Blind by choice

Two years ago Tony and Teresa bought a house in a northern burb of the GTA. “It was a steal,” he told me. “They were desperate. Freaking.”

It was the winter of ‘08-09. The world had almost ended. The housing market atrophied. The home which had been listed for $680,000 in the summer sold for a hundred less in the snow. The vendors said a little prayer when Tony showed up. He was ecstatic, able to buy above the means of an industrial adhesives salesguy and his teacher-mom wife. “It’s all lawyers and executives on that street. This is the best for my family.”

Or not. Today Tony has three kids, a wife on mat leave making diddly on EI, and an income which has fallen by 50%. His total liquid investments amount to $35,000 in an RRSP (in cash) and a $7,500 TFSA at the grocery store bank. His mortgage is $450,000 at 2%. He looks like a man ready to burn the furniture.

“But,” he brightened, “my house is now worth seven bills.” So sell it and crawl out of debt, I offered. “No way,” he said. “This is my lifestyle. And I want to keep my wife.”

Tony, I said helpfully, you’re screwed. And he is. The mortgage will renew in a few years at double or triple the rate. The house will fall in value concurrently. His net worth will crumble. His one giant asset could turn as illiquid as it was for the traumatized people he thinks he stole it from. And Teresa may split anyway.

Plus ça change plus c’est la même chose.

Today’s topic is one of my favs. Wilful blindness.

It’s how people view misfortune. Like car crashes. They’re riveting when you drive by and gawk at the flashing lights and all the cops. But you’re immune. Like the guy at work who got melanoma. But that won’t keep you out of the sun. Like a housing crash wiping out the US middle class. But no lessons here.

Tony can’t see his real estate gain is illusory. That he risks becoming the person he gleefully exploited. Blind. By choice.

This week a big milestone passed. We may wish not to see it, but that would be foolish.

Between 1928 and 1933, the worst years of the Great Depression, the value of houses in the States fell by an unprecedented and shocking 25.9%. Between June of 2006 and last month, home worth crumbled 26%, surpassing the collapse of the Dirty Thirties, according to In fact, in each of the past 53 months, the price of real estate has declined in the country the most like our own. Worse, the pace of that decline – after moderating earlier this year – has accelerated.

And now mortgage rates are rising.

You may choose to be blind to this, like Tony, but that’d be unwise.

In Canada, meanwhile, there are cracks if you choose to look. Try selling a house in Alberta these days for what you paid two years ago. Check out the power of sale offerings in Brampton. Listen to the central bank warnings about household debt. Then gaze at Vancouver where a middle class family can no longer afford a middle class house. Or observe Toronto, where 19,000 condos were added last year, and 17,000 more are coming in 2011.

Real estate’s become not only an obsession, but an addiction. It sucks up the bulk of most families’ net worth, entangles them in unrepayable debt and sweeps people like Tony and Teresa away on a tide of unearned social status.

This week came news construction has tanked.  Housing starts have fallen sharply, especially in Ontario, particularly with condos. Just a dozen days into a new year, and the forecast now is for layoffs among the trades, a weak market and a drag on the economy.

Said TD economist Sonya Gulait: “Ballooning Canadian household indebtedness levels and the prospect of higher borrowing rates confirm the notion that households cannot continue doing the heavy lifting going forward.”

And as this lascivious blog has told you often, all this reflects the six-month-long year-over-year collapse in resale home deals that every real estate organization in the country has been trying to shield your eyes from. Not that they need to. Few are looking. Fewer care. It just feels better to believe Royal LePage.

Some days I swear it’s a total eclipse.

The following words came to me from Brad, in Calgary. He gets it.

I am in a bizarro world.
There is no other explanation.
I was just told in my office by my boss that one of my co-workers here in Cowtown is buying a house this week specifically to rent out.

Turns out, it is actually their (her and her husband) 2nd rental house.
With my mouth having dropped open about halfway to the floor, I managed to mutter “wow, really, they must be doing that with cash?” To which the reply was, “nope, I think they’re financing it.  They said they think prices are low.”

As my mouth dropped the rest of this way I said, “ok, well for the record, I think that is completely insane.” And the look I got… it was like he thought I was the insane one for saying something like that.

I know I’ve written this before to you, but I just don’t understand this psychology.
I understand sheep psychology in the stock market.  In bullish times, most people think prices will go higher forever and they don’t want to miss out on the opportunity.   But most of them aren’t crazy enough to BORROW money to bet on that sentiment. With housing, they are willing to borrow to play.
I just don’t get it.

I am slowly clueing into the fact that I must be the insane one.  And they are brilliant.  And people like you are just imaginery characters they create in order to test people like me.  If we listen to you, we fail their test and stay lower class forever.

Greed, in the end, really is good.  That’s probably the message.

Now let’s light a candle for Tony.


#1 bill on 01.11.11 at 10:49 pm

a roman candle?

#2 Behavioral Finance on 01.11.11 at 10:53 pm

Does Tony and Teresa have tulip bulbs in their yard?

#3 HouseBuster on 01.11.11 at 10:56 pm

Greed is bad…very bad.

#4 T.O. Bubble Boy on 01.11.11 at 10:59 pm

I’m confused:

Tony and Theresa put $200,000+ down on their $680,000 home, but only have $42,500 in other assets? (all in cash)

If you had $250,000 in assets, what on earth would make you decide to “bet” 80% of those assets on the GTA housing market?

Imagine you put 80% of your assets in any other investment — that would sound crazy, right?

80% in bonds — crazy!
80% in equities — crazy! (usually)
80% in GICs — crazy!
80% in Gold — crazy!

With 3 young kids at home, now it will be even tougher to save… the only chance they have you have is to have your existing assets working for you. I don’t think the giant “seven bills” home is going to help pay for university for those 3 kids.

I said they bought it for $100K less. — Garth

#5 Sean on 01.11.11 at 11:00 pm

Garth take a look into ghost estates in Ireland, and the size of houses 20 year old’s built in the 10 years of the celtic tiger and try again to explain to people here in Canada that it can happen & very fast.

#6 Behavioral Finance on 01.11.11 at 11:03 pm

“I am a liberator of them! The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind.” – Gordon Gekko

#7 Silentblogger on 01.11.11 at 11:08 pm

Layoffs in the sales departments & in trades? Hate to own a power toy (boat/bike/ski-doo) business when those take hold.

#8 T.O. Bubble Boy on 01.11.11 at 11:10 pm

Here’s a scary calculation…

A $450k mortgage @2% with 35-year amortization
= $1,488.77 per month

After 5 years, the principal is down to “only” $403k

For years 5-10 on the mortgage, if F changes mortgage limits to say 25 year amortization, and rates go up to say 5%…

$403k mortgage @5% with 25-year amortization
= $2,343.87 per month

That’s $850 more per month (+57% more on each mortgage payment)!!!

#9 waiting for events to unfold... on 01.11.11 at 11:11 pm

I am slowly clueing into the fact that I must be the insane one. And they are brilliant. And people like you are just imaginery characters they create in order to test people like me. If we listen to you, we fail their test and stay lower class forever.
Greed, in the end, really is good. That’s probably the message

^^ this sounds like something out of 1984-War is Peace,
Freedom is Slavery, and Last but not least: Ignorance is strength. Add to this: Debt is Wealth….

#10 Kevin on 01.11.11 at 11:12 pm

Here is a quote about why most people bought into the bubble from Robert Shiller

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

Three economists, Sushil Bikhchandani, David Hirshleifer and Ivo Welch, in a classic 1992 article, defined what they call “information cascades” that can lead people into serious error. They found that these cascades can affect even perfectly rational people and cause bubblelike phenomena. Why? Ultimately, people sometimes need to rely on the judgment of others, and therein lies the problem. The theory provides a framework for understanding the real estate turbulence we are now observing. ”
Saskatoon Housing Market: The Psychology of the Bubble

#11 andrewS on 01.11.11 at 11:15 pm

In the Star today there was an article assuring us that there is, indeed, no real estate bubble, we’re in for a “soft landing” and not to worry, everything is fine.

“Drop in home starts eases crash fears” was the actual title of the article. As of now, a hair before 10pm, it’s still in google’s cache of . I am not making this up.

It has since been removed, and the guts are now a paragraph or two hidden at the bottom of a feel-good article about how housing starts are up year-over-year.

#12 LLHW on 01.11.11 at 11:16 pm

Reading a book called ‘The Big Short’ where certain hedge funds in the U.S. encouraged the creation of Credit Default Swaps and then bought them against mortgage bonds and made a fortune off the housing collapse. Could this happen in Canada? Anyone know what the mortgage bond market is like in Canada? Are there tranches that carry high risk and are made up of higher risk mortgages?

#13 T.O. Bubble Boy on 01.11.11 at 11:16 pm

I said they bought it for $100K less. — Garth

Ah – reading comprehension issue….

So, $580k house w/ $450k mortgage… that’s still probably a $120,000+ down payment against just over $40,000 in other (cash) assets — still around 75% of all assets being put into the house.

They’ve double their money (on paper) in 2 years — $120,000 into the house, and now $250,000 in equity.

In any other investment, you’d take the gain.

#14 Danforth on 01.11.11 at 11:17 pm

“It’s not getting any smarter out there. You have to come to terms with stupidity, and make it work for you.”
– Frank Zappa

This famous quote applies in so many aspects of business, politics, and society.

#15 dmc on 01.11.11 at 11:18 pm

Apparently regional BC still isn’t as bad as regional Tasmania.

#16 Karl Hungus on 01.11.11 at 11:21 pm

Im guessing you were telling everyone to get out in the winter of ’08/’09 as well. Now he has $250,000 of equity and this is a terrible thing in your eyes I guess.

He has no equity gain unless it is crystallized. Did you miss that? — Garth

#17 Boombust on 01.11.11 at 11:21 pm

CTV’s 6 o’clock News in Vancouver tonight did another talking realtor head piece about the boom on Vancouver’s West Side.

Realtor Top Dog, Cameron Muir was trotted out, as per usual, and another realtor gushed about prices going ballistic.

So much air time for so many airheads.

#18 celine on 01.11.11 at 11:21 pm

love the picture Garth, actually always get a nice laugh from viewing your selection. This one is perfect – ignoring the fact that the dog is doing what he should not be doing to the child…pretty good metaphor for screwing the future by what we do today!

#19 Western Canadian on 01.11.11 at 11:26 pm

” In bullish times, most people think prices will go higher forever and they don’t want to miss out on the opportunity. But most of them aren’t crazy enough to BORROW money to bet on that sentiment. With housing, they are willing to borrow to play.”

How are times bullish Brad. The market in Calgary has been in decline for three years, if anything buying now constitutes the opposite of going with the grain…

Brad is completely contradicting himself.

#20 squidly77 on 01.11.11 at 11:27 pm

Albertans cheer high Oil prices because somehow they think that paying more for Gasoline helps them.

The media cheer higher houses prices because somehow and for some reason its good that you should pay more.

Is the Monkey catching the nuts to amuse you, or are you throwing the nuts to amuse the Monkey.

#21 MikeT on 01.11.11 at 11:27 pm

Funny, but as almost all of us here agree that the end is nigh, the housing market is still kicking. Houses are being bought and sold, people I know flip houses and make good dough, banks lend insured money, people get themselves into loads of debt with smiles on their faces, etc. Some of them are starting to get it (like Tony), but the vast majority is still oblivious and this keeps the market going pretty strong, despite recent weakness.
It’s housing – it’s different, and it’s something that always goes up in the memories of first-time buyers who were in diapers the last time this market tanked.
I agree it will not end well, but I am tired of waiting for it to happen. Trying to have an open mind and really see what’s going on, I see a pretty good housing market. Not that I intend to buy anytime soon (wifey has to start working for us to even think about buying), but from what I see, I will have to wait quite some time till prices in GTA will go to the 3.5 X avg. income level. Or, it will just blow up and drop hard and lightning fast – to compensate for the long wait :)
Anyway, I can the doom and gloom are on the horizon, but it’s kinda staying there and Mr. Carney keeps pushing them away with low rates – even if he’s threatening to raise them a little bit. Will that little bit be enough to bring a correction? Who knows? I am starting to doubt that because it could also kill the economy and he’s smart enough to avoid marring his reputation with something like that.
The bears are right too sometimes, it’s the waiting for them to be right that’s taking too long.

#22 sho-gun on 01.11.11 at 11:28 pm

I am here in cowtown, born and raised. At least once a day I say out loud “how are people doing it”
I am in this bizarro world, right along side you! Lately I have had to ask my friends and family if people in Calgary truly believe they are in a city equal say to NYC. Calgarians act like they are headed to broadway or “da” club later. (When we all know this place is a black out by 9pm.) Neither of which Calgary knows anything about unless you happen think the nutcracker preformed by a bunch of jr high students and time spent in one of Paul Vickers establishments is broadway and “da” club…..Its truly bizzaro and I am relieved to know out of the million other people here I am not alone in this cracked out indebted city!

#23 Mean Gene on 01.11.11 at 11:31 pm

Buy rand and eat fried lice.

#24 Stevermt on 01.11.11 at 11:33 pm

Tony will maintain his lifestyle for now,but for how long?

If we light a candle for him will he see the light?

#25 Sasquatch on 01.11.11 at 11:35 pm

Brad’s co-worker is crazy. Just 2 months ago I was looking for a rental in Calgary, and as I said before here in comment ally, that there are a lot of places with no takers.

Hell, there isn’t even people looking at them. I was getting desperate calls a week after viewing places asking if i was still interested.

This will drive rental rates lower and hurt people who own rental properties on payments.

#26 Mountain Girl on 01.11.11 at 11:36 pm

Brad, well said.
That’s exactly it – they borrow to play. Staggering, isn’t it?
I’m in Calgary, too. And I think I’m in the nut house with you, brother, because there is not a heck of a lot of real estate around here that would even tempt me to consider that kind of leverage.
Personally, I couldn’t sleep at night with that kind of risk, but it sure seems like everyone and their mother has no qualms whatsoever. And the pitying looks! The gentle encouragement to stop wasting my money by renting. I’m so tired of trying to explain basic math principals in my own defense. I’ve given up! I just smile and nod politely and change the subject.
That’s my strategy for keeping my head above the insanity (or below, if your theory is right and we’re the crazy ones!).

#27 wetcoaster on 01.11.11 at 11:43 pm


Global BC is just another arm of the Liberal government and Remax/LePage. Big Chris keeps smiling and flapping his gums in agreement like a big dummy at all the pumper talk, it’s all good in La La Land until someone loses an eye. Investigative journalism is dead at GlobalBC because they would uncover their own who make up part of their paycheck.

Now they are pumping Christie Clark and they won’t even question her about her brother while she does not want an inquiry into the BC Rail scam. “It’s over” she says, in other words “bury this bastard”. It’s an f’ing disgrace how corruption and payoffs is just buried in this province while we pay a criminal’s legal bill of $6 million.

Just in the early stages of “The Big Short” too. There must be a way to short this ticking time bomb. I’m digging.

#28 Barrie Real Estate on 01.11.11 at 11:46 pm

Housing through the years has been the most desired asset of a family. Tony thought he had a good bargain with the house he bought. a house worth $680,000 was sold at a hundred less, it’s a good bargain come to think of it. but what really is it good for? ask yourself who would sell a house hundred less? there must be a real catch behind that. still, the best way is to have the asset appraised before having a deal with it. real estate has it’s own dark secret.

