Don’t be emotional

The corner of Port Union and Lawrence, in the nether east reaches of godless Toronto, is not a place I’d want to sleep out. Unless you like dining at a 24-hour Subway. Or want the latest hot look from Najiba’s Hair Salon or Hip Hop Nails. Or you like streets landscaped with three-foot-high sticks wearing plastic tubes. But this just goes to show you. I’m not normal.

Days ago, hundreds of folks did sleep there, waiting for mega-builder Mattamy Homes (they pioneered throwing together houses on an assembly line) to release a new development. In case you missed it, here is a first-hand account (posted on this blog hours ago):

My wife and I went to that grand opening and it was crazy. People were waiting in line since the day before and slept there overnight. The first batch they released was sold out in less than 4 hours and they was over 200 people waiting to get in the door. We were 35 on the list. We did get in and there was only two townhomes left. We were standing around a table of 5 other buyers. We asked our questions and thought hard about it for 5-10 minutes, then they brought more people inside and said “all sold”. I was not 100% sure about buying as the prices were very expensive. To make matters worse, they came with no appliances. Not even an air conditioner, washer dryer, stove, fridge, etc. I thought that was really crappy. Also, there was extra closing costs associated with a new build, like driveway, tree planting, hydro, gas and water hook ups, etc all passed to the buyer. Then there is no fence, deck or finished basement, no curtains, etc. The cheapest townhome 1385 SQ Feet with all those costs have been over $430,000-450,000 with closing costs!! They said come back tomorrow when they release the next batch and they were raising the prices.. There are only a total of like 100 homes available. We walked out.

The psychology of the people there was crazy. People were buying these places without asking these questions of extra costs.”

Meanwhile, three thousand miles away, at the corner of Nelson and Bennett in Burnaby (like nearby Vancouver but fewer Starbucks), Mark is walking out of his front door, and sees this:

“Here I go outside to go to the mall and just one block away I see all these tents and chairs. Interesting, never seen that before (and I go to the mall almost every day). Is there a food fair or something on, but how could there be on a Sunday night? As I get closer, I see the big sign POLYGON HOMES – Opens April 16th, 2011.

“Ok, but that’s like 6 days away.  No way. These freaks are lining up already.  Of course it doesn’t surprise me now (mostly Asians).   There were a lot of empty chairs too, but I’m sure they all have a condo speculators name on it.  Nevertheless, the ones that were there, were sitting, eating and drinking and waiting.”

I relay these two stories from this past weekend to remind you that all markets – stocks, bonds, futures, derivatives, gold or real estate – are determined by human emotion. But the most emotional of them, by far, is housing. After all, people driven to sleep all night in front of a sales trailer and then spend $500,000 in five minutes or waste six days in a lawn chair to buy a condo are emotionally unstable. Not in a mental defect kinda way, but rather in a we-now-own-your-brain fashion.

Incapable of rational decision-making because of social pressures, they were victims the minute they joined the line or hauled their aluminum chair out of the trunk. What made them flip? Could have been family beating on them to buy a house, peer pressure, HGTV porn, realtor hype, cultural juices, or old-fashioned greed. Then again, they might have been doing it because everybody else was.

This is why markets become over-valued, and always revert to their mean. In buying traded equities, for example, smart people watch the 50-day and 200-day moving averages and put away their cheque books when the line snakes too high. They whip it out when the line plunges through the MA.

This is why people flocked to buy Nortel when it was $120 a pop. It’s why the greatest torrent of mutual fund selling was on March 9th, 2009 – the absolute bottom of the market. The majority of investors did the mirror opposite to what was in their best interests. They should have sold Nortel (or Bre-X) somewhere near the top in 2000 or 2001, when buyers flooded in, and bought bank stocks in the winter of 2009 when sellers stormed markets.

Today there’s every indication housing values are far above the trend line. The only way average families can buy is through the use of extreme leverage, and still they sleep on pavement and pee in jars for an unbuilt home. Why would they do this? Yes, I answered that already – emotional instability. And how is that manifested? In one phrase – buy now, or buy never.

It’s this wholly irrational belief that prices will rise forever that goads people into extreme actions and unprecedented risk. And yet we all know, in our calm moments, that such things do not happen.

This affects us all. Let me remind you of what the IMF said about Canada this week:  “Risks to the growth outlook are tilted to the downside, with the main domestic risk being deterioration of housing markets and household balance sheets.” You bet. Never before have we owed so much, or had so many people buy so many houses with so little skin in the game.

Meanwhile it cost me $100 to buy gas today – and that wasn’t even the Hummer. CIBC estimates current gas prices will sucks $12 billion from consumer spending this year – almost a thousand bucks a household. That’s a grand which won’t be spent on other things, with a direct impact on economic activity and jobs. Never forget that 60% of the entire economy results from what families buy.

Yes, the people on the pavement are fools. They gamble their futures. Sadly, they gamble yours as well.

There are rare moments when being a contrarian comports so powerfully.

This is one.

199 comments ↓

#1 Paolo on 04.11.11 at 10:24 pm

This will end badly…

Like I’ve said before, like watching a train wreck slowly unfold and watching people continue to line up to get a seat on that same train…

#2 Cellar Dwellar on 04.11.11 at 10:28 pm

“…..most of the buyers were Asian…..”
I can just hear BPOE crowing his pointy little head off.
” See ,See , I TOLD you ! It’s the BEST PLACE On EARTH”!
yeah yeah, until gas hits a Buck Fifty a litre like it did two summers ago. Then BOOM !
As Garth correctly points out the majority of GDP is based on what consumers buy ….
And if they aint buying…….

#3 bsallergy on 04.11.11 at 10:30 pm

Can’t wait for the end, tired of all the smug idiots telling me I don’t got no clue what I’m talking about. Just can’t wait for the couple in the 4000 sq ft house with their two cats, and their huge new lakeside cottage, and their new pontoon boat, and, and, and, to suddenly find out they can’t afford the payments. The shit kicking can’t come fast enough. Maybe I’ll be able to find contractors who will show up and work for a reasonable price on the free house I inherited.

#4 T.O. Bubble Boy on 04.11.11 at 10:32 pm

Calgarians are also buying a lot of assembly-line homes from Mattamy:

http://www.calgaryherald.com/Mattamy+sizzle+means+Calgary+expansion/4588257/story.html

#5 Patiently.....Waiting on 04.11.11 at 10:34 pm

And people still think Canada is different. Lets check back again in 3 months. Hello Inflation!

#6 Mike Rotch on 04.11.11 at 10:35 pm

Wow!

I can remember looking at townhomes at Port Union and Lawrence in 2007, and thinking that $309K ish seemed way too steep for 1300 sq ft of suburban paradise in the extreme east of Scarberia.

At that time, $450K would have got you something bigger down by the water (yes, c/w the spectacular view of Pickering Nuclear Station’s unspoiled natural beauty)

Idiocy!

#7 Bill Grable on 04.11.11 at 10:39 pm

* Showed this post to a gent from Arizona – lives next to my Maui rental. .

I went to make us a smoothie.

I came back and he just said ” Pal – tell your Canadian buddies what is happening here in Hawaii or in my hometown of Scottsdale – wow”.

Indeed.

#8 Doesn't look good on 04.11.11 at 10:41 pm

People will buy new when thousands of already made condo’s sit empty. People wil buy when resales are falling month after month after month. This does not end well and many will see what happened to the American. We all seen this movie and soon we will see it in Canada. Very sad for those who will be in ruin in just a few months. The stockmarket is going to crash in about 2-3 months as Japan is going to ripple around the world. When this quartar numbers come out look out below.

#9 cognizant on 04.11.11 at 10:46 pm

I will buy a house when everyone I know tells me it’s a BAD idea. Right now I’m “that guy,” the fool paying the landlord’s mortgage – priced out forever.

I think I just wrote about you. — Garth

#10 Mikhail on 04.11.11 at 11:01 pm

Garth, I was there ( on Nelson) yesterday. 100% of these people are Chinese. 100%. I think, they are OK to pay 90% of their income for housing. This is the difference. In The US bubble they didn’t have Chinese factor, but it is one major factor in Canada and in Vancouver especially. Chinese buyers will pay 90% of their income for housing and eat rice and water, and will be happy.

How do you know? — Garth

#11 sick_of_waiting_to_buy on 04.11.11 at 11:01 pm

So far, the people who have been waiting seems to be fool as prices keep going up. Since the maket hit bottom in 2008-2009, house prices have already recovered (at least in GTA) and went up 15% from 2009 bottom. So even if there is correction of 15-20%, people who have bought in early 2009 which is still within two years lose nothing. They ateast would built some equity.
And if market keeps going up, people waiting are even greater fool. That’s what rushes people to buy. There is no sign of price correction. This market needs a crash to prove buyers are greater fool.
Garth, you were projecting HST would be a killer for new home sales, then why people still tent in front of trailers to buy new homes.
Between that, 22.5 foot lot semis of 1380 foot starting from 420’s in Mississauga are on sale.

Thank you for proving the point. — Garth

#12 Richie Rich on 04.11.11 at 11:07 pm

Sold my house in Whitby last weekend. No bids for six weeks then 2 offers on the same day. My house went up a whole 6% in 4 years. No bubble east GTA!
Now the big decision, buy a house in Mississauga (where my new job is) or rent for a year a see what happens.
Anyone know how the Mississauga market is?

I’ve noticed that there was only a dozen houses in Whitby similar to mine and looks the same in Mississauga. Maybe 3 houses I would consider owning.

#13 Jj3 on 04.11.11 at 11:15 pm

Garth, great post as always. I’m wondering if you have any idea what percentage of recently bought residential RE is financed thru fixed vs thru variable rate mortgages. I couldn’t find such stats on CMHC website. If it’s mainly VR then I guess the correction will take force very soon. If it’s mainly fixed then do you think it’ll take a while longer since most recent will be hit only after the rates reset?

#14 jason on 04.11.11 at 11:17 pm

Another great blog, Garth.
I am a long term investor in real estate who sold everything a couple yrs ago.
I am glad when i see people on here trying to argue against your sound logic. I know most are realtors but when everyone in the general public starts to argue that we are in a great boom that will never end. It is the best evidence for me that we are at a top. Sell Sell Sell
When they start to tell me things cant get any worst and that real estate is the worst investment ever, I will start to buy again.lol
sadly its that easy.
here is a great video about chmc, these guys have some other good vids as well check them out
http://www.youtube.com/watch?v=HFbzwW12kRg

#15 AxeHead on 04.11.11 at 11:18 pm

I just built a robo-realtor with a synthetic memory and had to program his brain. This is what I coded:

Objective > profit
Tactic > fear, lies, greed
Advice > always buy

Scenario 1: When housing prices are falling: Tactic > fear (buy now or miss out), Advice > Buy now.

Schenario 2: When housing prices are low: Tactic > fear (buy now or miss out), Advice > Buy now.

Schenario 3: When housing prices are rising: Tactic > greed (buy now or be priced out), Advice > Buy now.

When housing prices are high: Tactic > lies (buy now cause schenario 1, 2 never happen), Advice > Buy now.

So here’s a summary of the algorithm I will code in my pseudo realtor: Your objective is profit at all cost, your advice is to always buy, your tactic is to use Fear, Greed, or Lies to achieve your objective.

#16 The Phantom on 04.11.11 at 11:31 pm

Garth:

Once again another posting that was thoroughly enjoyed. Although I had to consider the source when reading the names attributed to me from yesterday’s real estate agent (“yesterday” in more ways than one), I wonder how he and those of his ilk will fare when housing prices and sales move sideways or decline? (Ilk means “type” or “manner” in case he happens to read this: saving him the effort to revert to his Thesaurus or “Shift”/ “F7” keys on the computer).

Contrary to the opinions espoused by many RE agents, the increases seen during the previous decade that have priced housing beyond the reach of many families and moved others to treat their homes as ATMs is simply unsustainable. This will result in a world of hurt when property values fall below the value of the mortgage. I don’t believe for a moment that this fate will befall everyone but I also think that those who leveraged 95% or more of the value of their homes are deluding themselves if they don’t see the potential for a disastrous ending when any one of a series of factors makes its influence felt in the economy: higher oil costs; increased interest rates; falling trade with the USA because of exchange rates; a reduction in federal, provincial or municipal spending or any other item that could adversely wreak havoc with stability and/or constrict the economy. Everything is wine and roses until the locked in period expires, the time to renew is at hand and the bank demands an amount of money upfront IOT wipe out negative debt/equity before they will agree to another locked in period (at a higher rate of interest). I witnessed this as a teenager during the early to mid ‘80’s with friends and family members.

My spouse and I own a home…we have done so for many years and we see it as a place to live. We don’t speculate with it (although I borrowed against it many times during the early years when we were a single income family with three young children). Today my spouse has returned to work (only this year now that our oldest is ready to graduate) and we owe around $4,000 when savings is placed over and against our only liability (the mortgage). I recall when we purchased our house; I sold off some non-registered investments, emptied a T-bill account and put down 25% to exempt us from the insurance fees assessed by the CMHC. I also recall being unable to sleep at night sometimes because I owed $66,000 in 1993…not certain how some of these people sleep well today owing several times that amount….

In closing, I’d like to respond to an earlier post made a couple of days back by Moneta who spoke about returns on bonds and equities as I may have been misunderstood. When I said that low interest rates have punished savers, I meant that if rates were higher (like 7% or 8%) you would see more people saving money and less people extending their lines of credit as higher rates would constrict the money supply. I own bonds like Fronterra Copper; Nova Scotia Power, Algonquin Power and know that they pay far higher rates than GIC’s and as for equities, I own those as well and they have rewarded me handsomely. I believe those who are risk adverse (like my dad) would save more if the prevailing interest rate was higher, that’s all. For my part, I have given up on Banks entirely in favour of schedule 2 institutions like Credit Unions but only for paying bills and depositing pay. Higher rates would encourage more people to save money…I also would like to remark, Moneta, that you seem like a person who approaches matters with an insightful and analytical mind…impressive…FYI our worlds aren’t too far apart either as our son was diagnosed with a disability (or an exceptionality).

Anyway I’ll be offline for a couple of weeks; stepping off for a FTX and will “drop off the radar” until late next week when we’ll be able to use cell phones and access the Internet once more. Until then…

The Phantom

#17 Sasquatch on 04.11.11 at 11:33 pm

Yep that is a thousand dollars that each house won’t spend, AND the cost of anything that needs to be transported using gas getting more expensive. Yes that is everything.

One thing I noticed is that companies with fleet vehicles were starting talks to buy only bio-diesel on contract with bio-diesel producers. Then gas prices tanked overnight.

Odd, no?

