It’s different here (IV)

As you can readily see, I need all the friends I can get. There’s something about a bearded boy with cowboy boots, a camo Hummer and a financial blog full of indelicate pictures and too much underwear that distances people. I have no idea why.

So what a thrill yesterday when somebody here asked about my Facebook page, and a mess of people went there and signed on as my friends. I’m now planning a sleepover at the Bunker. Bring your own udder cream. If you want to befriend me, hurry. There’s some sort of contest, and the prize involves a condo in Richmond, 72 virgins and MissyBunny. I’m only eight thousand friends short.

While you’re doing that, a little update on our potential future.

The kind of bizarre behaviour I described here yesterday, with squads of newbie buyers rushing to sign up for 35-year mortgages, bringing back multiple offers and mindlessly driving up prices before F-day on March 18th, ain’t a good sign. Mortgage brokers and bank loans officers are busy doing pre-approvals and new life has been breathed into the cheapo end of the real estate market.

Not because houses just got any more affordable, mortgage rates fell or the government’s giving away money. In fact, the opposite – F’s murder of 35-year ams is actually increasing what sellers are getting and creating more unsustainable long-term debt. Therefore it might just be the perfect government strategy. There were optics of restraint and caution. The minister flummoxed about debt and crisis. Rules were brutalized. Then the result was a borrowing and buying frenzy, giving F evidence to boast that the economy is thriving.

In reality, the feds want house lust. A cynic might say changing the mortgage rules but giving two long months’ notice was entirely intentional. News raced through the Twittersphere and soon young hormones everywhere were raging. The irony is this burst of juices and the resulting higher real estate values will do the most damage on those stupids who think they are ‘beating’ some kind of deadline. If they’d only wait a few months, they could buy the same property for less money and lower debt.

But, alas, all reason is now gone from real estate. We’re back to fear, greed and herds.

So let’s get a fresh glimpse of where this goes.

Between 2000 and 2006, the price of a home in 20 of the largest US cities doubled. This, as you know, is what has happened over the last seven years to SFHs in places like Vancouver, Saskatoon, Winnipeg and Toronto. But between 2006 and April of 2009, US house prices crashed 33%, which put the value of real estate back to 2003 levels.

In other words, the average person buying the average house from 2003 to 2006 – the boomiest years – was creamed. Chances are if they still own, they’re underwater, owing more in debt than their houses are worth.

That’s scary enough. But it gets worse.

This week’s numbers show real estate is still collapsing, dropping in November by the most in a year, with 16 of those 20 cities in decline, and fresh lows being hit in nine markets. Still to come is a new wave of foreclosures, since it’s expected more Americans will lose their homes in 2011 than any previous year – the fifth anniversary of the bust.

Thus, it’s reasonable to expect a further price drop, according to Morgan Stanley, of about 11% over the next few months. That means a double-dip – a rare occurrence in which a new post-peak low is set without the faintest glimmer of a real estate recovery. It’d also mean a peak-to-trough decline in the value of a house of 36%, spread over half a decade.

Could that happen here between, say, late 2011 and 2016?

Well, of course. We know mortgage rates will be rising, since they can’t fall any further. We know that already 70% of Canadians own real estate, so it’s not like there’s a big pent-up demand. We know taxes will only be increasing in a country with an historic deficit and an exploding debt. We know that idiot 5/35 rules have allowed armies of people without money to buy houses. We know household and mortgage debt is extreme. We know the cost of living is rising and salaries aren’t. We know the Boomer geezers are house-rich and need of retirement cash.

So what is it, exactly, that stands between us and them? Where’s the lift for houses? Is it not obvious what probably comes next?

Well, it is to me. But I’m just a lonely guy. And Richmond seems so romantic this time of year.

205 comments ↓

#1 Hoof Hearted on 01.25.11 at 11:34 pm

Which one is the stiff ?

#2 LH on 01.25.11 at 11:37 pm

I just prepaid $53k yesterday (this year’s 10% quota). Juicy 3.75% tax-free yield over 3.5 years. That’s better risk-return than most corporate bonds (and certainly better than 2.55% 5Y Govt Debt!). Garth, your 40/60 portfolio probably has lower yielding, higher risk fixed income securities in it. I hope you don’t have any outstanding debt!

At this pace I’ll have a mortgage burning party by my 30th birthday (by the way this was a 25-year term; to me that’s more than long enough!).

What a genius – investing more after-tax money in an asset about to decline. Almost as smart as borrowing $500,000. — Garth

#3 Debt's Dark Embrace on 01.25.11 at 11:39 pm

Yawwwnnnn. Business as usual Garth. F’s “announcement” had the intended results. There will be another “announcement” after March 18th by F or C or H that will induce more frenzied buying and inject more helium into the bubble. I’m betting that it will be an “interest rate” thing………….

#4 kitchener1 on 01.25.11 at 11:40 pm

Here is a simple formula:

take whatever the mean average income is in your city.

For GTA its 3.5, never mind that it might overshoot to the downside to say 2.8, just like it did to the upside. Lets stick with 3.5

Now take a 6-7% 5 year rate, and see what 3.5 times income will buy, and there is your best case scenerio for a soft landing in the GTA

Approx thats 270-320K for an average house, and thats optimistic

#5 bsallergy on 01.25.11 at 11:41 pm

Damn it all Garth! What is wrong with a housing economy? Land is scarce, houses are a good bet since everyone needs a place to live, hell we aren’t the states, we ain’t better, we’re just less bad.

#6 BC Bring Cash on 01.25.11 at 11:43 pm

Been cruising around K town BC lately. Noticed that all the old motels in town have vacancy signs out front. That hasn’t been the case in Jan. in the past years. They have always been occupied by monthly rentals in the winter. Is it possible that desperados out there are all renting out their mouldy basements to keep the wolf from the door. Maybe just maybe there is over supply of housing. DA whats your take on this strange situation?

#7 Stevermt on 01.25.11 at 11:46 pm

I don’t think that you’ll be lonely for much longer…

#8 Soylent Green is People on 01.25.11 at 11:47 pm

Facebook? Facebooks is just for teenaged girls. Grow up people!

oooooooooooooooooooooooooooooooo

The 1,100-member Ontario Trial Lawyers Association told the Star it is astounded by the “hurdles, the runarounds and the hardships” Canada’s veterans face when they try to collect federal military service and disability benefits.

“These veterans fight for our country and they really should not have to fight for these benefits,” said lawyer Patrick Brown, chair of the new initiative called Trial Lawyers for Veterans.

“If we can help out, we will,” said Brown. “The commitment from our volunteers is to offer free services. It is all pro bono.”

http://www.thestar.com/news/canada/article/906497–ontario-lawyers-to-represent-injured-vets-for-free
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#9 Hoof Hearted on 01.25.11 at 11:47 pm

I see on TV Iggy is saber rattling, force an election, blah blah.

No more tax breaks for corporations, increase pensions, support families….( at least he’s unique, never heard a politician say that before !! !).

I see Alberta Premier Stemlach is quitting.

Obama’s doing a koombaya with the Republicans

Oh…I just saw (30 seconds ago) my First Federal Election ad…an attack on IGGY ad.

Doesn’t matter, only so many ways you can shuffle the Titanic’s deck chairs.

It’s simply a lost cause.

#10 LH on 01.25.11 at 11:49 pm

I’m repaying debt (this is a full recourse loan after all), not investing in more houses. I own four already in downtown Toronto and that’s enough for now!

Long term I see solid demand for big houses downtown (south of Dupont, and between Bathurst and Yonge), however current prices are already pretty rich (but so are equities and commodities!). I am sitting tight for now, collecting my 6% net yield (pretax).

#11 bunny munro on 01.25.11 at 11:49 pm

this is not usa.

#12 Utopia on 01.25.11 at 11:50 pm

.
That was brilliant commentary today Mr Turner.

One of the very best pieces you have done in a while. A nice recap of all the hazards, substantiated facts rolled in with the inexplicable emotional behavior of herd mentality.

Truth puddled with fear, diapers for those holding long term debt, loathing, lust for homes and a horrible sinking feeling of regret. Gulp.

A real work of beauty…… The future foretold.

Could not have done a better job myself.

#13 al on 01.25.11 at 11:53 pm

Yorkdale Mall is expanding big time – more jobs=booming economy=higher real estate prices !

#14 The Apocalyptic One formerly Old is Gold on 01.25.11 at 11:55 pm

Richmond is a dump, there ain’t nothing worthwhile there except the airport. The fools bidding up RE there are not just greater fools, they are the greatest of the greater fools and they deserve exactly what is coming, whether it takes 6 months or 6 years it matters not a wit. I heard good analysis back in 2003 of the pending US RE collapse, it took a few years but id did arrive. Ours had arrived in 2008 but the corpse was put on life support. However it does not change the fact that it is still a corpse and deader than it has ever been. The stench of the rotting corpse will not be concealed for long, no matter how many flowers HFC throw at the coffin! This is going to cook Canada Geese like nothing else in our short uneventful history; it will be an event to remember for the generations. Can politicians really be that short sighted to destroy generations of wealth? Or is there more to it than meets the eye?

#15 rightiswrong on 01.25.11 at 11:56 pm

We know that the self-servatives will run on a platform of “fiscal responsibility” based on their actions to quell the housing mess they made. We know they will pretend to be able to shepherd us out of the deficit mess they created with their irresponsible consumption tax cuts. We know that they will be tough on unreported crime and spend billions on jails to house ummm who will they house? Probably the kind of people who write books they shouldn’t have been allowed to write.

We know the suckers will fall for it and vote for them again. We know it is different here…

#16 BingoBabe on 01.25.11 at 11:57 pm

Hi all,

Just wondering if anyone else has found the December stats on the BCREA web site. They usually have them posted by the second week of the following month (much shorter when its “good” news) but all I can find are the quarterly reports. Maybe the numbers are there somewhere but I have not been able to find them to date. Hmmmm, I wonder if they are trying to bury the December data…

#17 Nostradamus Le Mad Vlad on 01.26.11 at 12:01 am


#190 bridgepigeon and #199 Devil’s Advocate — “George Carlin; right?”

There are many here among us
Who think that life is but a joke

(Bob Dylan, All Along The Watchtower)

George and you say it very well. Many posters here are far more intelligent and in tune with what’s happening than I.

I’ll be around, because You Can Check Out Any Time You Like, But You Can Never Leave!

#18 Chris L. on 01.26.11 at 12:03 am

We used to be friends on FB Garth, but you didn’t have enough updates or pictures. We can be friends again, but you gotta do more updates. Facebook is just like that.

#19 I pity the fool who drinks soy milk on 01.26.11 at 12:03 am

True (real) story.
A couple minutes of downtime at work today (rare, though I’m a despised, entitled healthcare minion). My younger, wiser, and more courageous colleague proceeds to tell me about how he’s got a broker who is about to go to bat for him to get approved for a third residential property, quick too, before the new rules roll out. (he’s maybe 28, two kids, two cars, 400k pile of bricks, and his wife and he might pull in 140k +/-) He’s crunched all the digits and feels the capital gain down the road trumps being in debt now with little change in cash flow, provided his rental properties continue to rent. hint, we are located in a certain government town where there are an obscene number of transient, monied, young professionals. Top it off, he’s getting his wife a new diamond ring in the 4-5k range, to celebrate a big extension on their HELOC, not to mention the ~100% gains he’s made thus far for his RE investments. He says his father told him, “son, you’ve got to get that home equity working for you!” My family is older, earns marginally more, conservative with spending, saving and investments. (no cars and one kid) My family rents, and have been waiting for YEARS for a sign of the mythical 15% slide while in real terms residential RE took amazing gains that have only slowed, not even going sideways yet (if ever). A year ago I would have collared the kid and called him a fool for risking his family’s financial future. Looking in the mirror of my dingy rental apartment tonight, I have to wonder who the real fool is.

#20 HOUSING IS CRASHING on 01.26.11 at 12:07 am

worth repeating as I talked with people in the biz and they all said the same thing. Realtors are trying to hype a market which is still stalled.

kitchener1 on 01.25.11 at 1:41 amWell, talked to my contacts this weekend, here is what they told me.

Mortgage broker 1- Phones are busy, started on Wenesday its like ” someone turned on a light switch”, running about 50/50 for new approvals and HELOC’s.
He does not thing that all those who are pre approved will be buying as he is getting repeat customers whose preapprovals have expired in the past.

Mortgage broker 2- same thing, lots of pre approvals , running about 75/25 preapproval vs HELOC. Same opinon, people getting HELOC’s will max them out but does not feel that all pre approval business will take advantage before the deadline.

RE agent buddy- Tells me that things are heating up at the office, lots of listings coming online with sellers as well. Sellers that were few and far inbetween are coming out of the woodwork. were a few weeks ago they were hard to find. His thoughts were that we will see an increase in sales but it wont be spectacular like last year. RE biggest concern right now is that listings will well surpase buyers and that what does not sell before March 18 will not sell for a while.

Right now, there is lots of “hype” but not much action in actual sales. well see

#21 Jim Summers on 01.26.11 at 12:08 am

It isn’t correct to say that paying down a mortgage is investing more money in an asset about to decline. The investment was made when the house was purchased, and paying down a mortgage doesn’t affect the value of a house in any way. The value of houses will decline (or not) no matter what the size of mortgages. Paying down debt is not a bad strategy given the high prices for all assets.

#22 Rafinator on 01.26.11 at 12:11 am

Kill ’em all and let God sort ’em out

#23 Utopia on 01.26.11 at 12:14 am

“So what is it, exactly, that stands between us and them? Where’s the lift for houses? Is it not obvious what probably comes next”? —–GarthTurner

———————————————————-

It is indeed obvious. There is no room for doubt anymore. The only thing that really separates Canadians from Americans right now is pure blind faith. We are perhaps a little ignorant of the facts up here in Canada too. A bit too smug.

That’s it.