#29 MikeT on 01.11.11 at 11:52 pm

And one more thing – about Tony:
House worth seven bills, let’s take the minimum = 1 mil.
Mortgage at 450k. If the market “tanks” and loses 25%, it’s still worth 750k, which is 300k more than his mortgage. He is SAFE! Even if he sells it at 750k, he’s getting a nice profit of 300k.
Apart from his ability to make mortgage payments at a higher rate, I don’t see any other dangers. But if it becomes impossible – he can price it below the market, sell it to an inexperienced vultch and take a nice profit anyway. What’s the problem?

“Seven bills” = $700K, not a mil. If the market drops 25% he loses $60K in equity. If he sells with a commish, he’s lost $90K. — Garth

#30 Justin on 01.11.11 at 11:53 pm

Gentler reader as you ponder lifes ever increasing inticacies (and the real estate market) I’ve decided (with the maestros permission of course) to repost something I cobbled together and posted here approximately one year ago. The intention is not to discourage but to comfort as in truth we are all part of a grander scheme which only a handful now perceive.

Is historical precedence relevant? Are we individually and collectively creatures of habit?
Now I ask this as I believe that the Occident has reached (matured) into its final stage and a new epoch is beginning in which we (the West) will no longer dominate.
Proof you ask? Yes! The following exhibits are presented.

Exhibit A)
Major world empires of history, dating the time of their rise and fall.

Assyria (859-612 B.C.): a 247-year reign.
Persia (538-330 B.C.): a 208-year reign.
Greece (331-100 B.C.): a 231-year reign.
The Roman Republic (260-27 B.C.): a 233-year reign.
The Roman Empire (27 B.C.-180 A.D.): a 207-year reign.
The Arab Empire (634-880 A.D.): a 246-year reign.
The Mameluke Empire (1250-1517 A.D.): a 267-year reign.
The Ottoman Empire (1320-1570 A.D.): a 250-year reign.
Spain (1500-1750 A.D.): a 250-year reign.
Romanov Russia (1682-1916 A.D.): a 234-year reign.
Great Britain (1700-1950 A.D.): a 250-year reign.
The USA (1790-2009 A.D.): 219 years and counting.
America’s reign is currently at 219 years. He further notes that the average duration of every world superpower listed above is a little over 238 years.

Exhibit B)
Alexander Tytler, a Scottish historian who lived at the same time as the American Founding Fathers, who described a repeating cycle in history. He had found that societies went through this same cycle again and again, and that the cycle lasted roughly 200 years each time. Tytler said the cycle starts out with a society in bondage. Then it goes in this sequence:
Spiritual Faith
Dependence – We are largely centered here now.
Then starting over with Bondage

Excerpts from various News sources:

Bill Bonner’s “Daily Reckoning”
– As economies age, more and more people become ‘rentiers.’ That is, they get some special privilege…some inside angle…some conniving advantage. The latest numbers, for example, tell us that almost half of all households pay No federal taxes. They collect benefits – jobless benefits, food stamps, education, day care, Medicare, Social Security – without contributing to the system that provides them. Add to this number the millions of households that pay taxes but receive a large part of their money from the government itself – employees, contractors, lobbyists, etc. – and you have enough to win any election in the country.

– But the welfare chiselers and food stamp cheats are small time crooks. The big crooks go for billions. John Crudele in The New York Post:

– More and more people get something from government. Fewer and fewer are net taxpayers. This is the basic formula that bankrupts democracies. The political system becomes skewed towards spending; then, there’s no stopping it. Once the majority of voters and special interests has an interest in increasing spending – even by borrowing – rather than in limiting taxes and debt, the game is practically over.

– USA Today reports on the number of children whose lunches are furnished partly at taxpayer expense. The figure rose from 24 million in 1990 to 31 million today. That is, the welfare program increased by a third during the biggest boom in history. Think what will happen during the bust.

Bob Chapman’s “The International Forecaster”
– What else would you expect with a government that is growing four times faster than the economy? Over the next three and a half years the size of government will double. There will be millions more parasites to feed off the carcass of government. Throw in buckets of corruption and you have a failed government and a failed system.

Breakfast at school now is on the principal By Alfred Lubrano, Inquirer Staff Writer
– In a locally unprecedented move, the School District of Philadelphia will hold principals accountable for the number of students eating breakfast in their schools. Breakfast participation will be part of the report card that rates principals each year, along with categories such as attendance and math and reading performance.All 165,000 students in Philadelphia public schools, regardless of income, are eligible for free breakfasts. But just 54,000 ate breakfast last year, district figures show.

43 Million on Food Stamps
– (Wall Street Journal) Some 42.9 million people collected food stamps last month, up 1.2% from the prior month and 16.2% higher than the same time a year ago, according to the U.S. Department of Agriculture.
Nationwide 14% of the population relied on food stamps as of September but in some states the percentage was much higher. In Washington, D.C., Mississippi and Tennessee – the states with the largest share of citizens receiving benefits – more than a fifth of the population in each was collecting food stamps

Economists foretell of U.S. decline, China’s ascension
DENVER (Reuters) – To hear a number of prominent economists tell it, it doesn’t look good for the U.S. economy, not this year, not in 10 years.
Leading thinkers in the dismal science speaking at an annual convention offered varying visions of U.S. economic decline, in the short, medium and long term. This year, the recovery may bog down as government stimulus measures dry up.
In the long run, the United States must face up to inevitably being overtaken by China as the world’s largest economy. And it may have missed a chance to rein in its largest financial institutions, many of whom remain too big to fail and are getting bigger.
On the one hand, Harvard’s Martin Feldstein said he believes the outlook for U.S. economic growth in 2011 is less sanguine than many believe…..

#31 Potato on 01.11.11 at 11:55 pm

Tony, you sound like an excellent candidate for my new service, the “Slap of Sense”. For a nominal fee, I will drive you your house, ring your doorbell, and slap you. A full, open-handed slap across the face, or optionally delivered via glove-in-hand (a free option in the winter when gloves are readily available). I will also shout “come to your senses, man!” or “snap out of it!”

It’s a very cost-effective service, I highly recommend you look into it further.

#32 InvestorsFriend (Shawn Allen) on 01.12.11 at 12:00 am

Number 10, Kevin Quotes Robert Shiller

“Were all these people stupid? It can’t be.”

…Can Too!

#33 Soylent Green is People on 01.12.11 at 12:01 am

Aspers and Harper, A Toried Love
Ties that bind CanWest to the Conservatives.
By Marc Edge, 13 Nov 2007,

Steve Harper and Leonard Asper: Mutually assured ambition

The likelihood of any limits on media ownership being enacted by the new ruling party in Ottawa also grew scant for another reason. The Asper heirs had moved almost as close to the Conservatives as their father had been to the Liberal party.

[Editor’s note: This is the first of four excerpts from Marc Edge’s new book Asper Nation: Canada’s Most Dangerous Media Company.]

One senior editor at Global Television even ran in the 2006 election as a Conservative candidate in Toronto with Asper blessing. A new chairman of CanWest’s corporate board came directly from Tory ranks and aligned the Aspers uncomfortably close for some with the new party in power. A CanWest executive was discovered helping to fundraise for the Conservative cabinet minister in charge of broadcasting. Parliament Hill reporters for CanWest News proved more co-operative than most with the media management tactics of the new Tory government.

“Big media is in the driver’s seat of big politics,”

said Peter Murdoch of the Communications, Energy and Paperworkers Union of Canada. “It’s clear who the government is listening to. It’s not just outrageous or appalling. It’s scary.”

CanWest must quit referring to themselves as a newspaper and call themselves what they really are: an advertising brochure.


#34 Patz on 01.12.11 at 12:02 am

Remax vp Phil Soper was on the Bill Good show in Vancouver today. Should I tell you what he said or can you guess? Markets have stabilized, they will start to go up about mid–year as the recovery takes hold ya da, ya da, ya da. Listening to it was like watching a slow motion car wreck—I just shook my head. So, there’s one answer to why people like Tony hold on to their RE delusions. It’s what they want to hear and the Phil Sopers of the world are there to give it to them.

I used to have a modicum of respect for Bill Good as a journalist, very middle of the road, but willing to give diverse opinions a hearing. No more. He’s just another shill for the house pumpers and whatever else sells air.

I am in my car a lot and am getting frustrated at the lack of anything decent to listen to. Gian Gomeshi’s pretty good sometimes but I’m too old to be interested in an interview with the latest garage band from TO. Books on tape?

#35 Junius on 01.12.11 at 12:05 am

Hey Brad,

Give Book 7 of Plato’s Republic a read when you have a chance. It is the famous allegory of the cave.

The philosopher returns to the Cave after leaving and seeing the truth in the light outside. He returns to the Cave and tries to tell the people inside about the wisdom he has seen. Even though he speaks the truth they refuse to listen to him. They prefer to believe in the false shadows cast upon the walls. Eventually he has to leave before they kill him.

Not much has changed in 2500 years.

#36 LJ on 01.12.11 at 12:13 am

Calgary is totally unhinged. They are still slapping up “Million dollar” chipboard shacks all over the place while empty houses dot the suburbs and the sign weeds are just waiting to swing in the breeze come spring because of all the “pulled” listings recently.

Methinks that there will be a lot of unemployed hammer swingers soon unable to make their own mortgage payments. They might find employment driving around in their pickups putting up signs to sell the houses they built last year which sit empty, accruing interest payments for the banks and taxes for the city.

The busiest people come spring will be the sign makers. At least they will get paid, unlike the real estate professionals who will likely have to return their BMW’s for lack of commissions.

January sales, so far, are looking like a total rout. It will be interesting to see how they spin the numbers after this month…

If you want to check them out, Calgary daily MLS stats can be found at:

Calgary, meet cliff. Cliff, Calgary.

#37 Joe on 01.12.11 at 12:14 am

you know things are getting back out there with people being able to take out mortgages anywhere when slimes like harold the jewelry buyer are advertising that they are giving out loans now..give me a break

#38 Another Albertan on 01.12.11 at 12:17 am

Time to trot this out again:

“The Logic Of Failure: Recognizing And Avoiding Error In Complex Situations” by Dietrich Dorner
ISBN-10: 0201479486
ISBN-13: 978-0201479485

Buy it. Read it. Know it. I can’t recommend this book enough. It’s been on my shelf for over 15 years.

Moneta and Aussie Roy: I think you’d especially enjoy it.

Everyone else’s mileage may vary.

#39 The truth on 01.12.11 at 12:18 am

So a friend just put money down and bought 2 condos. Completion 2013. Location GTA.

Justification was rent will cover the mortgages.

Bears or bulls, one of them, are going to be awefully
wrong. Or could F et al. tinker with policies and attain a goldilocks housing market??

#40 Tom from Mississauga on 01.12.11 at 12:24 am

I’ve totally experienced the same as Brad. Trying to change their mind is hopeless. The only thing now is for the feds to inject fear into the market. There’s no other way to convince somebody that doesn’t know how a calculator works that their finances are not good.
Also, coming around to the sector ETF thing. Was going to buy CNQ with new TFSA deposit (a crown jewel corp). Then the upgrader exploded. Went with ZEO instead. Keep giving the dogs a bone Garth!

#41 The truth on 01.12.11 at 12:26 am


The problem with your logic is that the people in the cave might be right… And make policies to suit them. Anyone who ventures outside the cave loses a tongue…

#42 carol on 01.12.11 at 12:29 am

Hello. A little offtrack here, I need advice..I have my late husbands mutual funds with an adviser. Switched it from a bank to him.
Now I want to sign over the fund to his kids as that is really their money..They live in Alberta, I,m in Ontario.
Can the adviser switch the funds to the kids without being mad as the funds will then be out of his hands..Is there penilties? Thanks

#43 tired vulture on 01.12.11 at 12:29 am

I bet you 1k dollars….no crash in prices, no more 10%increase year over year in prices, no more multiple offers, 3-5 months to sale a house. But crash? No even close! seat down if you are waiting for a crash, you might get tired waiting for it.

My faith is unshaken that we will have a correction, not a crash, followed by a multi-year melt. Either way, not a lot of fun. — Garth

#44 Utopia on 01.12.11 at 12:38 am

Thank you for those insights today Garth. I agree that one of the biggest red flags on the scene this past week has been news that building permits have taken a nose-dive. Reports were similar all across the country too.

Permits for both residential and commercial construction are off by double digits in many regions. Clearly the business, investor and speculative class of builders now smell trouble coming. They are holding their fire and waiting for an all-clear on the economy.

At least the savvy ones. Those companies will survive.

In the broader picture though we can expect our unemployment rate to begin creepng up where construction and the building trades are concerned. This is a big deal because those jobs typically pay well.

If we follow the course of the US we should expect this trend to accelerate as the housing bust becomes apparent to all builders. We have to watch building permits more closely. They may be taken out and issued but if ground is not actually broken there is no construction. Permits really only represent plans, hopes and aspirations. Not reality, not yet.

A lot of holes can be dug, only to be backfilled by autumn if the market makes the correction that I am still anticipating.

Toronto in particular looks to me to be headed for real trouble with a huge oversupply of units built to appeal to first time buyers. That class of people are about as common as bell-bottoms lately.

If national home sales numbers do not meet the expectations of the speculative money by mid summer and property prices soften and point to a downtrend we will see project cancellations and a further tightening of the housing related labour market.

I have been doing an informal survey of friends and aquaintances. I have to be honest and say that I now believe spring might actually bring the last hurrah in this market. It is not good news.

I was really stunned by the ignorance to the risks of investing in real estate at this time. Some of the people I talked too simply refused to hear that trouble is brewing. Despite all the major media attention about an overheated market etcetera, all they really heard were the words “rates might be going up…buy now or be priced out forever”


CREA and gang might actually have the last laugh this spring as the last of the panicked doves fly right into the bird cage.

But so what. It’s only 3 decades of debt imprisonment, misery and regret that awaits……what can I do about it anymore if they won’t listen.

#45 Alex on 01.12.11 at 12:38 am

Guys and gals, honest story. I was in a bicycle shop in White Rock this afternoon, and the topic got around to real estate. I mentioned I’d sold my home a few months ago because 1) I wanted out of a mortgage, and 2) I believe prices are on a fairly serious downward trend. And this one guy from across the store pipes up, “Not here. It’ll never happen.” So I, being curious, ask him why. And he says, rather emphatically, “Because 1.2 billion Chinese want to move here.”


So I say, “Why would all 1.2 billion Chinese want to come to this rainforest?” And he says, “Because it’s cheap.”


But see, that’s the thing. Most Greater Vancouverites who don’t look beyond the realtor-backed MSM headlines *believe* this sort of stuff. Granted, you only have to spend a few hours researching Richmond, for example, to see that the mysterious “rich Asian” buyer isn’t quite so mysterious. However, here in lala land, the prevailing thoughts are: A) The Chinese will keep our prices rocketing skyward forever, and B) All 1.2 billion of them can see only Vancouver.

I foolishly tried to use logic with him, and he actually seemed to be listening. For a few moments anyway, until he sauntered off, muttering something about “Best place on earth.”

#46 mom on 01.12.11 at 12:39 am

Sanity is pissing in the wind against the collective orgasmic sigh of self interest, the blowback is a mouthful of said matter.

#47 Freaked in Vancouver on 01.12.11 at 12:45 am

Seems like the prices of houses should be going down, but they still just keep going up. Tons of excited people in Open Houses south of Vancouver, in White Rock, B.C. on Sunday looking to buy. (Mostly Asians).
Oh well, who knows? I’ve given up trying to predict. In the meantime, I am enjoying my addiction to this blog. Love the writing, Garth, and enjoy most of the posters, who seem to be a pretty intelligent group. Best entertainment anywhere, who needs TV.

#48 Patz on 01.12.11 at 12:50 am

Some on this blog put on the tin–foil hat at the drop of a, well, hat. Others are accused of receiving their info through its antennae. So what would you think of someone who said that the sub–prime crisis that tipped the economy into its worst trauma since the Great Depression was either carefully planned or willfully allowed to happen?

