‘The end is nigh’

Although you won’t read much about it in the MSM, a plunge in house prices in China’s capital city has turned into big news in parts of Toronto, Vancouver and Richmond. And with good reason. In case you missed it, the numbers are grim. Suddenly there’s a whiff of Phoenix or Miami mixed in with all that noxious smog over Beijing.

According to the Housing and Urban-Rural Development Commission (whatever the hell that is), new home prices last month dropped 26.7%, while home sales in general collapsed 50.9% from year-earlier levels, and crashed 45% from February. The reason seems obvious – the government acted to crush speculators through a severe restriction of credit, a quota on real estate and higher interest rates. That’s the cool thing about a controlled economy without the fuss and bother of elections and this democratic nonsense. At least flippers and speckers weren’t tortured and fed to feral creatures. As far as we know.

Update: China tightens again on Sunday

Why does this matter in Richmond Hill or Richmond? The fear (among realtors in love with HAM) is that a squishing of China’s booming property will erase some wealth that was destined for here. After all, runaway housing values in that city of 22,380,000 people (yes, it’s actually two-thirds the population of Canada) have created a class of millionaires that otherwise would not exist in a country of abject poverty, state-run industries and millions of poorly-paid people who make the crap your Wal-Mart sells.

But escalating land values along with food inflation have spooked the party bosses. The latest growth numbers show the economy powering ahead – up 9.7% in the first quarter, with inflation galloping at 5.4%. Last week that prompted yet another rate hike by the central bank. Making it all worse is oil, because at over $100 a barrel China is spending massive amount on crude imports, since it’s now the globe’s biggest energy pig.

So what happens if hot Asian money gets scarce?

Have you seen ‘Deep Impact’? ‘Apocalypse Now’? ‘Titanic’? ‘The Towering Inferno’? How about ‘Escape from Vancouver’?

I mean, just look at the latest numbers from the national real estate cartel, released yesterday. Nationally, house sales in March stagnated – despite an expected surge in advance of the new mortgage rules that deep-sixed the 35-year mortgage. But prices romped ahead 8.9% – or about four times the inflation rates. But if you exclude Vancouver, then the price increase was cut in half.

Said chief economist Gregory Klump:  “A record number of multimillion-dollar property sales in Richmond and Vancouver West are pushing up average prices for Greater Vancouver, British Columbia and nationally.”

Hmm. And here’s Sotheby’s International Realty president Ross McCredie, in a recent quote:  “There is a very strong demand out there, and it’s real,” he said. “Without the foreign buyer, who is largely Chinese, our market would look completely flat.”

Of course, nobody in Toronto or Vancouver has provided any hard numbers on the scope of Asian buyers, or the impact they’ve had on prices. But that now seems to be a moot point. When enough people believe something, together they can move a market – which is exactly what’s going on. Pumped up by the real estate community and parroted by the media, most people seem convinced planeloads of house-horny Chinese with endless amounts of cash are propelling prices skyward.

This has caused normally sane people to become infected, and start thinking it’s routine to pay $1.2 million for a boring house in Burnaby or Uxbridge that used to be worth a fraction of that. As CREA attests, it creates a scenario in which sales can go damp while prices flame – the classic sign of a perilous market. All it takes for people to realize real estate is insanely overvalued is an event. Might be an interest rate jump. Might be a credit squeeze. Might be freaked-out Chinese.

A blog dawg sniffed out these words, published in December of 2006 in the USA, which was at the frothy height of its doomed housing market:

One argument I hear a lot is that foreign demand for local real estate has grown substantially in recent years, and that such foreign demand will be supportive of prices in the future. Unfortunately, this argument puts the cart squarely in front of the horse. Investors from other countries are well known to be the very last participants to arrive at the scene of a financial bubble. They are the last to hear about all the riches to be made, the last to buy in, and the last to realize that the party is over.

It can easily be seen that foreign buyers chased the U.S. tech stock bubble all the way to the tippy top, and that they lagged prices the entire way. The final onslaught of foreign cash did not even hit our shores until after the Nasdaq had begun to decline from its final peak.

Far from being a positive fundamental, a sudden excess of foreign participation in an asset market is indicative of ill-informed speculative money at work. When the foreigners really start piling on, it’s always a good sign that the end of the bubble is nigh.

Some things never change. We just forget them.

218 comments ↓

#1 Torquemada on 04.15.11 at 6:30 pm

Bingo! As an immigrant I can tell you that by the time foreigners and immigrants are let in, the party is long since over and we’re expected to clean up the puke.

#2 DearSummer on 04.15.11 at 6:36 pm

First, JK

#3 LH on 04.15.11 at 6:42 pm

the end may be nigh for condos.. but I think there is still value in well located rental properties in Toronto.. you know, ones that can carry nice and positive (hard to find but they do exist!!)

after all, commercial property can’t lose right? ;)

#4 AxeHead on 04.15.11 at 6:52 pm

Red Deer Alberta Stats:

April 2010 – 69 houses sold, over 500k – 8
April 2011 – 50 houses sold, over 500k – 1

Only low end houses selling (proabably end of 35 year mortgage), the times the are a changing – B. Dylan.

#5 avenirv on 04.15.11 at 6:55 pm

maybe this is an opportunity.
i am sure not officially borrowed money are used by the chinese buyers (if is true they are buying in canada) to buy here in canada. more unofficially taken out from china money.
under communism people used to be very creative !

#6 Nostradamus Le Mad Vlad on 04.15.11 at 7:00 pm

*
Little Johnny. An outstanding upstart of a boy-man, destined for a wonderful future in the political arena.

Little Suzy Creamcheese, Little Johnny’s girlfriend of eons, was not immediately available for comment.
*
STEPHEN HARPER was visiting an Ontario primary school and the class was in the middle of a discussion related to words and their meanings.

The teacher asked Mr. Harper if he would like to lead the discussion on the word ‘Tragedy’. So our illustrious leader asked the class for an example of a ‘Tragedy’.

A little boy stood up and offered:

“If my best friend, who lives on a farm, is playin’ in the field and a tractor runs over him and kills him, that would be a tragedy.”

“Incorrect,” said Harper, “that would be an accident.”

A little girl raised her hand:

“If a school bus carrying fifty children drove over a cliff, killing everybody inside, that would be a tragedy.“

“I’m afraid not,” explained Harper, “that’s what we would refer to as a great loss.”

The room went silent. No other children volunteered. Harper searched the room.

“Isn’t there someone here who can give me an example of a tragedy?”

Finally, at the back of the room, little Johnny raised his hand and said,

“If a plane carrying you and Mr. Ignatieff and Mr. Layton and Mr. Duceppe were struck by a ‘friendly fire’ missile and blown to smithereens, that would be a tragedy.”

“Fantastic!” exclaimed Harper, “And can you tell me why that would be a tragedy?”

“Well,” said Johnny, “it has to be a tragedy, because it certainly wouldn’t be a great loss, and it probably wouldn’t be a fucking accident, either!”
*
“. . . this democratic nonsense.” — Harper put paid to democracy when he said in 2005: “You won’t even recognize this country when I’m through with it.”

You were right to stand your ground, Garth. May Harper and his neocon nutbar wankers rot in hell, although that is probably too good a place for them.

“But escalating land values along with food inflation . . .” — So bring on rampant inflation, the ME, Japan, North Korea, oil, ‘quakes and volcanoes, CCC (Constant Climate Change), WW3, changing cycles and there are billions of messed-up sheeples.

The world is okay. Sheeple aren’t.

#7 Kevin on 04.15.11 at 7:01 pm

The Asian X factor was tried in California in 2007

“I have been following all your posts for quite sometime. I think your price dropping theory is way too unrealistic. The income that are charted are income reported to the IRS. Most of the the population in Irvine are Asian about 40%. The graph predictions do not apply to Asians.”

http://vancouvercondo.info/2011/03/macleans-on-the-cmhc-bubble.html/comment-page-1/#comment-121625

Here is the link from Irvine
http://www.irvinehousingblog.com/blog/comments/predictions-for-the-irvine-housing-market/

#8 tran,Calgary on 04.15.11 at 7:01 pm

Every owner that I know in Calgary told me that he/she
is going to retire after having sold his/her home.

#9 ballingsford on 04.15.11 at 7:05 pm

Wow, this must be the earliest post by you ever for the next day. The question I asked at the end of the day on yesterday’s blog is answered here. Thank you Garth!

#10 Macrath on 04.15.11 at 7:32 pm

DIY E-Trade Baby Loses Everything

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

#11 gman on 04.15.11 at 7:38 pm

For those that like facts (like Garth:), real estate is very serially correllated. What that means that if the trend is upward it can persist long after the fundamentals don`t add up. That can be because real estate has a long lag from when information is made available to when the market reacts to it. Really if you condiser it, real estate is very thinly traded and and ineffecient to in corpartaing data aka reality. What that also means that when (not if) real estate turns (it`s like moving the Titanic it seems) because it is serially correlated down trends can PERSIST for very long periods of time (like the US) and take years if not decades to turn around.

For that reason, the negative cash flow can persist whilst your price declines. Really why would you buy it at this price. Should have bought 10-12 years ago when nobody wanted it. Equities are the place to be, you know buy low (better 2 yrs ago but still not even close to being overvalued) and sell high. Buy when nobody wants it and sell when everybody wants it.