Just emotions with a dollop of hope and a few ladles full of bull-shit from some of the banks and brokers who are desperate for a last minute cash-in, a select few Federal officials, certain repeater members of a sold out and spineless media (you rats know who you are) and the whole real-tard cartel………..nothing more.

I am not blaming everyone. Not by a long shot. There are some really good honest people out there who have done an outstanding job of warning Canadians of the risks and hazards we all face.

I commend you.

But there are many others who have sold out and let the nation down. I have nothing but feelings of disgust and contempt for them when their individual names are mentioned here.

They can atone in private.

#24 Ukee_soul on 01.26.11 at 12:15 am

Every few months right before the bubble is about to pop F-ool and the Gang or the Bank robbers step in and throw some gas on the fire. I said last year when the banks raised mortgage interest rates a bit that they were doing it so that they would have some room to drop em again to stoke the house lust fire. I recall getting pooed on by some dogs for that comment but then it happened in the late spring as house sales withered. Now once again the sales were withering so F pulls out his poker and up go the flames, rinse and repeat till all the wood is gone.

#25 Jane on 01.26.11 at 12:16 am

Where do you get your pictures???

You wouldn’t believe it. — Garth

#26 Cowboy_aka_My_View on 01.26.11 at 12:18 am

Let’s face it the lobbyists’ get what they want. I can see the news in a couple of years, now is a great time to buy, rates are low and 0/35 is back plus take advantage of the reno tax credit. Spin rinse & repeat……

#27 Min in Mission on 01.26.11 at 12:19 am

Sorry, don’t do Facebook. Can I still read the blog?

When we bought the ratio, for us, was about 2.2. We could have spent way more. We wanted a place to live, that we would call home. Fortunately, “Awesome Lady” and myself don’t need anything fancy. Plus this allowed us to buy only 6 years ago, and, have it nearly paid for. Prices, although they are dropping around here, still have a long way to go to get to our original purchase price.

#28 nonplused on 01.26.11 at 12:25 am

72 virgins? Wow, that’s better than a martyr.

But as I like to say, I’ll take 2 well trained ho’s over 70 virgins any day. MissyBunny can be one of them.

Maybe F should have made the changes overnight. Pre-announcing stuff is usually a bad plan, unless you are trying to get people to front run. For example, the Fed likes to pre-announce when they are going to be buying treasuries, which causes all the funds to front run them, which does much of the heavy lifting before the Fed has to lift a finger.

The nice thing about the US is the Case-Schiller index is same house sales, so it removes all the “average price” shenanigans that can occur in CREA numbers (I’m pretty sure anyway). Prices are compared to the last price that same house sold at in the US. Not sure exactly how they do it because there would need to be an adjustment for how long it’s been since that house last sold, but I’m sure that’s all doable.

I agree what comes next is obvious, even if taxes don’t go up.

And I also think it’s the last of our worries when it comes to money. Nothing that a little court ordered power of sales and some write downs can’t fix. The government spending problem, the pension bomb, the CPP bomb, the Medicare bomb, changing demographics, peak oil, the Chinese real estate bubble, the weak economy, the Ponzi scheme we call banking, and global instability each have the potential to make us laugh at how worked up we were over housing at some point in the not too distant future. But the housing bomb is here now so I suppose we can get practiced up by dealing with that one first.

#29 TheBestPlaceOnEarth on 01.26.11 at 12:29 am

Could that happen here between, say, late 2011 and 2016?
()()()()()
Not everyone took out a 35 or 40 year loan. So the person who bought in 2003 and took out a 25 year mortgage by 2015 has already paid off 10 years, possibly 15 years of the mortgage if they made extra payments. Their house has tripled in Value and grown tax free. Junius our renter friend has spent on an equivalent home well in excess of a QUARTER MILLION DOLLARS and still is at the mercy of the landlord. Junius’ lawyer friends all bought in Dunbar for 600k and now are sitting on 2 million dollar homes by 2015 these homes are closer to 3 million. The numbers tell the story and the TRUTH. Buy while yuo can or be priced out forever. Tell the truth do you wish you were the person who bought back in 2003 or earlier or are you happy like our renter friend Junius watching the rest of the world succeed. Become part of the creme de la creme, join us in Heavenly Vancouver. It don’t get any better folks and that’s a FACT

#30 Jsan on 01.26.11 at 12:31 am

Blah Blah Blah, I can’t understand why some people are upset about what we all pretty much predicted would happen, that is a last ditch rush by the fiscally retarded to lock into a house at the very top of the bubble.

70% home ownership in this country, Century low interest and mortgage rates that have nowhere to go but up, massive personal debt heading to the stratosphere and some people are worried about a possible stampede of one more straggling bunch of fools trying to guarantee themselves a very poor future? GOOD GRIEF, if we had one bad omen hanging over the housing industry in Canada it would be bad enough, we have a handful as mentioned above. There is only one direction this market can eventually go, and if you can’t figure out where that is I won’t even bother trying to explain it to you!!

Turn on the TV show “Till Debt Do Us Part” and watch and learn just who is buying at these levels. You will than understand just how extremely fragile this whole mess is. I am talking a country full of young, financial train wreck couples and right now those train wrecks are in a panic signing up for a mortgage that they can barely qualify for at the best of times.

#31 RE Bear on 01.26.11 at 12:32 am

#19 I pity the fool who drinks soy milk on 01.26.11 at 12:03 am

You do understand what risk is, correct?

You do understand that highly leveraged debt-laden investors frequently live the high life one day, then go bankrupt in the blink of an eye when the markets turn against them?

Speaking of which, I recently spoke to a friend, mid 20’s, earning about 70k as an actuary. He was thinking of pooling with a friend and buying a $1M+ house by fudging some numbers and renting 4 rooms out at $800 a month. He knew prices are going to drop; I attempted to explain to him that the house could easily drop to $200-300K in 2-3 years. He said he understood, and that it’s a huge bubble. He then said he’d wait until the bubble popped and bottomed out, then buy in March. Sigh.

People really are that stupid.

#32 tiger_baby on 01.26.11 at 12:36 am

> There will be another “announcement” after March 18th by F or C or H that will induce more frenzied buying …

This cannot continue indefinitely, it only brings us closer to the turning point … the overall pool of house buying funds is shrinking with each announcement

>It isn’t correct to say that paying down a mortgage is investing more money in an asset about to decline.

Shouldn’t someone sell an asset that’s about to decline, so the debt can be retired completely? (plus some profit)

#33 Kurt on 01.26.11 at 12:38 am

#21 Jim – not a bad response. To flesh it out further, look at

the interest being paid on the loan, now and in the future
the expected trajectory of prices relative to rent in the local market, now and in the future
the all-up transaction costs of selling now to lock in gains, renting for a number of years and then buying back in when owning is likely to remain cheaper than renting for a while.

In some markets this trade-off is difficult to assess; in others, it’s a slam-dunk.

#34 tiger_baby on 01.26.11 at 12:47 am

> The investment was made when the house was purchased, and paying down a mortgage doesn’t affect the value of a house in any way.

I should add that I suspect few would think this way regarding any other asset … however it’s ubiquitous for housing

#35 GenXer on 01.26.11 at 12:48 am

To “#19 I pity the fool who drinks soy milk” – are you familiar with Nassim Taleb? He is a fund manager who believes in taking out big bets that bad things will eventually occur. 364 days a year he loses a little bit of money – but when things fall apart, his competitors go bankrupt, but he makes millions.

The moral of the story is that it is easy to do what everyone else is doing – making small gains every day and watching your assets slowly rise is an easy thing to do. It’s hard to take a risk, even if it is based on solid math / fundamentals, and watch the opposite outcome of what you believe occur day after day.

In the end, the math does not lie. Canadians cannot afford the real estate that they are living in.

Anyone notice the CPI numbers came out at 2.4% today? From “Mark Carney: Inflation targeting in a global recession”:

“When a shock threatens to push inflation either above or below the target range, the Bank of Canada will act to bring inflation back to the 2 per cent target. This certainty – that the Bank will act – helps to keep expectations of future inflation close to the inflation target. Economists call this “anchoring inflation expectations,” and it brings a number of benefits: it helps to reduce swings in interest rates, lowers the cost of borrowing for Canadians, contributes to a more stable, competitive cost of capital for our companies and, ultimately, supports more sustainable growth in output and employment.”

So we are running 20% ahead of the bank of Canada inflation target, and it is a certainty that the bank of Canada will Act. Hmm…

#36 pablo on 01.26.11 at 12:54 am

But, alas, all reason is now gone from real estate. We’re back to fear, greed and herds.
Fantastic; time to get the realtors in here and see what this house will fetch before the spring market glut of listings hits. Yeah baby, fear and greed and herds oh my!

#37 Get Real on 01.26.11 at 1:06 am

On the contrary

Mortgage rates set to rise to double digits in the developing world

http://timesofindia.indiatimes.com/business/india-business/Home-loan-rates-set-to-soar-to-double-digits/articleshow/7364157.cms

#38 robert on 01.26.11 at 1:10 am

This last spurt of gas on the RE bubble is a blatant bribe to land H a Parliamentary majority. The bad news comes afterward, but with the caveat that “we told you so” was splattered through the media. Then watch for drastic cuts to social services, fire sales of Crown property to the “Oligarchs in waiting”, an orgy of sell offs of our natural resources to the hovering (and hoovering) foreign multinationals. Suddenly the inflation dragon will magically appear to threaten our creaky economy (as if the inflation of housing values was just a chimera), with Saint F waving the interest sword.

#39 Rhino on 01.26.11 at 1:12 am

LH,

Your under 30, and own 4 houses in downtown TO. And you have over 50K cash left over at the end of the year to put towards a mortgage. What the hell do you do? Crack dealer? its gotta be crack..

#40 obert on 01.26.11 at 1:13 am

No Garth, you are not alone! Do you need a hug or what? ;)

As A. Greenspan used to say “too much froth” in the real estate … and then the bubble was pricked with rising interest rates, and then the prices continued to go down a down despite the interest rates decreasing.
The bigger the bubble the bigger the consequences.
As for the man paying off the debt – good for him, but he should not boast that it’s a smart investment, because it’s not. He bought a house, like buying a stock on a margin.. and no matter if you gain or loose .. you have to pay back. Hope his only “stock” or investment is not his house. Because then he is very poorly diversified.

#41 obert on 01.26.11 at 1:19 am

Then again, if your stock is high you sell it and pay back the margin. So now his house is expensive so maybe should sell – but maybe it’s just an expense/cost of living, and not an investment vehicle.

#42 Mark on 01.26.11 at 1:26 am

Most expensive TEARDOWN ever!!! Read the description!! TOO FUNNNY. http://www.realtor.ca/propertyDetails.aspx?propertyId=9336360&PidKey=-1407470911

#43 Junius on 01.26.11 at 1:36 am

#29 BPOE,

LOL! You are more of a comic book character every day.

You said, “Buy while yuo can or be priced out forever.” Is that a typo or did you mean to get it backwards?

Buy now and be screwed forever is more like it.

Adn what makes you think I rent?

#44 Jeff on 01.26.11 at 1:36 am

Canada is different from the US and the housing market is evidence of that. We have lower unemployment, stronger banks, a better regulated financial system and loads of natural resources that will power us through this mess. You have been consistently wrong with your predictions of a correction and you keep pushing it back further, now it is late 2011-2016. By 2016 many will have paid the bulk of their mortgages…

You provide a textbook example of delusion and gullibility. Thank you. — Garth

#45 InvestorsFriend (Shawn Allen) on 01.26.11 at 1:48 am

Number 2 LH tells us he managed to pay down $53k on his mortgage and might be mortgage free by age 30.

Garth, in his NOT friendly reply says:

What a genius – investing more after-tax money in an asset about to decline. Almost as smart as borrowing $500,000. — Garth

OUCH, that response was not deserved.

LH you are paying down debt. Great on you to have come up with $53K. congratulations!

LH and I both know that he is not investing more in his house. LH was already on the hook for the entire amount of his mortgage. He is paying down debt.

Whatever the value of your house is, that is what your current investment in the house is. Not your equity.

It’s a simple balance sheet for gosh sakes, investment is the asset, the value of the house. That is offset by mortgage debt and equity.

Reducing debt and therefore adding to equity does not change the amount you have invested in the house one bit.

Again (for the slow). When you buy a house your investment is the full price. You pay some now with equity and you borrow some.

The amount you borrow does not change with market values in future.

Again congrats LH on paying down your debt. Your investment in the house is its full market value and that has not changed.

And if the house value is about to decline, well that won’t change the mortgage value owed. LH needs to pay his mortgage no matter what happens to the house value.

It’s generally a good idea to pay down a mortgage no matter which direction house prices are going.

A paid down mortgage offers flexibility. You can get by on unemployment insurance if you have no mortgage. With a big mortgage UI is not going to cut it… Imagine the stress of losing a job when you have a big mortgage.

A mortgage truly makes you a wage slave and means you run scared of job loss.

Garth consider apologising to LH.

It’s a spec house. He is the problem, not a role model. — Garth

#46 Stevermt on 01.26.11 at 2:01 am

I may be #1..woohoo

#47 Yank on 01.26.11 at 2:07 am

” Damn it all Garth! What is wrong with a housing economy? Land is scarce, houses are a good bet since everyone needs a place to live,”

I really hope this is a joke — “Land is scarce” in CANADA?

Land. Is. Scarce. In. Canada.

Really? Yeah, they just don’t have any trees or land around here. The wildlife is taking up all this space…

(hitting head against wall now…)

#48 Phil Indablanque on 01.26.11 at 2:14 am

“The kind of bizarre behaviour I described here yesterday, with squads of newbie buyers rushing to sign up for 35-year mortgages, bringing back multiple offers and mindlessly driving up prices before F-day on March 18th, ain’t a good sign.”

Never underestimate the stupidity of the general public.

