Pay attention

Two more sleeps and the 35-year mortgage is kaput. Despite the buying orgy that seemed to precede this move by Ottawa to save us from ourselves, house sales fell in February. But anxiety rose. In fact, mix in Japan, and this society’s in need of a good romp and a cigarette.

First, houses. The real estate cartel confirms what this pathetic blog has been spewing for eight months. Sales dropped last month. Again. Down about 6% from last year, while prices rose almost the same amount. This is a classic sign of a market top – increasing prices on decreasing volume. Whether it’s stocks or houses, you push back from the table when you see this unfold.

The average property ($365,674) now costs 4.4 times the average household income – which is slightly below the level at which the US market crashed. But the average SFH (which accounts for the bulk of the housing stock) now costs 5.1 times income. In Toronto (416) it is 8 times. In stoned Vancouver, 13 times.

This is where the confusion starts.

Two-thirds of Canada had sales declines in February. Just Calgary and Vancouver were higher. New listings jumped 1.5% in a month, or an annualized 18%. So, again, the trend was to fewer buyers and more sellers. Whenever supply increases and demand doesn’t, prices usually plop. And meanwhile the very fact the feds are ditching long mortgages – which encouraged over-borrowing and speculation – shows the market was in desperate need of repair. Trust me, politicians think it’s in their best interests to have a house horny nation.

Right now sellers are taking a bath in places like Edmonton, Calgary, Surrey, Kitchener, Kelowna and Muskoka. People who bought in, say, 2006 are finding it impossible to sell in 2011 for what they paid. Despite incredibly low mortgage rates, 35-year amortizations, zero-down purchases and non-stop sunshine-pumping by newsroom glee club at Global TV. Factor in commissions, legals, moving costs and IRDs, and it’s financial folly.

In fact, were it not for HAM in Vancouver and Richmond, where an earthquake-prone lot now sells for a million, or the horsey parts of the GTA, where a SFH is now clocked at almost $750,000, we’d be in the first stages of a significant real estate correction. And, never fear, those hot bits of BC will be dying embers in a year, despite the appearance of Lawn Asians.

More confusion comes from Bay Street. Economists for Bank of America Merrill Lynch say the real estate market is under stress, but a crash isn’t forthcoming. “Valuation metrics are clearly stretched, but the usual symptoms of a tipping point are simply not there,” write Sheryl King and Ryan Bohren.

Once again they trot out the well-worn reasons we will not suffer a “US-style” real estate apocalypse – government mortgage insurance, recourse mortgages and prudent, cautious, carrot-up-the-derriere Canadians, supported by bankers who are all former nuns. Oh yeah, and ‘conservative’ levels of household debt.

Hmmm. Interestingly, the US feds also insured mortgages, while states with recourse mortgages (people can’t walk away) had real estate crises just like the non-recourse ones, while Canadian debt levels now exceed those of American families.

But no matter. It’s all irrelevant. We don’t need no US-style screwup when we have our own.

So this brings me to the wider picture.

The Canadian real estate correction has already started. By the time you read about it in the MSM, it’ll probably be too late to sell. No, it will not be like the US event, so stop waiting for a crash (except in you-know-where). Instead, it will be a months-long correction leading to a meaningful decline in average prices, and (more importantly) a steady melt over the course of a few years. This will happen as interest rates normalize and the economy flatlines; as Boomers trade houses for income and the world becomes increasingly destabilized.

It’s hard to imagine a decade ahead where gas isn’t $3 a litre and food costs don’t soar. Taxes in Canada will have to erupt merely to cover federal and provincial debt service charges and all the health care the disintegrating Boomers will suck. Commodity prices will continue to rise in a resource-starved world as China grows a middle class and climate change disrupts established agriculture.

If you think having 80% of your net worth in your house makes sense in that context, you deserve your fate. There’s only one holy grail ahead. It’s called liquidity. Pay attention.

The good news – there’s still time to get there. The bad news – your real estate lusty spouse, the flippers and speckers at work, or your Italian (or Indian or Chinese) father who thinks you’re already a loser.

I never said this would be easy. Just righteous.


#1 sue on 03.15.11 at 10:10 pm

Forgive me if you’ve covered this already but how do I transfer funds from an RRSP to a TFSA? Most of it is in a LIRA. My financial advisor is very old school with mutual funds inside of an RRSP although she does dig the dividends….something about a contribution in kind?

Can’t be done without triggering tax. — Garth

#2 S.B. on 03.15.11 at 10:10 pm

Although this is a RE blog I like to talk about the high costs of living in a city, including costs imposed by the “Greenwashing” of our youth and society, costs that claim to aid the envinroment yet have no effect; and, anyway, we’ve outsourced our pollution (E-waste, manufacturing, the devestating pollution from war) to 2nd and 3rd World countries.
Out of sight, out of mind I guess.

Example: the 5 cent plastic bag fee on Toronto (kept by retailers for their own use I might add). Supposed to help the environment, right?

Let’s look at a typical shopping trip:

– Buy berries in plastic non-recyclable clam shell cases
– Buy veg and put it all into plastic produce bags freely dispensed by the roll in every store
(but remember, plastic *shopping* bags are evil!)
– Buy cucumbers and bananas wrapped in non-recyclable plastic
– Buy baked goods in plastic non-recyclable clam shell cases
– Buy fish and meat wrapped in non-recyclable foam/plastic
– Buy cereal in boxes, contained in plastic non-recyclable bags
– Buy drinks, juice in plastic containers
– Buy cheese or slices wrapped in plastic
– Buy eggs in foam or plastic containers.
– Buy yoghurt in plasic containers
– Buy milk in plastic jugs

Do you see the *amazing* quantity of plastic generated by a simple basic food shopping trip – the majority of it unrecyclable? And many people do not recycle, anyway.

So charging 5c per plastic bag is going to help the environment how??

And be sure to ignore the elephant in the room: the countless millions of non-recycleable Tim Hortons and Starbucks cups we trash daily. The ones you drink every day during your morning commute.

Nevermind though, you are “ECO-CONSCIOUS” because you don’t use plastic bags! Your email signature even says “consider the environment before printing this email”, and it’s in green colored text (cute). You surely are the penultimate environmental steward.
But you’ve successfully Greenwashed your own brain into believing it true.

#3 tkid on 03.15.11 at 10:12 pm

Vlad, a link for you:

Do a search to find ‘1058068’ as the above link won’t go directly to the comment.

#4 BlorgDorg on 03.15.11 at 10:14 pm

I’ll just leave this here.

#5 Rex on 03.15.11 at 10:30 pm

You have provided valuable information on this blog for some time. What is happening in real estate is certainly important and the education you bring on the subject certainly shows the depth of that undertsading.
What is more important though is the basic underlying problem of the banking system in Canada. This is something not understood by a vast majority of people and I for one am just beginning to see the ugly scene.
A brief 101 of the banking and money system in Canada would be a worthwhile effort.
Why not start with the fact that chartered banks in Canada can create their own money out of thin air and that reserve requirements are 0%, since 1994.
The real estate situation pales compared to what is going on behind the scenes.

#6 BPOE on 03.15.11 at 10:31 pm

RBC just lowered mortgage rates today
Vancouver Point Grey Homes a few years ago 3.5 million no upwards of 17 million.
Japanese earthquake tragedy spawns huge migration to Vancouver safety
Richmond BC on absolute fire as multiple bids continue on a daily basis.
Folks things are looking great

#7 The InvestorsFriend (Shawn Allen) on 03.15.11 at 11:00 pm

I agree house prices likely to drop.

A ton of people over-leveraged themselves in the past and paid a lot for a house and then the value of the house happened to soar.

That’s a good outcome. But it was still a bad decision.

Understand the difference.

Running across a busy and fast highway to catch a bus is a good outcome if you don’t get hit and you catch the bus. But it was still a bad decision. Comprehende?

Now just because the bad decision to over leverage on an expensive house has worked out splendidly in the past does not mean it is likely to work out nicely in the future. All good things come to an end.

Bad Decisions eventually catch up with people. (Think STD…)

#8 Not Fooled By Property Spruikers Hype on 03.15.11 at 11:02 pm

In 1975 only 24% of average income was needed to service a typical Australian mortgage. This was with a prevailing interest rate of 10.38%———

By 1985 it was still steady at 24% of average income needed to service despite interest rates soaring to 13.5%——–

By 1990 Interest rates went to 16% plus but you still only had to use 34% of average income to service a mortgage.——–

By 1995 you needed to use 29% of average income to service a mortgage (10.5% Interest rate)——–

By 2005 it had soared to 40% (7.3% Interest Rate)——-

Now in 2010 it takes a staggering 50% of average income to service a typical Australian mortgage despite interest rates being only 7.79% ——–

Despite this REALTORS continue to say Australian property prices will double every 7-10 years??? ——–

How will anyone pay for it? —–

Historically interest rates in Australia have averaged 10.11% over the past 30% —-

Just 3 years ago in 2008 it was 9.5% —-

A 7% interest rate is equal to paying a 22.5% rate in 1990 in comparative terms.{Wages Vs Percentages of income to service mortgage payments etc}

Think about that when house hunting.

Property is no longer affordable 7 will fall shortly!!!

Australia & Canada will not be immune to market forces but somehow we both think we are?

#9 Danforth on 03.15.11 at 11:05 pm

#1 sue on 03.15.11 at 10:10 pm

Garth’s right.
The best you can do is just STOP contributing to RSP and start working towards maxing out the TFSA room built up thusfar.

After that, pay yourself 5K a year there, and then figure out if the balance of your annual savings is better in RSP or cash investments.

If you by chance happen to be in a (rare) situation where you can not have any income for a year or more, plus you have someone (say a spouse) who covers life’s costs, then you could pull out RSP money at lower tax rates for purposes of transfering to TFSA. Plus, those withdrawals might be at a lower taxation rate than what you got in return when you made the contribution in the first place.

In the long haul, given the small amount of TFSA room we have thusfar, it won’t make much difference.

Think ahead a generation.
38 year olds will have 20 years x 5K = 100K of TFSA room (plus the planned indexed increases).

#10 The American on 03.15.11 at 11:07 pm

With respect to the following article:

When the CREA begins allowing trickles of this kind of information to enter the market place, it means it is over and probably has been for some time. The truth is, it is probably much worse than what they’ve even been able to bring themselves to openly admit. This is quite similar to the behavior of the NAR in the U.S. 5+ years ago. They do this in order to ease into the colossal damage that has already been created and will continue throughout the downturn as not to alarm consumers. Additionally, they believe it buys them additional “face time” to speak to the masses and try/hope for some kind of miraculous turn around, which of course will never happen.

To Garth’s point, every market in Canada was negatively impacted last month for the exception of Calgary and Vancouver. This may/may not be true due to the severe lack of transparency to the Canadian consumers with respect to real estate. Additionally, this was quite similar and echoed in the United States 5+ years ago when markets such as Seattle and San Francisco were deemed to be “impervious” to the fundamentals of a country’s economy. However, we fully see where that has gone, right? Seattle down nearly 30%, depending on area, and same goes for San Francisco. Seattle was also the last remaining market of “strength,” meaning it was minimally affected if at all, prior to the stronghold of the economic demise taking place for a long period of time.

