The News

The Hummer careened dangerously toward a police cruiser parked on the shoulder of Highway 407 as the radio news wafted through the cabin. “Metro’s red hot real estate market continues,” said the announcer, “as first-time buyers flood in.” After I pulled the surprised officer from the wreckage and was again on my way, I used my remaining good hand to Google the latest sale statistics. That’s when my day started with a shock.

Real estate‘s an emotional asset, which is why so many people are hopelessly seduced by it. They crave houses and, armed with a thin grasp of the facts, gobble up any scrap of information which will justify their irrational but throbbing desire for a killer foyer. The media knows that. So do the pumpers at Re/Max. And the combination is almost always a brand new low point in journalism.

So on the same morning news broke about a meaningful plunge in house sales in the country’s biggest market, the story didn’t even get airtime. Instead, the latest fluff piece from the fluffiest of house marketers dominated. Said Re/Max: “First-time buyers are contributing to strong upward momentum in residential housing markets across the country.” But, there were no statistics to support that. No independent market research. Not even any company mock research.

In fact, the only meaningful stat the company had to offer was this: “Just over 30 per cent of markets are reporting sales in excess of 2010 levels while almost 70 per cent have experienced an upswing in average price.” Translation: sales have declined in 70% of Canadian markets, and prices have started to fall in one out of three.

Of course, there is no surge in first-time buying. Re/Max made it up. Not that this matters any more when it comes to getting media coverage.

Meanwhile the planet’s biggest local real estate cartel announced its latest numbers – the tally for March in the godless GTA. As you know, this was billed as a super-sized month, replete with lower fixed mortgage rates, the looming death of the 35-year mortgage and an unabashed effort by ethically-challenged realtors everywhere to lure in as many sacrificial virgins as possible. Despite all that, crickets.

The headline on the Toronto Real Estate Board media release said “Second Best March on Record,” but here was the reality:

  • Sales in 2011 plunged 11% from the same period last year.
  • Sales in the second half of the month tumbled by more – almost 16%.
  • Not much better in the teeming hinterland, with 905 sales plopping by 13%.
  • Active listings were down more than 10%. New listings caved by 19%.

Of course, the average price was up – which is exactly what you’d expect when supply falls faster than shrinking demand. It’s also a classic sign of a market top, as any technical analyst will tell you. Increasing price on decreasing volume usually indicates that serious money has drifted off and an asset’s momentum is waning.

This is the reality – at least in Toronto. And Edmonton. Kelowna and Calgary. London and Montreal and Muskoka. Yet compare that to Vancouver, where March sales rose by 30% and listings dipped 3% – but prices fell a little. The reason: the average family can no longer even dream of buying the average home.

The conclusion, in case you need it, is the emergence of an unhealthy market – made all the more bizarre by fabricated research, misguided opinion and deliberate misinformation. That some greater fools continue to slap down higher bids on the fumes of an exhausted beast is their problem. I stand behind my conviction that residential real estate is not an asset class with legs.

Which had some cheeky little peeps asking here yesterday why I would (as I mentioned) do a real estate deal in the past couple of weeks. Why would I buy even as I forecast softer prices ahead and a moribund market lasting sever years?

Simple. I didn’t buy myself a principal residence, but rather an investment property. Two, actually. They came together – a tenanted SFH and a heritage commercial building, both within commuting distance of the glistening downtown bank towers. The sale price sure wasn’t the  asking price, and settled at $59 a square foot.

As I said, if you think there aren’t already bargains, you’re not looking.

Anyway, I needed a place for my Re/Max rehab centre.

179 comments ↓

#1 The InvestorsFriend (Shawn Allen) on 04.05.11 at 10:49 pm

Technical Analyst = Oxymoron?

Technical analysis is the study of human emotion on asset values. It has much to impart. — Garth

#2 MarcFromOttawa on 04.05.11 at 10:57 pm

5th

#3 S.B. on 04.05.11 at 10:59 pm

‘Replete’ – a decent word, I’ve seen it in previous updates (kind of like ‘resplendent ‘).
Have you thought of working in ‘chimera’ and ‘imbroglio’?

Definately, C and F are creating a RE imbroglio.

#4 The Phantom on 04.05.11 at 11:10 pm

Hi Garth: It seems as though some of the numbers you quote prove that the market is beginning to exhibit the signs of a correction. I know the stats you employ are for GTA but are the numbers the same for some of the smaller centres (markets) like Regina and Winnipeg? (yes I know you’re not terribly fond of these destinations but thought I’d ask nonetheless)
The Phantom

#5 Birdieman on 04.05.11 at 11:11 pm

But if someone is looking at buying within the next 12 months will the price decreases be equivalent to the 5 year mortgage rate increases? I know they all reset eventually but do we all agree we’ll see actual price decreases of 10-15% in 6 months? 12 months? Townhouses in a certain block I saw in the fall at around 289-299k are listed at 319k???? I’ll check what they sell for but sitting on the sidelines is getting tiresome.

#6 The InvestorsFriend (Shawn Allen) on 04.05.11 at 11:11 pm

Technical analysis is the study of human emotion on asset values. It has much to impart. — Garth

That is true though I might quibble and say emotion affects Price and not value.

Value is the same as price to someone who must buy or sell now. Fundamental analyts believe Value is often different than Price. Their goal is to buy at a price below the true value.

The technical analyst asks not what is value?, but only, where does price seem to be heading?

Technical analysis seems to have value for short term trading but long term investing is the province of the fundamental analyst.

I don’t see anything technical in technical analysis. It should be called emotional analysis I suppose.

I drank the Kool-Aide on fundamental and studiously avoid technical myself. Short-term trading just does not suit my temperment.

#7 Jean on 04.05.11 at 11:11 pm

How do you do the search, Garth? MLS?

#8 Cellar Dwellar on 04.05.11 at 11:11 pm

I remember you commented that you were looking at a heritage commercial building a month or so ago. New boiler,roof, windows,etc……?

#9 xindai shan on 04.05.11 at 11:13 pm

Hi Garth,

Why are listings down so much? Is it simply a large number of homeowners, holding off and waiting for even greater price increases?

#10 wetcoaster on 04.05.11 at 11:14 pm

The other sign of a market top is like what is happening in Victoria where the majority of the so called “affordable ” homes for sale are junk.

They have been relisted at least once, if not twice, have crap reno jobs or are in lousy areas. This is what happened pre-financial crisis peak in 2008. The fools keep buying the left over moldy garbage.

When has ReMax ever told the truth ? Between the BC government’s new princess and them I’m not sure who would score worse on a lie detector test.

#11 Antonio on 04.05.11 at 11:17 pm

Garth give it up! The big story out of the GTA numbers was supply and not demand. We all know that sales would struggle to meet last year’s numbers. But where did the sellers go? Here in the beaches in Toronto, a local realtor tells me that we are back to bidding wars because of lack of supply. One can see it compared to previous years. There just arent as many for sale signs.

So where did supply go? I believe that it got pulled forward with last year’s demand surge. Just as few need a new home after that binge last year, few are left with a home to sell.

So what does it all mean? Interest rates can go as high as they want this year. With no supply prices will keep rising.

Next year- who knows. A modest uptick in demand and supply is all it would take to create a balanced market.

Please note I am not a realtor or connected with the industry in any way. It is simply that reality has started to dawn on me. This market aint going down in the forseeable future.

You mean it’s different this time? — Garth

#12 Cellar Dwellar on 04.05.11 at 11:18 pm

by the way… Where’s the “Richmond rodent” aka BPOE since interest rates jumped .35?
Selling your “flipper”? Or dropping a strangers zipper to supplement the mortgage payment?

#13 realist on 04.05.11 at 11:26 pm

You know, it’s very difficult to set all-time sales records year after year.

A more sober and realistic interpretation of the latest TREB sales figures would lead one to believe that the second highest March on record does not represent a plunge in demand. That is an overstatement.

Shrinking supply and multiple offers on existing listings that end up selling well above list price would indicate that demand is quite healthy.

Re/Max has there spin and the bears have theirs.

#14 FerrisWheel on 04.05.11 at 11:30 pm

Well Garth, what do u think of Gold and silver now? PMs are taking off and ur book does recommend we have some but over the past few months, I’ve seen u ridiculing the Gold bugs. I think they have the last laugh. By the way, I’m no Gold bug but am invested 25% of net worth. Been good but not great. (Bad stock picking) Live and learn.

#15 Weeping in Windsor on 04.05.11 at 11:31 pm

Great photo!!

Harper’s staff have checked their Facebook pages.
No incriminating photos (with any Liberals).

#16 Timing is Everything on 04.05.11 at 11:34 pm

I guess it was a rumour… ;)

#17 Ex-Cowtown on 04.05.11 at 11:35 pm

Re/Max Rehab

ROFL! Gotta love it.

Looking at a house tomorrow. Don’t worry, just for fun. I figure it’s about $200K overpriced, so I’m just going to go have some fun and scare a realtor.

He may be your first client/patient when I’m done with him…

#18 Cellar Dwellar on 04.05.11 at 11:38 pm

@ #198 realPaul yesterday.
HILARIOUS! Et tu Shitty Hall…
I noticed Van City Hall shrink wrapped the other day and thought that the Mayors’ head had swollen again and he couldnt fit into his office without a little ‘ballem bondage”
What does one call a Building Girdle?

#19 Kevin on 04.05.11 at 11:44 pm

The chart that is used in the Remax report is a joke. The title “cost to finance an average priced home” has an asterisk. Why? Because it does not take into account property taxes, heating costs. And most first time buyers are loaded with debt. Income required is a lot more to buy an average home than that charts would make you believe.

#20 Tim on 04.05.11 at 11:53 pm

WHere are the bargains in Vancouver Garth?

Wait. — Garth

#21 NotSoHornyinBC on 04.05.11 at 11:54 pm

I moved to Vancouver from San Fran about a year ago. I also had the the pleasure to live in Phoenix. What i see here (specifically in White Rock / Crescent Beach) here scares me to get into this market (as a home owner). Instead of buying and get into this over heated real estate market, we have decided to rent and invest our down payment in Stocks and ETF’s. So far not too bad 9% return and this enough to pay our rent for 1 year. The home prices here are not sustainable and now I hearing this from a few of the veteran real estate agents. Apparently, they are not putting in clause in the contract of their buyers are that that they are buying property that is over valued…

Apparently, the white rock/Crescent beach area is the favourite new destination for the Asian investors.

Garth … how long will this insanity last?

#22 Mister Obvious on 04.05.11 at 11:56 pm

It seems then that the Canadian real estate market is rocketing toward ever greater heights while simultaneously collapsing like a house of cards in a hurricane. Is that essentially correct?

You need a new name. — Garth

#23 bps on 04.05.11 at 11:58 pm

Australia, its different here!

Sales listings up, Sales down…

Home loans sink to decade low…
http://www.smh.com.au/business/home-loans-sink-to-decade-low-20110406-1d3n2.html

#24 Jsan on 04.06.11 at 12:02 am

Allot of the strength in the Canadian economy recently has undoubtedly been due to two factors. One is the housing bubble which just like the US housing Bubble, juiced their economy for a few years with the Wealth Effect until the Bubble inevitably burst. The other factor has been the China factor and the belief that heavy commodity driven countries such as Canada and Australia will continue to do well as China’s economy soars.

But as has been stated before, it appears the cracks are beginning to show in China’s “phony” economy. By phony I mean they have deliberately pumped up their GDP numbers by overbuilding and overspending. As has been posted before, there are brand newly built, totally empty cities all over the country and as many as 62 Million empty condos as the Chinese building boom went schizophrenic over the last decade. Now are we beginning to see inventories that are so overstocked they just cannot take anymore? Without a doubt a China slowdown would most be felt in commodity driven economies such as Canada and Australia.

http://www.zerohedge.com/article/american-superconducter-plummets-after-company-announces-cancellation-chinese-contract-due-o

http://globaleconomicanalysis.blogspot.com/2011/04/roubini-on-chinas-unsustainable.html

.