#49 Timing is Everything on 01.26.11 at 2:20 am

#34 tiger_baby – said “I should add that I suspect few would think this way regarding any other asset … however it’s ubiquitous for housing”

Hmmm, most folks only buy a house to flip. I was not aware of that.

#50 Hoof Hearted on 01.26.11 at 2:26 am

WTF?

Where are some of these posters coming from ?

This reminds me of Cheech and Chong’s ” Up In Smoke”, y’know, the scene where the Van coated in Pot starts to catch fire and gives off smoke. Some of you are either tokin or blowin….

BTW..isn’t it obvious by now where Garth gets his photos?

#51 Gord In Vancouver on 01.26.11 at 2:26 am

Another day, another great post by Garth.

#52 Hoof Hearted on 01.26.11 at 2:36 am

#14 The Apocalyptic One formerly Old is Gold

Richmond is a dump, there ain’t nothing worthwhile there except the airport.

========================

Actually Richmond is designed/evolved? to be one of the world’s premier money laundering city’s.

Start at YVR.

Jump on Canada line.

In 5 Minutes, dropped off right at the RiverRock casino.

Use cash, buy chips, cash em out.

Get back on Canada Line.

Get to Richmond Center. Every bank has branch within 5 minute walk.

Check out a pre-sale presentation center. Put Ca$h down on some condos….or maybe buy SFH or two

Get back on Canada Line…go back to YVR…head back to Far East.

#53 Bill Grable on 01.26.11 at 2:46 am

Mr. Turner and even Mr. Goldman Sac, er Carney are teling you rates are going nowhere but up.

This clip for those hoseheads that are saying that those clever Chinese are going to be snapping up that Richmond Real Estate – (*if they aren’t too busy acting like jerks and whining about the ‘Ghosts’ from a proposed hospice, next to their overpriced dumps at UBC) –

>Some Chinese banks have drastically raised interest rates on loans to comply with government orders to rein in credit growth after another lending surge at the start of the year, state media reported on Wednesday.

Instructions have come down from head offices to some bank branches, saying they must strictly abide by credit quotas this month, the China Securities Journal reported, with regulators keeping a closer eye than normal on lending activity as part of their campaign against inflation.

Although consumer price inflation dipped to an annual rate of 4.6 percent in December, many analysts expect it to rebound this month to its fastest in more than two years and warn that excessive lending by banks would compound the problem.

The China Business News said that banks had already lent 1.2 trillion yuan ($182 billion) as of January 24, putting them well on track to blow past limits that regulators had wanted to set for the first month of the year.

http://tinyurl.com/62fnxdl

DUH! China’s RE is leveraged to Jupiter – now watch as the cretins have to dump their “investment properties” in Hongcouver – “The Best Place on Earth”.

Wake up – I won’t even bore you with a stat from the States….where homes have lost value for 53 straight months – and $7 billion worth of Bank REO’s are about to come onto the market. Go ahead, buy some junk in Palm Springs, or here on Maui.

Bugs Bunny said it best (with apologies to Miss Bunny) – “MAROONS”.

#54 Saw this in the States and now it’s definitely here in Canada on 01.26.11 at 3:10 am

Here in Kelowna housing has been coming down in price and will continue. At Barona Beach, West Kelowna, there are about 48 units for sale, in a very small condo complex. There hasn’t been a sale in that complex in almost a year, nobody is buying. Now you’re seeing many million dollar homes go into foreclosure, many of them lakeshore. A 5 million dollar house on Pritchard Dr. had to reduce its price to 4.5 million and it still hasn’t had any offers. Another house on Pritchard asking price 2.1 million is in foreclosure. The inventory of homes is piling up; now the realtors have only 66 days before housing Armageddon commences. They may have a small blip in sales, but they’re losing the battle. It the US a few years, but slowly the housing ground down in price, that exactly what’s happening here. If you live in Kelowna and you’re thinking of selling now is the time.

#55 wes_coast on 01.26.11 at 3:12 am

I think we should all pump real estate (to others) as much as we can. Let them buy. Let them build more. Over capacity will create buying opportinities when rates push down demand. Buy Richmond!! Its a steal!! Get in now before its too late!! Haha. I sound like that ‘Greatest place on Earth’ guy now.

#56 LS on 01.26.11 at 3:18 am

#14 Apocalyptic one

Richmond is a dump. Isn’t THAT the truth! Not to mention worries of sliding into the sea when the big one hits.

#57 MPM on 01.26.11 at 3:22 am

A couple of weeks ago we decided the time was ripe to sell. We bought our condo in Vancouver in 2004, we bought before the big bubble, we weren’t smart we were lucky. And thank god we have a 25 yr annum.

We have a prime first time buyer apartment, not made for seniors and definitely not for families. In the midst of home prep for sale I heard the news of F’s big announcement, I was delighted. Of course when I tell people of our decision, they think we are crazy, and maybe so – the koolaid is strong in Vancouver. But everyones comment was, ‘this will only affect first time buyers’. C’mon, does anyone realize that real estate is a ladder game??

You buy small and move larger. So if in a year I sell my first time buyer condo for 10% less, I can only buy a larger place for 10% less. For now it’s only the newbies that get hit, but the ripple well be felt be all.

That $200 less per month (touted by the major news propaganda) will become $500 – $600 less per month.

But then again, why should I care if they don’t see it….

#58 Hoof Hearted on 01.26.11 at 3:23 am

Top 10 ways to get rich…..

http://nachocelebrity.blogspot.com/2011/01/top-10-ways-to-get-rich.html

#59 Jay Currie on 01.26.11 at 3:27 am

Actually, my hat is off to F.

He can claim fiscal rectitude while arranging the pre-election rape of the last RE virgins in the land. All good from a CPC perspective.

The bubble burst is postponed for, say, four months and Dunbar houses still sell for silly millions. Quite clever I’d say. Deeply immoral; but the CPC’s quest for the Holy Majority leaves morality and fiscal probity in the dust.

F. knows precisely what he is doing and he does not give a squirrel’s ass.

Last time I bought real estate was 1982. Did quite well. For the moment, and for the foreseeable future, I rent on a hill overlooking the ocean. My money is out working. It may be working long after I stop.

#60 TheBestPlaceOnEarth on 01.26.11 at 3:29 am

Richmond a dump? Old Gold, I don’t think so they don’t call it RichMan for nothing. This is flood plain real estate baby. The whole island of Richmond is on a flood plain but because of location location location it will be going higher floods or not. They don’t call it RichMan for nothing. Even the flood plain goes for a premium in the BPOE

#61 Crash Callaway on 01.26.11 at 3:30 am

The pic above is about revenge

Want to get even with a snot face sibling…
Leave em the house!

Looks like coffin boy got the last laugh.

#62 Nick on 01.26.11 at 3:37 am

Embracing debt at peak RE value and historically low interest rates thinking “I’m ok, Canadian banks are sound” is like driving at 190kmh while texting, thinking ” No problem, I know a great doctor”.

#63 confused and a little crazed on 01.26.11 at 3:43 am

guys,

i agree wit a previous poster…sorry don’t know who but flattery will announce an increase in interest rate around match to to keep the real estate going…then again in june/ july for increase house lust…until the very end where they will get relected for another …once that happens. The market will be out of juice and slide downwards.

Once the public demands why did n’t he stop the crash…he’ll saay he tried by reducing mortgage amortization and increasing interest rates. he did his due dilligence. As far as he is concerned his hands are clean…now he will try to save the people using tax payers money…what a guy !! :)

my family is putting press on me to buy right now to…my younger cousin is getting married in july/ Aug and they are buying a place….so it about time for me.

Asian girls need to own a place to feel secure and its
gives you an impression of being successful… u know how it is but my math is telling me otherwise 350 k for a townhouse is steep with a 35 yr mortgage. while in 20 years i would have saved / invested over 600 k

good luck everyone…i gotta admit realtors got the psychology down pack with the govt helping them…how can they loose

#64 Crash Callaway on 01.26.11 at 3:45 am

Further to “F” creating a frenzy for home ownership,
“F” should also be mandating banks to supply their mortgage holders with a copy of the Kama Sutra,
That way home owners will be able to assume the positions required to keep those houses.

#65 Kate on 01.26.11 at 4:47 am

“And Richmond seems so romantic this time of year.”
I love this comment. Richmond SUCKS this time of the year.

Richmond Dweller

#66 Jimmy on 01.26.11 at 5:38 am

American housing lows
http://www.bbc.co.uk/news/mobile/business-12280038

I hear all this talk that America can’t recover until it’s housing sector recovers. I think if oil was $12 a barrel like it was in December 1998 the housing problem would be moot.
I agree that people have huge issues with debt and RE and rampant consumerism in general, and that RE agents are poor investment advisors; but I’m starting to feel this mess is not all just bad bankers and greedy shoppers.
This is a fundamental shift in the cost of liquid fuel.

#67 boomer62 on 01.26.11 at 5:54 am

#21 Jim Summers on 01.26.11 at 12:08 am

Dude, a house is not an investment…its a speculative luxury item.

#68 Melissa on 01.26.11 at 7:35 am

Garth. It’s not just US house prices that crashed, but the UK’s as well. Here’s an article explaining the dire state of the UK economy following the crashing of its housing/credit bubble. Scary stuff.

http://macrobusiness.com.au/2011/01/uk-deleveraging-standard-of-living-to-plunge-at-fastest-rate-since-1920s/

#69 Pr on 01.26.11 at 7:57 am

29 TheBestPlaceOnEarth … So the person who bought in 2003 ..Their house has tripled in Value … Become part of the creme de la creme, join us in Heavenly Vancouver. It don’t get any better folks and that’s a FACT.
Bravo, finding you self la cream de la cream buy enslaving the next generation and your owned children to the banking system. You dont get it. Go cash your check and smile at your children.

#70 Shane on 01.26.11 at 8:26 am

Garth, I’m beginning to think the market will never go down? what will it be next spring 2012 the government will change something again to keep the market going?

Shane

#71 X on 01.26.11 at 8:42 am

Had a client in yesterday, who told me he is buying a home, he has to buy before the end of March his agent told him to qualify for the 35 year mortgage. He has no money down, so he is using the HBP to get 20K downpayment.

I didn’t say anything, but he has no clue that he is losing short term money by buying something that is going to go down in value in the near future, and losing long term money by losing the compund interest of his RRSP.

I wonder how many are in a similar situation to him…

#72 The Celiac Husband on 01.26.11 at 8:57 am

Where do you find those hillarious pictures for your Blog?

#73 Moneta on 01.26.11 at 9:08 am

Jim Summers on 01.26.11 at 12:08 am
It isn’t correct to say that paying down a mortgage is investing more money in an asset about to decline
———-
I don’t think the issue is not so much paying down debt but having a debt load of 500K and paying it down when when your rate is 3.75%!!!

In my book, the only ones with a 500K mortgage should be multi-millionaires and even then they usually buy their houses cash.

1. If you’ve got a 500K mortgage, you’ve probably got too much house and should sell.

2. 3.75% is a gift. Why would you pay that off when you could probably find a better place to park your money? If you think rates are staying low for 10 year, why would you want an expensive house and such a big debt load?

#74 Moneta on 01.26.11 at 9:11 am

Shane on 01.26.11 at 8:26 am
Garth, I’m beginning to think the market will never go down? what will it be next spring 2012 the government will change something again to keep the market going?

Shane
——————-
Thius is what you need:

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

;)

#75 pbrasseur on 01.26.11 at 9:22 am

“So what is it, exactly, that stands between us and them?”? —–GarthTurner

I think the answer is obvious: Access to credit.

In other words the CMHC. If it was’nt for CMHC real estate would have crashed a long time ago in this country.

Still the growth in credit that supported the real estate market is unsustainable, therefore that market is unsustainable.

In the long run…

#76 T.O. Bubble Boy on 01.26.11 at 9:22 am

TheBestPlaceOnEarth has a time machine now!!!

While we’re all travelling back to 2003 to buy houses, let’s also go back to 1999 and short the dot-com bubble while we’re at it, or maybe buy some gold when it was $250 or some Apple stock at $8 in 2003.

It’s 2011 buddy, pay attention!

#77 The American on 01.26.11 at 9:28 am

I get a huge kick every time I see comments like, “this is not the USA (@ #11),” or “We’re just less bad (than the U.S. @ #5)” Oh, how pride cometh before the fall.

Canada is lagging (as usual) the U.S. trending by about 5 to 6 years. One thing is certain, Canada sure is not the USA for a plethora of reasons, all of which I will not get into here. As for mortgage lending practices, the truth of the matter is that Canada has performed worse and acted the LEAST conservatively than any country in the G20 (this will be forthcoming news to the Canadian people in the next 18 months). Canadian government officials and banks have been nothing but incredulous frauds over the past several years. Of course, Canadians as a whole are completely oblivious to this fact as they’ve eaten all propaganda hook, line, and sinker (as usual). When the collapse begins, it will be anything but a “soft landing” for Canada and its people, the tax payers. Canada is a country with higher household debt, higher taxes, and even higher “delusion rates” than that of its neighbor to the South. I’ve said it for a while now that the housing bust in Canada will BEGIN sometime third quarter this year – and that will only be the very beginning. I understand there are several areas throughout Canada that have already softened in prices, but trust me when I say that does not even start where it will be headed. Sustainability ratios of debt to income is truly 3 to 4 times one’s household income in any given area; Anything more results in a correction. So, look at your income, folks. Decide if YOUR household yearly income is $200,000. If it is not, then you cannot afford that $1,000,000 home you mortgaged at $800,000 (that is assuming you’ve put 20% down on the property, which hardly any Canadians are doing or have been doing) Most Canadians are putting 0-5% down and amortizing at exceedingly long periods as rates reset every 5 years. Un-friggin’-believable. This is exceedingly dangerous, not prudent, highly aggressive, and will end incredibly poorly. I do believe what goes up, must come down relative to expendable income, of which Canadians have less than Americans (oh, and most bank senior analysts agree, all outside of the Canadian system, of course). Well, of course that is true; hence, Canada’s crash will indeed be worse than the USA’s. That is all there is to say and nothing to defend. Such is life. Wait, watch, and hold on to your asses.

