainability when in fact they suggest the opposite.

#63 Utopia on 01.05.11 at 3:51 am

“That and three bucks will get a coffee at Starbucks”. — Garth

I will buy the coffee. Does your car have gas in it?

#64 Mark on 01.05.11 at 3:52 am

#20 dd, “There is a least another 15% to go until the housing market is reasonably priced to income.”

Try more like 50-60%. No reason for the average Calgary house to be more than $200k.

#65 TheBestPlaceOnEarth on 01.05.11 at 3:53 am

Just watching the news out here in BPOE. Homes in Vancouver and Richmond up OVER 20%!!! since last year. Scenario 1 Buyer Pays $700k for Richmond house now worth $840k and has a place to live forever. Scenario 2 Renter pays $24,000 in rent and missed out on 140K price appreciation. Down $164000. Rents in 2011 again now down $188000. Now who’s the greater fool. Final kick in the teeth renter gets evicted due to home being bulldozed and a monster home being built. Renter now homeless.

#66 Peter Pan on 01.05.11 at 4:07 am

Only in Vancouver – a tripling of prices in the past ten years is seen as a good sign that one should buy today.

And residents of this city wonder why this place runs on booms and busts…

#67 realityguy on 01.05.11 at 4:09 am

Why not Shawn Allen, the low interest rates allows us to borrow more and take risk

#68 Utopia on 01.05.11 at 4:12 am

To Devils Advocate…….

In response to your rhetorical question to me of a few days back referencing the future of Canadian real estate where you wrote to me something along the lines of..”I don’t know..but do you”…..?

My answer to you Mr. Devil is an absolute and unequivocal yes. Yes I do know. But you don’t. You will see the facts soon enough though and you will enjoy the truth from the back of the EI line-ups.

You do get EI don’t you?

#69 VanLarry on 01.05.11 at 5:02 am

Looks like rents going up now that property assessments are out.

My own house is up…30.6%. I’m suppose to be a millionaire now according to net worth. Strangely, I feel poorer then richer.

The house two blocks down from where I live has finally sold. It’s been in the market for more then 150 days. The listed price was +1 million.

Yup yup. Things are slowing down in Vancouver, yet still crazy.

#70 NOBODY on 01.05.11 at 5:46 am

#26 InvestorsFriend (Shawn Allen):

Municipal property assessment are for property tax purposes only. That’s how a municipality can set the taxes you must pay…
Not an actual “sales” price for listing.
I love the posters here: all misinformed, brainwashed and… alarmists!

#71 Calgary REality on 01.05.11 at 5:54 am

#28 Seeker”Calgary Assessments”

As per Garth’s prediction listings were up and sales were down in Calgary in 2010. However, $800k+ home sale were higher YoY whilst all other price categories saw declines. In statistics, if you don’t throw out the outliers (excessively low or high values) the average will be scewed by these values. High priced sales will skew stats much more, which is why the overall average price is higher than it should be.

Since Calgary city assessments are based on sales value (at July 1st) they not only based their assessments on the best part of the 2010 year (Jan-July) but their assessments would be skewed by the average price stats throughout the year, as mentioned above.

As I’ve said before, if you look at individual communities you will see prices are down (e.g. 1950’s bungalows were $500k during the boom, now are $325-400).

The average joe is getting screwed if they are receiving a higher city assessment for 2011.

#72 Devore on 01.05.11 at 6:45 am

Be sure to keep renting for a few more years boys and girls. Maybe you will see those 2008 prices again. Of course you will have wasted tens of thousands waiting for prices to drop to a level where you could have bought years ago. Lol – super smart decision.

Well, you know, if the average Vancouver house already costs upwards of 70% of average income to finance, say RE goes up another 30% until it’s 100% of average household… where to then? Who are all these people buying all these houses driving prices higher? Will rates go lower? Will wages go up? to eventually bring us down to an acceptable 30%?

I think I will continue to rent, until I can afford to buy something without feeling like I signed my life away by doing it.

#73 Jody on 01.05.11 at 7:15 am

A very educational video, even Albertans will be able to understand it. It’s about banking, it’s animated and funny.

http://www.youtube.com/watch?v=ZPWH5TlbloU&feature=player_embedded#!

#74 Paully on 01.05.11 at 7:20 am

Forget The Alarmist, bring back The Survivalist. That was a way better picture.

#75 BC Bring Cash on 01.05.11 at 8:27 am

#46 Dexter

Sure B.C. assessment concludes that some assessed values are up and some are down however mine is down I believe for first time in 14 years at least. Is it not possible that the ponzi scam is running out of recruits.I’m sure some assessments are up due to improvements to their property’s. TD for example a couple of years ago offered 0/40 + mortgages. In other words full page ads with the green chair offering financing of more than the house was worth. Oh wow, you can spend that extra cash on whatever you liked, for example furniture… etc. By the way I live in the glenmore area of K town. Cities don’t assess home values. B.C. assessment is a provincial body that provides info to cities for tax purposes.

#76 Calgary REality on 01.05.11 at 8:49 am

#65 TheBestPlaceOnEarth “Final kick in the teeth renter gets evicted due to home being bulldozed and a monster home being built. Renter now homeless.”

Vancouver built on river delta. River delta floods, liquidfaction sets in, Vancouver underwater and gone. Home owner loses everything is homeless and unemployed due to act of god. Renter moves to dry city to continue employment then renter laughs at Vancouver homeowner greater fool.

#77 Moneta on 01.05.11 at 8:50 am

She should really wear nylons to hide those bruises. It would definitely look more professional.

#78 Can't Spell; Won't Stop Me on 01.05.11 at 9:00 am

Found an interesting article that provides the riskiness of various neighbourhoods in Toronto:

http://www.leslievillepost.com/2011/01/05/safest-real-estate-in-toronto/

#79 Moneta on 01.05.11 at 9:07 am

I still fear when it does how many people are going to get hurt, but I’m still stunned. Until you talk to people, you just never realize how close it is to you. We’re surrounded by these people.
———–
I stopped warning people in my entourage when one person argued that if I knew what I was talking about, I’d be rich.

As if I’d tell him what my net worth was. And of course my average lifestyle was proof that I was less than average. LOL.

You can’t win.

#80 fancy_pants on 01.05.11 at 9:12 am

ok, it appears lipstick on a pig is no longer just a metaphor.

you know, it may be a lot of folks who frequent this blog are hoping for a RE fallout (like myself) as a lot of folk here are ones who can afford to live bigger but choose to refrain. A RE fallout will dismiss the chaff who are living in my future upgraded house but undeservingly so.

May the greedy soon find themselves needy. I know, I have become calloused to those living beyond their means since they played a role in creating the problem in the first place.

#81 David B on 01.05.11 at 9:17 am

Yesterday’s news that 72% of new senior boomers plan to continue to work past age 65 means they just may stay in their homes longer. What effect will this have on Real Estate? What effect will it have on unemployment and most of all what effect will these people have at the poll booth? We are about to find out.

http://www.usdebtclock.org/

and check out Canada as compared to other countries

http://www.usdebtclock.org/world-debt-clock.html

Looking at the USA note who really is on the hook ….. “Taxpayers” that’s who … and here in Steve’s Kingdom of Canada he continues to spend with only threats of higher interest rates and taxes albeit he calls taxes service fees. (HST for Ontario & BC)

Happy New Year y’all

Note: Can not wait to see America’s new budget and the look on those Tea Parter’s faces when they sign the $1.4 Trillion ceiling increase on their National Debt …. it will be just like the Reformers taken their pension checks and accepting Senate Appointments.

#82 Moneta on 01.05.11 at 9:20 am

So the title “THE HONORABLE” knocks off two bucks a coffee at Star Bucks. That is the best reason ever to get a title, or is that for the itty bitty tar flavored sludge?
—–
Well if you want to save money, skimping on your morning coffee always comes out at the top of the list.

#83 Moneta on 01.05.11 at 9:33 am

They said the average gain is 8%. I couldn’t have sold my house at last years assessment value since 2008. I’d love to know how they make these decisions. Anyone know?
——-
They have an expense budget for the year and determine the price of your house by the amount they need to get from you and your neighbors.

At one point, fellow citizens will revolt and city hall will be forced to lower the assessments. Deficits will balloon, services will get cut and people will be pissed.

It’s like clockwork. That’s what is happening in the US.

http://finance.fortune.cnn.com/2010/12/17/bubble-trouble-for-muni-bonds/

#84 Aussie Roy on 01.05.11 at 9:35 am

73 Jody on 01.05.11 at 7:15 am

Jody, what a great video. Thanks for posting it.

I’ve noticed, those who know how money is created (commercial banking issues our money – understanding debt) and have studied the history of bubbles (speculative manias) see what we are facing.

History can teach you a lot, after a lifetime of interest in history there is only one thing I’m sure about. Most people actually don’t learn from it, they think some how, the now, is a different time where history is irrelevant. (currently in ecomonics)

I think this is why you never get a comment from one of the housing bulls, comparing, pre and post the last housing bubble burst (Income to price ratio, rental return rates, affordability) to now, and pointing out the differences (arguing why we don’t currently have a bubble – they can’t). Others know there is only one difference this time, income to price ratios, rental returns and affordability are worse.

Then there is the “mania”, well we are blessed to see it first hand, thanks BPOE and others.

#85 Gord In Vancouver on 01.05.11 at 10:07 am

Garth,

Make sure that this post is archived and reposted WHEN your predictions come to fruition.

http://www.greaterfool.ca/2011/01/04/alarmist/comment-page-1/#comment-75477

Not only do I not hide my words, I have the courage to speak them under my own name. And you? — Garth

#86 a prairie dawg on 01.05.11 at 10:14 am

Yikes, what a picture. Although I think I’ve figured it out. The transvestite is a metaphor for the housing market.

No matter how you dress it up it’s going to be ugly. lol

#87 Moneta on 01.05.11 at 10:24 am

Aussie Roy:

Did you ever read the book Collapse? I thought he was over the top but everything he wrote seems to be panning out. For me, the most shocking segment was his analysis of Australia.

Last year, I met with a banker who left Australia 15 years ago. Apparently, when he left, everything used to look lush and green from the sky. Now when he goes back home to visit family, he can’t believe how brown it has become. He did not seem to associate it with Diamond’s analysis. He seemed to think it was temporary.

Any thoughts?

#88 Gord In Vancouver on 01.05.11 at 10:30 am

Re: post#85

Garth, Make sure that this post is archived and reposted WHEN your predictions come to fruition.

http://www.greaterfool.ca/2011/01/04/alarmist/comment-page-1/#comment-75477

Not only do I not hide my words, I have the courage to speak them under my own name. And you? — Garth
_________________________________________

I was supporting you, not being sarcastic.

I wouldn’t be paranoid if they weren’t out to get me. — Garth

#89 dd on 01.05.11 at 10:31 am

#71 Calgary REality

…The average joe is getting screwed if they are receiving a higher city assessment for 2011…

Wake up. The city needs x dollars to run for the year. If all assessments are low they will just raise the mill rate.

#90 Nadine Lumley on 01.05.11 at 10:39 am

I love this picture of the guy who needs nylons. Reminds me a bit of Tim from the Rocky Horror Picture show. You know a night spent drinking with this person you will never forget it.

Speaking of screwed up sexually men:

From blog: In the spirit of the New Year, when everyone is listing their favourite music, movies, worst dressed, etc., I thought I’d list my top ten Conservative misdeeds. The worst of the worst.

These aren’t the obvious things, like 130 million for self promo television ads, 45 million for signs or 100 million for opinion polls, and then ignoring our opinions completely.

These took a lot more work. A lot more cunning. And a lot more deceit. And several of them you may not have even been aware of until now.

SAMPLE

7. Breaking election laws by allowing a non-profit organization, then headed up by Kory Teneycke, to campaign for the Conservatives under the guise of promoting renewable energies. The Conservatives 2005-06 election platform on environmental issues, was called ‘Made in Canada’. Coincidentally the same ‘Made in Canada’ solutions promoted by Canadian Renewable Energies, which was funded in part by the oil and gas industry.

They were also given a two billion dollar grant by Jim Flaherty.

The brochure used to be available on-line, but it has conveniently disappeared (I have a printed copy that I’ll scan and show later). However, it was filled with pictures of Harper Conservatives and headed ‘Made in Canada’. A steal at two billion dollars.

http://pushedleft.blogspot.com/2011/01/another-list-of-conservative-misdeeds.html

HAPPY NEW YEAR!

More Lists:

1. My Next Top Ten List of Conservative Misdeeds
http://pushedleft.blogspot.com/2011/01/my-new-years-top-ten-list-of.html

2. Another List of Conservative Misdeeds
http://pushedleft.blogspot.com/2011/01/another-list-of-conservative-misdeeds.html
.
.
.
.

#91 Nostradamus jr. on 01.05.11 at 10:44 am

…”” the Food and Agriculture Organization has just announced that world food prices have just surpassed the previous record last seen in 2007-2008…The last time food prices hit ridiculous levels, the immediate outcome was global food riots in places such as Haiti and Bangladesh””…

Zero Hedge

How will the above affect Canadian citizens lives and Canadian RE values?

tia

Nostradamus jr.

#92 pessimist on 01.05.11 at 10:59 am

I just love how RE bulls will tout previous years’ increases as reasons to buy now.

Given the spectacularly bad relevant numbers (price to wage and price to rent ratio), this advice is just as valid as saying that one should play last week’s winning lotto numbers – look how well they worked last week!

Oh well, I will just keep renting my place at about 40% of the cost of owning. No worries, lower expenses, lower house prices coming. Net worth is up almost 20% over last year. Can’t complain!