#18 All is knowledge. on 04.11.11 at 11:39 pm

Blog dogs , I had an interesting conversation with two Hong Kong ex patriots who told me Chinese from mainland communist China are desperate to buy homes in GTA or Vancouver especially Toronto now because its a little cheaper. Mainland Chinese who have made some money in China buy homes at any price so as to get there kids to come and stay in Canada and go to school here as it is cheap high education. Then when kids graduate they remain in Canada and sponsor the parents. Sacrifice they do by paying high prices for a better secure future in Canada. Mainland Chinese see Canada as there way out of communist China and are willing to pay any price to gain entry. Now you will understand what is driving prices higher. They tell me mainland Chinese will pay anything to gain a foothold in Canada and there are one billion Chinese.

Did I miss the start of rutting season? — Garth

#19 alwayswaiting on 04.11.11 at 11:39 pm

i am waiting and waiting….if i bought 2 years ago i would have made a lot of money. Kept thinking its going down down down it is going up up up

#20 nikola tesla on real estate on 04.11.11 at 11:40 pm

“The [house pornographers] of today think deeply instead of clearly. One must be sane to think clearly, but one can think deeply and be quite insane.”

Awesome ;)

#21 Joe on 04.11.11 at 11:46 pm

I live in a Lower Mainland suburb, 1980s homes. In the neighbourhood directly around me houses were listing between $430,000 and $480,000 last summer, around July. In the fall they dropped a bit. They’re listing now on average between $405,000 and $430,000. A couple have been on the market since the fall and are only now dropping their prices from $430,000 to $420,000. Not exactly a huge decrease. One went from $435,000 to $429,000. A few have sold within days, others are sitting and sitting and sitting. I’ll be keeping an eye out to see what happens later in the summer and fall.

#22 Joe Q. on 04.11.11 at 11:48 pm

For the non-Torontonians in the reading audience, the townhouse development Garth referenced is at the far south-east corner of the City of Toronto, about a 35 km drive from downtown on some pretty busy highways. There is a commuter rail station a short distance away that takes you to the city centre in about 40 minutes for $5 each way. There is a park along the lakeshore near there, but it is separated from the houses by an elevated VIA/freight rail track. The area itself is pretty much strip-mall city.

#23 inexsucks on 04.11.11 at 11:49 pm

Those empty chairs (on Nelson) got REALTORS’ name cards holder stick to it. The spot is yours if you are willing to pay for it.

Developer knows the market. Polygon can sell this place anytime during the next 4 years; until it’s built.

Developer wants to sell it now coz they can foresee what the market is like from now on.

#24 Hoof Hearted on 04.12.11 at 12:10 am

I think I saw BPOE with Baby Butter Ball in the pawn shop.

#25 Hoof Hearted on 04.12.11 at 12:15 am

Did I miss the start of rutting season? — Garth

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

Well Garth…you did admit a porn factor exists, and further verified by your RE friends in the previous post.

#26 Gimli son of Gloin on 04.12.11 at 12:17 am

First

#27 WesternCanadian on 04.12.11 at 12:29 am

“In buying traded equities, for example, smart people watch the 50-day and 200-day moving averages and put away their cheque books when the line snakes too high.”

This isn’t Garth’s most egregious statement, but its up there. “smart people watch what the 50-day and 200-day moving averages”…

Yeah if there some technical analysis nut who completely ignores 30 years of research on market efficiency.

There is very very little evidence that one can consistently outperform the market by analyzing past trading patterns, Garth is an alleged student of finance and economics and dosen’t know this??

You don’t believe me? Testing technical analysis techniques is fairly easy to do. Pick 30 stocks and look back over their 5 year charts, choose 6 month intervals and use technical analysis and/or moving aberages to try to predict performance, compare to actual outcome. You will find zero statistical significance.

Yes, my advice – don’t buy in rising markets – is so extreme. — Garth

#28 David09 on 04.12.11 at 12:51 am

Garth, I’ve been reading your blog here from the US, where the housing news never seems to improve in the slightest. I have many Canadian friends that mention the “boatloads” of Asians rushing to the Great North to purchase property. What I am confused about is why the lack of foreign investment for many great places here to your south? We rarely hear the media here pumping up Asians with pocketfuls of cash picking up bargain properties in AZ, NV, CA for the South. While Canada is a splendid country, we do tend to have better weather. Any thoughts from the group on why Canada?

#29 PostCarbon on 04.12.11 at 12:54 am

$100 for a fill up? A wise real estate investor or home buyer will buy in a walkable neighbourhood near transit so that $100 fill ups are unnecessary or rare. Or better yet, rent in such a neighbourhood, sell the car and buy a bicycle. You will be healthier, wealthier and wiser.

#30 Nostradamus Le Mad Vlad on 04.12.11 at 12:58 am


“Don’t be emotional . . . are emotionally unstable.” — That sentence can easily be applied to salespeople, politicians (on the take), just about any walk of life we care to travel down.

Sometimes one is better off to shake their head, and walk away from this Justin Bieber hero worship.
*
Fukushima Getting worse, not better. Fukushima “I guess that’s because the West Coast of North America is directly downwind from Japan.”

Who Owns GE? “The Rockefeller organization, of course.” GE built the Fukushima reactors.

ETFs and toxic derivatives (US), and Rome Burns while dickheads (politicos) argue amongst themselves.

Jessie Ventura on HAARP and other things.

Tesla Weather warfare. Tesla was ahead of his time in scientific terms, but the US and China have caught up. Link in for two video clips.

Gold and Silver Corection? How low? US$50 and US$2.50 per oz.? I’ll buy in!

Silver Guess who is buying it now? Is JPM flat broke, and running their day-to-day operations on fresh air?

Utah Gold Second story down, and Pakistan asks US nicely to get lost.

Same old, same old New York has highest number of homeless in 2010, plus other stuff.

Harper What will it take to get rid of him?

Chaos — One of Edgar Cayce’s predictions / prophecies had a large chunk of Japan sinking, which somewhat goes with the change in cycles. Also CMEs — ‘Natural or nuke-powered ‘quakes following?

#31 Controller on 04.12.11 at 1:03 am

Hey Garth,
I’m an Air Traffic Controller – I hate that picture !!
Love the blog, though. 99.9% of my friends think RE will make them rich. Sad.

#32 kftcic1 on 04.12.11 at 1:03 am

Hey Garth, pardon if this is way off topic and feel free to delete. Thought there’s somebody here from back home. This message is for Kuwaiti.

Hey Kuwaiti,

If you’re reading this, I lived in Kuwait all my life until I came here in 97. Does Yusuf Ahmed Alghanim & Sons ring a bell? If so, want to get in touch?

#33 The Original Dave on 04.12.11 at 1:20 am

Can someone with time…please start a first-time buyers strike in Canada, just like in Australia ??? This is getting ridiculous and realtors are really getting annoying….Need to get the message out in facebook.

———————————————————-

please don’t do this. This would make the correction take longer. You can’t force something to go up or down in price. Whenever governments tried price fixing, the price of the asset exploded upward. You can’t control markets.

Look at our housing situation. CMHC was suppose to fix/control the housing market making it affordable for EVERYONE. Well, all it did was give everyone an easy shot at purchasing real estate. The end result has been skyrocketing prices.

By starting a rally or strike (which are typically aggressive), expect the opposite to occur. Maybe prices decline for a bit, but then those desperate strikers and those that were absorbed by the strikers jump in under false presumptions….they don’t understand markets, they’re just going from following the house pumpers to following the aggressive strikers. The followers/ house lusters have to all be gobbled up and then the market corrects…………..naturally. The market has to realize for itself. If you try to manipulate it, you’ll end up disappointed. People will get clobbered – that’s how it goes. When those that are looking to buy now (at the worst possible time to date) buy and then realize that they’ve made a mistake, the reversal starts.

Let the market take care of things. Be patient. Striking is for aggressive, emotionally charged, impatient people. Real estate will correct. Don’t try to stop the public from what they instinctively must do…..they follow and they eventually lose money. Don’t mess with their instincts.

#34 Carp on 04.12.11 at 1:25 am

We have mattamy homes in Ottawa (West) and it’s amazing how they can sell homes downwind the Carp Dump … And to add to this … they call the area Fairwinds .. hahahaha!!!

#35 Michelle on 04.12.11 at 1:25 am

Have to tell you this little story about my great-grandfather “Gung-gung” who came from a little fishing village in Canton (now called Guandong).

My great-grandfather paid the Chinese “head tax” (equivalent to 2 year’s income) and came to Canada, working as a cook for the men building the CN railway. He eventually settled in Fort William (now Thunder Bay), working in a restaurant.

Gung-gung brought his eldest son over to Canada at the age of 12 so he could get educated in a Canadian high school and also help him out at the restaurant. Throughout their life-time they sent money back to the family still living in the village in Canton.

While my grandfather “assimilated” to Canadian culture, my great-grandfather Gung-gung always talked about wanting to go back to China. His dream was to return to his little fishing village and build a brick house, because that meant that you were “rich” if you could afford a brick house (we’re probably talking under 500 sq ft).

When my greatgrandfather retired, he finally realized his dream by going back to Canton and building his brick house…

Three years later he was back in Canada. Turns out he remembered why he left Canton in the first place. It was cold and damp, people were starving in the countryside, and he hated the Communist Party.

So I guess the moral is… Don’t build a fancy overpriced home in a crappy location… You’ll probably end up regretting it.

#36 Gerge on 04.12.11 at 1:33 am

I know high oil prices will impact the economy, but I do get some satisfaction when I see that people who own gas guzzling SUVs, yes most of who rarely go off road, will pay more at the pumps. Our Govt was going to put a special tax on SUVs but lacked the spine to go ahead with it.

#37 Sea Wave on 04.12.11 at 1:34 am

A future historian once said, “in 2011, Canadians, smugly emergent in the warm glow bestowed upon them by the world economists, actually believed that their time would truly be different … long term trendlines and historical ratios of house price versus equivalent rent and income be damned! … and, with recently-donned (Asian-made) gossamer wings buffeted by the beguiling winds of fate (and cheap credit), they flew too high and close to the sun … and then, oh-so-suddenly, just like the wax that had bound their (borrowed) wings, the pool of greater fools most-assuredly melted away, and Icarus-like they and their lofty house prices plunged … back … down … to earth”

#38 poco on 04.12.11 at 1:40 am

#19alwayswaiting
i am waiting and waiting….if i bought 2 years ago i would have made a lot of money. Kept thinking its going down down down it is going up up up.

i too have been waiting for about 2 years now, but unlike you i am quite contented to watch “my market” fall further–down-down- down- it goes

last week the tri cities had 90 price changes–83 downward and 7 up ticks–i guess the sellers heard some of that bull put out by CREA and thought their places had increased in value for some reason so put them up 10k

here’s a couple i’ve found recently
mls#v874853 2105-2978 Glen–bought july 09–544.9–listed back in oct 09 and after several price drops now sits at 439k—that’s a big “holy f_ _k”–why no buyer??
mls#v872925 514-121 Brew–bought nov 08-319.9–listed last june and now at 285.5k

there’s lots of them out there–you just have to do a little research
this ones’ for all the naysayers who feel they’ve been priced out of the market
mls#864716–305-2425 Shaughnessy -Pt Coq.–listed in Jan for 169.9k–completely redone–floors- counters/cupboards- lighting and new appliances-small at 676 sq. ft. top floor of an older bldg.(1976)–sold for 133k–that’s 20% below list–i wonder if “Tired Vulture” saw this one–he might be kicking himself–ya, not for everyone, but you could buy it on minimum wage

#39 Mikhail on 04.12.11 at 1:55 am

Garth, for this new building in Buranby ALL buyers in-line are Chinese, 100% – I was there yesterday.
I work with Chinese guys ( PhD’s and Masters) . All of them bought a house: they are not very well dressed, eat very cheap food, drive old cars… but ALL my Chinese co-workers have a house and some of them already have paid off mortgage ( they save on everything and try to pay off mortgage in much shorter time, like 10-12 years…) It is another lifestyle. Save on everything, but a house….They think – I’m creasy – I’m in Canada for 13 years and I don’t have a house. ALL of them have and some – already paid off mortgage.

#40 Dark Sad Monster Bunny on 04.12.11 at 1:55 am

16 Phantom – I hope you dont miss this – just curious.
You say you have owned since ’93 and your savings fall
$4K short of what you owe on your mortgage? That’s not
a lot of headway over the last 18 years. Aso means all
your net worth is in your house (according to Garths
definition).

#41 Whistle punk on 04.12.11 at 2:00 am

Why try figure out the stupidity just sit back and laugh. I have learned that over the years with the job I have, makes you wonder where people were standing when the brains were being handed out.

I’am the type of person that laughs at peoples miss fortunes, looks like I will no shortage of laughing.

I do feel bad for the younger people my age that are in so deep into debt they will never get out the hole they are in. Monkey see monkey do, they thought it was a good idea to own a house.

Get the pop corn and a comfortable chair your going to see lots of drama when the bubble pops.

#42 aurora on 04.12.11 at 2:02 am

My brother in law is lining up for the Chancellor (the one you mention in Burnaby). More than half of the people there are middle-aged Chinese men looking to flip these condos and the other half are being paid to wait in line for mega rich Chinese buyers. My brother in law is one of those mega rich Chinese buyers and unfortunately, I work a 9-5 job, barely scraping to buy an 800 ft condo with my fiance. I would like to eventually have two children and I don’t see how I can even come close to being able to afford a house unless I live 1.5-2 hours away from Vancouver. Most of my friends would likely never be able to afford an apartment in Vancouver!
This should be on the agenda of our politicians…

#43 Staying the Course on 04.12.11 at 2:12 am

Garth, thanks for the blog. It’s been very informative and refreshing. It has kept me from getting back in at a time when it is clearly the wrong thing to do. Haven’t taken your investment advice…yet, mainly ’cause I need to grow a set. I’ll consume your next book and see what affect it has.

I debated whether or not to post this because the last thing I want to do is give the bears something to be smug about. But I recalled Garth’s mantra…”you have to sell to realize your gains”. Considering the nature of the ego, the more you gain on paper, the more likely you are to think that you are smarter than everyone else, and the more likely you will go down with the ship. And, of course, jumping in with all the lights on the dashboard flashing red…. ’nuff said. So, I am glad I am where I am. Renting a rock star mansion for the price of a mortgage in Pitt Meadows, watching and waiting, and not at all in a hurry. Just enjoying mortgage freedom.

I decided this story, which is taking place in real time, is more likely to demonstrate that the elastic is about to snap rather than give the bears something to cheer about. And it has yet to have an ending, so it is something we can follow over the next however many days it takes to end to give us an idea of where we might be on the snap-o-meter.