#12 Ahsan Zaman on 04.15.11 at 7:41 pm

Garth. Once more pure speculation about the future. Just as you speculated when every past change such as mortgage rule changes happened. None of this is guaranteed.

Want your money back? — Garth

#13 kilby on 04.15.11 at 7:51 pm

Besides the loss of HAM, there is another factor that is talked about more and more here in Vancouver and thats the horrific quality of these new buildings. Everybody now knows about the Olympic Village and the fact that owners of those that have actually sold (still looks pretty empty) Will be forking out some pretty big strata fees once the various warranties run out. We lease a nice looking high end waterfront condo in North Vancouver, great location but there is so much wrong with the place that if anybody had a home inspection done there would be even less sold. Had a repairman in today to order a new control panel for the fridge and he said that all the newer buildings he visits for warranty repair that it’s always the same story from the owners….poor quality construction. He had just come from downtown and a new B-sa development that is particularly bad, nothing but trouble. I’m amazed that this is not more of a well known issue beyond unhappy condo buyers….I guess you don’t want to devalue your own “investment”

#14 Hoof - Hearted on 04.15.11 at 8:00 pm

Have you seen ‘Deep Impact’? ‘Apocalypse Now’? ‘Titanic’? ‘The Towering Inferno’? How about ‘Escape from Vancouver’?

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

Why would I watch Hi Brow crap….
I thought this was a soft porn site…

Y’now ” Debbie does Derivatives” Goldman Sachs, etc etc.

#15 Jim on 04.15.11 at 8:04 pm

I’m in Vancouver. I just sold my west side house. 9 bidders. 7 Asians. Sold to a white entrepreneur and his wife.
I think the Asian Invasion is driving the market frenzy for detached West Side and Richmond homes. But Chinese are buying specific properties right now. Typically lot value properties or new construction. They are buying “place holders” for a future retirement here, or a nest egg if needed. I think the frenzy is real, but I think the actual number of Asian buyers, except in those specific property types, is small. I further think they are about to be “all in” because as Garth points out these same speculators are taking their lumps financially back home. When they stop buying Vancouver will plummett. (If they stop buying). Real stats don’t exist. My bigger worry is no due dilligence is done on these immigrant investors-how do they come by their money?

#16 moloko on 04.15.11 at 8:06 pm

I wish Mainland Chinese read your blog so we could get this ball rolling a little faster!

#17 Nostradamus Le Mad Vlad on 04.15.11 at 8:47 pm


#10 Macrath — Great link!
*
2:45 clip Clarke and Dawe (satire) on BP.

1:30 clip Who invented the internet? The answer is right here.

3:58 clip Taxman. George Harrison and Eric Clapton.

Failed State Not for the very rich, America isn’t.

Fukushima Concrete not good, so they are caught between a rock and a hard place.

The Toilet “OK, folks: the alleged “Al-Qaeda” (which means, in colloquial Arabic, “The Toilet”) is absolutely an invention of the CIA, created as the 21st century’s “Emanuel Goldstein”; a figure conjured to bring fear and terror to the hearts of the non-thinking.” wrh.com.

Nevada Turning health-food practitioners into felons.

Africa “Analyst suggests hike indicate ‘boots on ground’ soon.”

Arab Spring Funded by the US. Big surprise. Libya Hard Sell.

Detroit sends layoff notices to all their teachers. “This would swell the ranks of the military without ever reinstituting a draft.” wrh.com. And that’s what the feds. want — keep the wars going forever.

Gold, and some of the dumbass things said.

Merkel bids adios to nuke power.

Libya “The pro-Democracy movement has been hijacked and turned into just another imperial grab for other peoples’ oil, water, and gold.” wrh.com.

Zero Hour As credit is being tightened, RE in China starting to tank where will stagflation end up?

CFR The Bragging Show. Offshore Banking and tax havens.

2015 As well as retiring boomers, this.

Mind Control via new drugs from big pharma. That’s why natural health food stores are being wiped out. Get rid of the goddamn politicos!

Obamanomics Well, they’re working. Everybody’s leaving! TPTB must be delighted with what is going on.

#18 Hoof - Hearted on 04.15.11 at 8:52 pm

Re the “A blog dawg sniffed out these words, published in December of 2006 in the USA, which was at the frothy height of its doomed housing market”:

Sorry , but here at ground zero in BC since 1986 it has been offshore money since 1986.

The BC market slowed in the mid to late 1990’s….

From what I observed, once the Hong Kong crowd felt that Red China (which it is it’s still communist) would not only allow business as usual, but in fact literally plagiarized the Hong Kong model), then even more wealth was created ….and followed the same path in the 2000’s as HK in the 1980’s.

All Ottawa did was a lag phase….minions from the US came up here, whispered in Harper’s ear….and I submit that at least in BC, there was mutually symbiotic camouflage ie the house horny CMHC subsidized on one side, and the off shore money on the other.

Off shore act like herds……once a few are scared…word spreads at dim sum..herd mentality..go to Smashed in Buffalo Head in Alberta….

#19 Hoof - Hearted on 04.15.11 at 9:02 pm

Here’s value !!!!

Put your REIT in this !!!!

Olympic Village

http://vancouver.en.craigslist.ca/van/apa/2325630261.html

#20 Jsan on 04.15.11 at 9:04 pm

My guess is there will be allot of people in Canada, or should I say certain overpriced neighborhoods in Vancouver (Toronto, Calgary, Edmonton, etc. to a lesser extent) that will be absolutely kicking themselves in a few years time for not cashing out while they could.

My buddy in Florida had high hopes 5 years ago that his home was his retirement cash cow, or at least he was going to sell it in a few years, move his family to a cheaper state and buy a mansion on a 100 acre ranch. His house had skyrocketed in price and there was nothing I could say that would convince him that the price would not last. After all, “It was different in Florida”. Fast forward 5 years and his house price has plummeted back to the point of what he paid for it in the late 90’s.

Just another person who foolishly bought the idea that house prices doubling, tripling or more in only a few years was somehow a normal occurrence that would last? Sort of like 90% of all homeowners in Canada……for now!

#21 Where's the money Guido? on 04.15.11 at 9:23 pm

Re: #13 kilby on 04.15.11 at 7:51 pm

“it’s always the same story from the owners….poor quality construction. He had just come from downtown and a new B-sa development that is particularly bad, nothing but trouble”…
I agree totally. I worked on some of Bosa’s construction sites 20 years ago and couldn’t believe the poor quality (like concrete walls poured 2 inches out of level in 8 feet!!). It seemed like they just stuck their thumb up to see if it was plumb and straight, lol.
Our trade had a war with the developer when they wanted us to try to seal windows under 2 inches of water puddles on the floor. We argued that we couldn’t seal the windows properly and they said to install them anyway, we’ll deal with it later. Well, they dealt with it later alright.
When I was back on those buildings for repairs with another contractor (sometimes in as little as one years time), I found out from the developer, H-nderson, that they had budgeted up to 5% in the original build cost for just those repairs if they couldn’t pin it on the new sucker, the owners. The company that I was employed made out like a bandit on these contracts (made millions).
I would never buy in any high rise in Vancouver with the so-called “window wall” technology, unless it is a true “curtain wall” commercial type system like the wing- like Wall Center across from the Law Courts building. The “window wall” type of window is ripe for leaks between the floor slabs and since it will be installed in Vancouver soaking wet winter weather, you will always get mould and dampness. It’s Crap !!!!!
I worked on repairs on sites that when it rained, the whole wall would be a waterfall if you were living halfway down the building or more. I just couldn’t believe it and how there wasn’t more media attention given to this plight for the owners (we know who is bought and paid for now, don’t we). And this was after the inspectors signed off on these sites.
Contractors would come and go, except the owners would be the same, just another company name. Like today with a company only limited to one residential build per company number, to stop the class actions against these thieves.
Buyer better beware !!!!!!

#22 Vik on 04.15.11 at 9:25 pm

#15 Jim on 04.15.11 at 8:04 pm

Were the 7 Asians bidding on the condo from asia
or were they locally residing permanent residents and Canadian citizens of asian heritage ?

#23 VICTORIA TEA PARTY on 04.15.11 at 9:32 pm

BELLWETHERS OUT THERE: HEADS DOWN!

Another of Garth’s articles worthy of be clipped magnetically onto fridge doors everywhere, because of its guiding characteristics for those who still know how to read.

IN SUPPORT OF THE ABOVE…

Some fundamentals took centre stage on world markets as we slip into yet another geopolitically uncertain weekend:

–Gold made a “record high” according to the business press, to more than $1,486.00 an ounce US! And silver is some $43.00 an ounce US. Oil, both Brent and WTI, are up, big time, after last week’s burpy little downside price hiccup.

–China’s leaders MUST be hitting the panic button this weekend, rummaging through boxes of good luck charms as they desperately try to contain soon-to-be rampant inflation of real estate and commodities.

–Over in the USA, meanwhile, Mr. Obama’s got the right idea. It’s party-time! He’s smart enough to know that he and his presidency, at this stage in history, make ZERO DIFFERENCE to anything that’s ongoing in this old world right now.

No matter what his battery of speeches this week contained nobody was listening and the American Cultural Civil War continued unabated between the red necks and the entitled-coastal classes of Congress.

–In Libya, meanwhile the Gaddafi bunch continue to slay their own, providing they’re of different tribes, of course!