Well meet conspiracy theorist Raghuram Rajan, the IMF’s former chief economist.

[He] argues that the subprime debt build-up was an attempt – “whether carefully planned or the path of least resistance” – to disguise stagnating incomes and to buy off the poor. “The inevitable bill could be postponed into the future. Cynical as it might seem, easy credit has been used throughout history as a palliative by governments that are unable to address the deeper anxieties of the middle class directly,” he said.

#49 Fractional Reserve on 01.12.11 at 12:52 am

What Garth has been teaching on this site since its inception are really time tested methods of wealth development. What Garth has been saying has been said before but it bears worth repeating because so many either don’t get it or do not want to get it when it comes to the way to achieve true wealth. Compare the Richest Man in Babylon book, written in the 1920s and summarized in wikipedia and see that it is the same message Garth has been preaching.

Real wealth comes through realized income that is kept and re-invested so that it continues to make money. Real wealth begins to develop when your primary residence is paid off and you invest your surplus income wisely. Wealth builders are sensitive to their money as are top traders. Read Jack Schwagers two books consisting of interviews with the world’s top traders and glean insights on how the world’s top traders handle their money. The traders interviewed are either centi-millionaires or billionaires. The bottom line for so many in society is that they are merely prancing through life with their illusory home values and illusory lifestyles that are nothing more than debt fueled conspicous consumption with no underlying wealth. It is all one big “look at me show”. One of the traders in Jack Schwager’s book stated he drove a used car and rented a condo. This was a trader with millions in his account. Nuff said.

#50 Fractional Reserve on 01.12.11 at 12:53 am

Here is the wikipedia info on Jack Schwager’s books. Forgot to post it in my previous message.

#51 BC Bring Cash on 01.12.11 at 12:54 am

Good stuff Garth. My elderly father tells me of my grandfathers experience during the 1920’s in Finland. Salesmen were running all about the country side trying to sell sewing machines. People of course would respond to the sales pitch with, I don’t have the money. The salesman would respond, no problem you can buy it on payments. No matter how things change they always seem to stay the same. Keep everybody in debt. Forever.

#52 Boombust on 01.12.11 at 12:55 am

“Global BC is just another arm of the Liberal government and Remax/LePage. Big Chris keeps smiling and flapping his gums in agreement like a big dummy…”

True enough. However, it wasn’t Global, it was CTV. Same shit, different station.

Can’t stand to watch pretty boy Chris Gailus on Global. And, his American-sounding accent grates on my nerves.

#53 Daniel on 01.12.11 at 1:01 am

I will keep you posted on my real estate endevour here in Calgary.

My wife’s mom passed away, leaving us the house with little mortgage. It was in rough shape, so I had it painted, updated the bathrooms a bit, new carpet and a cleaning, about 10k worth of reno’s.

At the peak it was valued at about $400k, last year the assessment was $292k and this year the assessment was $338k (as an aside – what a great way to make up the property tax “we’re only increasing your tax by 5%, but your house is worth 10% more – so you actually pay 5.5% more this year”)

Anyway. I’m going to list it for about $334k and hope for a quick sale – I’ll keep you posted.


#54 Marcus Aurelius on 01.12.11 at 1:01 am

It’s the same here in Australia

Normally, living in Western Australia (or WA for short, meaning “Wait Awhile”) we lag the rest of the world in economic matters. Not so with the real estate situation. We are moving hand in hand with Canada.

Garth says first listings rise and sales fall. Well, this from yesterday’s paper:

Listings rose by more than half last year, prices are easing in most areas, first home buyers grant is no more so the low end of the market is quiet.

And yet, most of my friends — all intelligent people — are up to their eyeballs in RE debt. Some have more than one investment property. I fear for their financial future, yet I cannot tell any one of them that what they are doing is so risky.

This week there were flash floods in Queensland following weeks of heavy rains. One town, Toowoomba, had a torrent carry cars and even a shipping container down the main street. You can see the videos on YouTube. Watching this last night on the news I was struck with the symbolism of it. That area last had floods in 1974, not unheard of but just outside of the memory of most people. And yet, after decades of quiet, the water carried them away in a matter of minutes. With the water up to your shoulders on a main street, there is nothing you can do.

That’s how I picture the economic situation that awaits us.

#55 Survivorship on 01.12.11 at 1:02 am

Wetcoaster – look up survivorship bias. 1 in 100 people make money shorting a bubble and they are the ones writing books about it.

#56 Pat on 01.12.11 at 1:02 am

Tony is OK, will survive. When his wife goes back to work their combined income should be sufficient to pay the bills even with higher mortgage rates.

You sometimes exaggerate the financial perils facing the people in your stories.

Actually it’s worse than I reported. She wants another baby. — Garth

#57 nonplused on 01.12.11 at 1:08 am

It’s wrong to view humans as ultimately rational creatures. True, we have the ability to reason, but for the most part it’s a last resort. Before thinking, we first consult our emotions (or they impose themselves on us), resort to habit, act randomly (learn through trial and error, an almost evolutionary process), or follow the crowd. The desire to “live with lawyers” is far more compelling than any chance look at your own personal finances. So Tony and Teresa are merely human, to a fault, but no more so than the rest of us.

In fact, in most situations in life, rationally thinking it through is useless for most people. They don’t have the knowledge to make a rational choice, don’t have the time to acquire the knowledge, and even if they did there is a fair amount of uncertainty that the knowledge acquired is accurate or relevant to today’s situation. Just look at all the uncertainty regarding European government debt right now. Rationally, they are going down and nothing can stop them, and so is the US and Japan. (And Canada with a delay of it seems 5 years or so.) But emotionally a stop gap must be found to kick the problems down the road even just 6 months, in the hope a miracle will happen. After all, it worked for Japan for going on 20 years now, even though it looks like what was inevitable then is still inevitable now, only with worse consequences. Still, 20 years they got out of it. That’s worth something to a species that thinks 4 years is forever.

Sure, there is a small percentage of us who can undergo the education and eventually become part of the team that developes the iPhone. But it requires years of study and extreme concentration, and usually incentive programs of one sort or another that provide cash to spend on emotionally pleasing goals.

And some of us can even train in economics, the most dismal of all pursuits. The line that started with Adam Smith and ended with what is now called “Austrian Economics” (and has now moved somewhat into something called “Behavioural Finance”) probably even started to understand the human condition somewhat. But in today’s world, economics is viewed as a means to political ends, which are highly emotional, and there is no room for Adam or Ludwig.

Fact is we are great apes carrying around a rather large cerebral cortex. That cerebral cortex probably evolved to facilitate spoken communication, and to advance hunting, social, and foraging skills. It also probably became a sort of “peacock’s tail”, in that the ladies find humour extremely attractive. To assume the mind has kept up in the 200 years we’ve had to adapt to what’s evolved on the technology front is folly. There will be many fits and starts, for a long time to come. It will be 10,000 years before the proper way to deal with what we have today is “common sense”, and by then we’ll be 10,000 years behind again.

It is the “fatal conceit” to assume otherwise. You really aren’t as smart as you think, no you cannot save the world with your ideas, and if your brain is funny enough to get chicks great, but don’t try and tell me what to do, because you don’t and can’t know what’s best, except through trial and error. And while I am destined to suffer my own errors, I have no interest in suffering yours.
Thus, the state we are in is and always was unavoidable. The only clearing mechanism is when Mark Carney decides enough is enough, and starts to send real messages to the populous and the elected buffoons they have doing their bidding.

That is why we are on the way, eventually, after a bout of confiscatory socialism, to a gold backed (but this time electronic and not paper) currency. Notional currencies are fine, same as a mortgage or a bond, but they have to be backed by final payment in something. As Alan Greenspan himself testified before congress, paper currencies are only valuable so long as they are in strictly limited supply. And he also took credit for simulating a gold reserve system.

It has nothing to do with Garth’s (and this is one area I disagree with him) idiot suggestion that gold has no use. It has 2 uses. First, girls love it so you better buy them gold jewellery in bigger quantities than their other suitors, and second, it’s final payment, like milk, a car, gasoline, or any other thing you can touch. It’s not a promise to pay in the future, but final payment. This is the part modern man has lost. Oh sure, it may be useless in every respect to have a gold coin. But you have it. And the women want it transformed into a nice necklace, thus its irrevocable value. Women trade and display gold. Have since it was discovered, will forever.

#58 BC Bring Cash on 01.12.11 at 1:15 am

# 27 wet coaster

It’s amazing the fraud that these so called ” Servants of the People” can get away with. Including pretty face, rambling lunatic Christie Clark. There’s always another “A” hole to take over from the previous fraud artist. The BC rail affair is one of the biggest scams this country has seen. Makes Mulroney’s Air Bus scam look like child’s play. By the way I’ve heard some of her rants on her radio show. SHE IS TEA PARTY MATERIAL… What a loonie tunes.

#59 Brad in Cowtown on 01.12.11 at 1:27 am

re: #19 “How are times bullish Brad. The market in Calgary has been in decline for three years, if anything buying now constitutes the opposite of going with the grain…”

The Calgary market has gone sideways for 3 years. The only way you can call a “decline” is if you start drawing your line graph from the absolute peak in 2007. And even then, you’re down maybe 10% at the most. But it is important to note that if you go back 3 more years, you’d see that Calgary home values doubled, from 2004 to 2007. So, if you double your investment in 3 years, and then only lose 10% the following 3 years, yes, I still call that a bull market.
The other reason I still call it a bull market is overall sentiment. In bearish times, people are fearful and nervous. In bullish times, people are greedy and confident.
Do you smell any fear in this city? Not me.

#60 604genX on 01.12.11 at 1:32 am


Metro Vancouver listings continue to pile on while sales remain tepid. We passed the 10,000 listing mark today.

January 11th, 2011
New Listings 261
Price Changes 56
Sold Listings 44

Total listings: 10,019

#61 Skigoddess on 01.12.11 at 1:41 am

I overheard a couple of young families in a coffee shop the other day talking houses & finances. The comment that floored me was “I heard they’re thinking of getting rid of 35 year mortgages. What are they going to replace it with?”.

Er, sensible borrowing perhaps? Living within your means?

#62 SophieZombie on 01.12.11 at 1:47 am

Garth you are the twelve-step program for the realestate addiction. Or maybe the methadone, since your blog is causing dependance too, but surely safer. Keep up the good work !

#63 45north on 01.12.11 at 2:06 am

Justin: Major world empires of history, dating the time of their rise and fall.

In the days of those kings, the God of heaven will set up a kingdom which will never be destroyed, and this kingdom will not pass into the hands of another race: it will shatter and absorb all the previous kingdoms and itself last for ever-

#64 Dmitri on 01.12.11 at 2:12 am

Ok, anyone who is thinking about buying a house in TO should go to Florida for a week and have a grand tour with local agent. That is what I was telling to my clients some time ago. Even said: look at me, look at what I am doing. Sold almost everything. Had to leave the trade (RE agent army). They bought anyway. Brick layer and wife bank teller: 500,000 mortgage, software engineer, house wife, 300,000 mortgage and list goes on and on and on. And reverse is true too. 1996-97 I was borrowing my brains out and buying RE as much as banks would allow me. Funny at one point they turned me down on mortgage because I was self employed and said: If you bring paper that you work at McDonald for 7 dollars an hour we will give you the money, but no to self employed. :-) But the same people who crave for house now were telling me in 96-97: You are crazy, RE is a killer, everybody looses on it and list of arguments goes on and on and on. Long live and prosper contrarians! But if you are contrarian and put your money where you mouth is you will prosper and loose all your friends and most relatives. That is what I feel calling them from my Miami suburb house (for which I paid less than people pay for their cars parked on their McMansion driveways in TO suburbs) to say Merry Xmas and listening back (even from my mom) that I am lucky ( lottery winner (never bought a ticket in my life) and do not understand hardships and life commitments (read mortgage, credit cards, cars etc payment) of normal people.

#65 bridgepigeon on 01.12.11 at 2:13 am

Costs to Consider:
Our recent sale of TO home went for $645,000. We were extremely rushed and anxious to sell before winter and barely completed final renos in November. 5% commission, staging fees came in at 1/2% ( extremely good investment which helped sell at top dollar) plus HST came to $40,000, legals etc. $862. Land Transfer Tax they paid around $20,000. $61,000 simply to buy and sell gone, plus our initial closing costs. Final spruce ups; shingles, paint, bay window, hardwood, WTF else, close to $20,000 (I’m a contractor doing everything quality but at rock bottom prices). That brings it up now to $80,000 in costs not considered when calculating one’s investment strategy, aside from all the other renos over the years…

#66 Aussie Roy on 01.12.11 at 2:20 am

Aussie update

Market had – 1.5% decline for owner occupy loans.

Investors down @ – 2.3% in Oct 2010, 5.7% lower y/y, the biggest drop since March 2009.

Overall new mortgages @ – 11.5 y/y[email protected]/Lookup/5609.0Main+Features1Nov%202010?OpenDocument

ABS stats above this is how they are reported by MSM.

Garth I think your topic today is excellent, too many refuse to see house price speculation for what it is, speculation. Its easy to look around the world to see the outcome of this housing delusion but many cling to the differences when they should be looking at the similarities.

#67 Edmontonian on 01.12.11 at 2:44 am

In regards to Garths statement in the latest post:
“Try selling a house in Alberta these days for what you paid two years ago.”

It’s 2011 and with interest rates at a 60 year low we have already had a price contract into 2006 prices! It’s been a slow up and down (but now going more down consistantly) just like the US stockmarket in the late fall of 2008 in a super slow dragged out version in the Canadian Housing Market.It’s like a “slow motion plunge”!

#68 Party On Garth on 01.12.11 at 2:44 am

“This is my lifestyle. And I want to keep my wife.”

Absolutely pathetic!

His whole ‘life’, self-esteem, future hopes and the ‘glue’ of his marriage is a freaking house?

Are people really this insecure and shallow?

Apparently so.

I anticipate lots of personal tragedies in the few short years to come, but hey, couldn’t happen to a more deserving bunch.

Let the bodies hit the floor.

#69 Party On Garth on 01.12.11 at 2:47 am

The level of willful self-delusion is epic.

So shall be the bite of reality.

#70 tmg on 01.12.11 at 3:08 am

#30 Justin…do you think westerners can learn from the past and reverse things? What if we all stopped demanding cheapo “made in China” stuff and demanded quality goods made in North America…stuff that wouldn’t clog up the landfills…toaster ovens that lasted more than 2 years?? What if we started wanting better rather than more?

…and for Garth…do you think we will see any increase in the # of rental properties in Vancouver. It’s slim pickin’s out here. We’re still looking to move from our moldy rental house but can’t find anything. We had a hearing with the tenancy board, but I’m afraid if they rule in our favour, there will be a mysterious fire.

#71 pablo on 01.12.11 at 3:15 am

Most of you bloggers have missed the most salient point in garth’s story; Tony is stuck between a rock and a hard place. “But,” he brightened, “my house is now worth seven bills.” So sell it and crawl out of debt, I offered. “No way,” he said. “This is my lifestyle. And I want to keep my wife.”
Tony has no choice; if he pushes for a sale and wife isn’t fully on board then he looses her and the kids. If he wants to keep the family together he has to stay put, bite his tongue and watch his equity dwindle and as long as they can make the nut every month on their lifestyle he gets to keep the status quo intact., his hands and feet are tied and he may as well gag himself for good measure. If his income drops any further, if the wife decides to become a homemaker rather than returning to her job, if rates rise before he renews…..if, if, if, then TSHTF big time: he’ll be saying good bye to the house, the kids, their networth, the wife, and most of his income once her lawyer finishes him off in family court.