#93 Demitro G. on 01.05.11 at 11:18 am

Canadas Personal Debt
“So serious is the situation that Carney hinted regulators and legislators may have to intervene because, although individuals bear responsibility for managing their household finances in normal times, “we are still living in abnormal times’ ba bla bla

We all know of this talk but here is what many of you are not aware of.
CHMC shows amount of mortgages which is at record high. I work for a bank and I can tell you first hand that 0ver 80% of these also have an average of over $150K line of credit. This is used for autos, vacations, kids school etc. The banks are making a fortune on line of credit and this January 2011 has hit an all time debt record of unbelievable proportions. Talk around the water cooler at our bank is ….”We are headed for same as U.S. Real Estate Crash any maybe worse….”
I think People better smell the coffee………

#94 Amarillo on 01.05.11 at 11:23 am

To be fair to TheBestPlaceOnEarth, Vancouver is a great city to visit. Moderate temperatures, nice parks, lovely beaches. Great place to spend a weekend. Living there is another thing – expensive housing, traffic jams, Hell’s Angels, job dearth, multi-cultural-equal-opportunity-gang-bangers, East Hastings, insufferable residual Brit attitudes, skanky drugs and did I mention the rain. But it’s a beautiful place for the most part, easily worth the $700k you need for a basic shack.

#95 Nostradamus jr. on 01.05.11 at 11:35 am

Garth, admit it, Vancouver is not a city for Eastern Canadians.

Eastern Canadians had more than two decades to investigate why Vancouver has always been priced at a 25% premium.

,,,If safety becomes more of an issue, expect Toronto’s wealthy Asians to relocate here too.

Nostradamus jr.

#96 BDG-YYC - on 01.05.11 at 11:36 am

Well if you think Greece’s “little” financial dust up is shaking the EU which by the way has a significantly higher GDP than the US. Here’s little ol’ Illinois with a plan (sell off future income and open a bunch of Casinos :-) ) . But of course … “Illinois is not greece” It is actually 2-Greeces … Illinois GDP- $630B, Greece GDP – $330B. Just to put that into perspective … Ontario GDP – $530B. Canada GDP – $1.4T. Now we have a few additional busts standing in line like of course Spain GDP – $1.3T … Italy GDP – $2.1T oops and California – GDP – $1.8T just to name a few.

– 2011 ? A year of financial uncertainty and turmoil – hold on tight. What’s in your balance sheet ?

http://www.bloomberg.com/news/print/2011-01-03/illinois-must-plug-13-billion-deficit-in-days-that-took-years-to-produce.html

#97 Jan Etter on 01.05.11 at 11:38 am

#42 Fool me once…
“…I’m confused too. My thoughts are reflected in much of Garth’s comments. However, if indeed we see the much toted 15% correction on the west coast, investors would only be seeing a loss of the gains made over the last 17 months. It’s publicly stated that the assessments are based on the previous year’s average home sale prices in the July to June time frame. The prices don’t make sense, conservatively RE is overvalued by at least 40%. A correction by definition should reflect this. Is this going to happen? Highly unlikely. Will we see a 15% decline? Very probable. But not a big loss for anyone.”

The % decline is debatable (if you believe the posters here it’s anywhere from 0% to 90%) but to say 15% is not a big loss for “anyone” is a pretty grandiose statement. There are a number of owners who would be impacted depending on their circumstances, and the number of owners that would be thus affected largely determines the affect on the overall market and the economy.

15% is a big loss, on paper, for someone with minimal equity in the property and a 5/35 or 5/40 mortgage with virtually no equity being paid down. And while it is true that a paper loss has no immediate impact if you don’t sell an asset, it will have effects down the road. For example, an owner’s ability to get a HELOC or refinance is affected because of the narrowed gap between the mortgage balance and the appraised value of the property. There is also the psychological impact of having one’s net worth reduced by the drop in equity in the property, which affects consumer spending.

#98 TEMPLE on 01.05.11 at 11:47 am

Hi Garth, first time poster here. Thanks for the great blog- I just found the blog on the weekend and I really enjoyed reading through the archives.

Two questions, based on recurring themes in your posts:

1. Why do you think the impending Canadian real estate correction won’t be of a magnitude equivalent to the US? As you point out, our valuations are equally absurd, and we have all the same negative economic and demographic factors that are so problematic in the US.

2. Now that the US Congress no longer controlled by the Democrats, do you have an updated prediction for the Canadian dollar? You mention in several older posts that you think the Canadian dollar is going to continue to rise against the US dollar- is that still your view? What will maintain the strength of the Canadian dollar given the economic fallout of house price deflation and reduced export strength?

Thanks again!

Temple

#99 Jan Etter on 01.05.11 at 11:50 am

#83 Moneta on 01.05.11 at 9:33 am “…They said the average gain is 8%. I couldn’t have sold my house at last years assessment value since 2008. I’d love to know how they make these decisions. Anyone know?
——-
They have an expense budget for the year and determine the price of your house by the amount they need to get from you and your neighbors.

At one point, fellow citizens will revolt and city hall will be forced to lower the assessments. Deficits will balloon, services will get cut and people will be pissed.”

I undertand your point, but just to clarify, in Ontario assessments are not determined by City Hall and are independent from tax rates, which are set by City Hall. Assessments are done by MPAC which is a provincial agency with the objective of determining relative values from one property to another. The municipalities then set the tax rates based on the total assessed values of property in the municipality to make sure their budgets are adequately funded. If assessed values decline, then the municipality simply increases the tax rate to end up at the same $.

#100 BigAl (Original) on 01.05.11 at 11:57 am

All of this talk about incomes not rising, jobs disappearing, etc is only true for the over-35 crowd. Young people, from my experiences (late 20’s, early 30’s couples) have their pick of choice jobs, making 100K-200K per household.
Gone are the days of entry level positions right out of university. These days, these kids are demanding, and getting, top pay, top positions.
I know one government department that took on 10 kids all around 24 to 26, at 55K/yr jobs. They’ve all left, saying it’s “not enough”, that they “deserve more”. And the employers are taking them on, with little experience, and paying them huge salaries in HR, “business analysts” (whatever that means), marketing.
One of them was excited at the idea that at her new office (marketing firm), “there’s noone over 35 they allow to work there – its, like, a really cool cool place”.

#101 serge on 01.05.11 at 11:59 am

Ok, enough with pointing out the problem. Give me solutions! Let’s’agree the prices will drop 30pct, ok your chief of boc, finance minister and chslc boss: what do you do. Im asking but i know these entities are working on the issue FOR SURE.

I say:
Step 1: bring down the max years on a morgage by 1 year every year for 5 years. 34, 33, 32, 31, 30
Step 2: bring up the interest rate at least .5pct, just to be able to lower it when prices fall
Step 3: tax break for renovations (why not)
Step 4: bring up the minimum down payment to 40pct on 2nd or investement housing

Then when it starts to fall undo the changes above …

I am not an economist but it seems there are tools to soften the blow and house owner or not we all loose in a bubble!

#102 Mike on 01.05.11 at 12:04 pm

re: #73
Jody, great video – thanks!

Back at you with Hayek vs. Keynes Rap Anthem

#103 Junius on 01.05.11 at 12:09 pm

#25 BPOE,

The most popular sport in Vancouver is finding ways to make money without actually creating economic value. This is why we are the home to so many drug dealers, arms merchants and scam artists.

Our former paragons of business virtue in the 70s and 80s were the pump and dumper of the Vancouver Stock Exchange such as Murray Pezim. Penny and nickel mining stocks along with the latest gizmos made up a stock market so bad that it eventually had to be moved to Calgary and have its name changed.

Real Estate didn’t become a sport here until the unsustainable gains of the past decade took off. The gold rush gene is alive and well in Vancouver. This is partly why the bubble is so pernicious here and certainly why when it crashes Vancouver will be hit the hardest.

Meanwhile just keep pumping away. I am enjoying it as we approach the End of Days for this market.

#104 Fractional Reserve on 01.05.11 at 12:10 pm

#19 Priced out of Toronto. Your survey of people around you falls in line with the main theme of the book entitled The Millionaire Next Door. The authors of the book examined the net worth of professionals living in expensive neighbourhoods and found, as you did, that while they all had above average incomes, they had very little wealth due to their massive debts that were fostering the illusion of wealth that they were portraying. The authors then went on to study where the real millionaires were and found to their surprise that they were small business owners living in middle class neighbourhoods, surrounded by blue collar workers. These real millionaires did not participate in “conspicuous consumption” and were excellent savers. While the book is from the mid 90s, nothing has changed in human nature as your informal survey demonstrates.

#105 c ames on 01.05.11 at 12:15 pm

i’m outside salmon arm. my assessment peaked 07 454000 .. got it yesterday in mail 371000…
in 1994 it was 224000.. i guess real value somewhere
between 224 and 371…. maybe. it will be interesting
what the bottom will be.

#106 Lonely Limey on 01.05.11 at 12:27 pm

Mum, can you come back home and get the tea on

#107 Moneta on 01.05.11 at 12:27 pm

CHMC shows amount of mortgages which is at record high. I work for a bank and I can tell you first hand that 0ver 80% of these also have an average of over $150K line of credit.
———-
Don’t even have to work for a bank to know the numbers… If you look at RBC’s balance sheet, you can see that mortgages have grown by 6-7% annually over the last decade. Personal loans by close to 10%.

#108 Aussie Roy on 01.05.11 at 12:35 pm

Hi Moneta, can’t say I’ve read that book, but will take a look at it.

Certainly large parts of the land downunder have been looking very dry (short dry winters) some places for nearly 10 years as the drought rolled on. But certainly not all areas, its a big place, some areas rainfall is measured in feet (metres) some areas just a few inches over the whole year is a good year (dry interior – outback).

Here we get 500mm – 20 inches a year). Drought to us means a rainfall of around 320mm (13″). When I bought this place in 1991 it came with the rainfall and temp records since 1886. Without looking, I think the worst year was 1891 just 200mm (8″) followed by 7 more years of drought. This time period also had some of the hottest summers with temps of 45c (around 120?) in the shade.

Australia is affected by both El Nino (dry conditions – drought) and La Nina (wet – tropical moisture comes much further south than normal), its a land of extremes. Right now we have a La Nina weather affect, the largest nth eastern floods for 40 years while a third of Australias sth west is still in drought.

My son was here for Xmas he said “never seen the place so green in the middle of summer”. Even this far south we have had a wet December almost semi tropical.

#109 BigAl (Original) on 01.05.11 at 12:40 pm

I agree with the statement above about a false belief in “market forces”. With so many artificial distortions, both by the private sector and government, in place, there is no free market with (and this is important) the required free flow of accurate information.
And the proof is really before us.
This rising equities/corporate profits tide is *not* lifting all boats, as promised since this all began with the Reagan/Thatcher/Mulroney era. It is broken, it is gutting the middle class, and creating a race to the bottom for western countries.

#110 pessimist on 01.05.11 at 12:42 pm

#96 Jan Etter

The % decline is debatable (if you believe the posters here it’s anywhere from 0% to 90%) but to say 15% is not a big loss for “anyone” is a pretty grandiose statement. There are a number of owners who would be impacted depending on their circumstances, and the number of owners that would be thus affected largely determines the affect on the overall market and the economy.
————————-

Not only that, but if one of these owners would have to sell, and extra 6% + HST comes off in the form of the agent’s commission. And 17 months of losses (probably more like 24+ once the realtor takes his cut) is really something if you have only owned your house for five.

But the biggest point is that the housing market as a whole is determined by the 5% or so of the houses that sell in a given year. I don’t have access to the exact number, but it is likely in that ballpark.

The point is, that 100% of the houses perceived values are set by what happens to those 5% or so of those that sold. Prices are always set at the margins. And the margins is where people who are unable to afford a house once interest, electrical or property tax rate increase, reside.

I believe that Garth has understated the percentage fall that we will see in prices. There certainly exist incentives for him to do that. If he were to call for a 30% drop, and prices only fell 25%, people would say he was being alarmist. If he were to call for 15% and they fell 25%, then people will say that he was right – particularly so if he stood almost alone in the media for making any call to the negative.

I’m not calling for a specific percentage drop myself. I’m not buying an average house, I’m going to buy my particular house.

For instance, this morning I spoke with a chap who is trying to selling his house in the Peterborough area. He has dropped his price 33% so far with no takers – and his starting price was a bit under replacement value. I asked if he would entertain an offer that represented a 40% drop, and he declined. I’m willing to bet that six months from now that my offer will look pretty attractive to him.

#111 Abitibidoug on 01.05.11 at 12:43 pm

Quote: So let’s cheer AFFORDABLE HOUSING, OK?

From what I’ve read, some people in the British government are among the few who understand this sensible idea.

Quote: 10,000 people a week and most do have money… That’s why RE continues to rise. Demand and supply restriction!

That’s what a lot of people said in 1989.

#112 Herb on 01.05.11 at 12:50 pm

Moneta @ #83,

as a fellow Ottawa resident, let me clear up how your property taxes are determined.

The City does not “determine the price of your house”. The City neither sets nor cares about the value of your property. All it cares about is its budget for the next year, and the sum total of the assessment roll provided annually by MPAC (Municipal Property Assessment Corporation in Ontario, with equivalents in all other provinces.) The City Treasurer then divides that sum by the budget total to yield the tax rate per thousand dollars of assessment. That tax rate then is applied to the assessed value of your property and presented to you as your tax bill.

MPAC is not the enemy of local taxpayers – City Hall is. It is City Hall that does not protect the general public from the demands of specific interests, whether “Arts Community”, developers, other squeaky wheels or (nod to realpaul) public servant wages and benefits.

That is what we’ll eventually have to revolt against, not the assessed value assigned to our properties on the basis of what they sold for in the past and should be worth in the local market.

#113 bigrider on 01.05.11 at 1:27 pm

I thought Garth’s advice to Realpaul to try raisen bran yesterday was generally some good advice for a few posters on this board.

In fact, a thorough, multi faceted regimen of colonics, administered on a regular basis, to some on this board , may prove useful in eliminated that which is so toxic to their respective thought processes.

#114 Republic_of_Western_Canada on 01.05.11 at 1:27 pm

#30 Corey – ‘rent’.

Google it.

#115 The Original Dave on 01.05.11 at 1:28 pm

Why wouldn’t RE rise in Canada when 10,000 people arrive in Canada each week?