And NATO, toothless NATO, run by fingernail polishing peacenik Eurocrats promises to stay the course (through continued furtive, inaccurate bombing raids approved by legions of lawyers and assorted sidewalk cafe at-lunch world-improvers) until Gadaffi leaves office, or SOMETHING like that.

NOTHING occurs in isolation in this wired-world anymore.

With that in mind, prospective Canadian real estate desirees should take note. Kindly sit this weekend out and several more to come. This is the top of the property market. Not the bottom, and not half way up.

To the real estate pilot fish out there. Get a real job, flogging burgers. Those will be premium careers shortly.

BTW. Keep a weather eye on May 16. That’s the day the US Congress has to have approved an increase in their country’s $14.3 trillion debt ceiling. If they fail to settle on a much high figure, a default of American “paper” would be the result.

I can’t see that default happening, frankly, because the results would be economically catastrophic for us all.

Instead, with the debt ceiling being raise once more, American “paper” will continue to degrade in the eyes of investors.

For instance, China sold a bunch of US bonds last month, billion of bucks worth, and that will continue.

Therefore, hang on to Gramma’s gold jewellry for while longer. It’ll be worth a fortune soon! You have no idea.

#24 Maxamillion on 04.15.11 at 9:42 pm

Has anyone seen John Baird during this election campaign? Oh, I forgot it’s time for his rabies shots. I could not tolerate listening to this guy for another four years.

http://www.projectdemocracy.ca/

#25 Timing is Everything on 04.15.11 at 9:52 pm

Garth said “….since it’s [China] now the globe’s biggest energy pig.”

Say what?

http://www.ritholtz.com/blog/wp-content/uploads/2010/06/Enerrgy-use-PerCapita.png

http://elainemeinelsupkis.typepad.com/energy_news/images/2008/05/30/picture_8.png

China has fastest-growing oil appetite on the planet. — Garth

#26 Tim on 04.15.11 at 9:53 pm

How can you drive around Vancouver and not see a tarp over some leaky condo? The fact that the government has done nothing to enforce higher standards and building codes is unbelievable. What else can you expect from a backwater town? I worked with someone in the glazing trade who said he would never buy a condo in the Lower Mainland, after what he’s seen working on jobs. So what the hell are we supposed to do if we can’t buy a million dollar house and don’t want to buy a house in Surrey?

#27 Timing is Everything on 04.15.11 at 9:54 pm

‘Libya all about oil, or central banking?’ Hmmm…

http://atimes.com/atimes/Middle_East/MD14Ak02.html

#28 Winterpeg on 04.15.11 at 9:56 pm

Have you seen ‘Deep Impact’? ‘Apocalypse Now’? ‘Titanic’? ‘The Towering Inferno’? How about ‘Escape from Vancouver’?
===================================
Just for morbid interest’s sake and an attempt at a gloomy metaphor: Today: April 15 is the anniversary of the sinking of the Titanic (99 years ago).

What’s in your lifeboat?

#29 bsallergy on 04.15.11 at 10:06 pm

The chinese are famous for their financial acumen, so obviously these mythical buyers are of a generation that was dropped on their heads at birth or something.

#30 Mr. Lee on 04.15.11 at 10:09 pm

‘Some things never change. We just forget them.’

No Sir, we choose to forget them. Like we forgot the summer of 2008 when oil reached $147 and the US housing market started to emplode. Like we forgot that Mr. Carney was raising interest rates that put a crimp on home sales. Like we forgot that this all took place in the context of a so called boom economy.

Well, I would say that now is the time to remember. No more bailouts, no more borrowed money, no more stimulus, soon to be no more rock bottom interst rates.
And yes this time we have to deal with Arab democray, an irradiated Japan and a half bankrupt Europe………2008…..the good old days.

#31 mab on 04.15.11 at 10:23 pm

Speaking of housing, Bank of America, one of the BIGGEST homebuyer financiers on the planet, is now saying that homeowners should not look at their home as an asset. What the hell? I’m not making this up, see for yourself: http://www.msnbc.msn.com/id/42556230/ns/business-real_estate/

That truly blows my mind. Don’t forget that for the past decade, mortgage finance has been the largest part of BAC’s revenues, income and bonus pools. ROFLMAO. This is an absolute tragic farce. The number ONE sales pitch used in a housing transaction is that “a house is a great investment!” Bankers all over the country got rich on this battle cry. Now we find out that it was one big lie? I’ll give BAC CEO Brian Moynihan the “asshole criminal of the year” award for the one.

snippet:
BofA CEO: Owners shouldn’t look at home as an asset
Housing rebound may take so long that homeowners should seek other long-term investments

CHARLOTTE, N.C. — Homeowners may need to look elsewhere for long-term investment returns as housing prices in some areas may not rebound long-term, Bank of America Corp Chief Executive Officer Brian Moynihan said on Tuesday.

Moynihan, CEO of the largest U.S. bank, said at a state attorneys general summit that low population growth in some regions of the country indicated that prices might not rise in the wake of the worst financial crisis since the Great Depression.

“It’s sobering to think, but some people shouldn’t be thinking of (their home) as an asset,” Moynihan said at the 2011 National Association of Attorneys General conference. “They should be thinking of it as a great place to live.”
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Moynihan said the long-term average annual rise in post-war U.S. home prices of 4 percent owed much to the explosion in domestic population and, in more recent times, the relaxation of credit standards across the mortgage industry.

“The reality is that the population is not expected to grow the way it did post World War I and World War II,” he said.

Moynihan noted an Ohio customers’ complaint that his 100-year-old home was valued at $50,000. The home, Moynihan said, would be valued as “some multiples of that figure” if it were located elsewhere, but stagnant population levels in the state are driving demand and home prices lower.

#32 Gord In Vancouver on 04.15.11 at 10:24 pm

According to the Housing and Urban-Rural Development Commission (whatever the hell that is), new home prices last month dropped 26.7%, while home sales in general collapsed 50.9% from year-earlier levels, and crashed 45% from February.

_____________________________________

Thank you for the post, Garth.

Not one MSM outlet has mentioned this significant news yet!

#33 Timing is Everything on 04.15.11 at 10:25 pm

China has fastest-growing oil appetite on the planet. — Garth

That’s better and Agreed.

Segue…

http://www.ctv.ca/CTVNews/TopStories/20110415/gas-prices-boycott-pumps-110415/

#34 Thirty something on 04.15.11 at 10:34 pm

This is frakking hilarious and totally on point.

https://www.youtube.com/watch?v=y8MjoB3vgv8&feature=player_embedded

#35 DJH on 04.15.11 at 10:35 pm

28 Winterpeg

Thanks for the anniversary notice – sinking of the Titanic. My late grandfather was a riveter and worked on the hull of the Titanic. He always bragged that it wasn’t his rivets that had failed.

#36 Kuwaiti on 04.15.11 at 10:54 pm

‘Escape from Vancover’ LOL!!!

I have a realtor ‘friend’ on facebook… lives the high life, looks GQ in every picture, drives a convertible and is the cool guy everyone wants to know… well, 6 months ago he was pretty cool.

For the past 4 months he’s been reposting properties in the GTA (all condos, surprise surprise!) with a price drop every 3 weeks.

The end is nigh!

#37 TaxHaven on 04.15.11 at 10:55 pm

Apparently, Canada is in the midst of a “recovery”. Yet nearly everyone feels worse off.

The Vancouver Sun is usually full of sunshine, lollipops and rainbows, so I was very surprised to find this story telling it like it IS…this woman has it SO right…

http://www.vancouversun.com/sports/Locally+made+fashion+fighting+losing+battle/4618853/story.html

But then the story disappeared off there so quickly…

#38 Enlightened on 04.15.11 at 11:07 pm

#136 Keith in Cgy
#137 Mr. Plow

Gail Vaz Oxlade’s show is interesting – but she doesn’t go far enough. She addresses selling and renting as an option but when the clients balk she lets them off the hook. Unfortunately, she doesn’t crunch the numbers about what people are actually going to be on the hook for over the life of their 35 yr. 350k + mortgage and what real sacrifices (no travel, minimal retirement savings etc.) they are facing long term. Also I do not recall her mentioning equity and what will happen ‘should’ the market drop..major oversights in my opinion. However, it is the only step I’ve seen on TV in the right direction – and it does beautifully illuminate how deeply people are sucked in and what they are willing to forgo to live in their ‘dream home’ at the age of 29.

#39 DML on 04.15.11 at 11:24 pm

Not only Beijing,March was a down month for most major
Chinese cities.

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/bernanke/China%20real%20estate.jpg

#40 Voter on 04.15.11 at 11:27 pm

You are a genius or some visionary Mr Garth. unfortunately you are way ahead than the rest of your contemporaries or you still have some moralitiy left in this era. These idiots will not learn a lesson, does not matter how much you preach. They have a non ending lust of these crappy cardboard boxes. It is really hard for me to realize why to be house poor than to be happy and rich renter. But I appreciate your efforts and I am not going to buy until I see the blood flowing on streets from the asses of these home horny owners.
This is the best post by you so far because it literally pin point some financial securities person should own in their TFSAs or RRSPs. Keep it coming dude, you will be remember as a brave Jihadist againsts these cartels around.