#72 Derek on 01.12.11 at 3:34 am

#30 Justin wrote:
Exhibit B)
Alexander Tytler, a Scottish historian who lived at the same time as the American Founding Fathers, who described a repeating cycle in history.

Except he didn’t. You have fallen victim to the Tytler hoax. See the Tytler article on Wikipedia or Google “alexander tytler hoax” for more info.

#73 mab on 01.12.11 at 3:56 am

Debt is a killer:

On December 23, 2009, just over ONE year ago, the US Treasury’s
debt ceiling was $US 12.104 TRILLION. On Christmas Eve, December
24, 2009, the US Senate signed a bill raising the ceiling by
$US 290 Billion to $US 12.394 TRILLION. On December 28, 2009,
Mr Obama signed that bill into law.

Just over six weeks later on February 12, 2010, Mr Obama
signed another bill which raised the Treasury’s debt ceiling by
another $US 1.9 TRILLION to its present level of $US 14.294
TRILLION. Thus, in the month and a half between
December 28, 2009 and February 12, 2010, the borrowing
limits on the US Treasury were raised by $US 2.19

#74 mrCatfish on 01.12.11 at 4:09 am

I was in Winnipeg over the holidays visiting my family. A friend of my sister dropped by and she and my sister were discussing the house across the street which is unoccupied. She said she knew someone who was looking to buy an investment property, and I remarked that it seemed very risky. She replied, “You can’t go wrong buying property in Winnipeg.”

I mentioned that that’s what people in Dublin and Phoenix used to say, and then she said, I couldn’t believe it, “It’s different here.” She went on to explain that because houses were so cheap compared to Toronto, people will keep on buying them.

I was flabbergasted. This insane logic, coming from a well-educated, intelligent person, left me dumbstruck. The fact that no one will buy a house in Winnipeg no matter how cheap it is compared to Toronto if they don’t absolutely have to live in Winnipeg seems not to have occurred to her… that people in Toronto might be scanning the country for the cheapest houses seems to though.

#75 Jody on 01.12.11 at 5:38 am

What gets on my tits is that idiots like Tony are going to go screaming to the government when their “investment,” starts giving them some afternoon delight. My money is on a new government program aside from the CMHC to help/enslave people like Tony at the expense of people with a clue. It’s like Frederic Bastiat spoke of, legal plunder – all forms of state violence employed to benefit one group at the expense of the rest of society.

As the government expands, it fosters the most antisocial aspects of man’s nature, particularly our urge to attain our goals with the least possible exertion. It’s much easier to acquire wealth by means of forcible redistribution by the state than by exerting oneself in the service of one’s fellow man. The character of the people begins to change; they expect the entitlement, things they once hesitated to ask for as charity become a right. That is the fallacy in the usual statement that “it would cost only $X billion to give every Canadian who needs it” this or that benefit. Once people realize the government is giving out a benefit for “free,” more and more people will place themselves in the condition that entitles them to the benefit, thereby making the program ever more expensive. A smaller and smaller productive base will have to strain to provide for an ever-larger supply of recipients, until the system begins to buckle and collapse. This is how a housing collapse will come to Canada, a program will be strained and break, everything will be sent into a freefall.

#76 Devore on 01.12.11 at 5:47 am

In Vancouver, it’s like somebody flipped a switch on December 31. We’ve had a month full of sales > new listings days. But since Jan 1st:

January 2011 month-end projections
Days elapsed so far 6
Days remaining 14
Average Sales this month 72
Average Listings this month 231
Projected sell/list 31.2%

Sales down, listings way up.

N/W Van so far this week:
New Listings 61
Price Changes 8
Sold Listings 4

North and West Van have been hobbling along for six months now, very slow markets.

#77 I. Muvrini on 01.12.11 at 7:26 am

The greeks had a word for this : scotoma, a mental blindspot.

One can help the blind and visually impaired, but there is nothing to be done for those with 20/20 vision who refuse to see.

#78 Markey on 01.12.11 at 8:09 am

Why is it so hard to believe that housing prices can crash? I saw prices drop in the ’70s in Edmonton to about a third from the height. I took over 30 years to recover. Ditto for prices on Vancouver Island in the 80s when vendors were begging potential buyers to take properties off their hands for ridiculously low prices and offering vendor-carried mortgages. I lost horribly in the early 90s in Ontario when the marriage fell apart and the matrimonial home re-sold for $30k less than it had been purchased for a year or so earlier.

My own indicator that the bubble is about to burst is when buyers line-up – as though to buy tickets to a Rolling Stones concert – to purchase in a new development. I’m surprised that housing hasn’t already tanked. (Guess it’s those low interest rates and relaxed borrowing qualifications.)

#79 Guan-Di on 01.12.11 at 8:38 am

T.O. Bubble Boy at #8

Oh come on, it won’t be that bad, F would never drop the am period from 35 to 25, the worst it will be is from 35 to 30, so I mean come on, how bad could it really be if say, as you put it, rates rise to only 5%… let’s see here… carry the two… I mean the mortgage would only go from $1,488 to… $2,150, so only $662 more a month (not your rediculous $850), so you know, just $8,000 more a year… which he could cover by cashing in his RRSPs and TFSA, minus withholding tax, he’d only need to come up with, what, an extra $4,500 over 5 years so $75 a month and by then he’d only owe about $370,000 on the house, would have nothing saved for retirement other than his wife’s teacher’s pension and would have three kids a few years from college or university… problem? The worst part of this is that someone might look at what I just wrote and think: “Hey, yeah, he’s not so screwed afterall!” Oh wait… no, no, no… they are two years into their mortgage and still owe $450,000 so the numbers are a little off… they should be higher, but yeah, totally, whatever, they’re completely screwed!!

#80 VMT on 01.12.11 at 9:02 am

@ mab

Senator Obama On The Federal Debt Limit

“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies…. Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”—- Sen. Barack Obama (D-Ill.), March 20, 2006

#81 Moneta on 01.12.11 at 9:10 am

You know it’s a bubble when outdoor kitchens have taken off in Canada. 10 weeks in the summer with maybe 3-4 excellent weekends and people are borrowing to invest in assets that spend most of the year in the elements. No need to learn the basics on how to choose the fastest depreciating “investments”.

And they have the gall to say that this trend is sustainable.

#82 Moneta on 01.12.11 at 9:20 am

Here’s a scary calculation…

A $450k mortgage @2% with 35-year amortization
= $1,488.77 per month

After 5 years, the principal is down to “only” $403k

For years 5-10 on the mortgage, if F changes mortgage limits to say 25 year amortization, and rates go up to say 5%…

$403k mortgage @5% with 25-year amortization
= $2,343.87 per month

Ande here is an even scarier one…

Your 450K house drops to 285K if buyers can only take 25 year mortgage, 10% down @ 5%.

So on top of paying $500 more per month, your house is now worth 175K less.


#83 Steve Lee on 01.12.11 at 9:24 am

How can we buy houses when the job market sucks so bad??

Canadians are reflecting, rightly, that the job market isn’t as good as it was when times were good and they say ‘we’re in recession’ because of that, where economists say ‘we’re in recovery’ because we’re not as bad as we were during the recession.

#84 Moneta on 01.12.11 at 9:25 am

Kevin on 01.11.11 at 11:12 pm
Here is a quote about why most people bought into the bubble from Robert Shiller
My theory is that hundreds of millions are innumerate and millions of the numerate are preying on the innumerate.

#85 T.O. Bubble Boy on 01.12.11 at 9:28 am

Here’s a phrase that should be banned from RE Association press releases:

“as expected”

In February 2010, the CREA “expected” that 2010 sales would be 13.3% higher than 2009:
(Feb 8th article)

But, according to CTV Toronto, apparently this forecast never happened:

“CREA has yet to release year-end data for 2010, but preliminary reports from two of the biggest markets, Toronto and Vancouver, released this week indicate 2010 declined as expected.”

Are they friggin’ serious?

That February 2010 forecast said that CREA expected a 19.8% sales increase in B.C. and a 14.2% increase in Ontario… but again, apparently this never happened!

Is it really that difficult to type in “CREA forecast 2010” into google news to validate these statements before publishing something?

#86 Moneta on 01.12.11 at 9:35 am

Im guessing you were telling everyone to get out in the winter of ’08/’09 as well. Now he has $250,000 of equity and this is a terrible thing in your eyes I guess.

He has no equity gain unless it is crystallized. Did you miss that? — Garth

If you’re buying for the long term, you should be living within your means. This means you should be able to concurrently build a fully funded retirement portfolio, 18% of income per year, and retire your mortgage by the age of 60-65.

If your strategy is not leading to this, you should be questioning your position. If your house is not paid off by around 60-65 and you are not building an investment portfolio, chances are you are renting a lifestyle.

Pay it off by age 65? I think 45 is more like it. — Garth

#87 tony w on 01.12.11 at 9:38 am

Building permit issuance lags sales especially in the GTA where starts can lag sales by 1 year+.
There were record sales in the 4th quarter of high rise condos that won’t be reflected in starts statistics until late in 2011 or 2012.
So I don’t think MSM storires reflect the truse state of sales in the “delusional” high rise GTA (especially 416) market.

#88 BDG-YYC ... Stuck On Variable on 01.12.11 at 9:39 am

#8 T.O. Bubble Boy on 01.11.11 at 11:10 pm

But here’s the kicker … the variables will slowly bleed to death in a state of denial and hope.

So that 2% is great as long as it lasts but that little bump to 5% right now on a fixed rate is a big $10K after tax bump which can represent an extra 15% or 20% of a decent after tax income. Trouble is that someone sitting at a 2% rate is not likely to want to eat the pain of going to fixed rate if they can avoid it and avoid it they will for as long as they can even as rates start to creep up. As variable rates start to rise the fixed rates will be rising of course. As the variable rises those monthly payments will eventually start to hurt but through the process Joe variable will be clinging to “hey … they’ll come back down soon” … “they’ll never hit 5%” … etc. until … well … they do hit 5% and the fixed is then sitting at 8% at which time they’ll be choking on those payments of $2,300 and stairing in wide eyed horror at an 8% fixed that commands $3100 a month to service … that represents over $55,000 in pre-tax income – and almost triples the current 2% variable payments.

Now there is a very meaningful number of variable rate households out there and many of them who are in markets that have been sliding – Calgary and Edmonton to name a couple – are already sitting with little equity and just able to cover all their expenses as it is with a 2% variable.

There are a lot of folks who are already trapped between the proverbial rock and a hard place with little or no equity and unable to afford to consolidate all of the debt they have ( HELOCS, CC’s, Auto etc.) all of wich is fully exposed to ravages of rate creep. Add to this the effect of a concurrent erosion in prices … and … well … it ain’t pretty.

Yup … stuck on variable … but … “we’ll be just fine honey … can’t happen here … we’re different”.

#89 bigrider on 01.12.11 at 9:43 am

I can tell you that conversations over the weekend and early part of this week ,with some of my well monied associates and friends, regarding real estate is still firmly entrenched on the bullish side. They do not buy any of the arguments against placed on this forum or any other. I have made many aware of this no avail.

One conversation with a close friend, 5500sq ft home in the burbs worth just under 2mill, 500k mortgage, cottage 300k , 150k line of credit very little liquid is that both are best investments you can make and only have higher to go. Went on to say that in 10 years both will double in value !!
Meanwhile carrying costs on both including property taxes and all as discussed here many times amount to about 50k a year. I told him 500k minimum will be eroded in 10 years based on that alone so your estimates on future appreciation better be accurate.
Alas, my words fell on deaf ears.

You simply underscore my point. Wilful blndness. The longer this affliction continues, the more pronounced will be the consequences. — Garth

#90 Moneta on 01.12.11 at 9:48 am

So what would you think of someone who said that the sub–prime crisis that tipped the economy into its worst trauma since the Great Depression was either carefully planned or willfully allowed to happen?
I’ve worked in banks. Bankers could not get out of a wet paper bag, never mind thinking outside a box.

It was not planned, it was willfully allowed to happen.

#91 the hangover 2 on 01.12.11 at 9:50 am

Great column today, I have lived in calgary since 1976 and have seen two downturns, and worked with young people and they dont have a clue like when I bought my first house here in 1981.

#92 Carpe Diem on 01.12.11 at 9:52 am

G-Man, we share the same view when it comes to irresponsible budgeting –

Working in a Trustee’s office – we had the highest volume of filings for December in recent memory. If that’s not a telling sign – what is!

I could tell you stories about client’s that would make you think I was making it all up –

We just had one client, lost there job – single parent with a grown child still living at home – and to this day,they have hawked jewerly to pay the basic living expenses – but the real kicker – has a mortgage – and can’t seem to understand that the house was saved from being taken by the Trustee cause there was no equity – but they continue to struggle (barely) to keep it..Why I asked – cut this money pit now – but this is there sanctuary – nothing more – nothing less.

I own a home – almost mortgage free – but my house is shelter – warm in the winter, cool in the summer – keep the rain off my head – thats it – no attachment, no kissing my house good night –

Some people have sadly reversed what level of importance they must adhere too –

Anyways G-Man, another EXcellent Post my friend!

#93 boomer62 on 01.12.11 at 9:57 am

#28 Barrie Real Estate on 01.11.11 at 11:46 pm

What good is an appraisal if you are having trouble putting food on the table?

#35 Junius on 01.12.11 at 12:05 am

Try Dante Aligheri’s Divine Comedy, its a little more up to date.

#36 LJ on 01.12.11 at 12:13 am

Few ‘hammer swingers’ are stupid enough to build on spec.

#94 Moneta on 01.12.11 at 10:04 am

I’ve worked in banks. Bankers could not get out of a wet paper bag, never mind thinking outside a box.


Most wholeheartedly believe that repackaging debt generates wealth.

#95 Aussie Roy on 01.12.11 at 10:05 am

US Housing -Home price drops exceed Great Depression

(Reuters) – Home prices fell for the 53rd consecutive month in November, taking the decline past that of the Great Depression for the first time in the prolonged housing slump, according to Zillow.

Home prices have fallen 26 percent since their peak in 2006, exceeding the 25.9 percent drop registered in the five years between 1928 and 1933, the housing data company said in a report on Monday. Prices fell 0.8 percent over the month.

#96 Mike on 01.12.11 at 10:17 am


War is Peace;
Freedom is Slavery;
Ignorance is strength;
Debt is Wealth

That is genius.

#97 bigrider on 01.12.11 at 10:40 am

Just another observation never really covered on this blog:

When it comes to Real estate investments, people approach them with great optimism, citing numerous examples of people who have “made money” on their homes, rentals etc. cherry picking so to say and ignoring all of the bad news stories that abound today in other parts of the world and also ignoring the numerous costs of ownership both opportunity and otherwise. Investors who got wiped out in the crash of 89 and into the 90’s long forgotten.

When it comes to financial assets, stocks for example ,they approach with great skepticism citing only the negative stories repeatedly, Nortel for example ,while ignoring the numerous good news stories that abound today(rally since bottom of march 2009 largely viewed with dis-belief).

Not sure why that is Garth or anyone else but am open to viewpoints on this extremely evident psychology that exists.

#98 fancy_pants on 01.12.11 at 10:42 am

To the greedy who helped inflate this RE bubble: burrow back to your dwellings of unearned social status and keep living the dream… reality will seek you out all on it’s own. blind by choice.

To the responsible but naive newbies in the RE market: my heart goes out to you as you will be the true victims when the RE bubble bursts. blind and mislead.

#99 bigrider on 01.12.11 at 10:44 am

Garth’s response to bigrider #89-“wilful blindness…

I know Garth. I can tell you that I run in some well healed circles. I can tell you that in order for me to keep my blood pressure down, I need to avoid the subject.

