On Toronto’s western waterfront sits a luxury condo building called NXT. To sell it last year the developer went nuts. People who signed up on a single night, for example, got a year’s worth of mortgage payments with just a wispy deposit. In fact, the cash-back paid for all of the down payment. So, the condos were free. You just needed to shoulder a mortgage worth about $500 a square foot.
Months after the building was finished, vast numbers of units stand empty. Sold, but empty. Most speckers thought they’d be able to flip before occupancy, but no such luck. This market’s already dying. And the renters shall inherit the earth.
This ad appeared on Craigslist. A two-bedder sold for north of $600,000 can now be rented for $1,200 a month, which is 50% of the occupancy cost. It’s also the same rent as others are paying in the building for half the floor space – all the proof you need that rents are about to come tumbling down along with the value of real estate.
It’s turning into an interesting year, just one month in.
It may be a smouldering Egypt, a sputtering Europe, a divided America, an oil price shock or an unsolvable debt crisis that defines what comes next. As this new week dawns, crude is above $90 again, the safe-haven US dollar is bouncing higher and stocks are selling off. The contagion of political unrest could destabilize the Middle East causing higher energy prices as oil supplies are threatened. A pro-Israel Egypt could turn into an Arab foe. Bad news. All while there are wars in Iraq and Afghanistan and degrees of mayhem in Tunisia, Yemen and Lebanon.
What it means: lower condo prices in Toronto. Tears in Vancouver. And millions of house-horny people wondering what the hell they were thinking last year.
The connection between Cairo and Kitsilano is pretty simple: lower economic growth. For the past two years governments have blown their wad trying to rekindle inflation, stimulate consumer spending, spur mindless spending and blow endless sunshine up everyone’s butt. The result has been historic levels of public debt, guaranteeing higher rates and taxes in the future; a staggering mortgage mountain; wildly inflated real estate values; and an economy that’s barely moving, despite almost-free money.
Since the financial crisis two years ago, this apoplectic blog’s been warning that the inevitable would be, well, inevitable. People sucking up huge debts to buy assets at gasbag prices with money destined to grow more expensive, in the middle of a recession were taking the gamble of a lifetime. Soon, I’d say, they’ll start to understand this.
It may or may not be Egypt. Or $2-a-litre gasoline. Or the failure of Barack Obama. Or house-dumping Boomers. Or more export and job loss. Or higher rates and banks hoarding money in Brazil, India and China. There’s a growing list of perils, any one of which is enough to make you question the stainless and granite gods we worship.
While I have no idea what will happen (actually I do, but I’m modest), my best advice still stands: If you’ve been thinking about dumping your real estate, do it now. Today. You’ll thank me in June. If you’ve been trying to buy before the 35-year mortgage dies in March, change your Huggies and wait two years. You’ll get way more for way less. If you’re in debt, sell stuff and get the hell out. If you’re an investor, own things that pay you yield and give you balance.
And let’s really understand what can happen when people come to their collective senses.
Canada is not the USA. But people are people. Americans got house horny a few years before we did. They inflated real estate, dropped lending standards and borrowed too much. So have we. Then this happened:
It’s been five years now since the housing boom in Arizona turned to bust. Home sales started to decline in mid 2006, then tumbled a year later. In one section of Phoenix (Zip code 85009), the median home price declined from $160,000 in 2007 to $30,000 today. That’s 81%.
But less spectacular are changes most people believe are now permanent across the United States. First, there are vastly more renters – by choice. As home prices plunged, investors snapped up cheap property, which now forms a new stock of rented, not owned, shelter. It could be a generation or two before Americans trust real estate again, guaranteeing prices stay where they are. Houses, which most people saw as their wealth and retirement plan, are a failed asset.
Second, millions of families are trapped in their high-end homes because nobody wants to buy them. Typically upper middle-class, they’re eating through dwindling savings and investments trying to survive a bust which will outlast them. They’re among the staggering third of all households who now owe more than they own. Because this has not happened before, the outcome is unknown.
Canada is not America, as I said. There may be no places in this country where real estate falls in value by four-fifths. But a one-fifth decline could put tens of thousands of recent buyers underwater and create a mortgage or bankruptcy crisis. It would wound our economy, which is now 20% made up of real estate activity – repeating a blunder in California.
There was only one mistake Americans really made: assuming real estate values would continue to rise. Therefore they could justify small down payments, big mortgages and low interest rates they knew would eventually jump, since increases in home equity would keep them afloat and justify the risk. But, no asset swells forever. Only human greed.
I read on the weekend that average resale prices in Calgary will jump 5.4% this year, and 7% in Winnipeg.
Are we there yet?
202 comments ↓
Yup. And first.
yes we are.
Hi Garth,
I was the one who posted on the retirement homes the other day. Sorry, I think I wasn’t clear in differentiating between the government regulated nursing homes and the unregulated retirement homes (the ones where seniors pay $2000+ per month privately for room, board and a little medical care). The regulated nursing homes are basically full and have waitlists (no surprise, the population is aging and monthly rates are subsidized by the province).
I was inquiring about investments in the unregulated, private-pay retirement home side of things. Would you think that is a good investment area? I would think the positive once again is aging population. But my concern, after reading this blog, is that (1) seniors will have trouble selling their home because home sales volumes are going down, (2) home values are going down so seniors have less money when they sell their house and (3) with the low interest rate environment, even condo developers have been jumping on the bandwagon and building these retirement homes. I was wondering if you thought a rapidly aging Canadian population would compensate for these 3 concerns.
Thanks for blogging.
Andrew
Edmonton mortgage owners are bleeding money. More importantly, where in the hell do you get those pics, or do you pay a realtor 5 bucks for the photo shoot.
A staycation in the peg?
Be self sufficient, look around at what is going on in the world and what can be learned from it? Plant a garden if nothing else to at least sustain a feeling of independence.
cheers
Different year, same old story from the usual suspects. They must think people can’t use a search engine and pull up old spruiking attempts.
http://tasmanianrealestatetrouble.blogspot.com/2011/01/oh-ffs.html
Garth: “A two-bedder sold for north of $600,000 can now be rented for $1,200 a month, which is 50% of the occupancy cost.”
Closer to 35% than 50% imho. If occupancy cost = mortgage (4%) + condo fees + property tax + insurance.
The other mistake we made here in the United States was having the government bail out the big banks that were responsible for creating this mess in the first place. If we hadn’t done that, there would have been some turmoil, but instead a lot of Wall Street survived, and they are busy trying to cook up the next bubble.
I don’t think that a 25% retrenchment is in the cards, nor do I believe that the market will “grow sideways”. In the U.S. it took only 10% (I don’t have the reference, but I did read it somewhere) of the homeowners to get in trouble and that pulled everyone into the mess. Markets don’t go sideways; they either go up or down. It’s fear or greed that drives them, not benign neglect.
It will likely only take a 10% near term retrenchment for people to wake up and realize what the hell they just bet on (note I didn’t say invested in as that would imply rational thought) and start running for the doors. My guess is closer to an ultimate 40% price drop, similar to that in the U.S.
At the end of the day, somebody, somewhere has to do something on that little bit of dirt, be it residential or commercial that results in a payout of the investment. If someone else screwed up and has to take a haircut to get those values back into square, it must happen. The cost is irrelevant. What it’s worth on a going forward basis is the only thing that matters.
The laws of economics don’t get suspended just because it’s a house.
Isn’t cash-back really essentially a form of mortgage loan fraud? Why do the banks tolerate such?
I think rental housing targeted to seniors is a great idea, if you can find an area that is inexpensive with high rents (not vancouver).
But a one-fifth decline could put tens of thousands of recent buyers underwater and create a mortgage or bankruptcy crisis.
the banks know this so what they gonna do?
MKUltra: talking about the 5 big Canadian banks: Their collective minds are smarter than you on your best & luckiest day of your life.
http://www.greaterfool.ca/2010/11/09/woof/
I would say that they are going to make sure that their mortgage documents are in order and that delinquency notifications are prompt.
I agree with everything you say about the economy. Why then don’t more people get it, even some who read you regularly don’t fully get it, though I admit you’ve saved more than a few?
It’s simple and profound. It’s something Karl Marx was onto. It is ‘materialism’ meaning that ideas don’t move people so much as realities. So while there is some disquiet around RE most shrug it off and listen for the dulcet tones of the pumpers. They want to be told what they did or are doing is/was just dandy. When they go underwater they will wake up. The reality of owing more than your place is worth will hit hard and change minds.
Home ownership has become toxic to millions of Americans. They didn’t get it when RE hit an iceberg but they began to when they felt the chilly waters. Same here only later.
This is the same reason we don’t/won’t react to peak oil or anything else. It hasn’t really hit home yet–even though it has. (You figure that out.)
Garth, you said:
A pro-Israel Egypt could turn into an Arab foe. Bad news.
Maybe bad news for Israel but who else? Israel has been a bully and brutal occupier for far too long without seriously attempting to reach an accommodation with the Palestinians. There’s a lot of chickens winging their way right now. Egypt’s “pro–Israel” stance was all about geo–politics and sucking the American teat. It was never how the Egyptian people felt.
Great post!
I am in my 20’s, I currently live at home and work full time in Toronto with a plan to move out and rent a condo very soon.
I have seen condo listing prices lower over the last few weeks, and i just recently viewed a condo near that Panaroma building that Garth talked about in postings gone by.
The owner showed me the place. He told me he was taking a loss on the rent of the place though, he said
” that was the plan anyways”
would it be wise to wait a few months and get a better/cheaper place or should i jump in now ?
I have no problem waiting a few more months if it will be worth my while…
I have been investing over the years, and will keep it that way, even with the new added expense of rent.
thanks
A town-home in Toronto (Dufferin x Eglinton) was on the market for 420 K, after waiting few months for a buyer now is on the market for 399K
Garth, is this a sign of price decline in Toronto?
Buckle up, and enjoy the ride.
The real mistake was that Americans allowed their political and financial leaders to take advantage of their inherent greedy/trusting nature and thereby destroy them.
Will Canadians do the same?
Google Chrome screwed up and could not post my comment. Anyway, the dude looks like me in the snow bank without the swim wear. I have family in phoenix bragging for years how rich they were. Now they are looking for bridge lowns from family to get them by until the market picks up. Yeaaaa right….
#209 Moneta (yesterday)
Re: your statement that “….non-compliance and circumvention of laws/rules is because of authorities putting all their energies in stopping the ones physically fighting and making noise”.
Two questions:
1. Who are you defining as the “authorities” and
2. HOW exactly are they “putting all their energies in stopping the ones physically fighting and making noise?”
#11 – Yes it is Mark,
Banks do it because they’re using our taxpayer funded cmhc money to commit it without any bank risk whatsoever.
I think the perfect storm is brewing, and has been brewing for some time now. So it won’t be one of the following triggers that will pop the RE bubble in the last few remaining places in the western world where it was ‘different’- think Canada and Australia..
Egypt, Yemen, Saudi Arabia and the rest of the Arab countries imploding
The Eurozone sovereign debt defaults
Japan credit rating going down to be followed by UKUSA and who knows how many more
Oil going to $200
The US unemployment rising to 15%
QE III, QE IV, QE V….
Interest rates rising
Food costs soaring
An alien invasion
The storm will hit from all sides; all of the triggers (except for the last one) will go off one after the other over the course of this year, and then comes 2 0 1 2 – I am having difficulty looking beyond the end of this year, so no prognostications about the coming year.
Most eventful January that I can remember – 1 down, 11 to go!
http://ca.news.yahoo.com/agency-survey-shows-confusion-still-reigns-over-tax-20110130-123007-224.html
The little-known wrinkle says account holders can put back amounts they withdraw from a TFSA only in the next calendar year. If they do so in the same year, they face a tax hit for their “overcontribution,” even though they’re only replacing the withdrawn funds.
RE: Bankruptcy Laws & RRSPs
They just claw back the last 12 months of any RRSPs you buy/make deposits too now in Bankruptcy effective 2007.
See link:
I’m just plain sick of hearing from everyone how much they have made from flipping houses while I sit there renting. Can’t wait for this all to play out!
Good Article
Dump your RE & Run or forever be dependant..