#25 BC Bring Cash on 04.06.11 at 12:03 am

All those idiots that vote for Harper’s Fascist regime will soon regret that all he was doing was looking after his Corporate Sector pals. Who are his financial supporters? The Corporate sector of course!!! He is just trying to divert attention elsewhere hoping no one will notice. Jesse Ventura who I thought was a nut case has it all figured out. Corporate America along with Obama are a clever Fascist scam to enrich Corporate America and trickle down just enough to the masses to prevent a revolt. Do you see a connection between Obama and Harper? They are obvious bed fellows. They pretend not to be Pals of course.
This Blog is about RE of course. The reason I bring this up is RE, monetary policy and politics are very much intertwined. Check out Jesse Ventura,s web site.
He agrees with Ron Paul a US Congressman on a lot of issues.

#26 nonplused on 04.06.11 at 12:09 am

Technical analysis is the study of human emotion on asset values. It has much to impart. — Garth
Well, sort of. It’s the study of lines on a chart. But yes, it is meant to try and obtain some information about how the mad crowds are reacting to the pretty numbers, and thereby make predications about what foolhardy thing the lemmings might do next.

Speaking of lemmings, anybody note the new all time record high for gold today? From a technical perspective, this is very bullish. From a “what this means about the state of the world”, it is very, very bad news. But if we stick to just the charts, there is no overhead resistance anymore save Fibonacci intervals. Could be another 30% up year!

And unlike the stock market, the gold market appears to still be well bid with lots of volume. On the coin side of things, it’s pretty hard to get minted gold and silver coins right now (the most popular method for people to take delivery of small volumes of physical bullion). Both the US and Canadian mints are having a hard time keeping up with orders.

In other news, it looks like the fine folks at TEPCO have found a way to clean the radioactive contamination from Fukushima after all: Wash it all into the ocean!

http://www.zerohedge.com/article/tepco-knew-radiation-seawater-75-million-above-normal-it-started-dumping-radioactivity-sea-m

Personally I think the crumpled reactor core from unit 3 could be lying on the bottom of the ocean just offshore, which would explain the really high radiation levels before they started intentionally dumping poisoned water into the ocean. Alternatively it could have been caused by runoff from water sprayed/pumped/dropped on mangled spent fuel rods but either way it’s rather worrisome.

In any event, I think we can safely (sic) assume at this point that Fukushima will finish up to be a much larger and more costly disaster than the BP Gulf oil spill. The iodine won’t be a real problem as its half life is only 8 days, so expect them to report declining radiation levels in the weeks ahead. But don’t be fooled, a lot of caesium and probably lesser amounts of plutonium and what have you almost assuredly got out with the iodine, and it will be with us for a very long time. The half life for caesium is 30 years, so it’ll be 150 years until radiation levels from that stuff is back to “normal”.

My expectation of the timeline: 6-12 months of watching them hopelessly spray water at the thing until radiation levels decline to the point they can approach the plant, all the while the world watching as the water runs into the sea. Then, operation sarcophagus. The largest concrete pour since the Grande Collie damn. After that a world wide scramble for energy as every nuclear reactor in the world that isn’t at least a generation 3 is shut down. Bye-bye, dreams of plug in hybrids.

The good news is nobody will want to eat 3-eyed fish, so the ocean might actually have a period of recovery. Sort of. And Godzilla might be spawning right now as we speak, which is certain to provide more interesting news coverage in the years ahead.

Apparently, the CANDU reactor design is less susceptible to melting down, so maybe we’ll drum up some extra sales. But they still feel the need to put them in a containment unit, so I don’t know. At least the Russians were more honest about the nature of these things: They knew you couldn’t contain a core once you lost cooling so they didn’t bother to try.

#27 Nostradamus Le Mad Vlad on 04.06.11 at 12:23 am


“The news. The media knows that. So do the pumpers at Re/Max. And the combination is almost always a brand new low point in journalism. Not even any company mock research. Re/Max made it up. Anyway, I needed a place for my Re/Max rehab centre.”

Easy to see how the m$m is controlled, continually spewing out pure propaganda BS, and sheeple keep swallowing this nonsense. Just about everything the m$m reports is made-up-as-you-go-along. Pure fiction.

BTW, is your rehab centre open to anyone, or by invitation only? I could sure use about three to four decades of good mental health rehab!
*
1:45 clip “Fukushima Units 5 & 6 flooded, risk of losing their cooling systems. Watch the face of the TEPCO official.” wrh.com and Fukushima One.

Oil US$120 Global recovery my ass!

IMF One and IMF Two. If Greece defaults, everyone can default and the IMF is screwed by tungsten-filled gold bars along with lead-filled silver.

Euro Dump and Portugal downgraded (but doesn’t default).

UK Pensions revamped at a cost to taxpayers. Food Increases B-B-Q’s? Fuggedaboudid!

Nuke Power One and Nuke Power Two. What about Thorium and / or geo-thermal?

The Toilet alCIAQuada setting up shop in Brazil.

3:11 clip Converting cash to silver, and Barter Using Liberty Silver Dollars for bartering. WH must be scared of something, such as states going solo, fleeing the nest.

China Outsourcing not all it’s cracked up to be.

Hoaxes Par Excellence GW.

UK Military Not in great shape.

4:54 clip Boondoggle accelerating, as the karmic speed of time wends its way along the cycles of life.

Chinese HAARP? Seems so.

China and other countries will quickly pick up the slack, but this seems more of an election ploy to stay in the WH, plus Hypocrisy What of Guantanamo, Iraq etc.?

#28 Devore on 04.06.11 at 12:27 am

#9 xindai shan

Why are listings down so much? Is it simply a large number of homeowners, holding off and waiting for even greater price increases?

House prices are sticky, because hope springs eternal. When houses don’t sell, they get taken off the market.

#29 Your slip is showing on 04.06.11 at 12:36 am

Garth,

You were doing SO well for the last few weeks with the more relevant and non-sexist photos (but still quirky), but I see we’re back to scantily clad women and/or hookers and/or cryptic references to women as (edible?) objects?…..perhaps I shouldn’t be critical, as I don’t need to come up with funny and relevant photos every day for a blog…which has got to be tough.

I’m trying to be opened minded, but I still don’t get how the bawdy photos contribute to the housing/financial analysis — which is still brilliant, by the way.

And is a photo portraying black woman who are apparently prostitutes really that funny or harmless anyways? — most of us are aware of sexual slavery:

http://www.guardian.co.uk/world/2001/feb/28/gilestremlett

Other than that, fabulous financial/housing commentary. I keep reading every day and enjoy it immensely, but I guess I’ll just need to learn to ignore the photos! :)

Media = prostituting. How is that not obvious? — Garth

#30 Rob on 04.06.11 at 12:41 am

It must be Don Campbell week in Edmonton. Tonight on Global news he was interviewed and basically called for a boom in 18 to 24 months that will make 2004-07 look like a blip. He really could not jam more positive talk into a 20 second sound bite. Get in now Or you will regret it!
The fever is back in Edmonton. Everyone is talking about jobs, in migration, wage increases, labour shortages and house prices to the moon!
I know several people still in negative equity from the last boom…..

#31 April on 04.06.11 at 12:42 am

Antonio #11. You believe a realtor…?

#32 bcc7 on 04.06.11 at 12:44 am

it’s Don Campbell again:
“Real estate analyst says Edmonton on the verge of a boom” http://www.edmontonjournal.com/business/Real+estate+analyst+says+Edmonton+verge+boom/4556462/story.html

#33 The Original Dave on 04.06.11 at 12:56 am

Garth give it up! The big story out of the GTA numbers was supply and not demand. We all know that sales would struggle to meet last year’s numbers. But where did the sellers go? Here in the beaches in Toronto, a local realtor tells me that we are back to bidding wars because of lack of supply. One can see it compared to previous years. There just arent as many for sale signs.

So where did supply go? I believe that it got pulled forward with last year’s demand surge. Just as few need a new home after that binge last year, few are left with a home to sell.

So what does it all mean? Interest rates can go as high as they want this year. With no supply prices will keep rising.

Next year- who knows. A modest uptick in demand and supply is all it would take to create a balanced market.

Please note I am not a realtor or connected with the industry in any way. It is simply that reality has started to dawn on me. This market aint going down in the forseeable future.
———————————————–

weren’t the people of Kelowna saying the same thing a few years ago? We can’t use the argument that Canada is different than the U.S. Kelowna is home and is ground zero for Canada’s housing correction. It has already started there and there’s no turning back. Other areas lag. This will be Canada wide just like the lending frenzy was.

#34 Devore on 04.06.11 at 12:56 am

One thing you can count on near the end of a bubble is the endless stream of “experts” and “common wisdom” telling us why this time is different, and why it’s not a bubble at all, just a trend driven by healthy fundamentals.

Of course, they’re all 100% correct, until suddenly they are not.

Are we in a bubble? All the signs point definitely to “yes”. It’s very hard to see, when you are IN the bubble, because everything seems perfectly normal. It’s just the state of things, can’t imagine things being any different. But then reality sets in.

Real estate is a very local market. Expecting an entire country to keel over all at the same time is lunacy. So, keep laughing, bubble boys.

#35 Richard on 04.06.11 at 12:59 am

wow, garth. 59/ sq foot in DOWNTOWN?! Was the seller personally bankrupt? Or didnt know how to work his investment? Or had gone insane/alzheimers? Did you find him though MLS, personal contacts, or CAMH?

im simply flabbergasted and impressed.

Where did I say ‘downtown’? — Garth

#36 Bill Grable on 04.06.11 at 1:10 am

Commercial RE on Mau,is drying up faster than Ignatieff’s big mo’.
It was busy, on first sight this week, here in ‘everything costs a fortune’ land.

But, look closer. Closed Car Dealerships, stores with crazy pricing on loss leaders, and then you see the price of staples and your heart stops.

The vacant homes. The two for ones at places where you had to fight to get into. The sullen staff, slowly sweeping the endless palm fronds on the sweltering blacktop, of half empty hotel parking lots.

It’s in our FACE – but no one seems to want to say it.

OK, I will. CLAM DIPUS GIGANTUS, BRUTUS.

The tipping point came for me today when I read American spent 8 times what it took in last month.

That Tsunami I talked about – is here and my bet is that Mr. Turner has a Hummer that floats.

You best get get ready to hear the sound of the bond vigilantes riding in, guns blazing, and Geithner and Bernanke and crew running the presses like blue blazes.

The Seventies – the era of stagflation was really painful. Old dudes like me actually remember the oil shock, the lineups and the 21% mortgages.

Next? Your guess is good as mine, but it sure is going to be something for the ages.

#37 Bill Grable on 04.06.11 at 1:13 am

Pls: addenda:

That would be ”Maui” in “America” – tough to type with the sound of the luau in your ears – apologies.

#38 Kilt on 04.06.11 at 1:19 am

Garth, you are starting to lose your persuasiveness.

Last year was a record year for the early spring market. So no surprise to see sales down a bit.

Prices in many markets are rising or stabilizing- good for sellers.
Listings are decreasing – good for sellers.
Sales are down from last year, but well above 5 year averages.

Where is the good news in this for prospective buyers?

All this doom and gloom about taxes, and inflation and Canada’s economy, skyrocketing unemployment (which if you were looking for work through the 90’s – this is nothing).

I see a strong economy “Canada’s economy will grow faster than any other country in the G7 in the first two quarters of 2011 – OECD”

Strong local real estate
http://www.rebgv.org/news-statistics/home-buyers-and-sellers-enter-housing-market-near-record-pace-march

Interest rates have to rise to cool this market down. Yet another prediction of yours not coming to fruition. What was it 7 or 8% by 2013? You can still get 5 years for under 4%.

Time to throw in the towel? You are putting too much weight into some variables and not enough into others. Maybe you are getting too emotional about this.

Kilt.

Sales are down in 70% of markets. If you’d rather believe Re/Max, help yourself. — Garth

#39 Jane on 04.06.11 at 1:24 am

Thanks Wetcoaster, I’m with you on our “new princess”. OMG this province is going down the drain.

“When has ReMax ever told the truth ? Between the BC government’s new princess and them I’m not sure who would score worse on a lie detector test.”