Problem is it is so frustrating to hear the conversations, deliberately initiated, I believe , to my benefit(LOL) as my viewpoints among my peers are well known

#100 AxeHead on 01.12.11 at 10:47 am

#86 ‘Retire your mortguage by 60-65’

I’m with Garth on this one. How depressing to wait until you are old to have no mortgage. I bought my a 2nd house in 1986 for 75k, 20k down payment1200 sq ft bungalow, 5 years old, in Alberta. I paid it off in 5 years on an average salary of little over 30k per year.

That approach seems so ‘foreign’ now.

#101 Oasis on 01.12.11 at 10:48 am

oops, here we go again.

USD falling, US Bonds selling off again..

Commodities rising… foods up, metals up, energy up.
there’s only one way this will end.

print print print….

USD MUCH MUCH LOWER, US interest rates much much higher… and everything getting a lot more expensive.

it’s called… INFLATION.

print print print.

#102 Google: MGTOW on 01.12.11 at 10:50 am

Tony’s wife has no intention of returning to work and will leave him if he can’t provide a big house. What a sad marriage.

#103 BDG-YYC on 01.12.11 at 10:53 am

#59 Brad in Cowtown on 01.12.11 at 1:27 am
“Do you smell any fear in this city? Not me.”

Denial and Bull actually smell very similar to fear … its just a matter of intensity.

Calgary market level is actually near 2006 levels. Nobody has made a gain in over 5 years. A key characteristic of bull martkets is … um … rising prices represented by a progression of higher highs and higher lows.

At best we have a sideways market characterised by complacerncy … perhaps even cautious optimism. By the way, the peak of a bull market is generally characterised by an extreem in bullish sentiment and and a spike in prices as everyone who can rushes in before they are priced out. Now … if you were to compare today’s sentiment to that of a number of years ago I’m sure you’d find a great deal of difference in expections and conviction with not nearly as many people who are convinced the outlook is for much higher prices over the next few years. By the way … the average homeowner won’t be demonstrating fear until they have something immediate to be afraid of … like … not being able to make a payment – or seeing something on their block or in their complex sell at a price that puts them under water. There are an increasing number of people who are beginning to notice that prices are lower than they would like or need them to be. Listings have fallen off for a reason and part of that has to do with some people delaying their plans in hopes of better prices in the spring. This hope will turn to fear that even you can smell if those hopes are dashed come spring.

One more thing … about fear … it shows up in peoples eyes long before you can smell it in their pants. Use your eyes … look … can you see the smell coming? :-)

#104 Worldwide on 01.12.11 at 10:54 am

I love the people who say “RE will double in value in X year” they would never buy it at that price themselves… so how do they expect to sell it?

Maybe they want to sell it to their kids or someone else’s kids, ya, that’s it. $1m starter home, great investment for first time buyers, new families or people with no income.

#105 45north on 01.12.11 at 11:12 am

VMT: Senator Obama On The Federal Debt Limit

Obama promised change and he has!

Moneta: My theory is that hundreds of millions are innumerate and millions of the numerate are preying on the innumerate.

Numeracy is the ability to reason with numbers and other mathematical concepts.

Innumeracy is a lack of numeracy.

#106 X on 01.12.11 at 11:20 am

Tony, what is your home/asset/resource worth if you don’t realize/monetize it? Nothing. It is good for the ego though isn’t it. You are living in a big $700K warm hug.

In your situation it is good that your wife will get a pension though, but you still need to add to your retirement savings big time.

The more I read, the more I am convinced a 10% drop in RE valuations, (as proposed by Garth) then a slow melt in RE valuations, really is not as big an issue as the coming financial problems many will have in retirement.

#107 Daisy Mae on 01.12.11 at 11:28 am

“Gordon Gekko is a fictional character and the main antagonist of the 1987 film Wall Street and the antihero of the 2010 film Wall Street: Money Never Sleeps,[2] both by director Oliver Stone…..”

#108 Slice on 01.12.11 at 11:36 am

“It’s how people view misfortune. Like car crashes. They’re riveting when you drive by and gawk at the flashing lights and all the cops. But you’re immune. Like the guy at work who got melanoma. But that won’t keep you out of the sun. Like a housing crash wiping out the US middle class. But no lessons here.”

That’s it! That’s exactly it!

The safer people feel, the more risk they take. Therefore the safer you feel the more likely you will be hurt.

By the way, this is not from finance. I work in health & safety, but the same thing happens in all cases.

#109 boomer62 on 01.12.11 at 11:39 am

#97 bigrider on 01.12.11 at 10:40 am
#99 bigrider on 01.12.11 at 10:44 am

This post is about the blind (by choice) not the dyslexic by choice.

#110 Stevermt on 01.12.11 at 11:41 am

#31 potato
Too funny…if this caught on you would be verrrry busy !
A much needed service and a great niche market too.

#111 bridgepigeon on 01.12.11 at 11:46 am

Anything alternative to keep your sanity is good to listen to as we spend so much time in traffic now. In TO the university stations are often good 88.1 89.5 and 106.5 new aboriginal station. Sometimes I even listen to Salt Spring Island radio at home on the net.

#112 refinow on 01.12.11 at 11:58 am

Hey Ax head, you wrote…

I’m with Garth on this one. How depressing to wait until you are old to have no mortgage. I bought my a 2nd house in 1986 for 75k, 20k down payment1200 sq ft bungalow, 5 years old, in Alberta. I paid it off in 5 years on an average salary of little over 30k per year.

That approach seems so ‘foreign’ now.

Two major differences between your 1986 accomplishment and the bleak reality of today…

In 2011 many of us are able to pay off $55K of debt over 5 years …. Its called a car loan!!!

Also your $55,000 mortgage in relationship to your income of $30K is a debt to income ratio 1.83 : 1

Today we are running at 5:1 and as high as 7 to 10 time debt to income ratios.

If we were to use your 1.83 : 1 1986 ratio, and your income is $65000 (which would be a comparible increase in income since 1986), that would mean your maximum mortgage would be an astounding $118,950… and even if you could once again scrape togeather 20% down, you maximum purchase price would be below $150,000. I would hate to see what $150K purchase price looks like in Vancouver, Calgary Toronto or any major city in Canada.

Lets face it… In Canada
House Prices in 1986 = Car Prices in 2010…

Now in some US States……
Car Prices in 2006 = House Prices in 2011.

Weird Eh….

No correction in Canada Eh…..

Well I bet you thought the Canadian JR Hockey team was a lock to win vs the Russians too….

#113 SRV ES339 on 01.12.11 at 12:02 pm

The US data shows how misleading averaging can be! Try telling millions of home owners in S. California, Arizona, Nevada, Florida… that prices dropped 25%… that was in the first six months (25% of peak value is like it).

It will be the same here… The 25% (or 15%) average will do little to comfort many in here in the “Great White” once the tide turns. To Vancouver, Calgary, and TO (much of the market at least), 20% will seem like a speed bump… and it’s well underway (agents are scrambling for “½ of first month” rental listings already).

Tragic, to be sure, but even more so when you understand (thanks Garth) the stealthy, calculated actions taken by the complicit Harper Government… they really are getting off far too easy!

Please “pull the curtain” back a little more Garth… (btw, I for one want to know if the leader of my country is having marital problems… what is wrong with the Canadian media… or, Ministry of Stonewall?)

#114 Mr. Lee on 01.12.11 at 12:14 pm

“Unearned Social Status.” Bravo Mr. Turner, very well put. We are in a society of instant gratification that is acquired through reckless leverage the consequences of which seem to always be differed until the day of reckoning.
Day of reckoning:
Yesterday the Illinois State Senate passed a 66% increase in income tax (CBC morning new Jan 12 2010). Illinois’ GDP is greater than that of Canada. Looks as though California (8th largest economy in the world) may b forced to follow in Illinois foot steps.

#115 Mr. Lee on 01.12.11 at 12:23 pm

#59 Brad in Cowtown

Yeah, I refer to it as Caglary desease (live beyond ones’ means) of course you do not smell fear here because fear is for those in tune with reality.

One this is for sure though, I am not seeing any of those 18 year old high school drop outs driving around with their modified 1 tonne diesel 4X4s any more

#116 Live Within Your Means on 01.12.11 at 12:38 pm

In the 80’s a sis and I lived ‘downtown’ in a high rise 2 floors above each other. Finally decided to buy a place together – we were in our 30’s. Moved together into a great 2 bed apt 15-20 mins from downtown to save money. Year later bought a 3 level 18 X 40 ft condo townhouse in the same area – express bus. We bought at 14% rate ’cause all media said rates were due to go down. Instead they went up to 18%. We renewed for min 6 mo. Year after we were hit by a huge condo bill – all of the flat roofs were rotten – improperly done, to put it mildly, and the sleazy condo corp. did not have enough money to cover it due to lax condo laws here at the time. Forget the proper term. We managed to pay the mtg. and condo fees/bills and when both of us married – on the same day – we both made about $20K on the place. Sis moved down the street and hubby and I sold a few years later to a SF. She benefited more than we did as we bought her out, but she didn’t have to pay RE com. No regrets, however, as we were able to put down 25% on our current home & paid it off in 7 years. They, however, took 25 years to pay off their small mtg. as they both have ‘lived beyond their means’ for all those years. The other day she commented on a young couple that we both know who are in deep financial sh&t. However, learned that sis is using a LOC to pay some of her bills. I was a bit harsh with her; wasn’t she a bit hypocritical. She and a girlfriend are out in the malls every 2nd day. She calls it browsing. A mutual friend says differently. When we lived together she would hide her clothing purchases (expensive boutique) from me.

Hubby sent the following to me. Thought it was a bit appropriate and funny.

Looking for a Raise:

Employee: Excuse me sir, may I talk to you?
Boss: Sure, come on in. What can I do for you?
Employee: Well sir, as you know, I have been an employee of this prestigious firm for over ten years.
Boss: Yes.

Employee: I won’t beat around the bush. Sir, I would like a raise. I currently have four companies after me and so I decided to talk to you first.
Boss: A raise? I would love to give you a raise, but this is just not the right time.

Employee: I understand your position, and I know that the current economic down turn has had a negative impact on sales, but you must also take into consideration my hard work, pro- activeness and loyalty to this company for over a decade.
Boss: Taking into account these factors, and considering I don’t want to start a brain drain, I’m willing to offer you a ten percent raise and an extra five days of vacation time. How does that sound?

Employee: Great! It’s a deal! Thank you, sir!
Boss: Before you go, just out of curiosity, what companies were after you?

Employee: Oh, the Electric Company, Gas Company, Water Company and the Mortgage Company!

#117 Smoking Man on 01.12.11 at 12:38 pm

112 refinow on 01.12.11 at 11:58 am

Actually I knew Team Can was going to lose, even with a 3 nothing lead after the second. In fact people we had over to watch the game blamed me, cause I called it before the 3rd period started. Malcolm Gladwell wrote a book called Blink.
You need to read it to understand how I knew….Body language from coaches and players before the game said it all.

As far as Real Estate goes. The fundamentals are pointing to a crash. I don’t know other markets other than the GTA but what I do know is Single Family Homes south of lake shore between 1st street and 42 street in Toronto will go up this year, accesss to transport and shops everywhere. That’s why I bought here. No inventory, nada zip, demographics old people in bungalows when they go it’s in a box. Reno companies and builders dying to get land or product but can’t. Been here for 1 month and have had people knoking on my door to see if I want to sell. When new listings hit 100+ people at open houses if priced at market value or slightly above. Properties sell in days even now…

Now if you are in a 4500sqft McMansion in Brampton….unless you take a huge lose you are there for a long time.

#118 bill on 01.12.11 at 12:52 pm

I hope Tony reads this blog…..

#119 Mrs. Riverview in Winnipeg on 01.12.11 at 1:01 pm

Long time reader here, 1st time poster. Read ‘Greater Fool’ last year.

Garth, at the risk of sounding naive, can you clarify what exactly is Tony’s problem? Is it that the family does not have sufficient income to pay their mortgage when it resets at say, 4, 5 or even 10%?

You mention Teresa is on mat leave but mat leaves are generally 12 months. She’s a teacher so she can return to work at a decent salary and she likely has a solid defined benefit pension plan for when she retires.

Here’s what I’ve struggled with as a long time reader: Are people really that dumb? Why don’t they have savings (other than the house, which is not savings)? What do they think was going to happen? You never mention if you ask these people, “What do you think will happen?” and what their answer is. Surely most people are not simpletons who think it will all work out without them putting any effort into it.

#120 rory on 01.12.11 at 1:05 pm

Over at Barry has this ‘disclaimer’ preceding his comments section.

Barry R says:

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.”

Is this not hilarious and so appropriate?

#121 super dave on 01.12.11 at 1:36 pm

My friends think I’m a dope, they have warned me, “Don’t wait, get in now” well because they have only ever seen their assessments go up, and several took advantage of low interest rates and ballooning values to sell and downsize. But now, the talk around the water cooler is much different, when i mention prices are dropping, I don’t get laughed at. Some are starting to get it, but a few think, ok prices have dropped, so buy now… There are fools that buy on the way up, at the peak, and on the way down… they will not see the light until it is in their rear view mirror, by then of course… it is too late.

#122 David B on 01.12.11 at 1:39 pm

#30 Justin on 01.11.11 at 11:53 pm

Sorry Justin …. America rise to power happened in 1940 onboard a British cruiser off the coast of Newfoundland. America with all it’s troubles is still a 100 or so years away from serrending power.

“To victory goes the spoils” Justin … The USA are the worlds police force, with over 170,000 troops in over 150 countries …. Which country could afford to take over, and where would the money and training come from … look at what a hand full of nuts have caused in Iraq and Afghanistan caused.

China? not a chance …. they are too busy making money and at this point have not lost one soldier and what they have are healthy. America has over 360,000 cases of MTBD from Iraq and Afghanistan alone.

Iraq to-day

And just who pays for all this …. The American middle class which flows to other G-20 countries … They are spending multi billions on the War on Terror and can not keep a 9 year old girl safe standing beside a politician.

Of course things are more complex than this but we all need to stop and think, and post a good plan on our own fridge door and let government (s) do what they do, and if you disagree get out and vote.

Pay down debt
Save/Invest “Wisely”
Enjoy each day

#123 Kurt on 01.12.11 at 1:50 pm

Mrs. Riverview In Winnipeg –

Tony’s problem is as you state, and a whole bunch more. But that’s just the surface manifestation of a deeper problem, which is actually the topic of Garth’s post – willful blindness, which is a variant of the psychological defense mechanism known as “denial”. Tony turns a blind eye to all kinds of warning signs and looks to wishful thinking to save his butt. You ask “are these people so stupid…?” The answer is that they are plenty smart but lack the self-awareness and/or discipline to step off of the train tracks. This is not limited to the people you talk to everyday: Alan Greenspan seems to have been genuinely shocked that investment banks and other actors in the US financial system acted against their own long-term best interests in the meltdown. Apparently he needed to get out more.

#124 Moneta on 01.12.11 at 1:58 pm

Another Albertan on 01.12.11 at 12:17 am
Thanks. I just finished a book and was looking for a new title.

#125 Bill Grable on 01.12.11 at 2:13 pm

*Looks like Mr. Turner nailed it AGAIN – this from CNBC this morning _

“In the past few years, we’ve all been careful to choose our words carefully, not calling it a recession until it fit the technical definition and avoiding any inappropriate use of the “D” word — Depression.

Things were bad but the broader economy never reached Depression territory. The housing market, on the other hand, just crossed that threshold.