Here are some economic measures on Saskatoon real estate. Price to rent, median multiple, house price to wage, house price to outstanding mortgage credit and more
Saskatoon house prices show a definite disconnect in relation to inflation, wages, and rents. These 3 fundamentals are what allow house prices to rise in value over the long term.
http://saskatoonhousingbubble.blogspot.com/2011/01/saskatoon-real-estate-housing-measures.html
Saskatoon Real Estate Housing Measures
#213 Hoof Hearted on 01.30.11 at 7:03 pm:
“Walked around Vancouver Olympic Village last Friday… What a ghost town….worse than what I imagined. The architecture is hideous very 50′s style utililarian.”
I did the same tour on Sunday. It was the first nice day in the last few. Sunny, with lots of people out walking the seawall.
You are absolutely correct. The Millennium Water development is a true blight on the landscape. It’s always surprising to me how few people comment on its true architectural ugliness.
Such a travesty, so bleak and depressing. Vancouver city will be trying to live this down for decades. I hope at least that Montreal is feeling better now.
I drop by to visit, mainly because I tend to agree with most of the views, and outlooks, here. I am not looking forward to the next few years. A friend of mine has been trying to sell for the last three years. So far has dropped the price by nearly 60K. Still no solid offers. Complains that if they drop the price any more, they will lose money. They are probably not even thinking about all the closing costs, etc.
Where the heck do you guys get all the energy to keep up to all this stuff? Garth must only get 2 or 3 hours of sleep each night.
Hilarious …”change your Huggies and wait two years”..one of your best lines..
It will be a strong Spring market. Low inventory, low interest rates and strong sales (partly due to rule changes). Until one of these three things changes the market will hold up. Personally, I would prefer lower prices but wishing won’t change reality.
From yesterday:
#170 Repeat Post
I like Garth just the way he is. He gives his opinion, at times the rest of us disagree. That is how it should be. Nobody is perfect. Not even Garth. But we all have an opinion. Some more refined than others. Garth has at least refined his opinion, so let’s let him have it, and then have at him.
#181 Utopia
You made a very long response to me so I feel I need to at least acknowledge it. And respond in point. Yes, the protests may well be justified and necessary. But they can also still affect oil prices, and then everything else. Just because it’s a good revolution, doesn’t mean it can’t sink everything that depends on the bad status quo.
Garth,
Great post. But you are still wrong about rising taxes. If taxes are to rise, they will rise for the boomers. GenX, GenY, and the afters have no money. You simply cannot tax them, they cannot pay.
The boomers will not tax themselves. Nobody else has any money. Therefore, borrowing and QE to infinity, until one day, no more borrowing.
Garth, the one thing you and I disagree the most about is the ability to raise taxes. And here is the core of my argument: You cannot tax a person that has no money. This is where your argument fails. Raise taxes all you want, the generation you have in mind to pay the taxes has no money. You are trying to tax a stone.
#22 tran, Calgary
Ha!…The TFSA will save the day.
Confusing by design, I’d say.
It’s sco-cone time again.
#4 squidly77
“More importantly, where in the hell do you get those pics from”?
———————————————————
I know squidly………….but I am sworn to secrecy.
That craigslist ad is probably fake, put up by someone trying to bring down property values in that building. Looking at MLS, there are only 4 condos for sale in that entire building, and the cheapest is a 1 bedroom for 300k. If people were that desperate to get rid of them, we would see more listings and with lower asking prices. I don’t doubt we will see condo prices fall in Toronto, but it’s not happening yet.
Also Garth can you please stop posting pictures of naked butts? I like to read this blog at work and don’t like people seeing that on my screen as they walk past my cubicle.
Can the baby boomers just hurry up and die so we can get back to living?
What has happened in Tunisia and Egyps are great examples of the Law of Unintended Consequences…
The US Fed, trying to perma-prime the pump of the US Economy keeps interest rates rates abnormally low and creates massive amonts of electronic money via QEI and II.
All this cheap money floats around looking for returns… and ends up being used to speculate on the price of just about anything including agricultural commodities.
Agricultural commodity prices shoot up and cause those marginalized majorities in emerging markets to suffer financially.
Marginalized majorities are already politically repressed and figure they don’t have anything to lose by rebelling against the establishment.
Who knows where this will lead, but I’m sure Ben Bernanke didn’t think his “helicoptering” would potentially topple US allies like Mubarak…
Then again, that’s why it’s called “unintended consequences”…
Dude, the only connection between Cairo and Kits is weed…lol
Pretty good post today. What I find fascinating is how the US dollar continues to bounce higher on global fears despite all the prognostications of those who claim it should be in freefall as a result of the QE’s (yes, I am talking to the Goldbugs).
Speaking of housing that could actually fall to zero as it has done in parts of Arizona,…..out here in Saskatchewan we have hundreds of very small towns populated by people in the median age range 45 to 55. Many will be retiring in a few years and there really is no growing demand for housing in these tiniest of communities.
The trend over the last few decades has been for the smaller towns to shrink until they eventually just fold up and then disappear. This has been an outgrowth of the trend from country to city and the advent of the big commercial farms in place of small family operations.
There is quite a list of them too that are now all but gone. You can hardly even find old foundations in some towns and might not know a village once existed were it not for a stone marker or cluster of mature trees.
The real estate “wealth building” seminars are out in full force…sure sign that the real estate party is over.
NO money down – NO income – NO credit
http://www.remiccorp.com/toronto
(this website boggles the mind – truly)
“Andrew Jackson”, I have a buddy who looked into the residential care home option. The guy and his wife bought a McMansion and had a “what the hell can we do with this space to help pay for it” moment, right after they got their first utility bill. The wife put the kibosh on the care home idea, but he says the numbers looked good. Instead he went nuts weatherizing and shutting off heat to unused rooms.
Kind of raises the question of what else these oversized homes can be used for, especially since they lose a lot of their sales appeal if they don’t have the current check list full of features. Expensive renovation to make it marketable to the new buyers, convert to a nursing home, divide into apartment suites?
#4 squidly77, agree with both points!!!
#25 Edmontonian Here, agree totally…
how long now you have talking abut a correction or even a crash , and still the prices are going up, so if we bought a year ago with lower prices and we hve a house correction we will still not loose….keep on talking and prices will keep on moving higher, by the time it corrects it will be 25% high….the other day someone bought a condo house in Calgary for 4.1 million, do u think a guy with this amount of money is stupid and didnt do his research and due diligence before he buys.
#9 JackRussell
“…… but instead a lot of Wall Street survived, and they are busy trying to cook up the next bubble”.
———————————————————-
And damn successfully too.
Witness the Asian credit and housing bubbles and the torrent of Western funds flowing into those markets. Brazil is working overtime to stem a similar capital inflow to little avail. Or note the food and related commodities bubble etc….even Gold will eventually pop but I have no idea when.
I just know it will. All in good time.
I am not sure how accurate this is (plus it’s not really Canada – not yet) but it’s a nice visual at the very least:
A Frightening Satellite Tour Of America’s Foreclosure Wastelands:
http://www.businessinsider.com/satellite-tour-foreclosure-cities-2011-1#
ZEITGEIST: MOVING FORWARD (2011)
http://www.youtube.com/watch?v=4Z9WVZddH9w
Quite a comprehensive analysis of humanity in general, but again it attacks the current economic system.
As per Egypt, this latest Zeitgeist documentary does not paint a rosey picture for the future, but predicts riots due to economic situations and how the elite will try to fend off judgement day.
I recommend this
JULY 21, 2005
Lessons From The Brain-Damaged Investor
Unusual Study Explores Links Between Emotion and Results; ‘Neuroeconomics’ on Wall Street
http://online.wsj.com/article/0,,SB112190164023291519,00.html
The 15 brain-damaged participants that were the focus of the study had normal IQs, and the areas of their brains responsible for logic and cognitive reasoning were intact. But they had lesions in the region of the brain that controls emotions, which inhibited their ability to experience basic feelings such as fear or anxiety. The lesions were due to a range of causes, including stroke and disease, but they impaired the participants’ emotional functioning in a similar manner.
Excellent post.
Hey Garth is that you in the snow :) Man your Macho!
No. Way better butt. — Garth
I’ve been saying for over a year prices on resale houses are 20% over priced but they kept selling.
Time will tell by the middle to end of this year bankruptcy’s will be the highest in Canadian history.
And people will keep laughing at that, that’s fine but when we lose 500,000 manufacturing jobs and this government takes credit for 75000 + new entrepeneurs you got to believe something is wrong.
Desparate people trying to make a living and will really only end up going broke.
@ #20 Professor
Aren’t they actually committing 95% of the risk over to cmhc, while only shouldering 5% of it themselves with cashback schemes.
Pretty good hedged leverage when you look at it. Throughout the bubble they had huge upside potential with a guaranteed 95% stoploss built in. (courtesy of the same taxpayer making the mortgage payments)
I wish I’d thought of it!
How anyone can say there is no inflation is really beyond me. Have you been to a gas station or grocery store in the last 3 years? Every commodity both hard and soft is at or near record prices and rising. Governments around the world are printing money faster than they can give it to wall street. The very definition of inflation is an increase in the money and credit supply. Price inflation is the result of monetary inflation, always has been, always will be. The price of everything we use every day is not through the roof because there is too much demand for it. The prices are up because the currency that everything is priced in has been in a freefall for the last decade. Commodities will rise in price as long as Bernanke or anyone like him is in charge of the printing press. Think about this – the US prints money to buy their own treasuries, their own debt. Until insanity like this ends commodities will rise in price. Bill Gross the head of Pimco, the king of bonds has said publicly that the 30 year bull in the bond market is dead. As bonds fall, government bonds, rates rise. If the bottom falls out of the dollar and the fall in bond prices accelerates hyperinflation will kick in. For anyone that is old enough to remember 1976 through 1982 or has studied this period in school, this may be reminisent of about 1979 or so. History always repeats itself.
” The bold efforts of the present bank has made to control the Goverment are but premonitions of the fate that awaits the American people should they be deluded into a perpetuation of this institution or ythe establishment of another like it.”
US President Andrew Jackson ( re Central Bank he shut down , when US National Debt was zero in 1835. )
In 1913 International bankers created another central Bank…. the Federal Reserve
#17 Robert Dudek
Will they? They already have.
Hello Inflations
Inflation Inflation Everywhere and Not a Drop to Drink
At last, the doubters have nowhere to hide. The world is starkly revealed as an interconnected political economy force, and not as a disparate grouping of various nations, some authoritarian, some choosing democratically agreed upon policies, creating policy choice and thereby shaping of political outcome. Greece, Ireland, Tunisia, and now, the fulcrum of the Arab world, Egypt, stand as testimony. They are countries caught up in the machinations of a monetary policy to debase the world’s reserve currency.
All “he” wanted was some inflation, a little inflation to get America and the west out of the deflationary spiral caused by the failure of financial instruments (a.k.a. OTC Derivatives) and un-payable government debt – but he can’t get it. Everywhere it rages, but the place he wants it – home. So it erupts in global food prices and manifests itself in the attempts to bail out stone dead banks on the backs of the marginal economic player – post-destruction of the middle class. Most of the world has no savings to get through difficult times. Most of the world cannot “hedge” inflationary outcomes. Those outcomes appear quickly and change realities violently. The inflationary reality is their reality – the difference between starvation and survival. The result? Global upheaval, leading to where, we are not sure… but probably nowhere nice. Think American monetary policy was a uniquely sovereign, American affair? Think again. You are watching QE II live on television. American monetary policy and the global “race to debase” is that raging crowd you see on the television from Ireland to Greece and Egypt. It is that nascent force which Chinese leaders awake in terror, wondering what a billion plus people might do if faced with stark choices. If you can’t make the connection between the monetary policy and the political reality, you need to change the causal way you look at the world.
Nations hold dollars in reserve to meet the demands of running an economy. When debasement takes place, the marginal economic player gets hit first. This is what we see now. But there is another, geo-political aspect many are missing. The western attempts to control multiple political outcomes and a global geo-political/military order rests on the ability to finance and control that order. When the money gets degraded, the ability to finance that order goes with it. Degradation of currency inhibits foreign force projection, both militarily and politically. Nobody in Egypt believes America is capable of controlling political outcomes, as they did from Suez to Mubarak. That era has passed. It passed with the Shah of Iran, and the death of the widely despised (in Egypt) Anwar Sadat. The Mubarak intermezzo is over. In the Arab world, what happens in Egypt doesn’t stay in Egypt. The potential for “regime change” in Saudi Arabia is growing. Now we find that the financial necessity for Dollar debasement wasn’t as politically benign as people in Washington thought. Instability rages across a region that could usher in an era of global conflict.