Here’s the deal. Got word today my old house that I sold two years ago in Point Grey is listed for nearly double what I sold it for. I don’t need to list the figures since you know this area, ground zero bubble-onia. I noticed that in the house description on realtylink there is no mention of the single pane windows rattling your brain every time a bus goes by, the frequency of which has tripled since I bought 9 years ago. Local (but Asian) investor had bought two houses in Point Grey the same day. Mine was one of them. It was a rental for two years and is now empty and staged, at least that is the way it looks from the pics. It took me only a few seconds to search and find better homes on the same street for a couple hunni less.

It’s only one house, but let’s see where this goes.

Incidentally, I bought the house from a Hong Kong investor who sold for less than they paid five years earlier.

#44 Utopia on 04.12.11 at 2:14 am

“Meanwhile it cost me $100 to buy gas today – and that wasn’t even the Hummer. CIBC estimates current gas prices will suck $12 billion from consumer spending this year – almost a thousand bucks a household. That’s a grand which won’t be spent on other things, with a direct impact on economic activity and jobs. Never forget that 60% of the entire economy results from what families buy” ~~ Garth Turner

———————————————————-

Precisely. And that was about as good a description as I have read anywhere in the last few weeks. Few people really understand the impact of commodity price increases on consumption. These are less inflationary than they actually appear because these kinds of increases actually represent a tax on consumption and do not necessarily result in income growth or wage increases.

Commodity price increases such as we are now seeing are in fact an economic deflator particularly when they occur in tandem with falling real estate prices.

The benefits of asset increases on stock markets in turn do not accrue to the economy as a whole and as such are a transitory phenomenon. That is, these improvements are not necessarily beneficial to economic growth despite the fact that the wider view suggests a wealth effect is being created. It is not.

Such is the inverse relationship where plainly obvious inflation in our daily needs is in fact having a deflationary impact as the wider economy is starved of consumption dollars.

This is why I always call commodity (cost push) inflation the wrong kind of inflation because it usually bears the seeds of its own destruction through its own evolutionary process.

In short, a commodity boom such as we are now witnessing will almost always result in recession. This has been amply proven over time as each similar event where oil and energy prices spiked have resulted in economic slowdowns as consumption dollars were taxed away and investment and savings declined.

The statement quoted above in the first paragraph is obviously written by a person who “gets it” and is not confused by the current fear driven by the inflation-trade.

#45 Sargon on 04.12.11 at 2:20 am

To the Mattamy sleepover couple: He who hesitates….WINS! No buyer’s remorse.

Doesn’t surprise me that virtually everything is ‘optional’ on those builds. (BYO flooring and drywall?)
Peter Gilgan didn’t become a b-b-b-billionaire by operating an appliance charity.

———————————————————
AxeHead: What are the chances of your Robo-Realtor developing human emotions – about the same as a human realtor developing human emotions?
———————————————————

#46 realityguy on 04.12.11 at 2:22 am

Keep the low interest train going Carney.

Have the balls to stop the bleeding and put on the brakes now. Otherwise this will be way worst than what Greenspan did to the USA

#47 Carlyle on 04.12.11 at 2:27 am

Carlyle from Toronto here …

Funny you should mention Port Union and Lawrence Garth … That’s where my parents live, right across the street from Rouge Hill Station, on Trellanock.

I’ve been begging them to sell .. Both in their mid 60s and still working. maybe 100k or so equity in the house all gained from the last 2 years. they want to hold on or one more year … They are certain prices will go up thanks to being so close to a Go station, having an address in Toronto that isn’t downtown and isn’t ghetto either. That little corner is like a piece of Pickering that made it into Toronto.

It is certainly a desirable area for families … Good schools close by, 30 min to the core via GO, beach access complete with taxpayer funded waterfront and a Toronto
postal code. the area also has 0 supply or close to it … People don’t sell there (yet at least), and Mattamys development there is using up the last of the developable toronto area code land (right by where the old asbestos plant use to be)

Still I’m telling them to sell while they can although I know thru want yo wait or their fixed rate mortgage to run out (they have 5 percent or so, think there would be a big penalty but they are done their term in 5 or or so months) they are in the first wave of boomers and in a position to still cash in before the RE house of cards collapses.

The thing is the Mattamy craziness to them PROVES that prices are on the way up and that the area is desirable. I don’t know how to fight this kind of logic …

#48 Mels diner rocks on 04.12.11 at 2:48 am

Been here a while and posting for the first time.
Taiwanese Canadian, came to Canada at the age 14 and then moved to Beijing 13 years later and been here since 2003.

The “line-ups”, not sure about their authenticity in Canada but in China it is a known fact that they are fabricated. Let’s say that I am a careful and generous developer and want to put on a good show. 1000 tents for 6 days at 100 per day/per tent:

1000 * 100 * 6 = 600K

Let’s say the average margin is 20% with an average price of a unit at 400K. As long as I get to push out 10 more units with such a show, it is worth it. Employment is simply not pretty in general in Canada and believe me, it is even worse for the immigrants. Mass immigration from Taiwan and HK were done for decades ago. Mass immigration from China are also done, people who could have and wanted to leave, have left.

Three types of Chinese money, the mass, the well-off and the dirty money. Trust me, for the mass segment, the best they could have done were to exchange their condo in china with A house/condo in Canada. For the latter two segments, they are simply not dumb. Vancouver/Toronto are great but believe me, for Chinese people in general, they are no match for places like L.A/Sanfran due to weather and U.S supremacy. I don’t see the super rich having more than one or two properties in Canada. The talk on the street here is that many of them are shopping around in the U.S and were shopping around in Japan.

Some observations on the Chinese and Taiwanese markets. Coincidentally, both governments recently erected policies to curb speculation. The Taiwanese MSM says that the as a result, now there is a 30% negotiation room. Here in China, let me not quote official figures and instead speaking from my own experience. I sold my apartment 5 months ago when things were suppose to be really hot according to the MSM. We listed for 3 months, about 10 showings with 2 offers (one low ball).

I am renting a 3 bedroom for 7.5K rmb per month. It is a brand new complex so there are about 4 or 5 agencies on the first floor store fronts. Our place is listed for 5 million rmb and everyday I walk by these agencies, I see no customer.

Folks, export centric economies except for Germany uses real state to contain the export proceeds in order to prevent hyper inflation. Asians have seen more real estate cycles as a result. I really would doubt that those among us, especially the ones traveling in helicopters, would still be the catcher rather than the dumper. I am deeply saddened that the Canadian government, the beacon to those of us wanting a better life, have resorted to the same dirty trick to enslave its people with never ending property taxes and etc.

#49 Thetruth on 04.12.11 at 2:51 am

Anybody that thinks these buyers earn 50,000 per year and buy half million dollar homes are out to lunch! This is foreign money buying. Get your heads out of sand! Think a little harder … Those in line probably don’t work 9-5… Otherwise who has time to stand in line that long. Foreign wealth! No relation to domestic income. Everyone is coming here unfortunately as the door is wide open!

#50 Gary in Alberta on 04.12.11 at 3:00 am

So this is the New Canadian Way.

Harper and his gang along with the Goldman Sacks Bank of Canada Governor and the CMHC have destroyed peoples simple ability to nest and accumulate a simple lifestyle as in the not so distant past by owning their own homes.

With the way this has got, my children have no real future as two are in their early 20’s and the youngest is just 15. There are no real jobs for most of them and especially no long term secure jobs with a future with any kind of liveable pay scale.

Harper and his ilk know what they have done and certainly know what they are doing and they should be voted out or at least held to a minority government, however the thought of electing Liberals or NDP or Bloc as a Government is truely repulsive.

The Libs and NDP have trashed Quebec, Ontario, Manitoba and B.C. amongst others and you can rest assured they would easily gleefully trash the Country as a whole.

Maybe its time to have some honest and accountable government with real criminal repercussions for all of these effing carpetbaggers.

Or maybe its just time to totally cash out things and withdraw your funds from the bank and just quit (if you are financially able to) and let these bastards pluck someone elses feathers for a change.

#51 Andrew on 04.12.11 at 3:12 am

Long time reader, first time poster.

One thing I can’t get past is how almost every housing bear, when asked how much real estate might drop, puts in a figure of somewhere around 10-25 percent. This makes no sense to me. That would put real estate prices right back where there were just 3 to 4 years ago, when those very same bears were calling the housing bubble.

Another ridiculous comment I hear again and again is “We’re in a bubble, but I don’t think the correction will be nearly as severe as the US…” Excuse me. Have these people failed to notice that average home prices in Canada are now ~$50,000 higher than they ever were at the peak of the US bubble? Our bubble has been given an extra FIVE YEARS to grow and grow. If anything, the US housing market will get off easy because their bubble was popped sooner and at a lower price point. I haven’t even mentioned the fact that US interest rates are currently, get this, ZERO PERCENT. How in the everloving F*CK could a sane person call for the BOTTOM of the US housing market when debt servicing costs have LITERALLY nowhere to go but up? Insanity.

The US housing market has not even reached the halfway point of its fall, and because Canada’s bubble was unfortunately allowed to grow much larger, it will fall farther. People seem to forget that when a speculative bubble bursts, it basically always over-corrects to some degree. Usually the more overvalued something was, the more of an overshoot there is.

With food and gas prices headed sky high in the very near future, there will massive doubling-up and tripling-up by families looking to save money by moving in to houses together. With seniors having no way to fund their retirement, more and more will move out of the retirement homes and condos and into their children’s guest bedrooms. I haven’t even mentioned how the baby boomers are leaving the workforce en-masse, leading to huge tax and budget shortfalls in Canada. Oh yeah, and a mass exodus from the housing market as they require smaller and shared living spaces.

Ten to twenty-five percent correction? Get real. I would VERY conservatively say that our housing market is due for an AVERAGE fall of eighty percent. People would say “that’s crazy”. Well then, to that I say, show me one thing about the world economy in the past ten years that isn’t crazy. Then we’ll talk.

In the future, 1oz gold = 1 liveable house.

#52 Polly Pot Year Zero on 04.12.11 at 3:43 am

all is knowledge:

so what happens when canadians finally start turning off the immigration spigot and it’s not so easy to sponsor family members?

don’t take it for granted, it will happen eventually – it’s happened before.

i find it the height of irony that they are ‘desperate’ to get a foothold in canada because of all the positives of this country, specifically after years of Sino-triumphalism, and the enormous effort spent on propagandizing the populace that all is well and harmonious. when i heard the H in HST stood for harmonized, i couldn’t help but wonder how much time or politicians have been spending in China.

back to the mainlanders.. yet they have no interest in even basic “acculturation” let alone assimilation. we are a cultural mosaic and a fairly tolerant country, but that doesn’t mean you should just bring your bullshit here. there’s nothing wrong with not knowing any english or french, it’s just rather lame, given that there are subsidized, completely free classes for them to attend. why not? i can tolerate the rising RE prices if i didn’t feel like they were going to entirely be absentee landlords, with the usual Chinese historical ambivalence to the revenue procurement techniques of the state (open a history book)

re: absentee landlords – ask my Irish ancestors how well that one worked out in 1845 – is it time for us to flee again?

#53 van rain on 04.12.11 at 3:47 am

I went to an open house a few years ago and the realtor said to me: “hopefully people are more emotional than you else I would not be selling much… My strategy is to play on the wife, so that she pressures the husband =”if you cannot buy me this house you are a loser”…

This is what realtors try to do on this blog: play with your emotions.

#54 TS on 04.12.11 at 4:11 am

Yes, the people on the pavement are fools. They gamble their futures. Sadly, they gamble yours as well.

Lemmings jumping off a cliff.
You are so right. We are all in this together.

#55 keny65 on 04.12.11 at 4:51 am

So there is something wrong with 70% of us…right,I don`t even own a house and I`m going out on a limb and saying that our whole economic system is totaly fucked.But wait…that would be admitting that there is something wrong with us as a whole,no wait can`t do that right.There is just too many idiots around right…we don`t want to be exposing the grand masterplan for world enslavement of the illuminati.A wise man once said you can either thrust the good will and intelligence of your government or gold.

#56 a prairie dawg on 04.12.11 at 5:25 am

@ #17 Sasquatch

Odd?

Actually, no. That’s exactly how the futures markets behave. And futures markets have a direct bearing on the market price of any commodity.

Doesn’t matter if it’s orange juice or oil.

A lower perceived demand for any commodity results in lower futures prices, which will tend to be reflected in the market price falling to meet this expectation.

A higher perceived demand will do the opposite.

#57 rp on 04.12.11 at 6:23 am

Oh but Garth, I thought “the correction was here.” It’s not here. Psychology is entrenched, and we will never run out of buyers as long as the government continues to socialize risk. The market structure has changed.

You mean it’s different this time? ;-) — Garth

#58 1eyedj on 04.12.11 at 6:40 am

We saw this exact senerio occurring on the streets of Dublin in 2007/08.

It didn’t end well.

Ian

#59 OttawaMike on 04.12.11 at 6:56 am

Ah Port Union & Lawrence, my old neighbourhood. I bought my second house there at the peak in 1988. Paid $218k on the first day the listing came out. A 50’s era ranch style bungalow on a large overgrown lot, needing a kitchen,furnace, windows and doors. The basement apartment attracted me with its $725 monthly income stream.
I poured another $10k in plus countless hours of sweat equity. Got transferred to Ottawa in ’92 and sold it for $190k. The basement dwellers paying me $25k over the ownership period took some of the sting out but nonetheless still a humbling experience.

That same house is now worth around $475k-$525k.

#60 David B on 04.12.11 at 7:01 am

And so yet another GT prediction comes home to roost!

Confirmed losses on B.C.’s Olympic Village $230-million and rising
GARY MASON | Columnist profile | E-mail
From Tuesday’s Globe and Mail
Published Tuesday, Apr. 12, 2011 3:00AM EDT

#61 OttawaMike on 04.12.11 at 7:02 am

Gordon Brown the UK PM during the 2008 financial crisis talks to CBC radio about how badly the western leaders miscalculated the risks to the world banking system leading to the crash, the rise of eastern nations, how we are still on the wrong path in world finance and the immorality of the bankster set behavior:

http://www.cbc.ca/asithappens/

Go to the April 11 program and click on part 3 to listen to this fascinating interview.

#62 Ronaldo on 04.12.11 at 7:14 am

http://www.canequity.com/mortgage_rate_history.stm Interesting chart on interest rates over the past decade comparing variable vs fixed.

#63 X on 04.12.11 at 7:35 am

I am not priced out forever, but work too hard for my money to pay these prices.