Foreign money, yes, not a myth! Met a temporary student at a local temple this past weekend and he spends all his weekends at the casino! Parents also paying his 15,000 tuition and Says he is waiting for his program to finish so he can get permanent resident status so he can also sponsor his parents and siblings. Beats immigrating via the immigrant investor program!

Why spend hundreds of thousands to immigrate through the investor program when you can do it much cheaper via the temporary worker and students programs.

10,000 people a week and most do have money… That’s why RE continues to rise. Demand and supply restriction!
————————————-

are you insane???? 10,000 people a week? That’s well above the 1960’s immigration.

Your numbers are way off. There aren’t over 500,000 people coming into Canada each year.

#116 Jan Etter on 01.05.11 at 1:29 pm

#26 InvestorsFriend (Shawn Allen) on 01.05.11 at 12:40 am

“My house property assessment in St. Albert, Alberta.
(And these assessments are supposed to represent market prices)
2007, up 24%
2008 up 58% (hey look my house made $150k!!)
2009 down 12%
2010 down 5%
I am not sure the market is really down some 17% from the peak, but anyhow that is what the assessment was…
Does not matter to me as I have zero interest in selling but the variation is of passing interest.”
***

These fluctuations look generally accurate on a one-year trailing basis if you look at the changes in the National Bank/Teranet Index for Calgary.

http://www.housepriceindex.ca/

#117 bigrider on 01.05.11 at 1:31 pm

On the issue of colonics.

I have heard that marajuana infused, warm water enemas are all the rage in Vancouver.

#118 David on 01.05.11 at 1:37 pm

I’m all for affordable housing…..because I sold mine. As far as I’m concerned, the government should be givin’ ’em away! The free market, personal responsibility, the economy…that was all a huge mistake.

When you’re a student, you take to the streets over tuition hikes. Two years later….ennh.

Weird, eh?

#119 Abitibidoug on 01.05.11 at 1:46 pm

Quote from post #19 by Priced out in Toronto: I cannot believe some of the stuff I’ve heard. Credit cards with 10′s of thousands, new leased/financed cars with upside down loans (to pay off the loan on their previous car), mortgages that take more than half the net income, consolidation loans as a lifestyle choice after binging for so long, etc…

It makes you wonder what’s going on here. If I just took on a huge amount of debt to buy an overpriced house (which, luckily, I haven’t) the first thing I would do is go on a world class austerity program to save and chip away at that debt. I would buy items like furniture or audio/video equipment cheap at the Goodwill store or fish stuff out of the garbage. I’ve actually done that when staying at a rented room on a short term out of town job. In addition I would drive my old 1993 Plymouth until it collapses into a pile of rust.

It makes me wonder, what ever happened to the stereotypical Canadians who were net savers and quite cautious with how they managed their money?

#120 steo on 01.05.11 at 1:48 pm

Higher value assessment = higher property tax ? The government tries to get every penny from us after the crash.

#121 Republic_of_Western_Canada on 01.05.11 at 1:50 pm

#59 arctodus – Bad idea to convert vehicles to carry around nat gas.

Just convert completely over to small, clean diesel motors like most of Europe already has. Convert natural gas into ultra-clean diesel using Fischer–Tropsch Synthesis in industrial plants and use normal distribution channels for diesel fuel.

Avoid the incredible expense and waste of building and installing high-pressure vessels in all vehicles.

#122 UrbanCowboy on 01.05.11 at 1:53 pm

#99 BigAl (Original) on 01.05.11 at 11:57 amAll of this talk about incomes not rising, jobs disappearing, etc is only true for the over-35 crowd. Young people, from my experiences (late 20′s, early 30′s couples) have their pick of choice jobs, making 100K-200K per household.
Gone are the days of entry level positions right out of university. These days, these kids are demanding, and getting, top pay, top positions.
I know one government department that took on 10 kids all around 24 to 26, at 55K/yr jobs. They’ve all left, saying it’s “not enough”, that they “deserve more”. And the employers are taking them on, with little experience, and paying them huge salaries in HR, “business analysts” (whatever that means), marketing.
One of them was excited at the idea that at her new office (marketing firm), “there’s noone over 35 they allow to work there – its, like, a really cool cool place”.
———————————————————
I can also tell you coming out of an HR background that people lie about how much they make all the time, inferiority complexion I guess. 55K/year for a new grad
is absurd, unless they’re a freak of nature with specific skills a company maybe looking for, and thats rare and far in between. Work experince goes further than an education anyday.

#123 jess on 01.05.11 at 1:56 pm

alarmist:
tagged birds now are labelled spies

“A vulture tagged by Israeli scientists strayed into Saudi Arabia, … Report: Saudi Arabia Captures Israeli Vulture For Being Mossad Spy …”

#124 UrbanCowboy on 01.05.11 at 1:57 pm

Oh you said it was a government, makes a bit more sense, as opposed to the corporate world where salary is based on performance, not a peice of paper that says you apparantly know something, and seniority.

#125 Carlyle on 01.05.11 at 2:05 pm

Further update on my story:

So the family pressure to hold onto the house is starting to increase. Below are some choice quotes:

“You’ll lose your only asset”
“Next time you try to buy interest rates will be higher”
“What if prices increase”
“Garth Turner has been preaching doom for years now and it hasn’t happened”
“Prices will likely go flat not decrease”
“Canada is different from the US”
“Milton is different from the rest of the GTA, all WASPS want to live here/are running here”
“Pay off your debt some other way — did you know you can refinance?”

All of that aside my wife and I are giving it until Friday to make up our minds. We’ve met with a real estate agent … after selling it’s likely we’ll make about 50k (37k of which is actual profit on top of what we put in originally … less if you include what we paid over the year in property taxes).

Our debt is 37k. If we sell I’ll have to split the proceeds with my wife meaning about 25k each. The debt is all mine which means after paying my share into it there will still be 11k remaining …. 7 k on a 0 interest credit card (good for another 34 months), and 4k on the LOC at 6.75.

Wife flat out refused a consolidation option (“No way in hell am I putting MY name under your debt”) … I don’t blame her.

So here’s the question … is there ANY way to hold onto the house and still be able to pay down my debt without all this leading to financial ruin? How long would it take? I make 48k annually and owe 36k …. my wife’s income is over 60k but she doesn’t pay into any of this debt (however she does split all household expenses)

8 k at 12percent
7 k at 19 percent
7 k at 0 percent
11.7 k at 6.75 percent (room to shift 3k in from one of the other cards)
2k at 19 percent
1k at 21 percent

Addionally 246k mortgage (1500 per month including property taxes)
13k car loan at 0 percent (2 and a half more years to pay off… 375/mth)

430/mth 407etr (gone if we sell)
440/mth gas (cut in half or more if we sell)

Those are the biggies. We also pay about 120/mth for our cells (but have no house line), 60 for internet, 0 for cable (rabbit ears). About 3 – 400/mth for food.

Utitilies are about 150/mth or so (estimate).

My wife did kind of come around to the idea of selling … but if we do she wants to go back to school for a year (or two) in September which will cut her income to very little (we’ll be living off my income and her share of the profits from the sale of the house). So I have to account for a 60k income drop as well if we do the “sell the house” option.

*sigh*

#126 AM on 01.05.11 at 2:06 pm

#94 Nostradamus jr. on 01.05.11 at 11:35 am

“Eastern Canadians had more than two decades to investigate why Vancouver has always been priced at a 25% premium.”

That’s funny Nosty. I moved from east to west in 1990 for the less expensive real estate. Quit making $hit up.

#127 wetcoaster on 01.05.11 at 2:20 pm

What people don’t get with these HELOC’s is trying to pay it off once you have racked it up to the max or even near it, is that average working couple with kids have a hell of a time trying to make a dent in the principal. Something gets in the way of that, it’s called “life”. Shit happens.

I was probably one of the first suckers to experience what a HELOC was back in the early 90’s when I wanted to borrow only $10,000 to do a kitchen reno. Next thing I knew I was convinced by the banker to take out a $45,000 HELOC which was about one third of the home value.

Fast forward a few years and the following “life events” happen from family illinesses causing major travel costs, used vehicle loans, raising two kids in normal activities and some cheap family vacations (and I mean cheap), the typical home applicance breakdowns, and it is now adding up bigtime.

On top of that it was a decade of ZERO house price increases. Welcome to “real life”, that’s what’s coming next for the majority of the so called real estate mogul wannabe’s. Suck it up, it will be a costly experience you will never forget with most HELOC’s around 3 times what I was sucked into.

#128 bill on 01.05.11 at 2:22 pm

gee bpoe
once again we are having great difficulty in renting a suite.
we are currently thinking that a refurbishing of the suite might help. we are also contemplating some sort of ‘sweetener’ such as a free microwave or some other appliance in an effort to attract a living breathing renter with good credit.
a casual look at craigslist in vancouver indicates we have a lot of competition for the aforementioned renter.
looks good for renters here in vancouver.
our superiors in the company warned us that we face tough times ahead and that we should not get discouraged by the lack of suitable tenants.
currently one of our surrey highrises has a 20 apt vacancy. not so bad here in kits but we know we have our work cut out for us.
so dont feel bad about the renters eh?
rent price reductions are now on our radar as we have a lot of competition from the struggling mortgage holders.

#129 pablo on 01.05.11 at 2:31 pm

I watched an entertaining fiction on superchannel last night called “the Joneses” with d. dochovney and mrs aston kurcher. A nice piece of fiction(i hope) as well as a thought provoking commentary on recent times; excessive credit spending in order to maintain appearances of affluence.

#130 Mark on 01.05.11 at 2:33 pm

#121, “55K/year for a new grad
is absurd, unless they’re a freak of nature with specific skills a company maybe looking for, and thats rare and far in between. Work experince goes further than an education anyday.”

Are you out of your mind? $55k/year for a new grad is abnormally low, and doesn’t even get said new grad into basic home ownership these days. Work experience, as in, being part of an old and worn out mold, is useless and actually counter-productive in most industries.

#99, the kids out of school these days are some of the most productive and trained ever. Why should some worn out boomer with a paid off house and a mountain of investments receive a king’s ransom in salary, while the young, who do all the work, get practically nothing? Having said that, there are far too many of those ‘business analyst’ jobs, and not enough good engineering jobs out there.

#131 dark sad person on 01.05.11 at 2:36 pm

#59 arctodus on 01.05.11 at 3:19 am

But I am sure that belief in “market forces” and long term cyclical economics will help most thinking people shy away from the brutal truth…..that their world is over. We will now see a steady brutal decline in our living standards and our western way of life will pass into extinction as our oil floated privileged craft sinks under the out going tide of oil decline.

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

That is stark fear speaking-
Think this is anything new?
Think again-

You think the world and the human race is over because this is happening to “you”
What self-centered thinking-

You mention the shift to NG-which is now being discovered all over the world in places that have never produced a drop of energy before-
There is a difference between shale and fossil fuels-the technology improves by the day-
We are back in drilling in formations that we drilled through in the 50’s and making huge discovery’s–

You mention the economic downturn world wide and yet nothing about the Oil demand dynamics that will accompany the pullback-
Have you bothered to check the ongoing race and advancement in electric vehicles?

Unlike you-the market looks ahead and the people who are not frozen in fear also look ahead and can see the change coming-
NG and Nuclear are the future and Uranium’s are giving a clear signal to those who aren’t shit scared and not afraid to have a look into the future because that is the direction we’re going and the naysayers will be dragged along with us-kicking and screaming-

http://www.stockwatch.com/Chart/Hist.aspx?symbol=U&region=C

I’m big into Uranium and future technologies and my portfolio is exploding-
Yes we will have a really tough period ahead of us-but so what-if you’re positioned right you’ll be fine-
The future belongs to the optimist-
If you’re fearful and obviously you are-then i guess–crawl in your hole and worry yourself sick?

#132 Western Canadian on 01.05.11 at 2:42 pm

Very little evidence that prices are going to fall substantially in Calgary.

Rental market is tightening, job growth is improving, migration on the rise.

Will prices fall, quite possibly a couple percent, maybe 5, big deal.

The difference between Canada and the US is the US lost 7 million jobs in the recession, the majority of which have not come back, Canada actually has more employed now than before the recession.

#133 kc on 01.05.11 at 2:45 pm

124 Carlyle on 01.05.11 at 2:05 pm

If the 2 of you are splitting all expenses for the home straight down the middle, and all the “card debt” is yours… you really need to sit down and take a hard look at your varible spending… My guess is you are wasting shitloads of money buying plain ol’ STUFF that you can live without…. I bet you eat out many times a month, and don’t use your home coffee maker to take a thermous with you to your job site….

if you sell and your wife “goes back to school” you better reign in all your expenses or you will be back in worse shape before you know it…. my other guess is that your wife is a “princess” and refuses to pay her way in your household dreams…. IE: you paint a selfish picture of her while she goes out blowing all her money on her life, while not looking at the whole picture… between the pair of you over 110K income…. any kids??

reset your daily spending and PAY off the card that has the highest interest first….

#134 Chris no longer in England on 01.05.11 at 2:47 pm

Hey Garth, a slightly shorter hemline might work better for you.

#135 Ben on 01.05.11 at 2:47 pm

$84,000 asking with a par dollar

http://www.flexmls.com/cgi-bin/mainmenu.cgi?cmd=url+other/run_public_link.html&public_link_tech_id=u4507xr43nq&s=12&id=1&cid=1

#136 Junius on 01.05.11 at 3:04 pm

#94 Nostry,

You said, ““Eastern Canadians had more than two decades to investigate why Vancouver has always been priced at a 25% premium.”

And Vancourites will have a life time to think about why it didn’t last.

#137 Jimmy on 01.05.11 at 3:06 pm

What does Garth think of Inverse ETF’s as a way of shorting the economy or stock market/sector. Is this a safer way to play the short game?