What I’ve found generally holds true in the market downturns across the U.S. is that most markets have returned to somewhat of a normalized market with respect to household incomes. The ratio is roughly is 3-4 times the household income, depending on the market. Of course, in areas that push toward the coast, it is closer to the 4 mark. In areas closer to the middle of the country, it is closer to the 3 mark. Desirability of the area is probably the main factor with this variance. Other areas of the United States have clearly over corrected, including Florida and Arizona (still not a fan of those areas, but it is clear they have grossly over corrected). The wave of depreciating home values started on the East coast in the U.S. and rapidly moved West. This means Vancouver may very well hold on the longest (just like Seattle), but it will also not be impervious to market corrections the rest of Canada will face. Values will return to the mean, meaning a healthy ratio of mortgage indebtedness to household income. This means, of course, some areas will correct tremendously more than others within Canada. I see a correction in Toronto (it will hurt, but won’t be as drastic as some believe, in my opinion), of course, but nothing will correct near to the degree of what will eventually be experienced in Vancouver. I honestly can attest that a 50%+ market correction is forthcoming there.

In all, it is a necessary evil to regain a country’s footing and eventually get back on track. Yes, the U.S. and Canada mirror one another in so many ways it is astoundingly eery.

What this means for Canada could be the following: It may be most noticeable in Toronto to begin, but then will move Westwardly. Additionally,

#11 Big Al (New) on 03.15.11 at 11:07 pm

Lawn Asians now that’s one for the ages. LM fn AO

#12 The InvestorsFriend (Shawn Allen) on 03.15.11 at 11:09 pm

Like Garths says, 80% of your net worh tied up in a house is a bad idea.

But do the calculation based on what the house is worth. That is your investment in the house.

If the house if worth $500k and you borrowed $400k, you have $500k invested in the house and $400 borrowed. (You don’t have only $100k invested since, in the event the house plummets to $100k value you still owe the $400). Comprehende?

This is an okay scenario at this time (with house prices likley to fall) only if you have other financial net assets of at least $500k AND you have the income to cover the payments.

So, $500k paid for house and no other assets is not so terrible. (Sure a little unbalanced, but at least without debt you should be safe from disaster). But $500 house and $400 mortgage and no other assets is asking for trouble.

#13 tmg on 03.15.11 at 11:15 pm

I’ve noticed that Vancouver westside SFHs have stopped moving after the first few days of March???? Anyone else notice this?

#14 Gord In Vancouver on 03.15.11 at 11:15 pm

The bad news – your real estate lusty spouse, the flippers and speckers at work, or your Italian (or Indian or Chinese) father who thinks you’re already a loser.

Flippers and speckers are great news – they’ll add more pain/intensity to the inevitable RE correction.

#15 Barrie profit taker on 03.15.11 at 11:22 pm

Interesting that CREA is starting to put out negative vibes because my local board (Barrie) hasn’t updated stats since december. Obviously they have them because they’ve been reported nationaly. Makes me wonder how bad they are in this area. I see so many agent signs it’s starting to look like an election.

#16 Dodged-A-Bullit-in Alberta on 03.15.11 at 11:23 pm

Greetings: # 2 SB

Your comment is right on the money!! Throw in real estate too. Styrofoam packing in appliances, TV and many other home purchases. Living room furniture, lamps, ceiling fans, list is endless. Wappers from bags of insulation, laminate flooring with foam between layers, mattresses and box springs, clam shell boxes from screws and nails, bubble packages from untold numbers of purchases when building or renovating a house. Electric power tools of all types, massive amount of packaging stuff going into landfills. Take a drive around a construction site with a digital camera and go into a house under construction, more waste. You will see dumpsters filled with building materials. Go to your local landfill with a camera, mind boggling. We are throwing away fantastic building materials only to replace them with sawdust and glue, pathetic. Then go on the internet and see how many other countries re use every scrap of material, because their people cannot afford to do otherwise. Last summer, I salvaged lumber from a deck ,at the minimun, firewood; more likely a new garden shed for storing firewood. Greenwashed==brainwashed

#17 JJ on 03.15.11 at 11:23 pm

Garth, I am starting to fall under the spell of these “doomer” and “prepper” sites. Reassure me why a societal crash cannot happen? We are overloaded with debt, the U.S. dollar is at a tipping point, the mideast is in flames and peak everything is around us. I can’t help but think a major reset is around the corner.

Go look at houses. — Garth

#18 Min in Mission on 03.15.11 at 11:29 pm

Man, I really enjoy the “word pictures”.

Thanks for all the info. Garth. I just got everything together, quite late in the day unfortunately, but I am trying to “keep it together” now. I have no problem believing that house prices will follow the path that this blog has forecast.

A friend here has just sold their house. On the market over a year, price drop of nearly 60K. They are telling everyone that they broke even, personally, don’t believe it. They will have to pay when the deal closes.

Fortunately, for me, the prices have a long way to drop before they would get to my purchase price. Plus, I should have it paid off before the interest rate, inevitably, goes up. I believe that there will be loads of “hurt” in the next few years.

#19 Financial Insights on 03.15.11 at 11:34 pm

Garth, you’re right about the B of A report….it’s garbage. They’ve used questionable stats and pretty flacid logic:

#20 cool on 03.15.11 at 11:39 pm

fortunately there is no buying orgy this year….slow melt has already started .

#21 cool on 03.15.11 at 11:40 pm

in RED DEER ,fortunately there is no buying orgy this year….slow melt has already started .

#22 bridgepigeon on 03.15.11 at 11:42 pm

@ #2 BS, I mean SB
Google or YouTube: Man invents machine to turn plastic into oil
What’s wrong with saving the 2 million bags a week Canadians are using to carry their groceries 100 feet? It’s a start anyway.
We’re still waiting for your acid rain, ozone hole response…

#23 Lawn Asians Once More on 03.15.11 at 11:48 pm

Sadly my attempt to raise a larger downpayment for a Vancouver crackshack was circumvented yesterday when my “lawn Asian” ad was quickly ripped from Craigslist within ten minutes of being posted. Thus proving my long held belief that real-estate agents know what is coming and have no sense of humor.

#24 Jax on 03.15.11 at 11:52 pm

“Instead, it will be a months-long correction leading to a meaningful decline in average prices, and (more importantly) a steady melt over the course of a few years.” – Garth

A Correction, then a decline, then a melt. Garth, I realize that nobody knows exactly what the inevitable downward trend will look like, but you’re starting to sound like CREA with the creative wording.

Markets correct. Prices decline. What part of that do you have trouble with? — Garth

#25 Guy_in_Regina on 03.15.11 at 11:52 pm

#6 “Japanese earthquake tragedy spawns huge migration to Vancouver safety”.

LOL, Vancouver safety?! Take a good hard look at the footage from Japan. You don’t want to be in Ditchmond when Poseidon shows up!

#26 early mid life crisis on 03.15.11 at 11:56 pm

#2 S.B. – AMEN!!!! I have coined it “Suzikism’ I have nothing against doing whatever we can to protect the enviroment but the way you describe “But you’ve successfully Greenwashed your own brain into believing it true.” is classic “Suzikism”. Like it’s distant cousin, this type of enviromentalism is a religion based on guilt; if we do our hail mary-blue box-reuseable bags it will all be ok. We are cleansed.

#27 Dave on 03.15.11 at 11:59 pm

>You surely are the penultimate environmental steward.

Penultimate means second to last.

#28 Tim on 03.16.11 at 12:03 am

“And, never fear, those hot bits of BC will be dying embers in a year, despite the appearance of Lawn Asians.”

That’s what you said last year…

Try to be accurate. — Garth

#29 Fool me once... on 03.16.11 at 12:09 am

“so stop waiting for a crash (except in you-know-where)”

OK, I give up…where? Can’t be Vancouver, 1.4 billion potential customers yet to come…apparently.

#30 Jeff on 03.16.11 at 12:13 am

Royal Bank Lowers Mortgage Rates

#31 Dork on 03.16.11 at 12:16 am

There is no financial data in the last century that correlates RE sales volume and RE price. This is a created fiction.

This is why readers may have found themselves reading about the idea of sales volume declines for years without the expected corresponding price drop.

Sorry to disappoint. No RE downturn here.

Nice try tho.

#32 kc on 03.16.11 at 12:28 am

74 S.B. on 03.15.11 at 10:52 am << from yesterday

See, the local politicians are selling our rights to private corps. all under the guise of “green power”. Remember Enron – human greed knows no bounds.

Have you read this book about Enron's scams? (worth the overdue charges at the library)

#2 S.B. on 03.15.11 at 10:10 pm

I fully agree. Nicely said

#33 ken s on 03.16.11 at 12:55 am

Live geiger counter Tokyo: Could change all of the above math and assumptions.

Brilliant use of the net. The lighting is not good, but readable

Will post 5 day jet stream forecast Link & others

#34 Aaron on 03.16.11 at 1:00 am

What is HAM? (As in, “HAM in Vancouver and Richmond”)

Thanks. Love the blog.

Hot Asian Money. — Garth

#35 Adventures in Sea-Tac with Moneta on 03.16.11 at 1:00 am

5 Rex – see Shawn @7 regarding fractional reserve banking.

Now for those of us who wish to do more research on the photo:

#36 Utopia on 03.16.11 at 1:06 am

#168 dd replying to #161 Utopia on 03.15.11

…Precious metals are still commodities ~~Utopia
Wrong. Look at the long term US$ and compare to gold chart. Direct opposites. Gold has increased 15% a year. The dollar has depreciated every year since 2000.

Don’t get all bent out of shape DD. I was on pretty safe ground calling gold a commodity. That statement of mine does not impinge on gold’s utility as money. In the strict sense of the word though and as interpreted by most definitions, gold is a commodity.

Google it for yourself if you don’t believe me.

(it is in the dictionary too)

#37 HouseBuster on 03.16.11 at 1:06 am

The Canadian real estate crash is here. You are in it.

Prices will not recover for another 20 years.

#38 rickster-bc on 03.16.11 at 1:08 am

I’m not so sure you’re right about Surrey, at least not yet. My property assessment, which I think reflects approximately the market value, is 45% higher in 2011 than it was in 2006. In a year or so, perhaps, this will be lower. Some neighboring houses are still selling at listed price or greater although I am sure they are taking longer to move. The removal of the 35 year mortgage I think will definitely force downward pressure.

#39 Canned Goods and Buckshot on 03.16.11 at 1:19 am


Your post is mostly classic straw man material. If you shop wisely, most fruit and vegetable purchases can be done with little packaging. Most other grocery store purchases are contain packaging material that is re-cyclable. If you buy items that are over packaged and un-recyclable then a $ 0.05 bag is irrelevant.

There are many examples of wasteful practices and behaviors we can improve towards decreasing our personal impacts. Attacking 5cent plastic bag fee makes you appear like a shill for the Counsel of Plastic Bag Manufacurers.

Perhaps you envision a Canada similar to the link:

#40 Nostradamus Le Mad Vlad on 03.16.11 at 1:19 am

“Two more sleeps and the 35-year mortgage is kaput.” — Haven’t figured out if there is a link between the Supermoon (March 19) and F’s cock-up ending March 18. Or maybe it’s Harper who is the Supermoon — his ego is taller than The Eiffel Tower now, made entirely of Cotton Candy.

“This is where the confusion starts.” — In Stoned, Ottawa, we know!

“But no matter. It’s all irrelevant. We don’t need no US-style screwup when we have our own.” — Correct. Cdn. sheeple can, and will do, a complete, total, right royal f*%k-up of their own lives, because they watched too much HGTV.
#3 tkid — Thanks for the link, tkid. Did a search but nothing came up. I’ll try other methods, but so far no luck.
This might be interesting. As Japan’s society ages with few replacements coming in to take the reins, and with Chrysler – Ford – GM sending a large chunk of production to Chindia, the ‘quake could be the catalyst for Japanese automakers to ship production to lesser-paying countries.