People say, “be careful what you wish for” when you talk about the end of western hegemony, but while the political hegemony is dying by the hour, the monetary hegemony is currently intact and its results are evident. When those results swing full circle and return to the west, currency upheaval will be guaranteed. Global system breakdown, which made its debut in 2008 is now back for its main act. Money printing didn’t quite work out the way it was supposed to. This time, a rush to the security of Treasury instruments is unlikely to be the fallback position for global capital that now sees Fed monetary policy as a destructive boomerang cutting inflationary swathes across the planet… en route to its place of origin.
#17 Robert Dudek
That is to say, the damage is done during the credit boom phase. The damage actually experienced during a bust is just the inevitable consequence of the boom.
I love Garth’s posts. I read this “pathetic” blog everyday. Real estate will implode and a lot of people will be left bleeding dry. Rent should go down too. Here in London, Ontario, the rent is unusually high for a city that is small and has little to show in terms of economic improvement.
BTW Garth, I believe that silver and gold will go up in price, especially with the government expanding our monetary base. Until the money base has dwindled, I am keeping some silver and gold. Not too much, just a little bit.
10% Decline in home prices would put tens of thousands of buyers underwater. Please remember that it is negative equity that is the real risk, not affordability.
If rate go to historical norm with a rules to get back a minimum 20% cash to buy a house, may be, like in Cairo, will see LOW F-16 JET PASS over Flaherty an Carney office!
It is late now. Too late at night to send out a warning that I believe markets are on the verge of a very serious correction.
I hinted as much in a post in yesterdays blog but am now convinced after many hours of looking at the numbers that trouble has finally arrived. This is my opinion only and is not meant to be investment advice of any kind. You need to do your own work and research to confirm the market signals for yourself.
This looks to me like it is shaping up to be one hell of a rocky week for stocks though. You may want to take cover until it blows over.
(Ask your advisor or broker what he or she thinks)
The next argument from house pumpers will be based on demographics. House sales are falling because their are fewer buyers so it is a good time to buy.
And yet there will be no cut backs in the fat and sloppy pensions paid to the civil service pension pigs. While Canadians slave and suffer these pukes suck the life out of the CPP and leave nothing for the rest of us.
Heres an example of the egregious nature of union greed. This couple asking for a ‘financial makeover’ in the G&M are a ‘municipal worker and a teacher’ retiring with a pension of $240,000 p/a.
It will take almost 70 workers CPP contributions to pay for these pigs luxury every month until they die. This is fair? This eqwuity. No, this is a country where union scum have taken liberties with the generosity of Canadians for their own greed.
http://www.theglobeandmail.com/globe-investor/personal-finance/financial-facelift/giving-up-security-for-freedom-its-not-a-pipedream/article1886926/
#20 Professor, re: mortgage fraud:
Yeah.. The RE pumpers have no problem running around claiming there’s little fraud in Canada, when these shams are very common. Just like the United States.
So two new friends have decided to buy houses in Surrey before the elimination of 35 year mortgages.
They’re immigrants via the temporary workers program. They’re not investor immigrants, etc. but they have immigrated via the temporary channels and somehow think that will eventually mean permanent status. And yes they have money.
Oh yeah, i don’t care if this is posted or not as long as garth reads it… And by the way, their arrival is not reflected in any statistics that you and your followers quote and it is Scotiabank that is helping them out.
That’s the truth, like it or censor it.
RE #23 Edmonton Banker
They just claw back the last 12 months of any RRSPs you buy/make deposits too now in Bankruptcy effective 2007.
I know for a fact they will take all your RRSP’s during a bankruptcy and that is agains the law. But your bankruptcy trustee will do nothing to help. The Banks attitude is “so sue us”. No one give a damn.
Just like Robert J. Ringer once said. “I’m sorry I cut off your hand at the wrist, but you were reaching for your chips!”
Folks, get in before you are priced out. Today the angels sang in Vancouver, blessing all Asian investors letting them know that flipping dates of aug 8 will triple their investments so they all need to pile in now!
Folks, crap smells like roses here, the bums on the streets will polish your cars for free and do your lawn in exchange for the bottles in your garbage – this happens nowhere else.
Honeybees fly here in winter, we’re the only place on earth who will benefit from tonal warming, lowest energy rates in the world. If oil goes to $400 you will still not have financial problems as you can always ride a bike.
This is the only place on earth where common sense is not something investors need to concern themselves with as all the realtors have been blessed by the pope himself.
Get in before you’re priced out. Invest every penny you have as property values ALWAYS go up in Vancouver. Go for 20:1 leverage ratio and buy several houses and condos, you can make 5x the cost of ownership in monthly rent.
This is the only plae on earth you can live in where you can share an elevator with a 17 year old Chinese Ferrari driver (N plated) who has earned all their money honestly, the hung over kids of Iranian Revolutionary Guards who really enjoy the life their parents put others in prison or death over back “Home”.
If you have cash you can always buy a couple of homes and flip them. In Vancouver if you evade income tax on cash rentals and capital gains tax by pretending to live at a home you are renting out, nobody cares, it is Vancouver and it is different here.
So take your cash to a realtor, they will get you the best deal while making sure the seller gets the best price. Hand them their commission, don’t worry you will make it back in 15 minutes and believe everything they tell you, they are the benchmark of truth, honesty and integrity.
Canada, let alone Vancouver are different than anywhere else, here fundamentals have no effect and technicals always point up, your money is 110% safe in real estate!
Pile in and become a billionaire in a week!
How do Canadian banks normally respond to underwater borrowers who are easily making all payments on time?
Does anyone know how Canadian banks typically handle borrowers who are in negative equity, but current and up to date on all payments? Also, does anyone care to speculate about how bank policies and procedures on underwater borrowers might change as the Canadian housing bust unfolds?
My apologies if this question is already asked and answered. Thanks in advance to any informed person who takes the time to answer or provide a link.
Andrew Jackson on 01.30.11 at 11:31 pm
————-
Mostly everything they’ve been building in the last decade has been for at least 350K or 3000$/month or more when it is estimated that most elderly people are only able to afford 800$ rent or less per month.
There may be pent up demand but not at profitable levels.
My take is that when real estate implodes, these projects will also crater and be bought up to serve poorer retirees. Will government buy it up for cheap? Not sure it will have the money but you never know.
I would not touch these things with a ten foot pole until the real estate bubble bursts and I have not even touched the regulatory nightmare…
#209 Moneta (yesterday)
Re: your statement that “….non-compliance and circumvention of laws/rules is because of authorities putting all their energies in stopping the ones physically fighting and making noise”.
Two questions:
1. Who are you defining as the “authorities” and
2. HOW exactly are they “putting all their energies in stopping the ones physically fighting and making noise?”
——–
1. It depends on the situation.
2. You’re writing an exam. One guy is complaining that the question is not clear enough or whatever. While the teacher is focused on this whiner at the other end of the class another guy is pulling out a piece of paper and copying the answers.
Do I really need to give examples in all of life’s settings?
How about this one in Toronto: brand new condo near Bloor/Jarvis, 42 floors of units I believe, and 38 units are listed on MLS all are 1-2 bedrooms, all for over 300-600k :o
http://tinyurl.com/49yzjo5
Egypt ETF up 2% in the pre-market… apparently everyone is felling better today? (not sure why, considering Mubarak is still in power)
Singh on 01.31.11 at 12:45 am
——–
The grass is always greener on the other side.
I’ve sold 2 houses and both times were stressful despite selling in seller’s market.
In the last year, all I keep on hearing is people suing the sellers for hiding defects.
Some people are winners in this bubble but not that many. Flippers and downsizers gain but all the other ones are in for a rude awakening. And there are probably more in the other group than in the downsizer group.
For most Canadians, the net result of this bubble will be more interest payments, more money into the money pit and higher muni taxes during the sum of ownership years.
Utopia on 01.31.11 at 1:38 am
Pretty good post today. What I find fascinating is how the US dollar continues to bounce higher on global fears despite all the prognostications of those who claim it should be in freefall as a result of the QE’s (yes, I am talking to the Goldbugs).
———
You’ll notice that most who predict a tanking USD are American navel gazers. They are not used to pain so they don’t realize that it could get 100X worse than the US situation anywhere else in the world.
the wilder the party – the worse the hangover
#65, What do banks do about negative equity
When houses are in negative equity, typically, interest rates rise to reflect the increased risk of outright default. If not on an individual basis, then on a systemic basis.
If a loan already exists and isn’t being renewed at the time of negative equity, the bank will continue to accept the contractually agreed upon interest rate until the renewal, and then re-evaluate the circumstances accordingly.
Phoenix has more to worry about than falling home prices. They are running out of water and guess what happens when you don’t have water.
Interesting, true and pointed out here repeatedly, but largely divorced from real estate values. — Garth
Does anyone know how Canadian banks typically handle borrowers who are in negative equity, but current and up to date on all payments?
———-
At renewal time, if the borrower has other assets, such as investments, the banks might refuse to refi and call back the loan forcing the borrower to liquidate or go to a subprime lender.
#65 somecatchphrase on 01.31.11 at 7:54 am
How do Canadian banks normally respond to underwater borrowers who are easily making all payments on time?
Does anyone know how Canadian banks typically handle borrowers who are in negative equity, but current and up to date on all payments? Also, does anyone care to speculate about how bank policies and procedures on underwater borrowers might change as the Canadian housing bust unfolds?
<<<<<< Never fear the Banks will always take your money with a smile of reassurance. In fact they won't even display concern….UNTIL you start getting behind on your payments OR your mortgage comes up for renewal…….. then it will be a time for a hell of a lot of people to suck back and wonder how the hell they got in this mess……….and why this compassionate banker suddenly has become quite aggressive in covering their ass…….Banks are in business to make money–nothing more and will settle for nothing less.
the banks might refuse to refi and call back the loan forcing the borrower to liquidate or go to a subprime lender.
—–
Depending on your mortgage contract, the bank might have to keep on lending but could impose a very high rate.
A house down the street sold in less than 3 days and for $150,000 more than I paid 4 years ago. Wow. On this blog people make one statement and say you see this is a trend or Garth your wrong.
So here is my statement,
I have watch RE for 30 years, and every Jan,Feb and even March houses sell high priced and very quickly. I will be interested to see what happens next. I hope Garth is wrong, but spring will tell. Maybe this year or maybe next year. but for January RE is hot where I live.
I will keep you posted in March.
#42 John wrote:
how long now you have talking abut a correction or even a crash , and still the prices are going up, so if we bought a year ago with lower prices and we hve a house correction we will still not loose….keep on talking and prices will keep on moving higher, by the time it corrects it will be 25% high….the other day someone bought a condo house in Calgary for 4.1 million, do u think a guy with this amount of money is stupid and didnt do his research and due diligence before he buys.
++++++++++++++++++
The other side to this story was that the owner tried to sell the property in May ’10 for $6.25 million. $4.1 looks like a bit of a haircut from the previous owners expectations.
#75 Moneta on 01.31.11 at 9:56 am
As much as people here would like to make banks out as greedy predatory machines,there are people involved with a conscious making the decisions.
Banks will just renew the mortgage if the payment history is good and the persons circumstances have not changed substantially which could put the loan at risk in the future. Why would they want to foreclose or force someone out? They just want the loan paid.
Utopia on 01.31.11 at 1:38 am
Pretty good post today. What I find fascinating is how the US dollar continues to bounce higher on global fears despite all the prognostications of those who claim it should be in freefall as a result of the QE’s (yes, I am talking to the Goldbugs).
___________________________________________
really? the USD is bouncing higher? please show me where? it’s on the verge of a complete collapse.
http://charts.insidestocks.com/chart.asp?sym=DXH1&data=A&jav=adv&vol=Y&divd=Y&evnt=adv&grid=Y&code=BSTK&org=stk&fix=
First: Canadian banks DO practise prudent banking in the mortgage business: the buyers who can put 20% down are the safest ones, and the rest are covered by CMHC’s umbrella. Now, how’s that not prudent banking?
Second: on Saturday evening, after watching the CBC news and seeing packs of stranded tourists in Cairo’s airports, I was reading this blog and comments, where many dawgs were saying that the events in Egypt could trigger something much bigger worldwide. My dear wife was watching a movie on channel W. One of the ads was about… EGYPT! Paid for by the Egypt’s travel industry or agency. The last phrase in the ad said: “Egypt. Where it all begins.” I understand that W got the ad money before the protests began and they had to air the ad. But the “where it all begins”, together with the comments here saying it could trigger something bigger, sounded really prophetic…
A flipper to-be guy at work bought a home for a few hundred grand. Said he was going to renovate the place including adding a garage for about a hundred grand. Real estate guy said he could sell it for about a hundred grand more after renos.