#138 Coho on 01.05.11 at 3:12 pm

“But Canadian General Rick Hillier, who commanded NATO forces in Afghanistan from February to August 2004 and was later chief of staff of the Canadian Armed Forces from 2005 to 2008, wrote in his memoir A Soldier First, published in 2009, that NATO was an unmitigated disaster in Afghanistan.” Question: Why are Cdn. soldiers still there? At Harper’s pleasure?

Harper governs at the Queen’s pleasure, particularly when it comes to foreign policy, as do most or all governments who run countries headed by royal families. The PM can run things as long as he or she doesn’t run afoul of the royal “figurehead”. Day to day affairs don’t matter, but certain foreign or domestic policies may very well matter and if a PM doesn’t follow orders, the hammer comes down as it did on Rudd, the former PM of Australia. Rudd gave stimulus money directly into the pockets of the people instead of to big business and the big banks, which helped the economy. Just another example of what is good for the people isn’t good for the ruling class for some reason.

In some constitutions, it is written in clear and plain language that the sitting King or Queen are not mere figureheads, but in fact heads of their countries. Others are written deliberately complex (such as Britain’s) to obscure this fact and lend itself to be interpreted in many different ways.

#139 Chris no longer in England on 01.05.11 at 3:13 pm

61 The truth:

“Met a temporary student at a local temple this past weekend and he spends all his weekends at the casino! Parents also paying his 15,000 tuition…”

Which they can do if they have not plunged all their cash into property (in a country they do not yet live in). Yes foreigners have money – I am one of them – but if the trend in temporary workers and students is because they have researched the best and cheapest way to get into Canada, then they have probably researched other things too – like I did.

Only people with no money trying to gain a better life jump in with both feet without looking. People that actually do have money want to protect it and keep it that way. I don’t see 10,000 houses a week being sold to wealthy foreigners. Let’s see the evidence for that.

#140 Chris no longer in England on 01.05.11 at 3:16 pm

Garth – you seem to have moved your clocks forward an hour. Do you know something the rest of us don’t?

#141 Moneta on 01.05.11 at 3:20 pm

Jan Etter on 01.05.11 at 11:50 am
If assessed values decline, then the municipality simply increases the tax rate to end up at the same $.
————-
Declines don’t happen all at once so they can’t just change the tax rate by house when it pleases them.

Assessments are reduced one by one. Then they start incurring a budget deficit. Then they raise the tax rate.

#142 Sue on 01.05.11 at 3:21 pm

Carlyle,
Wow, all I can say is that it’s very likely that your house will be worth less than your mortgage in the next few years. That thought alone would scare me into selling regardless of the other stuff. (that 407 bill is crazy!..not to mention the toll commuting takes on your life)
Your house may be gone one day without you even selling it…very sobering thought.

#143 Mr. Lee on 01.05.11 at 3:22 pm

Mr.Turner
I think your predictions by the end of 2008 were spot on. It it was not for the crash in interest rates in 2009, the errosion you speak of would of happened a lot sooner.

Another point to ponder is the increase in non core inflation numbers that are resulting from the increase in commodities. This will bite into people’s disposable income in conjunction with the factors that you have already mentioned.

#144 Hoof Hearted on 01.05.11 at 3:25 pm

Re Assessments:

In BC, my understanding that the assessements made reflected the values as of July 31 of the previous year. I’m quite sure that time is determined as a bell curve average of the peak buying times ie Spring and Fall.

Of course, getting one’s assessment in mid winter causes mixed feelings, from euphoria to dread of as yet unknown property taxes.

One has the right to appeal, and if your home City has a GIS system, (Excellent I might add)you can use it to seek comparables from you own home.

One thing I also found interesting was that my home town has an interesting methodology. If your assessment is below a certain percentage increase, you pay no increased taxes, but at or above a certain percentage increase, the tax burden is shifted onto those in that position. For example, one year the golden number was 6.9 %.

I’ve appealed in the past, but it is a lot of work. The key in my view is to find the right comparables , otherwise the appeal board always sides with the appraiser.

Check it out

#145 GregW, Oakville on 01.05.11 at 3:26 pm

Hi #58 The Original Dave, re: quite the character.
Yes, I’ve here that from time to time. I recall hearing it sometimes takes one to know one. ;)

Re: from bizzaro world. You’ve noticed that too. I first thought about it when I saw ‘war’ on TV as a child.

Here are a couple links that you and others may find thought provoking
What would you do???

conformity 2:40 video
http://www.youtube.com/watch?v=-qlJqR4GmKw&feature=related

Milgram Experiment 10min
http://www.youtube.com/watch?v=e9IVSfAAHoA

Evil Psychology Experiment, Stanford Prison Experiment 10min
http://www.youtube.com/watch?v=aGc58tpXjDk&feature=related

This video is about 58min. But worth the time.
Could he be Garth if you gave him hair, a beard, and leather boots? Probably not.

Link to, The largest and most popular philosophical conversation in the world.
‘Live free in an unfree world’ 58min
http://www.freedomainradio.com/

Social Psychology Experiment 3min
(I liked the last guy, he looked and seemed to use his own brain.)
http://www.youtube.com/watch?v=a71h6LZKXTc&feature=related

#146 Jan Etter on 01.05.11 at 3:28 pm

#100 serge on 01.05.11 at 11:59 am
“Ok, enough with pointing out the problem. Give me solutions! Let’s’agree the prices will drop 30pct, ok your chief of boc, finance minister and chslc boss: what do you do. Im asking but i know these entities are working on the issue FOR SURE.
I say:
Step 1: bring down the max years on a morgage by 1 year every year for 5 years. 34, 33, 32, 31, 30
Step 2: bring up the interest rate at least .5pct, just to be able to lower it when prices fall
Step 3: tax break for renovations (why not)
Step 4: bring up the minimum down payment to 40pct on 2nd or investement housing
Then when it starts to fall undo the changes above …
I am not an economist but it seems there are tools to soften the blow and house owner or not we all loose in a bubble!”

***

Your proposed solutions may prevent the bubble from inflating any further but I think the horse has already left the barn. These sorts of changes won’t solve the already record high levels of household indebtedness, record high % of home ownership, record high real estate values or record high home price to income ratios.

Even with an immediate change in consumer behaviour and attitudes to resist overpaying for homes, the factors necessary for a gentle deflating of the bubble as opposed to a crash is mostly out of the hands of Canada’s policy makers. It will take a reinvigoration of our export economy, which in turn relies on the recovery of the U.S., continued demand for resources from China and elsewhere, positive net inflow of personal wealth from immigrants as the wealthy classes escape turmoil in their homelands, etc. Then rising personal incomes can be applied to pay down household debt.

So what solutions are available to us? What policymakers can do is put in policies to facilitate the above external factors (e.g. immigration policy, international trade policy, domestic taxation policy and regulations to improve competitiveness of Canadian exporters) and, perhaps just as importantly, do whatever they can to lead the public through policy and education to a greater sense of austerity and (small-c) conservative fiscal behaviour, for even if the external factors save us from a crash, if Canadians continue to borrow our brains out we’ll end up right back where we started.

#147 Moneta on 01.05.11 at 3:29 pm

All it cares about is its budget for the next year, and the sum total of the assessment roll provided annually by MPAC (Municipal Property Assessment Corporation in Ontario, with equivalents in all other provinces.
——
MPAC is just as independant of City Hall as the BoC is of the Fed.

All I know is that my assessment is not what houses have been selling for on my street… so in my book MPAC is not doing its job.

I trust MPAC as much as City Hall.

#148 jess on 01.05.11 at 3:30 pm

conversion vultures

44 Monroe Constrution Update May 2008
luxury-condo communities have gone rental
(couldn’t get 200k)

The median resale price for a condo in Phoenix dropped to under $60,000 in November, according to Jay Butler, an Arizona State University housing expert.

A year earlier, the median condo price had been about $88,000, according to Butler, of ASU’s W.P. Carey School of Business.

wiki entry:
The project’s exterior and interior design were inspired by a painting by artist Jennifer J.L. Jones named “Five Elements,” which incorporates the five Chinese elements of nature — earth, wood, water, metal, and fire. The elements will be expressed as five vertical fins on the front of the structure’s façade, with the pattern to be repeated throughout the building’s interior. The building will feature seven floors of above-ground parking and 196 residential units, ranging in size from 780 to 4,800 square feet (450 m2). Residential unit prices range from $480,000 to $3.2 million.

As of August 2009, the completed project was 5% occupied[1]. In September 2009, its primary lender, Corus Bank based in Chicago, was taken over by the FDIC, and in January 2010 the project was headed for a trustees’ sale and likely foreclosure [2].
============================
Condo-to-apartment conversions hinder the ability of existing unit owners to sell their properties, Kammrath said, but could keep the project viable until the downtown housing market recovers…

Read more: http://www.azcentral.com/business/realestate/articles/2011/01/04/20110104downtown-phoenix-condos-converted-into-apartments-44-monroe.html#ixzz1ABoDPOp7

http://online.wsj.com/article/SB10001424052748703808704576062212675194104.html

#149 The truth on 01.05.11 at 3:32 pm

#114 the original Dave

You want to bet on that number? How much? I can pm you on the stats…

And to some other poster… We were no where near the 10,000 per week in 1989. Numbers doubled roughly in 2004-5.

#150 Dan in Victoria on 01.05.11 at 3:35 pm

Carlyle @ 124
Hey Carlyle, do you have a goal?
Like paid off house by age xxx or whatever?
This stuff isn’t rocket science.
Seems to me you’re running around with your arms in the air what do i do what do i do??????

Get a damn calculator out and figure it out, its math, plain and simple.
When you have it figured out how long it will take and how much its going to cost to pay those cards off, then you’ll know. Column “A”
Then figure out where you’re at by selling the house and sending the wife to school. Column “B”
Allow for a possible correction in real estate and factor that in.
Pretty simple stuff really.
You’re going to pay no matter what.
Biggest thing you have to learn is to make your money work for you.
Start understanding what interest does to you, watch Jodys link to the “American Dream” Watch Chris Martensons “Crash Course” Go over to the “Automatic Earth” go to the links on the left side and read “Patrick Killiea” On rent or own. Pay attention to what Patrick says about the commision you pay on your real estate sale, not how much, but how many years of your mortgage/ life it is…..
Think of it this way, that coffee you bought this morning
2 bucks right?
No. It’s 2 bucks plus your highest rate of interest cause you didn’t pay debt down.
All those “plastic pumpkins” (junk from China) that sits in the basement, after the first month they aren’t paid for, 21 per cent silently ticking away.
Debt will kill you financially. Learn what it is and how its created, learn how to use it.
What do you think the Banksters are up to?

#151 kc on 01.05.11 at 3:39 pm

124 Carlyle on 01.05.11 at 2:05 pm

oh, one other thing…. take a sharp knife to the cards and chop them up… learn to live without them.

#152 GregW, Oakville on 01.05.11 at 3:47 pm

Hi Garth, fyi It looks like there are more than a few smart people in Calgary that can look at the science and critically think for themselves, then act to protect peoples health. Get informed and write them an email.

Alderman rallies support to remove fluoride from Calgary tap water
By Jason Markusoff, Calgary Herald Jan 5, 2011
http://www.calgaryherald.com/health/Alderman+rallies+support+remove+fluoride+from+Calgary+water/4060259/story.html

FYI, Still not sure if you should drink fluoride or not?
I don’t drink fluoride anymore, I’ve seen the evidence.
I’ve been convinced it’s Toxic to the body and brain!

Here is a link to some good info. see the FAN 28min video for yourself! scroll down a bit.
http://www.fluoridealert.org/
“Featuring a Nobel Laureate in Medicine, three scientists from the National Research Council’s landmark review on fluoride, as well as dentists, medical doctors, and leading researchers in the field,”

#153 Cowboy_aka_My_View on 01.05.11 at 3:49 pm

I’ve read it all here before. Watch out when 0/40 is gone! Oh more rule changes now second homes (spec-homes) will require 20% down. The market is done! So what happened? Nothing! Now there is talk here about how the BoC is warning us and the banks are worried (DEBT). These are the same banks who are offering the cash-back mortgages, going against CMHC 5/35 requirements. Lets not mention how the banks are making record profits in part because of loans. And it’s not just mortgages, its lines, helocs, credit cards & car loans. As far as Mark Carney, well the way I spin it he can’t raise the overnighter cause a :) the US Fed is frozen and b :) the loonie will soar.

Just think about the people who got in with the 0/40 back in 2006-07, in hindsight they are geniuses.

At least if rates do go up (Prime + 5 yr bond), the orange shorts dude will be offering a higher yield for those riskless GIC/High Interest account souls.

#154 Sue on 01.05.11 at 3:55 pm

Carlyle,

I also get the impression that your wife is a bit of a self-centred “princess”. Sorry, it bugs me that she all of a sudden wants to go back to school and wants to be supported by your income. Yikes. That’s a really, really bad idea.

#155 dd on 01.05.11 at 3:57 pm

#131 Western Canadian

…Very little evidence that prices are going to fall substantially in Calgary…

Just wait for a couple more months when a whole lot of listing come on the market.

#156 dd on 01.05.11 at 4:01 pm

#94 Nostradamus jr.

…Vancouver has always been priced at a 25% premium…

… And Micheal Jackson, Elivis, and the sugar plumb fairy just bought a home around the corner.

#157 dd on 01.05.11 at 4:02 pm

#48 Crash Callaway

..Oil is on the way out in Calgary…

Ummmm no.

#158 UrbanCowboy on 01.05.11 at 4:04 pm

#129 Mark on 01.05.11 at 2:33 pm#121, “55K/year for a new grad
is absurd, unless they’re a freak of nature with specific skills a company maybe looking for, and thats rare and far in between. Work experince goes further than an education anyday.”