After a few quarter point rate hikes this year….next years spring RE market will be a huge letdown for many sellers.

#64 Bill in Nobleton on 04.12.11 at 7:54 am

Great Blog Today!!

Speaking of the Markets:
WATCH THESE LEVELS. The NDX right here as it is the weakest index…2320. The NASDAQ at 2750…the S&P at 1312…the DOW at 12,150 and the RUSSELL at 815.

#65 fancy_pants on 04.12.11 at 7:58 am

Canadian RE is going to drop, all the economic signs and financial stars are pointing to this. The economic labour pains are obvious… just ask our friends to the south who dropped the bomb 5 yrs ago.

Labour pains folks. The water broke some time ago. The reality of your decision is going to fall on your lap whether you are ready for it or not.

To all the naysayers who point and wag their fingers, lets bend you over the bankers desk again and look at what you signed if you need a reminder of how it all went down.

#66 C on 04.12.11 at 8:00 am

If the Bank of Canada does not raise interest rates this morning it will be a complete joke!!! Come on now, I think we’ve somewhat recovered a bit in Canada. Just look at the following areas:

-housing at record high valuations
-TSX has almost recovered most of it’s losses
-many commodities have recovered their losses and some are at all time highs
-the rate of inflation is rising

on and on.

Don’t get me wrong I think this recovery is a bit of a facade, but to warrant multi-decade low interest rates for sooooo long, is dangerous. Just look at bubbles Greenspan circa ’01-03.

Carney get some balls and some guts and do the right thing. This is seriously well beyond dangerous. You held off much longer than you should have. The longer you delay raising rates the closer the Canadian housing market morphs into an Ireland/US housing disaster. I think as of now we are likely to see a strongish ‘ 89 debacle but the longer he waits this thing will get extremely nasty.

DO THE RIGHT THING CARNEY

There’s an election on. Mr. Carney is a Harper guy. No increase. — Garth

#67 bigrider on 04.12.11 at 8:08 am

Smoking man yesterday #162

Property on lakeshore looks good on paper but why is it for sale?

#68 Moneta on 04.12.11 at 8:08 am

Contrary to the opinions espoused by many RE agents, the increases seen during the previous decade that have priced housing beyond the reach of many families and moved others to treat their homes as ATMs is simply unsustainable
———–
Just one more sign of a real estate bubble…

I went shopping for a patio set yesterday and gave up. Went back home and put 2 screws on the wobbly leg. That should hold until the real estate bubble bursts and products start reflecting real needs and our Cdn weather.

When I bought my first house in 1995, it was hard to find a patio set that was not in resin. If you bought Grosfillex for 200$, you were going all out.

Now, it’s hard to find anything under 500$ that is kid friendly and will make it through at least 5 years. The more expensive, the more maintenance it requires. You better make sure you have a maid who will take care of those cushions!

The reality is that many are using the equity in their homes to buy this stuff. Stuff that stays in the ELEMENTS and depreciates even faster than your new kitchen or even your roof!

These expensive fast depreciating consumer products are the culmination of the excess.

#69 SMOKING MAN on 04.12.11 at 8:17 am

Fibonacci , moving averages, stat arb,
bla bla bla……………

RE will tank when you can rent in a nice building in a nice area where it is much cheaper to rent than own…………When the upside to RE is not possible.

We haven’t hit that sweet spot just yet…and may not for a long time……

#70 john m on 04.12.11 at 8:29 am

Every day things get worse,a whole generation of new buyers facing poverty,a government hungry for power trying to infiltrate and control everything that has protected our democracy…..makes me wonder how those people in other countries driven to poverty and now trying to regain freedom with and makeshift weapons and anti aircraft guns in beat up pickups got to this stage?

#71 Moneta on 04.12.11 at 8:58 am

Every day things get worse,a whole generation of new buyers facing poverty,a government hungry for power trying to infiltrate
————–
My parents’ appliances lasted over 25 years. You don’t see that today.

When I went to get a new belt for my dryer, the salesperson there said it did not matter how much you pay, most appliances last 7-8 years nowadays. And the more expensive stuff is riskier because very often you can’t find the pieces 1 or 2 years down the road.

So the young who have been buying for the last 5 years at bubble prices are in for a tough time.

Usually, after 5 years of hoem ownership, you can start breathing but in their case, they’ll be starting to replace everything they bought. It’s hard to build wealth when depreciation just keeps accelerating.

But most people can’t see past the end of their nose.

#72 S.B. on 04.12.11 at 8:59 am

I knew a former Futures broker who said in the early 1980’s people were lined up outside of his office in the mornings, clamouring to open gold accounts.

How’d that work out in the early 80s? Check the gold chart:

http://www.tradingreview.com/images/gold-chart-june06.gif

Churn ’em and burn ’em. Actually, you can’t really blame the dealers/builders/brokers because the people want their fix badly. If you cannot provide, they will simply try another dealer/builder/broker.

#73 realist on 04.12.11 at 9:10 am

First, my bona fides. I am what Garth would call a flipper and a specker. For the past decade I have done fairly well as the real estate market has continued to rise. Any dummy could, as a rising tide lifts all boats.

I’m not sure what the market will do from here, so my speck days are over. I just don’t see much more rapid upside, which is what a flipper like me looks for.

High transaction costs (legals, LTT, realtor’s fees, capital gains, etc.) require a substantial profit margin for the amount of risk involved. The margins are looking pretty thin for flippers going forward.

I am not predicting a crash or even a correction (who really knows?) but the fact is that even if the market rises only marginally, there simply isn’t enough profit for the average flipper to make it worth their while.

As for ‘house-horny’ property virgins who are hot to buy no matter what, I suggest qualifying yourself as if 5-year mortgage rates were 7%, and purchase accordingly, no matter what your banker, mortgage broker or realtor says.

#74 jounetsu on 04.12.11 at 9:14 am

wow that’s really disturbing… it’d be a cold day in hell before I’d spend the night on pavement for anything let alone an overpriced, unbuilt property… I don’t even like granite…

#75 Tom from Mississauga on 04.12.11 at 9:16 am

Hi Garth
There was a comment you said you were going to do a post on for somebody wanting put $200 or $2,000 a month into savings regularly what to do. BMO, the only big bank to have ETF’s now has the perfect product now. http://www.bmo.com/home/personal/banking/mortgages-loans/loans-loc/loans/semi-revolving
Borrow the money from and make a monthly payment, buy their ETF’s with Investorline. Do I make sense here?

#76 Crazy on 04.12.11 at 9:32 am

Well, look here:

CBC: Bank of Canada holds rate steady

http://www.cbc.ca/news/business/story/2011/04/12/business-boc-rates.html

With all the inflation going on!

#77 Martha on 04.12.11 at 9:34 am

To the greater fool (smoking man)

Your numbers are hilarious, tennants, Municipal, provincial, & federal taxes, along with utilities, contractors, accountants, banks, and lawyers, tribunals, and insurance companies, politicians, and bylaws, and inspectors, will eat your profits. 30K doesn’t even cover the interest payments let alone any principal reduction. The reason the owner is flipping is obvious, the property value has peaked and so too will interest rates in a few years. The owner sells high and lets some other greaterfool deal with the full time headaches while he comfortably makes more money investing somewhere else.

#78 avenirv on 04.12.11 at 9:52 am

bsallergy,
it is absolutely unbelievable the way you hate people. how can you wish somebody’s harm ?!
it is not at all christian way !

#79 Silentblogger on 04.12.11 at 10:01 am

Since nobody has gotten to this yet and I don’t like to open my system to the crazies so it could be in nut vlad guy’s links (his are usually crap and infested…)

the MSM is away and this is no longer news:

http://www.theglobeandmail.com/globe-investor/investment-ideas/experts-podium/signs-point-to-a-severe-housing-correction-in-canada/article1979229/

if the bright lights and horn that are now two feet in front of you haven’t warned you a while back you’re about to become art d’ freight train…after all, it’s history, right?

#80 Joe Q. on 04.12.11 at 10:03 am

#47 Carlyle on 04.12.11 at 2:27 am writes: “That little corner is like a piece of Pickering that made it into Toronto.”

Actually, your comment is literally true. The area between Port Union Road and the Rouge River was part of Pickering until the mid-1970s, when it was annexed onto the east edge of Scarborough.

#81 BrianT on 04.12.11 at 10:05 am

#44Ut-An inflationary depression does not mean the average person gets large wage increases-I don’t know why you keep stating this. An inflationary depression is underway in the USA right now-large cost increases (look at the increase in numbers of food bank users or the incredible rise in “health care” costs) along with the lowest level of oil imports since 1999! The actual productive economy of the USA is contracting, while the parasitic government/sick care/war machine grows without slowing in any way. The majority of USA homes are headed to a very low valuation, while these monopoly costs are rising at a very strong pace.

#82 Jack on 04.12.11 at 10:20 am

http://www.kurtismycfo.com/eNewsletter/Canadian%2030%20Year%20Olds%20Are%20Screwed.pdf

#83 Rob on 04.12.11 at 10:27 am

Daily report from the well paid blue collar world.

This morning all the talk at the coffee table at work was of inflation! Most did not know they were on the topic by name, they just refer to it as a scam of some sort (fuel, food, electricity, taxes etc). Most drive pickups, live in the burbs, and have a few kids, no one over 50, most under 40.

Yet at the same time much happiness of prime not moving, sort of a collective sigh of “we still have time”.

Tick Tick……

#84 Ex-Cowtown on 04.12.11 at 10:45 am

#29 PostCarbon on 04.12.11 at 12:54 am

$100 for a fill up? A wise real estate investor or home buyer will buy in a walkable neighbourhood near transit so that $100 fill ups are unnecessary or rare. Or better yet, rent in such a neighbourhood, sell the car and buy a bicycle. You will be healthier, wealthier and wiser.

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

Good points, but you lost me at the bicycle part. Obviously you don’t have kids, or plan to have them.

I rode my bike everywhere when I was in my twenties. In my thirties with a wife, two kids, diapers, groceries, etc. the bike was relegated to the garage for all but the warm days. In Canada that means 300+ days per year.

#85 Mr. Plow on 04.12.11 at 10:57 am

#7 Bill Grable

Hey Bill. Looking to buy a place in Maui. Any suggestions? I am looking predominantly Kihei cause that is what I know, but if you have some suggestions or good websites to visit (other than zillow) I would appreciate it.

Thanks.

#86 Prof ANON on 04.12.11 at 11:04 am

What’s with all the HAM stories today? A little anecdote for those that believe the Chinese juggernaut is here to pump up real estate prices forever.

I went to dinner a couple of weeks ago with an individual who wrote some of the first IPOs for Chinese government companies as they transitioned out of government control. To sum up a three hour conversation: few Chinese “investors” have an adequate comprehenshion of risk and even fewer know how to put a price on it. The reason for this risk-blindness is a lack of experience with publicly traded investments combined with the fact that the entirety of that experience has taken place during an incredible period of economic expansion. All they have ever known is UP.

So a relevant question is, how long can a group of individuals play a game and win when they don’t understand one of the basic rules?

So, no…the HAM won’t last forever, and I certainly wouldn’t be using Chinese as bellwethers for the real estate market.

#87 Live Under Your Means on 04.12.11 at 11:05 am

#68 Moneta on 04.12.11 at 8:08 am

Re patio furniture. About 6+ years ago hubby and I went to Costco to buy a BBQ. They had a terrific deal on teak patio sets in comparison to other stores and what I saw online. Set is beautiful, but I now regret buying it. It’s very heavy, is a little too large for our upper deck (2 levels) and requires staining every 2nd year – lots of maintenance if you want to keep the original ‘golden brown’ colour. Have thought about selling it, but in today’s economy not sure there’d be many interested. And yes, we paid cash.

About 20 yrs ago a sis bought an expensive set. Still using the original chairs. We children bought my Mom an outdoor (non wood) rocking type of chair 25 yrs ago. It was expensive, but its still in fairly good shape and I still use it. I’d rather buy a good quality set that doesn’t rust out in a few years.

#88 CalgaryRocks on 04.12.11 at 11:06 am

#74 Crazy on 04.12.11 at 9:32 amWell, look here:

CBC: Bank of Canada holds rate steady

http://www.cbc.ca/news/business/story/2011/04/12/business-boc-rates.html

With all the inflation going on!

The BOC understands that this inflation is not due to the Canadian economy overheating therefore raising interest rates will not do anything.

#89 Sean on 04.12.11 at 11:16 am

Can someone explain how people can wait outside for days. Do people not work anymore? I guess they have amazing stream of income when you can afford to drop 400k+ on something you can’t physically see/touch.

The speculators must have been winning, right? How else can this madness continue.

I guess it’s like the penny stock game. The experts get in and out and make a fortune, but there are tons of suckers that get left holding the bag.

#90 Mr. Plow on 04.12.11 at 11:20 am

#18 All is knowledge.

“Sacrifice they do by paying high prices for a better secure future in Canada”

Hey Yoda, what makes you so sure that China is such a bad place? Have you ever been?

May the force be with you.

#91 Mr. Plow on 04.12.11 at 11:24 am

#23 inexsucks

Actually most developers need presales for bank financing so they can start construction. I don’t know many developers who will build a building on cash. That’s a lot of a business’ cash flow out there.

#92 Mr. Plow on 04.12.11 at 11:33 am

#74 Crazy

Its cause of the election.

#93 Pat on 04.12.11 at 11:38 am

In yesterday’s post Garth wrote:

“For the record, TFSAs should contain rapidly-growing assets such as emerging market or small cap ETFs; RSPs or LIRAs should have your fixed-income, like bonds, which are taxed more…”

Just wanted to note that as long as you maintain relatively constant allocation between growth and income assets, how they are distributed among the TSFA and RSP accounts is irrelevant.

(apologies if somebody has already commented on this; I haven’t read all the comments)

Wrong. Growth assets which produce capital gains or dividends inside RSPs must be redeemed as income, which is taxed at your marginal rate, which may be higher than the allowable deduction when the funds were contributed (a large probability for now-young contributors). Gains inside a TFSA remain untaxed when withdrawn. Obviously the best place for tax-efficient assets producing cap gains or dividends is a non-registered account. The best place for fixed-income is your RRSP. Unless you feel compelled to assist with the national debt. — Garth

#94 mad vancouver on 04.12.11 at 11:47 am

The people lining up are not the people with the money. Many are poor folks trying to make some money by lining up for somebody else. I can hardly imagine people with 500,000 cash in their pocket spending days lining up under the rain.