#78 fancy_pants on 01.26.11 at 9:37 am

Give the banks the risk exposure they deserve and you would see lending standards find the proper equilibrium automagically (instead of F dicking around with the levers).

If you think about it, it is ridiculous the banks can approve whomever, knowing it is not their as$$ on the line if things go sour. All they do is tick the boxes required to get gov’t backing provided through CMHC.

The gov’t should exit the business of mortgage insurance and stop guaranteeing residential mortgages with public $. As long as the they insist on backstopping the risk of high-ratio mortgages with taxpayers’ $, the banks will simply sell as many high-ratio mortgages as they can, knowing that taxpayers will ultimately pay the price if/when rising household debt creates problems in the future.

Like most gov’t programs, must have been lucrative for someone to get the CMHC program on it’s wheels – maybe it involved a condo in Richmond , 72 virgins and a round of golf. Many a folk have sold out for less.

#79 Ray MacDonald on 01.26.11 at 9:51 am

Got a friend who lives in Fayetteville NC – not far from Ft. Bragg.
She and her husband just bought a 1200 SF house on 35 acres in the country near town. It needs some work to fix up the roof and the heat pump.
It was a foreclosure on someone’s estate – guy died with a mortgage and the heirs walked away. The bank sold it to my friend for $130K. It’s different there, of course.

#80 Utopia on 01.26.11 at 10:05 am

#6 BC Bring Cash

“Been cruising around K town BC lately. Noticed that all the old motels in town have vacancy signs out front. That hasn’t been the case in January in past years. They have always been occupied by monthly rentals in the winter”
———————————————————

That is strange. I spent part of a winter there back in 02. Rented a hotel room for the price of an apartment. I recall that at the time it was not easy to find space there. Everyone was booked up solid for winter.

So you have a good question. What’s up? Perhaps the skiing is not good this year, or tourism is down because of the lingering effects of the recession.

Or maybe Kelowna has finally just lost it’s shine as the costs of living there are so high now. Have you ever commuted down Harvey Ave in rush hour?

I really hated Kelowna traffic snarls. How can a city prosper with only a single main street through the center of town when that same road also doubles as part of the highway.

I say, build a ring road or send the tourists packing.

#81 john on 01.26.11 at 10:21 am

What if the US starts to rebound and the world economies start to improve and confidence of the general consumer rise it is also possible real estate in Canada may infact surge

#82 Utopia on 01.26.11 at 10:25 am

#19 I pity the fool who drinks soy milk

“True (real) story”.
——————————————————–

Give me a freakin break pal. I know BS when I read it and you just dished out a crock full. You must be from the realtor class pulling on the emotion heartstrings to get things moving again.

#83 robert james on 01.26.11 at 10:26 am

#54 Saw this in the States I live in Peachland and I don`t think I have ever seen so many For Sale signs before.. There is a new sub division here ,,actually there about 3 or more,, that was completed about 3 years ago.. There are 11 lots in the sub division and only 2 have sold in 3 years and that was after the price drop from 269K to 179K.. There is no shortage of land here .Period!! I heard a great joke from a 90 year old guy a few days ago.. This may be old as the hills but I never heard it before.. 2 old guys were sitting on a park bench and one guy says,”I got Herpes at 74″.. The other guy says,,”that is not so bad,,I got Nortel at 102″ lol

#84 Nomis Ralpmet on 01.26.11 at 10:42 am

The current house price craziness hit closer to home yesterday. A house in my mid-50s era Mississauga neighbourhood was picked up by a bunch of flippers last summer from the original owner. They finally put it up for sale, I guess to draw in the [hopefully] last round of greater fools. Wifey and I were blown away to see it listed on MLS for 730k!!! We bought our home (maybe 200sqft smaller) in 1994 in the low, low 200s. Shudder to think of what young family is going to pick up that place with a 650-700k mortgage for 35 years!

How many future generations are going to suffer for the credit excesses of today?

#85 AACI-Okanagan on 01.26.11 at 10:45 am

Real estate values have droped after every boom, there is nothing new here. Someone always gets caught holding the ball, from developers, to buyers. It happened in the early 90’s , late 80;s etc. Values jump up 20-30% during a boom and fall 10-15% there after. This last boom values climbed 50% to 100% over 7 years so a drop of 25% to 50% would not be surprising. After every boom there are lots of foreclosures, it is just the way it is. Fact is, people will always need a roof over their heads and if you think long term, real estate is still a good investment.

#86 Devil's Advocate on 01.26.11 at 10:59 am

#54 Saw this in the States and now it’s definitely here in Canada on 01.26.11 at 3:10 am
Here in Kelowna housing has been coming down in price and will continue. At Barona Beach, West Kelowna, there are about 48 units for sale, in a very small condo complex. There hasn’t been a sale in that complex in almost a year, nobody is buying. Now you’re seeing many million dollar homes go into foreclosure, many of them lakeshore. A 5 million dollar house on Pritchard Dr. had to reduce its price to 4.5 million and it still hasn’t had any offers. Another house on Pritchard asking price 2.1 million is in foreclosure. The inventory of homes is piling up; now the realtors have only 66 days before housing Armageddon commences. They may have a small blip in sales, but they’re losing the battle. It the US a few years, but slowly the housing ground down in price, that exactly what’s happening here. If you live in Kelowna and you’re thinking of selling now is the time.
Barona Beach is a complex of 155 vacation rental units of which only 17 are for sale not 48. The lowest priced unit is a 1 bedroom, 620 square foot unit asking $318,000. The most expensive unit for sale is $1,088,000.00 for which you get 3 bedrooms in 1,942 square feet. The average is 2 bedrooms in 1,247 square feet for $599,724. Of the historical sales reported on MLS the average price has been $890,876 for an average 3 bedroom, 1,485 square foot unit.

Need I go on about the rest of Pritchard Drive on which street is the $10,000,000 home of one of our more notable local celebrities?

#87 Responsibility on 01.26.11 at 10:59 am

#60 TheBestPlaceOnEarth ” This is flood plain real estate baby. The whole island of Richmond is on a flood plain but because of location location location it will be going higher floods or not. ”

Floodplain real estate only goes up?

Tell that to the folks in New Orleans.

Vancouver is GOING DOWN…look it up:

http://gsc.nrcan.gc.ca/urbgeo/geomapvan/geomap8_e.php

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

Geomap Vancouver
Earthquake liquefaction
Moderate to High (modern lowlands sediments)

#88 Devil's Advocate on 01.26.11 at 10:59 am

#54 Saw this in the States and now it’s definitely here in Canada on 01.26.11 at 3:10 am
Here in Kelowna housing has been coming down in price and will continue. At Barona Beach, West Kelowna, there are about 48 units for sale, in a very small condo complex. There hasn’t been a sale in that complex in almost a year, nobody is buying. Now you’re seeing many million dollar homes go into foreclosure, many of them lakeshore. A 5 million dollar house on Pritchard Dr. had to reduce its price to 4.5 million and it still hasn’t had any offers. Another house on Pritchard asking price 2.1 million is in foreclosure. The inventory of homes is piling up; now the realtors have only 66 days before housing Armageddon commences. They may have a small blip in sales, but they’re losing the battle. It the US a few years, but slowly the housing ground down in price, that exactly what’s happening here. If you live in Kelowna and you’re thinking of selling now is the time.

Barona Beach is a complex of 155 vacation rental units of which only 17 are for sale not 48. The lowest priced unit is a 1 bedroom, 620 square foot unit asking $318,000. The most expensive unit for sale is $1,088,000.00 for which you get 3 bedrooms in 1,942 square feet. The average is 2 bedrooms in 1,247 square feet for $599,724. Of the historical sales reported on MLS the average price has been $890,876 for an average 3 bedroom, 1,485 square foot unit.

Need I go on about the rest of Pritchard Drive on which street is the $10,000,000 home of one of our more notable local celebrities?

#89 Ret on 01.26.11 at 11:05 am

CNBC interviewed the Ontario Teacher Pension Plan CEO this morning. Real Return Bonds make up 20% of the Ontario Teacher Pension Plan assets as shown on the allocation of assets graphic that was pulled up during the interview.

Say Garth, what’s the story on these bonds?

#90 Azza4 on 01.26.11 at 11:07 am

Finally deposited $12000 to our TFSAs today ($10000 in new contributions and return of $2000 in take-out-invest-in-RRSP from last year). It took us 7 weeks to accumulate these funds on 2 IT job incomes + investment income with hard restrictions on spendings. It’s so hard to do! I can imagine average Canadian family could struggle to accumulate investment funds, especially with mortgage payments holding them back.

#91 Prufrock on 01.26.11 at 11:20 am

Garth:
History teaches that history teaches nothing.

#92 BDG-YYC on 01.26.11 at 11:21 am

.#29 TheBestPlaceOnEarth on 01.26.11 at 12:29 am

“It don’t get any better folks and that’s a FACT”

Yup … I think you can take that to the bank. Its about done all right. Hell of a ride while it lasted though … eh?
Time to cash out and hit the Tahiti beaches.

#93 panopticon singularity on 01.26.11 at 11:24 am

I love this website, but my GOD some of you need to proofread, there’s no excuse for not being able to spell the computer does it for you for crap’s sake.

#94 TheBestPlaceOnEarth on 01.26.11 at 11:25 am

To the American. Your theory on the third quarter of 2011 housing starting to slide in Vancouver will be proven incorrect. For the rest of Canada I agree. Homes are bought here with cash from oversees. I keep banging the drum that Vancouver is not a place for Canadians to be buying. Cash deals only folks. It’s sad that Canadians need to get mortgages but that’s what happens when you plan poorly and don’t work hard. I would invite the American to come down to Vancouver for a visit. A side trip to Richmond is in order as home after home is being bulldozed and transformed into a Xanadu for the Creme de la Creme. Did I mention Vancouver just got voted 3rd most expensive City in the World? I love it!

#95 TheBestPlaceOnEarth on 01.26.11 at 11:28 am

Fact is the old motels are being bulldozed in K Town for luxury Condos. Remember the motel along the way to Summerland across the water? Closed for condos for the rich. Go to Gyro beach and you will see what’s happening
^^^^^^^^^^^^^^
#6 BC Bring Cash

“Been cruising around K town BC lately. Noticed that all the old motels in town have vacancy signs out front. That hasn’t been the case in January in past years. They have always been occupied by monthly rentals in the winter

#96 The American on 01.26.11 at 11:34 am

At #81: John, if markets elsewhere rebound, it will have little to no matter to what takes place in Canada. After all, markets that collapsed had little to no affect in Canada. The argument that markets rebounding will positively help Canada’s situation cannot be used as it certainly was not used on the way down. In other words, you can’t have your cake and eat it too.

#97 Timing is Everything on 01.26.11 at 11:36 am

What’s a Facebook?

#98 HouseBuster on 01.26.11 at 11:36 am

New-home sales in 2010 fall to lowest in 47 years
Buyers purchased fewest number of new homes last year in nearly half a century

#99 Stevermt on 01.26.11 at 11:37 am

Post #46
that was my post from yesterday #10…why did it go up today…and at 46 I’m really way off. How did that happen?

#100 refinow on 01.26.11 at 11:37 am

72 virgins, and miss bunny, sounds like garth is recruiting for suicide bombers….

#101 The American on 01.26.11 at 11:37 am

At #81: John, nobody in Canada wanted to align themselves with the global markets when real estate across the globe collapsed. In fact, I continually hear and read, “We’re different here (Canada)” So, if Canada is so different and wants to appear as if it has not partaken of the credit frenzy/madness, then why would Canada be given the opportunity to align itself all of a sudden with global real estate markets if/when they begin to recover? The argument/train of thought just does not make sense.

#102 kitchener1 on 01.26.11 at 11:42 am

#77 The American

Watch and wait, I agree, there will be no soft landing in RE. 2008 going into 2009 would have been an epic crash save not the emergency interest rates.

To the posters on here– there is no frenzy in housing sales, lets see what shakes out in the next 2 months.

I said on this blog, back in march of 08 that either thats it or this will be the biggest blow off top in history.

Like i said earlier, take 3.5 times income at 6% interest rate over 25 years in GTA and see what that gets you.

approx 300K for the average home. What happens when all these condos come online and the spec buyers rush to dump them??

#103 The American on 01.26.11 at 11:49 am

At #94: ADecentPlaceForCanada, I am in Vancouver 4-6 times/month. Believe me, I fully understand the market as my line of work dictates that I understand it. Additionally, I do agree with you the Chinese have fuled the market in Vancouver, but that has quickly been diminishing and you know it. The Chinese real estate markets are falling, which much of the wealth was coming. Hence, Chinese money is rapidly drying up and sales are stagnating in Vancouver because of it. Next up, Vancouver prices will begin sliding. No way around it. You believe what you want, but do not try to push your propaganda by me. I’ll back it up if it is what you’re seeking. Careful, though, you may not want to go down that road in an open blog forum as it will negatively impact your business.

#104 Carpe Diem on 01.26.11 at 11:50 am

I was completely floored by the misinformation regarding filing Bankruptcy’ s on the blog yesterday that I have to correct the dozen or so sorely misguided soul’s .. I have worked directly with a Trustee in Bankruptcy and currently working in “articling” to become a licensed Trustee (I am not claiming to be an expert – but I must set the truth about some awful facts being noted yesterday).