Are you out of your mind? $55k/year for a new grad is abnormally low, and doesn’t even get said new grad into basic home ownership these days. Work experience, as in, being part of an old and worn out mold, is useless and actually counter-productive in most industries.
———————————————————-
Sorry dude you won’t convince me of that. I started at $30,000 about 9 years ago. Today average is about $36,000-$45,000 for someone with a commerce degree. And I’d like to know what these people who think $55k/year wasn’t enough are doing – likely just lying to you. And I hope at 35 somone isn’t already molding out from over work, unless they worked at Shaw.

#159 Devil's Advocate on 01.05.11 at 4:06 pm

Never is it so clear how un or misinformed so many are on matters of real estate as when it comes to a discussion of a property tax assessments.

#160 UrbanCowboy on 01.05.11 at 4:09 pm

#129 Mark
Are you out of your mind? $55k/year for a new grad is abnormally low, and doesn’t even get said new grad into basic home ownership these days. Work experience, as in, being part of an old and worn out mold, is useless and actually counter-productive in most industries.
———————————————————
And you are right about one thing a salary like that doesn’t get you a home, and I think that is the underlying problem with real estate today and explains the absurd amount of mortgage debt carried by so many Canadians.

#161 Jan Etter on 01.05.11 at 4:13 pm

#140 Moneta on 01.05.11 at 3:20 pm

“Jan Etter on 01.05.11 at 11:50 am
If assessed values decline, then the municipality simply increases the tax rate to end up at the same $.
————-
Declines don’t happen all at once so they can’t just change the tax rate by house when it pleases them.

Assessments are reduced one by one. Then they start incurring a budget deficit. Then they raise the tax rate.”

***

I think you’re confusing owner-requested reassessements of individual properties with the total annual assessed values on the assessment roll. I was saying if the overall assessments decline because real estate values have dropped, for example, 15% by the next asssessment date Jan 1, 2012, then each municipality will just increase the tax rate to compensate for the overall total assessment. A municipality will not be affected much by individual reassessments on individual houses – building permit revenues and development charges are by far the biggest unkonwn variables in a municipal budget, but that’s a topic for another day. MPAC assessed properties as of Jan 1, 2005 and then spread out the increase over three years. It reassessed on Jan 1, 2008, graduating the increases over four years until 2012 when the assessed value will equal the Jan 1, 2008 amount. Muncipalities know what the total value of the assessment roll is for each year before they levy the tax rate.

#162 Hoof Hearted on 01.05.11 at 4:13 pm

Love the casino money laundering story, finally its been officially reported.

I mean really, what idiot/s go into casinos with thousands in CA$H except launderers? A few people have been murdered already , one was a loan shark.
Now, after reading the story, all sorts of Don Corleone wannabees will be hanging around casinos trying to get lucky with a robbery of anyone with a suspicious bag.

Gov’ts don’t care, they get their cut, which is what expanded gambling was all about anyway, tax on “after tax” funds.

Gambling is a good parameter on the health of the economy….in the sense that Gov’t originally greased the skids for expanded gambling with promises of distribution of gambling revenue to various non profit groups. In BC ,there has been such a cut back that many groups are scrambling, as Gov’t has clawed back these funds and re-directed them to general revenue to cover deficits.

Regardless, all the above was predictable.

#163 GregW, Oakville on 01.05.11 at 4:22 pm

Hi Garth, fyi This sound interesting, speaker, Thursday, January 20, Canadian Club of Halton Peel
Mike Tennant
Co-creator of CBC Radio’s The Age of Persuasion
Co-Author of The Age of Persuasion: How Advertising Ate Our Culture
“The Great Unwritten Contract: What Advertisers Owe You, And What You Owe Advertisers”

Join writer/broadcaster Mike Tennant as he explores the most talked-about chapter of his book (co-written with Terry O’Reilly).

Mike will add stories and insights from his work on The Age of Persuasion radio program and from the three decades that he has spent creating award-winning ad campaigns. (more info on Mike http://www.miketennant.ca. )

Oakville Conference Centre
2515 Wyecroft Road, Oakville, Ontario (QEW & Bronte Road) L6L 6P8
Registration/Cash Bar 6 pm Dinner 7 pm Students $15 Members $30 Non-Members/Guests $40

Reservations made by telephone or e-mail – non-members please provide Visa, M/C, Amex information
Cheques should be payable to The Canadian Club of Halton Peel, 283 River Side Drive, Oakville, L6K 3N3
Please notify us of a cancellation by Tuesday, January 18.
Email: [email protected] (Barry Wylie, President)

#164 (low density) Sam on 01.05.11 at 4:25 pm

#99 BigAl (Original) on 01.05.11 at 11:57 am
Gone are the days of entry level positions right out of university. These days, these kids are demanding, and getting, top pay, top positions.
_____________________________
Please come up out of the asylum & tell us what color the sky is on your planet.

#165 dark sad person on 01.05.11 at 4:25 pm

But Canadian General Rick Hillier, who commanded NATO forces in Afghanistan from February to August 2004 and was later chief of staff of the Canadian Armed Forces from 2005 to 2008, wrote in his memoir A Soldier First, published in 2009, that NATO was an unmitigated disaster in Afghanistan.”

Question: Why are Cdn. soldiers still there? At Harper’s pleasure?

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

I believe the last person to occupy Steve’s space under the desk in the oval office was Monica Lewinski and that was all about pleasure-
so yeah LMV–great question

#166 Jan Etter on 01.05.11 at 4:28 pm

#145 Moneta on 01.05.11 at 3:29 pm

“…MPAC is just as independant of City Hall as the BoC is of the Fed.

All I know is that my assessment is not what houses have been selling for on my street… so in my book MPAC is not doing its job.

I trust MPAC as much as City Hall.”

***

Trust who you want, but you should have the facts right before you decide who to trust. You should read these first:

http://www.mpac.ca/pages_english/property_owners/how_mpac_assesses_property.asp

http://www.mpac.ca/pages_english/pdf/important_information_brochure_2009.pdf

This will explain why the current assessed value on your MPAC notice doesn’t match the current sale prices. Also see my last post re Jan 1, 2005 valuation and Jan 1, 2008 valuations.

Also, I’m not sure what you mean when you question MPAC’s independence from City Hall. MPAC makes the valuations then sends them to the municipalities. City Halls, Town Halls, County Halls just take the information and decide if what factor to apply to the valuations to charge their residents. Municpalities don’t care and have no stake in caring what numbers are sent to them, they can choose whatever factor they want. Could you please elaborate on why you feel they are not independent?

#167 David B on 01.05.11 at 4:28 pm

Let the games begin …. so much for that new bunch of Tea Party cost cutting crowd ….and this is day one!

http://thinkprogress.org/2011/01/05/hypothetical-cuts/

#168 Abitibidoug on 01.05.11 at 4:36 pm

Quote from posting #99 by BigAl (Original):Young people, from my experiences (late 20′s, early 30′s couples) have their pick of choice jobs, making 100K-200K per household.

Interesting. We all hear stories of the opposite, where college and university grads are unemployed or under employed. If what you say is true, and meanwhile there are many older people out of work who, because of the laws of supply and demand, be willing to work for less, won’t more older workers be hired (even as temps) and put downward pressure on wages?

If I were a younger person offered a job with such high pay, I would gladly accept it, but save some of my money (and avoid too much debt) and keep in mind that it may be an anomaly and not last forever. That would especially be true of a job in the government, where there will sooner or later there will be pressure to cut costs in order to reduce deficits (does anyone remember Ralph Klein or Mike Harris?).

#169 Roial1 on 01.05.11 at 4:51 pm

134 Ben on 01.05.11 at 2:47 pm
$84,000 asking with a par dollar

http://www.flexmls.com/cgi-bin/mainmenu.cgi?cmd=url+other/run_public_link.html&public_link_tech_id=u4507xr43nq&s=12&id=1&cid=1
Just last night watched a documentary on that part of the US. About how they are running out of water. Very fast.
If it is at all true I do not think that any price is to low.
In fact, it will go back to desert as soon as the power to run the system gets any more expensive. (Like NOW!)

#170 Roial1 on 01.05.11 at 5:02 pm

#137 Coho on 01.05.11 at 3:12 pm

Coho, I don’t know where you studied your history BUT you must have missed every class. (Out fishing maybe???)
Britain, Australia, Canada and every one of the “Comonwealth” countries are “Constitutional Democracies”.That means they are SELF governed.
(except for being owned by the bankers)
Harper & co. really do run things. (down)

Not even Charles could screw things up so bad.

#171 AG Sage on 01.05.11 at 5:05 pm

>Scenario 2 Renter pays $24,000 in rent and missed out on 140K price appreciation.

On. Paper.

Madoff’s investors also argued voraciously that their friends were missing out.

>#76 Calgary REality on 01.05.11 at 8:49 am

The liquefaction I imagine is due to earthquake.

>#127 bill on 01.05.11 at 2:22 pm

Daily morning coffee and fresh scone?
Free laundry services?
Wait, that sounds like a Holiday Inn . . .

#172 Junius on 01.05.11 at 5:40 pm

#147 thetruth,

Canada averages 250,000 immigrants per year so more like 5,000 per week.

Stats here: http://www.cic.gc.ca/english/resources/statistics/data-release/2010-Q2/index.asp

#173 DARLENE on 01.05.11 at 5:46 pm

124 Carlyle

Man are you screwed. If you don’t sell the house you will be forever in debt. If you don’t end up selling take the $3000 on both high interest cards and put on the one with room on it at lower interest. Look closely at your credit card statements. They usually say how long it will take to pay off using minimum payments. Some cards minimum payments are configured differently. Some, if your lucky, pay more of the principle down than others. These are the ones that you make the minimum payment on. On the ones that you barely pay more then interest on minimum payments are the ones that you want to maximize your payments on. Don’t worry about paying anything extra on 0% . You really need to do the math and work out which ones to pay off first. Usually paying off the highest interest takes priority, but as I was saying pay attention to your statements. Sometimes it’s beneficial to pay extra on a couple at a time, but it sometimes feels like your not getting anywhere

All I can say is been there, done that. Wouldn’t wish that situation on anyone. Best of luck to you.

#174 604genX on 01.05.11 at 5:49 pm

hey Garth, do you know when the new MLS self-listing rules kick in?

I’ve Googled April 2011 but could not find a reliable source of info.

If so, then sellers will likely step-back from listing right now and wait til April. We’ll then see a tsunami of new crazy listings with prices all over the map. That will add further confusion to the market.

#175 Contrarian Canuck on 01.05.11 at 5:55 pm

#131 Western Canadian

“The difference between Canada and the US is the US lost 7 million jobs in the recession, the majority of which have not come back, Canada actually has more employed now than before the recession.”

Garbage! The major difference between us and them is that we are still willing to blow our brains out on credit while they finally get it.

We have our own credit bubble set to burst. When it does we’ll find out quickly just how ‘different’ we are and how sound our labour market really is.

#176 Canuck on 01.05.11 at 6:00 pm

Jody,

Thanks for the video. However, what the video proved in my case was that I’m a lot better off in 2010 than I was in the 1960’s. House, 2 cars and boat came to $33,500 less mortage and loans of 10,000…net $23,500. Today, house, 2 cars, boat and RV $307,000, less mortgage and loans of 15,000…net $282,000.

The real difference is the cost of living from today to the 1960s to maintain a standard of living. Mortgages, insurance, utilities, and education have risen much faster than income. The disparity between the two means two people have to work and they won’t accumulate the same amount of net. Credit is the enemy that defeats modern workers.

#177 David on 01.05.11 at 6:05 pm

#158 DA So, people’s inability to understand their tax assessments is proof that the general area of real estate is simply beyond the grasp of the average person, and proof that the all criticism about your corrupt realty fee structure is made out of ignorance?….does that adequately summarize your point?

That is a patronizing, arrogant, wildly inaccurate extrapolation to suit your transparent purposes.

People don’t understand their income tax forms either … does that mean we shouldn’t be allowed to have our own money? Let’s start with you giving back all yours…after all, you didn’t actually earn much of it.

#178 Coho on 01.05.11 at 6:18 pm

#169 “Royal One”

Parts of The Australian Constitution

Section 5: The Governor General may by proclamation or otherwise, prorogue the parliament and may in like manner, dissolve the house of representatives..

Section 57: The Governor General may dissolve the senate and house of representatives simultaneously…

Section 56: Votes, resolutions or proposed laws for appropriation of money goes through the governor general….

Section 68: The command in chief of the naval and military forces of the Commonwealth is vested in the Governor General as the Queen’s representative…

These are just a few examples. In a nutshell, the Queen’s has authority over appropriations of money, national defense, dissolving government (which is especially easy in minority governments and there seem to be many nowadays including Canada, Britain and Australia).

#179 45north on 01.05.11 at 6:25 pm

Carlyle: Milton is different from the rest of the GTA

well it’s different because it’s going down the hardest

Tony posted that Brampton would never go down but he hasn’t said a word about prices in Brampton for a couple of months now.

oh yeah Carlyle, deciding to sell is different than selling

Priced Out in TO: these people you see with the fancy homes and cars aren’t really richer than you, they’ve just signed their names on the dotted line and borrowed the veneer of wealth.

good post Priced Out

No Crystal Ball: We are solvent and free and it really feels good to be out from under the bank’s thumb.

good for you Crystal

Skeptic: the truth is probably somewhere in the middle.

that’s not my feeling, prices in the US have come down hard and predictions are for a further decline

Demitro: I work for a bank and I can tell you first hand that over 80% of people who have mortgages also have an average of over $150K line of credit.

are you kidding me? $150 K Line of Credit!

rising interests are going to hit a lot of people hard

Jan Etter: a good clear explanation of property assessment and mill rates – Moneta yeah properties are assessed one at a time whereas mill rates are set once a year and apply to all properties

Pessimist: The point is, that 100% of the houses perceived values are set by what happens to those 5% or so of those that sold.

good point

#180 GregW, Oakville on 01.05.11 at 6:28 pm

Hi Garth, 3 article fyi

Economic Consequences Of The “New World Order”
http://www.infowars.com/economic-consequences-of-the-new-world-order/

“In the end, dirt poor nations might progress, but never enough to actually prosper, and all at the cost of finding themselves beholden to the IMF. This is the essence of the New World Order. This is the dark side that elitists never openly delve into; total centralization, total poverty, total control, no other options…

Middle-Class Beheaded

In a centralized global economy, financially secure classes of common people become a problem. The less the masses have to worry about everyday survival, the more time they have to question the system’s validity, or its leadership. Therefore, the globalist hierarchy benefits by removing such subsections of the population like the middle-class altogether. This process has already commenced in the midst of the engineered credit crisis, as well as the continued devaluation of the dollar that Soros speaks of so fondly.