#41 CanIShortIt on 04.15.11 at 11:33 pm

Is there any way I can benefit from the future dropping houses market just like some U.S. people did?

#42 Enlightened on 04.15.11 at 11:42 pm

#34 thirty something

thanks – that was awesome!…….tooo funny – I’ll be paying it forward :)

#43 Dimaga on 04.15.11 at 11:54 pm

I thought that ‘hot asian’ money didn’t exist?

Now it does and it’s drying up?

Cool story.

#44 BC Bring Cash on 04.16.11 at 12:00 am

Here’s just more evidence that the Kelowna market has tanked. A new sign has appeared outside the Southwind at Sarsons development at 4388 Lakeshore rd. It reads, Real Estate prices in Kelowna have bottomed. (We guarantee it)
By the way where is DA lately? Maybe he has had to get a real job in this pathetic job market.
Welcome to the problems of the Kelowna RE market, the rest of Canada is about to experience the same pain of illusion.

#45 Dclipse on 04.16.11 at 12:15 am

I have to add a comment similar to a few above, about the quality of condos in Vancouver. My wife and I just moved here from Mississauga ON. Sold our condo there and renting now in North Van. 2 year old building. Nothing is falling apart yet… but the material and workmanship is disgusting. And btw, it’s a 760 sq. ft. unit worth $450.000 according to similar ones on mls. We sold our 1015 sq.ft 2bed 2bath for $278.000. To say there is a bubble in Van city is an understatement. At least our old place built by Tridel was excellent quality. And for 6 years we lived there it was as new. If you’re paying big money for a place you should at least have good quality (you would think). Met a guy 2 weeks ago that works for a company fixing leaky condos. Says they’re making a killing. And right now they’re working on a 3 year old building in Yaletown. Can you believe that?

#46 khosro tohidi on 04.16.11 at 12:20 am

7 – 8 month ago a canadian dollar was 800 toman of iranian money now it is 1200 toman because of sanction and other reasons it means iranians that are the second forign buyers after chinese now must pay 50% more to bring money to canada pleasa correct the wording if nessasery and do not publish my name thaks

#47 Nostradamus Le Mad Vlad on 04.16.11 at 12:40 am


#34 Thirty something — That also is an excelllent link.
*
Libya’s Water Great write-up of all the underground pipes, the size and many other things. Libya’s water is the reason for the present shenanigans.

Event Here is one possible event that could turn out nasty (if it happens), plus The Sun This will put the W into GW.

The Present vs. The Future.

Lifeboats There is no political will or business savvy in NAmerica to save us from ourselves.

Ireland ho-hum, Greece sliding, BRICS warn over commodities.

Possible reason why Pakistan ditched the US for China.

Gold standard back? Some states think so.

Coke and Pepsi Backed by the CFR.

Obama Egotistical maniac and / or delusional.

Cdns. ordering Americans around? Eminent domain.

Harper’s dirty tricks.

The ‘Me Generation rises again, and US3 Trillion China could pay off Canada’s debts and buy us out.

PMs and Equities Something wicked this way comes?

Loblaws, RC Superstore, Extra Foods (all Weston Foods) priced all food 5% higher beginning of April.

Obama Raise debt ceiling or face global recession. Yawn.

#48 Utopia on 04.16.11 at 12:50 am

Well I have been following the news stories of the “crash” in Chinese property prices with real interest. Months ago I was predicting this outcome to the jeers of those who said it could never happen (not on this site actually).

The answer they offered went something along these lines. Chinese real estate cannot be in a bubble because owners have so much equity. The whole market is immune. Even if prices fell very few would be affected.

Of course that was BS then and it is still BS. They were offering the classic “it’s different here” argument. It is not different though, it is only a bigger bubble and will be uglier when the bust comes.

I countered naturally that the price of real estate relative to incomes was so skewed that even the blind could recognize the making of a world class disaster.

Whatever……That was then and this is now and so here is what you need to watch for. Growth in China will slow. How much cannot easily be predicted because the government there is not really liberal with offering good hard data in a transparent way.

It does not matter though. GDP will decline and that is guaranteed. Growth will slow first in construction of new housing, some production will go off-line and unemployment will naturally rise. There will be knock-on effects in the large manufacturing sector that supplies finished goods for construction.

This should further impact other areas of the economy. Many manufacturers in China are already on wafer thin margins…(the toy industry for example) and even small disturbances can have nasty consequences.

There will be repercussions for Canada too but I am not referring to housing here. That Hot Asian Money miracle was a nonsense argument and a Red Herring from day one anyway.

No, I am talking about resources now. I am referring to commodity buying. The Chinese if you are not already aware are amongst the biggest consumers of commodities in the world. Canada is one of the biggest sellers of the stuff they need. Like coal, iron ores, lumber, uranium. potash, grains etc, etc, etc.

The need to feed their factories for the products demanded by the whole world is just the beginning. Don’t forget though that they are also building whole cities, new railways, nuclear plants, millions of new houses, thousands of kilometers of freshly paved roads, dams and all the infrastructure that goes with it all.

A housing bust affects some of these plans immediately and most notably the housing sector which is one of the biggest consumption areas of lumber, cement, copper wire and asphalt shingles to name but a few inputs.

A housing bubble burst in China can mean an end to the commodity boom for everyone else and that includes Canada in particular as we are a major resource producer and supplier.

So it is time to start watching for the fallout, cancelled contracts, falling prices, stock markets retreating somewhat on falling earnings and naturally a Loonie that does not keep flying quite so high.

A true housing bust in China will be felt by the whole world and when we consider that impact concurrent with the major slowdown in Japan (post Tsunami, post nuclear meltdown) then it is time to get the hell out of Dodge so to speak.

The Second and the Third largest economies in the world both hitting the shoals in the same year (and just within months of each other), spells bad news for quite a few asset classes. That, unfortunately also includes Canadian real estate if there is any significant slowdown in resource sales to Asia.

The warning signs are clear, the outcomes inevitable.

#49 ripa on 04.16.11 at 1:03 am

The truth is out there. From the tabloid daily in Melbourne Australia:
http://www.heraldsun.com.au/news/melbourne-home-property-prices-plunge/story-e6frf7jo-1226039922655

#50 Rookie57 on 04.16.11 at 1:27 am

I believe China is the largest foreign holder of US treasuries and Japan is the second largest (please correct me if I am wrong). It seems to me that any large scale selling of their holdings would more or less crater the US dollar, which would in turn decrease the purchasing value of their holdings. This would not be smart. I would expect both the Chinese and Japanese to do the smart thing so I am not expecting them to sell their US treasuries. However, I don’t believe they like their exposure to the US $$. I expect that in the not too distant future that both Japan and China will buy America – they will convert some of their US $ treasury holdings into US based assets. If this occurs, it will be interesting to see how the US Congress reacts.

#51 Utopia on 04.16.11 at 1:33 am

#32 Gord in Vancouver

You need to pick up these stories by following some of the very active and engaged business sites on-line Gord. Zero Hedge is great for getting article out in a really timely way. The writing is a bit hostile and aggressive at times but when they are right the MSM does run with it.

Here is an article on the Chinese
http://www.zerohedge.com/article/observations-chinese-real-estate-sector-following-biggest-price-decline-5-years

#52 realpaul on 04.16.11 at 1:43 am

The game in Chian has not been one of making money through the ‘flipping’ of multiple properties and incrementally gaining wealth….rather it is a game of mass fraud…….through accumulation of multiple properties with bank loans against any number of properties………………..and then taking out the massive mortgage at the end………….and flying off to Canada with your loot and no intention of ever paying back the loan. You can see this by observing the resale market in Beijing………there isn’t one.

There is also the fact of ubiquitous corruption among the ‘officialdom’ in China. Every department is 100% corrupt and massive amounts of every budget is skimmed off and squirrelled out of the country by relatives. Generals, police chiefs, mayors, ministers and officials of every stripe have been looting the treasury and sending the loot off to Canada with relatives for safe keeping while the perpetrator tries to hide the scheme by staying in power so that no one finds out. Occaisionally they will trot one out who gets caught burning his betters and perhaps not sharing the booty…….this results in a well publicized firing squad……popular on Chinese TV.

There are the children of the military commanders who have been stealing everything that isn’t nailed down since the ‘Great Leap Forward’ started 20 years ago. This is beyond the value of all Canadian real estate combined and sits in the trillions in Swiss, UK and US banks.

There is no stopping the corrupt money coming out of China…….a property bubble in Beijing is a pimple on the ass of the real beast called The Peoples Republic of China .

#53 BPOE on 04.16.11 at 2:04 am

I’ll let the FACTS do the talking rather than bogus 40% drop forecasting and Brad I hate Vancouver and own in Kits with no mortgage but am not selling because I see the market dropping 40%
VANCOUVER POWERS AHEAD. OUTSTANDING!!!!
Douglas Porter, deputy chief economist at BMO Capital Markets, sounded the alarm about Vancouver’s “jarring” 30-per-cent increase in sales, which flew in the face of declines in 21 of the other 24 major markets.
“The one market that can in no way be described as calm is Vancouver,” Porter said in a morning note. Price increases in Metro Vancouver are also skewing national average prices, he said. While the average Canadian house price rose to $366,000, that number would have been 11-per-cent lower ($327,000) if Vancouver was taken out of the mix.