Filing a 1st time bankruptcy – 9 months “BUT” any unsecured creditor can oppose there discharge. 2nd Time bankrupt (as someone said yesterday 2 / 3rd filings) – that’s an automatic date in Bankruptcy Court. The court may impose some serious conditions – (you are allowed to appeal, after 1 year and with the hired Bankruptcy Lawyer in toe). Some conditions can be so severe that it may take years before you are able to meet the conditions PLUS – 2nd time filing is 14 years on your credit report. 3rd time filing – the courts have the right to even refuse your discharge if they have evidence of blatant fraud – that means your credit is forever tarnished if you live in Canada! Period!
Someone noted that a friend filing and driving a Porsche after filing – in Ontario – the exemption is $5650… any value higher and they would have to repurchase for the creditors benefit. The Porsche guy probably has a secured loan against it – meaning the financing company technically owns it – no value.
Income / single person in Ontario is exempt from surplus payment is net is not over$1840 per month, not much to really live on (that’s approx. $12hr) –any additional income above that amount, 50% is calculated to be paid into estate + a 21 month term under bankruptcy.

Proposals (payments often over 5 years) – miss 3 payments – its annulled – you lose your protection under the Act – creditors can force legal action again – and all the money you paid – gone –
The biggest development – creditors are the ones who oppose discharges – before you get your discharge – you better hope no creditor has issues with your status. As the number of write-offs mount, look at job postings at banks – there building there back office in non-performing loans.
Transfer property even 5 years before filing – must be documented (forget to tell us) if that is ever presented by any creditor – FRAUD – good luck in convincing the Judge of that – Purchase shoes 5 days before you file (FRAUD) – creditor jus t needs to file an opposition to your discharge.
Lie about your status – get discharged – years go by – fact brought to light – the creditor can petition to have the discharge revoked (under making false statements under the Courts – do you think the Court take lying to them lightly – bend over is all I can say) – and watch the courts impose significant penalties that will take years to comply with.

It all comes down to creditors – they all share the same database on consumers – if they waive off a charge – you can count yourself lucky – if they pursue it – they will get the Office of Super indents to conduct an examination under oath. They can literally bury you with conditional orders / and with in-house legal teams – try fighting that.
Student loans – 7 years – or if you apply to the court to vary the order if 5 years+, but you have to convince the courts that the loan is directly benefited you today – that you must show hardship, that you have been making attempts to pay and ontop of that – you will need the legal assistance to vary the order –

People – stop providing inaccurate info if you don’t know the facts – I just gave a very brief account without any in depth detail – I am now questioning if most facts on housing by the blog dogs are very much misaligned – scary that people can talk out of the other hole in their body!!

#105 Timing is Everything on 01.26.11 at 11:55 am

We’re back to fear, greed and herds. – Garth

And I thought I had enough sno-cones to last me thru 2011…Ain’t the circus neat-o.
Garth, isn’t that the bearded-lady?…I thought it was fake.
The show must go on….(until it doesn’t)

“With a 61 per cent increase in building permits in 2010, Douglas noted there is a potential of excess inventory, adding “2011 will be a buyer’s market. Even with interest rates increasing, they are almost at 50-year lows. It’s an ideal time for qualified buyers — they will rule.”” [Comox Valley Record]…It’s Vancouver Island for all you guys on the ‘Big Island’.

http://www.bclocalnews.com/vancouver_island_north/comoxvalleyrecord/news/114600449.html

Hun, d’ya mind makin’ me a lime sno-cone while your at it…Luv ya.

#106 Marcus on 01.26.11 at 11:58 am

TheBestPlaceOnEarth…you don’t get out much do you…

#107 Timing is Everything on 01.26.11 at 11:59 am

@ #97 Timing

Ya I know ‘you’re’ not ‘your’…you anal retentive.

#108 AG Sage on 01.26.11 at 12:08 pm

>#44 Jeff on 01.26.11 at 1:36 am
>Canada is different from the US . . . etc. etc.

Did they print this on the back of all the cereal boxes in Canada? Over Christmas I was talking to a Canadian relative who on every over topic is a conspiracy nut, singer of the Internationale, government and businesses are out to enslave us exposer par excellence. But he parroted exactly what Jeff said above, almost verbatim. I was floored.

When I made noises about Canadian debt levels, he said, “well, we will see, won’t we?” going defensive.

How in the world did the Canadian regime get the nutcases on board this train?

#109 AG Sage on 01.26.11 at 12:13 pm

BTW, Teranet data for November has been released.

housepriceindex.ca

Vancouver flat. Montreal flat. Toronto increasing downward momentum (looks like a copy of the 2008 decline on the way).

#110 Junius on 01.26.11 at 12:13 pm

#81 John,

You asked,”What if the US starts to rebound and the world economies start to improve…”

Then interest rates will rise. This is the thing the “recovery” crowd doesn’t get. When the economy does recover there is still a huge amount of slack in respect to employment and capacity. Wages won’t move up quickly. We will be lucky if they stay even with tax increases and other inflationary rises.

Meanwhile interest rate rises will push mortgage rates up. Do the math on the impact of a 2-4% increase in interest rates.

When the economy improves the Real Estate market will be kicked even further down as a result.

#111 Junius on 01.26.11 at 12:17 pm

Dear American,

Please get to Richmond quickly. After the earthquake hits it will be under water. Muck like the implosion of the Canadian housing bubble it is coming. It is just a matter of when and how severe it will be.

We humans are slow learners.

#112 Oasis on 01.26.11 at 12:22 pm

does anyone have any doubt that the US Fed is going to continue printing as much money as they think they need? the effect of which, will be to drop the value of the USD another 20-30% in the coming years…

what is Obama going to cut from his budget? US debt keeps growing faster than GDP. Debt is nearly 100% of GDP…. does anyone have any doubts that there is massive inflation coming ??

#113 robert james on 01.26.11 at 12:23 pm

I have a friend that lives out in the mission so I drive past Gryo beach once a week or so and there is a new Condo developement that has a sign out front that says,,”Inventory Pricing” ..I thought it was kind of cute. It has been there for months..lol

#114 Devil's Advocate on 01.26.11 at 12:29 pm

#94 TheBestPlaceOnEarth on 01.26.11 at 11:25 am

Did I mention Vancouver just got voted 3rd most expensive City in the World? I love it!

All you need mention BPOE is that prices don’t go up for no good reason. Why are they so high? Because people are willing to pay the price. Always been that way and always will be that way.

Vancouver and Kelowna have ALWAYS been expensive. Get over it people… some of you just have to come to terms with the fact that you can’t afford to live in Kelowna or Vancouver. Well you could… but you will have to get off your sorry self entitled ass and work for the “privilege” of living in such a beautiful place. Don’t think it is a “beautiful” place? That’s great then you don’t have to worry about not being able to afford the price to live here. It all works… ain’t economics grand?

#95 TheBestPlaceOnEarth on 01.26.11 at 11:28 am

“Been cruising around K town BC lately. Noticed that all the old motels in town have vacancy signs out front. That hasn’t been the case in January in past years. They have always been occupied by monthly rentals in the winter

It used to be that the college students rented them off season. Now with the University of British Columbia here and on campus residences there is not such a need. Also Okanagan College used to serve a broader geographical area, but now with the proliferation of regional colleges more students can live at home and attend college in their home town. And motels appear to have raised their off season rates. Might have something to do with the “Mexican Method” of maintaining cash flow. The “Mexican Method” is that when tourism is slow they raise prices to get more out of each in an effort to maintain the same cash flow in off season as in peak season.

#115 john on 01.26.11 at 12:30 pm

nothing will come next, prices will stabilize across the country, it has been and it will continue to do so in 2011, if not increasing only slightly under the pressure of increased interest rates, this scenario will continue until 2013, then prices will start jumping again.

#116 Devil's Advocate on 01.26.11 at 12:51 pm

#95 TheBestPlaceOnEarth on 01.26.11 at 11:28 am

Fact is the old motels are being bulldozed in K Town for luxury Condos. Remember the motel along the way to Summerland across the water? Closed for condos for the rich. Go to Gyro beach and you will see what’s happening.

That is true. There are a number of developers who are taking this opportunity of lower land and labour cost to commence building inventory in anticipation of the next ramp up. It is a smart thing to do. They have been trough this before and know well the pattern by now. Cycles.

I know builders who curbed their activities during the “boom” as prices had escalated too high in light of the risk as we were nearing the peak of the market. We all knew it wouldn’t last. Trades were trying to “make hay while the sun shone” capitalizing on the demand by raising their rates and rushing through jobs leaving a lot of poor workmanship in their wake as they hurriedly moved on to the next job. Nothing wrong with that unless, of course, you are the contractor who holds the warranty on the structure left answering to your buyers complaining of sinking floors and cracking drywall or leaking roofs.

This is a way better time to build. Prices are down. Trades are not nearly so busy so they slow down and do a good job as they are happy to do the work and want you to hire them to do the next job based on the good work they are doing on this job. It’s all good.

A cruise down Pandosy and Lakeshore will prove what I am saying. There’s a lot of money in those projects and the minds behind them are not of greater fools… far, far from it. They know that while you may have no intention of buying today… tomorrow is another day just as it was in around 1981 and 1990 and 2000 and today. ;-)

#117 Stevermt on 01.26.11 at 12:57 pm

#93 panopticon…you need grammar and punctuation check :)

#118 Bottoms_Up on 01.26.11 at 1:01 pm

#19 I pity the fool who drinks soy milk on 01.26.11 at 12:03
—————————————————
If you have a long term horizon, buying (within your means, and factoring in higher mortgage rates) is the right thing to do. Even if waiting for a 10-15% drop, you have to ask yourself, how quickly will it come, because if it doesn’t come quick enough, your paid rent offsets that drop. A long term horizon means your paper gains/losses don’t matter because you’re buying for a place to live, not for an investment.

#44 Jeff on 01.26.11 at 1:36 am
————————————-
I agree with you and disagree with Garth on this. I experienced twice the tigher lending standards in Canada. I was turned down for a modest mortgage because I was a professional student and didn’t have a job. There’s is no doubt in my mind I would have been given a mortgage in the USA. Also, Canadians have more incentive to pay down their mortgage as the interest is not tax deductible. It was in the better interests of Americans to buy big and not pay off their tax-deductible mortgages.

In my mind there is a big difference between the two countries. The question is, is this difference enough to prevent a real estate collapse here? (I think it is)

#119 Nibs on 01.26.11 at 1:16 pm

Jeremy Grantham wrote a great newletter about bubbles over at zerohedge

http://www.zerohedge.com/article/jeremy-grantham-q4-letter-pavlovs-dogs

Application to the Canadian real estate market…

http://financialinsights.wordpress.com/2011/01/26/asset-bubbles-according-to-jeremy-grantham-applications-to-the-canadian-real-estate-market/

#120 Barbmul on 01.26.11 at 1:17 pm

#88 DA

Regarding Barona Beach, there are 18 units for sale on MLS. But the strata can provide you with a list of 40+ units for sale including all sources (FSBO, MLS, realtor only, etc.). And regarding Pritchard Drive, #54 Saw this in the States, etc. is not making up the 2 million dollar foreclosures – they do exist. Not too sure what your point is.

#121 BC Bring Cash on 01.26.11 at 1:24 pm

#95 TheBestPlaceOnEarth
Explain what the issue is with the motel bulldozing of the motel at the corner of Richter & Lakeshore the Gyro Beach development you are talking about. That was bulldozed a couple of years ago, preload hauled in and eventually hauled away. Discovery Centre shuttered on the site for ages. Lot is still vacant. I’ll be surprised to see construction activity there. I wish they would finish that eye sore called the convervatory on the corner of High & Glenmore. It’s been laying there unfinished for better part of the last decade.

#122 Bottoms_Up on 01.26.11 at 1:42 pm

#77 The American on 01.26.11 at 9:28 am
———————————————-
Ok, why don’t you talk to my dad who’s a small business owner (a business with positive cash flow) and throughout the 1990’s COULD NOT get a mortgage from a Canadian bank (and to this day still has problems getting small lines of credit for his business).

Ya, Canadian banks the worst of the G20 hahahahahahahahahahahahaha

#123 Business Unusual - the BUN on 01.26.11 at 1:44 pm

Breaking news on BNN this morning.

Home pricces fell more than expected in November. Home prices fell in November for the 3rd straight month. Home prices in 6 largest canadian cities fell 0.2 percent in November.

#124 kilby on 01.26.11 at 1:49 pm

Summerland, 40km south of Kelowna. 263 homes for sale. 8 sales in the last month. 6 were under $300K the remaining two were around $500k.

#125 Ted Pasri on 01.26.11 at 1:52 pm

Canadian home prices fall 3rd straight month

http://www.cbc.ca/money/story/2011/01/26/canadian-home-prices.html

#126 confused and a little crazed on 01.26.11 at 2:13 pm

hi garth,

i like to thank you for this blog..It was like I ‘m an alien species before not succumbing to the real estate mania.

The numbers just do not fit… because I got burned during the dot. com era. I did n’t buy the dot come companies but my stocks were dragged down anyways. There was similar talk as it is today…
It’s different here.
The valuations don’t matter it going up
etc..etc..yada yada

I lost money and most of it is still down …luckily just out if school didn’t lose much since i have little to begin with.

However good companies because their valuations maade sense…you know P/e ratios cash flow ..etc they came back

because of this harsh lesson i bought some stocks in 2005 sold them in march – july 2008 .

bought more in 2009…pretty much all are doing well. This blog has given me insight on a few things and conversations with other like minded people is great.