9:56 clip Hiroshima and Nagasaki, similar to current events and Nuclear Dragons.

Plummet Dow Futures, and Oil Th envelope, please.

Roubini Who he? and Food Commodities.

SnoreFest “The Fed is causing the price ramps in commodities!” and Groceries.

Bizarre Pole Shifts, Full Moon Fever Supermoon this weekend, and Conspiracy Theories and Cherry Blossoms Matt Drudge, from The Sludge Report and his take. Triple Whammy underneath Mount Fuji.

If Japan does another Atlantis or Lemuria (The Lost Continent of Mu), one of Russia’s politicos has come up with a possible solution — Siberia!

#41 tran, Calgary on 03.16.11 at 1:43 am

Fireman rushing into a house on fire.

#42 Ray in Vancouver on 03.16.11 at 1:49 am

Been quietly watching the condo and townhouse movement here in Vancouver/Burnaby and getting multiple MLS exchange notices of price drops each day.

Went to a few open houses the past few weeks and the majority of the units are vacant. The tide seems to be shifting slowly away to a buyer’s market which will have a ripple effect on SFHs later on.

Time for EI applications for mortgage brokers, real estate agents, and developers who didn’t cash out and get out.

Sell now or be priced IN(debt) forever!!!!! Its a balanced market out there!!!!

#43 BPOE on 03.16.11 at 1:51 am

50% retraction??? No big deal and here’s why.
First of all anyone who bought after 2005 is already up over 50%. These owners are still ahead of renters. The next batch of Canadians with big mortgages are the weak bids and will be mopped up by offshore investors. Offshore investors can weather any storm as they buy with cash or have cash ready on the sidelines. They typically buy multiple houses at one time.
Once this correction would occur Vancouver real estate would be in strong hands with the Canadians long gone. This would set the scene for a rocket ship in price increases as the Worlds Richest would compete for a piece of BPOE. Problem with the Americans assessment in regard to price retratction is it will never happen. Folks, RBC just lowered interest rates today. There will not be any significant interest rates until the baby boom retires. What you see posted here by some is just pure fear mongering and sour grapes by those that missed the boat. China is moving a significant portion of all it’s money to Vancouver and there will be a 50% price retraction LOL Ain’t gonna happen, Nope, NO WAY
I honestly can attest that a 50%+ market correction is forthcoming there

#44 Alan on 03.16.11 at 1:58 am

Last Spring, Garth called the end of real estate in Canada. Sighting HST, the end of amortizations beyond 30 years and the inevitable decline in home prices -especially in bubblicious Vancouver. Today, he’s calling the final nail in the coffin triggered by the unfortunate timing and horrific malaise of a natural disaster in Japan and of course the tired old excuse of reduced amortizations on mortgages in Canada. None of these items takes into account the human condition to want to own the roof over your head.

Garth, you’ve now become desperate, clinging to any bit of news so you can justify your long time premise with regards to real estate and to finally say, I told you so.

You forget that there are people who have been reading your predictions of real estate doom for too many years. You know what they say if you are going to predict a price don’t give the time-frame and if you are going to predict time-frame, don’t give the price.

However, I do appreciate your advice on diversification and a reasonable allocation of assets into equities and income producing investments. Owning a home can be a burden if you are over-levaraged and under capitalized. I don’t see a problem that can’t be fixed with government intervention and historically low interest rates.

Always nice to hear from Re/Max. To be accurate, last year I warned people with an overweighting in residential real estate. This year the danger is even higher. I have laid out my reasons why. It is what it is. — Garth

#45 tiedattutu on 03.16.11 at 2:07 am

I have a RE rental business in the southern US. There is no debt, but the margins are squeezed to zero. I do most everything from gardening to electrical. And since I have a Masters in EE I take the inevitable electrical shocks with aplomb. Maybe its the nerve damage. The cost of services, taxes and insurance have not only skyrocketed in the last 10 years, but the increases are accelerating. The property value didn’t just plunge-it vaporized. I couldn’t sell for shit. Who would buy something where you work hard, deal with sometimes psycho tenants, and make no money. And to find an assistant that isn’t a lazy bum pothead. Even the Guatemalans now are expensive and do crummy work. I met a guy who said he was unemployed and I told him I had work for him. No, I’m cool. WTF? And the RE value continues to fall as the neighborhoods continue to deteriorate. It seems I am broke and stuck on an endless hamster wheel. I guess the only thing to do is sell out to sleazy slumlord, but I hate those guys with a passion. They turn the neighborhoods into trashy hellscapes. I guess I can’t blame them because in this environment, frills like repairs, landscaping and painting, aren’t something a landlord can afford. And to all the pinheads that think being a landlord is so great, you are going to find out if you know what you are doing it’ll be a rough slog, and if you don’t have a clue, it will be a complete money losing disaster. Enjoy the inevitable heart attack-stroke combo.

#46 Blacksheep on 03.16.11 at 2:20 am

From Garth’s book, Financial Wisdom, circa 2001.

From the chapter, “Can you live without gold?” direct
quotations, not in any order.

“In times of war, uncertainty, upheaval, prosperity and inflation – for four thousand years preceding our lives today-humans coveted gold. It was always considered a form of money, since it it portable, instantly recognizable, durable, divisible and virtually indestructible”

“The standard of the monetary system is no longer a physical, rare,beautiful,historic commodity, but a battery of printing presses in Washington and the faith in what 300 million Americans will do next.

“The entire system that governs your financial life is now a giant leap of faith.

“Imagine a time when that leap faith could be questioned.

“It might be the result of economic, technological or enviromental event that disrupts this digital world.
Something as simple as a continental power outage”
“At such a time, would you want to own a form of money that is universally recognized, portable, indestructible and divisible?

You Sounded like a hard core gold bug Garth, what the hell happened?

Fast forward ten years and we now have:

US housing collapse, real US unemployment @ 20+%, Ireland, Spain, Greece all facing restrcuturing,
Middle East over throwing dictators, and now the poor souls in Japan get left with six nuclear plants in various states of meltdown/explosion/fire with the last 50 plant staff, running for their lives.

Sounds like a reread of your old material is due.

take care

First, you glued together 10-year-old quotes out of context for effect. Regardless, I have maintained in all my writings that there is a place in almost any asset allocation for PM, for obvious reasons. But that position (as I’ve also stated) should probably not exceed 5%. This would make it roughly equivalent to a current weighting in REITs (up 21% last year) and US small caps (up 28%). Anyone overweight in gold will regret it. Diversify, or suffer. — Garth

#47 ted23 on 03.16.11 at 2:24 am

“New listings jumped 1.5% in a month, or an annualized 18%”

Sorry Garth but this just more silly scare mongering. There is no way your annualized statement will become reality in 2011. It’s not a guarantee that 1.5% will be anywhere close to becoming 18%. In some markets inventory is down.

If you are going to quote negative market declines it would be more balanced if you quoted City’s were good market conditions exist. Barrie Ontario Residential sales are up over last year listing inventory is close to 2010 volume and prices are a healthy 2% ahead of 2010. Real Canadians live here as do folks in many communities that have a healthy market in the trade of Real Estate.

The next leg down is interest rates.
While this will affect sales volume and a small 5% to 10% knock on prices it will not impact in the way you have been hammering at on this pitiful blog for the last two years. Bet I am right!

#48 The Original Dave on 03.16.11 at 2:51 am

#142 bigrider

I know at least ten italians with at least 4 houses each. A majority of them have no mortgages left on their properties. I see them laughing and going on vacation a lot.

Most of them have no big pensions and no investments. They don’t pay any fees to anyone.

the irony: mostly skilled labours and self-employed.

MILLIONAIRES they are MANY times over.


cool story. Sounds just like my parents (Italian too). The only difference is they have more than 4 houses..quite a few more. Their rental income is their retirement.


The biggest difference is: I realize that you can’t force proper timing. If I went and bought today, I’d be doing exactly what my parents didn’t, which is, buy at the peak. For decades they bought in a down market – when people like you weren’t interested in real estate.

I know all their numbers. All of them. I can tell you this…… had they bought some of the properties they currently own at their peak, they’d be bankrupt right now. One property in particular was sold for $2.5 mill in 1989. Those people lost that property. If it was my parents that bought that in 1989, they would have lost it too….along with everything else. Instead, they purchased that particular property for 65% less than those that bought in 1989 just a few years later (people like you hated real estate then though when they bought).

The whole real estate thing is part of my background since I was a child. I don’t mean to air out my stuff, but I’m annoyed by people like you that assume trends exist forever. If trends were permanent, we’d all be looking to buy stocks in the best VCR company.

I will tell you this, real estate in Canada is a screaming….a screaming SELL. Every indicator I’ve applied to measure the valuation of real estate tells me it’s way over priced. The market psychology is telling me real estate is a strong sell too.

What people on here don’t seem to get is: the general public is completely oblivious to a potential correction in real estate. You will get ridiculed if even under your breath you mention you think real estate might go down. Ridiculed. That’s how you know you’re right.

Remember to thank Garth. He’s going to save a lot of asses around here. There are people that have the vision but lack the honesty. There are people that have the honesty but lack the vision. There are people that have the honesty and vision but don’t have the exposure. The G Man brings all 3 to this blog, so be grateful.

and for the person talking about italians buying multiple houses, speak to someone who’s lived it, and is current. Some of the children of these Italians have a fraction of the work ethic as their parents. They chalk up their parents success to: buy real estate at any price. With so many more information outlets than decades past, it is so sad that these people can’t take what they’ve learned and understand the principles of their parents success. The only excuse is laziness. Of course then they’ll come to a blog like this and spread sunshine on the real estate market. I’d call that negligence and ignorance.

Last point……if you feel what these Italians did is the gateway to success, then go ahead and do it. You’re presuming real estate is a buy at any price. I can tell you of many horror stories of extended family that were just like you in the late 1980’s. They got into the real estate game because it was a sure shot and everyone was doing it. They still pay for it today……..and they should be retiring with lots of money right now, but bad timing in the past says otherwise.

Good luck to everyone. Sorry for the long rant.

#49 Devore on 03.16.11 at 3:11 am

Interesting reading over at Pension Pulse:

The upshot is that CalPERS wants (or rather the actuary does, because apparently they’re the only ones in government who can do basic math) to lower their assumed rate of return from the utterly insane 7.75% to a slightly less ridiculous 7.5%. This rate determines how quickly the pension is planned to grow, and how much employees will need to contribute. This request got nixed. By reducing the rate of return, it would force the employers (ie the state of California, ie taxpayers) to contribute more to the plan, because public employees cannot be forced to contribute fairly to their own pensions (a topic for a rant some other time). The last thing California needs is more money going out of its treasury.

Now, how a pension can possibly make 7.75% (or heck, even 7%), when 10 year pays 3.5%, and even risky (for a pension plan) high yields barely break 6%? Well, it can’t. It’s already over 30% underfunded. So instead of addressing the problem, they will continue to pretend everything is ok.

I wonder how Canadian public pensions are doing?

#50 Values on 03.16.11 at 4:22 am

“Two-thirds of Canada had sales declines in February. Just Calgary and Vancouver were higher. ”

While the sales in Calgary did go a little higher it really didn’t help the median price go up much, in fact, RE prices in Calgary for new listings are now starting to move down again after a 1.5 month little jump due to the March 18th deadline.