#54 TakingResponsibility on 04.16.11 at 2:08 am

#15 Jim on 04.15.11 at 8:04 pm

“Sold to a white entrepreneur and his wife.”

Something needs to be done….these white foreigners are coming here in droves. Seriously. How are they coming by their money?

#55 BPOE on 04.16.11 at 2:09 am

I agree with many posters regarding shoddy workmanship on everything from condos, townhouses and homes. Unfortunate and criminal yes but has no effect on house prices as we see time and time again. Put a tarp on it pay your $40000 fee and watch it go higher. Remember the Condo Rot gang from the early 90’s never hear them complaining anymore.

#56 Dodged-A-Bullit-in Alberta on 04.16.11 at 2:28 am

Greetings: Here is another indication of the desperate situation in China:

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10719682

#57 Cato on 04.16.11 at 2:46 am

First came greed, now comes fear. Big part of the inflation problem in China can be attributed to pegging the renminbi to a failing US dollar. At some point the cord needs to be cut and yuan left to float freely – US is pushing for this but probably won’t like the end result. Chinese consumers get a big leg up in purchasing power, western consumers big leg down. It would probably remove alot of chinese attraction in western real estate – why buy an asset priced in western currency that from their perspective if losing value.

Bank of China began offering renminbi savings accounts in the US – anyone figure out a way to hold RMB domestically?

#58 Falling sales in GTA on 04.16.11 at 2:54 am

Update on GTA housing sales.

Sales are way down and driving through the GTA confirmed what a realtor buddy told me. Didn’t matter where i was driving as for sale signs where everywhere and nothing seemed to be selling. I was driving through forest hill , Annex and different parts of north york as I made my way down town. I think for every 10 for sale signs only one or two where sold. The drop in sales is getting worse and prices are now following the drop. This is from a realtor buddy.

#59 Thetruth on 04.16.11 at 3:22 am

Vancouver and Toronto are different because CHAIN IMMIGRATION is allowed here! No not in the USA, Europe, Australia, etc.!

Real Estate Millionaires from these countries continue to come here! Then their extended families can come. Then they live like Kings with their wealth…. Watch the record crowd of South Asians in Vancouver Saturday… Next Saturday in Surrey!

…and speaking of stats, it doesnt take a rocket scientist to figure out that multi-million dollar homes are sold to recent immigrants and not to first time Canadian home buyers!

S*** will hit the fan when cuacasian housekeepers end up working as housekeepers in the homes of these wealthy immigrants… But Canadians have made their own bed.

#60 betamax on 04.16.11 at 3:36 am

#28 Winterpeg: “What’s in your lifeboat?”

Brilliant. Good post, thx for reminder.

#61 Aussie Roy on 04.16.11 at 3:36 am

Nice article today Garth, this story has been doing the rounds on the MSM downunder.

What has been interesting to see here is even the MSM seems a little more balanced. Don’t get me wrong it’s still very much towards the spruiking type stories from the RE industry but IMHO it’s much better than even just a few months ago. This goes torwards your excellent (and far too overlooked) influence in markets, that is, human emotion (belief).

Aussie Update – Not good news.

Check out these auction clearance rates for Australias capital cities – the rot has started.

http://www.myrp.com.au/showNews.do?id=462

MELBOURNE’S property bubble is bursting, with $400 a day wiped off the average house price in the past three months.

After peaking at $601,000 late last year, the median price has fallen to $565,000 – down $36,000.

The 6 per cent slump is the biggest quarterly drop in more than two years and one of the biggest the Real Estate Insititute of Victoria has recorded since the height of the global financial crisis.

It has raised hopes for buyers desperately trying to break into the market and will create speculation over whether a crash is coming.

http://www.heraldsun.com.au/news/melbourne-home-property-prices-plunge/story-e6frf7jo-1226039922655

The bubble has burst but it’s good news, prices cant fall, its different here we have a shortage. – LOL What is the clearance rate ?, maybe he means a shortage of buyers.

http://www.theage.com.au/business/property/has-the-real-estate-bubble-burst-20110415-1dhpw.html

Time to sell Melbourne housing and take your profits?.

http://macrobusiness.com.au/2011/04/time-to-sell-melbourne-housing/

The fundamentals of the economy are strong, house prices falling on a national basis, never happen.
MMM where have I heard this before.

http://www.theage.com.au/national/budget-reveals-massive-slump-20110415-1dhzv.html

#62 property bear on 04.16.11 at 3:51 am

Apparently, the property bulls that were at the back of the Titanic when it hit the iceberg said,”that won’t affect us-the hole’s at the front”.

#63 not asian on 04.16.11 at 4:00 am

If…..” government acted to crush speculators through a severe restriction of credit, a quota on real estate and higher interest rates.”
Then…it would go to reason that China Buyers would come to Canada to buy RE where we don’t have a severe restriction of credit, a quota on real estate and higher interest rates. Chinese speculators would drive the real estate prices through the roof! Oops! Has it happened already? Our government does not crush them, instead we roll out the red carpet for them.

#64 Aussie Roy on 04.16.11 at 4:40 am

Aussie housing buyers strike reaches Malaysian MSM.

Should KL homebuyers go on strike?

“Property prices are a function of what the market will bear. The price for a house can yo-yo up and down for no reason other than what you are willing to pay for it.”

http://www.themalaysianinsider.com/opinion/article/should-kl-homebuyers-go-on-strike/

#65 Robert Dudek on 04.16.11 at 5:40 am

“My bigger worry is no due dilligence is done on these immigrant investors-how do they come by their money?”

Do we really care? I mean we have no problem trading freely with China, which still runs a gulag-style economy in some sectors.

#66 Aussie Roy on 04.16.11 at 5:55 am

Buyers strike group, up the ante !

Facebook – End negative gearing.

When politicians say they are committed to affordable housing, you know THEY ARE LYING!

Hard-working and honest Australians who pay taxes are forced to subsidise the investment losses of property speculators! This tax subsidy is called “negative gearing”.

Loss-making property speculators will not speculate in properties unless they expect their properties’ price to go up. Indeed, this is what happened:

http://www.facebook.com/EndNegativeGearingTaxSubsidy#!/EndNegativeGearingTaxSubsidy?sk=app_4949752878

#67 Kilt on 04.16.11 at 5:58 am

Way to go Garth.

For months now you have denied the existence of these plane loads of foreign buyers. Now you say they do exist and are causing normal people to pay 1.2 million for homes. Which is ridiculous as normal people can’t afford million dollar homes.

And face it, just south of the border we have the most obvious reason to fear real estate, yet most people who own think it is a good investment, and most people who don’t own, want to buy.

You would probably earn more credibility if you a) quit changing your story, b) actually made a correct financial prediction.

Kilt.

And you’d do better learning to read. I said there is no statistical evidence, but the widespread mania about Asian Invasion was moving the market. This is why real estate is so inherently dangerous, It’s irrational, like you. — Garth

#68 Moneta on 04.16.11 at 7:51 am

I’m keeping track of listings in specific areas and the new inventory is getting pricier. Inventory in the 500K+ is growing mcuh faster than in the cheaper stuff.

Canadians are priced out.

#69 Oasis on 04.16.11 at 8:43 am

oh my GOODNESS…

CONSUMER CREDIT CONTINUES TO RISE IN THE US

http://research.stlouisfed.org/fred2/graph/?chart_type=line&s%5B1%5D%5Bid%5D=TOTALSL&s%5B1%5D%5Brange%5D=5yrs

the PRINTING PRESSES CONTINUE TO WORK OVERTIME

http://research.stlouisfed.org/fred2/graph/?chart_type=line&s%5B1%5D%5Bid%5D=BASE&s%5B1%5D%5Brange%5D=5yrs

http://research.stlouisfed.org/fred2/graph/?chart_type=line&s%5B1%5D%5Bid%5D=M1SL&s%5B1%5D%5Brange%5D=5yrs

CONSUMER PRICES SKYROCKETING

http://research.stlouisfed.org/fred2/graph/?chart_type=line&s%5B1%5D%5Bid%5D=CPIAUCSL&s%5B1%5D%5Brange%5D=5yrs

as are PRODUCER PRICES

http://research.stlouisfed.org/fred2/graph/?chart_type=line&s%5B1%5D%5Bid%5D=PPIACO&s%5B1%5D%5Brange%5D=5yrs

STAGFLATION HERE WE COME!!

everyone prepared?

#70 charles on 04.16.11 at 8:44 am

So to be clear, in the past you have debunked the Asian money buying up overprices crack shacks in Van but now that the meme is usefull to your argument you embrace i.
Politics really is your calling.

“Of course, nobody in Toronto or Vancouver has provided any hard numbers on the scope of Asian buyers, or the impact they’ve had on prices. But that now seems to be a moot point. When enough people believe something, together they can move a market – which is exactly what’s going on. Pumped up by the real estate community and parroted by the media, most people seem convinced planeloads of house-horny Chinese with endless amounts of cash are propelling prices skyward.” What about those sentences do you not understand? — Garth

#71 Almost a Believer on 04.16.11 at 9:38 am

I have been following this blog from the beginning and have waited (and waited) for things to cool down in Toronto for me to move up to a larger home (in a more suitable location). Now I regret not buying in 2008 as the house I wanted was 150k less than it is right now.