#40 Dan Gabriel on 04.06.11 at 1:37 am

One thing every finance book will tell you is that capital is a FINITE resource at a given time. Limited. You choose : a house in Vancouver – I lived there, it rains 7 months a year, sometimes for weeks continously and it is always dark. Or a house in sunny Florida, costing half. You want a vacation property. Which one are you going to buy?

#41 Devore on 04.06.11 at 1:49 am

Nothing to see here. Prices rise. Real estate bears talk about everything else, but price.

Different day, same story.

It was explained, Did you miss that? — Garth

#42 reality guy on 04.06.11 at 1:51 am

Mortgage rates went up just this today

I love it, now that the banks baited and hooked up all the suckers , its time to wheel them it.

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/banks-boosting-mortgage-rates/article1969683/

5yr up .3%
\
http://www.canequity.com/

#43 bystander on 04.06.11 at 1:54 am

photos get better by the day :)

#44 Karl Hungus on 04.06.11 at 2:00 am

Garth from the last post,

Still waiting for that crash in Edmonton, average residential price up 4.8% since last month.

“Edmonton ranks #1 as the city with the largest loss of equity since their peak 45 months ago. Average SFD prices (chart) are down $66,094, a 15.5% loss of equity since the peak.” Source. — Garth

First, 15% is a far cry from the huge crash you used to predict. Before you flame me, I know that you have changed your tune to a slow melt, but on March 15th you proclaimed that “its here”. I assumed you meant the crash, (since you pictured a crash), as in, the crash has started. Since then edmonton prices have gone up 4.8%.

No crash in edmonton.

Get it right. I have said consistently a correction, then a melt. One month means nothing. — Garth

#45 Crash on 04.06.11 at 2:07 am

I saw a good show on NOVA called “Mind Over Money – can markets be rational when humans aren’t?”. Good discussion of why markets don’t act rationally.

http://www.pbs.org/wgbh/nova/search/results/?q=mind+over+money&x=14&y=12

#46 reality guy on 04.06.11 at 2:07 am

China keeps on raising rates to fight inflations

Just wait a bit when their food supplies start running dry due to the wreckless destruction of their farm land for useless real estate.

Mother nature will punish them for destroying the planet

http://online.wsj.com/article/BT-CO-20110406-700055.html

#47 Thetruth on 04.06.11 at 2:13 am

Someone used my advice (via multiple posts) and purchased Ontario real estate! Farmland ??

My bad as people should value their knowledge and not give it away for free!!

Lesson learned! good thing I never followed the herd on this blog and sold!

#48 John Adamson on 04.06.11 at 2:50 am

I was surprised to see that Kijiji has over 11000 house listings on its site for the gta. Sure some are listed with agents, but I bet those that are not listed with agents aren’t included in the real numbers presented by CREA. Perhaps the real number of true listings is much greater, perhaps many people can’t afford an agent, or maybe options to sell are changing. Anyways, I want to say that I am a trustee in bankruptcy and these days, we are seeing a steady flow of people walking from their homes. We saw this in Windsor a few years ago, but the storm is heading up the highway now and is very real in places like London, St. Thomas, Kitchener/Waterloo. In 16 years of doing this work, I would I am seeing more people who are walking from the home ownership dream, than in any time before. But no one ever talks about that. Not sure what it is like in GTA but I bet there is a similar trend. Garth do you have any stats on the number of Power of sales. That would be interesting to see. Keep up the good work, maybe you will prevent some people from meeting me!!!

#49 dosouth on 04.06.11 at 3:51 am

Don’t know if this has been shared yet. I find it quite imaginative and following in the wake of the latest Canadian and US RE reports…. eye opening!

http://tinyurl.com/3lt8fe8

#50 Cato on 04.06.11 at 4:20 am

Sales data needs to be treated as public data – and before RE industry starts whining they should realize other developed nations around the world recognize government data is owned by the public and not the sole domain of special interest groups. Trouble for Canada is not only can the industry spin stats deceptively, they are preventing useful consumer tools from reaching the marketplace ( zillow as an example).

In my personal experience its not a bad time to buy if you put in the leg work and stand firm for price you want. I’ve found most sellers have far less equity in home then CMHC would have us believe. This isn’t a good thing as they are in a debt trap. Can’t reduce price without going bankrupt so they are not worth wasting time approaching. Sellers with significant equity are ones that have room to negotiate. As one group of foreign buyers are rushing to get in at the top other foreign sellers are looking to get out and want to deploy capital elsewhere. Probably only 5% of listings fall into the motivated category and RE agent likely won’t do legwork to ferret them out. So cut buying agent out of the picture, call selling agent directly, ask questions and make it clear they need to put commission on table before you make an offer. Get list of possibles together and spend a few bucks on title search then stink bid properties that don’t have mortgage on title. Foreclosures are different story, courts/lenders seem to prefer to let property sit vacant then price to sell so they aren’t the steals most people expect.

I suspect reason listing volume is dropping in many regions is due to sellers with no equity simply can’t price to sell and agents don’t want to carry the dead weight. Why carry upfront ad costs of property that has no hope of accepting an offer less then asking. Not sure what the solution will be, sitting on fence for wave of foreclosures could be long wait.

#51 Mike on 04.06.11 at 4:57 am

@FerrisWheel, you could write a book.

“How to Make Money in a Rising Commodities Market!”

Chapter 1. Using Hindsight to Eliminate Risk
Chapter 2. Buy Now, Hold On!
Chapter 3. The Power of “Should have”

hmm…

#52 LH on 04.06.11 at 5:16 am

Now we’re talking!! What’s your cap rate? $59/square foot seems awfully cheap. BTW my four investment properties are all within WALKING commute of downtown office towers. Are yours accessible by GO Train? Some of my tenants pay more than $59/square feet (annually). How are the rents up in 905?

#53 market top on 04.06.11 at 5:28 am

I always find it interesting that people can switch stats around and claim fame to them. Market top, declining volumes and raising prices.

There are lots of other explanations as well. As you love to quote so often on this blog that the boomers will be flooding the markets in 10 years give or take.

Perhaps what is happening now all the boomers are not trading up? or they have moved up so many times that there are no bigger homes left.

Or maybe just maybe they are staying put with their Viagra and K-jell and saying let the kids come home and live with us again.

Who knows what is going on? like I have said many times before a market top in housing is visible when the houses on your street sell for $400,000 and some jack rabbit puts out a sign for $450,000.

Anyway here are my signs that housing is going to tumble.
1. There are lots of the upper end homes for sale.
2. Forget Re/max signs if you see lots of for sale by owner signs, and they stop moving. (greed)
3. unemployment is going up? well not in Canada or USA
4. Interest rates now thats a good one, do 90% of us care
5. Long winded writings on this blog

#54 Bestest place on the smallest part of earth on 04.06.11 at 5:38 am

I’m going to start the crash… I figured my timing has been impeccable in mistiming markets (why ETFs and negative correlation in a balanced diverse portfolio are such a great idea) that I will bring down the RE market by becoming a realturd…

Consider me your man on the inside. I will let you know the process (so far $900 for a useless book and about 12 hours over 3 days of time to write some 9 essays which any retard can do) of becoming one of these people. I will report on the tricks of the trade, how big a fool the next biggest one one in line is, how misguiding the financing is and, well whatever else I find.

I have diversified my portfolio and have $500k in a variety of asset classes well diversified with negative correlation at it’s heart. I’m shorting the housing market by renting and having 0% direct exposure to it, but hedging that move by becoming a realtor, which I will do at the same time as my day-job…

Stay tuned!

#55 Brian1 on 04.06.11 at 6:08 am

Brian1 reporting…………from the Toronto
Stock Exchange. Thars a lot of gold in them thar hills yet.
Question: was CIGX litigated to death by Reynolds? Are they desparate enough to do almost anything?

#56 Brian1 on 04.06.11 at 6:25 am

I used to think fundamental analysis was built into the price of stocks.It is affordable to be wrong at $4.00 but not more. Maybe that is the real reason people lose at technical analysis.

#57 Brian1 on 04.06.11 at 6:31 am

So the TSX wants to join the London Exchange. Is that because mining stocks are going nowhere? Are Euro stocks that much tastier?

#58 Aussie Roy on 04.06.11 at 6:36 am

Great article today Garth, its the same old story its not so much the facts, its how they are spun to the sheeple.

Aussie Update

WA, Australias biggest mining state in technical recession.

http://au.news.yahoo.com/a/-/latest/9143133/economy-flat-as-technical-recession-hits-wa/

On todays topic, it happens here to.

Yet again Australian media outlets have published stories based on press releases from RP Data. You might say ‘so what’ ? The problem is that RP Data statistics are inaccurate and unreliable. Yet it is presented as factual information.

http://tasmanianrealestatetrouble.blogspot.com/2011/04/alarm.html

Home loans dropped for a second consecutive month in February with New South Wales posting its biggest monthly decline in 14 years. The share of first-home buyers shrank further. But dont forget there wont be ANY price falls – LOL.

http://www.theage.com.au/business/home-loans-sink-to-decade-low-20110406-1d3n2.html

Some of the most expensive properties are those lossing the most.

http://smh.domain.com.au/real-estate-news/obeid-dream-house-back-on-market-20110405-1d2zz.html

So should we buy, sell or just rent?. You decide but put away the emotion and buy a calculator.

http://www.moneymorning.com.au/20110406/should-you-buy-sell-or-rent.html

#59 Oasis on 04.06.11 at 6:55 am

anyone want to make a comment on the American lira (better known as, American toilet paper?) .. still “predicted” to go up any day now?

http://charts.insidestocks.com/chart.asp?sym=DXM1&data=A&jav=adv&vol=Y&divd=Y&evnt=adv&grid=Y&code=BSTK&org=stk&fix=

#60 House on 04.06.11 at 7:07 am

How is it that we never see the cost to construct a building so that we can compare it to the selling price? If selling prices skyrocket then the profit to the contractor must go up as well. What happens when selling prices then fall (ie. do construction costs including profit also fall or stay at the same level so that there is a new floor when selling prices start to rise)?

#61 PM'S on 04.06.11 at 7:29 am

Look at gold and silver just crushin’ everything.

The PM’S will leave nothing in their path.

Get long. Stay Strong.

#62 Tkid on 04.06.11 at 7:40 am

26 Nonplussed, silver is very available but not as coins. Dealer in Welland gets in solid silver silverware, with hallmarks, all the time. Sold me some for scrap silver price as he was only going to melt it down otherwise.

#63 Moneta on 04.06.11 at 8:03 am

But where did the sellers go?
————-
Most of the sellers will upgrade or downsize.

When my parents wanted to downsize, the prices did not make sense. 1950s bungalows badly maintained and overpriced due to overlevergaed first time buyers.

Also, many of the boomer downsizers are probably relaxing a few years before packing up.

All the upgraders have either done it or can’t do it because the mortgag would be too big.

People are priced out folks, so they’re staying put.

#64 Richard on 04.06.11 at 8:14 am

Where did I say ‘downtown’? — Garth

bad assumption. I thought it was pretty much downtown since you hinted that it was within commuting distance to the bank towers there.

And it is. — Garth

#65 Aussie Roy on 04.06.11 at 8:19 am

House on 04.06.11 at 7:07 am

Building costs and replacement price are not what has driven prices to the moon, its the land price. Both our countries are in the middle (IMHO Aust towards the end) of a good old fashioned period of “land speculation”.

History is littered with these events.

Talking of history in Melbourne Victoria in the 1890s there was a resource boom (gold) House prices doubled in just 5 years, there were claims of a shortage and news that Melbourne would soon be Australias biggest city (currently Sydney).

Funny how just this week these claims are once again being made. Take a look at this article even just for the graph (down the page), if you bought at the market peak in the 1890s it only took 100 years to get your money back.

http://www.unconventionaleconomist.com/2010/08/safe-as-straw-houses.html

#66 Moneta on 04.06.11 at 8:20 am

Real estate is a very local market. Expecting an entire country to keel over all at the same time is lunacy. So, keep laughing, bubble boys.
————-
That’s what the US used to say….