I think we will start to see the effects of slumping Calgary RE prices starting April 1st.

Realtors in Calgary should know that if they don’t sell their clients home by Friday, the client will have to lower their price.

#51 Montrealer on 03.16.11 at 5:20 am

if anyone is interested in a detailed two part analysis of that BofA/Merril report, you can find one there:

I’m pretty sure in a few months I’ll be able to tell my friends that I wasn’t wrong when telling them it’s not the time to buy!

#52 SquareNinja on 03.16.11 at 5:39 am

#2 S.B.: I totally agree! I didn’t even think about all the other plastic waste… But, I also agree that there’s so much greenwashing now that it’s annoying. Green this, green that. The biggest green thing we could all do is live downtown in a condo and give up our suburban McMansions.

Hey, do you work for a developer that has an oak tree in its logo?

#10 The American: I think in Canada’s case, the bubble will pop starting in the west, and move east. It was only in 2008 that Vancouver plopped by 30%, whereas Toronto and Montreal lost maybe 5%.

#13 tmg: Habe you ever seen a Vancouver Westside property tax assessment?! It goes something like this, and I am not exaggerating in the slightest:

Land value: $1,000,000
Improvements Value: $70,000

The land/improvement value is always something crazy like this in Vancouver.

#53 SquareNinja on 03.16.11 at 5:58 am

@S.B.: I just read two of your follow-up comments from yesterday. Acid rain and the hole in the ozone layer still exist. and please don’t confuse “The Greenhouse Effect” with “Global Warming,” because the former is necessary and good in moderation, but the latter, if allowed to run its non-natural course, would have disastrous consequences.

Nuclear power is theoretically cheap and clean, but reality never quite matches up with theory.

I like Shawn Allen’s example of running across the road to catch a bus… very relevant to our present debate.

I get that you’re trying to deride the MSM, and I agree on your views about them… but there are, in fact, lots of good journalists and journalism out there. You just ain’t gonna find it in The Toronto Sun, or CP24 news. In the end, the news business is just that, a business, and they need to compete and survive just like everybody else.

#54 Steven Rowlandson on 03.16.11 at 6:43 am

Garth what happens to real estate values in Vancouver and Victoria if by chance those cities get a dusting of nuclear fallout? Do home owners there get to save on their energy bills due to their homes glowing in the dark?

Don’t get ticked, I am trying to be funny.


#55 sue on 03.16.11 at 7:30 am


Thanks for the advice. I will open an TFSA and consider transferring a little over every year. I work P/T so my income is low. I don’t have someone supporting me, I just am happy with less stuff and more time to be a mom/go to yoga etc Paying less income tax/HST makes me happy.
I think income taxes will be 90% by the time I

#56 Shane on 03.16.11 at 7:37 am

Garth, Aee you still standing by your word that a 10-15% correction for 2011?


#57 MatthewfromMontreal on 03.16.11 at 7:57 am


Some Mop and Pail dribble you might enjoy. Same old, same old.

As a ex-newspaper editor I wonder…

Do newspapers have pieces they just recycle when there is nothing to report? Add in a few fresh (or not so fresh) stats and you are good to go!


(Also – a good laugh at the stat sources….)

#58 Buyright on 03.16.11 at 7:59 am

Check this out

#59 Pr on 03.16.11 at 8:17 am

Economists Sheryl King and Ryan Bohren. What are you smoking!

#60 Duh on 03.16.11 at 8:19 am

I come in peace, but understand a few of you will be riled, assuming I’m slopping from the trough… what do you brilliant folks think will happen to Public Service (specifically DND and RCMP) pensions as the next 15-20 years unfolds? Garth? Anyone?

#61 V Fekete on 03.16.11 at 8:20 am

House prices in Vancouver and Toronto are going UP not DOWN:

#62 Jas Girn on 03.16.11 at 8:22 am

@ #2 (S.B.) — You took the words out of my mouth. You are so right. The 5 cents plastic bag fee is stupid. They should look at the products that come with non-biodegradable packaging. But we do not care yet because we ship the junk to the third world.

#63 bigrider on 03.16.11 at 8:28 am

Morry from #155 yesterday. “I see a lot of Italians four homes each all paid for rented and going on vacation laughing a lot”

Yes Morry that is my parents generation. 65 years old and over. Real estate pruchased at a different time with different circumstances and vastly different economic backdrops.

You are a fool if you are implying same easy road to riches can be repeated again.

My grandfather always told me first house he bought in 1958 cost him $10000.00 Yonge and Steeles. He sold it in 1985, 27 years later for $500,000, 50 times your money.

Almost 27 years after that brings us to today and that same house barley reaches 700,000 ,certainly a far cry off 27x and if you believe that 27 years from now it will be worth 27 times $700,000 or approximatley 18.9 million (LMAO) then you are smoking some bad stuff.

Stop with the RE religious mantra pumping already.

#64 bigrider on 03.16.11 at 8:30 am

Morry comment, meant to say 50x your money 27 years from now or 35 million.

But I am sure you get the essence of the argument.

#65 JC on 03.16.11 at 8:30 am

#43 BPOE

50% retraction??? No big deal and here’s why.
First of all anyone who bought after 2005 is already up over 50%. These owners are still ahead of renters.

Is this some sort of skill-testing question?


100 x 1.5 -> 150


150 x 0.5 -> 75

So these folks are now 25% in the red according to your “rosy” arithmetic.

Hmmm… on a $1 M crackshack I hardly see how one could stay ahead of renters.

#66 bigrider on 03.16.11 at 8:49 am

Original Dave #47 to Bigrider.

Can you read ?? Go back and re read yesterdays #142 that you commented so incorrectly on today. The person who stated that Italians own four properties and rent and laugh was Morry responding to me. Nothing in my comment stated that I hate real estate and nothing in my comment stated that I hate real estate at any price. I hate it now at these prices.. By the way I am of Italian background and very much understand the lust of real esate ownership among my peers.

By the way, it is people like you who get it all wrong much like you have demonstrated today.

#67 bigrider on 03.16.11 at 8:51 am

Morry reponded to my #142 in #155 to be clear Original Dave

#68 Carruthers on 03.16.11 at 9:06 am

#6 BPOE on 03.15.11 at 10:31 pm wrote: “Japanese earthquake tragedy spawns huge migration to Vancouver [for] safety”

Vancouver, which is also on the seismically active Pacific Plate you mean? You have issues with logic don’t you BPOE? Or perhaps you will spew forth any unexamined idiotic notion to support your weak hypothesis in hopes that nobody will notice?

#69 Herb on 03.16.11 at 9:08 am

The Harper style of politics –

#70 incubus on 03.16.11 at 9:10 am

US vs. Canadian home prices

During the US housing bubble, Canadian and American home prices diverged. But now, they show similar trends.

#71 TS on 03.16.11 at 9:17 am

Seems to me the Asian appeal is waining in Vancouver.
The wheels are starting to come off. High land values, big debt and limited demand creates this…

#72 part of history on 03.16.11 at 9:25 am

when we all look back at this blog…I want to be part of this history lesson.

don’t get too excited until interest rate hike, this is the real killer for housing, 1-2% will shut everybody up…no need to debate, the market will tell you

amortization is another way to fool around with the #s

#73 TS on 03.16.11 at 9:28 am

To: #46 ted23 on 03.16.11 at 2:24 am
The next leg down is interest rates.
While this will affect sales volume and a small 5% to 10% knock on prices it will not impact in the way you have been hammering at on this pitiful blog for the last two years. Bet I am right!

I presume you are young and have not been around long. Demand is slowing and we do not need interest rates to rise to see a 5% to 10% reduction. Those interest rate increases are going to affect values a hell of a lot more than 10%. It was fun while it lasted. Canadians are going to wake up one day and wonder what they were thinking paying that kind of money for a home.

#74 Live Within Your Means on 03.16.11 at 9:28 am

OT – ‘Fairness’ in federal spending pays off

SINCE the Reagan-Thatcher era began in 1980, conventional wisdom is that economic growth depends on ever-lower taxes, especially taxes on wealthy individuals and business.
Not so, says a growing chorus, including voices within the International Monetary Fund, World Economic Forum and Britain’s Conservative Prime Minister David Cameron. They argue the route to economic growth and a better quality of life for all is to attack rising social and economic inequality, the dark legacy of the neo-conservative era.

The National Union of Public and General Employees, the national body representing all provincial government employees, received its inspiration from The Spirit Level: Why Greater Equality Makes Societies Stronger, a groundbreaking book by two British epidemiologists on social trends in the Organisation for Economic Co-operation and Development’s 34 member countries. Even the very rich suffer in highly unequal societies, the book argues, because the social pathologies caused by the growing gap between rich and poor — crime, violence, poverty, illiteracy, homelessness — shatters the social cohesion upon which democracy depends.

When it comes to economic growth, there is a difference of opinion between federal Finance Minister Flaherty and Finance Canada economists. Last January, Flaherty toured the country claiming slashing taxes on corporations — “job-creators” — to the lowest level in the G8 is key “to grow our economy.” But Finance Canada statistics tell a different story. Lowering corporate taxes provides just 20 cents of growth for every dollar of tax cut. That compares to $1.40 per dollar growth from income support for unemployed and low-income Canadians and $1.50 per dollar growth from infrastructure investment.

To read the complete article:

#75 HouseBuster on 03.16.11 at 9:53 am

Have you seen the latest housing numbers from the US?

You’re delusional if you think that can’t happen in the Great White North.

Get out while you still can.

#76 45north on 03.16.11 at 10:08 am

The Original Dave: I will tell you this, real estate in Canada is a screaming….a screaming SELL.

good post

#77 Ex- Cowtown on 03.16.11 at 10:22 am

#31 Dork ( aptly named)

The paper that you quote is irrelevant. That’s why realtors are never given anything more technically challenging to read than the wording on their ball point pens.

#78 Live Within Your Means on 03.16.11 at 10:55 am

#16 Dodged-A-Bullit-in Alberta on 03.15.11 at 11:23 pm
Greetings: # 2 SB

I agree generally with your comments about our throw away society, but sometimes we have no choice. We recycle & compost everything that we can according to our mun guidelines. When my husband renovated our kitchen 10+ years ago, we put in a 3 bin under the counter system – reg. garbage, paper products, and recyclables (Pete 1 & 2 are only recyclable here, unfortunately, but plastic bags, bubble wrap, glass jars, metal cans, etc. are.) Also have a bin for compost which goes into a large green bin along with non-corrugated cardboard. (Our 4 compost bins at the back of our lot are full.) We have to tie up corrugated cardboard for collection. All electronic equipment, etc. must be taken to a depot for recycling.

We have, for years, commented on the excessive packaging. I know that some of it is to prevent potential store theft, but it’s a bit much as most stores have cameras, etc.. I think it would take the majority of the western world to say ‘NO’ to the over packaging problem to make a difference. Re garbage, we normally only put out 1 or 2 garbage bags out every 2 weeks. If anyone is interested please see I believe we were a leader in this field in Canada. It’s not all about going green, but the cost of expensive landfill space. We, unfortunately, added to the landfill site last year when we replaced our old windows with energy efficient ones and replaced the crap outside styrafoam with more efficient insulation.

If anyone is interested in our mun regs re recycling see

#79 Live Within Your Means on 03.16.11 at 11:00 am

Oops, seems I repeated the website.