As far as people on here saying that nothing is selling in Toronto I don’t think that’s true. I went to look at a house last week as it was located where I want to be (Thornhill) and seemed priced ok. 549 but it needed a fair bit of updating. (Two old people that haven’t done a thing in 25 years) It had only been on the market for a day when I got there and there were atleast 100 agent cards on the kitchen table. When I was looking at the house there were several other couples waiting in their cars for me to finish. It sold two days later on the “offer date” for 690k. It will take about 50 to 100k to fix this place up.

I’m not sure what is going to be the pin that will burst this bubble or when it will happen. Garth has pointed to several big events (such as mortgage and downpayment changes) over the years but nothing seems to have any real effect.

The US housing market peaked in terms of sales in late 2005. It peaked in terms prices in 2007. It is still falling in 2011. Have you learned nothing, or is it different in Thornhill? — Garth

#72 Kaganovich on 04.16.11 at 10:18 am

Attention Dawgies!!

“Certainly only one lesson from The General Theory has passed into the wisdom that guides policy. When conservatives are Keynesians, then tax and spending policies may well be used to give life to rentiers rather than abet their euthanasia.” Hyman Minsky

David Stockman on the debt situation:

http://www.marketwatch.com/Story/story/print?guid=5887681E-652A-11E0-BBB0-00212804637C

#73 BrianT on 04.16.11 at 10:24 am

Interest rates are rock bottom in Canada as long as the RE bubble holds together-don’t be surprised to see large rate increases AFTER the bubble bursts (which is the exact opposite of what a prudent steward at the BOC would be doing). OTOH he has us gobbling up US treasuries that no one else wants so he must have a plan for us.

#74 John on 04.16.11 at 10:45 am

I can’t believe realtors would come here claiming that housing are selling in a day or two when the cold hard facts is sales have dropped for months now. It’s clearly obvious when driving through Toronto or North York see that the same ten houses on my way to work have been there for weeks and times for months without even one for them selling. I seen houses taken off the market and re-listed months laster and then taken off the market after weeks of no activity. Sure homes have sold but very few do. Realtors who post on this blog seem a bit worried of the falling sales situation and their fake stories of homes selling in a couple of days are 100% false from the majority of transactions. Btw Almost a Believer , Moneta , Thetruth , BPOE and many more. It’s seems half the posters here are out of work realtors. Doesn;t look good for the housing market.

#75 The American on 04.16.11 at 10:54 am

AT #1: Torquemada, you said, “Bingo! As an immigrant I can tell you that by the time foreigners and immigrants are let in, the party is long since over and we’re expected to clean up the puke.”

Can I ask why you would think that it is the immigrants who are expected to “clean up the puke” as you put it, instead of long-time Canadians? Why do you feel this way? Please explain.

#76 Utopia on 04.16.11 at 10:56 am

The NDP’s new found strength in Ontario may just assure a Conservative majority in that province as vote splitting of the middle and left ultimately leave Mr Harper with the best chances of success.

It seems ironic that it is in fact the NDP that Ignatieff is most threatened by at this stage of the game and not the Conservatives.

Ignatieff’s current style of blaming, accusing and misdirected rhetoric in place of good ideas and policy proposals is playing well into Jack’s fortunes and dousing Liberal hopes ahead of the vote.

It seems to help that he does not really understand why Jack is coming up from the rear and may just kick his butt election day.

Canadians, like Americans do seem to prefer the politics of polarization. The Layton team has staked out all the best positions on the left already though. This has left the Liberal party grasping for a unique platform and positions that set them apart from the pack.

No easy task at this late stage of the game.

It leaves you to wonder if over the next few elections that the NDP in fact becomes the real political alternative to Conservatism as the Liberal lights dim.

#77 CalgaryRocks on 04.16.11 at 10:59 am

#57 Cato on 04.16.11 at 2:46 am

Bank of China began offering renminbi savings accounts in the US – anyone figure out a way to hold RMB domestically?

Give these guys a try. As far as I know, you don’t need to be a US resident to open an account.

https://www.everbank.com/personal/foreign-currencies.aspx

#78 Almost a Believer on 04.16.11 at 11:02 am

Interesting point about prices continuing to rise. I’m not sure why though. Correct me if I am wrong but when things went down in the late 80s it happened pretty fast. In more recent memory in 2008 the prices also dipped pretty quickly before shooting back up.

There is a certain amount of local differences though. Parts of the U.S. aren’t nearly as down as other parts. Sunbelt vs. big cities in the east.

If the market conditions in Canada are similar. Cheap mortgages for everyone etc. How come Calgary has dipped in sales and price when other places chug along? Is there something different happening there that I am not aware of?

#79 a prairie dawg on 04.16.11 at 11:11 am

@ #41 CanIShortIt

“Is there any way I can benefit from the future dropping houses market just like some U.S. people did?”

– – –

Since CMHC isn’t publicly traded like Fannie and Freddie, and since the banks here have very little skin in the game in Canadian Real Estate, the short answer is NO.

And profiting from others misery is about as low as it gets. Why don’t you contact Goldman Sachs. Maybe they have a job opening…

#80 Daisy Mae on 04.16.11 at 11:14 am

“Some things never change. We just forget them.”

Collectively, we have so much to learn…..

I’m staying put because it’s all about ‘location’ — I’m centrally located. Can, if necessary, walk everywhere. Our house prices have not spiked, there have been no bidding wars…prices appear to be holding. We do have a number of spring listings in this gated community…lots of open houses….but no sales. Very interesting.

#81 Daisy Mae on 04.16.11 at 11:15 am

Geez! By the way, I’m talking about the Okanagan, specifically West Kelowna, BC. LOL (Always forget that little detail….)

#82 Dodged-A-Bullit-in Alberta on 04.16.11 at 11:17 am

Greetings: Can this happen in Canada??

http://www.huffingtonpost.com/2011/04/13/americas-foreclosure-ghost-towns_n_848715.html#s264053&title=Chicago_Englewood_Neighborhood

#83 a prairie dawg on 04.16.11 at 11:37 am

#43 Dimaga
#67 Kilt
#70 charles

Are you different realwhores®, or just the same realwhore® posting under different aliases?

#84 wetcoaster on 04.16.11 at 11:40 am

“The chinese are famous for their financial acumen, so obviously these mythical buyers are of a generation that was dropped on their heads at birth or something.”

Financial acumen ? Yeah right. They are nortorious gamblers and cheapskates at the same time. I was in McDonald’s yesterday and one well dressed Asian lady had to buy a $1.29 coffee on her Mastercard, and made the elder lady buy her own coffee with $5 bill. They are cheapskate even with each other.

Ever tried to do a business deal with them ? They take forever. If they are flocking here like fleas dumping cash like confetti into overpriced shacks, you know that money is being scammed out of the country for a reason, they do nothing fast.

The money is most likely dirty money escaping the now apparent Asian crash-in-process before the bank shuts down their HELOC accounts or forecloses on their ghost condos built on thin air.

#85 Industrial Guy on 04.16.11 at 12:03 pm

With these few words, Rick Mercer may have changed the political future of Canada:

“So please, if you’re between the age of 18 and 25 and you want to scare the hell out of the people that run this country, this time around do the unexpected. Take 20 minutes out of your day and do what young people all around the world are dying to do.” VOTE!

I bet the Conservatives didn’t see this train coming.

#86 bridgepigeon on 04.16.11 at 12:06 pm

The name of the movie is The Perfect Storm.
What’s in your lifeboat? Well for starters, perhaps a geiger counter. After reading how the chef at one high end sushi restaurant in NY city checks all his fish I checked out getting one online. Everything is sold out for months ahead. Time to start researching non msm sources about the consequences of this continuing disaster.
We are also being lied to about the wars and where this could be heading. We could be in world war three right now and wouldn’t know it because we’re watching the news. At the minimun, blowback is an eventuality.
The economy seems like a bouncing balloon on a bed of nails. Like Bush said after 911, just keep consuming folks…
It’s really getting more and more difficult to keep pretending that everything is working out just fine.

#87 Evangeline on 04.16.11 at 12:30 pm

((You would probably earn more credibility if you a) quit changing your story, b) actually made a correct financial prediction.))

Garth correctly urged people to stay in the stock market when most people were terrified to do so; if they’d have listened, trusted and done what he told them to do on this blog, they’d have done very, very well. There were some amazing buying opportunities out there when Garth was saying stay in and everyone else was yelling stay out. So to say he does not make correct financial predictions is untrue.

#88 Moneta on 04.16.11 at 12:31 pm

I have little doubt that the high concentration of sociopaths and psychopaths in the FIRE sector would be tyrannizing in a much more harmful way if it weren’t for that sector opening the doors to their personalities, but that doesn’t mean that they should not be regulated and policed simply because of their vocation.
==========

As long as you have the necessities of life, everything else becomes discretionary. And in today’s life, it’s a lot.

This preference can be for soft goods or hard goods. and discretionary spending is a reflection of our values and everyday choices. We could settle for 1,500 square foot houses, spend more on arts and culture, not skimp on the nanny, but we prefer 3,000 square foot houses and American Idol.

It is apparent that Canada has been increasingly moving towards the hard goods over the soft goods and this is logical in a world where population has exploded and the fight for hard goods will probably soar over the next few decades.

The problem is that we have been irratioanl about it as a large percentage of the investment in hard goods we have made has been in cheap depreciating assets (including high maintenance houses) with a lot of it going into our local dumps.