Private wages fell to historic lows at the beginning of 2010:…”

Oil Continues Steady Climb
http://www.infowars.com/oil-continues-steady-climb/

Why are the animals dying? Birds, fish wiped out in mysterious deaths
http://www.infowars.com/why-are-the-animals-dying-birds-fish-wiped-out-in-mysterious-deaths/

CBC News
Four of the 50 species of bumblebees found in the U.S. are “significantly in trouble,” University of Illinois entomology professor Sydney Cameron said Tuesday.
http://sync.sympatico.ca/news/bumblebee_species_in_trouble_us_study/7d8ec345

#181 TS on 01.05.11 at 6:29 pm

Just watched part of an episode of “Big City Broker” with Brad Lamb (could not stomach to watch the entire thing). Very enlightening to see Lamb on camera explaining to his real estate agents that they need to create a sense of ‘buying urgency’ at a new condo development (550 Wellington) they are selling in Toronto. The objective, he explains, is to create a buying fever so that buyers will get consumed by their emotions to buy and “will be unable to resist” signing up for a condo unit.

Talk about master manipulation and sleeze!

#182 Carlyle on 01.05.11 at 6:35 pm

Wife is great guys. Remember i’m the one that ran everything up due to a gambling problem. She has NO debt at all aside from exposure to the LOC (which she cosigned with me to help me consolidate my original debt a year ago back when we only owed 6k).

The other 30k was all my fault. If anything she’s been a saint when confronted with the amount of debt I added on to the relationship. I’m lucky she didn’t divorce me on the spot to be honest.

You can’t blame her for not wanting to expose herself via a new consolidation loan again to debt after what i did (I don’t blame her at all).

The school thing I understand … her work means 12 hour days no weekends off, messed up night shifts … we want to have kids, a normal 9 – 5 life.

Her opinion right now is to sell the place so she can get her share of the monies before it goes “poof” if housing prices flop and that way she can do the school thing with her share of the profit. It’s not a bad plan, also considering I get a get out of debt free card.

#183 arctodus on 01.05.11 at 6:37 pm

130…chillax dude…

I am not at all worried about the world situation personally….I am just a realist.

and yes my portfolio has done rather well over the past 5 years based on my ‘fearfulness”…so funny that.

I run my own business, manage my own investments and answer to no one….I like it that way.

But I do not make the mistake of thinking my own book to the point where I think “that I because I am so damn clever that the world will not shit on me”……it can and it probably will.

Have a blast thinking that we will just have an “adjustment” and all things will be fine….that my friend is BS.

The world of 1980 had 2.5 billion humans crawling on it….today it is in excess of 7 billion…….that alone should scare the crap out of any thinking sentient being…..exponential growth in anything usually ends in a dramatic fashion….and this will also…driven by the energetic peak (and no, I do not think that cambrian methane will save us).

I suspect that you have never really had to work (not the bone tired, weather weary work of a serf in a field) virtually no Canadian under the age of 40 and most certainly not the urban raised, have any idea what a brutal existence that entails…..but many of the teenagers of today will experience it.

I submit that many should read the works of Tainter or Diamond or Savory to understand the true nature of the razors edge that we humans walk today……

complex systems collapse suddenly and usually with violence…and all indications point to a dramatic collapse of most western and perhaps all economies in the very near future……EROEI always tells the true tale.

If you do not like the future that I describe it is perfectly ok…..I will not insult your personal vision of human ingenuity trumping anything that the universe throws at us……I would hope that you would give my own vision of a new dark age the same level of probability?

#184 canali on 01.05.11 at 6:39 pm

love this: vancouver sun bus editor and team putting together a list of some of van’s most expensive homes, with recent assessments that came out (most expensive thus far in west van: $39 million!!):
http://communities.canada.com/vancouversun/blogs/businesseditor/archive/2011/01/05/bc-assessments-homes-for-sale.aspx

also van real estate board’s president on van RE in 2010:
http://www.vancouversun.com/business/Lower+Mainland+real+estate+rebound+settles+2010/4065238/story.html

#185 Moneta on 01.05.11 at 6:40 pm

Municpalities don’t care and have no stake in caring what numbers are sent to them, they can choose whatever factor they want. Could you please elaborate on why you feel they are not independent?
——-
I agree with everything you wrote but I’m not particularly interested in the details. I usually focus on the big picture and go for the trees when it counts. In this case, I don’t feel the details are important unless I want to purchase a particular muni.

I keep it simple:

1. Municipalities have budgets which have to be met and

2. I’ve rarely seen them get slashed.

3. Ultimately, homeowner and businesses pay. And if they don’t pay, services get cut.

4. Muni taxes are like car lease payments where if they cut the rate, they increase the residual.

5. So whatever formula MPAC uses, my taxes will go up. And if I manage to get them cut and so do many of my neighbors I know City Hall will find a way to make up for the loss.

#186 dark sad person on 01.05.11 at 6:44 pm

BofA Freddie Mac Putbacks Resolved for $0,01 on the dollar
by Barry Ritholtz – Big Picture

Bank of America settled numerous claims with Fannie Mae for an astonishingly cheap rate, according to a Bloomberg report. A premium of $1.28 billion was paid to Freddie Mac to resolve $1 billion in claims currently outstanding. But the kicker is that the deal also covers potential future claims on $127 billion in loans sold by Countrywide through 2008. That amounts to 1 cent on the dollar to Freddie Mac.

****************
Why was i foolish enough to think when this first come to light a few days ago- it would force BOA into “admitting” bankruptcy?
Guess i overlooked the special accounting rules that get made up-on a day to day basis-

#187 Crash Callaway on 01.05.11 at 7:16 pm

Calgary spikes the Kool Aid with Oil.
People having regular bowel movements tend to buy bigger houses with more bathrooms.

#188 Mr. Plow on 01.05.11 at 7:19 pm

I love the same stuff everyday, I swear I come for Garth’s insight and information. But I stay for the entertainment on the comments section.

Someone posts something polarizing on how they think the market will not crash. Then you get your token patronizing comment from Junius or whomever telling them they are wrong and how life will be over for them when it crashes.

Squidly and his continual predictions that never materialize.

You then get those who jump all over Devil’s Advocate for nothing. Dude posts something about people not understanding property tax assessments, and someone takes that and twists it into DA paying money he hasn’t earned as a realtor???! How that came from a comment on property tax assessments I can’t figure out.

Either way, keep up the good work guys, I will be back tomorrow for more!

#189 realpaul on 01.05.11 at 7:34 pm

I know that many Canadians find the truth too brutal….some say its ‘offensive’. We should be clear on anything in Canada….we need to coach what we say in politically correct ‘happy talk’.

After all, calling a whore a ‘whore’….has obviously raise hackles in some quarters.

We listen to TV spokesmen on the subject of real estate and instead of calling him/her what they really are ( which is a whoreing mouthpiece/apologist for the industry) we instead say…”Credit Union economist” or “representaive of the Real Estate Board”.

We know they people are bald faced liars attempting to water down the truth so that their own employers and self intersts are portrayed as infallible sources of information….but instead…we all play nice so that millions of ‘other’ Canadians get screwed…just as long as it isn’t us.

Whereas if we could collectively bring ourselves to call a whore a “whore” and have done with it these cretins would be laughed off the airwaves and off the pages of the media as charlatans, thieves and rascals.

Recently I answered a poster who wondered how best to negotiate with a realwhore over the sake of his house. I pointed out exactly how to do that…..”Kick the bastard out” I said ( to paraphrase) as I have used this tactic many times in the past successfully. If one were to follow that advice they would find the deal done and realise thousands of extra dollars in their pockets. But this is seen as being abusive……hahahahahahahahahaha thats rich. How can one be morally abusive to a thief who has tried to lie to my face and rip me off in my own house while thinking he has the upper hand on people who may know less about the real estate business than he does? No….aside from being a thief and a whore…he also desrves a swift kick in the ass.

So there it is….I’m not complacent with things as they are. When I see fat sucking civil servants driving their luxury SUV’s over the ( figuatively) bodies of half starved children and seniors in this country I speak out. It may sound ‘negative’ to bring the bad news into the public forum…..we are all so proper and insulated aren’t we……but some one has to speak up. Change comes at the fulcrum point of maximum discomfort to someone…that discomfort is rightly the doamain of the perpetrators.

In Canada we have been trained like barking seals to overlook the foibles of dishonest unions, outrageous incompetance of the civil service, corruption in Government, civilian murders and subsequent coverups by the national ploice force. Even though its right in your face…you look away because you can’t bring yourself to speak the truth.

Sorry deniers all..I’m not with you on that point.

1) The real estate industry is basically dishonest , has a blatant disregard for the well being of the client and expresses that disregard through manipulative sales tactics and manipulation of monopolistic practices. Pour some saccharin on it …but its a cess pool from top to bottom.

2) The recent Basi Virk corruption cover up shows how deep the level of scum is withing the civil service.

3) Its a fact that civil servants are recieving pay and benefits many times what everyone else does…which would be fine if they were private workers managing a profitable business but it is not fine that they do none of the work of the private sector and expect to get paid more and receive outrageous pensions that have cause taxes to triple in the past ten years to pay for the growing numbers of wealthy civil servants living on the backs of the taxpayer…..taxpayers that are hardpressed and barely making ends meet on average.

3) In cases where murder convictions would have been a foregone conclusion for a private citizen the national police have continued to exonerate their own members from blame. In 2010 more citizens in Canada were killed by Canadian police than Canadian soldiers were killed in combat globally.

These are just facts…..quick look the other way…….the truth might be considered. might be ‘obscenely negative’.

Feel free to make a comment some time that is relevant to this blog. — Garth

#190 Hoof Hearted on 01.05.11 at 7:37 pm

Re Local Gov’t property taxes….

I think enough studies show MOST Local Gov’ts annual property tax increases are beyond the annual rate of inflation. Of course, the insidiousness of this is that it is also compounded. Just take a peek at your old tax records for the last 5-10 years and see the jumps.

Many staff reports re budgets start out with given scenarios usually doomsday ie say 4.9% or 5.1% increases. Then of course, the City Council will “look concerned”, rent a white knights outfit, and say,” Oh no we can’t do that to the taxpayers, we must lead and show fiscal conservatism”.

Then they end up saving the day with some sort of say ‘lower” 3.65 % tax increase….and most of the suckers buy it.

=========

In addition, in these dog days of Real Estate, ( ie early part of the NewYear ) the pumpers are traditionally out there taking the assessments and abusing the statistics.

Nothing new….

#191 kc on 01.05.11 at 7:51 pm

182 Carlyle on 01.05.11 at 6:35 pm

sorry didn’t know the rest of the story…. in the broader scope of the problem it really doesn’t change much….

what are the dreams the 2 of you have as you venture on the road you are taking? how can the 2 of you reach the goals? and more importantly… talk about where the money is going now (every penny) and where it will be going in the future… if you sell and if you don’t. If you sell and she goes back to school you need to make a strict budget and stick to it for you have a hole to dig out of….

best of luck

#192 VICTORIA TEA PARTY on 01.05.11 at 7:52 pm

“GOOD NEWS” YIELDS UP-MARKETS. BUT, THERE’S MORE THAN MEETS THE EYE…

Most major stock markets have been generally trading up since Monday on apparently good US economic news, specifically release of statistics revealing an increase in jobs and manufacturing activity in December 2010.

Additional stats due out on Friday (and those have long had shakey accuracy track records BTW) may spell out whether the hiring, specifically, was a Christmas-only thing, or that something more positive and enduring is in the works.

In the meantime I continue to pick through the usual well-worn economic bones trying to figure out the economic future. It’s difficult. But here’s what I do know NOW.

-Baltic Dry Index continues to do a gurgling face-plant in an ocean nearest you (or a large lake would do if there’s shipping on it!);

-Meanwhile there’s pending huge price inflation in the US, according to Karl Denninger’s Market Ticker blog this date (check this out):

“…..commodities up in price:

Airfares; Batteries; Beef; Copper Products; Cotton; Cotton Products; #1 Diesel Fuel; #2 Diesel Fuel; Fuel; Gasoline; Heating Fuel; Liner Bags; Paper; Polyester and Polyester Products; Polyethylene Bags; Service Labor; Soy Oil; Steel; Steel Products; Sugar; Transportation Costs; and Waste Management Services.

That’s pretty much all of them. What’s not? Computers and pork products (who thinks they’re selling down their hogs as feed goes into the stratosphere?…)

But remember folks, inflation expectations are well-anchored.

That’s a lie.

In other news food prices hit all-time record highs worldwide last month. That’ll go over well with those who aren’t living in an ivory tower – or in Washington DC – while ADP (jobs) report the best service-sector hiring in 10 years while the ISM (Institute of Supply Management) says…… employment in the services sector is barely positive.

I think I’ll wait for the Household Data on Friday to see what sort of absorption of those higher prices is possible. If, as I expect, the answer is ‘none’, things get rather interesting on a forward basis for corporate profits (or rather the lack thereof.)…;”

-Oil. It’s $95.00 in London and more than $92.00 in the US (West Texas). Further price inflation;

-US 10-year bonds are creeping back up toward 3.45%, a sign of higher mortgage rates to come, in the US, but also in Canada, eventually;

-Read the latest despatches from London Telegraph finance columnists, Ambrose Evans-Pritchard and Jeremy Warner on Euro and US financial problems. Not good…;

-An opinion from another columnist is that China, in buying up Spanish debt, is now moving into its next area of interest, becoming the world’s chief lender of last resort.