#80 Alex on 03.16.11 at 11:16 am

Bankers sponcor polititians to be in power, politicians create CMHC that insures million dollar properties even if it is 3rd or forth one(despite CMHC primary mandate to make housing affordable), anotherwords thanking their sponcors. It is quite simple.
Another screw up: Government created pension, so people know who “feeding hand” is but for that favour to its people they remove definition of “store of value”
from money by creating controled inflation, so money becomes a medium of exchange and not a store of value anymore (gradually). From 1700s to 1900s average Joe, would buy a house or 2 and that was his pension. Prices were stable and no common needed financial advisors. Now average Joe needs to go to “financial advisor” who will take care of his and 100 more like him or face inflation eating out his retirement fund (thanks to bankers ). This system is highly unethical. Media is controled and doesn’t dig real issues. Immigrating populace came from “undemocratic” coutries and thinks freedom once fought by previous generation of canadians and americans is something that will never go away.
Leaders are happy they can leave fat live, populace happy they have strawberries on the table (for now).
I said long ago, screw pension, I have seen how that was done in USSR to my parents. Believe me, when things get tough, government official will come out
and say with stone face “Sorry there is no pension money left in tresury”. In this regard all those “uneducated” italians
who buy houses on dips and keeping them instead of government pensions are way wiser then PhDs
who stretch thier financies to have fancy live today and hoping for RRSP later. Good luck with that.

#81 Prof ANON on 03.16.11 at 11:17 am

Trouble in the orange shorts?

Seems ING is going to continue offering 35 year amort.
Also seems that the new International Financial Reporting Standards are going to be an issue for them.

What’s the big deal with IFRS? It requires that securitized mortgages show up on the balance sheet and that captial to those mortgages.

#82 Brad in Van on 03.16.11 at 11:23 am

Responding to #6 & 43…

BPOE, you are a fool. I recognize nobody on the site who agrees with you. You say, “Japanese earthquake tragedy spawns huge migration to Vancouver safety.” Are you kidding me? Says who? You just made that up. The Japanese have no affinity for Canada. The Chinese like Vancouver – not the Japanese. The Japanese definitely prefer the U.S. over Canada, and the U.S. has a relationship with Japan that would make that transition easier than moving to Canada. The American is right when he/she said you never back up your claims and you just make shit up.

Also The American is right there will be a HUGE correction in Vancouver. My wife and I already are seeing inventory set longer, and we are seeing price reductions everywhere. We’re also seeing a tonne of vacant commercial real estate for lease all over downtown and the peripheral neighbourhoods of downtown. This is a horrible sign of things to come. You also say “Once this correction would occur Vancouver real estate would be in strong hands with the Canadians long gone. This would set the scene for a rocket ship in price increases as the Worlds Richest would compete for a piece of BPOE.” That is a flawed argument. You assume the Chinese aren’t suffering a correction of their own yet they ARE suffering one even today in a downward crunch only expected to get worse. The Chinese aren’t coming here nearly to the degree of what they were even two years ago so the Chinese argument is tired and over in my opinion. That’s why they tried to pump up the media with that stupid game with the helicopter in White Rock. What a joke. See, they did that because they KNOW it is over and they’re trying their best to garner additional Chinese interest, but it just simply isn’t there any longer.

You also said “Folks, RBC just lowered interest rates today. ” Well DUH! That’s not news at all. What did you expect to happen? They’re getting ready to shave off amortization from 35 to 30 years in another day. THEY HAD NO OTHER CHOICE BUT TO LOWER RATES. This also serves and will continue to serve as a testament of the long-term valuation of the CAD that our currency is way overvalued. You cannot compress rates for this long of a period without raising an eyebrow or two as to why our rates must remain so low. Only a matter of time before people start to catch on to this notion and realize our dollar isn’t that strong at all. Otherwise, they know everything would come to a screatching stop and the gig would clearly be over. This way they will actually ease people into the notion that we’re toast. Damn your stupidity is laughable.

#83 Crash on 03.16.11 at 11:27 am

Hey BPOE, thanks for the comic relief. We need a few laffs from a clown.

#84 The Original Dave on 03.16.11 at 11:30 am

Original Dave #47 to Bigrider.

Can you read ?? Go back and re read yesterdays #142 that you commented so incorrectly on today. The person who stated that Italians own four properties and rent and laugh was Morry responding to me. Nothing in my comment stated that I hate real estate and nothing in my comment stated that I hate real estate at any price. I hate it now at these prices.. By the way I am of Italian background and very much understand the lust of real esate ownership among my peers.

By the way, it is people like you who get it all wrong much like you have demonstrated today.


I didn’t specify a particular person. I copied, pasted, commented. Why are you assuming my comment was directed towards you? I understand that someone was filling you in on their opinion.

#85 The Original Dave on 03.16.11 at 11:40 am

just wanted to add, I mentioned about family members that did well with real estate. Well, they went through a 17 year period where they didn’t buy any real estate. Patience and timing.

#86 fancy_pants on 03.16.11 at 11:41 am

It will be denial up until the clock strikes twelve.

On a side note, $1 million + for a property in Richmond is just insane. Are the realtors giving scuba gear as a housewarming gift? It is simply a matter of time before an earthquake and tsunami hit vancouver.

and that will be a real kicker…nothing worse than being underwater financially and physically.

#87 Andrew on 03.16.11 at 11:43 am

just hoping Garth can explain to everyone how his precious bank preferred shares are going to hold up while real estate melts and banks take a hit?

seems like they’re a huge part of your recommended portfolio Garth, but you’re not making the connection between them and the real estate market…

You have a fair amount to learn. For example, most housing risk is borne by CMHC, so I expect bank common shares to be barely impacted by a housing correction. Preferreds are even more distant, since their share price is largely unaffected by market volatility and the dividend payments completely divorced from earnings. People buy these for income, not capital gains, and to enjoy a steady 5-6% dividend yield, which is equivalent to owning a GIC paying 6-7%. Having said that, they are remarkably stable and bounced back quickly after the 2008-9 financial crisis. Along the way, of course, not a single dividend payment by any Canadian banks was missed. I think an investor with a diversified and balanced portfolio might want to have 20% of so in a variety of preferreds in banks and insurers. I gather that doesn’t include you. — Garth

#88 Live Within Your Means on 03.16.11 at 12:07 pm

#22 bridgepigeon on 03.15.11 at 11:42 pm
@ #2 BS, I mean SB
Google or YouTube: Man invents machine to turn plastic into oil
What’s wrong with saving the 2 million bags a week Canadians are using to carry their groceries 100 feet? It’s a start anyway.
We’re still waiting for your acid rain, ozone hole response…
bridgepigeon – Agree. I use those bags for my 3 bin+ system. I don’t know of any other bags that will fit in my system. They are recyclable here. Loblaws bags are crap and when they tried to charge people 5 cents a bag, most people were outraged and started shopping at Sobey’s. Loblaws no longer charge for bags, but I would only recycle newspapers in them as they always have little holes in the bottom.

#89 tonguestump on 03.16.11 at 12:10 pm

Original Dave, right on insightfull thanks

#90 jess on 03.16.11 at 12:29 pm

so the japanese invented a robtic water cannon mounted on it’s whaling ships to shoot at the greenie’s … how come they wait so long to shoot the nuke?

#91 jess on 03.16.11 at 12:30 pm

forgot to include this

Besides the electronic and computer features, you will also need to decide on what type of water cannons and how many you want, You can find water cannons in almost any shape, size or weight. Unifire AB of Sweden makes some of most technologically advanced water cannon systems and some of the most powerful water cannons. Designed to be integrated with infrared and CCTV cameras, as well as early detection radar systems, their cannons can hit a moving target over 90 meters away and hit it hard. Their most powerful systems can shoot out water at a rate of 5,000 liters per minute; enough to sink a small boat relatively quickly.

#92 Utopia on 03.16.11 at 12:33 pm

But no matter. It’s all irrelevant. We don’t need no US-style screwup when we have our own.~~Garth


Exactly. We are too smart up here in Canada. The first time newbie buyers, the kids, they all know better than us. Their parents too.

The kids don’t want to hear this bad message about falling real estate prices. You see, they don’t need no education. They won’t make the same mistakes those foolish Americans made. Oh No, not here.

So hey teacher, stop trying to set them right. Stop with all that thought control too. I say, Leave those kids alone! They are not pawns. They can spend and borrow all they like and get rich doing it too. Just watch them go. Prices are still rising, right?

Can’t you see that Garth?

They don’t need no education pal! And here they are…so sing along as the good times roll in our cold northern real estate land of fantasy and myth.


#93 tkid on 03.16.11 at 1:02 pm

Vlad, go to page 2

#94 Ron S on 03.16.11 at 1:05 pm

I think there are many people who are just doing 35 yrs mortgage approval before March 18th and start looking in April/May.

If this is true then June will be the crash month of Canada.

#95 bigrider on 03.16.11 at 1:11 pm

Original Dave #84 and #86 to Bigrider.

It sounded as if you were lumping me in to the category. It still does after re reading. Nevertheless no harm no foul.

And I agree whole heartedly with your comment on patience and timing. I too know many who have made there millions with Real estate. However, I strongly believe that such opportunities will not exist to the same ease and degree as they have in our parents generation regardless of patience and timing. In fact , I think they are gone for several decades, period.

I think Garth made some comment months back about the age of real estate being over or something to that affect. I think it is lost on most as the mantra lives long and hard in the minds of those who have been successful in the RE game. Those who have been successful, credit their own prescience and not the economic backdrop to which they had been so fortunate to have had while they went through there asset accumulation years. They fail to see the different set of economic circumstances today and the sheer impossibility of a repeat of there generations success in same.

Original, they had the tailwinds and we will have the headwinds and Our children even worse off will be living with us into their 30’s years from now

#96 vancouverite on 03.16.11 at 1:19 pm

What on earth is a Lawn Asian?

#97 Values on 03.16.11 at 1:23 pm

CBC is running a live Poll, VOTE NOW!

Can you afford to buy in Canada?

My answer was NO. There is no “it’s unaffordable option so this is as close as you get.

#98 Mr. Plow on 03.16.11 at 1:23 pm

Hi Garth,

You used to have that little box in the top right corner of your site with the best mortgage rates. When you clicked on it, it brought you to a website that listed a bunch of the best rates for the different products.

Can you give me that web address? I liked to check it out from time to time and with everyone rushing to the bond market I would expect rates to drop.

Thanks for your help.

#99 Mr. Plow on 03.16.11 at 1:25 pm

#85 The Original Dave…

Excellent point.

#100 Bubble Butt on 03.16.11 at 1:25 pm

I think prices are likely to rise to the point all the complainers on this blog just stop showing up because they too will have bought at that point –into the market at wildly inflated prices and hoping that it will continue to rise.

Continue to rent if that’s your thing. Spend your life trying to wait-out and prove an economic theory that may never come.


Look around HARD for a decent deal on a place you can afford and live happily closing your own doors. There are many deals to be had and people that need to move won’t be as greedy as you think. Those that have made 300k on their houses might settle for only getting 150k in the right circumstances. You can always make a low ball offer. If the real estate agent thinks their is shame in that get another agent. In fact my advice is to shop around yourself and use the dealer that is indicated on the sign. The RE agent who lists the place has a greater influence and also does not have to split commission with anyone. That’s how I looked when I bought, and some RE agents laughed at my offers, but I eventually found a place and got 40K of the list price–and this was when the market was hotter then hell. With a cool market you are in the driver’s seat. Be shrewd and you’ll get what you want.

#101 Joe on 03.16.11 at 1:36 pm

Suburbs everywhere will definitely crash and burn… Just like they did in the US.