I told him that doing a regut and adding a garage would cost him more than a hundred grand. He said ‘No’, he priced it himself about 7 years ago. (Note: Electricians, Plumbers and other trades were less expensive then.)
The renovations have begun and now he figures it’ll cost him a couple hundred grand.
No flip to be made on this deal, he’s decided to live in the place instead of selling it. No kidding.
I pointed him to this site many months ago, but some people never learn. It’s always different here.
sarcasm on And so as it has always been and shall forever be that there is a subservient lower class of renter to they who own, oversee and take a profit from the land. What’s with this idea of 70% of the populace owning their land. Preposterous I tell you. An outrage! Only the elite shall enjoy the benefits to be had by ownership of the land. Peasants were meant to work the land extracting from it we their noble lord’s bounty.
Well now that you’ve had your fun and we have sucked what little wealth you had along with the lint from your pockets… welcome back my shepple. Please remember your rent is due promptly on the first of each month. sarcasm off ;-)
>#75 Moneta on 01.31.11 at 9:56 am
>At renewal time, if the borrower has other assets, such as investments, the banks might refuse to refi and call back the loan forcing the borrower to liquidate or go to a subprime lender.
Brutal. On that note, has anyone seen a reset/recast/refi graph for Canadian mortgages? Something along the lines of this:
http://www.ocgproperties.org/wblog/wp-includes/images/graph1.jpg
…maybe not so sarcastic…
… maybe… perceptively aware of your plight for while history may not repeat it most certainly does rhyme.
The conspiracy theorists among you have got to be asking themselves; was just happenstance or was it by sinister design as they who fell in and out of home ownership come out with far less than they went in with? And where, where did that wealth go? ;-)
#81 Oasis on 01.31.11 at 10:21 am
“USD is bouncing higher? please show me where? it’s on the verge of a complete collapse.”
http://charts.insidestocks.com/chart.asp?sym=DXH1&data=A&jav=adv&vol=Y&divd=Y&evnt=adv&grid=Y&code=BSTK&org=stk&fix=
.
Sorry but I have to wade in on this one. No way you can use a daily 3 month chart to make such an extreme call as “on the verge of collapse”. That said Utopia’s pretty much off base as well. Not at all arguing that you may not ultimately be correct in your directional call … just that it is not at all correct to claim technical validation for a “crash” call.
Use your own link and look at the MONTHLY. Absolutely nothing decisive on that chart and if anything a case could be made as much for a basing pattern as anything else and the only technical generalization that is evident is that it is rangebound between 70 and 90 and on the face of the chart it is every bit as likely to test the upper 80’s as the lower 70’s in the mid-term within what appears to be a developing triangle pattern. Near resistance and support are at 90 and 75 and a breach of 75/74 would open the door to a critical retests of the most important 70 level.
Now … all of this said … nobody should be drawing any comfort from the dollar index … since it is nothing more than a relative measure of performance against 5 currencies and heavily weighted against the EURO and British Pound both of which are themselves basket cases. Under the circumstances we’re really just comparing the relative condition of hospice patients …
:-)
#64 BC is even better,
Thanks for the laugh. I love the fact that you pulled so much of it out of his posts. Excellent parody.
#82 MikeT,
You said, “Canadian banks DO practise prudent banking in the mortgage business: the buyers who can put 20% down are the safest ones, and the rest are covered by CMHC’s umbrella. Now, how’s that not prudent banking?”
Are you serious or just being sarcastic?
#54 BPOE,
You realize that your global system break down rant goes against your main theme of “it is different here” in Vancouver. Did the fact that we are not just connected but interconnected to the rest of the planet strike you like lightening over the weekend or did you just miss the contradiction?
A strange start to the year and a strange end to a volatile week, so we take a whiz across the air waves in order to get a ‘feel’ of whats going on, so this will be a mixed bag of data. The first eye catcher is this:
Eric Sprott – Expect $50 Silver, Gold Possibly $2,150 by Spring.
What follows is brief summary of an interview that
Pump on your own site. — Garth
A few things to consider:
1. The Canadian Dollar hasn’t really “strengthened.” Other currencies have only weakened, meaning the CAD’s value right now isn’t a result of significant increase in GDP, sound banking policy, or government regulation or profitability. What has happened is that other currencies, the US Dollar, the British Pound, and the Euro, have tanked in relative value. The result is the CAD can purchase more Euros, Pounds, or US Dollars than previously able. Please keep in mind that most of the devaluing of the dollar is DELIBERATE and in actuality does not reflect the true value of the currencies, meaning the currencies’ values could be pushed upward too should the powers-tha-be decide it will be better for exporting/manufacturing (which it won’t at this time). The USD is still the safe haven currency throughout all the ups and downs in the global economic mess. That speaks volumes.
2. At #17, Robert Dudek, although I do believe Americans sometimes have a propensity to want for the material, I would hardly call it an “inherent greedy/trusting nature” that Americans encompass. Americans as a people are giving of their time, money, and human capital. Americans also give more to charitable, global causes than ALL OTHER COUNTRIES COMBINED every year, so please spare me the moral superiority b.s. I would also ask that you review the Canadian peoples’ consumer debt levels and try to explain how you wouldn’t view that as not having a sense of entitlement. After all, Canadians consumer debt levels exceed friggin’ Americans’ debt levels, yet expendable incomes are significantly less than Americans’. Eh hem, and WHO is it again you are calling greedy/trusting? Canadian people have continued for YEARS after the global economic melt down to stick their heads in the sand and act like NIMBYS (not in my back yard), believing every media outlet and “official” report concerning real estate. Canadians have continually sang the song of “We’re Different.” But, in all honesty, you really aren’t. You’ve only prolonged your situation even more due to a lack of transparency and an overly confident and trusting people. Americans are trusting/greedy? Are you friggin’ kidding me? Clean up the trash in your own back yard before you point at your neighbor’s.
#88 BDG-YYC – on 01.31.11 at 11:56 am
i only bothered with the daily chart, because the claim was with all the termoil in Tunisia and Egypt, the USD was going up… which is CLEARLY NOT the case, and easier to see on the daily chart.
i beg to differ in the larger technical picture. it’s crystal clear, that the USD, once it breaks below 76, will see the life sucked out of the dollar, and will confirm a collapse to 60.
technically speaking, you can draw a simply uptrend line on the montly chart, it’s really clear, and once the level is broken, there will NOT be any support. not at 75, not at 70.. not until the USD reaches 60 or less.
there is no hope for the dollar any more.
The US$ will not collapse. Au contraire, it is the favoured safe haven. — Garth
Utopia #38
The US dollar is measured against a basket of paper currencies that are also declining. When the dollar is “up”, it just means it is declining less rapidly than the others. Amazing that people fall for this.
Thanks to all who responded to my earlier query regarding a negative equity scenario where the borrower has no problem making payments.
I`m surmising that banks are very unlikely to force a liquidation in a situation where the underwater property owner is easily able to keep all payments up to date.
FWIW: The reason I ask, I know about a FSBO income property that is strongly cash flow positive at the vendor`s asking price, with a 5.5% interest rate, and a 10% down payment.
The mortgage rate on this property would have to go north of 10% before there would be a negative cash flow situation. (Making the dangerous assumption that heating costs and taxes remain relatively constant.)
As an added bonus, the rents could be raised about 20% and still be very competitive in the local market, and, I would be living in one of the units, so all of the money that I currently spend on rent would be going into a TFSA instead. The current owner is elderly and doesn`t seem to realize that she could be charging a lot more.
On the “don`t buy“ side, I could easily imagine a negative equity situation as this property is located in one of our `have not` provinces which is heavily dependent on federal transfer payments and doesn`t have much going on in terms of real, organic, private sector economic activity.
Hi Garth, Just wondering about this new Taser device.
I wonder if someone in the Canadian Government might be pro-active this time about this new technology? Banning it in Canada comes to mind first?!
Remember the Polish guy that was killed at a Canadian airport with tasers.
And after seeing the Egypt Government use of tear gas (Chemical weapon), rubber bullets and real bullets against there people-human beings, that I assume were mostly protesting peacefully.
And what happened at the Canadian SPP and G20 meetings!!!
“The device is a cartridge the size of a regular shotgun shell, loaded with the Taser components that shoot a wireless charge. “It packs twice as much power and has four times the range as the standard Taser guns,” said Danny Kleitsch, president and co-owner of Icon.”
http://www.micromanufacturing.com/showthread.php?t=1083
38 Utopia on 01.31.11 at 1:38 am
Many will be retiring in a few years and there really is no growing demand for housing in these tiniest of communities.
True AND when they sell that 6 sections of good wheat farm to Cargil————they move to Vancouver Island———and live happely ever after.
Just ask any of my neighbours. (Most are from the prairies) LOL.
#34 Elmer
Agreed on the craigslist ad…
But the butt thing is probably a fetish…His blog his pics.
As in, Fetish – An abnormally obsessive preoccupation or attachment; a fixation.
Well… it’s not yet 9:00am here in Kelowna with yet a full day of entering those real estate sales which took place over the weekend as well as those of today and here are the numbers compared to last year:
THIS MONTH TO DATE (2011)
Total Units Sold = 105
Average price of units sold = $496,426
Average Days on Market = 115
THIS MONTH LASST YEAR (2010)
Total Units Sold = 149
Average price of units sold = $506,581
Average Days on Market = 95
Yes it is down but NOT NEARLY as much as most everyone on this blog had predicted. AND the fat lady ain’t sung yet… we got a full business day to go!
Snorkelling in Mexico, be careful
AS THE MIDEAST TURNS AND BURNS
To return to an earlier theme, what should amaze us now in the unraveling of this region is how remarkable and long the recent era of stability lasted. Meaning, most of all, how reliable those tanker shipments of oil have been moving through the Straits of Hormuz and the Suez Canal to their destinations in the lands of the Crusaders (and their younger kin in the New World). To put it pretty starkly, the so-called developed world can’t keep its act together more than a week without that steady mainline of Arabian oil, even though it doesn’t represent most of the oil traded in the world. The margins are too thin. There’s no wiggle room, really, especially for us, in our kingdom of freeways. We lose ten percent of our oil supply and that’s all she wrote for business as usual around here. I’ll put it even more starkly: we can’t afford to let this shit get out of hand for a New York minute.
#62 Thetruth
I love it when people think they have some huge truth to reveal to the world, acting like a great conspiracy is holding them down.
We know all about your rich Asian buyers. We’ve had them in 2008 too, if you catch my drift. We’ve had them for decades. Hopefully I don’t have to post a chart of Vancouver real estate prices, because you already know it. You also know rich buyers, Asian or otherwise, will not stop falling prices, or sustain the market up in the air. They haven’t before, they will not now.
There were lots of rich buyers (and drug money too, on a scale Vancouver can only dream of) in UK, Spain, Florida, California, Pheonix, etc. Didn’t do diddly squat. They’re just like any other buyer: buying with both fists when times are hot, crapping their pants when wind blows the other way. Momentum buyers. They’re always right, until they’re not.
#60 norespect
The retiring municipal worker and school teacher with a retirement income of $240k. Will have “private incomes” , inherited or were astute investors. The average municipal worker will gross between $45K and $55K and a school teacher with a Master’s degree would be at the most $80K but most around $65K. At the most their pre-pension incomes would have been around $130K. After 20 years as a municipal worker my pension is $1,070 per month and my CPP is $504.00 for a total of $1,574 per month minus $200.00 for Health care benefits plus income tax. I don’t know where people think union workers make so much because it just isn’t that way. Without my investments I would be living below the poverty line.
#81 Oasis
“really? the USD is bouncing higher? please show me where? it’s on the verge of a complete collapse”.
———————————————————-
Patience my little dove. It is bouncing right now. The rumours of a US Dollar death are greatly exaggerated.
Well… it’s not yet 9:00am here in Kelowna B.C.with yet a full day of entering those real estate sales which took place over the weekend as well as those of today and here are the numbers compared to last year:
THIS MONTH TO DATE (2011)
Total Units Sold = 105
Average price of units sold = $496,426
Average Days on Market = 115
THIS MONTH LAST YEAR (2010)
Total Units Sold = 149
Average price of units sold = $506,581
Average Days on Market = 95
Yes it is down but NOT NEARLY as much as most everyone on this blog had predicted. AND the fat lady ain’t sung yet… we got a full business day to go!