Home values have fallen 26 percent since their peak in June 2006, worse than the 25.9-percent decline seen during the Depression years between 1928 and 1933, Zillow reported.

November marked the 53rd consecutive month (4 ½ years) that home values have fallen.

What’s worse, it’s not over yet: Home values are expected to continue to slide as inventories pile up, and likely won’t recover until the job market improves.”

#126 Carlyle on 01.12.11 at 2:33 pm

Another update:

Sign with Realtor on Friday and house lists over the weekend. First open house is on Tuesday.

Comparables are between 285k all the way up to 354k (the 354k price is insane) … we are listing at 320k. A similar model to ours sold for 315 k a month or two ago.

Our realtor said now is a good time, as there isn’t really much competition for our type of home (although that will change by March).

Hoping we can get our price …

Why would you list at a level greater than the sale of a comparable? That turns buyers off. List for $10K less and you’re more likely to get your price. — Garth

#127 jess on 01.12.11 at 2:33 pm

lower class ?

piranical = predator squared
Reverse mortgage as the bailout against the predators

…”married for fifty six years berringer said she and her husband had wanted 14k to pay off their credit card debts the loan officer persuaded them to roll over their existing mortgage, which brought the amount of the loan to -a round 66k.but the loan ended up topping out at over 84k because famco charged them roughly 18k in up front points and closing costs. the couple couldn’t afford their payments and to save their house they refinanced with another lender taking out a special loan designed for elderly home owners known as a reverse mortgage.

The Monster how a gang of predatory lenders and wall street bankers fleeced america and spawned a global crisis : by Michael Hudson the writer

#128 Carlyle on 01.12.11 at 2:37 pm

Regarding Tony,

I can sympathize … it was a miracle my wife came around to the idea that we need to sell.

Is selling your home worth losing a marriage over? I know some people say that the home being the “glue” that holds the home together is shallow …

But it’s really not as simple as that. For alot of people their home represents that they have “arrived” in society … Society has taught that owning a home = responsibility, good financial stewardship, etc

And not being able to hold onto that home therefore represents some sort of failure on the part of the person selling.

#129 Devore on 01.12.11 at 2:47 pm

#128 Carlyle

But it’s really not as simple as that. For alot of people their home represents that they have “arrived” in society … Society has taught that owning a home = responsibility, good financial stewardship, etc

Fake it till you make it?

Garth called it “unearned social status”, and he’s absolutely right.

#130 The Coming Depression on 01.12.11 at 3:00 pm

Garth lets ask that question again: “How is that depression doing”. Right here on mainstream news:

#131 Mr. Plow on 01.12.11 at 3:10 pm

#67 Edmontonian…

I concur. We were transferred from Calgary to Edmonton in 2006 and I would say our house is worth what we paid back then.

#132 Worldwide on 01.12.11 at 3:14 pm

#128 Carlyle “But it’s really not as simple as that. For alot of people their home represents that they have “arrived” in society … Society has taught that owning a home = responsibility, good financial stewardship, etc” #129 Devore “Fake it till you make it?
Garth called it “unearned social status”, and he’s absolutely right.”.

I have lived in those tony neighbourhoods in the rich houses, but let me tell you, it’s not just being in the tony hood that counts, it’s being on the RIGHT street too and going to the dinner clubs, saying the right things and owning the right stuff.

Anything less and you might not even been seen.

Plus, you can tell the “new money (ie, those in debt” because they don’t have the right stuff nor have the right wine at the parties because they are really broke.

#133 Grrr on 01.12.11 at 3:16 pm

#26 Mountain Girl

” I’m so tired of trying to explain basic math principals in my own defense.”

Just ask them how much interest they’re paying per month. When they can’t answer, just smirk and say “I’m sure the bank knows, and appreciates your contribution.”

#134 Anne "Pom Pom" Rohmer on 01.12.11 at 3:30 pm

via Bloomberg.
Canada’s top economic officials yesterday urged households to be wary of taking on too much debt after data showed the indebtedness of Canadians surpassed U.S. levels for the first time in 12 years. Bank of Canada Governor Mark Carney, Finance Minister Jim Flaherty and Prime Minister Stephen Harper said in separate public appearances that they are concerned about rising debt. The ratio of household debt to disposable income in Canada was 1.48 in the third quarter according to Statistics Canada, exceeding the U.S. level of 1.47.
“Our parents were more inclined to pay off that mortgage as soon as possible, and some Canadians are not as inclined to do that now,” Flaherty told reporters yesterday. “I encourage them to do it.”
The comments by the policy makers underscore government concern that debt levels in Canada could threaten the recovery if borrowing costs rise and households struggle to pay their bills. Canada has relied on regulatory steps to rein in mortgage borrowing, most recently in February, and Flaherty said yesterday he is prepared to take additional measures if needed.
“The fear is that were we to see sharp rises in interest rates or were we to see sharp rises in unemployment, that a significant number of people might not be able to afford their debt obligations,” Flaherty said. In Canada, where banks largely escaped the global financial crisis and continued to lend even as credit dried up elsewhere, low interest rates have encouraged consumers to take on debt.
Carney, 45, left the benchmark target rate at 1% this month to gauge the global recovery after three earlier increases.
While Canada’s economic recovery could be threatened in the future by elevated debt levels, higher Canadian interest rates could also cause the Canadian dollar to appreciate. Carney noted that the bank had flagged as a risk to the economy that “persistent strength of the Canadian dollar” and weak productivity could crimp exports and hinder Canada’s recovery.
Measures to restrain lending taken earlier this year included changes for government-backed mortgages that forced buyers to meet standards for five-year, fixed-rate mortgages even if they opt for variable rates. Limits on refinancing were made stricter and down payment rules were tightened.
The proportion of Canadians in a stretched financial position “has grown significantly,” Carney said in his speech — entitled “Living with Low for Long” — adding that authorities continue to monitor households’ finances. “We have debt levels that are unprecedented in this country,” Carney said in an interview broadcast today on BNN Television. “We are in uncharted territory.”
That should sound familiar to American readers, flashback 5 years…

#135 boomer62 on 01.12.11 at 3:31 pm

#128 Carlyle on 01.12.11 at 2:37 pm

A home is where people live, eat, play, grow and feel warm and safe. A house is bricks and mortar (aka money pit).

Everyone needs a home. The future for large SFDs is uncertain in several Canadian localities.

When will You come around.
It is that simple.

#136 Ex-Calgary on 01.12.11 at 3:32 pm

#127 Carlyle

As the Chairman of Fiat motors said years ago when questioned why Fiat left the U.S. (then) the largest car market in the world: “I realized it was more important to show a profit than to be seen to be in a market”

That pretty well sums it up to me. We bailed out of Calgary 18 months ago. It allowed us to clean up all of our financial issues and start all over again somewhere else.

I had a serious business problem related to the price of natural gas tanking. I wasn’t alone, and contrary to popular perception Calgary and Alberta are NATURAL GAS driven provinces, not oil. The oil that is being found is extremely expensive nowadays and certainly not a windfall. Calgary needs high natural gas prices to thrive. But I digress.

My point is that the stress of hanging on and fighting through everything while having that large Calgary home around my neck almost cost me my family, marriage, everything. When I quit fighting it all and surrendered to reality, I was able to hit the reset button and life, downsized and much simpler, is now far less stressful and amazingly enough, enjoyable. My only regret is hanging in there as long as I did. I should have moved on quicker and saved myself the stress.

Stress comes from denying reality, not from surrendering to it. Tony’s wife will have to learn that she can be disappointed once, or disappointed every day of her life. Pick one.

#137 Ret on 01.12.11 at 3:36 pm

“Unearned social status”

Would that term apply to those “homeowners” who blight our neighbourhoods with their illegal basement suites in pathetic attempts to make their next mortgage payment?

Is that a rhetorical question? — Garth

#138 wetcoaster on 01.12.11 at 4:00 pm

“Tony’s wife has no intention of returning to work and will leave him if he can’t provide a big house. What a sad marriage.”

What’s real sad is that there a few million more Tony’s out there too chickensh*t to cut bait and get the inevitable over with and find someone who wants to be with them for who they really are. I know a bunch of them. Thank God I cut bait 10 years back and never regretted it a minute.

This will be part of the major correction coming when couples in these type of weak relationships dump the hubby at the first sign the castle is at financial risk.


interesting…for the record “The Big Short” was written by someone else who went looking for this guy,not by himself though I am sure he gets a cut.

#139 Canned Goods and Buckshot on 01.12.11 at 4:32 pm


There is a lot of rich metaphor to be made. You could also say Garth’s blog is like Tang, disguising the bitter circumstance of our debt predicament.

#140 The InvestorsFriend (Shawn Allen) on 01.12.11 at 4:42 pm

Let’s see, the United States has a surplus of homes. Lots of second and third houses and investment houses that people can no loger afford.

China meanwhile has a lot of rich people crammed into crowded Cities.

I think I see a solution to both problems.

Add a LARGE head tax and the U.S. can also pay off a whack of its national debt.

#141 Larry on 01.12.11 at 4:47 pm

Anyone see the Vancouver Sun piece about what a million dollars buys in Vancouver versus in Newfoundland? Property prices in Vancouver are a joke! Blind by choice is right!

#142 Livingthedream on 01.12.11 at 4:48 pm

Rolled the Land Rover into my driveway of the McMansion after a tough day of flipping and financing. Life is good here on the mountainside at the wetcoast.
As I parked in the 4 car McMansion garage, next to the Beamer, Lambo and Lexus, couldn’t wait to read Garth’s latest advise on how to invest my surplus cash and insight into the politicos and financiers intentions. Heavens knows I love those guys. They made my lifestyle possible. What with easy money, lax credit . No money down, no money in the bank, I wrote my own ticket.
Also need to thank” financially qualified” immigration rules. Brought a ton of cash into the lower rainland area to buy up my flips and fixer-uppers. Stainless steel, bamboo floors and granite added to the right spot and magically you’ve got another 1.5 mil McMansion to flip. Add to that the ½ million dollar,500 sq. ft waterfront Olympic hostels in the core of Raincouver that I’m holding on to. We’re “braced” for the building momentum and high demand for these to be filled with social housing and civil servants .Its high times like always here at the wetcoast.
More joy to my life, I got my assessments in the mail for the dozens of properties I’ve “leveraged” myself into. Behold…. they’ve all gone up in value according to the local assessment gurus. That means I’m off to my friendly banker tomorrow first thing to increase all the mortgages and my line of credit. Then we’re good for another 6 months. Probably right time to trade the Land Rover in,as the new models are in.
Turned on the local news channel ( on one of my many widescreens) and there she was telling me my property had gone up again today along with some shinny suited realtor giving the latest upward trend in housing dynamics for the Bring Cash region. Buy now, don`t get left out. Then commercial break, cue the real estate franchise advertisement. Think it’s time to light up. (BC’s other strong cash generator) Real Estate and Reefer! Now if we could just eliminate the taxes on the real estate we’d be home free.
So while Ottawa fiddles the wetcoast burns, I’m so happy that I live in an area where property values always go up( Since 1980 anyway.) My realtor, lawyer , mortgage broker and banker have all assisted me in my climb to success. I’m sure they’ll always be there when I need them.
There’s the doorbell. Gotta go. Probably my realtor with another offer . Oh Oh… there a bunch of cops at my door with sniffer dogs and pruning shears………….

#143 cash is king on 01.12.11 at 4:52 pm

Aussie Roy,

Good to see your high and dry and still posting. Spent summer 2008 in the Ispwich / Toowoomba areas. The devestations from the flooding will be felt for next 10 years.

Will your gov’t respond as poorly as the US to New Orleans?

#144 Bottoms_Up on 01.12.11 at 5:07 pm

Ooops, looks like someone ran out of money in Ottawa, 6 bed, 4 bath reno, asking 150k:

#145 Only The Bankers Laugh on 01.12.11 at 5:27 pm

Tony Baby, Throw down the gauntlet, man up, grow a pair, put a pair on the truck and have the conversation “aboot” being a “donkey on the (financial) edge”. Amazing what things happen when people look deep into the financial equations that happen when divorce is about to happen. I tried it 5 years ago, bluff was called and there was no answer – not even an automated message. Unless she’s already got someone lined up (Ol’ money bags McSugarDaddy), she may begin to look at things realistically. Honestly, she may posture and you posture back. Sure, you won’t sleep with her for a couple of months (think of all the hog riding and hockey you can play) when you finally flash your pants but you may actually be perceived as “tool belt wearing sexy” and perhaps “a man” when she realizes you stood up. After all, she wants another gaffer so you have that huge plus (as long as DNA suggest that you’re the father of the others).

Good luck. Let me know how it goes. Disclosure, I think I got lucky as it could be a long putt from the sounds of it.

A lot of you “Tony’s” getting into this woman trouble.

#146 bigrider on 01.12.11 at 5:28 pm

#117 smoking man –

Ya right different between 1st And 42nd street in T.O?? Not going to get hit ???

Nonsense, and by the way, lots of listings for sale

#147 MP on 01.12.11 at 5:34 pm

Not sure if anyone posted this already? Schiff had it up a couple days ago:

“Canada’s interest rates are still much too low. But they [authorities] feel that they can’t raise them, because they don’t want to see their currency rise too rapidly against the dollar. That’s a mistake. The longer they follow our lead, the more problems they’ll create for their own economy. We’re going to take a lot of countries down that have tethered their currency to the [U.S.] dollar.”

#148 UrbanCowboy on 01.12.11 at 5:35 pm

How will popluation difference between the US and Canada affect the correction in Canada. I guess there will be less deliquents/forclosures so will be outcome be less tragic?

#149 Kevin in Winnipeg on 01.12.11 at 5:46 pm

If the mortgage rules do change to 25 to 30 years max, what happens when the time comes to renew the 35 and 40 year existing mortgages? Do existing mortgages stay at the amortization they were originally signed at?

#150 McLovin on 01.12.11 at 5:48 pm

DA care to comment? More cooked numbers out of the Okanagan?

#151 patiently waiting on 01.12.11 at 5:57 pm

Fraser Valley Real Estate Board Stats can be seen here with daily updates.

Looks like sales are declining slowly but steadily regardless of what the main stream media and real estate pumpers are telling people. November shows a year over year decline of 33%, December’s decline is 20%, and so far January is a 27% decline. There will be a lot of young families that will be in deep doo doo within pretty soon because they fail to do their homework and simply put their trust in the msm and Realtors who tell them what they want to hear . . .

Fraser Valley Home Sales Stats – as of JAN 12, 2011 (6 of 20 Working Days)
JAN 2011 Listings 764 Sales 187
DEC 2010 Listings 398 Sales 277
JAN 2010 Listings 774 Sales 255

Fraser Valley Home Sales Stats DEC, 2010 (21 of 21 Working Days)

DEC 2010 Listings 1104 Sales 1015
NOV 2010 Listings 1769 Sales 1081
DEC 2009 Listings 1451 Sales 1260

Fraser Valley Home Sales Stats to Nov 30, 2010 (20 of 21 Working Days)
NOV 2010 Listings 1715 Sales 1015
OCT 2010 Listings 2125 Sales 1013
NOV 2009 Listings 2100 Sales 1519

#152 Robert Dudek on 01.12.11 at 6:07 pm

The problem with the real estate market isn’t the value of the real estate, it is that most people have to use a very high debt ratio to get in the game.

Leverage is the real problem. Imagine if you were able to put all your money into Bank of Nova Scotia stock, but at 25 to 1 leverage. The chances of getting wiped out are very high because a 4% drop in the stock means a loss of 100%.

#153 Pr on 01.12.11 at 6:07 pm

#112 refinow
Good analyze, that is where we are now, so different from the 1980 years. Now is debt every where.