Major cities like Vancouver, Toronto, SF, NYC, London, Paris, etc. might see a drop, but nothing major. Wanna know why? The people living in them aren’t stuck in their cars, in fact a lot of city dwellers don’t own any.

So enjoy the RE crash, skyrocketing price of oil, long commutes and being a taxi driver for your kids, suburbanites!

#102 (low density) Sam on 03.16.11 at 1:38 pm

#44 Alan on 03.16.11 at 1:58 am
was this the same MORON that claimed housing can never fall because housing does not trade like stocks ?

That must be the reason housing never fell in


Canada (in 1990)

The same moron I read on US boards in 2005 and 2006 that house prices never go down?

Thanks moron. I think the Americans that listened to you in 2006 are real happy today.

#103 Mr. Plow on 03.16.11 at 1:39 pm

#82 Brad in Van

Just a suggestion, but its best to just ignore him.

I think likely 99% of us recognize his comments as pure BS, in fact some of them are so crazy (today’s for example) that he destroys all of his own credibility by posting them.

So even if he really wanted to weigh in on a real discussion no one would ever take him seriously anyway because of all the drivel he posts.

I mean we don’t all have to agree with one another, but pretty tough to entertain another point of view when previous comments are as silly as his.

#104 triplenet on 03.16.11 at 1:40 pm

To Garth’s point, every market in Canada was negatively impacted last month for the exception of Calgary and Vancouver.


#105 Live Within Your Means on 03.16.11 at 1:48 pm

The Canada bubble
The Canadian economy is booming and investors are flooding in.
Is it too good to be true?

Worth a read.

#106 RE 4 EVA on 03.16.11 at 1:49 pm

As a previous poster mentioned, there is no link between sales volume and price. Nobody has even attempted to post any remotely related literature on that assumption. It was made up. Don’t respond unless you can cite a source (or do respond and prove me right again).

It’s still funny that posters think that $1M is a lot of money. A shoebox 1 bedroom condo in Singapore is $1M. Vancouver is crazy cheap for asian foreigners and a damn nice place to park money.

If you’re not familiar with foreigners pushing locals out of a housing market, you should visit Costa Rica where Canadians are doing the exact same thing to the locals over there.

Get real. No housing downturn no matter how hard up you get for one.

Rising prices on falling volume is a classic danger sign in technical analysis. To wit: “Price is rising, but volume is declining. This divergence indicates that even though demand still outweighs supply, buyers are not willing to pay up to own the stock. Such a pattern can signal that the uptrend is running out of steam and should put the swing trader on alert for a trend reversal.” That’s investing 101. Perhaps one of your little friends can help you. — Garth

#107 Jan Etter on 03.16.11 at 1:50 pm

“#54 Steven Rowlandson on 03.16.11 at 6:43 am
Garth what happens to real estate values in Vancouver and Victoria if by chance those cities get a dusting of nuclear fallout? Do home owners there get to save on their energy bills due to their homes glowing in the dark?

Don’t get ticked, I am trying to be funny.



I’m not ticked, but that was not funny. However, it was certainly insenstive and demonstrating a lack of empathy, if that’s the impression you were trying to make.

#108 Two-thirds on 03.16.11 at 1:52 pm

“People who bought in, say, 2006 are finding it impossible to sell in 2011 for what they paid. Despite incredibly low mortgage rates, 35-year amortizations, zero-down purchases and non-stop sunshine-pumping by newsroom glee club at Global TV. Factor in commissions, legals, moving costs and IRDs, and it’s financial folly.”

A question and a point:

1) After the new mortgage rules come into effect, when 2006 0-40 buyers want to renew their mortgages in 2011, will they have to qualify under 5-30 rules at the posted 5-yr rate?

2) RE sales for investment properties in Edmonton must be close to nil. Kijiji shows the following figures for properties:

Current Matches (12372)

housing (12372)
apartments for rent (3616)
commercial (675)
house rental (2020)
housing for sale (2957)
real estate services (466)
room rental, roommates (1790)
short term rentals (211)
storage, parking (149)
other (488)

Total rental stock (houses+apartments) = 5636
Total stock for sale = 2957
Rental-to-for sale ratio = 1.9

So, for each unit for sale, there are roughly 2 available to rent. Two interconnected points can be made:

a) Rental supply is plentiful = downward pressure on rents

b) Rental supply is plentiful = motivation to buy properties to rent is low (high competition)

These factors combined do not paint a pretty picture for increased gains in RE in this market. Unsuccessful sellers who may decide to rent out their unsaleable properties have their work cut out for them.

My 2/3 cent on the future: moment of maximum pain in Edmonton RE = 2012-2014.

To quote Another Albertan: “everyone else’s milage may vary.”

#109 Mr. Plow on 03.16.11 at 1:53 pm

#72 part of history…

I disagree. I think at this point interest rates are irrelevant.

I do agree with you that if rates increase substantially that will be a huge killer because of the monthly costs associated with financing some of these highly priced homes.

But I think even if rates stay low we will still see a slow reduction in prices simply due to the oversupply. I can only comment on where I am from, but there are simply too many available homes in Edmonton/Red Deer/Calgary to sustain the current prices.

Too much competition, people will reduce prices to sell.

#110 Kitchener1 on 03.16.11 at 1:53 pm

Garth, you suscribe to the soft landing theory??

The decline in RE prices will be dependant on a few variables.

a.) Banks willingness to extend credit– if we have another liquidity crisis, banks will tighten up.

b.) trajectory of interest rates– RE prices are dependant on carrying costs, an increase in rates means prices drop, the faster the increase, harder the drop.

c.) Finally, Supply vs demand, and increase in supply in a rapid manner will tank prices fast. Once we get to 8 months-10-12-14 etc.. months of inventory, prices will drop hard and fast. The dynamic of the market means that just as prices rose exponitally with low supply, the inverse will be true on supply side increase.

Supply will grow exponitally as people rush for the exits and prices will also drop.

Factor in a little bit of all 3 factors, at the same time and we have a crash. It wont be day over day but the first Year it will be huge.

#111 eaglebay on 03.16.11 at 1:54 pm

#86 fancy_pants

No tsunami for Vancouver. They’re protected by Vancouver Island. Maybe the west coast of VI.

#112 poco on 03.16.11 at 1:57 pm

#71–TS–this goes along the lines of your post

this is what happens when you get greedy and price property too high and the market turns on you and you don’t drop your price quick enough to take advantage of a greater fool
bought -oct 06–1.54m
listed may 07–2.48m–on and off the market with several price changes
listed again in dec 10–1.88m
now up for 1.47m and the kicker is, it’s a bank forclosure–i guess our tax dollars will be assisting the bank to prevent a loss on this one and i wonder if the owner is still in the country
if the link doesn’t work its 3151 Plateau Blvd Coq. mlsv875596 on
now, if you could afford it (i can’t) what would you rather live in–this place or one of those beauties in delusional van–same price

#113 Mr. Plow on 03.16.11 at 1:58 pm

#63 bigrider

Not to weigh in on something that I didn’t read about yesterday… but $10,000 in 1958 would be worth quite a bit of money. Back then if you told them the property would be worth $700,000 in 2011 they would laugh as much as you are laughing that it could be worth 18 million in 2060.

Perhaps the value of what the dollar can buy you at that time would have something to do with it. I’m sure in 1958 a bottle of coke didn’t cost $1.50.

#114 new_era on 03.16.11 at 2:06 pm

There are no surprises with the housing prices in the US.

Once the Obama housing grants stopped you knew this would happen. It takes time for the numbers to appear in the statistics.

In two days the goverment 35 year mortgage disappears. It will take several months before we see the numbers appear in the statistics.

Along with the “WHAT IF” there was a earthquake factor, due to the destruction in Japan, buyers and sellers might want to unload some RISK in places like Richmond, Langley and downtown vancouver.

All I can say the hot sellers will be Earthquake insurances, which I believe cannot be purchased in richmond.

Also If the Nuke Power Melts down, expect FOOD and Farmland to do very good. Since they Kaboshed most of the farmland in BC and China into real estate.

Companies like Potash should do very good due to Human panic.

Hey you could of bought Potasium iodine pills for 4 bucks a crack and sold it to the chinese for 50 yesterday.

#115 Vancouver_Bear on 03.16.11 at 2:37 pm

6 BPOE on 03.15.11 at 10:31 pm

Vancouver safety? Where the same magnitude 9 can strike any moment. Stop kidding yourself.

#116 jess on 03.16.11 at 2:49 pm

close some loopholes
“Taxes in Canada will have to erupt”

offfshore tax havens
eight years later the 3 f’s = fraud, forgery, fake (cinar)36 charged

…and then they cry,”tax cuts!” i wonder if the ones that yell the loudest have the most to lose/hide?

Afterall, is it 20,000 + Americans who have come forward to the IRS rather than be NAMED/SHAMED . Did that swiss banker /other whistleblowers from the caymans and other tax havens made a few folks nervous.

#117 realpaul on 03.16.11 at 3:05 pm

Richmond like ….Tokyo is just one Black Swan away from any kind of disaster. Who says it can’t happen anywhere?The human world means nothing against the backdrop of the natural world.

I’m sitting pretty in Helsinki having passed through Singapore Beijing and Shanghai over the past couple of weeks. Singapore is Vancouvers wet dream…. a real business centre and reason for people to invest and stay.

China , as most of you know, is one step away from a collapse of the communist regime devolving into bloody chaos. Its a police state hiding behind a lot of cheap crapola and cheap labour that lays like a sheet of saran wrap covering a rotten mess of leftovers. Its what Europe would have looked like if the Nazi’s had won the war. Police and goose -stepping soldiers are the norm. I believe the commies know they’re on borrrowed time the way the white South Africans did when they saw the black face of the masses staring back at them……and they were no longer willing to stand back and smile away the egregious nature of the relationship.

The trillions of new units of paper being pumped into the economic systems everywhere are producing rampant inflation. I think the Japanese disaster may be a tipping point which will not only cause shortages of raw material and create an arena of spiralling prices but force interest rates up at the same time with many deliterious effects elsewhere.

Meanwhile the Europeans are already paying $6 dollars a gallon and the PPP is 65% higher than in Canada. When the stagflation hits North America don’t be freaked out when prices , rates and taxes all begin to get physical all at the same time. In this scenario people will no longer be able to afford a mortgage payment…they will be hardpressed just to feed themselves and get to work.

#118 Alpha Bravo on 03.16.11 at 3:08 pm

#30 Jeff

Re: Royal Bank Lowers Mortgage Rates


When the rest of the banks repeat this very timely reduction tomorrow. Could this not in fact boost the RE spring market?

#119 Hell in a Handbasket on 03.16.11 at 3:20 pm

I’m out, subjects are off today. i feel free. Time to go rental hunting. Our realtor contacted us about a house that was recently bought for over a million $, 4 bedrooms with a view and they can’t live there and are looking to rent it out. I get to live in the high life, without the burden of the mortgage.

#120 DebtCrunch on 03.16.11 at 3:28 pm

Watch a video called “Joe’s Debt” at

Debt: Canada’s Record Level of Household Debt

Joe is a regular Canadian making a living. Through taking a mortgage, and buying things using credit, Joe builds up a lot of debt. When interest rates go up, Joe’s debt becomes unsustainable.

Created by: Action Canada Task Force on Household Debt

#121 TheBigLebowski on 03.16.11 at 3:49 pm

#143 dd-Massive money printing coming from Japan, US, and Europe. QE to infinity.