This will represent the first real challenge to American reserve currency hegemony, since the various Bretton Woods and other currency conflabs, dating all the way back to 1944 that gave that currency “honour” to the then nascent American Empire at the close of WW2.

Here in good old Victoria, the Greater Fools are out in force big-time. Why? Because their property assessments are out, and the numbers are UP.

That means those who don’t read Garth have probably been to their bankers, by now, to stoke up on more “house money” to buy even more stainless, granite and cattle-boat-in-the-sky cheapo flights to Honolulu and Mexico!

As the plaintiff hippy song still asks, “when will they ever learn…?”

Answer…

When a great fiscal two-by-four clobbers them about their foreheads in a sudden upward jolt of interest rates and cascading stock markets. All possible, and all in good time.
I’m patient.

#193 Dan in Victoria on 01.05.11 at 7:53 pm

Carlyle @ 182
“also considering I get out of debt free card”
Geez man, GO READ THOSE LINKS.
Learn.
Like I said earlier, you’re going to pay one way or the other.
So you use up the 37K that you blew on whatever, sell your house use the ” Profit”( not really but whatever)to pay it off.
And now you are freeeeeeee!!!!!!!!!

Think so?

Ok, now you go buy a house again guess what? That 37K that you blew, its gone, it has to come back from some place, yep, you’re in debt 37K again on the new joint, EVEN if it goes down in price.

How much is that going to cost you in interest on your mortgage over 35 years.

RBC calculator 35 year loan 35 year amortization 5% interest rate cost $41000.
I made it simple (35 year amortization over 35 years)
How long does it take you to make 41K in after tax money?
Better Yet, how long does it take you to save it…….

#194 Mr. Plow on 01.05.11 at 8:12 pm

#189 realpaul

You don’t sound negative, just like a crazy or an ass or both.

I feel bad for people who go through life with that much anger.

#195 The truth on 01.05.11 at 8:17 pm

Nice censorship Garth… You’ve lost all credibility! The last post you censored , watch for it on canadamortgagetrends.

I’m glad you’re making money this way and are not in parliament.

I have warned you in the past about posting deliberately fraudulent numbers. So suck it up. As for posting something on the Canadian Mortgage Trends site, who will know about it? — Garth

#196 bill on 01.05.11 at 8:18 pm

ag sage
Free laundry services?
that might fly….
i will suggest it as everybody has a microwave.
the hotels aint doin so hot either.
we used have like 20 or 30 people interested in a suite.
last year it just stopped.
we have had two nibbles and they went elsewhere

#197 jess on 01.05.11 at 8:21 pm

186 dark sad person

pari delicto
In Pari Delicto definition:Latin: both parties are equally at fault.
http://www.duhaime.org/LegalDictionary/I/InPariDelicto.aspx

In Pari Delicto Continues to Curtail Financial Fraud Suits Against Professional Service Firms in New York
Financial Services Alert
Oct.27.10

Dec. 14 2010 –
Francine McKenna
Accounting Watchdog

…”All three – Glitnir, Satyam and Landsbanki – were felled by non-existent controls over related party transactions and blatant misstatements of asset and liability balances. Those misstatements were allegedly covered-up via forged documents that helped to further the frauds for the benefit of insiders. Each of the three failed Iceland banks — Kaupthing, Landsbanki and Glitnir — had loaned large sums to their biggest shareholders on favorable terms
http://blogs.forbes.com/francinemckenna/2010/12/14/is-pwc-conspiring-to-evade-liability-for-frauds-in-iceland-and-india/#post_comments

PwC, “is alleged to have missed numerous warning signs about the state of Iceland’s banks long before they collapsed in 2008, according to a leaked investigation that exposes widespread irregularities among the doomed lenders. The findings were made by a team of international investigators in reports commissioned by the Icelandic special prosecutor who is probing possible criminal wrongdoing before the bank crash.”

http://blogs.forbes.com/francinemckenna/2010/12/14/is-pwc-conspiring-to-evade-liability-for-frauds-in-iceland-and-india/#post_comments

Icelandic bank Kaupthing threat to WikiLeaks over confidential large exposure report, 31 Jul 2009
From Wikileaks

Report Says PwC Missed Signs Of Icelandic Banks In Deep Trouble
Submitted by global.abi.org on Mon, 12/13/2010 – 09:10

=

http://www.crowell.com/NewsEvents/Newsletter.aspx?id=1576

No Bark, No Bite: PricewaterhouseCoopers Rolls Over To Beat Fraud Cases
Posted by forex on Dec 31st, 2010 // No Comment

#198 dark sad person on 01.05.11 at 8:22 pm

#183 arctodus on 01.05.11 at 6:37 pm

130…chillax dude…

I am not at all worried about the world situation personally….I am just a realist.

and yes my portfolio has done rather well over the past 5 years based on my ‘fearfulness”…so funny that.

I run my own business, manage my own investments and answer to no one….I like it that way.

But I do not make the mistake of thinking my own book to the point where I think “that I because I am so damn clever that the world will not shit on me”……it can and it probably will.

Have a blast thinking that we will just have an “adjustment” and all things will be fine….that my friend is BS.

The world of 1980 had 2.5 billion humans crawling on it….today it is in excess of 7 billion…….that alone should scare the crap out of any thinking sentient being…..exponential growth in anything usually ends in a dramatic fashion….and this will also…driven by the energetic peak (and no, I do not think that cambrian methane will save us).

I suspect that you have never really had to work (not the bone tired, weather weary work of a serf in a field) virtually no Canadian under the age of 40 and most certainly not the urban raised, have any idea what a brutal existence that entails…..but many of the teenagers of today will experience it.

I submit that many should read the works of Tainter or Diamond or Savory to understand the true nature of the razors edge that we humans walk today……

complex systems collapse suddenly and usually with violence…and all indications point to a dramatic collapse of most western and perhaps all economies in the very near future……EROEI always tells the true tale.

If you do not like the future that I describe it is perfectly ok…..I will not insult your personal vision of human ingenuity trumping anything that the universe throws at us……I would hope that you would give my own vision of a new dark age the same level of probability?

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

183 diarria dude

But I do not make the mistake of thinking my own book to the point where I think “that I because I am so damn clever that the world will not shit on me”……it can and it probably will.

Have a blast thinking that we will just have an “adjustment” and all things will be fine….that my friend is BS.

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

Where did i say the world will “just” have an adjustment and all will be fine?
I’m probably as or more bearish than most on what lies ahead-
but- you said-

“We will now see a steady brutal decline in our living standards and our western way of life will pass into extinction as our oil floated privileged craft sinks under the out going tide of oil decline.”

it is medieval…….quite literally medieval.

**********

As i said-you see only one possibility–i see several that will take the demand pressure off of Oil-including a decade of un-affordability and low economic growth and i never really live that high to begin with so i have no fears of a declining living standard and neither should anyone who didn’t max themselves into bankruptcy-

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

The oil price will pass 120 per barrel this year and it will matter not one single ounce to Canadas economy. As our dollar heads north (I predict 1.15-1.20 US to Can exchange rate late this year) our export based economy will stagnate…while many parts of the world will start to tear themselves apart…social unrest is rising now).

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

What makes you so sure Oil is going to that price this year–are you using- EW?

I’ll counter your call and say Oil will hit $50 before it hits your price-

What makes you say 1.15-20 CAD–
What are you using to see those numbers?

Again i’ll counter your call and say we’ll hit .90 or .80 before we see your numbers-

Why would a housing crash and rising unemployment make for a strong dollar-If we have the global economic crash you’re predicting?
(and i’m not discounting an economic crash)

Where will the demand for our resources come from?-how will that-along with falling manufacturing trade exports be bullish for our dollar?do you believe Canada will sit idly by and let the US or the euros or any other country out devalue us to the tune of 20% and have our dollar go wild in a carry trade when our government is already starved for money-or do you suppose they’ll print in sync?

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

Despite Mr. Turners protestation, gold, silver, palladium etc will make large advances (but it only reflects devaluation in fiat world wide).

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

I disagree again at least partially- gold is reflecting devaluation but that is not the main driver behind gold-

Credit/default/deflation risk is what’s powering gold higher in all currency-of course you have to believe gold is money before that makes sense-

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

I suspect that you have never really had to work (not the bone tired, weather weary work of a serf in a field) virtually no Canadian under the age of 40 and most certainly not the urban raised, have any idea what a brutal existence that entails…..but many of the teenagers of today will experience it.

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

You missed that one in every sense-by a mile–

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

I submit that many should read the works of Tainter or Diamond or Savory to understand the true nature of the razors edge that we humans walk today……

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

I’ve read about peak oil kustler/simons and a gazzilion other stories and i understand it and the implications if we do not go hard into alternatives-and-guess what my chart above shows-we are-
NG filling stations are old news-they’re already coming on and so is electric and so is drilling for this new source of energy and something else is coming too-a society that will learn to live within their means and not consume like in the past and that will be forced by the market-

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

The world of 1980 had 2.5 billion humans crawling on it….today it is in excess of 7 billion…….that alone should scare the crap out of any thinking sentient being…..exponential growth in anything usually ends in a dramatic fashion…

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

I would never discount the possibility of a die off from whatever or a war-those could happen tomorrow or they could not happen-

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

If you do not like the future that I describe it is perfectly ok…..I will not insult your personal vision of human ingenuity trumping anything that the universe throws at us……I would hope that you would give my own vision of a new dark age the same level of probability?

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

I don’t subscribe to your vision of the future mainly because i disagree with most of what you’ve laid out for evidence-

Human ingenuity has gotten us this far despite wars and plagues and like i said to begin with-If you think what’s happening is anything new–it isn’t-

#199 Behavioral Finance on 01.05.11 at 8:25 pm

Priced Out in Toronto,

Debt is sexy today. The new generation has no problems with carrying massive debts. They grew up in so called liquidity.

I think this pretty much sums it up.

“In 1950, an American household ‘s liquidity was its bank account, no its credit line. The bank’s liquidity was its cash and certain deposits, not its (assumed perpetual) access to credit. The bank’s profits were slow (interest earned minus interest paid) and built up over time. (An analogue exists to the industrial company.) More recently, profits were instant. Becasue of bank-deposits insurance, a depositor does not consider whether a bank hold gold or confederate dollars in reserve. That being so, banks do not mah such distinction either. Money – inseparable from credit in the mind – always be as accessible as the air we breathe.” from Panderer to Power

#200 Behavioral Finance on 01.05.11 at 8:35 pm

That 70% ownership should raise some flags, but maybe this time is different. Right F?

“Home ownership was integrated into President Bush’s public appeal for second term. He decided that 70 percent of Americans should own a house. (The ratio of owners to renter had been 60 to 65 percent over the past few decades.) In a July 14, 2004 reelection pep rally, he told his Waukesha, Wisconsin, audience: “Homeownership rate is at all-time hight. That’s a fantastic statistic, isn’t it? We want more people owning their own home. When you own something you have a vital stake in the future of the United States of America. He made it sound like a ball game with a whole nation rooting for a .700 batting average.” – Panderer to Power

#201 Cookie Monster on 01.05.11 at 8:42 pm

Feel free to make a comment some time that is relevant to this blog. — Garth
———–
It’s all relevant, and one of realpaul’s post are more relevant than the sum of all the posts ever posted by Devil’s Advocate because each of realpaul post is talking about the structural underpinnings that make the current Ponzi scheme possible in the first place! So much ignorance and so many ignorants.

Misunderstanding gold as money, having faith in government, FIAT, socialism as ‘good’, the public sector, the threat of modern economic theories grounded in immorality theft by stealth from the proletariat is the connection you’re missing.

The present real estate debacle is merely a symptom of the deadly disease commonly referred to as government.

You two should get a room together and weird each other out. — Garth

#202 Moneta on 01.05.11 at 8:46 pm

Jan Etter:

I wrote:
I agree with everything you wrote but I’m not particularly interested in the details.

———–
I wrote this in a rush and it does not reflect my thoughts.

What I should have written is:

I don’t disagree with anything you wrote but I don’t think one needs to know how assessments are calculated to undersand what is going on.

One needs to know what the muni budget is and whether or not one’s home assessment is fair relative to others in the neighborhood.

City hall needs a certain amount and it will do what it has to do to get it.

#203 Tiffa on 01.05.11 at 8:57 pm

All around me, my peers (late twenties to early thirties, near Vancouver) say they “know someone who bought a condo and doubled their money in a few years” … and use that as evidence that real estate is a “good investment”.

Even ignoring the fact that this supposed doubled money figure is on paper only, or only a “gain” if they sell and stay out when the price is high, what madness is this??

In what world would I be sane, if I said … “I know a guy who took ten grand to the casino, and walked out with twenty grand! So I’m heading there now with my life savings” … or worse “so I’m going to take out a hundred thousand dollar loan, and head to the casino!”

I feel like I’m taking crazy pills. People LOOK at me like I’m taking crazy pills, when I say real estate isn’t ALWAYS a good investment, that I expect prices to fall, and that I hope prices then STAY reasonable.

Risk means you might come out ahead, you might not. The fact that you know a guy who came out ahead, does not mean he was guaranteed to do so. I can stomach people acknowledging that it’s a gamble, and going for it. What I can’t fathom is anyone claiming that there’s huge guaranteed money to be made in something, with a claim of literally no risk.

Garth should sell off space in his bunker. (how do you determine bunker strata fees?)

#204 Nostradamus Le Mad Vlad on 01.05.11 at 8:58 pm

#65 TheBestPlaceOnEarth — What of the debt / mortgage servicing costs? Option One — The owner of the house must stay burdened with debt for donkey’s years, and pay all the bills in order to keep the home; Option Two — the renter has to find a new place to rent, but has no debt at all.

I would choose Option Two and stay flexible.

#90 Nadine Lumley — “Speaking of screwed up sexually men:” — and — #117 bigrider — “On the issue of colonics.” — and — #187 Crash Callaway — “People having regular bowel movements tend to buy bigger houses with more bathrooms.”