There are a few ways for the central bank to inject money into the system. One of them is private credit and another is public credit.

Money injected for the private sector is most usually backed by hard assets. Money printed for governement spending can be backed by soft and hard assets. As you can see, there is propensity for our money system to favor hard assets so it’s not surprising that the general population has focused on what seems to be more scarce.

One thing you must remember with money printing is that the 1st one to get the fresh new money is the winner. Since most of the time, new money is backed by hard assets, most of the winners in our system are the ones in the FIRE and resource economy.

You will notice that the soft assets are usually acquired by those who own the hard assets unles government intervenes. The soft asset owners are usually the second ones to get the money.

If you want to make good money with soft assets, you better have something the owners of hard assets want and you better have an edge.

Our economy could be much bigger and stronger if we valued soft assets more than we currently do but the reality is that the political mood in the western world is increasingly moving to the right which typically favors hard assets. This movement will kill the middle class because spending on soft assets will get crushed.

All the rich have to do today is to tank the real estate market, get a bailout, pick up major chunks of real estate, tranforming Canada into a rentier society.

Unless there is some butterfly effect that makes us value soft assets, the fight for hard assets is going to put a stranglehold on the Western world over the next decade.

#89 BPOE on 04.16.11 at 12:39 pm

22 million in one City you say that has created a class of millionaires!! Hmmm and many of these millionaires from ONE City love Vancouver. Yet dummies like The American aka Shiller aka Clueless in Seattle are going to the airport to blockade these buyers from purchasing Vancouver. Yeah right. The American doesn’t understand how expensive a condo is in Hong Kong. He thinks how can the person in Hong Kong in their $50,000 condo afford to keep bidding up places? How can someone not from America be rich and successful and choose to live in Vancouver over Seattle. You can tell it really gets his blood boiling over the fact America and Seattle specifically is considered a 5th rate place to live compared to Vancouver. The Facts don’t lie. Vancouver won and Seattle lost big time. 30% falling and still along way to go.
The reality is the condo is not 50 grand but more like a few million. Suddenly that million dollar home in Richmond looks dirt cheap. Remember Brad in Vancouver the guy who owns his HOUSE outright in Kits on the West Side and says its overpriced and how he loves Seattle. Well Brad aka The American aka Shiller here’s your chance to sell before your 40% price slide LOL
I’m starting to wonder if Garth is paying Shiller aka The American to post here

—————————————————-
After all, runaway housing values in that city of 22,380,000 people (yes, it’s actually two-thirds the population of Canada) have created a class of millionaires that otherwise would not exist in a country of abject poverty, state-run industries and millions of poorly-paid people who make the crap your Wal-Mart sells.

#90 S.B. on 04.16.11 at 12:58 pm

If I heard the words spruiking or spruiker one more time….

#91 vancouverite on 04.16.11 at 1:12 pm

I live in Point Grey and am currently surrounded by these mythical buyers from mainland China. They tear down imaginary houses and build hideous new ones that only the delusional can see.
These fictional people roam the streets shouting loudly into their cell phones and spitting loudly and dramatically.
However, there is no statistical evidence that they exist, so they must be a figment of my imagination.

I said there is no statistical evidence of the Chinese influence on the overall market. The largest impact appears to be psychological and emotional, which you just proved. — Garth

#92 maxx on 04.16.11 at 1:16 pm

Have you seen ‘Deep Impact’? ‘Apocalypse Now’? ‘Titanic’? ‘The Towering Inferno’? How about ‘Escape from Vancouver’?

….and “American Beauty”: “I will sell this house today!”

#93 morpheus on 04.16.11 at 1:25 pm

The US housing market peaked in terms of sales in late 2005. It peaked in terms prices in 2007. It is still falling in 2011. Have you learned nothing, or is it different in Thornhill? — Garth

****************************************

You’ve said this a few times but prices in the U.S. peaked July 2006. Sales peaked mid 2005. Much like Canada they didn’t acknowledge the 12 consecutive YOY sales declines because prices kept going up. Sound familiar?

Not all markets peaked together, obviously. My reference was to those which saw the greatest increases, then declines. The point remains. Anyone who thinks Canadian real estate will turn in a few months, or even a couple of years, is not paying attention to the influencing factors. Those people who come here just to find out when they can buy a cheap house are amusing. — Garth

#94 Hoof Hearted on 04.16.11 at 1:31 pm

Garth:

Any of your REIT investments have leak issues requiring major restorations ?

#95 Cellar Dwellar on 04.16.11 at 1:45 pm

@ #55 BPOE
Yes I remember the “Condo Rot gang” … Where are they you ask?
Everywhere you see a Tarped, Shrink wrapped Building. They havnt gone away, they just gave up after YEARS of fighting, developers, city inspectors, etc.

Anyone who buys a condo in this rainforest is insane.

#96 TheBigLebowski on 04.16.11 at 2:05 pm

It’s amazing how the mainstream financial media continues to preach to investors that gold is in a bubble. As if gold must be doomed to failure by virtue of having been a great performer over the past decade.
What the ‘talking heads’ can’t seem to understand is that bubbles pop when prices lose all sense of reality, or when there’s no one left to buy.

Neither is the case with gold, which is still far short of $2300 per ounce, the inflation-adjusted previous high in January 1980.

Bubble comparison….
Close to 75% of people in Canada are home owners. Less than 1% of the same group own any form of precious metals investments. Worldwide Governments are verging on debt default and massive inflation. Reminder, over the past 100 years , the average financial weighting in precious metals has been 20%. We have a long way to go both in housing and precious metals. The skill testing question is, one has a long way to go on the upside and the other has a long way to go on the downside, which one is which?

#97 45north on 04.16.11 at 2:10 pm

BPOE: Vancouver won and Seattle lost big time.

he who laughs last laughs best

we’ll see

#98 Nick on 04.16.11 at 2:12 pm

To all the bubble deniers : don’t waste your time writing long posts, just cut and paste this bu^%}~hit piece written by your friends at the Cato Institute in the US in 2005 :
http://www.cato.org/pub_display.php?pub_id=4243

If this “analyst” has 1 once of pride he’s walking with a paper bag on his head today.

#99 AG Sage on 04.16.11 at 2:34 pm

>#52 realpaul on 04.16.11 at 1:43 am

Curious if you think the Chinese will ask the Canadians and Americans to track down the money that left and go after it? It’s all tracked on this end, even if the Chinese are too incompetent/corrupt to track it on theirs.

#100 kc on 04.16.11 at 2:34 pm

21 Where’s the money Guido? on 04.15.11 at 9:23 pm

Makes one think of the words “Pre-Sale” buy before built and let the new suckers hold the bag.

#101 BrianT on 04.16.11 at 2:41 pm

35 facts about the vibrant US economy-check out #12 and #29-wow http://endoftheamericandream.com/archives/35-statistics-that-show-the-average-american-family-has-been-broke-down-tore-down-beat-down-busted-and-disgusted-by-this-economy

#102 vancouverite on 04.16.11 at 2:42 pm

Re: #91
Thank you for your sassy but completely meaningless response.

#103 not asian on 04.16.11 at 2:43 pm

It is happening – Buyers are walking away from deposits this month in Richmond. Asian buyers paying $1m with long completion dates hoping to flip. More inventory, and suddenly lots for sale under $1m. Homes aren’t moving as fast, so they walk away. This causes a “butterfly effect”. The end is nigh.

#104 Alpha Bravo on 04.16.11 at 2:46 pm

#71 Almost a Believer

“I went to look at a house last week as it was located where I want to be (Thornhill) and seemed priced ok. 549 but it needed a fair bit of updating – It sold two days later on the “offer date” for 690k.”

———————–

Do you have an exact address or MLS number?
Please and thank you.

#105 moloko on 04.16.11 at 3:11 pm

“I live in Point Grey and am currently surrounded by these mythical buyers from mainland China. They tear down imaginary houses and build hideous new ones that only the delusional can see.
These fictional people roam the streets shouting loudly into their cell phones and spitting loudly and dramatically.
However, there is no statistical evidence that they exist, so they must be a figment of my imagination.”

Lol, classic! very well put!

#106 john on 04.16.11 at 3:18 pm

I can’t believe realtors would come here claiming that housing are selling in a day or two when the cold hard facts is sales have dropped for months now. It’s clearly obvious when driving through Toronto or North York see that the same ten houses on my way to work have been there for weeks and times for months without even one for them selling. I seen houses taken off the market and re-listed months laster and then taken off the market after weeks of no activity. Sure homes have sold but very few do. Realtors who post on this blog seem a bit worried of the falling sales situation and their fake stories of homes selling in a couple of days are 100% false from the majority of transactions. Btw Almost a Believer , Moneta , Thetruth , BPOE and many more seem to be realtors. It’s seems half the posters here are out of work realtors. Doesn’t look good for the housing market.

#107 BrianT on 04.16.11 at 3:28 pm

#96Big-That $2300 is using bogus inflation stats-if you compare the price of gold circa 1980 and circa 2011 to total paper “assets” each yr you get a far greater estimate.