Ultimately backed by taxes. — Garth

“When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it.”
–Frederic Bastiat

Massive taxes and Government induced inflation via money printing is theft made legal by a corrupt banking elite.

#122 not good on 03.16.11 at 3:53 pm

Earthquake forecaster Jim Berkland warns of a ‘high risk’
seismic window and potential for a massive quake
poised to strike somewhere in North America in
between the dates of March 19th and 26th.

Berkland points to the recent mass fish die-off
at King Harbor near Redondo Beach as a harbinger
of a potential catastrophic quake in the near

Berkland accurately predicted the 1989 San Francisco earthquake.

#123 Rob on 03.16.11 at 3:56 pm

We recently sold our Vancouver home and will likely be sitting on the sidelines for a while. It was the right move for us, for several reasons: our mortgage servicing costs were minimal, but we are over invested in one asset class (real estate, obviously). We have lived in this home for over a decade, and have therefor witnessed some very good returns on our original, leveraged investment. We could never have done anywhere near as well with any other investment.

That said, I have personal experience with someone close who lived and, almost literally, died by real estate. I am highly aware of how illiquid real estate is; the last thing anyone needs is to be stuck with a depreciating asset that represents the vast majority of one’s wealth, especially if you’re getting on in years.

So for us, it was a prudent move.

#124 TheBigLebowski on 03.16.11 at 3:57 pm

As Obama comes on T.V giving his top NCAA basketball picks and saying its a nice distraction from Japan, The true heros of this world are the 50 Japanese workers saying they are not afraid to die as they work on the reactors. Obama is nothing more than a clown propped up by the bankers to keep the public distracted from real issues in this world. But all politicians play that same role as they pat us on the shoulder with one hand and reach into our back pocket with the other.

#125 SquareNinja on 03.16.11 at 4:00 pm

Garth and everybody else… have you ever heard of “Starve the Beast”? It’s where conservative politicians intentionally bring debt and deficit upon the country, leaving only two options: raise taxes or cut the government bureaucracy. The people decide.

The people always decide to cut government bureaucracy of course, thus shrinking the size and influence of government. And that’s exactly what the conservatives want; a smaller, less meddlesome government.

That’s what the GOP and Harper are doing right now! Can’t you all see it? Although Garth has said to expect “higher taxes and less government services,” I would probably only expect less government services and probably no significant tax increases.

For those of you who use the argument of a strong Canadian dollar for reasons of no real estate decline in America’s hat, well… America is actually engaging in strategic devaluing of currency, so that they are more competitive on the world stage; more attractive to foreign investment. They are doing this through quantitative easing, as mentioned before – the buying up of American bonds with non-printed, but created money.

#126 lockstep on 03.16.11 at 4:33 pm

only 125 posts…..Bears must be capitulating. You know what that means.

#127 Alpha Bravo on 03.16.11 at 4:36 pm

#95 vancouverite

What on earth is a Lawn Asian?


(excerpt from an earlier blog)

Trying to sell your house? Need that extra boost? We’ve got the perfect marketing tool for you! Asian lawn ornaments!

For a low hourly rate of $50, you can have your very own Asian to stand on your front lawn making important sounding phone calls in Mandarin. For this week only we are throwing in an ** BONUS ** – YOUR Asian will drive up in Mercedes CL600 with additional Asian Family members added for authenticity.

Don’t delay! Call us today!

#128 Mr. Plow on 03.16.11 at 4:45 pm

#108 Two-thirds

To respond to your points:

1.) Depends on the institution and it depends on their payment history. I have spoken to two folks one at RBC and the other at BMO and they said if they are making their payments they will just send renewal papers in the mail and that new rules will not be grandfathered. If they are changing products and or institutions that could all change.

2.) I see your point on the amount of rentals available, but one thing to keep in mind with Kijiji is that people will post the same property multiple times and on top of that may post their property in different categories multiple times, the website will count all of these in their totals when in fact it is just one rental unit available. Your numbers may be slightly skewed because of this.

#129 poco on 03.16.11 at 4:59 pm

#100 Bubble Butt–
why on earth would you buy into a hot hot market–especially when you say you did some research–when every indication is the market is correcting and quickly

sorry to tell you this but i find 40k price reductions quite frequently in the tricities–no big deal anymore

i do hope the realtor you dealt with at least bought you a big screen TV for all the commission money you made him —and yes they will do that and more–i think he saw you coming–if you know what i mean

check it out mls#v874659–list aug 10 -318k–now at 258k
mls#v874853–listed last month–489k–1st price drop down to 449k

if you’re going to use a realtor make sure it’s a trusted friend or relative–you get the real scoop– never never trust the listing agent–remember he’s working for his clients not you !!!!

#130 Dodged-A-Bullit-in Alberta on 03.16.11 at 5:15 pm

Greetings: #111 [eaglebay] No tsumai for Vancouver, protected by Vancouver Island.

I think you are wrong, read this:

#131 Totalchaos on 03.16.11 at 5:18 pm

#110 poco

Did you check out the art work on the walls of the foreclosed place? It looks as though the folks foreclosed on were (gasp) Asian! But I thought they only purchased with cash!

#132 jess on 03.16.11 at 5:18 pm

Can someone explain :

as tenants they want lower value= less tax? so does that mean rebate and then who does the city go for the difference?

The towers, which house the head offices of the Big Five banks and some of Canada’s biggest corporations, law and accounting firms, have a combined assessment of over $5 billion.

The assessment corporation argued the value of the towers should be determined by their value as a going concern, fully occupied by rent-paying tenants.

Lawyers for the towers argued that the wording means the value must be based on a building that is “unencumbered” by tenants and leases.

Instead, they insisted the towers should be valued the same way a house is – as a vacant building on the date of sale, with no tenants and no furnishings. That generally produces a lower value.

The review board sided with the towers; it said the assessment corporation’s assessment method “contains a fundamental flaw.”

The City of Toronto had joined with MPAC in resisting the bank towers’ appeal. But the assessment board rejected the city’s submissions, saying they were “based on an incorrect interpretation of the words of the Act.”

#133 Jan Etter on 03.16.11 at 5:29 pm

#113 Mr. Plow on 03.16.11 at 1:58 pm
“#63 bigrider

Not to weigh in on something that I didn’t read about yesterday… but $10,000 in 1958 would be worth quite a bit of money. Back then if you told them the property would be worth $700,000 in 2011 they would laugh as much as you are laughing that it could be worth 18 million in 2060.

Perhaps the value of what the dollar can buy you at that time would have something to do with it. I’m sure in 1958 a bottle of coke didn’t cost $1.50.”


It’s not a perfect formula but the same basket of goods and services worth $10k in 1958 would cost $78,533.33 in 2011 dollars.

#134 ballingsford on 03.16.11 at 5:51 pm

Tomorrow is St. Patrick’s Day, so lets all raise our glass and toast the poor Greater Fools. Only 2 more days to go before the shit hits the fan.

I’ll raise a pint with my 3 yr old son who I am trying not to spoil and say “Son, when you get into high school and learn about this point of time in History or Economics class, this is what happens to you when you are raised as a spoiled little monkey.”

Son says this to me when he’s in his twenties, “Dad, thank-you for not spoiling me.”

I say, “Son, you are now a Man!”

#135 BrianT on 03.16.11 at 6:04 pm

#133Jan,etc-Yes, but the original poster was attempting to explain that the bulk of the gains were from 1958 to the late 1980s as Toronto grew incredibly, along with huge median wage increases during that period. Also huge increases in all types of debt levels-now that balloon has pretty well blown to the limit. The bigger anything gets, the higher any price gets, makes it harder for continued % gains at the same rate-basic math. This is why GDP accounting is such a joke- mathematically it is IMPOSSIBLE for global output to keep growing at basically the same rate forever, which is what they are and have been selling-everything is finite.

#136 Bubble Butt on 03.16.11 at 6:08 pm

Tomorrow is St. Patrick’s Day, so lets all raise our glass and toast the poor Greater Fools. Only 2 more days to go before the shit hits the fan.

I’ll raise a pint with my 3 yr old son who I am trying not to spoil and say “Son, when you get into high school and learn about this point of time in History or Economics class, this is what happens to you when you are raised as a spoiled little monkey.”

Son says this to me when he’s in his twenties, “Dad, thank-you for not spoiling me.”

I say, “Son, you are now a Man!”


I find this type of comment to be the general quality of the posts from people who read this blog.

The only thing you will teach your son and the other people on this blog is that you are a troglodyte that takes comfort in the economic failings of the people around you. Your anger and envy just oozes from your comments. My guess is that you have a chip on your shoulder and hate working for things too.

Honestly. . .any housing downturn will affect you and your son. When the economy fails we all lose.

#137 ballingsford on 03.16.11 at 6:51 pm

#136 bubble Butt

Are you one of the Greater Fools? Man, it must suck being you.

There is no anger or envy intended, only humor.

As for you using words such as ‘troglodyte’, it implies to me that you were a spoiled child who spent your days in your room instead of outside playing with the other kids.

Give me a break and go back to your dictionary!

Now, get your ass out of your butt. Are you always the last one laughing when someone makes a joke.

#138 Mr. Plow on 03.16.11 at 6:57 pm

#133 Jan Etter

Thanks for that. Not sure how that would translate to housing, but certainly shows the point that I was trying to make in terms of the value of the dollar in different times.

#139 jess on 03.16.11 at 7:12 pm

Full-Time Minimum Wage, Adjusted for Inflation
1968: $18,262
2004: $10,712

[5] Julie Hollar: “Wealth Gap Yawns and So Do Media: Little Interest in Study of Massive Race/Gender Disparities,” EXTRA!, a publication of Fairness & Accuracy In Reporting (FAIR); February 6, 2010

With food insecurity/lack of resources , young african girls have choices
2)get paid by the “sugar daddies” for blig and HIV
3) the world bank pays you to stay in school and not have sex.

#140 tonguestump on 03.16.11 at 7:18 pm

Hey Big Lebowski – good riff on politicians

#141 Nostradamus Le Mad Vlad on 03.16.11 at 7:30 pm

#93 tkid — Thanks! I did, and found the following comment of interest:

“Where do you think they are going to put all the Japanese? Hockey night in Canada will become Iron Chef Night in Japanada.

“Oh Japanada, our new home and native land…..”

Obviously the four western provinces do have plenty of land — free space — and there are plenty of natural resources. If this does come to pass, it’s gonna change things again mighty quick!

#111 eaglebay — “No tsunami for Vancouver.”

Correct. If the SAF causes a subduction ‘quake, it will do the same as Alaska in 1964, when certain parts were pushed higher by several feet.

However, if the opposite happens and VI disappears, then Vancouver and Seattle have no protection.

#119 Hell in a Handbasket — Well done! It’s a great feeling to be free and clear!

#121 TheBigLebowski — “Massive taxes (arriving shortly) and Government induced inflation via money printing is theft made legal by a corrupt banking elite.”

So true, and there is not a damn thing we can do about it.

#122 not good — To keep sheeple off guard, no doubt. Either the New Madrid Fault or the SAF, with Yellowstone being thrown into the mix for good measure.

#142 poco on 03.16.11 at 7:47 pm

#131 Totalchaos–you’re right –the westwood plateau area of coq. is (or was) very popular with the Chinese along with Iranians.
take a look at the realtor map–i wonder where all these sellers are going–to Vancouver–not!!!