#95 Industrial Guy on 04.12.11 at 11:53 am

Imagine this ……… The Royal Bank is saying the following:

“As an overall financial focus for the year, managing debt remains top of mind for consumers across the country, with 39 per cent planning to pay off their debt as much as possible, 30 per cent focused on spending less, 23 per cent looking to save or invest more and 25 per cent saying they intend to do all of these.”

http://www.rbc.com/newsroom/2011/0412-cdn-consumer.html

So, if 60% of GDP is based on consumer spending, We’re heading for a major economic correction ….. The same report says families are struggling with increased energy and food costs. If we add to this record high family debt … well, you can’t spend it if you don’t have it. Even a fool or real estate agent can see this is not going to end well at all. The low interest policy of your Government set this trap. Re-floating a floundering economy on debt and not productivity and exports simply means the true costs of the recession will be with us for a long time. Unless there is a sudden and dramatic upswing in the U.S. economy, we are destined to experience our own “Lost Decade”.

http://www.japan-101.com/history/history_lost_decade.htm

Once the election give away is over, Our Federal Government will have no choice but to increase taxes to pay for all of the deficits it accumulated over the last 3 years.

So, if you have a job ….. today would be a good day to ask your boss for a big raise.
Otherwise, you may want to skip that Timmies double double … permanently.
Trade the Hummer in for a bus pass.
Cut back on the 500 channel universe. Buy an antenna
Go to a no name brand Internet service provider.
Shop at Food Basics or No Frills (Bring your own bags)
Sell the mega house and rent.
Invest in companies which make “For Sale” signs and tents. Tents will be the only thing a lot of Boomers will afford once they retire.
Buy cases of Ramen Noodles whenever they go on sale. I hear is goes well with stewed Squirrel.

#96 bigrider on 04.12.11 at 12:18 pm

As a person of Italian background I can tell you with certainty that Italians still buying RE… FULLFORCE.

The humping of RE is a full time sport for those of Italian pedigree

#97 bigrider on 04.12.11 at 12:23 pm

$250,000 for the stonework alone !

A home in Klienburg, Ontario. This was the bill for the front facade of a luxury home being built in the Klienburg area.

Yes an Italian.

As much as I wish the RE obsession would end, the end may not be in site.

Yes Garth, ‘paucity’ not a strong suit of mine.

#98 Herb on 04.12.11 at 12:23 pm

To answer Vlad’s question about what it will take to get rid of Harper:

Canadians waking up and saying that they don’t want to be governed by slimeballs.

#99 Devore on 04.12.11 at 12:30 pm

#39 Mikhail

ALL my Chinese co-workers have a house and some of them already have paid off mortgage ( they save on everything and try to pay off mortgage in much shorter time, like 10-12 years…)

Well, I do say, 10-12 years ago houses were much cheaper and more reasonable. Today is not 10-12 years ago.

#100 bigrider on 04.12.11 at 12:31 pm

Woodbridge Ontario is grand central station, the ‘woodstock’ of real estate agents. Most RE agents per capita for sure !

Such adages like ” Real estate is always a good investamento” and “naw-ting beatsa da owning of a you house” and the old time favorite “La terre e sempre la terre'” which translated means “land is always land” have all originated from this mini center of the universe.

LOL !!!!!!

#101 Utopia on 04.12.11 at 12:33 pm

#79 BrianT

“An inflationary depression does not mean the average person gets large wage increases-I don’t know why you keep stating this”
—————————————————————–

Hi Brian,

I never said anything about us being in an inflationary depression. I mean, I had not drawn out a final conclusion to say that we were either here or there.

I was merely having a round out the folk who blither on about “inflation going through the roof, blah, blah blah” and always pointing to commodity price increases to prove their point.

You know…the price of gas and bread and cheese etc.

Few seem to consider the larger deflationary effects we are experiencing as consumption is still low globally and not expected to pick up significantly anytime soon though. Fewer still seem to grasp how this affects us mechanically nor why commodity booms are actually self extinguishing because of the way they reduce economic activity.

And this is partly the reason why there is no room for income growth in a competitive economy such as ours at this time. In Canada we are anticipating a housing correction and some deleveraging. Typically that will result in jobs losses as a big chunk of the economy is housing dependant. Naturally, a higher unemployment rate translates into a surplus of labour which further inhibits wage growth.

OK…so lets draw some conclusions then. Lets assume that the commodity boom continues for two more years before high energy costs drive us back into a renewed recession. Gold and precious metals prices have peaked and the Canadian housing correction is fully underway. I am suggesting that the price increases in metals will end simultaneous with a correction in resources.

Would we not then be taking a triple whammy? First there would be losses to our export trade from reduced sales in resources, second, unemployment would be rising and third, debt deleveraging would be fully underway.

All at the same time.

Timing is everything isn’t it? I think it is safe to assume that the commodity boom will become a bubble eventually (which might thrill the gold crowd, but not me) and that our overheated housing market will be in the throes of its own correction.

Needless to say, this is fundamentally why I am in favour of deficit reduction and in opposition to increased social spending and new programs at this time. We do have the time and the tools to prepare for what lies ahead and can make some reasonable predictions about where the economy is headed (all things being equal).

#102 BrianT on 04.12.11 at 12:46 pm

Good chart-the actual economy of the USA is about the same size as in 1991 while total mortgage debt is an incredible FIVE TIMES LARGER http://www.businessinsider.com/30-charts-you-must-see-before-buying-a-home-2011-4#-8

#103 Moneta on 04.12.11 at 12:50 pm

Live Under Your Means on 04.12.11 at 11:05 am
———
When I bought my first house, everything had to be stained and regularly maintained: windows, front door, siding, patio, fence. I had a beautiful garden that required 1 hour of weeding per week in the front and the same for the back. Got a nice expensive tent which went flying in a wind storm. I bought nice cushions but we had a summer where it would rain off and on every few hours so I’d perpetually be thinking of my cushions even while on a bike ride. LOL!

So I’ve learned my lesson. Everything I now choose is based on maximum longevity and minimum maintenance.

I love the wood sets but they don’t pass my first criteria: low maintenance. I love the Victorian metal ones but I avoid cushions. Also, my kids do arts and crafts on it so I don’t like tabletops with cracks. And the chairs need to be light, slide easily, and not tip over for the kids. Basically there is not much out there matching my long list of criteria.

So when I see what people are buying and what happened to everything I owned, I am 100% convinced there’s going to be a movement towards the zen approach to life over the next few years.

#104 Taiwan is not China on 04.12.11 at 1:10 pm

CRASH HAS ARRIVED…. in Australia

http://www.theaustralian.com.au/national-affairs/buyer-retreat-spells-slump-in-home-prices/story-fn59niix-1226034940341

#105 MikhailC on 04.12.11 at 1:14 pm

To 28:

This is simple: the Canadian immigration policy.
In Canada, if a foreigner buying a house, these money will be considered as an investment and will allow this person to become an immigrant ( investor type or business-type, I don’t know for sure). So, it is MUCH easy for people with 1-2M $ to become a Canadian, than an American, MUCH EASY. Same story in Australia. As a result, just in two countries in the whole Western world the prices are so ridiculously high – in Canada and in Australia. Vancouver is about 2 times more expensive, than London, there is no other explanation of that rather then foreigners, who (via buying property here) getting their they to become citizens… If the US government will permit foreigners, who bought a house to get Green Card in short time – you will see, what I mean.
Sorry for my English ( I’m Russian, not Chinese, and I don’t have a house after 13 years and hard work here – I just can’t compete with Chinese guys)

#106 BPOE on 04.12.11 at 1:18 pm

At #24: Hoof Hearted, ummmm, that’s lil’ baby Butter Bean – not Butter Ball! What do you think I am, a cruel human being? Besides, his new parents I sold him to for a carton of Marlboroughs and a couple coupons to White Spot down on Davie last night could have changed his name by now.

#107 Taiwan is not China on 04.12.11 at 1:20 pm

#33 The Original Dave

I don’t think so… The more the fools get in , the more the trouble everyone else is… So stop the party before they burn down the house.

See my previous comment. Party is over in Australia. First time buyers and investors have literally disappeared. Luxury home are auctioned at half price and some has no bidders at half price too.

Next stop …CANADA

#108 super dave on 04.12.11 at 1:31 pm

“Garth, I was there ( on Nelson) yesterday. 100% of these people are Chinese. 100%.”

Really? Well then I guess i am not Canadian, I must be Scottish… did you check their Citizenship papers?

I would guess these are Canadians, of chinese decent or imigrants to Canada. Which makes them Canadians just like you and me.

#109 Crash on 04.12.11 at 1:32 pm

Ha… Ha… Ha… darn Chinese bogeymen.

http://www.news1130.com/news/local/article/211203–chinese-buyers-keep-local-housing-prices-inflated

#110 Dylan on 04.12.11 at 1:44 pm

could we not argue that Oil is in the same bubble as real estate…

$150 oil makes no sense with the amount of inventory/current production.

oil price is being driven by speculators just like our good friends the asians and their hord buying?

oil deflates, housing deflates, and we can go back to some normal times

#111 Dylan on 04.12.11 at 1:47 pm

to MikhailC:

I think you might be off on the prices compared to London..

#112 Utopia on 04.12.11 at 1:47 pm

#51 Andrew

“Long time reader, first time poster”
———————————————————

I always enjoy it when a new poster comes to the site with both barrels blazing. Some good points too Andrew.

I will have to admit I have been forced to eat some of my words on the US housing correction as the bad news keeps rolling in and the depths of the collapse worsen by the day. Maybe I was just feeling optimistic once that a true recovery might finally be at hand.

Sadly, you are right about reversion to the mean and an overcorrection on the downside. That is as much repenting for my sins as I am prepared to do in one post though.

How long do you figure it will be before the Dow equals the price of Gold by the way? That will get to the heart of how steep the market decline might eventually be or would conversely suggest how high the price of gold goes.

Will they meet in the middle at say 6000 or will the Dow perhaps fall to 2500 and thus finally determine Golds ultimate high……

#113 Utopia on 04.12.11 at 1:54 pm

#104 Taiwan is not China

CRASH HAS ARRIVED…. in Australia

http://www.theaustralian.com.au/national-affairs/buyer-retreat-spells-slump-in-home-prices/story-fn59niix-1226034940341
—————————————————————–

Wow. Those numbers do look steep. It is hard trying to imagine a soft landing there if public sentiment in Australia turns too sharply. Guess Canada really will be the last man standing after all.

#114 not 1st on 04.12.11 at 1:58 pm

Garth, here is the one thing you don’t realized about foreign buyers from china, japan, india etc. They will get 15 people together to buy an asset. Assets are inter generational. 15 people contribute to the mortgage and they have no problem stuffing 15 people into a SFH. Here in the west, 2 people sit in a home thats 5,00 sq ft. To them thats ludicris. That same house could hold 4 generations.

Now when you think like that a million dollar investment is not a problem.

#115 BPOE on 04.12.11 at 2:12 pm

The lineups tell the story. People want Real Estate. 2011 is another great year in the History of Vancouver Real Estate. Renters are the true bag holders of this past decade. The American and others on this blog running around posting figures on how great Seattle is because of the Boeing plant and Microsoft? Any 6 day lineups for Seattle? I think not. What your witnessing folks is buying and house lust of epic proportions for BPOE. Recent article by Peter Ladner would like to see cap put on foreign ownership for Vancouver due to “prices being out of control” No stopping folks we’re going much much higher. Economics 101 of DEMAND and Supply

#116 The American on 04.12.11 at 2:19 pm

AT #48: Mels Diner Rocks, I have to admit that your commentary is incredibly accurate and hard-hitting. I too have been explaining that the “rich Chinese” argument in Canada is a narrow-minded farce for supporting real estate values. The Chinese simply prefer San Francisco and LA to Vancouver and Toronto, and that’s a fact. As for Chinese buyers shopping the U.S. right now, that is quite true. Even in Seattle, they are everywhere now and in every gallery looking for property. Bellevue also stands out with both Chinese and Russian, but yet they weren’t able to keep the values up here. It is funny the delusion I continue to hear from my friends in Vancouver who are really HOPING for it not to collapse as opposed to actually knowing in their heart of hearts it is going to collapse.

#117 Taiwan is not China on 04.12.11 at 2:23 pm

113 Utopia on 04.12.11 at 1:54 pm#104 Taiwan is not China

Wow. Those numbers do look steep. It is hard trying to imagine a soft landing there if public sentiment in Australia turns too sharply. Guess Canada really will be the last man standing after all.
————————————————

When it rains it pours….

#118 Taiwan is not China on 04.12.11 at 2:25 pm

Now they blame government incentives for housing crash… Where were you then, you Idiots ??

http://www.theaustralian.com.au/business/opinion/rba-and-government-incentives-hurt-housing-market/story-e6frg9qo-1226036868376

#119 kilby on 04.12.11 at 2:25 pm

Is having a few hundred ounces of silver bullion a good addition to a balanced portfolio? It seems pretty liquid and as there is a finite amount of this product that is used a lot in electronics etc…Very disappointed that BOC did not raise the interest rates today….no inflation,HA!

Keeping an eye on a Vancouver Island home for sale, just perfect for us. Last spring it was $619k, fall $539K and now at $499K, wonder what the fall will hold?

Garth, your views are becoming mainstream now, it will be interesting who takes credit for raising the alarm??

#120 BPOE on 04.12.11 at 2:30 pm

Bank of Canada holds rates steady. As I have noted many times, interest rates are never going higher. Buy now folks money is cheap and the door is being banged down from all over the world to get in to BPOE. Golf in the morning, Sail in the afternoon and ski a t night. Live the dream

#121 Mbanx on 04.12.11 at 2:36 pm

BOC maintains overnight interest rate at a steady 1% . although there are signs of economic improvement.

What I’m I missing here ?

#122 Daisy Mae on 04.12.11 at 2:41 pm

#66 – “Carney get some balls and some guts and do the right thing. This is seriously well beyond dangerous. You held off much longer than you should have. The longer you delay raising rates the closer the Canadian housing market morphs into an Ireland/US housing disaster. I think as of now we are likely to see a strongish ‘ 89 debacle but the longer he waits this thing will get extremely nasty.

DO THE RIGHT THING CARNEY”

There’s an election on. Mr. Carney is a Harper guy. No increase. — Garth

Carney will do as he’s told….after all, Harper is the boss.

#123 Hoof Hearted on 04.12.11 at 2:48 pm

#28 David09

Good question, especially coming from another jurisdiction, and we can compare notes

My 2 cents is this ( and I live in Metro Vancouver area).
Canada has always accepted immigrants, I am 1st generation Canuck, , but my experience was that immigrants were often refugees and middle class.

In BC, the economy often fluctuated, and when Premier Bennett was in office, we won the World Exposition rights(EXPO 86), which in my view is a bread and circuses event that keeps people minds of core focusses such as dubious economies.