#154 Worldwide on 01.12.11 at 6:30 pm

#149 Kevin in Winnipeg “If the mortgage rules do change to 25 to 30 years max, what happens when the time comes to renew the 35 and 40 year existing mortgages?”

That’s a good question. I’d ask your bank. I would guess the SAME bank will keep you on the SAME mortgage. But if you go to another bank, I’d say they wouldn’t honor the higher am term anymore.

Well, I just bet for the CDN vs the USD. I just exchanged $20k USD for $19.6k Canadian. Let’s see if that was a good move. I figured it was a better move than buying gold with it (I did contemplate it).

#155 BAD on 01.12.11 at 6:38 pm

#141 Larry on 01.12.11 at 4:47 pm wrote:

Anyone see the Vancouver Sun piece about what a million dollars buys in Vancouver versus in Newfoundland?

That article compares one orange to many apples and is confusing.

Here are three examples of somewhat cheaper than one million dollar homes in Newfoundland:

$879,000 property
$994,900 property
$995,000 property

Interesting, eh?

#156 dark sad person on 01.12.11 at 6:40 pm

#156 a prairie dawg on 01.11.11 at 9:00 pm

Money is only a medium of exchange. It has no intrinsic value beyond the cost of the paper and the ink. Whereas real commodities have always had an intrinsic value. The pulp that made the paper that made the money is a commodity, but that’s as close as it gets.

If you don’t believe me try auctioning $1000 cash on eBay. Then get back to us and tell us how much profit you made.


I don’t follow that logic-

How about if i auctioned or bought Iraq dinars on e bay and the price tripled or crashed vs the CAD a week later?

Or-if i auctioned them off and an hour later the cash that i sold dropped 20% in value-

Isn’t that profit or loss in a fiat cash transaction?

Currency-even paper currency cannot deflate in the same sense as can credit-it is always somewhere unless it’s destroyed by fire etc.
It can go up or it can go down in value vs a basket of currencies or a basket of commodities-no different than one commodity does when measured against another-

What the discussion was about was “currency” and that it acts as a commodity-in fact is a commodity-


What do we mean by demand for money? And how does this demand differ from demand for goods and services?

Now, demand for a good is not a demand for a particular good as such but a demand for the services that the good offers. For instance, individuals’ demand for food is on account of the fact that food provides the necessary elements that sustain an individual’s life and well being. Demand here means that people want to consume the food in order to secure the necessary elements that sustain life and well being.

Also, the demand for money arises on account of the services that money provides. However, instead of consuming money people demand money in order to exchange it for goods and services. With the help of money various goods become more marketable — they can secure more goods than in the barter economy.

What enables this is the fact that money is the most marketable commodity.

#157 R on 01.12.11 at 6:55 pm

The other day, as I left work, I overheard a girl talking about being really anxious to start ‘investing’ in real estate. I thought about telling her to read this blog first, but didn’t. She sounded too house-horny to listen.

Once they’ve drunk the Kool-Aid, there’s little hope.

#158 Nostradamus Le Mad Vlad on 01.12.11 at 7:14 pm

#30 Justin — “The USA (1790-2009 A.D.): 219 years and counting.”

Roughly correct. The Causasian (white) Race took over top spot on July 4, 1776. Add 250 years to that date (+ / -) and it is easy to see this cycle has almost concluded, with the clock marching on with the Asian (yellow / red) Race to replace it.

And so the cycles of life continue unabated (only in the lower psychic heavens – planes – levels -regions; cycles are not needed in the higher, pure spiritual planes), not caring one whit what folk say here. Good and interesting post.

#48 Patz — “Well meet conspiracy theorist Raghuram Rajan, the IMF’s former chief economist.” — Right on. Follow the money to . . .

#90 Moneta — “. . . it was willfully allowed to happen.” — Accurate, but not politically correct to say so.

#69 Party On Garth — “The level of willful self-delusion is epic. So shall be the bite of reality.”

Life (reality) is a hard-assed moron, but delusion is a soft, warm and gentle cozy cushion.
Tinkerznutz and Fairyzballz.

Seems the couple in question are well on their way to living life the way one wants to, and the other doesn’t. Never mind. Life will teach them better.

There was a dump in the Okanagan last night / today . tomorrow, and to listen to the radio DJ’s, one would take the view the world is coming to an end.

To get a dose of life, see the flooding in Sri Lanka and Oz. Those people have pretty much lost everything (like folk here who gorged themselves on cheap money), and are paying the price for their excessive greed.

Compassion? Yes, as they didn’t know what they were doing. Sympathy? Ask Lucifer!

#159 Wilde_at_heart on 01.12.11 at 7:27 pm

Google: MGTOW on 01.12.11 at 10:50 am
Tony’s wife has no intention of returning to work and will leave him if he can’t provide a big house. What a sad marriage.

Some guys are such idiots.

Of course, he could just be blaming is wife for his own aspirational desires and she could very well be more sensible than that if shown the numbers. If she’s not then he’d likely be better off at least trying to call her bluff – the thought of life as a single mum might just do it.

Half the time the ‘Jones’s’ they are competing with are fakers living beyond their means too.

I just hope this isn’t the set-up for a future murder-suicide headline.

At the very least they should have no more kids until they sit down and do an honest appraisal of where they are with their finances now and over the next couple of decades.

#160 Mr. Plow on 01.12.11 at 7:28 pm

#149 Kevin in Winnipeg…

I would think that if you renew with the current bank that is holding the note you would be fine to renew at the same amortization. But best to ask them, I bet they all have different rules.

But generally speaking, and I could be wrong, banks simply just send you some papers in the mail at renewal time if you like your current product you sign and move on. If you want to make changes, like the term they may want to completely redo the file which I would assume would be subject to the new rules.

I have a rental that was on a lengthy amortization that I increased the payments to a much shorter one to get it paid down should they require a 25 year at renewal.

#161 Mr. Plow on 01.12.11 at 7:32 pm

#145 Only The Bankers Laugh

That sounds like great advice, sounds like the high school football players I coach talking about each others girlfriends.

Good thing they aren’t married with kids though.

#162 AG Sage on 01.12.11 at 7:32 pm

>#75 Jody on 01.12.11 at 5:38 am
>It’s much easier to acquire wealth by means of forcible redistribution by the state than by exerting oneself in the service of one’s fellow man.

When humans do this it’s called human nature and should be a given assumption in personal contracts and policy making. When banks and large industries do it, it’s the end of the economy.

What human with a normal brain is going to work harder for less payout, or forego possible benefits during negotiation of a contract? Are you seriously arguing that would be reasonable or is some kind of normal state of humans in magical happy anarchy?

If the state is throwing a bone to some nearly powerless subclass, it’s to hide a much larger benefit to a handful of powerful beneficiaries. For example, mortgage credits to homebuyers when the market turns. That’s a kick-the-can-down-the-road bailout for the banks so they can cash in their far-out-of-proportion-to-their-actual capitalist worth bonus checks another year. Just FYI, falling for the ruse by waving around magical notions about humans lets the elite continue the pillage indefinitely.

#163 Moneta on 01.12.11 at 7:36 pm

Ooops… went for my jog today and one of the McMansions that was price reduced not long ago and sold lost its sold sign.

Hmmm. Wonder if it was the inspection, the financing or the wind…

#164 jess on 01.12.11 at 7:37 pm

The government said that requiring routine reporting to the IRS of all U.S. bank deposit interest paid to any NRA is appropriate because in the years since the 2002 proposed regs were released, there has been a growing global consensus on the importance of cooperative information exchange. Such reporting “will further strengthen the United States exchange and information program, consistent with adequate provisions for reciprocity, usability, and confidentiality in respect of this information,” the government said.”

The U.S. Treasury Department has issued proposed regulations that would require banks in the United States to report to the U.S. Treasury annually all interest income paid to nonresident aliens.
profit from handling illicit money that flows to the U.S. in search of financial secrecy (and other attractions) will scream about this. This was proposed in the dying years of the Clinton administration, and was shot down by the banking lobby, and our good friends at the Center for Freedom and Prosperity (CF&P) are promising another fight this time around. A hearing on it is due in April.

freedom and prosperity presents
“moral case of tax havens”

#165 No crystal ball... on 01.12.11 at 7:40 pm

Carlyle you said “And not being able to hold onto that home therefore represents some sort of failure on the part of the person selling”.

Trust me, it is a state of mind. I definitely don’t feel like a failure. We sold 18 months ago and are renting and it really was the best thing we ever did. You and your wife will get there too. Peace of mind does not come from being financially stretched with a view to becoming even more stretched. When stretched too far things eventually break. Like, say your health? What then?

My husband was the one who convinced me, and we even went to hear Garth speak after we sold – maybe your wife would benefit from that too. Either way you have to do what is right for you and not worry about what family, friends or even what the neighbours think.

Have you ever seen the movie “Fun with Dick and Jane” (remake with Jim Carey)? I watched part of it with my husband the other night and realized something. This movie that I found so hilarious years ago all of a sudden wasn’t so funny anymore.

This couple is living large – all on borrowed money – and it all falls apart when they lose their employment. Until the point that they resort to a life of crime and then the perfect Hollywood ending, the story is neither funny nor unrealistic, and I am sure strikes a familiar chord with many people.

Dick could be Tony or anyone for that matter.

#166 Alex on 01.12.11 at 7:45 pm

Here’s my “Rainforest Special” for the day. Located inches from Granville Street, miles from downtown and where all four lanes of cars are moving at highway speeds, and featuring rotted wood throughout each and every room for easy demolition, it can be yours for a mere $980,000.

#167 Devil's Advocate on 01.12.11 at 7:48 pm

#150 McLovin on 01.12.11 at 5:48 pm

DA care to comment? More cooked numbers out of the Okanagan?

Sadly, I must agree that all too often the OMREB statistics released to the public appear “cooked” although I do not believe it is intentional. I always grab my own raw numbers by running a search on the system, exorting it to an Excel file and manipulating it as little as possible such that the numbers tell me what I need to know.

Sorry no time to elaborate any further than that for now.

#168 S.B. on 01.12.11 at 8:13 pm

Reverse mortgages up 87%: HomEquity Bank

Record breaking performance in firm’s first full year operating as a bank

Tuesday, January 11, 2011

By IE Staff

HomEquity Bank originated a record volume of reverse mortgages of $206 million in 2010, parent company HOMEQ Corp. said Tuesday.

On an annual basis this is an increase of 87% over 2009 and an increase of 58% over the previous record of $130 million set in 2008.

Mortgage originations in the fourth quarter were $47 million. As at Dec. 31, 2010, HomEquity Bank’s portfolio of reverse mortgages surpassed $1 billion and was 17% higher than a year earlier.

This record breaking performance was attained by HomEquity Bank in its first full year operating as a Schedule I Bank.

The bank offers reverse mortgages to Canadian homeowners 60 and older and have no income, credit or health qualifications. Unlike traditional loans, borrowers don’t have to service the interest or repay the principal for as long as they own their home and are living in it.

#169 hobbitt on 01.12.11 at 8:25 pm

Sorry Garth,
Lately, reading the postings on your blog is like standing in toxic rain. There is a black cloud over most people here and it comes out in vitriolic rants. Bitter, jealous acidic comments no matter the situation mentioned in your post. Most end in something like” they’re so screwed”

It burns the skin to linger here.

First, Tony is not screwed. We don’t Even know his income/expenses, how can we decide his fate? He is at a place where he has to prioritize his choices.
Is it so important to live in that neighborhood that he willingly risks it all? Maybe it is to him and his family? But he’s NOT screwed, it sounds like his wife also has to decide to go back to work and help support the family, or stay home, live the dream, and risk it all. They don’t have much cushion if something goes wrong,
What if Tony has a stroke and requires full time care? Without his income, they would burn through savings quickly.

Whatever happens they need to decide soon, risk it all or make some eyes open choices and claim that equity windfall. No problem, just serious choices.

Don’t let the door hit your butt on the way out. It burns. — Garth

#170 Nostradamus Le Mad Vlad on 01.12.11 at 8:28 pm

Food Prices In combination with the flooding, cold weather Uncle Monsanto seems to be tightening his grip. Plus — 0:25 clip Gas riots in Chile.

US Fed Well, at least it does something right! But — Gold Virginia considering gold when the US Fed folds up shop.

War Blabber “Great: rather than taking actions to calm the situation with North Korea, it appears that the US is ramping up the pressure on North Korea and China.”

Greed Is Good Let’s have more wars!

Harper’s Legacy FBI in BC.

Weather Modification Such as the stuff that happens worldwide has a different outcome in India.

This is why Monty Python is so absurdly funny; living under a Brit. govt. is not a realistic option.

Illegal Downloading Now the shoe is on the other foot!

Dictatorship? You bet, and Harper will / has already bought one here as well.

Illinois 66% tax hike.

WikiLies “So … Assange claims he is leaking documents the media doesn’t want you to see, but then hands them back to the media in an exclusive (and paid) deal, which edits at will before publication? Wikileaks is an extortion racket!”

9:28 clip China’s creative accountants. “How publicly owned banks benefit the commonwealth instead of a few private financiers and what it means for you and I.”

#171 Shy Blawg Dawg on 01.12.11 at 8:35 pm

The pictures usually give me a chuckle! I always look to connect the picture to the blog narrative – even if GT does not intend it.

My read on this one. The dog is representing the huge and almost overwhelming burden (the “dog” investment resulting in residential asset debt) being supported by future generations (the “child”) for a uncertain financial future (the “vehicle ride” with an unknown path and destination).

Brad will be ok. Tony and Teresa may not, they should begin playing defense now. They have to decide if they are a team or not.

#172 ballingsford on 01.12.11 at 8:37 pm

Tony’s comments about keeping his wife reminded me of a bumper sticker I saw the other day:

“Better to have loved and lost than to live with a psycho the rest of your life.”

#173 hobbitt on 01.12.11 at 8:45 pm

On the other hand, how does he know it is WORTH 700k? His words ” “It was a steal,” he told me. “They were desperate. Freaking.”

Seller was trying to get 680k, no buyers, sold for 580k. Maybe that’s the real value? Whatever someone is willing to pay.

#174 Devore on 01.12.11 at 9:04 pm

#154 Worldwide

Well, I just bet for the CDN vs the USD. I just exchanged $20k USD for $19.6k Canadian. Let’s see if that was a good move. I figured it was a better move than buying gold with it (I did contemplate it).

I just wonder whether all the people touting their supposed 400% gains on gold in the last few years are accounting for the CDN:USD exchange rate. In 2002, 1 CDN bought a mere 60 cents. If you’re losing 80% on the currency pair, what does that do to your 400%?

#175 GregW, Oakville on 01.12.11 at 9:30 pm

Hi Garth, re #42 carol. I’m sorry to here about her late husband passing.

I composed a couple post I thought I might send her, since I haven’t seen any others, but I’m not even sure it is appropriate for me to do so? And I’m certainly not qualified!

Did she email you personal for advice? Could she? I wonder what her present adviser thinks?
She didn’t give much info in the post for someone that is qualified to tell her what to do from what I can see, how old are the kids for one? But what do I know, hope this post isn’t out of line.

I hope she asked someone qualified, maybe a family lawyer that can get more of her personal details and take her personal situation into account. Her age, age of kids, family business, stuff I haven’t thought of and now nothing about, etc. Maybe she has a doctor or friend that know a family lawyer that she can get advice from, might cost a few dollar but might be worth it.
Your paying them for legal advice that’s in your own best interest.

Personally with no young kids, the will our lawyer help with (glade we got one to help) was pretty straight forward. But I was made a wear it can get much more complex, especially if young kids are involved, and other issue that could be involved, and you should thing about, like what might be a good time to have the will changed as personal situation changes.