Sex, drugs, geritol and colonoscopies — what more can old farts like us want?!

#138 Coho — “Just another example of what is good for the people isn’t good for the ruling class for some reason.”

Noted. It is well known that the ‘royal’ family are in cahoots with the elite. As other posters have pointed out, it is all a huge ponzi scheme which is set to fall, as France’s royalty did during their revolution. All things in good time.

The reason why Diana was conveniently knocked off was because she and Dodi (a Muslim) were dating, and getting close to setting their nuptuals. Queen Liz couldn’t stomach that.

#140 Chris no longer in England — Garth lives somewhere between Zombieville and Realityland. Give him time; he’ll arrive back at Normaltown soon!

#150 Dan in Victoria — “What do you think the Banksters are up to?”

A shot in the dark, but I would hanker to say they are hunkering down in their own bunkers, preparing for citizen uprisings, wars, etc. (the cause), and we’re experiencing the effect of, but I may be wrong.

#165 dark sad person — “. . . Steve’s space under the desk in the oval office was Monica Lewinski . . .”

Chances are good that she has a brain between her ears; Harper’s space is filled with Stikee Goo!

#180 GregW, Oakville — Good post on Soros, NWO and loss of bees, birds, fish etc.

#183 arctodus — “complex systems collapse suddenly and usually with violence . . .”

Agreed. That is the easiest way for TPTB to get what they want, GW or not, and that is to have us all fighting with one another, killing one another off.

There are many twists and turns left yet.

#205 Behavioral Finance on 01.05.11 at 8:59 pm

That is simply amazing.

The share represented by revolving credit (personal lines of credit and credit cards) within total consumer credit issued by chartered banks grew from 21.1 per cent in 1989 to 77.7 per cent in 2009. Borrowing through personal lines of credit increased 25 fold within this period of time.

http://www.cga-canada.org/en-ca/ResearchAndAdvocacy/AreasofInterest/DebtandConsumption/Pages/ca_debt_default.aspx

#206 Cookie Monster on 01.05.11 at 9:00 pm

From my last post I don’t mean to belittle anyone for being ignorant, it’s pretty common and I’m not claiming to know-it-all myself either by any means, but my biggest disagreement is always on gold as money. I’m not a gold bug either but I do recognize that gold is money, always has been and always will be, and of course the golden rule, ‘He who has the gold makes the rules’.

I was going to say something else too, but I forget now.

#207 AG Sage on 01.05.11 at 9:01 pm

>#182 Carlyle on 01.05.11 at 6:35 pm

If you are serious about selling, be serious about selling. Keep the house spotless and neat and scentless and remove at least half of your stuff from it before letting a single shopper inside (and every single bit of personal stuff. You want it to look like a hotel: stylishly impersonal)

Be aggressive on price right out of the gate. You will never get as much attention for the house as that first week or two it is listed. Price reductions later are nowhere near as effective and scream desperation.

Good luck. (seriously)

#208 Cookie Monster on 01.05.11 at 9:02 pm

Oh, I remember!

Gold as money will be here once again not by choice of government but by force, the market will demand it. FIATs are collapsing as we speak. Education will reign and a new world will begin.

If I were writing the 10 commandments today, #1 would be gold is money.

#209 Vancouver_bear on 01.05.11 at 9:03 pm

#95 Nostradamus jr. on 01.05.11 at 11:35

Safety you say? You must be kidding!

http://www.theglobeandmail.com/news/national/british-columbia/10-shot-in-outrageous-display-of-gang-violence-in-vancouver/article1834642/

“It never seemed like a gang hub.” But it’s a gang hub now. And we don’t even have guns to protect our families….I have pitchfork…..but the guy with the gun will have a better chance.

Got guns? Welcome to BC the best place on METH!

#210 Cory on 01.05.11 at 9:12 pm

I just dont get these “experts”. Calgary is not affordable by any means. I make good money and I can’t afford the kool aid they’re selling here…..or trying to anyway. Sure we could goto the bank and get the money for a nie big house, no problem, but it doesn’t mean we can “afford it”. We like to live within our means and simly use a dwelling as shelter, as it is meant to be.

I just wish it would all die already. Calgary Herald had a front page story saying houses up 8% in 2010!!

#211 Vancouver_bear on 01.05.11 at 9:13 pm

#65 TheBestPlaceOnEarth on 01.05.11 at 3:53 am

Those are assessments, not real prices. Gains will be realized only IF an idiot pays that price for that shack. Government needs more taxes, therefore your house will appreciate on paper and deflate in reality. You have a chance to appeal it though, don’t expect it to be easy, so how it is a good thing I can’t understand.

Nostri, you are really dumb if you praise higher taxes….bummer. Go back to school educate yourself on the subject…..or even take those 2 week courses for high shool dropouts ppl here call realtu*ds.

#212 Defrauded2 on 01.05.11 at 9:14 pm

LATE BREAKING NEWS…

CALGARY HERALD JANUARY 5TH 2011
“MOST CALGARY HOMES VALUES RISE 8%”
“CALGARY POISED TO SCRAP FLUORIDE”

Housing valuations will cause an increase taxes for homeowners…..
Cutting fluoride will save the city the better part of a million per year…..

See any connections?

(caution falling birds, and real-estate prices)

#213 Mark on 01.05.11 at 9:25 pm

#199, just saw on Facebook a 20-something-year-old female of friend of mine ‘bought’ a new house, and wants to rent her old one out. New house is $250k. “old” one is $200k. A few months ago, on Facebook, she was crying that she couldn’t even afford a replacement water heater.

I’m astonished. 28-year-old single gal, with not a dime of equity in anything and no room to put a water heater on her credit cards, can have $450k in real estate debt on a mere $45k/year job.

Oh yeah, and she commutes 2 hours each day to her ‘job’.

I got a hunch that this is not going to end well for her.

#214 Cookie Monster on 01.05.11 at 9:40 pm

But of course we don’t need any commandments to know gold is

DELETED. This is not a gold blog. — Garth

#215 Cookie Monster on 01.05.11 at 10:05 pm

Excellent article by Nick Barisheff – Bullion Management Services
Published : January 05th, 2011

From the article:
The Golden Rules

Rule 1: Gold is money, not a

DELETED. This is not a gold blog. — Garth

#216 Cookie Monster on 01.05.11 at 10:15 pm

DELETED. This is not a gold blog. — Garth
——
Fine, but for a blog that’s focused on Canada’s real estate bubble to not recognize that the cause of the bubble is in fact solely due to a FIAT paper money fractional reserve credit expansion that floats in space without any connection to something tangible is a very serious oversight.

#217 Cookie Monster on 01.05.11 at 10:22 pm

I come here because I like the format and openness you’ve provided till now, but if you insist on disallowing topics of discussion that at times might focus on money and gold in particular then I will stop reading and posting. I have no self interest motive concerning gold and I do not own any gold or gold stocks. I have concern in what is happening to average people and the corruption that surrounds us all. That’s my motive. Honesty.

#218 S.B. on 01.05.11 at 10:22 pm

January 05, 2011 “New York Times” – Jan, 03, 2011 — – Faced with growing budget deficits and restive taxpayers, elected officials from Maine to Alabama, Ohio to Arizona, are pushing new legislation to limit the power of labor unions, particularly those representing government workers, in collective bargaining and politics.

State officials from both parties are wrestling with ways to curb the salaries and pensions of government employees, which typically make up a significant percentage of state budgets. On Wednesday, for example, New York’s new Democratic governor, Andrew M. Cuomo, is expected to call for a one-year salary freeze for state workers, a move that would save $200 million to $400 million and challenge labor’s traditional clout in Albany.

But in some cases — mostly in states with Republican governors and Republican statehouse majorities — officials are seeking more far-reaching, structural changes that would weaken the bargaining power and political influence of unions, including private sector ones.

#219 BigD on 01.05.11 at 10:25 pm

Hey Realpaul. Dark Sad, Mad Vlad, etc.

When your comment is longer than the article. you should consider editing down.

If your comment is a random rant about the same shit you always rant about, start your own blog. I think I see where Canada’s 30% drop in productivity is hiding.

#220 Contrarian Canuck on 01.05.11 at 10:29 pm

Garth, why are you censoring out my links? They are relevant to this discussion. They are not gold bug links or racial links or anything like that. What’s your official policy on what links you allow and what links you censor?

I discourage posting links to proprietary web sites. Make your argument here. You are most capable. — Garth

#221 GP girl on 01.05.11 at 10:40 pm

Aha !
Someone here asked about GT’s next book release.
Click on the About Books link at top of the page.
It’s February 1st. No picture but there is a description.

Sorry, babe, that was the last book. Next one in a few months. — Garth

#222 dark sad person on 01.05.11 at 10:46 pm

#192 VICTORIA TEA PARTY on 01.05.11 at 7:52 pm

-An opinion from another columnist is that China, in buying up Spanish debt, is now moving into its next area of interest, becoming the world’s chief lender of last resort.

This will represent the first real challenge to American reserve currency hegemony, since the various Bretton Woods and other currency conflabs, dating all the way back to 1944 that gave that currency “honour” to the then nascent American Empire at the close of WW2.

******************
On that point i disagree as long as China’s currency is pegged to the USD-if you buy the CNY you’re still buying the USD-
If the USD crashes-so will the CNY-
China would have to un-peg and let the CNY float-
Otherwise whatever happens to the USD will happen to the CNY-
Oil or anything else doesn’t have to be paid in USD’s anyway-
We buy from foreigners and pay in CAD-
As long as any currency is accepted in trade-that is thew currency used-they never have needed USD’s to trade between Countries-

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

#197 jess on 01.05.11 at 8:21 pm

”All three – Glitnir, Satyam and Landsbanki – were felled by non-existent controls over related party transactions and blatant misstatements of asset and liability balances. Those misstatements were allegedly covered-up via forged documents that helped to further the frauds for the benefit of insiders. Each of the three failed Iceland banks — Kaupthing, Landsbanki and Glitnir — had loaned large sums to their biggest shareholders on favorable terms

The findings were made by a team of international investigators in reports commissioned by the Icelandic special prosecutor who is probing possible criminal wrongdoing before the bank crash.”

**************
The rot and corruption goes so deep it’s unbelievable-

I hope Iceland does go ahead and start prosecuting the crooks/bankers –ya never know–maybe the lights will come on in Canada?

Nawww our banks are sound-fiscally responsible-firmly structured and fully backed by the debt slaves of Canada-
Where could there ever be any wrong doing in something so wonderful?

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

You two should get a room together and weird each other out. — Garth

********************
Maybe i can watch?

I like a lot of what both those weird outs say-
Nasty Paul is right-
Downsize and gut out the Government waste and stop competing in the market place and especially the place of Business and the Union love ins and turn it over to the private sector and slash Government spending to the bone-

#223 Contrarian Canuck on 01.05.11 at 10:55 pm

What do you mean by ‘proprietary’? There are many links posted on this blog. How does one determine if a web site is a proprietary site. Not trying to be a pain- just wanting to clarify.

Is that not your site? — Garth

#224 S.B. on 01.05.11 at 11:01 pm

2011…the elites’ attack upon our food supply. PSSST there is no “global warming”, just weapons and technology deployed that are unimaginable to us.

The “solution” will be presented as GMO and frankenfoods.

Map of mass fish and bird death:

http://j.imagehost.org/view/0695/animal_deaths_2011

#225 Nostradamus Le Mad Vlad on 01.05.11 at 11:27 pm


Deflation or Inflation? Confuse-A-Cat Ltd.

2:32 clip Really funny creepy money.

0:33 clip “Looking at the pennies-on-the-dollar settlements on the foreclosure fraud cases, with no criminal charges to be filed it is clear which course the government has decided on.” wrh.com.

US Fed How To Win Friends And Influence People. NOT!!

Vive la revolution!

Headline of the day! :-D Plus — Forther to the Scandinavian countries, dead birds and fish, now the UK. Probably includes the Eurozone. Gittin’ Colder Sea temps. Is this a clue?

BoA Recall those toxic mrgs. that GS said BoA had to live with? BoA is not clear yet.

Ten States have introduced gold as money.

Something To Hide? Seem Obama is closing ranks on the WH.

Decaying Infrastructure Everything is falling to pieces.

Bills C-36 and S-510 This may happen here soon.

Sexual Innuendos The US Fed — GOTCHA!

#226 GP girl on 01.05.11 at 11:32 pm

Darn.

#227 dark sad person on 01.05.11 at 11:43 pm

#219 BigD on 01.05.11 at 10:25 pm

Hey Realpaul. Dark Sad, Mad Vlad, etc.

If your comment is a random rant about the same shit you always rant about, start your own blog. I think I see where Canada’s 30% drop in productivity is hiding.

*******************
Suck it up-
Every name you mentioned including the etc. could kick your sorry ass around-
Are ya up for it-or do you just whine?

#228 45north on 01.05.11 at 11:54 pm

Victoria Tea Party: the nascent American Empire at the close of WW2.

nascent: just coming into existence
http://en.wiktionary.org/wiki/nascent

well the United States had existed some time before World War II but it emerged from the War as the most powerful militarily but also economically and politically.

#229 David on 01.05.11 at 11:55 pm

#219 Big D

[Golf clap]

#230 the hangover 2 on 01.06.11 at 12:33 am

Realpaul maybe change your name to real idiot. If civil servants make so much money go get a job there.

#231 concessionman on 01.06.11 at 12:54 am

“Said Diane Scott yesterday: “Undoubtedly housing markets in Alberta and Calgary underperformed in 2010”

lol..Good thing she speaks clearly to her audience…otherwise the Calgarians would have only though it was localized to Alberta…

#232 GregW, Oakville on 01.06.11 at 1:17 pm

Thanks #225 Nostradamus, for the link to atricle
“Bills C-36 and S-510 This may happen here soon.”

We the people are loosing our rights and most don’t even know it! Were will your family find good clean food to help keep us all healthy?