And how about this… at the peak of the market the same month in 2007…
THIS MONTH IN 2007
Total Units Sold = 186
Average price of units sold = $440,054
Average Days on Market = 10
How about those prices?!? And you all thought they had dropped since then!
(notes) Units Sold and SFD Single Family Dwelling Units, ADOM Average Days on Market under most recent listing agreement
Garth, love the blog. Please everyone, sign this, or at least investigate it if you love the internet:
Dear Internet Supporters,
Last week the CRTC made a decision that, while disappointing, was nevertheless a small a step in the right direction. It rolled back 15% of the usage fee profits big telecom wanted to extract from indie ISPs. This is a big deal, and it shows that we’re turning the tides on this issue.
But the decision does leave Internet metering in place. The unnecessary fees charged to Canadians for Internet “overuse” will stifle innovation, ground-up entrepreneurialism, and social progress.
You responded to the CRTC’s weak-kneed decision by helping the Stop The Meter petition reach unprecedented numbers – 160,000+ signatures!
To stop new punitive fees from being imposed on us we need to get the Government to overturn the CRTC’s decision. Now that the NDP has come out against metering, the next step is the get the Liberals to adopt our position. Lets send them a message by reaching an historic 200,000 signatures:
Email the link: http://stopthemeter.ca
Share it on Facebook: http://tinyurl.com/45nmvcv
Tweet it: http://tinyurl.com/4nxd52y
We think the Liberals are on the verge of coming out with a position on Internet metering and there can be little doubt that they’re facing a barrage telecom lobbyists at the moment. In response, we’ve made it so each petition signature triggers an email message to Michael Ignatieff and the Liberal Digital Critic Pablo Rodriguez. The best way to stop the meter is to get as many petition signatures as possible today.
@90 Junius:
Well, I would say I’m half-half.
The banks risk extremely little, don’t they? They do it at the expense of everybody else, but they are indeed prudent with their own money. They put our (taxpayers’) money at risk. Am I wrong?
#81 Oasis –
Wonder what the price of oil would be doing today, absent a global superpower capable of keeping the Suez canal open, no matter how far and how fast the situation in Egypt deteriorates?
With housing values deteriorating across Canada, the national unemployment rate inching skywards, and personal debt loads exceeding record levels, and personal bankruptcies high record, it’s not a surprise that foreclosure statistics are also increasing at a significant pace in Alberta, British Columbia and Ontario.
While the exact number is unknown – unlike in the US, foreclosure statistics aren’t publicly available in Canada – many experts, including those at the Bank of Canada, believe that increasing foreclosures are a natural side effect of a poor economic climate such as this one. The fact many Canadian homeowners are holding mortgages greater than the value of their house – particularly those who obtained the now-defunct 40-year, zero-down mortgages – is only adding to this number.
Unlike in the U.S., you don’t have the option of mailing in your keys and walking away. In Canada, the mortgage debt is the homeowner’s – not the lender’s – and the lender can do whatever it takes to get that money from you, including garnish your wages. As a full-time Canadian real estate investor, you should be aware of the downsides to a loan or mortgage
If you do lose your house to Power of Sale and or foreclosure, it will stay on your credit report for six years.
This will not end well.
“If you’re in debt, sell stuff and get the hell out. If you’re an investor, own things that pay you yield and give you balance”
Ya, and what if you debt is a mortgage payment, and you have no intention of selling it and renting. Do you pay off the mortgage? Garth has said, paying off an asset that is doomed to drop in price is senseless, but at the same time so is carrying a 35 year compounding loan that can only reset higher in 5 years.
Why pay off a 3-4% mortgage when you can invest to earn 7-10%? — Garth
#105 Utopia on 01.31.11 at 1:31 pm
Patience my little dove. It is bouncing right now. The rumours of a US Dollar death are greatly exaggerated.
_________________________________________
HAHAHA, if by “bouncing” you mean heading straight down.. then yes.. AHHAHA
some people can’t tell up from down
The US$ will not collapse. Au contraire, it is the favoured safe haven. — Garth
______________________________________
the world has changed. the US is bankrupt. no different than greece or ireland or iceland. they will soon leave the middle east. they can’t afford it any more. they don’t have any money to pay social security, medicare or medicaid. they will be running 2-3 trillion dollar deficits soon as more and more people retire.
the world has changed. the USD is no longer a safe haven. it’s on the verge of a collapse. it’s all happening before your eyes.
US dollar safe haven?
As I write, Euro is around 1.37, Yen not far off its all-time high at 82, gold is holding strong at around 1337 and silver is finishing the month on an up note 28.32.
Just because some stupid people THINK the US dollar is a a safe haven doesn’t mean it is.
#100 Devil’s Advocate
2010 has been the turning point nationally. Some markets are visibly slowing, others are flatlined, others are down slightly. No market, to my knowledge, is accelerating growth, either in sales or in prices.
No one’s been predicting or expecting any steep declines. Real estate moves slowly. (Oh, that pun works on so many levels!)
A movie trailer on a neighbourhood redevelopment in New York City. Similar happenings in Toronto. Loss of manufacturing is changing employment districts.
http://www.thedominoeffectmovie.com/
Change…
A nod’s as good as a wink to a blind bat!
#64 BC is even better than ten best place on earth
====
For a minute there I thought you were pulling our leg, but it’s so bloody true….
#62 Thetruth
Are you bragging or confessing?
Why keep that extra 5 years of cash used for longer amatorization for your retirement, when you can pay it to the bank in interest? Do you think that maybe that’s where the Canadian retirement bomb lies? People pushing cash into bricks and mortar for an extra 5 – 10 years? If these people have money then why would $200 – $400 a month cash flow be that important?
Oh that’s right, they’re new to Canada, and we’ll take care of everyone even if they won’t take care of themselves.
It doesn’t surprise me that these are your friends looking back at all those smart comments you’ve made over the past year about housing going up forever.
I hope they(your new friends) at least take you out for dinner for your sound and rational commentary on the housing situation.
CD Howe agrees with a good majority of the posters on here:
http://business.financialpost.com/2011/01/31/think-tank-time-to-leash-the-cmhc/
http://www.cdhowe.org/pdf/commentary_318.pdf
Garth,
That price on that condo seems really cheap compared to alot of the listings I’ve been looking at. Can I expect those type of low rental rates on condos to slowly become the “new normal”?
I’m likely going to rent in downtown Toronto (Harbourfront area likely), will rates fall there too? The condo you listed is sort of on the outskirts of the core. I’ve never seen anything listed that low …
#108 MikeT
The government is putting taxpayers money at risk. Banks, no matter how evil they are, do not have such power.
#54 TheBestPlaceOnEarth
Excellent post
I’m reviewing the “Zeitgeist” series……which lays out things in fairly plain language.
Basically, Gov’ts are the employees of vested interests.
The US Gov’t is the Mob Boss with the muscle (military).
The fix job is simple…bring in the economic hit men..bribe new leaders…bring in jackal/hit men ….or the military.
Goldman Sachs simply runs around manipulating and plundering economies and then Gov’ts bail them out or covers up the mess.
This Middle East uprising is something that likley caught the US off guard, but rest assured the Goldman Sachs and JP Morgans et al are making $$ whichever way this ends.
Banks will just renew the mortgage if the payment history is good and the persons circumstances have not changed substantially which could put the loan at risk in the future. Why would they want to foreclose or force someone out? They just want the loan paid.
———
That’s logical. But many are about to realize that the banks’ logic is not necessarily their logic. I guess you have not had a twilight zone experience with a bank yet, have you?
In most cases of negative equity, mortgages will be probably be refinanced at higher rates. Probably much higher rates… Ouch. Especially if real estate in the area drops like a rock. They don’t care if he can’t pay because either he’ll liquidate his assets if he has any or they’ll collect from CMHC.
In some cases, where there is negative equity and they know the individual has assets, they will try to squeeze.
In response to post #17, quote: The real mistake was that Americans allowed their political and financial leaders to take advantage of their inherent greedy/trusting nature and thereby destroy them.
That’s only part true. A person should pay more attention to their finances, as well as what’s going on around them. I’ve met people who think there’s something wrong with someone like me because I am more interested in business and the economy than sports, celebrity culture, or other trash. It’s your money, and your responsibility.
As for this crisis causing a stock selloff, that could be good news. It could be another chance to cash in some of the money in the orange guy’s shorts and buy some quality stocks at better prices than now. There’s difficulty in every opportunity, and opportunity in every difficulty. That’s all for now, as I move on to some investing web sites.
What’s up with the stock market rising today???
Unhappy with your phone company? These Belgium pranksters set up a container early in day blocking the entrance to the employee parking lot. The container had a phone number to call. The phone number took the caller to the a phone in the container. Poor Security!
It’s subtitled, but it’s hilarious! I posted this a few days ago, but thought I’d post it again.
http://www.youtube.com/watch?v=mxXlDyTD7wo&feature=player_embedded
#97 GregW, Oakville
You’ll shoot your eye out with that thing…
If Canadian society is so bloody perfect, why would we (Guv/police) need ‘electronic control devices (ECD)’ like these? The ‘regular’ tasers are bad/good enough.
Maybe you ‘investors’ should buy some TASR…Ha!..Got TASR?
“Taser International (NASDAQ:TASR) has the next highest with a Forward P/E of 57.5x.”
http://www.zacks.com/research/get_news.php?id=031l4119
If we buy ’em we’ll use ’em…That’s a fact, jack.
——————————————————–
Cute story…Ummm, News?
“A man builds a fine house; and now he has a master, and a task for life; he is to furnish, watch, show it and keep it in repair, the rest of his days.”
— Ralph Waldo Emerson
http://tinyurl.com/4epr42s
USD$ won’t be the only currency crashing, the question is who will be the first to start the domino effect:
http://theeconomiccollapseblog.com/archives/which-of-the-currencies-of-the-world-is-going-to-crash-first
Stop reading those damn doomer web sites. — Garth
#3 Andrew Jackson
In BC, what I am seeing is many homes turned into rooming houses, even McMansions.
This is apparently legal under the bylaws, as one does not have an illegal suite per se, so in other words 4 people plus 2 in an illegal suite is BAD….renting bedrooms couches for 10-12 is GOOD
In addition, Asians are pooling their funds to buy RE, this probably allows them to become investors for visa requirements.
However Asains have been up in arms re signs of death”hospices, old age homes…etc etc.
However, the Asian influx started about 25 years ago and these houses will depreciate. Their proliferation was widespread, and I can see them becoming a liability and creating and seeding slums all over.
Nursing homes are simply rooming homes for the elderly. Many people are simply bringing in Filipino nannies to stay with them in their homes until their final days, usually spent in a public facility.
Greetings: Something wrong here, # 102 Victoria Tea Party has posted and plagerized today post from James Howard Kunstler, oversite maybe or intentional???
http://kunstler.com/blog/2011/01/the-earth-shifts-1.html
#106 Devil’s Advocate on 01.31.11 at 1:32 pm
How about those prices?!? And you all thought they had dropped since then!
***********************************************
Classic! You should have gone back all the way to 2000, DA. The price hike would have looked better to serve your purpose. Soon, you’ll have to go all the way back to medieval times to find something to cheer you up.
Here’s what the stats you provided (thank you, btw) are really saying:
Sales: Down 30% from 2010; down 44% from 2007
Price: Down 2% from 2010; up 13% from 2007
ADOM: Now takes 21% longer to sell compared to 2010; 1,050% longer to sell compared to 2007
Yes, of course, how about those prices!
Classic. Sad. Pathetic.
Junius,
That post written by financial genius Jim Sinclair. As the chaos of the world continues there are only 2 things left which represent true wealth. Vancouver and Gold. The rest is goin down. West Vancouver has a high percentage of wealthy Iranians. The exodus of money from Saudi Arabia and the entire Middle East will continue to funnel it’s way to Vancouver A True Storehouse of Wealth
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
54 BPOE,
You realize that your global system break down rant goes against your main theme of “it is different here” in Vancouver. Did the fact that we are not just connected but interconnected to the rest of the planet strike you like lightening over the weekend or did you just miss the contradiction?
Another viewpoint on what’s happening in the middle east.
http://www.ericmargolis.com/political_commentaries/the-american-raj-in-flames.aspx
ROFLMFAO! The Chinese claim a military might, but they made a slight mistake using footage from the movie, Top Gun.
http://news.yahoo.com/s/yblog_thecutline/20110131/ts_yblog_thecutline/chinese-air-force-drill-looks-awfully-similar-to-top-gun
Garth I agree with everything you just said except one thing…
“It could be a generation or two before Americans trust real estate again,…”
Most consumers ( Canadian or American) have the attention span and memory retention of a drunken fruit fly hovering over a bowl of rotten oranges.