1. They’re not making anymore land
2. Everybody wants to live here
3. Real estate is local
3. Interest rates are low
3. Affordability is still good
4. Households will do everything to hold onto the house
5. Inventory is low

All these memes were based on ratios where both numerator and denominator were inflated. Nobody was looking at the pure nominal numbers which had gone ballistic and should revert to the mean.

It was all based on truthiness and mathiness.

#67 Jane54 on 04.06.11 at 8:22 am

In TO for the yearly visit to my parents with side trips to relatives in Mississauga and Brampton. There are No signs on lawns at all!! I can go for a two hour walk and see less than 6 reality signs. The market must either be in neutral or the MLS listings must all be condos.

Supply and demand does need more supply so this crazy market may go on for a few months yet.

I am also surprised at how slanted the media coverage is. Does Canada not have any govt agencies that one can complain too about biased reporting. if it does I suggest that you bloggies get those letters of complaint in.

Garth thank you for your nice comments to Anna. I shall come and kiss your feet in worship on my next trip.

The ring is fine. — Garth

#68 Moneta on 04.06.11 at 8:36 am

No crash in edmonton.
——

People forget that real estate is a leveraged asset.

If you bought your house for 400K with 5% down and it is now going for 380K, that’s a larger than 100% loss on your inital investment.

That’s a crash.

#69 bigrider on 04.06.11 at 8:37 am

Seriously Garth, you bought a tenanted single family home within commuting distance from downtown Toronto at some perceived discount/price to what it’s worth, in an environment you believe is stacked against RE.

What possible return could you be getting on that house SFH??

Seems to me you are ‘spitting into the wind’

The storm has already hit many areas. You should get out more. — Garth

#70 Neo on 04.06.11 at 9:03 am

Everyone keeps mentioning the sales record for last year in the GTA. Ummmm, the sales record was in 2007 where because of the 0 down 40yr the market got juiced to the tune of 93,193. How is the 86,170 in 2010 the best year then? It wasn’t even better than the 87,308 in 2009.

#71 Oasis on 04.06.11 at 9:08 am

Technical analysis is the study of human emotion on asset values. It has much to impart. — Garth
_________________________________________

what’s it imparting on you now Garth? on gold and the USD?

People buy at the top and sell at the bottom. Duh. — Garth

#72 Form Man on 04.06.11 at 9:13 am

#59 House

Construction costs are fairly constant. Rising prices of real estate reflects the cost of the land far more than construction costs. In a rising market, the developer benefits, not the builder ( in fact the builder often gets squeezed by increased labour costs in a rising market ). Following the same reasoning, the developer loses in a falling market ( while the builder often benefits from falling labour costs, assuming he can collect from the developer ). In short, when houses begin selling for below replacement cost, it is the land price which will have to drop, as construction costs are fixed.

#73 tired vulture on 04.06.11 at 9:35 am

You mean it’s different this time? — Garth

Yes Garth, I think is different this time! Statistics means nothing when are compared with historical crazy high numbers. Now if # of sales have droped, dont you think is because the low supply? I think RE market is behaving the way is going to behave for many years to come….fewer sales, prices staying, fewer bids.

I am framing this. — Garth

#74 CalgaryRocks on 04.06.11 at 9:35 am

#25 BC Bring Cash on 04.06.11 at 12:03 am
All those idiots that vote for Harper’s Fascist regime will soon regret that all he was doing was looking after his Corporate Sector pals. Who are his financial supporters? The Corporate sector of course!!!

Which of the 3 main political parties is full of United Nation fanboys, ready to bankrupt Canada and transfer billions to 3rd world Countries in green shift scams???

#75 MississaugaSOLD on 04.06.11 at 9:40 am

Just sold my house last night, was listing on the market Monday and had 15 viewings, 2 offers and was sold for $6k over asking, a new record on my street.

Anyways, I am debt free and will be renting a condo closer to work (as planned).

Garth, are there any “for dummy” books on how to invest? Im pretty risk adverse so any guidance will be appreciated.

Thanks!

There are lots. But if you’re planning to invest your house proceeds, understand the risks of self-investing. Would you be doing this to save money, or do you consider yourself more capable? — Garth

#76 BrianT on 04.06.11 at 9:52 am

Looks like there isn’t one high level guy at Berkshire Hathaway that doesn’t steal from the shareholders-oh well-the kindly old grandfather had pretty good control over the leaks until the Internet came along http://www.zerohedge.com/article/munger-recuses-himself-frontrunning-focus-shifts-his-and-berkshires-purchase-byd

#77 Ralph Cramdown on 04.06.11 at 9:52 am

“You know, it’s very difficult to set all-time sales records year after year.”

Actually, it should be easy. The population is growing, and so are average wages. All other things being equal, one should expect more sales and higher prices every year.

Now if you’re willing to admit that the market is cyclical, with periods of irrational optimism interleaved with periods of irrational pessimism, then we can admit the possibility of peaks and valleys in sales and prices, and we can start to debate where we are in the current cycle…

#78 grantmi on 04.06.11 at 9:52 am

Some info. from the Left coast!!

Met with a Realtor this week.. doing an appraisal on our rental home. Landlord is bailing on us! Asked him about the influx of Asian money coming in from across the waters.

The Realtor says it’s all true! Absolutely!! The Agents firm is catering and seeing it ALL THE TIME!!!!

The changes to the emigration rules that bumped the red carpet entry into Canada from $400K to $800K is a joke he says!!!

With $800K NOW allowed to invest in a house in Canada.. THAT is considered INVESTING in the future of Canada. (Not like the older criteria of $400K, when you actually had to bring something to this country to improve the economy. Like starting a business, hiring OTHER Canadians, etc etc.)

The Agent is happy! Because the agent doesn’t see it ending. $800K is a joke to them! To get them into this country and bring their family to great schools, etc, etc. is worth the entry.

Most cases they leave the kids behind, and the parents head back to their parent country and wait. The agent says in most cases. they will come in and buy full furniture and vehicles just to make the homes look inhabitable! But in pretty all cases the homes are empty.

Left Coast Folks! The Fix is in… like others on this god forsaken blog….. you’ll never be able to compete with bidding wars or buying a home with your little piddle 10% down with these folks. Stop trying!!

Have you looked a Chilliwack or Mission lately! because that’s were you’ll be looking! (But enjoy the new tolls coming your way on the Port Mann!… But folks in Ontario have been paying those for years on the 407. get use to it!)

#79 Sold @ the Top on 04.06.11 at 9:53 am

Just sold my house in ‘Trendy’ Leslieville, multiple offers and got what I was expecting (obviously over asking as the sign now states) but not more unfortunately for me.

Going to rent for a year of 2 and watch the train wreck from a distance.

#80 MississaugaSOLD on 04.06.11 at 10:05 am

There are lots. But if you’re planning to invest your house proceeds, understand the risks of self-investing. Would you be doing this to save money, or do you consider yourself more capable? — Garth

—————————————-

No, I am not doing this to save money. Moreso, in the past I dealt with “Financial Advisors” and have not found them to be any help; probably moreso because I was not well educated on my purchases. I would at least like to educate myself on how things “work” and to learn how markets work in terms of pricing and what affects changes. I see posts here re: understanding world situation/events as well as potentially following trends to determine where prices may be headed. I think that is some basic knowledge I need so I don’t blindly go out and invest.

Granted, I am not too sure on my timeline as at some point I would like to own a place again but like most on here, believe the market is overpriced and some reductions need to occur.

In the meantime I would like to get a better return for my proceeds to make up for renting costs.

Thanks!

#81 Mike on 04.06.11 at 10:09 am

Rebuilding Japan will cost trillions of dollars and this will come from cashing in US T-Bills. The Canadian dollar is expected to continue to appreciate and by year end and will be worth $1.09 according to some Banks. This will be a huge catalyst for a housing collaspe in Canada. There will be an exodus of Canadian snow birds selling their overpriced Vancouver and GTA micro mansions to buy USA property that is 75% cheaper. This is a no brainer.

#82 not 1st on 04.06.11 at 10:19 am

I know real estate is over heated but these people thinking stocks and ETFs are some sort of safe haven or alternate investment are dreaming.

The stock market is due for a 50% haircut and is wildly overvalued. Why? because we are witnessing the start of a tech bubble again and we know how that ended in 2001. But this time, the U.S. is insolvent with 75 trillion is outstanding debt obligations and the next rising economy (china) just built itself out by 50 years as witnessed by the empty cities and malls.

On top of that, there is a derivatives bubble of 100s of trillions floating out there and the U.S. dollar set to lose reserve status.

Instead of worrying about how you are diversified, worry instead about priortizing and number one investment should be some sort of AFFORDABLE housing or land. You can ride out a lot of uncertainty with that asset group regardless of liquidity.

#83 Alberta Ed on 04.06.11 at 10:20 am

This column should be stapled — print side in — to the forehead of every RE reporter.

#84 Brian on 04.06.11 at 10:31 am

Anyone who says there is tight supply in the GTA is selling poppy cock. Look up Beaches on MLS and you will find that there are too many properties to list all at once, in other words more than 500 properties currently listed in the BEACHES. The number of houses per buyer is increasing because people want to sell at the top. Supply is definately increasing relative to buyers and this why it takes longer to sell. There are lies, damn lies, and statistics, and there there is TREB.

#85 Tim on 04.06.11 at 10:41 am

Vancouver Olympic Village Lawsuit Growing
http://www.cbc.ca/news/canada/british-columbia/story/2011/04/05/bc-video-olympic-village-lawsuit-grows.html

Mould in the floors, water leaking through the roof. Weasel condo pimper Bob Renne says this is normal lol! It shows how poor construction is in Vancouver. Anyone who buys a condo in Vancouver is taking their chances. We have inept builders and incompetent inspectors. THere are almost 70 condo owners in Olympic Village who are suing the city, yet not one person on City Council has apologized for their colossal F*&^-ups! In the private sector, they would be fired.

#86 Painted Toenails on 04.06.11 at 10:46 am

Garth is right. It has begun. The danger is not losing a bit of money on your house. The danger is becoming more and more financially stretched as you age.

Imagine having to sell so you can continue to eat. Now add selling in a declining market.

My neighbours are doing just that. They retired here ten years ago to live their dream. It has become far too expensive and they must now go elsewhere. I’ve never imagined that a retired school administrator and his homemaker wife would have to leave because they just can’t afford to live here anymore. I remember chatting with her just before Christmas, just chatting, neighbourly stuff. She said she couldn’t afford to give the kids Christmas gifts this year. I didn’t know what to say. I blew it off. Actually as I look back, I realize I rationalized I really didn’t want to believe it. I told myself she was being dramatic and that she was just tired that day or perhaps a bit fed up with all the Christmas materialism. Her kids are adults so I thought that she might also be tired of adult kids wanting ‘stuff’.

Turns out she meant it. They really couldn’t afford to give gifts or to eat well.

That is what Garth is warning us all about. Choices can be made now that will help everyone later. Don’t wait until the choice is no longer yours to make. Don’t wait until your hand is forced.

It happens over a long period of time. Denial meets opportunity lost.

My neighbours are looking at a trailer home now.

Jesus.

#87 GregW, Oakville on 04.06.11 at 10:50 am

Hi 27 Nostra, Thanks for the links about the Japan issue.
What a mess they have is an understatement.
PS, I’m still positive about our Government ‘owned/controlled’ CANDU reactor plant design. The EC6 looks good to me.
I believe a review of the safety design is pressently underway and is surtainly welcome and wise considering the Japan issue. But I’m not at all concerned about using the CANDU design to help keep the lights on.

I’ve copied and pasted this first about Gatorade (and FYI bannanas have potassum too);
‘To help put that in perspective, it may help to know that Gatorade contains 4 Bq/Litre of radioactive potassium.’

Fukushima isotopes are going to be showing up all over the world for a while now. California recently measured 20 Bq/litre in rainwater. http://www.nuc.berkeley.edu/RainWaterSampling

To help put that in perspective, it may help to know that Gatorade contains 4 Bq/Litre of radioactive potassium.

#88 DouginVictoria on 04.06.11 at 10:52 am

If you can afford a 15yr term mortgage then you can afford to own a home.