#136 Bubble Butt–i don’t think anyone on here takes comfort in others economic failings,but we’ve all been warned,in more ways than one of what’s to come–believe it or not –your choice–
but let us know when the light finally goes off in your Butt–i mean head–and you have your place up in a distressed sale, cause many of us have cash and will swoop in and offer you 80k below asking–don’t believe it can happen
–in case you missed it
mls#v872803–bought apr 09–581.9k
listed oct 09–519.8—–now at 480k—only one of many who are under a false impression that re only goes up

#143 Nostradamus Le Mad Vlad on 03.16.11 at 8:18 pm

#4 Reactor — Not good, full meltdown, and Get Out Of Tokyo A mass refugee influx, tkid?

QE2 Everyday! So now QE32 is underway.

Spot On! No govt. is better than a big, fat, bloated and crooked govt. I vote for None Of The Above.

Iran “So it appears that the geopolitcal / military assets to have been put into place. One has to wonder if these people are insane enough to actually be contemplating a military conflict against Iran, particularly in light of the nuclear catastrophe in Japan, and its implications for the rest of the world.”

Libya’s Oil Speculators applaud, as war makes good business.

Schematics Fuel rods, etc.

Housing Anyone remember?

UK Shares Crash, and DJIA. Currency Meltdown So, new or alternative currencies?

FDA Govts. are friendly, no?

The Toilet (al Quaeda or FOX News) has a new joke for everyone today!

4:17 clip Jim Cramer — A man who should never be trusted!

US West overdue for a major ‘quake. As if we didn’t already know this. “Of course, setting aside that CNBC is owned by General Electric, which means Cramer works for the company that designed those exploding reactors, Jim Cramer is the guy who told us all that Bear Sterns was fine … just one week before it collapsed.” GE built the Japanese reactors.

#144 Gord In Vancouver on 03.16.11 at 8:21 pm

#136 Bubble Butt

Tomorrow is St. Patrick’s Day, so lets all raise our glass and toast the poor Greater Fools. Only 2 more days to go before the shit hits the fan.

Canada’s real estate market will not come to a screeching halt on March 18th as that is the last day on which people can get pre-approved for a 35 year mortgage. These people can still buy homes with their “sub-prime” mortgages after March 18th.

#145 hmm... on 03.16.11 at 8:22 pm

Hot Asian Money. — Garth

It looks like in Vancouver HAM will be replaced with HAF…

Hot Asian Fallout…..

#146 David on 03.16.11 at 8:33 pm


Mr. Mega Bull: Please identify yourself to us, so that we may seek out your largesse and conviction in real estate to possibly fill the role of buyer-of-last-resort for our real estate if, somehow, we ever need one.

Or are you just another one of those the gutless, clueless, big-hat-but-no-cattle B.S.ers?

#147 DaBull on 03.16.11 at 8:43 pm

#140 jess on 03.16.11 at 7:12 pm

Not quite right.

This is going back to 1965.

1965 2011

Alberta = $0.95 $8.80
BC = $1.00 $8.00
Ontario = $1.00 $11.00
Quebec = $0.85 $9.65

Working 2000 hrs a year and adjusted for inflation (current).

1965 2011

Alberta = $13,483.13 $17,600
BC = $14,192.77 $16,000
Ontario = $14,192.77 $22,000
Quebec = $12,063.86 $19,300

Minimum Wage:

No wonder housing is so high in Ontario, look at the minimum wage…. WOW. I would have thought the lefties from B.C. would have had the highest.

#148 r on 03.16.11 at 9:16 pm

“These people can still buy homes with their “sub-prime” mortgages after March 18th.”

that’s not what one of videos posted somewhere said. don’t remember if it was here or another blog, but it said march 18th you need to have a subject free offer or it’s no 35 year mortgage for you.

i could be wrong though.

#149 AG Sage on 03.16.11 at 9:17 pm

Bubble -Butt
>Honestly. . .any housing downturn will affect you and your son. When the economy fails we all lose.

What you and your fellow countrymen are about to learn is the failure has been the last decade of cheap and easy credit issued to anyone with a pulse that led the masses into debt slavery. The bubble burst is when the real economy can finally get back on its feet instead of being choked by insanely misallocated capital.

#150 ballingsford on 03.16.11 at 9:19 pm

146 Gord In Vancouver on

#136 Bubble Butt

Tomorrow is St. Patrick’s Day, so lets all raise our glass and toast the poor Greater Fools. Only 2 more days to go before the shit hits the fan.

Canada’s real estate market will not come to a screeching halt on March 18th as that is the last day on which people can get pre-approved for a 35 year mortgage. These people can still buy homes with their “sub-prime” mortgages after March 18th.

Yah right, typical realtor speak.

#151 S.B. on 03.16.11 at 9:21 pm

Sigh more fake Japan news. We are to trust an “anonymous official” from the Land of Freedom? No-one has names down there? Yet his/her comment is so scary…terror inducing in fact. Maybe that was the plan. Turn off your tee-vee box, it’s all made-up news. THINK for yourself. No I’m not a hippy :)

The White House is preparing for a situation in Japan that could be “deadly for decades,” a U.S. official tells ABC News.

According to the official, the U.S. believes a larger evacuation zone should be imposed and that the next 24-48 hours are “critical.”

“It would be hard to describe how alarming this is right now,” ABC quoted the anonymous official as saying.

The nuclear crisis in Japan has intensified since the massive earthquake first damaged nuclear facilities. On Wednesday, the White House advised Americans within 50 miles of the Fukushima nuclear facility to evacuate and plant employees were temporarily forced to retreat as radiation levels “soared.”

The difficulties caused by the evacuations were blamed for “escalating” the chances of a meltdown.

“They need to stop pulling out people — and step up with getting them back in the reactor to cool it. There is a recognition this is a suicide mission,” the unnamed U.S. official was quoted by ABC as saying.

#152 r on 03.16.11 at 9:33 pm

here’s a link to a faq about march 18. preapprovals aren’t worth anything after march 18. you need a binding agreement. since ianal, i don’t know what that is, but they seem to imply an agreement of purchase and sale.

#153 S.B. on 03.16.11 at 10:28 pm

Plastic bags: if my grocery store bans plastic bags, then how do I store my garbage and transport it into my (rental) condo’s garbage chute? I’d have to buy plastic garbage bags!
Or, do I use a plastic garbarge can with lid? Over 1/2 of my garbage is organic (chicken bones, melon rids etc). I could dump these raw items down the chute (icky), daily, and have to wash my garbage can, daily, with hot water and soap to keep it clean and mould/ant free.

So what’s worse, re-using my grocery store plastic bags, or buying plastic garbage bags, or using hot water every day for cleaning a garbage pail?? Oh dear, the greenies never told us about this.

And with the rampant pollution in the 2nd and 3rd World countries who make all our consumer junk, maybe that Ozone Hole automatically repaired itself? Come on, the hole used to be front page news? In
On TIME and MacLeans front pages. And acid rain, all the dead rivers, dead fish and birds, and dead lakes in the world suddenly disappeared?

My point is, all of these things are massive fads and frauds to distract us, while the real corporate crooks devestate our environment (and then WE have to pay for it by taxes, fees, guilt trips). Think of all the depleted uraniam deposited in the middle east by our truly, our tax dollars at work in the past five years

#154 tkid on 03.16.11 at 10:37 pm

Japanada! LOL!

#155 S.B. on 03.16.11 at 10:37 pm

ps. there’s no organic reycling in my condo building although I dearly wish there was. Maybe City of Toronto could actully collect the 5c/bag fee and add organic recycling to my building? Not a chance!! Makes too much sense. On second though, the city union salaries required to run and administrate such a program would each up the costs.

See the utter folly here? We are truly living in the book “1984” Orwellian times where the nanny government tells us how to live but in the end we suffer.

#156 confused on 03.16.11 at 11:14 pm

I sold in 2002 my house in kitsilano and have been renting since. I cannot even look at the prices without getting sick to my stomach. I have held firm that these prices are unrealistic and cannot go higher year after year….but they do. It is like being tortured until ya finally break down. I have finally broken down and am considering buying soon. Did you predict the seemingly endless increasing prices before it happened? If so, you are my hero and I will wait for the crash.

#157 BrianT on 03.16.11 at 11:27 pm

#153SB-The same guys that caused this mess are getting gigantic amts of money from the US taxpayer to build nuke plants in the USA.

#158 jas on 03.16.11 at 11:43 pm

In case of real estate, national/regional averages don’t mean much. Real estate is very local. Even in a city you may find that RE is cooling off in some parts while in other parts of the same city its hot.
Similarly a story of foreclosure here and there is not representative of the state of the whole market.
As for Garth’s view on real estate, he has been predicting a decline/correction for few years now.
(I’m not a realtor)

#159 Live Within Your Means on 03.17.11 at 6:20 pm

This grand branding exercise
by Aaron Wherry on Thursday, March 17, 2011 2:54pm – 28 Comments
The two-year Economic Action Plan™ announced by the Harper Government™ in 2009 will apparently be extended by another year. This will apparently be dubbed the Next Phase of Canada’s Economic Action Plan™.

Amateur Hour · 1 hour ago
““As a consequence, Canada had no failure of any major financial institution and no bailout with public funds, during a crisis caused by financial-sector instability and insolvency virtually everywhere else.”

This isn’t true. Unless you don’t count the $114 billion.
It’s a bit of a hobby-horse for me at this point, but here’re the facts about what went down at Finance and the Fed in 2008:

Text below is from:

You’ll notice that the average leverage ratio of the Canadian banking system is higher than that of the largest US banks in all periods we reviewed. It serves to note that each of the top ten US banks received common equity injections by both shareholders and the US government, thereby improving their respective leverage ratios.

Looking at the Canadian system more closely, all five Canadian banks are levered at an average of 31:1, which is actually the lowest leverage ratio during the three years that we reviewed. This implies that if the Canadian banks’ tangible assets were to drop by 3%, their tangible common equity would effectively be wiped out. Now, that doesn’t mean they would go bankrupt per se, but it does give us an indication of how little asset prices would have to decline in order to wipe out their tangible common equity. These leverage ratios worry us because they leave such a razor thin margin for error on the ‘tangible asset’ side of the leverage equation. We are always cautious about investing in companies that have zero or negative common equity – we’ve seen what happens to public companies that trade at those levels, General Motors being a good example.

Acknowledging the leverage levels above, you may wonder how the Canadian banks escaped the 2008 meltdown unscathed. The answer is that they received significant assistance from the Canadian government. First, they received $65 billion in liquidity injections from the Insured Mortgage Purchase Program (IMPP), whereby Canada Mortgage and Housing (CMHC) purchased insured mortgages from Canadian banks to provide additional liquidity on the asset side of their balance sheets.

Next, the Bank of Canada provided them with an additional $45 billion in temporary liquidity facilities. Finally, a Canadian Bank (that shall remain nameless) also received assistance from the Canada Pension Plan (CPP) through the purchase of $4 billion in mortgages prior to the IMPP program, for a total government expenditure of $114 billion.

For reference, the entire tangible common equity of the Canadian Banks in 2008 was $68 billion. Can you put two and two together? The Canadian government injected a sum through mortgage purchases worth more than the entire tangible common equity of the Canadian banking system! On top of that, the Bank of Canada provided more than 50% of the tangible common equity of the system in emergency liquidity facilities. Mark Carney, Governor of the Bank of Canada, acknowledged this, albeit in an indirect way: “Policy-makers had to do many unpalatable things to save the economy from the financial system – a financial system that begged for mercy.”