Expo 86 basically took land that was industrial waterfront and turned it into the site.

After EXPO 86, Bennett quit politics, his party chose a new leader, Vander Zalm. For some “strange” reason there was some urgency to sell the EXPO site…and it sold for $50 Million to Hong Kong Billionaire Li Kai Shing.
This was ridiculous, made even moreso by the fact the Expo soils were contaminated and the taxpayers had the bear the cost. This is where the real stink, political and otherwise, starts

However, shortly after Expo, Asians from Hong Kong began to show up and purchase Vancouver area real estate en masse , due to looming return of Hong Kong to China in 1997.

IMHO, the fatal flaw that continues today was that the immgrant investor program was continually diluted to allow for residential purchase, as opposed to establishing new long term jobs and new companies. Even Pierre Trudeau had limits on foreign ownership.

I am not saying housing is a right, but what is the Gov’t really doing ?

( Cont’d in next post )

#124 bystander on 04.12.11 at 2:59 pm

Fear the boom, not the bust

http://tinyurl.com/3zammx7

Ignore at your own peril

#125 poco on 04.12.11 at 3:14 pm

#119 kilby

keeping an eye on a Vancouver Island home for sale, just perfect for us. Last spring it was $619k, fall $539K and now at $499K, wonder what the fall will hold?

that’s almost a 20% drop in price –how far do you think the market will tank ??–Was it priced right to begin with (compareables)

there’s too many fools still out there –it won’t last –what if it could be had for 460k to 470k—will you be kicking yourself if it goes at that price ??

it may take 2 to 3 years for other compareables to come down that much–it’s all in location and what you want and can afford comfortably

could you weather a drop of another 10% from that 470k price–not advocating anyone buy into this market but that might just be one hell of a deal

just saying!!!

#126 Hoof Hearted on 04.12.11 at 3:17 pm

#28 David09

In a bit of personal pontification, Gov’ts should use local residential Real Estate Market as a local parameter ” canary in the mine ” as to the health of L-O-C-A-L economy. Apply those income ratios that is basically Grade 3 Math.

However, there is NOTHING special about Vancouver, The Mountains and the Ocean are really a holograph, or may as well be.

Vancouvers only advantage is less snow, and the grass grows/flowers bloom/trees bud sooner than other parts of Canada….most of Vancouver is populated by ex Prairie types. I think their is this brainwashing that occurs that we are the Best Place On Earth…… repeat..

Anyway….Hong Kong money flooded in, and everyone and their dog was building houses, putting up 6000 sq.ft. McMansions where 2000 sq.ft homes were previously. It was like a war zone….I saw it at ground zero….BUT human nature showed that greed was good…..the same people selling homes were concurrently asking why their children couldn’t afford a home?

The problem is, the Gov’t should never have opened this Pandora’s Box ….because it is compromising and ghetto-izing the locals. Gov’ts are so fucking clueless…equity and equality is 2 sided…ie don’t the locals BORN HERE have any rights ?

Eventually, the SFH market gave way more to condos….

The other unfortunate evolution was “Pre-sales” of CONDOS…apparently a sales technique imported from Hong Kong due to its then hot local RE market. This was a disaster in the making. No more kicking the tires upon completion…so this lead to developers flogging units to offshore parties desperate to park their money in an investment.

Once the investment is made on a piece of paper,for a condo that may take 2-3 years to be built,… they can buy their way into the country, and take advantage of Canada’s social safety nets(health care, access to education, etc. on par with someone who may be 2nd 3rd generation.

(Continued in next post)

It’s like someone at Disneyland allowed to pole vault to the head of the line of someone who was in line for 40 years.

#127 BPOE is a Liar on 04.12.11 at 3:25 pm

At #115: BPOE, you’re so stupid dude. You really are stupid. There’s really no other way to say it other than you’re an idiot. Vancouver will NEVER be Seattle because Vancouver has no idea how to get real companies and industry or create a sustainable and viable economy. You forgot to include these additional GLOBAL companies in Seattle:

Amazon.Com
Drugstore.Com
Russell Investment (the stock index)
K2
Adobe Software
Starbucks
Tully’s
Seattle’s Best Coffee
Red Robin
Redhook
Mike’s Hard Lemonade
Trubion
Zymogenetics
Fisher Communications
Cray Inc (the world’s super computers made here)
Vulcan
Nintendo
Slalom Consulting
American Seafoods
Getty Images
PEMCO Insurance Company
Big Fish Games
Classmates.com
eNotes.com
Onvia
Payscale
Popcap
Real Networks
Social Strata
Raw Signal
Zillow.com
Redfin.com
Safeco Insurance Company
Cutter and Buck
Tommy Bahama
Todd Pacific Shipyards
PACCAR
Diamond Parking
Weyerhauser Lumber
Windermere
Barsuck Records
Sub Pop Records
Tooth & Nail Records
Waggener Edstrom
Fantagraphic Books
Blue Nile Inc
Nordstrom Clothing Stores
Sur La Table
Car Toys
PCC Natural Markets
Union Bay Clothing
Costco Stores
NetMotion Wireless
T-Mobile
AT&T Wireless
Attachmate WRQ
Avanade
Isilon
The Omni Group
Aero Controls
Monster Energy Drinks
Bartell Drugs
Eddie Bauer
Expedia.com
Liftport Group
msnbc.com
Nirvaha
Oberto
Premera Blue Cross
Raleigh USA
R.E.I.
Sucker Punch Productions
Symetra Financial
True Blue, Inc.
eNom
Clearwire
Amaze Entertainment
bgC3
Kenworth
Papillon Airways
Expeditors International
Holland America Cruiseline
Alaska Airlines
Horizon Airlines
Ambassadors International

Vancouver has…. oh yeah… Lulu Lemon? Shit, dude. Vancouver can’t hold a candle to Seattle in a 100 years.

Oh yes, and the last two… That little company called Microsoft and that other small company Boeing where the manufacturing is completed.

#128 BPOE is a Liar on 04.12.11 at 3:29 pm

No wonder Seattle triples the GDP of Vancouver. OH yes, it is because Vancouver is not a conducive environment for operating a business nor does it have infrastructure to support growth. Vancouver sucks, dude.

#129 bigrider on 04.12.11 at 3:36 pm

Itsa a gooda thinga that e Italiani’s r no interested ina Vancouver.

e prezo (prices) woulda dopia(double) overnight.

F&^% I hate this whole RE HYPE !

#130 BrianT on 04.12.11 at 3:46 pm

#116Amer-One thing you should realize is that the actual goods producing USA economy is contracting steadily and will keep contracting for the foreseeable future. I don’t know how this will play out politically but the end result will be a Detroit-like mess. I say Detroit because the only part of the USA economy that is thriving is the government or non goods producing monopoly financial sector. USA oil consumption has regressed back to 1999 levels (and falling) and it isn’t because everyone is going eco. Tax revenues are terrible and the population has no wealth in any event to tax. IMO the main problem for Canada is our strong ties to the USA economy.

#131 Devore on 04.12.11 at 3:48 pm

#124 bystander

That the damage of the business cycle is done during the boom is one of the central tenets of the Austrian school. And I agree. The damage is done by misallocation of capital, resources and labor driven by expansion of credit. The eventual contraction of credit, which is inevitable, and the resulting correction (recession, depression) are just consequences that cannot be ultimately avoided.

#132 BPOE is a Liar on 04.12.11 at 3:51 pm

BPOE, don’t forget these companies also based in the Seattle area…

Hale’s Ales, Jones Soda,Pyramid Breweries,
Redhook Ale Brewery,Starbucks (including Seattle’s Best Coffee),Tully’s Coffee, Mike’s Hard Lemonade Co.,
Dendreon, ZymoGenetics, Trubion, Fisher Communications, Cray Inc. — supercomputers, F5 Networks, Isilon Systems, Vulcan Inc., Slalom Consulting, Plaster Group,Washington Federal Savings, Russell Investments and the Russell Stock Index, Uwajimaya, Darigold, American Seafoods, Trident Seafoods, Theo Chocolates, Corbis — stock photography, Getty Images, PEMCO, Safeco, Amazon.com, Drugstore.com, Big Fish Games, Classmates.com, Conceivian Corporation,eNotes.com, findwell, Groundspeak, Healthy Paws Pet Insurance & Foundation, Lockerz.com, Ecommerce; Entertainment
Onvia, Ovation Teas, PayScale, PopCap, RealNetworks, Redfin.com, Pet Holdings Inc., PersonRatings.com, Raw Signal, Social Strata, Soundrangers, Trupanion, Zillow.com, ModernPaperGoods.com, Cutter & Buck, Todd Pacific Shipyards, Diamond Parking, Plum Creek Timber, Windermere, John L. Scott, Waggener Edstrom, Communique PR , Raffetto Herman Strategic Communications, Fantagraphics Books, Barsuk Records, Sub Pop Records, Tooth & Nail Records, WallTools.com, Antica Farmacista, Amazon.com, Blue Nile Inc., Nordstrom, Sur La Table, Car Toys, PCC Natural Markets, Zumiez, Tommy Bahama, Union Bay, Costco, Outdoor Research, NetMotion Wireless, Social Strata, Groupee Inc., RealNetworks, AttachmateWRQ, Avanade, Isilon, The Omni Group, Cequint Incorporated, Nabtesc, Aerospace Inc., Aero Controls Inc., Expeditors International, Holland America Line, Ambassadors International, Alaska Airlines, Microsoft, 180 Solutions, Horizon Air, Brooks, Bartell Drugs, Bungie Studios, Clearwire, Classmates.com, Concur, Costco, drugstore.com,Eddie Bauer, Expedia, Inc., Liftport Group, msnbc.com, Nintendo of America, Nirvaha, Oberto, PACCAR, Premera Blue Cross, Raleigh USA, R.E.I., Sucker Punch Productions, Symetra Financial, T-Mobile, True Blue, Inc., Weyerhaeuser, eNom, Valve Corporation, Western Logistics Inc.

Of course Vancouver can’t light a candle to Seattle. Seattle kicks Vancouver’s ass in every way possible. Vancouver has what? Oh yeah, Lulu Lemon? Shit.

#133 Junius on 04.12.11 at 3:58 pm

#120 BPOE,

You said, “As I have noted many times, interest rates are never going higher.”

The dumbest thing you have ever said. And there are a lot of dumb things to choose from.

Interest rates are artificially low for a reason. Figure it out. They will not last.

#134 Junius on 04.12.11 at 4:00 pm

#121 Mbanx,

Yes. There is an election and they are not going up until after that.

#135 Crash on 04.12.11 at 4:03 pm

Now the news1130 site has modified their title and took out the words “Chinese buyers”… now it’s “low interest rates” but they still blame the Chinese in the text of the article.

http://www.news1130.com/news/local/article/211203–low-interest-rates-keep-local-housing-prices-inflated

#136 Hoof Hearted on 04.12.11 at 4:05 pm

#28 David09

So, since Expo 86 , it’s now 25 years.
When I was a consumer of public education…class photos did reflect a United Nations diverse base.

Now ? The truth is not racist.
In a class of 30, Caucasians stand out like a sore thumb.
My old 100+ house neighbourhood, a great middle class one in the 1960’s is probably 90% owned by offshore investors, and rented out.

IMHO, our Gov’t tried to ” fix ” the mess by manipulating the lending practices as they did in the US.
This bought some peace, stop internal revolt…. but concurrently offshore investment continued unabated.

Vancouver is a City of addictions on many fronts.
It has based its economy and bet its future on residential real estate. A 30 -year regional growth strategy involving approx. 24 Metro Van cities are rolling the dice on this.
They are displacing industrial and commercial areas to the periphery, to free up land for..you guessed it…more condos.
Documents even refer to the Hong Kong model
However, other documents re growth from our own BC Hydro state that within 30 years the death rate will exceed the birth rate , that in fact we are starting to plateau, getting older on average and entering a decline phase.

Residential construction simply creates short term jobs.
However, this is much like fiat currency, print more = build more.

Local Gov’ts rake in big dollars from fees permits and future property taxes. However, RE is a commodity,…..no commodity can retain its value forever….even gold.

One can drive by hi-rise condo towers whose ground floors are dedicated to lease for retail space….EMPTY…” for lease ” .what does that tell you

What I see happening is a HUGE crash….When Gov’ts can’t see it and/or admit it…that is the warning sign. EVERYONES property values will collapse as supply will eventually exceed demand to such a degree that Vancouver could end up like Detroit and/or China’s Ghost Cities….take your pick.

The joker in the deck is that the Locals may soon wake up and say enough IS enough
One indicator I use is how much one’s local gov’t invests in frivolous decorations, and a look at the wages and salaries

Our Provincial Gov’t has effectively sold us out to P3 interests on may fronts.

Gov’ts have simply swallowed the kool-aid, far too addicted to this ill – advised stimulus package of laundered funds.
Most of those in charge are older boomers or older,who obviously can’t see beyond their gold plated pensions coming up in 5 years or less.

BC , in my view, over the past 25 years, has set itself up for an enormous tectonic shift that will be unprecedented on the economic Richter scale. They may have to sell of the mountains and the ocean, then it will look like a shithole (anything East of the Rockies)

#137 VICTORIA TEA PARTY on 04.12.11 at 4:06 pm

#120 BPOE

THE GIFT THAT KEEPS ON GIVING: INFLATION

Another Global TV noon newscast this date and another well-fed real estate pilot fish is on the tube.

He is speaking the smarmy gargle that so many of his “colleagues” speak. That would be words bathed in soft intonations laced with certain key words all calculated to make you feel like a wall flower at the dance of the real estate dream merchants, if you don’t already have “property.”

He was grinding on about Vancouver being the best city on earth, which is why the Chinese mainlanders were buying up large clumps of Lower Mainland soil with Vancouver Specials planted thereon for huge amounts of money.

And then there are the posters on this blog telling of all-Chinese prospective buyers lining up in the wet for as-yet unbuilt concrete boxes in the sky.

Here’s what this “gift” from China is REALLY giving: INFLATION. That would be “local” inflation for local consumption and later suffering from. Inflation will wind-up reducing the value of everything it touches.

Those who are selling to the new immigrants, for as much as they can get, do no one in Vancouver a service.

It’ll take substantial increases in the bank rate coupled with a collapsing bond market to cast these real estate pearls before the bankrupcy swines.

That other gift Vancouver is concomitantly receiving from China is this: “May you live in ‘interesting’ times.” That’s a curse!