#89 Timing is Everything on 04.06.11 at 11:04 am

For Nosty….Ther’s oil in them thar sands…

The world runs on oil…But who runs the oil?

“The German government reportedly plans to halt an oil deal worth billions of euros between India and Iran — a deal which involved payments via Germany’s central bank — that had been sharply criticized by the United States government.”

http://www.spiegel.de/international/germany/0,1518,755234,00.html

#90 Alex on 04.06.11 at 11:07 am

Interesting overall tone to today’s comments. Lots of “The correction will never come” and “This insanity will last forever.” This in a period where much of Canada is already correcting and has already corrected to a large degree, where mortgage amortizations are shorter, where rates have just bounced up and will continue to do so, where the classic signs of a bubble top are there for everyone to see, where the real estate mob is spinning (LYING) harder than ever before, where the general cost of living (food, fuel, etc) is rocketing higher, and where our largest trading partner and the most powerful nation on earth is seeing even *further* housing price declines.

As I said – very interesting. Do we have an influx of realtors on here today? I know of a few that are hurting real bad trying to deal with the realities of today’s housing environment.

#91 DouginVictoria on 04.06.11 at 11:11 am

Some high-end B.C. rural waterfront properties see substantial price drops

http://www.vancouversun.com/business/High+rural+waterfront+properties+substantial+price+drops/4140062/story.html?tab=PHOT

#92 landlord on 04.06.11 at 11:12 am

it takes a lot of guts to buy re in this market. congrats on your purchase!

#93 Timing is Everything on 04.06.11 at 11:14 am

Garth said – “As I said, if you think there aren’t already bargains, you’re not looking.”

There are always bargains….as Garth states.

Just because something is cheap (bargain) is absolutely not reason to buy.

Obviously Garth thought his ‘deal’ was right for him at this particular time. Only Garth knows the ‘details’.

Congrats on your purchase. Hope it works out for you.

Positive cash flow always does. — Garth

#94 Kilt on 04.06.11 at 11:15 am

Hey Garth.

Sales are down in 70% of markets. But that is from record or near record sales levels of last year. If you look at a 5 year trend sales are quite strong.

Then factor in decreasing listings, this does not point to a imminent correction.

I still say interest rates are they key. Either that or force more buyers to the sidelines by increasing the down payment.

ps – other than being a vulture, how could one benefit (profit) from a prolonged correction in prices.

Kilt.

#95 martin on 04.06.11 at 11:16 am

#58 OASIS

leave the kings to do their job and just follow their strategy!! Best things to invest now days is with Americans and their currency. Times will change sooner then you think.

#96 NotSoHouseHornyinBC on 04.06.11 at 11:26 am

I moved to Vancouver from San Fran about a year ago. I also had the the pleasure to live in Phoenix. What i see here (specifically in White Rock / Crescent Beach) here scares me to get into this market (as a home owner). Instead of buying and get into this over heated real estate market, we have decided to rent and invest our down payment in Stocks and ETF’s. So far not too bad 9% return and this enough to pay our rent for 1 year. The home prices here are not sustainable and now I hearing this from a few of the veteran real estate agents. Apparently, they are not putting in clause in the contract of their buyers are that that they are buying property that is over valued…

Apparently, the white rock/Crescent beach area is the favourite new destination for the Asian investors.

Garth … how long will this insanity last?

#97 bill on 04.06.11 at 11:29 am

garth enjoys t/a . who knew?
this guy does too:

http://www.er.ethz.ch/people/sornette

as you can see he has written and otherwise participated in a lot of papers on the subject.
but have a look at some of his work…

http://www.er.ethz.ch/essays/marketcrashes

his predictions for the crash in america were most thought provoking.
couldnt find the ucla work but this guy and his associates are at the cutting edge.

Endorsements:

“A professor of geophysics gives a very different perspective, informed by his scientific training, on the stock market. I am sure that his view will be highly controversial, but the book is fascinating, and mind-expanding, reading.”–Robert Shiller, author of Irrational Exuberance

just dont use t/a for the venture exchange [ tsx-v]
the professors aren’t there yet.

#98 SM on 04.06.11 at 11:38 am

Trying to beat a dead cat? another sign of Market top reached in calgary:

http://www.660news.com/radio/660news/article/208381–alberta-s-raw-materials-will-fuel-small-real-estate-boom

#99 Devore on 04.06.11 at 11:39 am

#45 Crash

I saw a good show on NOVA called “Mind Over Money – can markets be rational when humans aren’t?”. Good discussion of why markets don’t act rationally.

They probably aren’t all of the time, but if only we put humans in charge of them, to wisely guide them through the irrationality, everything will be fine!

#100 X on 04.06.11 at 11:42 am

Spoke w a 25 economics grad the other day…to him RE prices in Toronto should always rise, people always want to live in the city, there will always be demand. Too bad his education did not give him enough education to fear that type of a mentality about any investment.

#101 Moneta on 04.06.11 at 11:46 am

My neighbours are looking at a trailer home now.

———-
US debt-to-gdp over 500%

http://www.pimco.com/Pages/Skunked.aspx

Canada is there too.

Only 2 ways to get that ratio down: write-off debt and entitlements or create inflation by printing money.

No matter what, lifestyles are going to shrink.

#102 Ex-Cowtown on 04.06.11 at 11:47 am

ps – other than being a vulture, how could one benefit (profit) from a prolonged correction in prices.

Kilt.

++++++++++++++++++++++++++++++++++

I don’t view waiting for a appropriate conditions to invest as being a “vulture”. Each of us has our own comfort zone. Over the past several years, many sane rational people have done insane irrational things with their or borrowed money. I don’t feel the need to help them out of their particular pickle.

At the end of the day, someone has to do something with an asset to justify the price, as in commercial RE the widget vendor must sell enough widgets to pay for the building or the building’s value drops.

Residential RE is the same…. with a twist. Ultimately someone must be able to live there on their salary AND pay for their kids education, braces, car accidents, unexpected pregnancies, lawyers for those inevitable small brushes with the law etc, AND their own retirement. If they can’t, the price of the asset must eventually fall. Now, they may no longer own it when it falls to that price, but that’s reality.

Unless of course the house crosses the line from being an asset and becomes a liability. In this case the cost of the liability can massively skyrocket due to 20:1 over-leverage, rising taxes, maintenance, and as we saw yesterday, climbing interest rates.

A friend of mine once said ” There’s a big difference between being able to buy a Ferrari and being able to afford a Ferrari”. He came to this revelation after taking out the third clutch in less than a year at $15K a throw.

Houses are no different; just because you can cobble together the financing to buy one does not mean you can afford it.

#103 BPOE on 04.06.11 at 11:59 am

Well, good morning, little ones! Yes, I saw rates pushed up 0.35% but that actually is a GOOD thing, folks. C’mon! You all need to get with the program and understand the implications and positive market this helps create. It means we have an opportunity to push even MORE real estate because buyers are scared rates could go even higher. Folks, since rates bumped up a bit, this week I have already single-handedly sold over like 683 condos and single family houses or something. You just can’t kill this market, even with higher rates, folks! Folks, my favorite sale this past week was to the sweetest little transgender, ex-communicated Mormon, hooker dwarf with a sub-talent for practicing veterinary medicine and snowballing. Damn, he/she was H-to-the-O-to-the-T!!! He/she came into my workplace and explained to me that he/she was in a dire situation because he/she did not have an “office” space in which he/she could practice her/his craft. I obliged to help the little bugger (can I just call her/him “Carol” or “Mel” from this point forward? Actually, I’ll just call it Carolmel.) Well, Carolmel pulled himself/herself up into my massive rented Lexus and off we went. After searching for minutes and minutes all around downtown, I was able to locate a few units that may work for Carolmel. In fact, I found over 1,100 units for in downtown Vancouver alone!!! I’ve got hemorrhoids. Well, we found this great little space for Carolmel in DTES (downtown East side). Because he/she doesn’t need too much space, being a dwarf and shit. We found a sixth floor walk-up, lightly-used storage locker with a padlock! It was truly amazing because it is located in Vancouver! It had a real modern feel too, having concrete floors, higher ceilings, and a metal caging all around it. Also, if it were to have had windows, it would have had an East facing view, which would have been good for feng shui. Carolmel immediately knew this would provide him/her the privacy, discretion and darkness he/she needs to practice his/her craft for all paying customers, including the donkeys and cats that may need “helping hand.” Seriously, my ass feels like I’ve been ran open-hole over a gravel road for miles. Carolmel immediately insisted the space was perfect and he/she signed the papers, all of which I readily keep in my satchel, of course. After signing the contract for purchase of this gorgeous storage locker, Carolmel asked me if we could christen the space together in celebration of the right step forward for him/her. Because I am a man who insists on the Best Customer Pleasing on Earth and making my clients happy, I gave him/her an enthusiastic “YES!” Carolmel too carries a satchel full of all kinds of things like a wallet, a laptop, a charger, some lipstick, some DVDs, a collapsible stepping stool, latex gloves, a web cam, jumper cables, a car battery, an array of glass “neck massagers”, peanut butter, and clamps of all kinds! Needless to say, we had an amazing time “celebrating” together. Carolmel is worth every penny of the $8.85, including train and transfers. Mother f*cker!!! I can’t hardly sit down today. Did Carolmel use broken glass or sandpaper? I followed up with Carolmel with an email expressing my gratitude for clients such has himself/herself. He/she was appreciative of it and because of all my hard werk, he/she has extended to me two additional therapy sessions between 1:30 a.m. and 3:45 a.m, weekdays only. Seriously, I think I’m bleeding from my ass a little bit. I’m going to have to go soon and get some Preparation H with Bio Dyne. This time, though, I WON’T confuse it with the Super Glue. Last time I did that I couldn’t play musical chairs with my REALTOR colleagues for nearly a week! See folks, we are SMARRT in Vancouver. Carolmel was only one small example of the exemplary customer-pleasing service I provide in one’s quest for the perfect home or “office.” You too can experience this kind of detail-oriented, comprehensive tour of my city if you just give me a call. Please, for all that is holy, I really have to go right now and get some new undies, ice and band-aids. Take care all you losers who rent and rich home owners.

http://www.virtualtourist.com/travel/North_America/Canada/Province_of_British_Columbia/Vancouver-903183/Warnings_or_Dangers-Vancouver-Beggars_homeless_junkies-BR-1.html

#104 Devore on 04.06.11 at 12:01 pm

#72 tired vulture

Yes Garth, I think is different this time! Statistics means nothing when are compared with historical crazy high numbers.

2010 was a pretty average year for sales, hardly “crazy”.

http://www.randi-emmott.com/market.htm#annual%20sales

Now if # of sales have droped, dont you think is because the low supply?

Did you really just write this? Supply is still good, (although dropping), and sales are certainly no limited by supply.

#105 Kevin in Winnipeg on 04.06.11 at 12:03 pm

….monthly mortgage payment will be substantially less than the $1,000 in rent they’re paying for a two-bedroom apartment in River Heights. “I think I don’t want to spend my money on rent,” he said. “I think it’s better… to spend my money on our own home.”

Some people are in for a surprise.

http://www.winnipegfreepress.com/business/young-couples-a-factor-in-citys-robust-house-sales-119310914.html

#106 Cellar Dwellar on 04.06.11 at 12:07 pm

INTEREST RATES GOING UP UP UP!
you heard it here first BPOE !
Sell NOW before the Tsunami swallows Richmond !

#107 Devore on 04.06.11 at 12:12 pm

#84 Painted Toenails

My neighbours are looking at a trailer home now.

Cat food not far behind.

hoocouldaknowed?

#108 DouginVictoria on 04.06.11 at 12:13 pm

Today’s paper (Vancouver Island)

Housing: new buyers drive sales
http://www.timescolonist.com/business/Housing+buyers+drive+sales/4566881/story.html

Apartments’ future looks rosy
http://www.timescolonist.com/news/todays-paper/Apartments+future+looks+rosy/4566879/story.html

Comox Valley housing project eyed
http://www.timescolonist.com/business/Comox+Valley+housing+project+eyed/4566880/story.html

#109 Brian1 on 04.06.11 at 1:01 pm

Brian1 reporting: Bloomberg states CIGX has failed to meet Nasdaq listing requirements.