Less than 5 years after the housing or condo prices have stabilized( hit rock bottom). The Open Houses will be full again.
Hopefully , the mortgage regulations will be set in place to avoid the coming tsunami of foreclosures.
B.C. SPCA probes mass killing of sled dogs (in WHSTLER..home of the 2010 Olympics)
http://www.cbc.ca/consumer/story/2011/01/31/bc-dog-mutilation.html
British Columbia SPCA officers headed to Whistler Monday to investigate claims that 100 healthy sled dogs owned by a tourism operator were slaughtered.
The allegations are contained in a filing to WorkSafeBC, the provincial workers’ compensation board.
According to a release from Outdoor Adventures Whistler, an employee of a company called Howling Dogs was compensated for post-traumatic stress after shooting 100 dogs in April 2010.
The general manager of cruelty investigations for the provincial SPCA, Marcie Moriarty, wonders why the company had so many dogs when it couldn’t keep them healthy. She said the dogs appear to have died a horrible death.
“I won’t use the term euthanized, [which] implies a humane death, and I can say that based on his description, at least a number of dogs did not have a humane death. His descriptions of using a shotgun, blowing off half of the dog’s head while it ran off, a dog crawling out of a mass grave, it just made me shudder,” Moriarty said.
============================
Very Surreal…….
I think Wall and Bay Street are in La La Land. A major shift in power in the Middle East appears to be underway yet markets just yawn. Oil was up 4% Friday, and has closed up 2-3% again today, yet the Dow is up? This is what really crippled the US consumer/homeowner back in ’08 and it’s coming again. The US$ is taking it on the chin again today, as the music keeps on playing…and Wall Street wonders why the retail investor has given up on the market. It’s because the whole thing is run by a select few using derivatives, futures, etc…very frustrating. Gold and silver metal are in heavy demand globally yet the paper futures market didle dallies downward. Likely a beatdown by the big wigs to load up before the seasonally strong Feb-May period for gold.
I really don’t think that the investment community is pricing in any truely negative Egyptian outcomes. Look how heated things got on Friday, yet the dow was down just over 1%? Maybe they are in oil, but everything else seems to be ignoring things?
As for real estate, looks like things are coming to a boil all at once. 70% ownership rate in Canada, 30 yr amorts. coming, the middle east boiling, loonie above par, oil and gasoline climbing daily, Canadians at record personal debt levels. The CDN real estate market should really be in for a hell of a correction here. It is holding on but once it buckles she could be swift.
Why pay off a 3-4% mortgage when you can invest to earn 7-10%? — Garth
I disagree with this plan.
Pay off the mortgage while the interest is low, sure in theory when rates are 7-8% investment returns should be at 12-14%.
The reason i think its bad advice is simple. Stick to the plan that most people will be able to accomplish.
People are greedy and fearfull, they dont take gains on stocks BUT generally take the loss when its going down.
In an ideal world, that plan works well, but for most people they will not have the discipline to stick to their investments during a crash.
At least the money in their mortgage or double payments are already paid for. People will hold on to a house until they can;t, not taking the immediate loss like they would with an equity/stock fund.
With everything in life– think finances, diets, etc.. the best plan is the one that people are going to actually stick with.
#107 icarus on 01.31.11 at 1:35 pm
I signed it last week and forwarded it to family/friends.
BC Banking Jobs Declined after Bank Tax Was Killed
Libs forfeiting over $100 million in tax revenue didn’t stop drain of 1,600 big bank positions.
http://thetyee.ca/Opinion/2011/01/31/BankJob/
“…….But even as the banks shift their operations to Ontario, the real growth in banking jobs is outside Canada. Despite Canadian provinces deliberately whacking their own revenue streams — cutting corporation income taxes and abolishing capital levies — in a desperate bid to woo the country’s largest financial institutions to invest at home, the banks are looking elsewhere.
Between 1998 and 2009, the number of people employed in foreign countries by our country’s big banks skyrocketed from 24,000 to 92,610. Put another way, a decade ago Canadians represented 89.2 per cent of the banks’ total work-force; today, the comparable figure is just 63.3 per cent.
And so, as Feb. 19 fast approaches, British Columbians might reasonably wonder what we received from abolition of the supposedly job-killing, corporation capital tax. The BC Liberals should answer that question as we near the third anniversary of Carole Taylor’s historic decision. ”
=======
Same old same old….
Madonna – Whore spin cycle
Get in….Get out….rewarded.
#42 john on 01.31.11 at 1:54 am
—————————————
The reverse arguement could be made too, don’t you think someone selling their condo for 4.1 million did their own due diligence?
Hence the name of Garth’s website, ‘greaterfool’…..
#75 Moneta…
Nope.
Did you ask someone before you posted that?
If someone is underwater, but making payments, the bank will likely simply send renewal papers in the mail for them to sign and send back.
I know a lot of people would like to think there will be some massive mortgage foreclosure crisis with people going underwater, but the real crisis would come if they are unable to continue making their payments. The only crisis that would ensue from being underwater is that you are a prisoner in your own house. No selling for you as you would have to pay out the difference to meet the loan amount.
I asked a friend who is a middle management guy in the mortgage department of RBC, that is what he shared with me.
AS MIDEAST RAGE BURNS, IT EVENTUALLY TURNS…WHERE? TO US.
Mr. Eff this morning was issuing comforting platitudes vis-a-vis our amazingly and apparently resilient economy because of newly-minted economic stats and good government, of course.
Three cheers for us for not borrowing as much as we did last December as we normally do, according to StatsCan. The impression left is that we’ve all found consumer rectitude of some order of magnitude. Good on us, some might say.
I will say that the consumer is tapped out and worried about tomorrow. Therefore the mall-buying rages were raging a little less. Our GDP increased by 0.4 per cent in November 2010 is, well, so what?
SO, FROM RELATIVE NONSENSE TO…THE MAIN ACTION…
My attention is still full-on toward the Mideast. Now Sudan’s citizens are rising up. Like their bretheren in Algeria, Tunisia, Jordan, Egypt, and elsewhere in the “developing world” there is one common thread behind these, and soon-to-be more, street demos: high flying food, and other commodities, prices and scarcities.
WHY? IT’S OUR FAULT!
Ever since the 2008 market melt, we’ve been calling on our central banks and governments to ease the economic and stock market pains.
And they did, through lower to zero short-term interest rates. Those rates drove down the USD in particular. And being the reserve currency, and given that commodities trade in that currency, for every Greenback printed a commodity price somewhere else went up, and up, and up.
And then, Kaboom! You get Egypt, and Tunisia and Jordan and Sudan…!
BTW, QE hasn’t help us either! Instead of using those low rates to make our debt repayments less painful, we borrowed like crazy and prosperity vanished, in a heart beat.
You can’t borrow your way back to prosperity! So, Mr. and Mrs. Canada and all of your indebted families and friends, here’s the deal.
Not only have we soiled OUR nest; We’ve ALSO soiled the Mideast nest.
And the cleanup bill, from THERE, is on the way, folks. Big Time.
Here’s the latest on this from my favourite American-based gloomer J.H. Kunstler:
“…To return to an earlier theme, what should amaze us now in the unraveling of this region (Mideast) is how remarkable and long the recent era of stability lasted.
Meaning, most of all, how reliable those tanker shipments of oil have been moving through the Straits of Hormuz and the Suez Canal to their destinations in the lands of the Crusaders (and their younger kin in the New World).
To put it pretty starkly, the so-called developed world can’t keep its act together more than a week without that steady mainline of Arabian oil, even though it doesn’t represent most of the oil traded in the world. The margins are too thin. There’s no wiggle room, really, especially for us, in our kingdom of freeways.
We lose ten percent of our oil supply and that’s all she wrote for business as usual around here. I’ll put it even more starkly: we can’t afford to let this shit get out of hand for a New York minute…”
When the Muslim Brotherhood “government” takes over in Egypt, I wonder how much MORE those laddies will be charging for oil tankers and US warships to transit the Egypt-controlled Suez Canal? An arm and a leg? Sure! Or maybe, the canal will have to be closed for a piece, you know, to scrape the barnacles off the bottom or whatever.
Also, the Brotherhood will inherit the Egyptian military establishment, the caretaker of the 10th largest land army in the world. And most of its toys are American made and maintained: main battle tanks, supersonic jets, intel equipment, the whole nine yards! Yikes!
Egypt gave us the pyramids, sphinxes and mummies, lots of mummies.
Now we’re going to get our due, debt repayment nightmares.
For an Eternity.
Now, some additional thoughts from Mr. Kunstler…
“…only people paid to flap their gums on Larry Kudlow’s nightly CNBC show, and children under nine years old, believe that anything like “democracy and freedom” will arise out of a street revolt in this region of the world.
Sure, the opening acts of an historic event like this bring on mass intoxication that the Shining City or the Kingdom of Heaven or some other ideal disposition of things is at hand. There may even be an intermezzo of civil factional interplay, as we saw in Iran thirty years ago, with figures like Shapour Bakhtiar…revolving through the turnstile of politics.
It doesn’t take long for the turnstile to turn into a meat grinder, and it doesn’t take much vision to see all the things that can go wrong when that happens in that part of the world.
Before I go any further, I don’t want to be misunderstood by eager misunderstanders. In my view, President Mubarak has about as much chance of sticking around his presidential palace another fortnight as a bluebottle fly has of conducting the next Easter mass at the Vatican.
#65 somecatchphrase…
See my post above (i read the comments from the bottom up).
No link, just a phone call. I would suggest if you need to know or are curious to call the bank that you care to know about to see how they handle it.
But ask yourself… Why would the bank want to foreclose on someone who is making their regular payments? They don’t care what kind of equity they have, they just want the loan paid.
When rates go up (and they will) if people can’t afford their payments then that is when there will be a problem.
CD Howe says that CMHC is too big
“the CMHC now backstops mortgages equivalent to more than 30% of Canada’s gross domestic product.”
“As a result, Canadians are exposed to “large, ill-defined risks,” says the report, which argues that Ottawa should crank back the CMHCs presence in mortgage insurance and allow more room for private sector insurers.
Originally conceived as a mechanism for executing public policy, the CHMC has expanded dramatically, especially in the wake of the financial crisis as the government encouraged banks to boost lending by allowing them to securitize more home loans.”
“But critics worry that the unintended consequence was that mortgages became too easy to get, pushing up real estate prices across much of the country to unsustainable levels.”
http://saskatoonhousingbubble.blogspot.com/2011/01/cmhc-danger-to-canadas-economy.html
CMHC: A Danger to Canada’s Economy?
#107 icarus
Thanks…..
Here is an excellent article that lays out a lot of the consequences
Canadians Just Became World’s Biggest Internet Losers
http://thetyee.ca/Mediacheck/2011/01/26/InternetLosers/index.html
I signed the petition and sent the petition link to others
QUOTE:
Hogwash
“…….Throughout, the public has been bamboozled and divided in its opinion by the presentation of easy caricatures. That damn bandwidth hog next door downloading endless porn, shooter games and episodes of NCIS — why not tag him with an extra bill for clogging the pipes? After all, the telecoms can’t be expected to lose money on the guy who comes to the all-you-can-eat buffet and scarfs down all the fried chicken, right?
Except officials with smaller service providers say what Bell Canada is charging for “overages” is well beyond, even many times more, what it really costs to provide the extra bytes to customers.
So what’s this really about? Bear in mind that Bell Canada and other big telecoms also are invested heavily in an old-fashioned media-delivery model called television. If you now have to pay by the byte to live your version of a rich digital life on the Internet, maybe the hits to your bank account will push you back in front of the television set.
The problem is that trying to herd Canadians in 2011 back to commercial-laden programs on TV is like trying to drive back the tide. Anyone with children knows they view the television set as a moribund, one-way screen versus the computer’s portal into a realm of interactivity and content on demand.
That’s the future, and everyone knows it. So why aren’t we preserving the level playing field that has made the Internet such a vibrant cultural commons?
Forget that caricature of the slobbering porn addict next door. Canadians accessed a treasure trove of National Film Board works by the millions of downloads last year. Universities and libraries across the country are working to move priceless archives onto the Internet, where, the idea was, they’d be available to all. Not if it’s too expensive to download them…..”