Some people believe you hate real estate but you don’t it’s just the value is not justified based on cost/ benefit/ ROI and personal exposure is 85 % and up. i’m more 30 % GIC, Stocks, Mutual funds.

so thanks :) i hope when i get to your age i will have the conviction to tell it like it is ..but right now i just avoid real estate talk…people are crazed here. i think if properties went down 20 % we ‘ve have people in counsellour/ psych wards…they just can’t believe it. “The realtor/ bank/ mortgage professional told me……..”

to eveyone out there …try not to be mean…at the end of the day …we just want to go home and have aa meal wwith the people we care about…we are all just people..trying to do the best we can

#127 Kevin on 01.26.11 at 2:22 pm

The only difference between Canadian and American housing markets is that Canada has not crashed yet.
I have compared these economic measurments of the two countries on my blog. More to follow.
Real House Prices,Median Multiple,Price to Rent,Months of Supply,Affordability,Ownership ratio,and Debt to Income

http://saskatoonhousingbubble.blogspot.com/2011/01/comparing-united-states-and-canadian.html
Comparing the United States and Canadian housing markets with some economic measurements

#128 Hoof Hearted on 01.26.11 at 2:23 pm

Alabama Town’s Failed Pension Is a Warning

http://www.nytimes.com/2010/12/23/business/23prichard.html?pagewanted=1&_r=1

PRICHARD, Ala. — This struggling small city on the outskirts of Mobile was warned for years that if it did nothing, its pension fund would run out of money by 2009. Right on schedule, its fund ran dry.

The situation in Prichard is extremely unusual — the city has sought bankruptcy protection twice — but it proves that the unthinkable can, in fact, sometimes happen. And it stands as a warning to cities like Philadelphia and states like Illinois, whose pension funds are under great strain: if nothing changes, the money eventually does run out, and when that happens, misery and turmoil follow.

It is not just the pensioners who suffer when a pension fund runs dry. If a city tried to follow the law and pay its pensioners with money from its annual operating budget, it would probably have to adopt large tax increases, or make huge service cuts, to come up with the money.

Current city workers could find themselves paying into a pension plan that will not be there for their own retirements. In Prichard, some older workers have delayed retiring, since they cannot afford to give up their paychecks if no pension checks will follow.

So the declining, little-known city of Prichard is now attracting the attention of bankruptcy lawyers, labor leaders, municipal credit analysts and local officials from across the country. They want to see if the situation in Prichard, like the continuing bankruptcy of Vallejo, Calif., ultimately creates a legal precedent on whether distressed cities can legally cut or reduce their pensions, and if so, how.

“Prichard is the future,” said Michael Aguirre, the former San Diego city attorney, who has called for San Diego to declare bankruptcy and restructure its own outsize pension obligations. “We’re all on the same conveyor belt. Prichard is just a little further down the road.”

#129 Hoof Hearted on 01.26.11 at 2:28 pm

Re: Pensions….I received this e-mail

The Hon. Diane Finley, P.C., M.P.

Minister of Human Resources and Skills Development

I am pleased to respond to your electronic message, which was forwarded to me by the Office of the Prime Minister, the Right Honourable Stephen Harper, regarding private member’s Bill C-428.

As you know, Bill C-428 proposes to amend the Old Age Security Act to reduce the residence requirement for entitlement to a monthly pension from ten years to three years. This private member’s bill was introduced in the House of Commons by M.P. Ruby Dhalla, a Liberal Opposition Member.

As the Minister responsible, I have been very clear that when this Bill comes forward we will strongly oppose it.

The Old Age Security (OAS) pension is paid to seniors in recognition of the contribution that they have made to Canadian society, the economy, and their community. The OAS program is non-contributory and is based solely on age and residence in Canada after the age of 18. The ten-year residence rule is consistent with many other countries that have residence or contribution requirements associated with their national pensions to ensure that benefits are given in proportion to years of residence or affiliation with their pension programs. With this in mind, it is felt that the current ten-year residence requirement represents a balance between a reasonable contribution to Canadian society and the right to receive a lifelong pension.

It is estimated that reducing the ten-year eligibility requirement to three years would cost over $700 million annually in additional OAS and Guaranteed Income Supplement benefits. Given that the OAS program is funded entirely from general tax revenues, this would be costly and place an additional burden on the Canadian taxpayer.

Yours sincerely,

The Hon. Diane Finley, P.C., M.P.

Minister of Human Resources and Skills Development

#130 Devil's Advocate on 01.26.11 at 2:33 pm

Real estate did not go up in price. The purchasing power of your money went down.

Since leaving the gold standard in 1971 the US dollar ceased to be an asset and became a liability.

This play is no different from so many others, from Rome to Germany… fiat currencies have a history ultimately leading to failure. Not one has survived. Is it wrong? No… it’s economics.

#131 kilby on 01.26.11 at 2:36 pm

Motel on the way to Summerland has closed but nothing is happening. Two kilometres north of that in Peachland there is a 5 year old partially finished “luxury condos” right across from the lake. Bankrupt…..

#132 Mr. Plow on 01.26.11 at 2:44 pm

#104 Carpe Diem…

There is misinformation in the comments section of this blog?

What!? You mean some blowhards, who appear to know everything, don’t know what they are talking about?

I can’t believe it.

#133 Sad on 01.26.11 at 2:50 pm

The Canadian Association of Mortgage Professionals provided a paper to Flaherty attempting to convince him that the rules did not need to be modified.
The title of the paper is Revisiting the Canadian Mortgage
Market – The Risk is Minimal
(Update from January 2010 Report)
It can be found here. http://www.caamp.org/info.php?pid=53
One statement on page 17 blew me away.
Here it is.
Some Mortgage Borrowers are Challenged
Data from the Canadian Bankers Association – which covers 7 major banks – shows
that there was a rise in mortgage arrears during the recession. Prior to the recession the
arrears rate was less than 0.30%. During the winter of 2008/09, however, the arrears
rate increased rapidly. Since the end of the recession, the arrears rate has fallen slightly.
The most recent data (as of October 2010) shows an arrears rate of 0.43%. While the
increased rate is indicative of increased financial difficulties, it is lower than was seen
during most of the 1990s (when the average arrears rate was 0.50%).
We are at .43% today.
How many of these rushed deals prior to March 18th are going to be placed in arrears? It my understanding Banks are playing games with reporting arrears today. Why you ask? Because CMHC might wake up and realize the actual exposure is greater than allowed for.

#134 TheBestPlaceOnEarth on 01.26.11 at 2:51 pm

Vancouver on track for 7% return this year. On that lawyer owned Dunabar house of 2 million that’s $140,000 tax free dollars. Sahhhwwweeetttt
http://www.vancouversun.com/business/Metro+Vancouver+resale+price+indicates+sellers+market+November/4170696/story.html

#135 Throwstone on 01.26.11 at 2:52 pm

#119 Nibs…Good little reference…I like this little tid bit…

“Does Canada meet the definition of a housing bubble?

The jury is certainly out when it comes to the broader Canadian housing market. Certainly there is widespread overvaluation relative to fundamentals, but that doesn’t necessarily imply a bubble. However it is worth considering the macro picture. There most certainly is a credit bubble in Canada. It’s difficult to distinguish a credit bubble from a real estate bubble when 70% of credit is mortgage-derived. The bottom line is that strong deflationary forces will be put in motion when the inevitable shift towards debt repayment and savings begins. This will wreak havoc on leveraged assets priced in our currency. If this is accompanied by commodity price inflation, look out. This one-two punch has the potential to significantly affect even the most reasonably priced Canadian market.”

I think it also captures the BIND that Flaherty finds himself him.

What is going to happen when we have to start repaying the debt?

What is going to happen when the boomers retire en masse?

What is going to happen when the interest rates start climbing?

“F” really has created the perfect storm….the perfect shit storm that is!

Combine all this with the information on Bankruptcy from #104 Carpe Diem (Good info thanks)…and

EWWW EEE… things could be shitty for a long time.

#136 robert james on 01.26.11 at 3:00 pm

It appears that some hockey players bought into the BC R/E ponzi scheme in a big way..http://www.theglobeandmail.com/sports/hockey/current-former-nhl-players-lose-more-than-13-million-in-resort-deal/article1883049/

#137 househunter on 01.26.11 at 3:06 pm

44 Jeff on 01.26.11 at 1:36 am

I’m with you Jeff. Garth is starting on his predictions again. This time he’s stretching it out to 2016. LOL.

We are not the US. We are not going to crash … doomer people.

I did not use the word ‘crash.’ But a 35% decline over 5 years? How is that not possible, if not probable? — Garth

#138 househunter on 01.26.11 at 3:11 pm

More info for the doomers. Wow. Its super bad out there……

http://www.vancouversun.com/business/Metro+Vancouver+resale+price+indicates+sellers+market+November/4170696/story.html

#139 prairie gal on 01.26.11 at 3:18 pm

Does anyone know whether Genworth and other private companies still offer mortgage insurance in Canada? If the private sector has bailed on the market, its a pretty good indication that they feel the risk is too high.

#140 poco on 01.26.11 at 3:22 pm

#102 kitchener1–totally agree –no big increase in sales from 1st time buyers yet (tri-cities)

i get a kick out of all the boomers on here praising the rise in RE prices through out the land, and now some of the bears on this blog (tired vulture) changing their tune

is anyone doing any research into the TRUE numbers????

here’s a couple of recent e-mails –i get them everyday –doesn’t anyone else?

V861888-bought Dec 07–510k
sold 459k

V842435-bought May 09–497.9k
listed July10-499k—–now-469k

here’s one for you “tired vulture”— better hurry
V861639 (court ordered sale)
bought Nov 09–425k
listed now –374k—-take a look on the realtor map–hell of a buy
no, i’m not cherry picking–lots of properties selling for, and listed for, less than owners paid 2 to 3 years ago
(ya, re always goes up don’t ya know)

one thing i have noticed is that many of the SFH listings coming on the market have not been listed since the 1990’s—boomer effect maybe???
don’t know if there are stats on that or not

here’s one i mentioned last summer-another foreclosure
1703 -555 Delestre V847727
bought June 09-539.9k–now listed 365k–this one is getting tempting

last one today-70 unit condo developement-“Pearl” city homes -downtown Poco-pre sales sold approx.40 of the 70 before they started building sept?10–they have now dropped pricing from 5k to 20k–i wonder how the pre sale buyers feel???

#141 Timing is Everything on 01.26.11 at 3:23 pm

My condolences on your loss. Garth, please take the time you need. I know it must be a difficult time for you and your family. ;)

#142 jess on 01.26.11 at 3:28 pm

the ties that bind …

http://www.scribd.com/doc/47494051/Life-Insurance-Companies-v-Countrywide-filed-Jan-24-2011

===========

Who is funding those attack ads?

With the case: Citizens United against Citizens United
5:4 ruling
===========================
This Judge says it is misunderstanding of understanding.

Supreme Court Justice failed to note wife’s income in his Supreme Court financial disclosure forms, a watchdog group says. He reportedly checked a box labeled “none” where “spousal noninvestment income” would be disclosed.

http://www.allgov.com/Controversies/ViewNews/Clarence_Thomas_Didnt_Report_Wifes_Political_Income_110125

http://www.law.cornell.edu/uscode/html/uscode05a/usc_sup_05_5_10_sq3_20_I.html

“NOTE: Any individual who knowingly and wilfully falsifies or fails to file this report may be subject to civil and criminal sanctions (5 U.S.C. app. § 104)”

I think when it comes to the law the “may be” should be removed to IS

#143 Debtfree on 01.26.11 at 3:40 pm

pages and pages of kelowna foreclosures .

click on list on pdf’s

http://kelownaforeclosurelist.ca/the-list/

#144 Timing is Everything on 01.26.11 at 3:41 pm

“Last year’s robo-signing scandals delayed tens of thousands of foreclosures in the 23 states where the process is handled in court. A new controversy could complicate foreclosures in the other 27 states.” [American Banker]

http://www.americanbanker.com/issues/176_14/new-pt-of-foreclosure-contention-1031585-1.html

#145 Debtfree on 01.26.11 at 3:45 pm

http://www.kelownarealestate.com/1702PritchardWEST-KELOWNABritish-Columbia/10017248/OMREB_COL504

foreclosed

#146 Timing is Everything on 01.26.11 at 3:52 pm

#118 Bottoms_Up – said “I was turned down for a modest mortgage because I was a professional student and didn’t have a job.”

WTF is a ‘professional student’?

#147 Timing is Everything on 01.26.11 at 3:55 pm

#117 Stevermt – said “#93 panopticon…you need grammar and punctuation check”

….and a life.

#148 City Slicker on 01.26.11 at 4:20 pm

Here’s the results from the Fed’s 2 day meeting, gold heading back up…..

The U.S. Federal Reserve gave a lukewarm economic assessment despite recent signs the recovery was strengthening, saying high unemployment still justified its $600 billion US bond-buying program.

In a statement following its policy-setting meeting, the central bank also said measures of underlying inflation were “somewhat low” although it acknowledged rising commodity prices that have fueled global inflation worries.

It left its benchmark interest rate unchanged near zero, as was widely expected, and reiterated that rates would likely stay ultra-low for an extended period. None of the Fed officials dissented.

“The economic recovery is continuing, though at a rate that has been insufficient to bring about a significant improvement in labour market conditions,” the Fed said.

That was slightly more upbeat than its December assessment, when it said the recovery had been insufficient to bring down unemployment at all. Since that December meeting, the jobless rate has come down four-tenths of a percentage point to 9.4 percent.

The Fed’s stance is in sharp contrast to the European Central Bank President Jean-Claude Trichet has warned they pose a threat, the Fed has focused on core U.S. inflation, which is at a five-decade low.

The Fed cut rates to near zero in December 2008 and bought $1.7 trillion in longer-term securities to provide an additional boost to the economy and battle deflation risks.

After the recovery appeared to falter in mid-2010, the central bank launched a new program to buy $600 billion in U.S. government debt to drive borrowing costs down further in the hope of lowering an unemployment rate stuck near 10 percent.

At its last meeting on Dec. 14, the Fed disappointed markets somewhat with a statement that gave scant notice to signs the recovery was accelerating or the likely boost from an unexpected payroll tax break.

However, minutes of the meeting released three weeks later clarified that while Fed officials were beginning to anticipate a more robust expansion in 2011, most believed the Fed’s aggressive easing was necessary to dent high unemployment.

Fed officials brought fresh economic forecasts to the table this week, but they will not be made public until Feb. 16.