#110 45north on 04.06.11 at 1:07 pm

John Adamson: talking about home owners walking away:

We saw this in Windsor a few years ago, but the storm is heading up the highway now and is very real in places like London, St. Thomas, Kitchener/Waterloo.

kitchener1: what do you see?

#111 Blobby on 04.06.11 at 1:11 pm

Vancouver sun yesterday – vancouver home sales 4th highest in 20 years.

Translation : They’re at the lowest they’ve been in 4 years.

#112 Oasis on 04.06.11 at 1:26 pm

People buy at the top and sell at the bottom. Duh. — Garth
____________________________________

… as your answer suggests, you really have no clue about technical analysis.

I’ll pray for you. — Garth

#113 Happy in Toronto on 04.06.11 at 1:56 pm

OMG! I cannot stop laughing. BPOE imposter, you’re CRAZY STUPID HILARIOUS!!!!!!!!!!!! I think I peed my pants. Where do you come up with this stuff?

By the way, I do have to admit that Vancouver is a N A S T Y city. Sure, it looks good from a distance, but once you’re standing in the heart of it you realize the buildings are all getting old looking, dated, and dingy. There’s little variation in the style of buildings in Vancouver. Also, the buildings are simply spread too far apart, which adds to the deception that it is more city-like than it appears from a distance. This allows for literal drug parks every other block as there’s nothing filling the space. So sad, so so so sad. It just doesn’t feel like a REAL city, and I’ve heard it before but I do agree with it, there is no soul or energy in Vancouver. Give me Toronto any day.

#114 Joe on 04.06.11 at 2:00 pm

So Gail Vaz-Oxlade of Til Debt Do Us Part fame is on HGTV with a new series of the show focusing on overextended home owners. It premiered last night.

One, I think it’s a sign of the times that HGTV is bringing in a financial help show instead of another reno show. Gail’s also filming new episodes of the show Princess, about spoiled women who overspend. Two debt shows. Hmm…

TDDUP home ownership disasters was a bit disappointing in some regards. “Balance your budget or you have to sell the house,” was the main task. I won’t get the details of how stupid the people were, you can watch it if you’re interested. But basically everyone came back to, “renting is throwing money away,” even though their houses were in need of repairs and they had no money to do them and in order to pull the money together they’d have to make some major sacrifices that it didn’t seem that either of the couples were prepared to make. It was putting huge stresses and strains on them and their relationships. These couples left me with serious doubts about their futures and I felt very pessimistic about their abilities to pull themselves out of the hole they’d dug and that they wouldn’t end up splitting up. The stress and strain that making stupid property decisions were putting on these couples were huge. It was really sad. I imagine there are a lot of couples like this or they wouldn’t be doing a show on it.

My point: Sign of the times, and times they are a changing.

#115 Vancouver_Bear on 04.06.11 at 2:07 pm

Major criuse line showed middle finger to delusional and stupid city – http://www.news1130.com/news/local/article/208488–disney-cruise-line-will-stop-using-vancouver-as-port-of-call

#116 Utopia on 04.06.11 at 2:12 pm

To BrianT,

The inflation/deflation debate has really heated up over at Rickackerman.com and I encourage you to go back there and check out todays article as it puts a truck sized hole in the hull of those who insist that hyperinflation is our economic outcome.

I suspect you are a deflationist at heart judging by some of your past comments so you will likely enjoy the debate that has developed.

We need to keep in mind too the impacts on Canada should the US fall into a steep deflationary cycle. We will not be immune here to the greater impacts and anyone who is now taking on significant mortgage debt really needs to have his head examined.

My instincts tell me we are headed for a real gut-check in the not so distant future in Canada and plenty of regrets from first time home buyers and those with but a little real skin the game. They will be punished because of the errors in their judgement regarding the slim hope that real estate always rises. It does not.

So here it is. It is brilliantly written and reasoned in my opinion and makes such a good argument that it leaves the hyperinflation camp just gasping for air (and a few straws too!).

http://www.rickackerman.com/2011/04/heres-why-hyperinflationist-lira-is-wrong/

#117 BrianT on 04.06.11 at 2:16 pm

Great article showing what a mess the USA has become-the idiot writing this says retirees should be spending $40000 to $50000 a yr out of pocket to the sickness industry down the road http://finance.yahoo.com/focus-retirement/article/112484/only-inflation-matters-retirees-moneywatch?mod=fidelity-livingretirement&cat=fidelity_2010_living_in_retirement

#118 Moneta on 04.06.11 at 2:17 pm

Let’s do a quick survey…

What percentage of households can afford a 500K house across Canada? And when I say afford, I mean sustainably and being able to save for retirement.

Because this is what is on the market these days:

500K+ listings in percentgae of all listings:

Montreal: 15%
Ottawa: 22%
Toronto: 39%
Vancouver: 55%

#119 NOTHING selling in GTA on 04.06.11 at 2:19 pm

March was going be the the RUSH into RE instead sales fell again for the 10th straight month in a row. Realtors spins are getting old . Cost of living going higher alone with interest rates and feller buyer equals a CRASH. Is it any wonder why you can drive around the GTA and see the countless for sale sign with very little sold?Canada is in the biggest housing ponzi bubble in history and it’s falling apart fast and hard.

#120 Mr. R. on 04.06.11 at 2:21 pm

BPOE

Are you Charlie Sheen?

#121 AgAu on 04.06.11 at 2:29 pm

From the April edition of a newsletter I just received (TopOttawaHomes.com), related to Ottawa RE market statistics – the arrows may not show up, so I inserted Up or Down where appropriate.

AgAu
——————————————–

Local Market News:

Ø March Sales↓ 17.6% over 2010 – Down

Ø 936 residential properties and 296 condos were sold last month

Ø Average sale price ↑ 5.6% ($375,364) for residential
-Up
Ø Average sale price ↑ 6.5% ($253,763) for condos
-Up
Ø Side-by-side doubles and duplexes have taken the highest hit for price decreases*

Ø Days on market for residential ↑ 13.4% (now taking around 31 days to sell) – Up

Ø Days on market for condos ↑ 52.9% (now taking around 20 days to sell) – Up

Ø Lots are taking about 0.5% longer to sell (39 days)

Ø Multi units ↑3.3% longer (around 129 days)
-Up

*These figures are averages. Please check with TopOttawaHomes.com to find out the specific figures for your neighbourhood! Location plus where your selling price is affects the numbers.

Ottawa Real Estate Board President, Joanne Tibbles, had this to say about the March resale market in Ottawa: “As you can see, last month we experienced a typical average March in terms of resale home sales.” (Last year’s figures were due to buyers leaping into the market to beat the HST). Further, she went on to say that “Despite the lower volume of units sold, the average price continues to rise slightly, indicating that we are still in a healthy balanced market. Ottawa’s housing market is actively moving along as it typically does in early spring,”

Canadian Market News:

On a more national scale, the Conference Board of Canada’s chief economist, Glen Hodgson believes, for Japan, that “… people need to rebuild infrastructure, rail and housing and that will actually improve growth in the next four to six quarters.”

The Bank of Montreal reduced their economic outlook due to the crisis in Japan. As a result, the bank doesn’t expect an increase in the Bank of Canada’s key overnight lending rate until at least this summer. Further, many Canadian businesses, including lumber producers and engineering and construction firms, will see an increase in business during the rebuilding phase. Canada’s economy is more closely tied to that of the US and they are on a steady path to recovery.

——————————————

#122 Industrial Guy on 04.06.11 at 2:31 pm

SW Ontario ….. this is what happens when all the industrial jobs disappear, plants close and all that’s left is minimum wage service sector jobs.

The nearly three year long strike at the Engineered Coated Products plant in Brantford, Ontario is coming to an end.
The plant is closing for good in June. Just like the plastics plant, the truck drive shaft plant, the truck brake plant, the forklift factory and the fastener plant before that …..
The “For Sale” and “For Lease” sign business is booming.

It’s different here …. OH, you bet!
Home sales are down 24 per cent from the same month in 2010.
Prices on the other hand are up. Unlike Vancouver and Toronto we can’t blame foreign investors for this. They probably couldn’t find Brantford on a map.

The headline in the local paper …. “Home sales down but prices up”. http://www.brantfordexpositor.ca/ArticleDisplay.aspx?e=3060613

The average price of a home sold in Brantford last month?? $233,840.00 …… Insanely expensive for this city …. but a steal compared to Toronto and Vancouver.

Location is everything. Brantford is 20 minutes from Hamilton, 50 minutes by the 407 from West Toronto and Pearson International airport. Its a short drive to the Aldershot (Hamilton) GO Train station.

Brantford has great schools (Laurier University, Mohawk College and Nipissing University) Family Doctors looking for patients! No one has job benefits so the dentists are finding it tough.
It’s a safe place to live, but good jobs are hard to find. In many ways it represents the future of Canada.

http://creastats.crea.ca/brnt/

#123 Matt on 04.06.11 at 2:43 pm

Sales are even down in Ottawa – 17.6% versus March 2010.

#124 Pr on 04.06.11 at 2:50 pm

I dont see, WHY THEIRS IS NO LAYER OUT THEIR, ready to sue CREA and RE-MAX are the real estate industry ( just like the MLS) for not giving the entire realty, not just the positifs to have some sales.

#125 Moneta on 04.06.11 at 3:45 pm

So here it is. It is brilliantly written and reasoned in my opinion and makes such a good argument that it leaves the hyperinflation camp just gasping for air (and a few straws too!).
——-
Why do the deflationists always have to turn it into hyperinflation? Plain old inflation will do.

#126 Makeorbreak on 04.06.11 at 3:48 pm

(sorry about previous post, use this one instead)

I saw in ‘Le Droit’ (Gatineau daily newspaper) today that there is going to be an auction sale for homes whose property taxes have not been paid. Only cash will be accepted.

The adresses of the homes are listed, as well as the names of the owners. Believe it or not, there are 3 full pages of delinquent home owners. The auction sale will be held on June 9. A neighbor has a Royal Lepage sign in front of his house and guess what, his house is also listed in the auction list.

I thought this only happened in the US! Garth, have you ever heard of such a thing in Canada? This is Gatineau, one of the most stable areas, employment-wise. What is going on? If people aren’t able to pay their municipal taxes, what about their mortgages?

#127 Dan in Victoria on 04.06.11 at 3:54 pm

Went to lunch yesterday with a manager of one of the wholesalers I deal with.
Best month ever for sales in March he said. Absoutely fantastic.

On the way out I got flagged over to another table with some guys that I know in the constrution industry, have a beer with us Dan.
Gee ok.
So sat there and listened for an hour and a half about what they are seeing in the trade end of things.
Prices down and going lower, lots of trades from Vancouver starting to show up to price jobs.
Neither fellow has gotten a full week in since January.
Getting paid on time starting to be a problem.

Ran into a couple of fellows this morning at a site
A little fear starting to replace last years cockiness as things are still “ok” but not like it was.
Lots of undercutting going on.

In my general area 9 houses for sale, talked to my realtor about it and she said anything not up to par is not selling. PERIOD.
Buyers are being very selective.
The nicely renovated and properly done homes were moving but at reduced prices.

My business phone has stopped, dead…..
(Well still getting calls from long time clients but just for a few hundred dollar type jobs.)
Only calls I am really getting are from people looking for work, anything please!

I had a couple of guys from the labour supply work for me for a few days, the one kid was just about in tears had only managed 4 days work in the last three weeks,
owed rent and didn’t think he could pay it.
The other fellow said it was the same for him, just dried up all of a sudden, thank god I live at home he said.
So who knows, its all over the place here some are busy, some are desperate and some are still drinking the kool aid and blowing sunshine.
See what its like around July.