#138 kilby on 04.12.11 at 4:07 pm

#125, Poco.
The house was a good price initially, apparently the owners are into it for nearly $600k, beautiful house on Pintail Drive,.48 acre backing onto a golf course and near the ocean. We had our Summerland (Okanagan) appraised professionally last June at $619K, We sold March 31st this year at $497K and out of 15 “lake view” homes between 500K and $600k ours was the only one to move until last week where another listed at $619k just sold for $500K after two price reductions. So many of the other listings refuse to believe that their places are worth so much less and do little price reductions all the time ($5,000 or $10,000) so they just sit there overpriced, some listed for over 300 days.

#139 super dave on 04.12.11 at 4:16 pm

Bershire Hathaway Annual Report 2010

“the third best investment I ever made was the purchase of my home, though I would have made far more money if I had rented and used the purchase money to buy stocks”

“for the #31,500 I paid for our house, my family and I gained 52 years of terrific memories with more to come.” – Warren Buffet

#140 MikhailC on 04.12.11 at 4:22 pm

to 126

I totally agree with you. High prices in Canada and especially in Vancouver are 100% based on political decisions, and have nothing do with economy here ( investor immigration program and also CMHC actions – are two major factors for such ridiculously high prices).

#141 nonplused on 04.12.11 at 4:23 pm

hmmmm…

http://en.21cbh.com/HTML/2011-4-12/4NMjM0XzIwOTg4Ng.html

“Non-local second home buyers”, eh? I wonder why this isn’t news in NA. A 27% m/m price decline sounds like a big deal to me.

#142 Bobby on 04.12.11 at 4:25 pm

I work in Asia, and if the Chinese are supposedly lining up to buy, I’m going the other way. The Chinese will line up just to see why they are all lining up.

Just it is going to crash, and it will be ugly.

#143 BrianT on 04.12.11 at 4:38 pm

The USA is looking more like Argentina every day-here is Tabbibi discussing the Real Wives of Wall Street http://www.zerohedge.com/article/matt-taibbi-asks-why-fed-gave-220-million-bailout-money-wives-two-morgan-stanley-bigwigs

#144 Utopia on 04.12.11 at 4:39 pm

#23 inexsucks

“Developer knows the market. Polygon can sell this place anytime during the next 4 years; until it’s built. Developer wants to sell it now coz they can foresee what the market is like from now on”
—————————————————————–

You got that right Inexsucks, Presales are one of the best damn games to be in right now, especially if you are a builder who sees the housing market rolling over.

What these guys see are dollar signs writ large. Oh, they will build alright but they will do it for much less than current rates as the whole construction industry gets squeezed by a R/E melt and the build contracts and bids come in much more favourably.

Actually, if you were a “major” you would be crazy not to hype a project to the nuts and get paid right now to keep yourself busy through a downturn and drought.

Doesn’t stop the inevitable though, it just insures the big guys that they don’t fall though the cracks when the real downturn arrives.

Which is riiiiiiiiight abooooout……………….now.

#145 Pat on 04.12.11 at 4:49 pm

#93 Pat:
“…as long as you maintain relatively constant allocation between growth and income assets, how they are distributed among the TSFA and RSP accounts is irrelevant.”

Garth:
” Wrong. Growth assets which produce capital gains or dividends inside RSPs must be redeemed as income…”

This is beyond the point as long as one “maintains relatively constant allocation…”

For those who don’t believe me, work out a simple example: growth 60% with 10%/year return; income 40% with 5% return; rebalanced annually. You’ll pay the same taxes at the end regardless of the distribution over accounts. We are talking about RSP and TSFA.

Any one final point. In many cases (for people who have little other sources of income), RSP withdrawals will be taxed at lower than marginal rates – average rates. It’s a very simple analysis – comes down to a single compact formula, to estimate weather RSP or TSFA are a better choice. I’ll write it in a separate comment as when one disagrees with Garth, one has to diversity or risk loosing all he/she has written in a single censure.

The point is about the taxation of returns, not the returns themselves. Please refer to my earlier answer. It was complete and correct. — Garth

#146 CrowdedElevatorFartz on 04.12.11 at 5:05 pm

@BPOE #115 and 120
Thanks buddy, I was feeling a bit constipated until I read your comments….
Oh, and Economics 101 is usually termed
“Supply and Demand” NOT “Demand and Supply”
Just thought you might want to know before the Big One hits, my stubby legged Tsunami dodger……….

#147 Taiwan is not China on 04.12.11 at 5:07 pm

BofA CEO: Owners shouldn’t look at home as an asset

http://www.msnbc.msn.com/id/42556230/ns/business-real_estate/

What a world….How quick an asset can turn into a liability.

#148 Taiwan is not China on 04.12.11 at 5:11 pm

Realtors cry that lending standards are too conservative… Haven’t they learned anything ???

You know what , Mr.Realtor…go get a degree and you might learn something.

http://www.msnbc.msn.com/id/42521765/ns/business-real_estate/

#149 Live Under Your Means on 04.12.11 at 5:12 pm

#71 Moneta on 04.12.11 at 8:58 am

My parents’ appliances lasted over 25 years. You don’t see that today.

When I went to get a new belt for my dryer, the salesperson there said it did not matter how much you pay, most appliances last 7-8 years nowadays. And the more expensive stuff is riskier because very often you can’t find the pieces 1 or 2 years down the road.

So the young who have been buying for the last 5 years at bubble prices are in for a tough time.

Usually, after 5 years of hoem ownership, you can start breathing but in their case, they’ll be starting to replace everything they bought. It’s hard to build wealth when depreciation just keeps accelerating.

But most people can’t see past the end of their nose.

……………………

When we renovated our kitchen (10+ yrs), we bought new appliances as ours were quite old. They functioned but were not as energy efficient. We bought a slide in stove – almost $1,400. (I keep all warranties, bills, etc. in a binder). Yr after we bought it, Sears had to replace the door. Two or 3 yrs ago the electronic panel went on it. Cost to replace it was exorbitant. Hubby found a unit at an electrical place for $250+ and replaced it himself. Hubby has also had to fix the dishwasher – even adding screws to the exterior to keep it together. Inside door for detergent opens as soon as DW is turned on. He tried to fix it but can’t. Knock on wood fridge still works, but I have to replace a bin. Had to replace hot water tank last year and were told life expectancy is 9-10 yrs. Also had to replace our electric panel. Upstairs badly needs repainting and I can no longer do it & hubby detests painting. Hopefully, neighbour who is a painter, can find the time to do it. He does a lot of under the table work for neighbours, family, etc.

Owning a home sure is expensive. I pity those fools who bought in the last 5 years also.

#150 new_era on 04.12.11 at 5:16 pm

IMF says canada’s Debt Burden Greater than Portugal
(which is now almost bankrupt)

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/canadas-growing-debt-doesnt-go-unnoticed-at-imf/article1981871/

#151 squidly77 on 04.12.11 at 5:24 pm

If you have a few million dollars that your willing to invest in a local economy, you can become a citizen of any country, Canada is not unique in this way.

Most likely destinations are the California coastal areas or perhaps Florida or even South Carolina. I don’t buy this HAM crap, why pay 5 times more for a place like Vancouver where it rains 180 days a year, Vancouver also has a very nasty Tax culture.

The only place I see HAM is on my breakfast plate.

What Vancouver has is Chinese Lotto.

#152 Sunshine Blower on 04.12.11 at 5:32 pm

#10 says.

“Chinese buyers will pay 90% of their income for housing and eat rice and water, and will be happy.”

It’s not just just rice and water.. it flied lice.. you plick.

#153 Nostradamus Le Mad Vlad on 04.12.11 at 5:44 pm

#50 Gary in Alberta, #95 Industrial Guy, #98 Herb and #122 Daisy Mae — “Canadians waking up and saying that they don’t want to be governed by slimeballs.”

You’re being too kind to politicos. I revert back to what I said a few months ago re: all these neocon neanderthals:

Lead them all to Death Valley or Alice Springs, hang them upside down in the noonday sun by the balls and let vultures peck away and nibble on them, all the while being hamstrung by their collective John Thomas’ (IQs).

Include all the tax increases coming after elections. That should wake them up a little bit!

#154 Hoof - Hearted on 04.12.11 at 5:45 pm

#141 Bobby on 04.12.11 at 4:25 pm

I work in Asia, and if the Chinese are supposedly lining up to buy, I’m going the other way. The Chinese will line up just to see why they are all lining up.

Just it is going to crash, and it will be ugly.

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

You are right….
Asians are the world biggest window shoppers….

Go to any Asian malls…its only the food court that’s busy

#155 BrianT on 04.12.11 at 6:01 pm

#138Super-The old grifter had 52 yrs of pleasant memories-I would be surprised if the rest of the clan would agree with him-he made a public show of cutting them out of his will http://www.cnbc.com/id/26905629/Warren_Buffett_Admits_Regret_Over_Wife_s_Departure_In_New_Biography_NY_Daily_News

#156 tired vulture on 04.12.11 at 6:15 pm

Every theory exposed by Garth makes sense however we are in a non-sense place. People are willing to eat can food before losing the house.

#157 Benjamin on 04.12.11 at 6:25 pm

Real estate speculation is rampant and gambling is addictive. One of the hooks that always snare the gambler is the idea that they will beat the odds no matter what… “It’s my time to win.” Hence, we witness the hysterical All-In phenomenon. It’s gonna be ugly for sure!

#158 ballingsford on 04.12.11 at 6:25 pm

Royal Lepage says home prices are going to increase this year. It must be true if they say it. (What a load of RE pumping crap that a lot of people believe.)

http://www.theglobeandmail.com/report-on-business/economy/housing/home-prices-to-creep-up-this-year/article1981663/

#159 Cato on 04.12.11 at 6:48 pm

Irrational markets, irrational gov’t – middle class takes another step closer to the brink. End result of the state sponsored ponzi scheme. What do you expect from a culture of money for nothing.

Any monkey can make money during a bubble, throw dart at a house, stock, commodity – doesn’t matter it comes up a winner. Then the monkey gets arrogant, starts attributing success to skill and is emboldened to make even larger wager. You see the same behavior watching tables in Vegas. At some point the house always wins.

Creating true wealth isn’t easy and there aren’t any shortcuts. Simply can’t build an economy based on a debt ponzi scheme, and gov’t can’t expect to grow an economy by robbing from producers to subsidize consumers. As bad as inflation is starting to feel now it won’t compare to whats coming down the pipe when the consumer based economy really starts to feel the pain of cost of living increases now working into the system. Over the next few years we get to see what the end result of a failed political experiment began after WW2 looks like.

#160 The American on 04.12.11 at 6:55 pm

At #155: Tired Vulture, tell that to tens of thousands of Americans who have lost their homes after they’ve lost their jobs. You can’t squeeze blood from a turnip is how the old saying goes. If people don’t have the money, it makes no difference if there is a recourse vs. non-recourse mortgage. If you can’t afford to pay, you can’t afford to pay. No amount of eating out of a can will offset the immense amount of a monthly payment.

#161 Devore on 04.12.11 at 7:00 pm

#148 Live Under Your Means

Owning a home sure is expensive. I pity those fools who bought in the last 5 years also.

Of course it is. It’s a depreciating asset. It would only go up in value if cost of construction labor and materials were to go through the roof. The structure is worth its replacement value. If you don’t maintain it, keep it repaired, and updated, it will go down in value. It’s the land that appreciates.

People who buy themselves expensive new houses will soon learn that a big house = big expense. Even if the property has gone up in value… funny thing about equity… you can’t spend it unless you sell the entire house. So all these overextended people will become even more extended.

#162 wetcoaster on 04.12.11 at 7:04 pm

Global BC finally admitting the jig is up. 25% correction coming. Miley the realturd and Bob Trueman should open a burger joint.

http://www.globaltvbc.com/video/index.html?releasePID=MWeX2bkH0iRHwudqph3O3mbyQ3zQ2HHK

#163 poco on 04.12.11 at 7:15 pm

#137 kilby–the property sounds great—the one thing i’ve found while watching this downward market is the dream home you find today (you know –the one you have to have )if it sells no big deal– another one seems to pop up in a couple of weeks–comparable and sometimes cheaper than the last

for now i’ll keep watching the slide—lots of properties sitting since last spring also–same type of price changes for those (5k to 10k )
other newer listings aren’t sitting around waiting–no interest in the first few weeks a 40k to 50k price reduction is not uncommon

#164 jess on 04.12.11 at 7:33 pm

brian T

that is outrageous !(article by matt T.)..but what do you expect as no one goes to jail. They simply pay a fine.

http://www.secrecyjurisdictions.com/PDF/USA_Delaware.pdf

lagging indicator
Johnson & Johnson Agrees to Pay $21.4 Million Criminal Penalty to Resolve Foreign Corrupt Practices Act and Oil for Food Investigations
Company to Pay Total Penalties of $70 Million in Resolutions with Justice Department and U.S. Securities and Exchange Commission

WASHINGTON—Johnson & Johnson (J&J) has agreed to pay a $21.4 million criminal penalty as part of a deferred prosecution agreement with the Department of Justice to resolve improper payments by J&J subsidiaries to government officials in Greece, Poland, and Romania in violation of the Foreign Corrupt Practices Act (FCPA), the Justice Department’s Criminal Division announced today. The agreement also resolves kickbacks paid to the former government of Iraq under the United Nations Oil for Food Program.

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

#165 S.B. on 04.12.11 at 7:37 pm

Forget the house price itself, the real costs will come in the form of land transfer taxes, CMHC fees, Insurance, Hydro, Gas, Water, Sewer, Garbage user fees, Interest, auto fuel costs.
The devil is in the details:

“Higher gas prices could cost Canadians an extra $12 billion, or $950 per household, in 2011, according to a new report from CIBC World Markets Inc.

The latest Consumer Watch Canada report by deputy chief economist Benjamin Tal suggests that the recent boost in energy prices, if sustained, will take a hefty toll on Canadians’ personal finances.

Households account for one-third of the total energy consumption in the Canadian economy, and about half of what they consume is gasoline. In 2010, total spending on energy by Canadian households was slightly more than $88 billion, according to the report.

Gas prices have risen by 23% since September 2010, and are quickly approaching the level they hit during the 2008 oil shock. Spending on gasoline, as a share of disposable income, is now estimated to be less than half a percentage point shy of the peak seen in 2008.

Low- and middle-income households are particularly feeling the impact of the higher prices.

“Higher-income households are better able to absorb the increase in energy spending without much sacrifice to their non-energy spending,” Tal says. “But for low- and middle-income Canadians, the situation is very different because energy represents a much larger share of their overall spending.”

For instance, he points out that low-income households spend more than twice as much of their income on energy than high-income households.

As a result of the higher energy prices, Tal expects Canadians to cut back on discretionary purchases, including motor vehicles and parts, sporting goods, clothing and personal care items.