#8 Pat on 01.30.11 at 11:43 pm
Hi Pat – I got impression for some reason that your loss of 35% is way better than 50%. :-(
Well i see the madness is back in January, the poor people are rushing to buy real estate before they cant qualify to a, extra super long 30 years mortgage, with no cash. What a nightmare its gonna be! Its been a long time that the rich people get it, even the owner of face book rent!
#15 l dubya on 01.31.11 at 12:14 am
” …
would it be wise to wait a few months and get a better/cheaper place or should i jump in now ? …”
Jumpin son – we are running out of greater-fools.
Sorry 4 sarcasm. :-(
#54 TheBestPlaceOnEarth on 01.31.11 at 3:20 am
Nostri it’s called – Dissociative identity disorder….you are very good clinical case…..doctors must recall your priviledge of Internet access.
http://en.wikipedia.org/wiki/Dissociative_identity_disorder
#131 TheBestPlaceOnEarth on 01.31.11 at 3:49 pm
Talk to you therapist before it’s too late. There is no gold in Vancouver…unless you associate urine smell in downtown with “golden” shower. It’s called perversion.
This madness in real estate is pump since 2006 by poor people who where not capable to get the seriousness, perseverance, discipline, to get some money on the side, to get the cash down, 20%, to buy. So the government invite those people to join the one who made the sacrifice necessary to achieve the goal. Wait and see how those people with 0% cash 40 years amortization, WILL BEHAVE when things gonna get tough!
” …. the connection between Cairo and Kitsilano is pretty simple: lower economic growth … ”
How does that bode for our well balanced portfolios coming in at 7-10% growth? Especially now that governments are turning towards austerity measures?
Last year this portfolio did 15%. This year 8% seems reasonable. — Garth
http://www.gvhba.org/educ_cons_first.aspx
Anyone attending the Greater Vancouver Home Builder’s Association’s annual first-time home buyer’s seminar?? March 22nd? It’s free!!! Anyone…? Anyone…?? ……Bueller?
*crickets*
#78 Is this spring gold or bust on 01.31.11 at 10:03 am
“… I will keep you posted in March.”
Can you post us next March (2012) even that end of 2011 should be fine?
Kilby…..you can’t make this crap up….I provided the link to the article in todays G&M. The unions keep denying the fact that the current status quo is unsustainable but the facts remain. At the current rate your taxes can reach 100% and it won’t be enough to sustain the outrageous compensation paid the gluttons of the civil service.
Already the entire revenue of large ministries such as education and health are near 100% swallowed up by the greed of the unions. There is nothing left for the actual infrastructure for which those ministries exist. The union answer ‘raise taxes’ , “We’re underfunded.” meanwhile the average Canadian feels the tax burden of carrying these parasites grow heavier by the day.
Where is the growth in education going to come from from the strikes only abate when the unionists are paid off?
Where are the seniors homes when civic workers in those ministries take millions in salaries , perks and fraud?
Who will feed the hungry and homeless when the social workers are taking the dwelling spaces built for their own subsidized use and all the while sucking back magnificent six figure salaries and matching pensions?
Everyone reads these stories in the newspapers everyday and yet somehow the truth of the wickedness doesn’t penetrate. I think people say “How can can these union people be so evil”, and don’t want to believe it even when it’s before the courts as fact.
It’s stunning, it’s unnerving, it creates an uncomfortable level of disonance with people who don’t want to think of the police as murderers, the civil servant as a greedy parasite because they were raised to think differantly about people.
It is this weak mindedness that the unions are exploiting. They have capitalized on the average Canadians desire to make the world a better place to take advantage of you all and drive away to their vacation homes in Cadillacs while Canadians struggle to feed themselves.
Love the post Garth! In your next post, you should mention how Internet bills might outgrow hydro bills for Canadians given the CRTC ruling. As a foreigner studying here, I find it funny that Canadians block the QEW over Sri Lanka or protest in Ottawa regarding Egypt but are apathetic to any major Canadian issues. Tme to get a lil Egyptian up in here lol… If my internet bill gets too high, I will probably need a snail mail in subscription to this blog :( lol.
#94 Oasis on 01.31.11 at 12:20 pm
“…
there is no hope for the dollar any more.
The US$ will not collapse. Au contraire, it is the favoured safe haven. — Garth”
Sorry Garth but I read/live similar things several times. It’s just mater of time when dollar will be worthless. US dollar is not world reserve currency (in full extend) any more – what was only think holding it from unfolding collapse. In most of the cases new monetary notes get issued with relation to old one 4:1, 10:1 or worst.
Sigh. — Garth
Buy now youngsters before you are priced out forever!!!
Buy, buy, buy!!!
Only a greater fool would hold out and buy later when the prices are cheaper. Buy now, buy, buy, buy!!!
You only have 60 days or less left to bankrupt yourselves!!! So, buy, buy, buy!!!
I’ll be waiting on the sidelines to pick up the scraps! Buy, buy, buy!!!!!!!!!!!!!!!!!!!
>and allow more room for private sector insurers.
Private sector insurers with MUCH higher capital reserve requirements. Ongoing lesson from the States: Bailouts are fully fungible.
Egypt turmoil pushes crude oil price over $100 a barrel Opec secretary general expresses concern with tension throughout region and armed guards at Suez canal
Interesting …. where will it end, better still when?
Too true I’d hate to be paying the electricity bill to air condition those big multi-million dollar houses. Same with those open planned type things with the big doors that take up the whole backyard wall that open so you can let in all the bugs and mosquitos. You’d want to have an income of around $200k just to tread water. Air con is a must have or suffer the stinking heat and humidity in Sydney. 36 degrees on the coast today. 40+ only a few kilometres inland.
The Frankenstein (Litowitz) Comb?
It is a tangled hairball of risk,” Janet Tavakoli, a Chicago consultant who specialises in CDOs, said of Norma.
“It’s been five years now since the housing boom in Arizona turned to bust. Home sales started to decline in mid 2006, then tumbled a year later. In one section of Phoenix (Zip code 85009), the median home price declined from $160,000 in 2007 to $30,000 today. That’s 81%.”
========================
The Timeline of Magnetar’s Deals
by Jake Bernstein, Jesse Eisinger and Krista Kjellman Schmidt
ProPublica, April 9
=
How Wall Street wizards conjured up sub-prime’s hurricane Norma
Carrick Mollenkamp and Serena Ng From: The Australian December 29, 2007 12:00AM
…this creeps me out
Two U.K. airports have unveiled holograms dressed as employees to help inform flyers about airline and luggage rules.
They’re so convincing that some passengers have reportedly tried to hand them their passports.
London Luton Airport unveiled Monday two holograms of a man and a woman, nicknamed Holly and Graham, who are actors in real life.
–
#21 The Apocalyptic One formerly Old is Gold — “. . . then comes 2 0 1 2 . . .”
See 11:11 clip further down re: Mayans and 2012. Again, it is the end of the Mayan Age, nothing more. The Aztecs and Incas follow on a few years’ hence, but there are a lot of old cycles ending (incl. the Caucasian race), and a lot of new ones replacing them. This is why there’s a whole lotta shit hitting the fan for the next few years, before everything calms down again.
#35 Bud — “Can the baby boomers just hurry up and die so we can get back to living?”
Certainly! I’ll pay for my celebration of life, be scorched so you can scatter my ashes on a compost somewhere and Pink Floyd’s “Shine On You Crazy Diamond” for my exit stage left music!
Break on thru to the other side!
#52 Hoof Hearted — “In 1913 International bankers created another central Bank…. the Federal Reserve”
Shortly after, WW1 broke out. Hmm. Wonder if there’s a connection there, because TPTB usually fund all warring factions, and become wealthier because of it. It’s their business to create false friction between countries, then let the controlled m$m report it.
*
4:13 clip Notice the similarities between Network, the movie from 1976 and what’s happening today?
A good lead-in for this. “When violence comes to the streets of America, as it clearly must, remember that Wall Street greed and Washington DC corruption are the cause.” wrh.com.
Soros seems to be orchestrating things. Soros has also said he wants Obama out.
US heads into Egypt “. . . where they will be the first to die when Israel hits the panic button and attacks after their (zionist) butt-boy Mubarak leaves.” wrh.com.
11:11 clip Reason why the Mayans chose their 2012 date.
For Garth: How to abolish the US Fed and use gold as money. Abolish the fed, yes; gold as money, don’t know.
Unemployment Another tool used by TPTB for endless wars, leading to continual profits for them. For instance, Davos.
Lay out the cards and the chess pieces…
The Middle East mess is a joker in the deck.
Watch a ramp up of Western world leaders, especially Harper, start the grand sell-out and favour pay back, on the assumption they will lose the next election.
Getting re-elected is just gravy….at minimum get into private sector with cushy job till Fed. pension kicks in.
EXAMPLE: The pending Internet gouge is non coincidental….(aka don’t bend over and go for crumbs the Gov’t tosses, its jail bait)
Forget Arizona:
A friend of mine’s daughter won an athletic scholarship down there…she bailed once her roomate got raped…and then went elsewhere ……its a sh*thole…
Sunbelt has a lure to “snow”birds….naive suckers
Mr Plow,
You are partially correct regarding underwater mortgages. What the bank will want is some equity to bring the financing down to say 90% when it is time to renew. That is where many people run into problems. They don’t have the cash.
I saw a lot of that when I was looking at rentals here in Victoria in the mid monetize.
In one case house had a mortgage of 185k but had an appraised value of about 188k at time of renewal. Unfortunately they had paid 229k for the house a number of years earlier. Bank wanted about 15k to bring equity up to 15% and sellers couldn’t afford it. Options were to sell for 188k or foreclose.
15 Vancouver detached homes you can buy for under $600,000
Only 15 detached homes are available on the market for under $600,000 within Vancouver city limits as of Jan. 31, and only two are below the $500,000 mark
http://www.timescolonist.com/Photos+Vancouver+detached+homes+under/4196643/story.html
I’m a renter with money in the bank. And yes, renters will inherit the earth.
Great blog Garth.
#107 icarus,
The CRTC is going to destroy our broadcasting system and the Internet for Canadians by giving control to the major carriers. It is a disaster on all levels.
CBC’s premier head cheese announces that the protests in Egypt are “widely scattered small demonstrations where hundreds of cameras converge to cover what we see.” (parphrased) This comment seems ok with Amanda as she moves on and later uses his “nothing burger” trademark phrase. Solomon, McNeil, Lang and O’really are lying to you pretty much constantly.
I have 15000.00 sitting in a savings account that I know ought to be in a tfsa. My bank is suggesting I put it into a savings account in the tfsa… yeah.
But with such a small amount of money – where / how is it most sensible to invest? Ideas? Anyone else in the same boat?
Mr. Plow on 01.31.11 at 5:18 pm
If someone is underwater, but making payments, the bank will likely simply send renewal papers in the mail for them to sign and send back
————-
You can believe what you want but if banks require CMHC approval for a mortgage with less than 20% down, I doubt they’ll just send you papers and offer you the best rates.
I am not saying that everyone is going to foreclose. What I am insinuating is that there will be enough to cause mayhem. All you need is 1%-2% because they’ve been planning for less than that. It’s over 10% in the US.
If you had CMHC insurance, it stays insured.
If you did not have CMHC insurance and your LTV goes over 80%, then you’ll have to pony up some money.
Now on the same show Perin Beatty and John Manley embrace a 0% corporate tax policy. It’s a neocon festivus for the rest of us.
@34 elmer.
google. nxt condos in kijiji and the add shown on the blog is not far off. 1200 to 1400 rent, there are about 10 listings.
#146-Pr–well i see the madness is back in january, the poor people are rushing to buy real estate…etc
Please, tell us where all this buying is taking place–i still don’t see this “panic buying” that’s suppose to happen before the mortgage changes in March
many of the e-mails i get show price changes downward –properties listed for less than the owner paid 1 to 3years ago—why aren’t these properties being snapped up ??
Sure, there are still sales taking place in the tri-cities but no where at the pace some of the posters here state
Went to a couple of opens on Sunday–first one up in Citadel –price dropped 41k since listing in July and is 11k from where they bought 2years ago
second one near Terry Fox school–listed for $300.00 (that’s hundred) more than they paid 3 years ago
remember RE only goes up
here’s a couple of recent price drops up in westwood plateau
mlsV866189-bought July 08–562.5k
now listed –538.8k
mlsv866389-bought Apr 08-349k
listed Apr 10-358k—now @339k
and as Mr Plow stated in post#140–“owners will become prisoners in their own homes” (so true) and the really sad part is all the recent buyers wont even see it coming!!!