I understand women tend to live longer than men, so my wife will need what ever we have left to help here with daily life. Maybe she’ll need a bit extra for help as we/she get even older.

I’m fortunate in that my parents are still alive and I’m glade I can still talk with them. I’m expecting there won’t be much of an inheritance, probably nothing. Can’t be disappointed then, nor should I expect any!
If I’m lucky they’ll be around as long as possible, hopefully in pretty good health, but may need some extra help at some point? And I imagine it won’t all be free help.

I’m not sure if any of this is at all helpful to @42 Carol.
I hope she finds some good advice!

#176 miketheengineer on 01.12.11 at 9:40 pm

Garth et al:

I saw these web sites, thought some on the site might like to review them:

Interesting Barbeque:

And what to get to prepare….for emergencies

10 things to do now:

Good luck and God Bless

#177 Timing is Everything on 01.12.11 at 9:43 pm

Actually it’s worse than I reported. She wants another baby. — Garth

Tony, buddy….Time for a doctor appointment. Short term pain, long term gain. ;)

#178 patient in BC on 01.12.11 at 10:01 pm

The bubble is growing to such proportions, and the collapse will be so tough, that I would rather not have a mortgage on my shoulders when the storm will pass through… Sleep, freedom and sanity: these make my luxury. For now, I enjoy focusing on my loved one and take long vacations… while saving tons of money. Not too bad of a lifestyle after all…

When people talk to me about their real estate investments, I like to move onto the increase in food prices and oil, and the potential impact of peak oil on daily expanses. They do not like it and give me break.

#179 Milhous Plumbers on 01.12.11 at 10:02 pm

Tony and all the other Tonys in that northen GTA burb KEEP THAT HOUSE.

#180 Markey on 01.12.11 at 10:20 pm

#169 hobbit – Sorry, but Tony is SCREWED. He flogs industrial adhesives for a living and industry is in trouble in Ontario. Unless he can find another lucrative source of income, his wife will become the primary bread winner. That will change the dynamic of the relationship which will put stress on the marriage, as will the financial stranglehold.

#181 Oasis on 01.12.11 at 10:25 pm

#174 Devore on 01.12.11 at 9:04 pm

I just wonder whether all the people touting their supposed 400% gains on gold in the last few years are accounting for the CDN:USD exchange rate.

easy enough to see, just visit kitco’s page, go to the bottom, find the canadian dollar, click, and pick 10-years. they even do the math for you. lol

#182 race against time on 01.12.11 at 10:27 pm

my in laws have told me that a certain royally blue bank here in BC will not raise their monthly payments if interest rates go up, but they will extend the length of the amortization instead. They owe 100k on a 500k home.

Has anyone heard of this? Could they pull the old bait and switch and say one thing now and do something different later? Any blue customers out there?

#183 Dark Sad Monster Bunny on 01.12.11 at 10:28 pm

66% tax increase on Illinois income tax. Sounds like a lot. You have to put an actual number to it with respect
to ones income. From NLMVs link:

“The hike increases the state’s personal income tax rate
from 3 percent to 5 percent.

In real numbers, if your gross income is $50,000 a year, your state income taxes will rise from $1,500 to $2,500 a year.”

So thats about 2% of typical wage, or $40/paycheque.

Mr Lee – Canada has about 2 times the GDP of Illinois.

#184 The truth on 01.12.11 at 10:29 pm


Buy us$…

Commodity correction in the cards and will put downward pressure on CAD.

Perceived Eurozone risks encourage flight to safety of US$

Look at charts… Cdn dollar most likely to go to 0.97 rather than 1.07…

Cdn gov always fights a high $, err free market

#185 S.B. on 01.12.11 at 11:14 pm

Hi Garth, FYI still drinking water? ;) An article.

ATLANTA – Fluoride in drinking water – credited with dramatically cutting cavities and tooth decay – may now be too much of a good thing. It’s causing spots on some kids’ teeth.

A reported increase in the spotting problem is one reason the federal government will announce Friday it plans to lower the recommended limit for fluoride in water supplies – the first such change in nearly 50 years.

#186 a prairie dawg on 01.12.11 at 11:33 pm

@ 156 dsp

I used the $1000 auction to make a point. No one will pay you $1500 CAD to buy $1000 CAD. (unless maybe they’re laundering money, lol)

By government decree, they value each bill with whichever number it has printed on it. In real intrinsic terms, each bill (5, 10 ,20, 50 etc.) is worth the same amount. So much pulp, so much ink, etc. It’s only marketable value was determined by the government when they issued it. Everyone legally selling any product in Canada is forced to accept X “dollars” for X “dollars worth of goods”. The medium has been established. It’s universal in Canada for all of us. And 2 fives buys you a ten, 2 tens buys you a twenty etc. They don’t fluctuate in value vs. each other either. I also can’t ask my employer to pay me in wheat or oil. Payroll would have hard time with that one. lol The company pays me in dollars because the government says they have to. I have no real demand for money. I only accept dollars so I can pay down a debt, exchange them for real goods, or invest them in ways to beat inflation so I can afford real goods in the future. I sure wouldn’t stockpile them at home. And they aren’t consumed either, they just keep floating around over and over repeatedly, constantly changing hands.

Sure different currencies fluctuate against each other but for various reasons. But the demand is not that someone somewhere wants to own a warehouse full of them though. Or that they might stop making them, or somehow run out of them. Demand for money between countries is usually to settle trade imbalances, purchase goods, repay a debt, etc. Forex provides a central clearing house where all currencies can flow through and the fluctuations can be monitored and reported. If all countries pegged their money to the US dollar like China did, there would be no need for Forex. They’d all be valued in US dollar equivalents. Heck we could all just use the greenback then. (yuck!) But they almost all fluctuate in value, independently of each other, for too many reasons to define. (politics, war, natural disasters, weather, overprinting, financial scandal, bad economic policy, yadda, yadda, yadda…)

And we’ll probably never see a single currency (I’m not advocating one either) because then individual governments wouldn’t be able to inflate individual economic problems away. Nothing short of counterfeiting would allow them to obtain more when they ran out of money. (assuming they had no more goods to trade and no credit with anyone) Inflation can’t be standardized across the globe either, so one currency isn’t going to work there either.

Our money is intentionally inflated over the years to perpetuate the Keynesian model. If it stayed the same value then I’d still be able to buy a Coke for 25 cents like I did when I was a kid. Now they cost 4-6 times that amount.

How can any commodity be worth less and less each year as time goes on? It takes more money each year for the same amount of goods. (assuming the demand for the goods remained the same and supply remained constant and cost to produce stayed the same)

To illustrate let’s invent a commodity called a widget. These are some very fancy widgets though. Very rare, very hard to detect, but highly desirable and sought after. If it costs $10,000,000 to dig up a widget today, we know that in 20 years it will cost more. (assuming no cheaper method of extraction is invented) Over the next 20 years wages will go up. Cost of equipment goes up. Taxes go up. Insurance goes up. etc. etc. Then 20 years later, let’s say it costs $80,000,000 to dig up a widget. If the demand and the supply is identical to 20 years ago, has the widget really increased in value 8 times in 20 years? Answer, No. The money has been devalued over 20 years through inflation and it now takes much more of it to buy the same product with the same demand. Inflation was ‘necessary’ to cover all the increased costs.

I’m never going to be convinced money is a commodity. Fiat was invented to be inflated. If it was backed by hard goods, it would have value over and above what the government says it’s worth. But it doesn’t. It’s value has been decreed. It’s just a medium. And it buys less each year as it inflates.

That is my simple understanding of “the system”.

If we can’t agree, then let’s agree to disagree. I’m already depressed enough knowing that our money will buy less next year. lol

#187 hobbitt on 01.12.11 at 11:40 pm

#180 Markey on 01.12.11 at 10:20 pm
#169 hobbit – Sorry, but Tony is SCREWED. He flogs industrial adhesives for a living and industry is in trouble in Ontario. Unless he can find another lucrative source of income, his wife will become the primary bread winner. That will change the dynamic of the relationship which will put stress on the marriage, as will the financial stranglehold

So has he got adhesive on his shoes?
Go look for a better job while you have that option. We don’t know if he is 35 or 65, that makes a big difference. He’s not behind on his payments or being foreclosed on so he still has time to decide his fate.

People that are screwed are ones without incomes, nearing retirement with high debt, or facing life altering health issues.
At 35 he could lose it all and still have 30 years to recover.

Many of us have been there, done that. Wife intact. Never quit trying, make tough choices. Not screwed. Yet.

#188 a prairie dawg on 01.12.11 at 11:58 pm

@ #182 race against time

ANY bank will extend the amortization vs. increasing the payment when they have that much equity in the house. The longer they can milk them, the more they can make from the transaction.

Now if the house dropped in value below the equity they’ve built up, or it went into negative equity, I don’t think the bank would be quite as “charitable”.

#189 EJ on 01.13.11 at 12:33 am

#166 Alex on 01.12.11 at 7:45 pm

A two liner description, one crummy photo of the outside, “approximated” measurements…

Yes sir, Mr. Lai is certainly earning his what, 3 or 4% commission? $30k. More than many people in this country make in a year.

This industry will go kicking and screaming, but they cannot avoid a future where comfree and zillow effectively replace them.

#190 dark sad person on 01.13.11 at 12:43 am

#185 a prairie dawg on 01.12.11 at 11:33 pm

I’m never going to be convinced money is a commodity. Fiat was invented to be inflated. If it was backed by hard goods, it would have value over and above what the government says it’s worth. But it doesn’t. It’s value has been decreed. It’s just a medium. And it buys less each year as it inflates.

You give a good description of the Keynesian model as it was intended/designed to work-but the problem with that is-its stopped working-(it never really did work)
and i fully agree with years of theft by inflation-

You cannot say after witnessing this credit bubble that there is no demand for credit money-there obviously has been great demand-

Also-that you’re forced to accept fiat by your company because of government law is true-but on the other side of the coin you also demand that money for your work-simply because it is the only recognizable money we have and then you spend it into existence or do whatever with it-
So there is a demand there for money-

I think your main point though-is that it has been devalued over the years-so it’s not acting the same as say oil-but this is also constantly changing-
Oil was at 150 a few years ago then it fell to 30 and is now up to 90-so in that light-your argument has a flaw-
If deflation and unemployment are ahead of us-then the dollar will gain buying power as prices that “must” clear the market are forced lower-so there will if that happens be a greater demand for dollars and what’s happened over the last (since Keynes) is now reversing and money demand is increasing-

Today for eg: you can buy the same US house for much less cash than 3 years ago-

You say how can a commodity be worth less each year-

Those are some examples and should deflation continue-maybe you will buy a coke for 25 cents (i’m not saying that will happen-but it’s certainly possible)

As my link explained-money is always in demand and even oil has periods of low demand-so money is the ultimate commodity-
If we didn’t have money-we would be trading in weights so yes-it is also a medium of exchange-

I for one-do not like this completely failed monetary system and do not like any paper currency and i’ve hated having to jump from one to other to try and hedge against the risk of a sudden devaluation when you never know when the next printing binge will start but as you say-what choice do we have and what you and a few others understand-means zero in the large scope of things and the masses will clamor and lust for decreasing circulating cash and that is “all” that matters-

Our system is nothing but a floating abstraction-

I would go into gold as money for another example but G usually blocks it out-so why even bother with it anymore-

#191 dark sad person on 01.13.11 at 12:58 am

188 a prairie dawg on 01.12.11 at 11:58 pm

@ #182 race against time

ANY bank will extend the amortization vs. increasing the payment when they have that much equity in the house. The longer they can milk them, the more they can make from the transaction.

Now if the house dropped in value below the equity they’ve built up, or it went into negative equity, I don’t think the bank would be quite as “charitable”.

I don’t believe that’s true-
G had a post not long ago saying that banks are desperately trying to get people to roll all outstanding debt into their mortgages-
Because CMHC will fund the debt to market value differential spread on the defaulted mortgage-so the wider the spread-the bigger the payoff–
The salable market value could easily be zero
(as in no bid)

#192 Timing is Everything on 01.13.11 at 1:00 am

Pay it off by age 65? I think 45 is more like it. — Garth

65’s the new 55….Where have you been? ;)

#193 pablo on 01.13.11 at 2:43 am

#169 hobbit; Yeah, like G said- Don’t let the door hit your butt on the way out. It burns. — Garth
It’s not the economics of the situation exclusive of the relationship dynamics.
#145 under that vaneer of male bravado you sound really bitter and angry at your ex. Just like a friend of mine; 15yrs out and he’s still not past his divorce.
#75; take your meds dude.

#194 youknowwho on 01.13.11 at 11:18 am

2 properties

2007 purchased for 350K, sold for 265K last week
2008 purchased for 320K, sold for 240K last week
Both properties in commuter towns just outside of Calgary.

Both properties are down 25%…

#195 GregW, Oakville on 01.13.11 at 11:42 am

Hi #157 R, What would it hurt if you had taken 10 seconds to tell her there is this interesting book she might want to read before jumping in? You might save a life, or reduce her ‘anxious’ level. Maybe next time?
At lease then she’d know were she could find more information.

Before x-mas when buying Garth’s book for a relative, I gave the last copy I had in hand to the guy that walked up beside me who picked up the book ‘Real Estate Investing for Dummies’. He did buy it. I tracked down another copy of Garth’s book at another store later that day.

#196 Ponzi Housing Bubble on 01.13.11 at 3:34 pm

It couldn’t possible happen in Canada.
We have much stricter laws than the U.S. and Mark J. Carney is focused on doing what’s right for us Canadians.
Don’t you people read the news paper?
Carney has great in-site into financial markets and how they work. After all he learned from the best intellects at Oxford and Harvard. He went on to further his skills at the trustworthy corporation of Goldman Sachs before landing a job at the Bank of Canada……

Let’s all keep borrowing more money and get rich off of the backs of someone else$$$$
Not my pound of flesh!
We’ll just keep printing borrowing and building until the earth is consumed to it’s bitter end. Who needs water, soil and trees when you’ve got money?
I don’t have a problem leaving my children in debt, with depleted fisheries, toxic water, poor soil and a pile of trash! Why should I care?
I happen to enjoy being self indulged in my toxic waste land!
In fact: I think I’ll go buy me another energy hogging plasma TV for my work shed and put it on my credit card. That way I’ll have another place to hide from my bills, wife and kids.

How sad we’ve become……

#197 grantmi on 01.13.11 at 8:49 pm

Just going to get worst and worst in the US!!!!


Foreclosure Filings in U.S. May Jump 20% This Year

By Dan Levy and Prashant Gopal

Jan. 13 (Bloomberg) — The number of U.S. homes receiving a foreclosure filing will climb about 20 percent in 2011, reaching a peak for the housing crisis, as unemployment remains high and banks resume seizures after a slowdown, RealtyTrac Inc. said.

#198 a prairie dawg on 01.13.11 at 10:32 pm

[quote= dark sad person]

You cannot say after witnessing this credit bubble that there is no demand for credit money-there obviously has been great demand-

Also-that you’re forced to accept fiat by your company because of government law is true-but on the other side of the coin you also demand that money for your work-simply because it is the only recognizable money we have and then you spend it into existence or do whatever with it- So there is a demand there for money-[/quote]

With the “house horny” types, I think the demand was for the ‘bling’ itself. The stainless and granite, all the ‘right’ toys, the ‘perceived’ lifestyle. The credit (debt) was just the medium to obtain it. Secondary demand in my opinion.

I’ll browse the other links you posted but I’ll need some time. After snow shoveling both before and after work today, and now resting up for the 1-2″ we’re expecting tonight, I may not have the time to get to them soon, but I will read them.

~Life’s a beach~