#128 BrianT on 04.06.11 at 4:07 pm

#114Utopia-Like I said before, this guy Ackerman doesn’t even understand the basics. Hyperinflation does not mean Joe Sixpack’s debt will not be a problem, or that his house will rise in value. Your weimar republic analogy doesn’t hold, as Joe Sixpack isn’t going to get a wage increase NO MATTER WHAT HAPPENS TO THE VALUE OF THE US DOLLAR. Hyperinflation is not high inflation-it is not caused by an increase in the money or credit supply. Hyperinflation is caused by a run on the currency. At least Lira understands the subject. I am not predicting hyperinflation, but if Ackerman wants to discuss it he should first educate himself.

#129 RB on 04.06.11 at 4:08 pm

Chateau d’if

#130 Smoking Man on 04.06.11 at 4:18 pm

Sitting here chuckling at all the bubble heads and basement dwellers who were banking on Houseageddon… In 2009 when I was screaming on the globe and mail all of Feb and March, buys stocks buy houses, bye bye bye. I was ridiculed, poked and slammed.

When I announced that my son bought a condo, everyone was calling him and idiot. He turned 10k deposit into 100k equity in 22 months. Less the 12k he has paid in interest which would have been rent, had he not bough, that’s a 800% return on investment.
So the moral of the story is herd dynamics kids, fundamentals are irrelevant for the short term and near turn.

What is so funny today is many of my attackers now claim they had called the bottom, ha.

How did I know, how did I pick the bottoms…see there is an insane crazy voice in my head he only comes out when I drink my Gin, the voice taps into the dark matter of everyone’s consousnes, that’s how I knew..
So far so good…..:)

And then some people get the gift of the spelling gene, we can’t have it all. LOL

#131 BPOE on 04.06.11 at 4:23 pm

Global News interview today about North Shore and west Vancouver sales are HOT!. Great news. Good to see some Candians selling and going into a diversified portfolio. Need to cleanup the weak bids so the big boys can come in and mop up. Sail in the morning and ski in the afternoon. Where else than BPOE

#132 Edumacation on 04.06.11 at 4:29 pm

Check it out…

National Homeownership Education Week!
http://www.genworth.ca/homeownership/index.asp

Even better, check out your “own” results from this survey.
http://www.genworth.ca/homeownership/content/survey.html

Apparently, I want to “have it all!” And there’s a product for me. Thank goodness.

#133 Smoking Man on 04.06.11 at 4:33 pm

The biggest argument and satire I hear on these types of blogs is the word it’s different here.

Well it is.

1) We have CBC, Can West, Globe Media, and Sun Media, that’s about it. The all make a nice percentage of their revenue via the real estate market. Of course they are going to blow sunshine, when sunshine is necessary, and they will cool the rhetoric down when big brother says so. Info is totally controlled. And the people buy it hook line and sinker.

2) We have a population of immigrants that don’t trust markets and fund pitchmen, they don’t understand investing, they know that daddy made his money from real estate. They don’t look at price to income ratios, they look at what does rent cost, if I bought what are my payments, and wow they always go up.

3) Until these folk are up to working 18 hour days to stay above water, they aint selling at a loss.

Head dynamics, understand it and you will prosper…

#134 Smoking Man on 04.06.11 at 4:44 pm

My last sentence “Head Dynamics” should have been Heard Dynamics, one day I will get it right.

Breaking News, Portugal just asked for a bail out.

Translation, people will be running back to Bonds, dropping what you pay on fixed rate interest.

#135 Nicky Bouts on 04.06.11 at 4:46 pm

Garth,
I’m a little behind on your articles, but I’m catching up at work, where else! I hope, and I’m sure, you leaned towards ignoring those who must protest against everything, and still have your unique sense of humour and one-of-a-kind way of providing financial advice that brings many of us back to your site each daily (usually).

As a side note, as many pointed out, Julie is clueless if she thinks her mid-twenties nephew doesn’t know the meaning of deep-throat, or most of the terms used on this site. Most guys pray their future girlfriend is blessed with such a gift.

Keep it up! I come to this site, and will continue to, because you offer your knowledge with an honesty, and humour, that can’t be found anywhere else.

What’s next?…”Politics”, I’ll catch back up…

#136 JohnnyBGood on 04.06.11 at 4:50 pm

Garth, you found a rental property with positive cash flow in THIS market in Toronto? Kudos to you, sir. I have an agent looking for me and I’m getting properties that on paper come out either flat or cash flow negative. And cap rates are pretty low. And the double land transfer tax in Toronto does not help. Are you using one of those foreclosure-finding services?

#137 realpaul on 04.06.11 at 4:54 pm

The Government ZIRP is an attack on seniors civic rights.

http://dollarcollapse.com/inflation/how-inflation-violates-retiree-civil-rights/

Last night on Adler Online the lid was blown off the insidious corruption of the overpaid civil service and the damage these parasites are doing to those who actually contribute to society. I suggest a trip to the archive for anyone currently concious.

#138 Victoria on 04.06.11 at 5:00 pm

Victoria prices up but sales down.

http://www.bclocalnews.com/vancouver_island_south/oakbaynews/news/119217539.html

#139 Mr. Plow on 04.06.11 at 5:10 pm

#12 Cellar Dwellar

“Selling your “flipper”? Or dropping a strangers zipper to supplement the mortgage payment?”

That is top notch, implying that he is performing oral sex for money. How does this crap get posted?

Nice contribution.

#140 Telemachus on 04.06.11 at 5:24 pm

I suppose that this isn’t a surprise to others, but I was astonished when local Calgary radio (660 CFR) played a real estate blurb by Don Campbell of REIN. The surprise wasn’t that Mr. Campbell waxed on about the upside of Alberta real estate (fuel, fertilizer and a 3rd ‘F’ that I cannot recall), but rather that REIN was never mentioned. Instead of admitting that he is a bonafide real estate pumper, he was identified with Cutting Edge Research Inc. While the Better Business Bureau knows that Cutting Edge is an alias for the Real Estate Investment Network, I doubt that many others do.

I see a future in politics for Don Campbell.

#141 BPOE on 04.06.11 at 5:27 pm

Folks, Vancouver is amazing for rain, cold weather, no sunshine 300+ days a year, overbuilt condos and nasty-ass architecture! You heard it first here, folks! As for those of you wondering how my case of crabs is doing, they’ve cleared up quite nicely, for the exception of the stab wounds to my groin and taint. However, after meeting Carolmel this past week, I’m going to need some reconstructive surgery on my rectum. I just got back from the clinic and the doc says, “Son, you’ve got to stop corn-holing yourself with those trannies.” I think he may have a point. I’m trying, though. So, you have to give me SOME credit for that, eh?

#142 AM on 04.06.11 at 5:31 pm

Calgary rocks,

“Which of the 3 main political parties is full of United Nation fanboys, ready to bankrupt Canada and transfer billions to 3rd world Countries in green shift scams???”

How’s the unicorn business going???

#143 Rookie57 on 04.06.11 at 5:34 pm

“People buy at the top and sell at the bottom. Duh. — Garth”

I agree with Garth’s view on technical analysis. Methinks a turning point in the US$, CDN$, AUS$, EURO, and PM’s/Commodities is just around the corner as things seem to have run their course for now. Remember the cliche “bears and bulls make money but pigs(the herd) get slaughtered”. At least I think it goes something like that.

Cheers from a very infrequent poster.

But a smart one. — Garth

#144 VICTORIA TEA PARTY on 04.06.11 at 5:35 pm

#120 Industrial Guy, and other economically-concerned posters

A sometimes contradictory picture of Canada’s current economic fortunes is the theme that runs through this blog on a regular basis, and it causes angst.

That’s because nothing happens evenly whether microeconomic and macroeconomic.

Mr. Market wends his way through our lives in serendipitous ways, and not generally to our liking.

While RE sales are down in many markets, prices will eventually follow, as Garth notes often. But follow they will soon when interest rates start heading up in a convincing and trending fashion. This will be most interesting.

It won’t take many quarter-point hits to render a new more austere picture to would-be real estate or other major goods purchasers. When that happens, Mr. Market will be going through this economy like rounds emanating from a large-bore weapon.

The “Chinese Factor”, or whatever you want to call that influential talking point on Vancouver-area real estate, ALSO has something to do with China’s view of the US buck, I think.

How many of those Vancouver transactions feature some US dollars? If it’s a lot then the obvious reason for such big deals is the Chinese government’s earnest desire to unload as many Greenbacks ASAP, in view of America’s increasingly “delicate” financial condition.

In other words, Vancouver’s real estate industry is likely part of a very much larger geopolitical and macroeconomic event something the local participants may not be aware of.

So. Beware of what you think you are “entitled” to from selling your Vancouver special to someone from China!

You may just get what you…deserve!

#145 SAD on 04.06.11 at 5:38 pm

To: #128 Smoking Man on 04.06.11 at 4:18 pm

I see why you drink after reading that post. Must be a lonely existence.

#146 Utopia on 04.06.11 at 5:48 pm

#126 BrianT

Hunh?? Lira is a popous clown Brian. He has no idea what he is talking about. The theory does not hold water. Like that espoused by most hyperinflationists the principles cannot be applied to the US economy.

#147 Utopia on 04.06.11 at 5:51 pm

That should read pompous,…not popous

#148 bigrider on 04.06.11 at 5:52 pm

Garth to Bigrider # 68 said ” The storm has hit many areas you should get out more”

Well then, I for one would greatly appreciate any guidance you could offer as to specific areas and types of RE I should be looking at. I do have the means to purchase, just maybe not the know how.

#149 bill on 04.06.11 at 5:59 pm

a solution? well insight anyway

http://www.er.ethz.ch/publications/finance/Reprint_PHM7_Sornette_einzels.pdf

he has a lot of interesting looking papers but he [ understandably ] wants some cash for his brainwork…..
but this one is free

http://www.er.ethz.ch/fco/CDS

#150 rental monkey on 04.06.11 at 6:17 pm

In the Times Colonist today is an article about how the DND is thinking quite seriously of moving the Esquimalt base to Halifax (WTF??) First, that is a lot of jobs gone. Poof. Second, apparently the base provides half a billion dollars to the local economy. Poof. Gone. Wonder how fast the bubble will deflate here as all the military families leave. No plane loads of Asians coming here.

And why, oh why, would they think it is acceptable to protect our nation from the East coast alone?

Didn’t you hear? We sold BC to China. — Garth

#151 Ronaldo on 04.06.11 at 6:19 pm

#138 Victoria Tea Party – are you suggesting that this may be a scheme by the Chinese Gov’t to unload part of that 2.5 trillion of U.S. dollars they hold and that are continuously losing value. I know that they have been busy buying into many of our resourse companies in the last couple years anyway. That would be a new twist. Wonder if we could end up with a bunch of empty houses in the lower mainland in the next few months. This is appartently quite common in China right now with the building of vacant cities. What next?

#152 Timing is Everything on 04.06.11 at 6:20 pm

“People buy at the top and sell at the bottom

#153 Timing is Everything on 04.06.11 at 6:22 pm

#148 nuke it…sorry about that.

#154 Mr. Plow on 04.06.11 at 6:40 pm

#101 BPOE…

Wow Garth, letting this crap through is taking this site to new lows.

Where do these people come from?

#155 cynic with a long view on 04.06.11 at 6:43 pm

#142….Hunh?? Lira is a popous clown Brian. He has no idea what he is talking about. The theory does not hold water. Like that espoused by most hyperinflationists the principles cannot be applied to the US economy.

Yeah we all know how “special” the US structured economy is. We all “know” that it is structurally impossible for the USA to suffer from an event that eventually assails all fiat currency driven nationstates that wish to escape their own debt ridden malaise.

We all know that the current Military super power could never suffer the same fate as say

germany
argentina
russia
chile
brazil
zimbabwe….

You get the idea (there are a LOT more)

We all know that dragons are not real in this world…..but that there is a santa claus…..

NOT

When will all the bright lights out there “get it”

WE have hit the energy wall (It really is about the OIL people)…..it is different this time around…..

We will see a unique phenomena now…never seen before…..multiple nation states experiencing near simultaneous hyperinflation at the same time….and no, the British pound dying will not save the US dollar…

Hyperinflation first…and then in the end…and I do mean the end (not in the “oh dear, my townhouse has lost 50% value) but in the “what am I going to do…my children are crying because they are hungry and there is no food”……in the Mushroom clouds on the earths surface and the end of modern human civilization sense…

Then we see full on crushing deflation without ANY end.