Regarding negative equity…
BTW, the issue does not only appear at renewal time. A LOT of money has been taken out using LOC. The rules are not the same with those beasts.
In many instances, the banks can call back these loans as they please… and this would happen pretty quickly with negative equity.
#167 Hoof-Hearted – That is more than insane. Remember the dotcom bubble? Welcome to the real estate bubble.
Get out while you still can.
#163 Nostradamus Le Mad Vlad
In a world that is increasingly compacted into a ” village ” there is no such thing as a coincidence.
Apparently, when the US assisted the Afghanis against Russia, the Taliban did a pretty good job of killing off Opium production. Opium production apparently bounced back up after the US military was sent in.
Create a law = create job/s
Haliburton and the US military- industrial complex must be praying to Allah for major conflict in Middle East, then they can go in and fix the mess, likely with untendered contracts.
Ain’t history shown that when the economies tank, WAR is a great economic generator/public distraction ?.
Garth are you sure that condo rental listing is for real? lots of people try to steal stuff on Craigslist. It seems a little too good to be true, despite the overpriced-ness of that building and the glut of new builds in Toronto.
just a thought.
Attempts by CIBC to keep the lusty motivated: http://opinion.financialpost.com/2011/01/31/cibc-unveils-home-advisor-mobile-app-for-househunters/
#136 “In an ideal world, that plan works well, but for most people they will not have the discipline to stick to their investments during a crash.”
Isn’t that why people enlist the services of an advisor?
Now, $1 trillion is a tough number to get your head around. Here’s a little visualization to help you…Imagine you had a stack of $1,000 bills. $1 million would be a stack eight inches high. $1 billion would be over 800 feet high (think of the Washington Monument). And $1 trillion would be a stack 142 MILES high.
http://www.zerohedge.com/article/inflationary-holocaust-survival-guide
About Egypt, as always we are only shown what we are meant to see…:
“Media ‘pundits’ are eager to blame the timing of the protests in Egypt on economic hardships. Citing Egypt’s jobless and inordinate poverty, they would have us believe that the American ‘social media’, Tweeter in particular, has prompted and aided the protests. They would have us believe that in spite of the fact that the Egyptians cry over the price of wheat, they have cell phones and access to social media. We are to accept that the poor, hungry, and jobless Egyptians are revolting against their lot by ‘tweeting’ in English.
Their access to modern technology aside, we are told to accept that the knowledge of English among 80 million Egyptians is so strong that they can ‘tweet’ — fully comfortable with tweeter abbreviations and acronyms. Else, we are to believe that Egypt is busy ‘tweeting’ in Arabic even if Twitter does not lend itself to Arabic any more than it does to Persian.
When Iran’s opposition leader, Mir-Hossein Mousavi compared the Egypt uprising to the 2009 post-election protests in Iran, he had a point. Both had an outside source. During the 2009 protests in Iran, ‘tweets’ were traced back to Israel (see link). The rumors and support for the “opposition” initiated in the West though Tehran Bureau — partnered with the American PBS. A CNN desk was created to give the protests full coverage.
America has been attempting to undermine Iran’s government for over 30 years. The media has helped to demonize the regime. Why would the media treat this obedient tyrant the same way? The mainstream media, as well as the ‘left’ are reporting on Egypt’s protests round the clock. It is important to ask why. “
Egypt ETF up about 8% today… you could have taken 11 months off and still made Garth’s target!
Kevin#143 CD Howe says that CMHC is too big
“the CMHC now backstops mortgages equivalent to more than 30% of Canada’s gross domestic product.”
“As a result, Canadians are exposed to “large, ill-defined risks,” says the report, which argues that Ottawa should crank back the CMHCs presence in mortgage insurance and allow more room for private sector insurers.
Originally conceived as a mechanism for executing public policy, the CHMC has expanded dramatically, especially in the wake of the financial crisis as the government encouraged banks to boost lending by allowing them to securitize more home loans.”
“But critics worry that the unintended consequence was that mortgages became too easy to get, pushing up real estate prices across much of the country to unsustainable levels.”
http://saskatoonhousingbubble.blogspot.com/2011/01/cmhc-danger-to-canadas-economy.html
CMHC: A Danger to Canada’s Economy?
———————————————————-
It’s obvious to all of us here that Canada has the biggest housing ponzi in Canadian history. Realtors know it but will never say it since it’s their job to SELL and make money. IMO what they are doing is fraud since they know but don’t care. You have people with NO MONEY out bidding people with money. It’s so crazy but true. Now the housing ponzi will become more obvious as the days, weeks and months go by and with some luck many will be jailed for their crimes.
POP………………..
Realtors……..Are they coming for me……fake bidding wars?
Mortgage brokers………..Was that police sirens? I didn’t have any real training.
norespect,
of course you can make this crap up! All you have to do is ignore facts and run off at the mouth to push the ideological talking point of your choice.
Small examples:
1.) What contributions over what period of time do teachers and similar “robbers” make to their pensions?
2.) What are the real wage differentials and comparables between public service (unionized) and private sector (your ideal) workers? (Non-unionized wage slaves working for minimum or less-than-living wages don’t count, although much-beloved by management.)
You make as much sense as realpaul. Come to think of it, welcome back.
@121 Devore:
regardless of who is initiating this, banks win anyway. We will all lose and banks will win – even if they did not lobby for CMHC’s coverage of risky mortgage loans.
Sorry if I sounded like banks caused all this – they are just lucky, compliments of CMHC.
And speaking of Egypt …
remember that we know squat, except what not-disinterested governments want us to know, and the MSM think “fit to print”.
#186 Dan…It’s obvious to all of us here that Canada has the biggest housing ponzi in Canadian history. Realtors know it but will never say it since it’s their job to SELL and make money.
No, you are rong. Even when you tell them the reality with facts and proof, they just dont believe you, and they turn around to find a other realator with the good, lying, delusional, positifs, everything is find, attitude. No problem, no where pal! Most home owner attitude is: I have a house= I become richer day by day (so shut up)
Garth, are you sure the condo sold for ~$500k ?
I can see a 2br + 2bath, 809 sq.ft for sale @ $399k
http://toronto.en.craigslist.ca/tor/reb/2176327595.html
but I don’t know what floor or ammenities (parking, locker, finishes) it has but would all that stuff add on another $100k ?
183 Charles – here is the quote from Prez Ronald Ray-gun
“Can we, who man the ship of state, deny it is somewhat out of control? Our national debt is approaching $1 trillion. A few weeks ago I called such a figure, a trillion dollars, incomprehensible, and I’ve been trying ever since to think of a way to illustrate how big a trillion really is. And the best I could come up with is that if you had a stack of thousand-dollar bills in your hand only 4 inches high, you’d be a millionaire. A trillion dollars would be a stack of thousand-dollar bills 67 miles high. The interest on the public debt this year we know will be over $90 billion, and unless we change the proposed spending for the fiscal year beginning October 1st, we’ll add another almost $80 billion to the debt.”
I cant say either the 67 niles or 142 is correct cuz I’ve never had enough $1K bills to measure. Not even enough $5 bills…..
#94 Oasis
“…..it’s crystal clear, that the USD, once it breaks below 76, will see the life sucked out of the dollar, and will confirm a collapse to 60”
Are you so sure? I will bet you don’t have money on that trade buddy. Not even ten cents. In other words, you don’t believe your own hype. Just wake me up when the dollar goes to 60, we will both have a good laugh.
———————————————————-
#95 realist
“The US dollar is measured against a basket of paper currencies that are also declining”.
Is the Canadian dollar falling?
———————————————————-
#112 Oasis
“HAHAHA, if by “bouncing” you mean heading straight down.. then yes.. AHHAHA. some people can’t tell up from down”
Straight down? Back to chart school fool.
———————————————————
#135 Hoof Hearted
“B.C. SPCA probes mass killing of sled dogs”
But BC is the best place on Earth……..Disgusting.
———————————————————-
#184 S.B.
“About Egypt, as always we are only shown what we are meant to see…They would have us believe that in spite of the fact that the Egyptians cry over the price of wheat, they have cell phones and access to social media. We are to accept that the poor, hungry, and jobless Egyptians are revolting against their lot by ‘tweeting’ in English”.
—
You are probably even surprised those people actually wear clothes SB. God forbid they “cry” over the price of wheat. You could understand it better if they were naked savages running through the streets with a stick and a drum, right? Would you get behind them then?
What you fail to understand is that for many people there, having a cell phone is the one piece of technology that is coveted amongst almost all others. People save for months and months on end to buy a good mobile phone. Not a car, not a truck,..not a TV……but a mobile phone. For many, it is the only piece of technology they own.
Do you wonder why? I will tell you. It is because a cell is considered an essential for anyone who wants to get ahead in life. It is a time saver, an emblem of success and even a right of passage. It is impossible to adequately explain this to anyone here in Canada but it really is a big deal to own a cell phone there, especially if it is one of the newer devices.
Ownership of cellphones in Egypt incidentally has only just reached the 75% mark for the whole population.
When you visited in Calgary, you said Calgary real estate prices will fall in 2011. Did you change your prediction??????????
Aren’t they? — Garth
poco,
you’re bang on ! I just got a list from my realtor of 72 SFH sold in Tri Cities between Oct and mid Jan in the 500-700k range. Not surprisingly 65 of them sold for an average 32k BELOW list…3 of them went for more than list and 4 went for list. The house we presently rent just sold for 25k BELOW list after 8 months on the market. The owner sold for same as she bought for back in 2007. Add in her property purchase tax, legal and commissions and she took a hefty hit to get off the property ladder !! Personally we sold back in July ( as we saw the melt coming ) and are happily sitting on the fence waiting to see how it all pans out. Our money is safely invested and our TFSA’s just got topped up today to the tune of 30k. The truth is that other than the West Side and Richmond, most of the Greater Vancouver area is in various phases of decline.
Envisioning money.
charles @ 183 yesterday had a good one. Here’s another:
Imagine 1 dollar = 1 sec
Then 1 million dollars = ~2 years
1 billion = 2000 years (time of Christ to present)
1 trillion = 2,000,000 years, which going back in time would take us to homo ergaster the first humanoid species.
I actually live at the nxt condos Garth is talking about and let me tell you. That is a bs ad. That unit rents for 2200 minimum.
196 Patz – check your math. A dollar per sec = $3600/hr
= $86400/day = 11.5 days to a million. Hmmm. A dollar
per minute will get you closer…
Hi Garth.
I’m Dominic Carrasco, the Massage Therapist who took your advice and was written about in the Wall Street Journal in February of last year.
Housing Rebound in Canada Spurs Talk of a New Bubble
http://online.wsj.com/article_email/SB10001424052748703808904575025100730017666-lMyQjAxMTAwMDAwNzEwNDcyWj.html
I did what you suggested. Cashed out (and made a bundle), have gone liquid, moved from downtown T.O to Burlington to be closer to work, renting cheap, aggressively paying down what debt I have left and building a down payment for when I’ll be ready to buy in a couple of years.
Thank you so much for your advice. I owe you one Garth.
derivatives are a good thing. can also participate – they add potential return to their portfolio where a hedger removes risk. Heres how MacroMarkets new ETFs MacroShares as they call them work for the housing market Exercise some caution however because there are nuances of how these things will behave. Ill distill Shillers 10-minute-Yale-finance-prof reply into two words for you You cant.With Given that these new securities are based on the CSI 10-City Composite which is down strong in the last 12 months theyre not going to be helpful to hedge in thank you.But if youre a reasonably diversified investor brokerage lender builder supplier or yes even if youre a speculator this is a great way to measure US housing broadly.
171 charles
Mr. Kouddous grew up in Cairo listen to the truth this is a leaderless movement. They want justice,freedom,equality etc this is not religious. They want a Coalition that will include all groups.
18m people no internet access since friday. The hotel connection was shut down today. The protestors are not afraid. The now their military will not shoot them nor stop them.
http://www.democracynow.org/
Senior Producer Sharif Abdel Kouddous
•Live From Egypt: The Rebellion Grows Stronger
By Sharif Abdel Kouddous
http://www.democracynow.org/blog/2011/2/1/democracy_now_s_sharif_abdel_kouddous_on_msnbc
http://www.democracynow.org/
Senior Producer Sharif Abdel Kouddous
•Live From Egypt: The Rebellion Grows Stronger
By Sharif Abdel Kouddous
What I’m worried about is the person underneath him…