The annual rotation of voters among regional Fed bank presidents brought aboard two officials who have been outspoken skeptics regarding aggressive Fed easing programs, Philadelphia Federal Reserve President Charles Plosser and Dallas Fed leader Richard Fisher.

The U.S. economy is expected to have expanded by a reasonably robust 3.5 percent annual rate in the fourth quarter after growing at a 2.6 percent pace in the July-September period. Similar vigor early in the new year may make the case for an ultra-accommodative monetary policy harder to sustain, even if unemployment remains relatively high.

Unemployment slipped to 9.4 percent from 9.8 percent in December, even though job growth was only modest.

Low levels of inflation outside of food and energy costs had spurred worry at the Fed about a vicious cycle of falling prices and declining spending and investment, but the brighter economic signs have left Fed officials breathing easier.

“We’re seeing some improvement in the labour market. I think deflation risk has receded considerably. And so we’re moving in the right direction,” Fed Chairman Ben Bernanke said on Jan. 13.

Still, officials realize it will take a long time to fill the hole left by the 2007-2009 recession and they have set a high bar for any changes to their bond buying plan, which markets expect to be completed in full.

#149 Live Within Your Means on 01.26.11 at 4:23 pm

67 boomer62 on 01.26.11 at 5:54 am
#21 Jim Summers on 01.26.11 at 12:08 am

Dude, a house is not an investment…its a speculative luxury item.

…………………

I don’t consider it either. For us, it was a roof over our heads & when we bought in 91 I needed to fulfill a passion at that time – gardening. Plus, we sold a TH condo which had so many utterly stupid restrictions and a corrupt BoD’s who had been ‘in power’ for years. I know, I spent many, many hours going over the books. Even the Condo CA told me things were suspect, but he could only go by figures presented to him. We couldn’t wait to get out of there. At least we can basically do what we like. BTW, I’ve lived in more apts. than I can count on my hands and toes.

#150 Junius on 01.26.11 at 4:28 pm

#115 john,

You said, ” this scenario will continue until 2013, then prices will start jumping again.”

Really? 2013 will be smack in the middle of a large number of mortgage renewals from 2008. Rates will be higher and many of these people will have to sell.

It is amazing that we cannot learn from the US. It was the mortgages resetting from 2000 that started the US market down in 2005. Then it all came down.

By 2013 we will be past the beginning in Canada. You are dreaming if you think prices will be headed up then.

#151 BCGirl on 01.26.11 at 4:37 pm

#29 – Best Place on Earth “buy now or be priced out forever”

Your posting today makes me believe you must be a realtor. I purchased a house in Point Grey (even hotter than Dunbar) at less than 400k 10 years ago. You may think I should be in agreement with you, given the fact I did make $ on the housing boom.

Would I purchase another house at today’s inflated housing costs? NO WAY! Maybe if I wanted to lose everything! This roller coaster ride has peaked and it’s on the way down. I agree that Vancouver is special, but it is not that special. The sudden increase in the Vancouver market the past few years is very unnatural. We will not be protected from what is about to happen.

Do you also recommend purchasing stock at it’s peak?

#152 Trino Tuta on 01.26.11 at 4:46 pm

“Metro Vancouver’s real estate market hit what could be considered sellers-market conditions, according to a new report out Wednesday.”

http://www.vancouversun.com/business/Metro+Vancouver+resale+price+indicates+sellers+market/4172028/story.html

#153 Stevermt on 01.26.11 at 4:47 pm

#126..so you think Garth is old?!!

Get out from behind your mama and say that. — Garth

#154 Oasis on 01.26.11 at 4:50 pm

well. lookie what’s happend since the fed came out and said they would keep printing a few more trillions… stocks hold up, every commodity in the book takes off, the USD sinks, and bonds collapse. funnny how things turn out.

#155 Mr.Lee on 01.26.11 at 4:54 pm

Canada’s housing issues reming me of an old saying back in China:

“man who keeps adding water to the soup will soon have a lot of water but no soup.”

Rough translation, but telling. The fact is no matter what other “restrictive” policy F comes up with which wil create a micro burst of energy in the housing market. Housing is a spent force and F is only post poning the inevitable until H gets his majority.

#156 Fractional Reserve on 01.26.11 at 4:56 pm

A humourous but painfully true message to all the indebted Canadians who love their helocs and low rate mortgages.

http://www.youtube.com/watch?v=VL3KuaFvOSc

#157 JR in BC on 01.26.11 at 5:03 pm

Someone asked about the glorious December results for BCREA.

#158 The Other Dave on 01.26.11 at 5:09 pm

I know 2 real estate agents, they are some greasy people, they do some unethical stuff when they sell their own properties, mind you the properties are bought in other people names(hubby with different last name). For one they pretend they are just the “agent” and don’t have anything to do with the property.

#159 Devore on 01.26.11 at 5:09 pm

Wed Jan 26, 11:01 am: New-home sales in 2010 fall to lowest in 47 years

But wait!

Wed Jan 26, 3:16 pm: New home sales at 8-month high

The bottom, I think I see it! Or maybe not.

And in a sign that the housing recovery was still a long way off, an industry group on Wednesday reported an 8.7 percent drop in applications for new home loans last week.

Maybe prices are so low, people are just buying with cash?

The bump is attributed to a rise in sales in the west, which is confounding analysts. Possibilities include foreclosures backlog and rush to take advantage of tax credits. Those sound like solid fundamentals that will stand the test of time.

#160 Moneta on 01.26.11 at 5:42 pm

It all comes down to creditors – they all share the same database on consumers – if they waive off a charge – you can count yourself lucky – if they pursue it – they will get the Office of Super indents to conduct an examination under oath. They can literally bury you with conditional orders / and with in-house legal teams – try fighting that.
————–
Thanks for the info.

I skip over the bankruptcy stuff. Why? Because IMO, we’re about to see what we’ve never seen before.

What’s the saying? “If you owe the bank a thousand, it’s your problem. If you owe the bank a million, it’s the bank’s problem”

Well I think it will change to “if millions owe the banks thousands, it’s the bank’s problem.”

Of course, they’re going to try to screw the little people and the first ones to default will pay the price. But when the tsunami hits, we’ll see.

Just look at the US. I wonder what will happen when the dust settles. The millions of bankrupt will never be able to borrow again? Ya. Right.

I can’t wait to see how our courts hold up when our very own Made in Canada SHTF.

#161 April on 01.26.11 at 5:44 pm

Garth, no big hurry but just wondering when I might expect to get a reply to my last email re investment?

I responded. — Garth

#162 Geology Joe on 01.26.11 at 5:46 pm

Vancouver is special. You get a free helmet and a ride on the little bus (not the big bus) with every home purchased.

#163 April on 01.26.11 at 5:55 pm

Poco – #139
Interesting. Keep it up Poco. Would you know if New West is included in the Tri-cities area?

#164 glu on 01.26.11 at 6:15 pm

Geez – just what I needed to cheer up my day:

“The only thing that could possibly work is to get money out of politics. Alas, money IS politics today. 1920s it is, then. Might as well get ready.”

http://theautomaticearth.blogspot.com/

Ignore it. They eat worms over there on the TAE commune. — Garth

#165 Patiently Waiting on 01.26.11 at 6:40 pm

TheBestPlaceOn Earth –
Your link to Vancouver Sun Article is full of BS. The Truth is Canadians debt to income ratio is near 150% (highest on record), Vancouver homeowners spend 70% of income on housing (that’s after tax) so many are using an LOC to buy food. Most mortgages in the last few years are high ratio 5% down, interest rates are the lowest on record. New mortgage rules will shave about 7% off of home prices even before interest rates begin rising later this year, 70% of population now own homes so where will future buyers come from, property prices in Vancouver are near 10 times average income (highest on record). My prediction – a short burst of activity as the last of the property virgins try to grab the 5/35 mortgages. A federal election call by Harper in a last ditch attemp to get his majority before the inevitable housing market correction. Late 2011 – 2012 we will see price drops of 20 – 30% putting many first time buyers in negative equity. Poor Sheeple always have to learn the hard way . . .

#166 john m on 01.26.11 at 6:44 pm

History in the making…. “H” and “F” will be Canadian history legends…as the biggest incompetent, damn fools who took one of the richest countries in the world and destroyed it in a quest for power.I can only imagine the backroom chatter from world leaders as they have sat back and listened to them blow their own horns, snickering as they bragged about their successes. Day by day playing con games to try and create a false economy while even the most gullible is starting wonder where this will all end………………..its inevitable ……..were simply screwed!

#167 Angela on 01.26.11 at 6:44 pm

The only thing better than reading BestPlaceOnEarth’s posts is seeing how riled up everyone gets trying to knock him down a few pegs. He’s a troll. I refuse to believe that anyone can really be that obnoxious and annoying. It’s an act put on to make people get all ruffled up and lash out at his outrageous statements.

But keep taking the bait, because if there wasn’t the snitty banter this blog would just be boring old Garth going on and on with the same old natter day in, day out.

#168 TheBestPlaceOnEarth on 01.26.11 at 6:53 pm

BREAKING NEWS.
Homes up over 50% in Hong Kong. As investors take huge windfalls and scout the Vancouver market for dirt cheap Real Estate. Everything is falling into place. Vancouver most favourite destination of investors from Hong Kong, HUGE profits in Real Estate from Hong Kong, Vancouver seen as safe haven. Wow folks I’m going out on a limb here but 2011 might be the best year in the history of Vancouver Real Estate. Time will tell
http://www.vancouversun.com/business/business/4171071/story.html?tab=PHOT

#169 Another Albertan on 01.26.11 at 6:57 pm

I did a bad thing and I clicked on BPOE’s link:

http://www.vancouversun.com/business/Metro+Vancouver+resale+price+indicates+sellers+market+November/4170696/story.html

Interestingly, the anonymous comment at 2:12pm reads, in tone and timbre, especially like BPOE.

anonymous
2:12 PM on January 26, 2011
“Great news for those [ie Boomers] who now have a once in a life time opportunity to Sell at a HIGH price in Vancouver and move to where they really want to Live for HALF the price.Personall I like the possibility of having $ 500,000. or more in my pocket, if I sell and buy elsewhere.Yes the Okanagan is to over priced to pocket $500,000 BUT this is a BIG Beautiful and wealthy Province.The Cariboo is still relativeley cheap and better Lakes than over developed Kelowna & area.If your really creative check out Smithers -you can get something Magnificent for far less .Try the MLS-Smithers [i dont live there but would like to ]Will knock your socks off &and all ammenities in the “Switzerland “of Canada!”

Everyone else’s mileage may vary.

#170 ballingsford on 01.26.11 at 7:06 pm

If you need some humor in these crazy times, here’s a video of some disgruntled customers who played a practical joke on their phone provider.

http://www.youtube.com/watch?v=mxXlDyTD7wo&feature=player_embedded

#171 BCGirl on 01.26.11 at 7:16 pm

#166 “The only thing better than reading BestPlaceOnEarth’s posts is seeing how riled up everyone gets trying to knock him down a few pegs. He’s a troll”

You’re right! I usually don’t waste my time responding to his annoying comments, but the temptation to respond today was too much and I caved! I think he may be my old realtor! : )

#172 T.O. Bubble Boy on 01.26.11 at 7:30 pm

Is there any way (through, say a “freedom of information act” type of concept) that we can force CMHC to open it’s books?

From the Financial Post today:

“Earlier this month the federal government announced plans to stop allowing banks to get CMHC insurance for HELOCs, which came as something of a surprise to the market as it was not generally known that such loans were ever eligible for government guarantees.

Leaving aside the question of why CMHC insures HELOCs in the first place, the obvious question is how many of those outstanding are backstopped by taxpayer?

If, as with mortgages, the majority of risky loans are insured, investors can stop fretting. If, on the other hand, there’s only limited protection maybe it’s time for lenders to shed more light on the issue.

But the answer to that question is not easy to find. The CMHC, hardly a paragon of transparency at the best of times, does not disclose the information. Nor do the banks.”

http://www.financialpost.com/news/Banks+spotlight+amid+rising+housing+debt/4173108/story.html

#173 Hoof Hearted on 01.26.11 at 7:47 pm

Len Barrie’s misadventures in leading the Bear Mountain golf resort and real-estate development into bankruptcy left more than 100 angry investors and creditors in his wake, including 18 current and former National Hockey League players who lost a total of more than $13-million.

Sean Burke, goaltender coach for the Phoenix Coyotes, is one of the unfortunate 18, having lost more than $600,000. What angers him more than losing the money is the impression Barrie, who used his share of Bear Mountain to help buy part of the Tampa Bay Lightning in 2008, is not going to face any consequences.

“How does a guy get away with being able to build something to that level, with everybody else’s money, and then not be accountable at the end of the day?” Burke said. “He’s walking away with a hell of a lot more than he ever walked in [with], whereas everybody else is walking away with nothing.”

=======

Another story of dumb jocks getting greedy…..trusting one of their own.

Wonder how Steve Nash and Trevor Linden are financing their Sport Club ventures….hmmmm

#174 Bottoms_Up on 01.26.11 at 8:00 pm

#145 Timing is Everything on 01.26.11 at 3:52 pm
——————————————–
I was nearing the end of a Ph.D. (professional student = spending your 20’s in graduate school)

#175 Stevermt on 01.26.11 at 8:10 pm

Garth, thanks for finally answering one of my posts, and someone’s a little touchy about their age.

#176 Mike on 01.26.11 at 8:15 pm

I was fiddling around with the Case-Shiller index and rebuilding the curve in MS Excel.

Basically if you take any 20 year period, you get an average year over year increase in a “Unit of Housing” of 3-4%/yr.

And think about it: A house appreciation of 3-4%/yr minus yearly property tax minus the inflation rate = !!!!

The C-S Index is pretty clear – over the long run, the return on housing after inflation is basically zero.

And this makes sense – A house does not pay income or dividends.