IE “

#166 BPOE on 04.12.11 at 7:50 pm

Yeah and still prices are down 30%. Like I say no one is stopping this train. Don’t you get it, it’s not about the jobs, it’s not about the economy, it’s not about interest rates. It’s about pride of ownership, it’s about making your family and parents and descendants proud you are an owner, it’s about being able to plant a tree or put down patio stones, it’s about being able to renovate whether painting or changing doors, it’s about being able to rent out part of the house for income, it’s about enjoying your life in your HOME, it’s about being able to sell the house and take all those fabulous profits and diversifiy if you so desire, it’s about being FREE and not a puppet and slave to your landlord. Buy BPOE and be a Landlord not a Slave. The choice is yours. Lineups have been going on for years and will never stop. Limited land with unlimited wealth. Please, come joing us BPOE.
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
BPOE is a Liar on 04.12.11 at 3:51 pm
BPOE, don’t forget these companies also based in the Seattle area…
Hale’s Ales, Jones Soda,Pyramid Breweries,etcetc

#167 housing bubble on 04.12.11 at 8:07 pm

Everyone is in the housing market just like everyone was in the dot.com bubble.It was different the experts said. I went to 7/11 and saw the guy behind the counter give housing advice to a customer. It was a flash back of 2000 all over again. The housing bubble will pop hard.

#168 Pat on 04.12.11 at 8:12 pm

“It was complete and correct. — Garth”

Yep, I had forgotten how stubborn old people can be.

Especially those with perceived authority.

Insulting me does not strengthen your argument. It weakens only you. I trust you’ll learn these things in time. Hope so, for your sake. — Garth

#169 doctore on 04.12.11 at 8:19 pm

Chinese this chinese that buying up everything in site. Well since I am heading to China in May for the first time on a tour, I should expect to see quite a few wealthy people around especially in the major centers beijing, shanghai and Xian. If all this is true there should be money gallore there whirling around.

#170 S.B. on 04.12.11 at 8:20 pm

How to profit from Alberta real estate slide:

– Big Rock Brewery stock, pays 20c quarterly dividend, symbol BR
– Symbol RUM, Rock Mountian Liquor, owns liquor stores. And RUM.DB debentures as of tomorrow.

People will keep drinking, more and more. :twisted: :twisted:

#171 Cabot Lodge brylcreem & trenchcoat on 04.12.11 at 8:36 pm

1/. Wonder how many mega rich Asians got burned Stateside?

2/. Wonder why mega rich Asians aren’t investing Stateside?

#172 ObserveR on 04.12.11 at 8:52 pm

Today there’s every indication housing values are far above the trend line. The only way average families can buy is through the use of extreme leverage

….so why does Mr Carney insist on prolonging this madness?

#173 Hoof - Hearted on 04.12.11 at 8:53 pm

#165 BPOE

How’s Baby Butter Ball:

Did you make sure that there isn’t a twin still in utero and not paying rent?

#174 Brad in Van on 04.12.11 at 8:59 pm

OHHHHH SNAP! BPOE got his ass handed to him on a silver platter by “BPOE is a Liar!” To say it isn’t about interest rates or economy and jobs is absolute rubbish.

BPOE, you said “It’s about pride of ownership, it’s about making your family and parents and descendants proud you are an owner, it’s about being able to plant a tree or put down patio stones, it’s about being able to renovate whether painting or changing doors, it’s about being able to rent out part of the house for income, it’s about enjoying your life in your HOME…”

Dude, you’re so dumb you don’t even realize what you said about Vancouver applies to ALL markets in the world. People own everywhere for the same reasons you just explained. It has NOTHING to do with Vancouver. Nothing you said differentiates Vancouver from any other market. You never have been able to stand on an argument with sufficient evidence to back you. Also, you continually get caught in half-truths and lies, only to have your ass handed to you much like “BPOE is a Liar” did to you just today. Face it, Vancouver is going down and you know it. You’ve clearly got too much time on your hands to be on here all day and blogging. So, clearly, you’re not selling jack shit.

#175 Nostradamus Le Mad Vlad on 04.12.11 at 9:04 pm


3:18 clip US$ continues its descent into the abyss.

Jim Cramer Flashback “Of course, setting aside that CNBC is owned by General Electric, which means Cramer works for the company that designed those exploding reactors, Jim Cramer is the guy who told us all that Bear Sterns was fine … just one week before it collapsed.

“UPDATE: http://blog.alexanderhiggins.com/2011/03/30/cesium-fallout-fukushima-riv…. Jim Cramer loyally serves his GE masters and destroys what little remains of NBC/MSNBC/CNBC’s credibility.” wrh.com. Who owns GE? The Rothschilds, of course!

IMF The US and the IMF both lack credibility. After all, Obama’s backers also run the IMF, plus Every six months, another trillion added on to the debt. 0:36 clip The US debt clock has run out of zeroes.

Nuke Nightmare on Elm Street. Aftershocks A major ‘quake in Tokyo, where three separate fault lines meet, would all but end Japan. Radiation in Ontario. Bunker time, Garth!

The Graaammmmarrr Police For you! I don’t need no stinkin’ edyoukayshun.

New Stock Market disaster, and Canada (of all places) is where this might happen.

Vaccine Induced Diseases Seems to be a new trend — Get vaccinated, be struck down by an illness then DDDIIIIIEEEE!

Harper “The measure supports plans for a North American security perimeter and illustrates how the Canadian government is more interested in appeasing U.S. interests than protecting the privacy and freedoms of its own citizens…”

Apathetic Watch the Europeans, then have a North American revolution!

#176 tkid on 04.12.11 at 9:08 pm

….so why does Mr Carney insist on prolonging this madness?

Because it is the middle of an election. If he screws around with interest rates he could be accused of interfering with the election.

Somewhere in that vast library of Parliment’s archaic rules and regulations is noted ‘thou shalt not frack with The Vote or She will Not Be Amused.’

#177 tkid on 04.12.11 at 9:10 pm

On a Xurbia note, has anyone here bought a Berkey water filter? Is it any good?

#178 CrowdedElevatorFartz on 04.12.11 at 9:15 pm

BPOE ….put down the Realtor “For Sale” sign and come for an elevator ride with me……..:)-

#179 rightiswrong on 04.12.11 at 9:23 pm

Hmmm you post that pic and the day after an A380 clips a regional jet. Coincidence? I think not…

That’s right. You think not. — Garth

#180 Ex-Cowtown on 04.12.11 at 9:26 pm

I hate to say this, but BPOE may have a point (right for the wrong reason, but right nonetheless).

The market is clearly irrational so the “old paradigm” of things like interest rates, income etc. clearly do not apply…….at this particular moment. And that was the same argument used during the tech bubble and every other bubble proceeding it.

But it ALWAYS eventually comes back to boring old items like income, interest and such.

And that is when the jig is up. Vancouver will likely always have a higher price than places like Calgary as Vancouverites have learned to tolerate renters living in their basements for the rest of their natural lives. Prairie dwellers have no such patience or tolerance and demand privacy in their homes. This holds prices down.

#181 poco on 04.12.11 at 9:35 pm

Phil Soper on bnn today–is his outlook changing???
http://watch.bnn.ca/#clip449110

#182 Onemorething on 04.12.11 at 9:50 pm

#159 The American.

Dead On! Garth, can you post your denial cycle diagram once again for your guests!

Drunk on cheap money for at least 10 years, monitized for 30 years! 10 years of downward and sideways movement is upon us and at the end there is NO recovery, just a great global reset!

If you plan to be dead in 10yrs you may consider yourself lucky.

On the flip side for those who heed the advice of THE TURNER may find light at the end of the tunnel.

Good Luck All!

PS – I think all thay CHF I bought at 1.15 is paying off! Up 30% on USD and best performance against all currencies! Not to mention 12.50 Silver! Ratio going to 15:1 gold! Still cant eat it but good denominations for bartering!

#183 Dark Sad Monster Bunny on 04.12.11 at 9:51 pm

131 BPOEL – a lot of dot coms in there. Do those companies actually make anything?

Found this for Van, a few years out of date. Lots of familiar names (to me anyway)

http://www.bcbc.com/Documents/EC_200612_CorporateHeadOffices.pdf

Looks like an interesting read as they note Van has lost ground in the top 500, but experienced growth in the
next 300.

#184 BrianT on 04.12.11 at 9:52 pm

#160Devore-Yes-the other thing is, the bigger the house the bigger the necessary expense for furniture and furnishings/decorations of all kinds. This isn’t a minor expense at all-I don’t know what % of Cdn discretionary expenditure is on household furniture and furnishings of all kinds but I would guess it is major judging by the quantity of retail space dedicated to selling it. Very little of this holds value-nowadays the really cheap or frugal can decorate and furnish their place for almost nothing through Craigslist or Kijiji.

#185 brainsail on 04.12.11 at 9:58 pm

#175 tkid

I don’t know anything about Berkey water filters. We are very happy with the following system. Easy to install, inexpensive, hidden and not piece of furniture. There are many systems available and many are complete BS. Spend time researching and compare the specs.

http://www.watergeneral.com/product02.aspx

#186 Hoof Hearted on 04.12.11 at 9:59 pm

Fer Fux sakes

Are there really some people that think BPOE is serious……and not on uber parody?

Those that do deserve to be stuck for weeks in a condo line-up and end up with a leaky condo.

#187 Brian1 on 04.12.11 at 10:02 pm

So; after all this idle chatter there is still time to buy a house and flip it.

#188 dd on 04.12.11 at 10:02 pm

#110 Dylan

oil deflates, housing deflates, and we can go back to some normal times
…………………………………………………………………….

And monetary system deflates ….

#189 dd on 04.12.11 at 10:09 pm

.#120 BPOE

..Bank of Canada holds rates steady. As I have noted many times, interest rates are never going higher….

There wil be price to pay. There always is. It is called inflation.

#190 Junius on 04.12.11 at 10:12 pm

#179 Ex-Cowtown,

BPOE is not right he is right now. That is the difference.

He says that interest rates will never rise and the sun will never set. In the near future he is road kill.

#191 Junius on 04.12.11 at 10:16 pm

#168 doctore,

Prepare to be amazed at all of the new infrastructure in China and how empty so much of it is. Also be prepared to be shocked by the clear stratification of the population as the average salary is only about $3,500 per annum but everything is priced like people make 10 times that or more. It is very strange.

#192 Mikhail on 04.12.11 at 10:22 pm

One more news from Burnaby ( get known from a conversation at my work place). An old house, listed for 900K, sold in bidding war for…. 1.4M. Burnaby is a new target of Chinese investors….

#193 Mikhail on 04.12.11 at 10:38 pm

to 170.
Rich Asians are not investing in the USA in real estate much, since they are not allowed to live there as investor-immigrants. It is MUCH more difficult for rich Asians to get a permanent resident status there.
This is the major factor.
Also, the taxes in some places in the USA are higher, hitting your house is much more expensive and there are some extra taxes for foreigners ( 10% at the moment they sell and also in US they are much more strict in taxation of rental properties, as far as I know)
My friend in New-Jersey told me that he pays around 6K/year taxes for a 300K house and that the fuel (gasoline for hitting) cost this winter was around $ 1000 a month.

#194 Phil Garnett on 04.13.11 at 5:47 am

King Harper, say’s all is good.

mmm, Harper have my vote ?

Nah,

Geez, I think we are all waiting for that special person with the character and charisma to inspire a nation.

In our lifetime, I live in hope before the donkey’s screw it all up.

#195 SMOKING MAN on 04.13.11 at 12:06 pm

Garth What a weird thing to say…..”Yes, the people on the pavement are fools. They gamble their futures. ”

I say who wants a boring un eventful trip through life on the path to death.

Sorry pal, No Guts No Glory, Risk taking and gambling are what make people wealthy, luck timing and a bit of intuition, or even better insider information, is all that’s required, sometimes you hit duds, most of the time you end up even, but if you keep talking risks and chances, once in a while you hit the jackpot. And once in a while you might go broke. I have experienced the ups and downs several times in my life. It’s fun but the mistake people make is they quit playing the first time they get bounced. Or they quit playing once they hit a small jackpot.

And you always say be diversified, well that’s wrong too not all the time, I quadrupled my net worth by going all in (Equities) with margin, in March 2009, And everyone that read my posts on the globe and mail, know this. It was a huge risk in fact I picked the bottom 3 weeks to soon, when my bets went south in that time frame, I hung in the rest is history I’m loaded yet again, The flash crash scared the crap out of me and I got most of it out, that was a big mistake, why did I do that, I kept going to pessimistic website, blogs and lost my nerve and confidence and intuition.

I have bought and sold over 18 properties in my life and have made money on all but one deal. What happened in the USA will not happen here, the time for that was late 2008, the tax farm slaves in Canada are different, fool yourself all you want. Canadians are stubborn, prices go soft, inventory dry’s up, that how it works here. I think it’s and immigrant thing.

98% of your readers will never be rich, they are pessimist by nature, they focus on why not to do it, rather than why not do it. They will only take small risks once they are 100% of a sure thing, and when it’s 100% of a sure thing, you missed the boat and your yield is small.

Kids you want to be rich, you got to go all in, in the dark once in a while. Should you buy BC real estate, Not right now unless you can steel one and flip it fast.

#196 MikhailC on 04.13.11 at 4:21 pm

Most people don’t want to be reach ( it is not realistic to dream about it).
Most people just want to have a house. Just one. To live there. Not to make money from it. It was affordable for theyr parents. They think it should be affordable for them as well.

#197 Al on 04.13.11 at 8:42 pm

Beijing Home Prices drop as per the following website; http://en.21cbh.com/HTML/2011-4-12/4NMjM0XzIwOTg4Ng.html

#198 Captain Barnacle on 04.13.11 at 9:11 pm

Here’s the thing that needs to be borne in mind: the Chinese are in general extremely inexperienced with asset bubbles. They have no recent cultural memory of it. They’re currently the investor naifs on the block, with disposable income but no idea how to spend it wisely. The yields on property in Vancouver are terrible! It’s like buying a stock at P/E of 50. There are millions of people in China who are going to lose fortunes investing in Vancouver. Vancouver should be regarded as an extension of the China property bubble, which is already starting to collapse in major cities. It’s going to be a slaughter.

#199 Captain Barnacle on 04.13.11 at 9:19 pm

Another thing that’s starting to happen: land prices are beginning to strangle the real economy in Vancouver. Businesses stop being viable when land prices get too high. And Vancouver is NOT a place of high incomes. It’s an illusion, folks. It’s been propped up by inexperienced Chinese fools and by active government intervention, but you can never buck fundamentals forever.