We are stupid monkeys that have squandered the future permanently.

It is so simple but we are so utterly lost…..

But we still do not get it…it is happening in front of your faces and you still don’t get it…..

and 99% of you never ever will…..

Even the bright lights out there still think it is about the money?

Mayan pyramids, Imperial Rome, Easter Island……it is always the same…..just now it is planetwide

We are not special, we were NEVER special and now we are going to find out just how not special we in fact are.

#156 Mr. Plow on 04.06.11 at 6:45 pm

#139 BPOE

Wow so much for coming for some insightful commentary or some “Respectful, wide-ranging discussion on the topic of the posting…”

Oh well I guess if the shoe fits…

#157 Timing is Everything on 04.06.11 at 6:54 pm

#148 rental monkey – DND

Here is the article….

http://tinyurl.com/3lhoavo

#158 Taiwan is not China on 04.06.11 at 6:56 pm

#44 Karl Hungus on 04.06.11 at 2:00 amGarth from the last post,

Still waiting for that crash in Edmonton, average residential price up 4.8% since last month.

——————————————————–
Karl, Don’t be stupid. Prices always increase in Edmonton during spring. Always compare last March to current March which you will see that prices have decreased. Also the March data was distorted due to a few million dollar sales(Even realtors agree)…

Anyway keep up the chin, Edmonton isn’t going anywhere but down.

#159 Ex-Cowtown on 04.06.11 at 7:35 pm

Been wondering about this for a while. A massive divergence between what the U.S. government is reporting and what Joe and Joan Lunchbucket are seeing

http://www.businessinsider.com/the-tale-of-two-economies-2011-4

Kind of sounds familiar; one part (the non-producing rent-seeking financial industry) sees things as rosy due to free money. The other part (people working and producing something real) getting squat, or bi-squat as Charlie Sheen would call it.

I am starting to get concerned about the free money traveling bubble show, and how it now has appeared to have infected the stock market. Maybe it is time to take the money and run?

As Smoking Man so clearly points out (unintentionally, of course, as he has yet to reach self-awareness) unless you take a profit, it ain’t a profit, it’s only a paper gain.

So Garth, my question to you is … When to cash out?

Makes no sense to have a massive paper gain and ride it over the top to the bottom into a loss.

#160 dd on 04.06.11 at 7:58 pm

#141 Rookie57

.. Methinks a turning point in the US$…

Sure on a tech basis – short term. But the fundamentals is what bulls and bears are all about. QE to infinity means the supply of US dollars is endless.

#161 NotAGreaterFool on 04.06.11 at 8:16 pm

U.S. shutdown could trigger meltdown says the Financial Post. Yet another example of risks and volatility in market place. Gold lovers will like this:

http://www.financialpost.com/news/economy/shutdown+could+trigger+meltdown/4569119/story.html

#162 Oasis on 04.06.11 at 8:19 pm

#141 Rookie57

.. Methinks a turning point in the US$…
_________________________________________

not any time soon. maybe after a 20-30% collapse from here. then maybe.

#163 Kurt on 04.06.11 at 8:26 pm

#125 Dan in Victoria

Thanks for the update, always appreciate it.

#164 45north on 04.06.11 at 8:30 pm

what’s up with the Canadian dollar?
http://www.xe.com/

funny that the Australian and Canadian dollars are equal in terms of the US

#165 Nostradamus Le Mad Vlad on 04.06.11 at 8:40 pm

#21 NotSoHornyinBC — “Garth … how long will this insanity last?”

As long as TPTB want. Currently, they are profiting enormously from all the wars, by funding both sides. RE and a financial takedown are part of their game, but by no means the main part. Depopulation is also a part of the whole, which is happening ever-more frequently.

#73 CalgaryRocks — All of them are involved in the fix. That’s why my choices are NOTA (None Of The Above), Independent or Libertarian. At least I’m voting.

#79 Mike — “Rebuilding Japan will cost trillions of dollars and this will come from cashing in US T-Bills.”

Which will screw the US up royally, and possibly explains the increase in wars — the US and states are broke and incapable of meeting their obligations.

Interesting that Ireland, Portugal (and possibly Greece) have not been allowed to default (who is in charge of those countries anyway? The ones the people elected, or the EU-IMF [NWO]?)

#85 GregW, Oakville — Hi Greg. Good to hear CANDU is still doing well. If used properly, nuke power has a lot going for it. Unfortunately, it’s the mistakes — Three Mile Island, Chernobyl, Fukushima — which make headlines now.

#87 Timing is Everything — “The world runs on oil…But who runs the oil?”

Hi TiE. Yep, the world’s fat, bloated donut is in charge of the oil reserves — for the time being.

As they stretch themselves through illegal and unnecessary wars, it may end up being a blessing in disguise for India and Iran, as they could turn to Russia or China for business.

BTW, gas is a buck thirty one.9 / litre here.

#166 poco on 04.06.11 at 8:45 pm

#88 Alex–good post–i’m taken aback by the number of posters who still can’t see that the long awaited correction has been happening for some time (at least on the west coast)
according to my e-mails (in the tri cities)there were 48 price changes for mon & tue–all down-some were only 2k but others 60k
i don’t know where everyone is getting their info, but for many they’re looking in the wrong places–i’ve watched this market go down since last spring

for those who missed this –watch
http://www.youtube.com/watch?v=q3qK1AI5bmo

#167 JC on 04.06.11 at 8:47 pm

#101

“Folks, since rates bumped up a bit, this week I have already single-handedly sold over like 683 condos and single family houses or something.”

Did someone buy your old antfarm at the spring garage sale?

#168 Cowboy on 04.06.11 at 8:49 pm

Calgary is supposed to have a boom due to lots of people moving here in the next few years for jobs.
You know what? I bet they’re right as much as it pains me to say! I have been waiting SOOOOOOOOOOOOOOOOOOOOOOOOOOO long for this and nothing would surprise me that housing will go up a bit and THEN go down.
This bubble is going on and on and on…..

#169 Cowboy on 04.06.11 at 8:51 pm

PS :
I am not a realtor, I just know it may take longer for prices to go down then all of us predict in Calgary due to jobs….

#170 Vancouver Laughing on 04.06.11 at 9:05 pm

To the fake BPOE at #101 – Keep it up! I LIVE for your humor. I don’t care how elementary or childish it is, but it is totally funny. The real BPOE is a complete liar.

#171 Vancouver Laughing on 04.06.11 at 9:14 pm

At #58: Oasis, damn you’re dumb. Here’s your predictions for the USD compared with the CAD. As you’ll see the CAD will be falling against the USD pretty soon here. It will change and it will change VERY quickly.

http://www.forecasts.org/cdollar.htm

#172 Oasis on 04.06.11 at 10:07 pm

#170 Vancouver Laughing on 04.06.11 at 9:14 pm
______________________________________

lol. you know… you should just keep buying those USD, and keep loosing money. it’s pretty funny. i’ve been hearing how the USD will start going up any day now for years. that day still hasn’t come.

the USD is toilet paper. the US government is in worse shape than Greece or Ireland. when a country resorts to printing trillions and trillions of dollars, they are bankrupt. when a country spends 8X more than it takes in, it’s bankrupt. it will only get worse.

within 5 years, the US dollar as you know it will cease to exist. america will have capital controls, inflation will skyrocket and the country will fall into disarray. america will remind you of Argentina or Brazil, or Mexico of the 80’s.

the canadian dollar will soon be trading over $1.10 USD/CAD. oil will move to $120+ and gold will be over $2000, probably much higher..

#173 Cellar Dwellar on 04.06.11 at 10:10 pm

Sorry Mr Plow but judging by the Pro BPOE comments for the Fake BPOE…..You’ve been voted off the Island.
Perhaps its time to ……..leave?

#174 Industrial Guy on 04.06.11 at 10:38 pm

#142 VICTORIA TEA PARTY “A sometimes contradictory picture of Canada’s current economic fortunes is the theme that runs through this blog on a regular basis, and it causes angst.” It’s a little patronizing, but everyone has their point of view ……

Actually, it’s the 50 something unemployed who come by my office everyday looking for work which cause me great angst. Many are starting to realize that retirement has been forced upon them. Even if they’re not prepared financially.

These folks are victims of an economic system which has failed us all. Communism doesn’t work and neither does the uncontrolled free market. The invisible hand of “Mr. Market” is more like a fist crushing the futures of millions. Our version of Capitalism doesn’t work well when massive amounts of wealth are hoarded by a few. It breeds unemployment, unrest, conflict and violence …. Yep! Even in Canada, eh

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

The Middle Class has always been the tax cash cow which kept the Government coffers full. This recent recession was unique in our history because it killed off so many of the industrial wage jobs which supported large part of this herd. Governments went from surplus to deficits almost overnight.

Consumers replaced lost income by turning their homes into ATM’s. Bulking up on debt with low interest rates to maintain their lifestyles (pay for groceries, heats …. ) It may have lessened the severity of our recession by keeping consumption up but, it was a recipe for future disaster. Once interest rates rise in earnest, there will be a nation wide shift from consumption to servicing debt. Many will fall under the wheels of this runaway train just as they did in the USA.

Don’t count stagflation out quite yet either. It was the energy price shock at the end of the 1970’s which created the Stagflation of the 1980’s …..and 21% mortgage rates. Here we are in 2011 …… A price shock of rapidly increasing energy costs (oil & electricity) is filtering through the economy. Fuel prices are up, food prices are up …Tim Hortons is raising prices…. is nothing sacred?
The Federal election is in a few weeks and I’m nervous. I recall the comments made by our great Minister of Finance before the last vote. That was some “Soft Landing” we had there bud.

#175 Mr. Plow on 04.06.11 at 10:49 pm

#172 Cellar Dwellar

You’re totally right. Because some other folks on here like it means I should too, or I might as well leave.

Good logic, keep it coming.

For others…

For what its worth, #168 was not me.

#176 Vancouver Laughing on 04.06.11 at 11:52 pm

Oasis, give it up. You’re a hater and its clear when you write. You’re anti-U.S., anti-American, and clearly not very well educated. The U.S. knows EXACTLY what it is doing, and the CAD will fall relative to the USD this year. That’s a fact. I doubt you’ll show yourself on this blog when it begins happening. Its funny how the USD has had but a handful of months of downward trend, yet you’re placing all your eggs in one basket. Seriously, for one to behave and invest in the manner in which you’re doing is completely reckless and malinformed. It is almost as if you believe the CAD is some sort of a reserve currency. Well, it isn’t, and it will never be. If the USD continues the trend in which you’re HOPING (which it won’t), this will only spell horrible things for us in Canada and the globe. I, for one, KNOW the reasons that QE exists and it is a GOOD thing for the U.S. for now. All currencies are relative. Sure, QE could potentially hurt the U.S., but it only means it would hurt the global economy the same as the Americans are a consumption-based economy. Without them, we’re screwed and so is Europe and China. You need to get your emotions and brain in check. I’m done with your ignorance. No sense in responding further to someone who is clearly choosing to be as naive, impatient, and near-sighted as yourself.

#177 Victor on 04.07.11 at 7:57 am

More young Canadians looking to buy homes in next two years: RBC study

The Canadian Press, On Thursday April 7, 2011, 7:24 am

By The Canadian Press

TORONTO – More younger Canadians, between the ages of 18 and 34, likely to buy a home over the next two years. About 43 per cent say they are looking to buy in that period, compared to a national average of 29 per cent, says RBC Homeownership Study.

http://ca.finance.yahoo.com/news/More-young-Canadians-looking-capress-591953429.html?x=0

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

Property virgins still eager. A little price correction coupled with an increase in rates should put a stop to this nonsense over the next 12 months.

#178 pablo on 04.07.11 at 11:31 am

Seen the pic before, can’t remember is this detroit or scarborough?

#179 CrowdedElevatorFartz on 04.07.11 at 8:49 pm

#176 Mr Plow Manure
Breathe DEEEEEEEEEEEP.
You’ll get used to it :)