Maybe in a place like Singapore where you’re going to run out of physical land can you really have a go at making the “appreciation” claim, but in a country with ample land and a willingness to keep making more urban sprawl ……. why on earth would ppl expect these things to keep appreciating in value?

#177 Mr. Plow on 01.26.11 at 8:25 pm

#139 prairie gal

Genworth has expanded their business and have a nice little partnership with ATB out here in Alberta.

#178 AG Sage on 01.26.11 at 8:54 pm

#167 TheBestPlaceOnEarth on 01.26.11 at 6:53 pm

I get the sense you aren’t very busy today.

#179 I pity the fool who drinks soy milk on 01.26.11 at 9:09 pm

#82 Utopia on 01.26.11 at 10:25 am

Mr. Utopia,
Reading my own post, I do come off like a little sad sack, but I’m telling it the way it was told to me. The dude even asked if I was interested in buying his rental property two years ago, before he changed his mind to go all in with RE. For the love of Pete, I reserve a special loathing for the spec housing/slum lord crowd, and the “professionals” that enable them. (sheesh, two years reading this blog, and one ill-thought out post and the revered Utopia tears me a new one. I’ll go back to the nose bleed section now, permanently!)

#180 45north on 01.26.11 at 9:21 pm

I always thought that Flaherty should tighten up the mortgage requirements and he has. No question that he should have done it sooner.

The American: Canada’s crash will indeed be worse than the USA’s.

I’m afraid it will be.

GenXer quoting Mark Carney: When a shock threatens to push inflation either above or below the target range, the Bank of Canada will act to bring inflation back to the 2 per cent target.

Here’s another quote: “Low rates today do not necessarily mean low rates tomorrow. Risk reversals when they happen can be fierce: the greater the complacency, the more brutal the reckoning.”

http://www.ottawacitizen.com/business/Debts+high+Canadians+warned/3973187/story.html#ixzz1CC1jPlrP

#181 Bottoms_Up on 01.26.11 at 9:22 pm

#171 T.O. Bubble Boy on 01.26.11 at 7:30 pm
————————————————–
Give it a try, it’s free….

http://www.tbs-sct.gc.ca/tbsf-fsct/350-57-eng.asp

#182 jess on 01.26.11 at 9:24 pm

167 TheBestPlaceOnEarth are you mr. tan?
http://www.starproperty.my/PropertyGuide/Finance/9659/0/0

Surrey-based Khaira Enterprises Ltd.’s “Golden Brushing” re-forestation crew last summer near Golden, B.C. Several workers from the Republic of Congo were found living and working in slave-like conditions in Golden.
By TIFFANY CRAWFORD, Vancouver Sun January 23, 2011

Vancouver-based company Intrawest, which for decades has marketed beautiful British Columbia to the world as a travel destination, is moving operations south of the border.

=====================================
Forget the cake … Let them eat CREDIT
former IMF chief economist Raghuram G. Rajan’s book Fault Lines, which gives several causes for the current crisis, explaining:

The first of them is political, and the politics that lead to rising inequality. That’s been a trend in recent years in most nations of the world. Inequality has been getting worse, particularly in the US, but also in Europe and Asia and many other places. One thing that this has done is it has encouraged governments, who are aware of the resentment caused by the rising inequality, to try to take some kind of steps to make it more politically acceptable. He gives other examples as well, but historically, that has often taken the form of stimulating credit: instead of fixing the problems of the poor, lending money to them. He has a chapter entitled ‘Let them eat credit’.

#183 jess on 01.26.11 at 9:29 pm

hoof hearted –
http://books.google.ca
June 12th 2003 14367 congressional record

“Thank you for the corporate welfare to criminal enterprises like MCI worldcom who stole the retirement savings of mroe than 1 million pension holders in new york state. these pension holders were victimized by MCI worldcom fraud and now see MCI abusing sec 108 of the internal revenue code of 1986 in order to avoid paying about 4b. in future taxes because of its past criminal behaviour. …”
=======
absolute return absolutely ?
sec take over to protect the retirement fund
http://www.scribd.com/doc/46488692/S-E-C-Civil-Complaint-Against-SJK-Investment-Management
=====================================
KYC – know your customer
http://en.wikipedia.org/wiki/Know_your_customer
http://www.asianage.com/business/citibank-says-working-fair-compensation-fraud-affected-435
Rediff.com » Business » How Munjals fell prey to the Citibank fraud
http://business.rediff.com/report/2010/oct/18/perfin-why-kyc-is-mandatory-now.htm
How Munjals fell prey to the Citibank fraud
Last updated on: January 19, 2011 13:02 IST
RBI is probing whether Citibank allowed these accounts to be opened after following the mandatory KYC (Know Your Customer) norms, which make it mandatory for verification of customer details such as valid identity and residence proof with documents like PAN card, Passport and utility bills.

As Mr. Black said: Easy way to Rob a Bank is be one
“Key to the swindle were bank insiders who took bribes to push the bogus paperwork through the system. Several of the bankers even became involved in a separate money laundering scheme, agreeing (at the behest of our undercover agent) to set up fake accounts to launder what they thought were illegal drug proceeds, in return for a percentage.

#184 Freedom 55r on 01.26.11 at 9:41 pm

#169 ballingsford
Thank you so much for that link. I’ve never laughed so hard in a long, long time. I can speak and understand Dutch which made it even better! I can tell you, I would never have been as patient as the customer on the phone. Everyone should play and listen to this to lighten up their day.

#185 Markey on 01.26.11 at 9:52 pm

Yep, it really is different here — and our mortgage brokers don’t want to be tainted with the same brush: http://www.investmentexecutive.com/client/en/News/DetailNews.asp?id=56647&IdSection=147&cat=147&BImageCI=1

#186 Timing is Everything on 01.26.11 at 9:55 pm

#173 Bottoms_Up

Cool…BTW DA is a ‘professional’ too. I guess he was a ‘professional student’ at ‘Realtor School’ too. Now I understand the term. Thanks for clearing that up.

#187 Mark on 01.26.11 at 10:05 pm

#104, Carpe Diem, your post concerning bankruptcy should be an addendum to every mortgage contract that is insured by the CMHC.

One thing you missed, is not describing the professional reprecussions of being a discharged bankrupt. For instance, obtaining membership in many professional organizations is impossible or difficult. One may also be subject to professional discipline or expulsion if they are an undischarged bankrupt. It is pretty serious stuff.

#188 einstein on 01.26.11 at 10:14 pm

It seems that Garth Turners’ rational is soley based on a dramatic rise in interest rates. Canada is currently experiencing a rapid rise in the value of our dollar. Any rise in interest rates will be marginal at best as there is no reason for the government to raise interest rates and slow the economy unless it’s back is against the wall and that is simply not the case. Interest rates may rise perhaps by half or one percent but to think that the bank of Canada is going to raise rates to five six or seven percent is simply rediculous. Hope you are enjoying the B.C. but Garth

While the BoC is likely to raise its key rate by 1% or more in 2011, impacting VRMs while the bond market raises the cost of long-term money, this is but one factor of many which is negative for real estate. I’m too bored to rewrite them all now, so go away. — Garth

#189 dd on 01.26.11 at 10:20 pm

…This week’s numbers show real estate is still collapsing, dropping in November by the most in a year, with 16 of those 20 cities in decline…

I though you said that the bottom was near, especially when your telling people to consider US real estate. This was back in September (ish) of 2010/

I knew there was another leg down. ARMs reset # II is underway.

DD,

PS … so much for your recovery senario.

So, an 11% potential decline in the price of a $70,000 Florida condo that used to cost $200,000 should delay a purchase? Good luck with that attitude. — Garth

#190 S.B. on 01.26.11 at 10:31 pm

This will hurt Canadian independent retailers:

Wal-Mart Canada to open 40 supercentres
Supercentre format coming to Manitoba and Quebec

Read more: http://www.cbc.ca/canada/story/2011/01/26/walmart-superstore-canada.html#ixzz1CCK5YcTm

And, Best Place on Earth?

Earthquake drill a dry run for B.C.’s ‘Big One’

Hundreds of thousands of British Columbians took part Wednesday in a massive earthquake drill

Read more: http://www.cbc.ca/canada/british-columbia/story/2011/01/25/bc-earthquake-drill-shakeout.html#ixzz1CCKh0V2j

#191 S.B. on 01.26.11 at 10:35 pm

143 Debtfree on 01.26.11 at 3:40 pm

Devils Advocate is our local version of Baghdad Bob

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

#192 Timing is Everything on 01.26.11 at 10:48 pm

Holy Crap…RE story of the year! Scoop!

http://tinyurl.com/4eza2xx

#193 Utopia on 01.26.11 at 10:50 pm

#178 I pity the fool who drinks soy milk

Sorry pal, I am a bit impulsive some days. It just did not have the ring of truth, I make mistakes too. Tell you what, you come back, I will leave. I think I have had enough for awhile anyway.

#194 kilby on 01.26.11 at 10:53 pm

“New home sales in the US up 17%” Was on the news today. New home sales account for only 10% of total sales….The 10% was downplayed at the end.

#195 AACI-Okanagan on 01.26.11 at 11:10 pm

#131 kilby on 01.26.11 at 2:36 pm

Motel on the way to Summerland has closed but nothing is happening. Two kilometres north of that in Peachland there is a 5 year old partially finished “luxury condos” right across from the lake. Bankrupt…..

Were you not around in the early 90’s? after that boom many developers went belly up, like I said earlier, someone always gets caught holding the ball.

#196 kc on 01.26.11 at 11:12 pm

#42 Mark on 01.26.11 at 1:26 am

At 8.5 mill the buyer has to be drinking the bong water and eating mushrooms while listening to the man behind the curtain….

too funny

#197 Cellar Dwellar on 01.26.11 at 11:17 pm

@ #11 Bunny Munro
Deep.
Glad you thought about that before typing

#198 Dark Sad Monster Bunny on 01.26.11 at 11:20 pm

47 Yank. Please don’t assume land that you see is in any way open for development. From my house, on central VI I can see thousands of acres of land (and millions of trees!) and relatively few houses. But what am I looking at? Agricutural Land Reserve. Indian Reserve. Forest
reserve (or forestry zoned land with giant lot size
requirements). Ecological reserve (gotta save the flowers
and oaks). Riparian areas. Crown Land? Sure – go settle
a land claim!

Of course when you find your piece, the neighbour whose
parcel you have to cross will grant you a right-of-way for
free cuz he is a swell guy. The local or provincial
government will be very reasonable and wont want the
road to specs, and all those services you bring in are free!

#199 Fractional Reserve on 01.26.11 at 11:23 pm

For those who bought into the rosy projections out of Davos here is what Marc Faber has to say: “They are a group of liars and people that go along with the system and perpetuate fraud and abuse and dubious practices in the financial system.”

http://www.youtube.com/watch?v=LweqPf8EcmE

#200 Cellar Dwellar on 01.26.11 at 11:30 pm

How ironic
#11 Bunny Munronic meet #77 The American ( who has an IQ unlike you. Please read his post. It makes sense. Unlike your myopic drivel.

#201 Cellar Dwellar on 01.26.11 at 11:40 pm

#116 DA
I agree with your arguement about “Cycles” but we havent had a down cycle for a while…….
Just sayin.

#202 The Original Dave on 01.27.11 at 2:52 am

you know you’re in a bubble when news that should be considered negative sparks buying.

If you’re a true market student, these are things you pay attention to.

Flaherty announced tighter lending which when enforced will bring in less buyers/ demand. This shouldn’t create any type of frenzied buying. If it does, you know that those purchasing the asset aren’t “all there”

These are tell tale signs. This happened in the tech boom and any other boom. Simple warnings signals that savvy people pay attention to.

Careful of what the crowd is doing.

#203 The American on 01.27.11 at 11:25 am

At #118: Tax deductible interest on home bought in the US is your argument that Canada won’t have a housing collapse? You seriously have no idea what you’re talking about. Truth is, tax deductable interest should HELP people to stay in homes as it puts more money back in one’s pocket at the end of each year. Do you have any idea what your train of thought is saying? And, I’d like to point out to all Canadians that although Americans’ interest expense is tax deductible a primary residence, Canadians are 100% tax free upon the sale of the home for 100% of its sale price. We have a saying… six eggs in one, half a dozen in the other. The short answer to your “question” is a resounding NO, Canada will not in any way curtail a real estate correction.

You should also consider that your bank in Canada should NOT have given you the mortgage loan – modest as it may have been. So I applaud them for realizing you never intend on working a day in your life at the tax payer’s expense (you being a professional student and all). You have no self-supporting income to support a payment. Period. And, for the record, absolutely no bank in the US today will give you a loan either. Your speculation does not make your argument true. I do know, however, that there are many “liar loans” being handed out to many people throughout Canada, meaning people only have to state what their income is, without providing any kind of supporting documentation. Perhaps you should take this route, and you’ll certainly qualify. Yeah, that sure sounds like a prudent banking standard to me… HA!

Also, getting a BUSINESS line of credit from a bank is quite different than getting a mortgage/deed of trust on one’s personal primary residence. Food for thought.

#204 Slow Slide in Real Estate Decline? « Saskboy's Abandoned Stuff on 01.27.11 at 3:52 pm

[…] Slow Slide in Real Estate Decline? By saskboy Garth Turner is predicting a slow slide in the Canadian housing market. I can’t say I disagree with his prediction. The market has taught us that when values go up higher than they’ve ever been before, they will come down again. The question is, by how much, and at what rate? And the biggest question is of course, “When?” It’d also mean a peak-to-trough decline in the value of a house of 36%, spread over half a decade. Could that happen here between, say, late 2011 and 2016? […]

#205 David on 01.27.11 at 7:55 pm

Summary: The banks are too smart to pass up on this easy, risk-free mortgage business, the politicians are too self-interested to care what they have done, and the voting taxpayer has proven too stupid to deserve better.