#108 Dusko Jocic on 04.16.11 at 3:36 pm

What I find disturbing about our love affair with real estate is that very few people are looking at the longterm viability of places like Mississauga and Milton. Without cheap fuel people will be unable to move from overpriced suburban homes to their jobs each day. Gas is 1.35 per litre. How long before people start stealing fuel from their neighbours cars so they can simply get to work and back. Take a look at my website and decide if gasoline theft won’t go hand in hand with collapsing real estate prices?

http://www.gasolinegangsters.com

I’m doing a show called “The Last Suburb Standing” about Mister and Mississauga for Sunday night. Some parts of Suburbia will hold themselves together better than others.

#109 Veej on 04.16.11 at 3:49 pm

I said there is no statistical evidence of the Chinese influence on the overall market. The largest impact appears to be psychological and emotional, which you just proved. — Garth

psychological and emotional?? are you nucking futs?

Have you been to Richmond lately?

You’re right, there is no statistical evidence – because no one keeps track of it. However it is not merely “psychological and emotional”. Spend a week in Vancouver and Richmond, go to a few open houses, visit a few strip malls on 3 road, take a stroll down Dunbar. Then come back here and tell us it does’nt exist. You are completely missing the boat on this.

We have some comprehension problems today. I did not say the Asian/Chinese influence does not exist, but that it’s greatest impact on the market is the hysteria it causes. Which you exhibit. On the overall GVA market, fueled by realtors and media, this had led to an over-valuation game which everybody is now playing. The Chinese influence is consequentially far larger psychologically than numerically. — Garth

#110 T.O. Bubble Boy on 04.16.11 at 4:02 pm

WARNING! Trying to keep up with the Chinese Real Estate Market can kill you:

http://blogs.forbes.com/kenrapoza/2011/04/15/century-21-realtor-in-china-dies-from-overwork/

#111 Burnt Norton on 04.16.11 at 4:04 pm

#91 vancouverite on 04.16.11 at 1:12 pm

I rent a place in Point Grey and there are only a few downsides to living here, among which are seemingly entitled whiners like you complaining about loogie-horking construction workers you spy on from your attic window.

#112 T.O. Bubble Boy on 04.16.11 at 4:04 pm

There is also a chance that China’s Big Brother (the National Bureau of Statistics – NBS) makes this data simply dissapear!

http://www.speroforum.com/site/article.asp?id=52343&t=China%3A+++Beijing%2C+housing+market+collapses%3A+down+50%25+in+one+year

They will release the “official” stats on April 18th… what happens if these numbers suddenly change?

#113 Almost a Believer on 04.16.11 at 4:09 pm

@ John – No I’m not a real estate agent (talk about people who don’t add value yet are there to take your hard earned equity). The house I discussed seeing last week that sold for 130k over asking was 147 Spring Gate Blvd. in Vaughan.

I follow the market pretty closely in certain areas in Toronto. I am finding that there are houses that are sitting around going unsold as some posters have described but if something is priced realistically and in reasonably good shape it moves pretty quickly. In my current neighbourhood very few houses sit around on the market.

#114 randman on 04.16.11 at 4:30 pm

#96

Great post Big L!

The key is …Less than 1% of people own precious metals

Translated=Less than 1% of people have real money

Imagine the tidal wave when they come to realize it!

Delusional. — Garth

#115 TheBigLebowski on 04.16.11 at 4:37 pm

#106 BrianT
You are so correct. But if I stated the real inflation adjusted number using unpublished M3 since 2006, people would think I am out in left field even more and tune it out. But $7700 is a long way from where we are now :)

#116 Al on 04.16.11 at 4:51 pm

Check out these recent sales in Thornhill – all sold for much more than asking;
MLS Numbers
N2072756
N2070919
N2071266

#117 Moneta on 04.16.11 at 4:52 pm

Btw Almost a Believer , Moneta , Thetruth , BPOE and many more seem to be realtors. It’s seems half the posters here are out of work realtors. Doesn’t look good for the housing market.
===========

I’m not a realtor. Sorry but perception is not reality.

#118 Al on 04.16.11 at 4:57 pm

Looks like Homes jsut North of Steeles Ave in Markham are selling fast, but this is not the case south of Steeles probably because of the City of Toronto’s Double Land Transfer Tax

#119 realpaul on 04.16.11 at 4:59 pm

The persistent, obvious and apparent inflation both locally and globally is met with indifferance by the chief real estate pimp Marc Carney. What an ass !!

http://business.financialpost.com/2011/04/15/global-inflation-sizzles/

Too look the other way and deny the reality on Main Street is akin to Nero Syndrome by the government. We all know that Harper and the Cons have tried to placate ever corner of the electorate while they manoever for a majority….but this is a wrecking ball past the apex of it’s curve for Canadians.

It’s the height of Machiavellian cynicism to have layed back and encourage the populace to self immolate the future while pouring gasoline on a mountain of debt. Harper can only hope for a majority at this point so as to control the message on the way down….otherwise….he’s gonna have some ‘splainin to do.

As has been posited many times…..”this cannot end well”.

#120 Hoof Hearted on 04.16.11 at 5:07 pm

103 not asian

is happening – Buyers are walking away from deposits this month in Richmond. Asian buyers paying $1m with long completion dates hoping to flip. More inventory, and suddenly lots for sale under $1m. Homes aren’t moving as fast, so they walk away. This causes a “butterfly effect”. The end is nigh.

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

I agree…….UNsold For Sales are mounting in Richmond

I think the $ Million + for Richmond homes had been exposed as a scamming Asian realtor trying to juice the reality ……..trying to flip…..media is the first to buy into the BS and the last to admit it.

The Asians see any stagnation in the market, they WILL bail…..check the stats in the pre 2000’s.

It will get very ugly in BC on many fronts…..a new clusterf*ck with sales not completed.

The Courts will be clogged…..

#121 Hoof Hearted on 04.16.11 at 5:16 pm

Precious metal cultees

Review Bre-X and Nortel

This investment class is one of the last vestiges of sucker bets.

Bail soon before Goldman Sachs and associated pull the plug and the rug.

#122 S.B. on 04.16.11 at 5:20 pm

Exaqmple of two Toronto sellers becoming frustrated and irrational in this market (not selling).

a realtor(r) blog but what can you do:

http://torontorealtyblog.com/2011/04/15/re-listing-at-a-higher-price/#comments

#123 jas on 04.16.11 at 5:21 pm

Here is an interesting post to read.

Canadian 30 Year Olds are Screwed

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

#124 Industrial Guy on 04.16.11 at 5:44 pm

Randman Can you eat gold? Or burn it for fuel? In times of social upheaval. Things people need to survive are valued.
Cases of canned food, hunting rifles and ammunition will be currency. Your little collection Krugerrands … basically worthless.

#125 vreaa on 04.16.11 at 5:55 pm

Peter Ladner On CBC radio – Foreign Buyers; Eroded Communities; Resort Towns; Avoiding Unaffordable Vancouver – “A chief financial officer from a mining company could not afford to move to Vancouver because of housing prices.”

Full transcript of the recent radio interview, with discussion.

http://wp.me/pcq1o-29i

#126 The American on 04.16.11 at 5:57 pm

I guess, according to BPOE, that I am Schiller. I’ll take that! It is a wonderful compliment, in fact. Thank you, BPOE. How’s the crabs doing? How’s that condo market doing? I see yet more price declines in Vancouver condo market. You know, the condo market is always the first to go :-)

#127 The American on 04.16.11 at 6:04 pm

For anyone looking to buy a condo in downtown Vancouver at a reduced price, here is a great site to have on your radar. There will be more to come in the future…

http://www.vancouver-downtown-condo.ca/whatsnew.html

#128 The American on 04.16.11 at 6:07 pm

And another link concerning Vancouver downtown condo price reductions and state of the market…

http://www.vancouvercondoreport.ca/SpecSales.aspx

#129 Pr on 04.16.11 at 6:16 pm

THE MOST IMPORTANT 30 MINUTES YOU WILL EVER SPEND IN YOUR LIFE IS ON THIS VIDEO…WATCH IT, SHARE IT…DO SOMETHING ABOUT IT! JEFFREY B. KLEIN M.D., CONSTITUTIONAL LIBERTARIAN

http://www.infowars.com/the-american-dream-founders-warned-against-current-financial-system

#130 The American on 04.16.11 at 6:21 pm

And a personal favorite…

http://vreaa.wordpress.com/2011/02/07/is-vancouver-a-fringe-of-the-china-property-bubble-it-sounds-like-a-criminal-or-insane-or-whatever-you-want-to-call-it-a-total-misallocation-of-capital/

http://www.canadianhomeguide.com/british-columbia/vancouvers-bubble-has-burst

http://worldhousingbubble.blogspot.com/2011/02/vancouver-january-2011-price-chart.html

#131 BPOE on 04.16.11 at 6:37 pm

No comprehension problem. No hysteria. Just buying of homes. Not everybody is playing the “over valualtion” game. Canadian renters for the most part have taken their ball and gone home. Big boys moving in here. This is a pure numbers play. The only psychological component is offshore investors want to own a home not rent. Math is simple. Limited land + millionaires immigrating + Huge desire to own a home at any cost = prices rising
******************************
We have some comprehension problems today. I did not say the Asian/Chinese influence does not exist, but that it’s greatest impact on the market is the hysteria it causes. Which you exhibit. On the overall GVA market, fueled by realtors and media, this had led to an over-valuation game which everybody is now playing. The Chinese influence is consequentially far larger psychologically than numerically. — Garth

#132 Fractional Reserve on 04.16.11 at 6:39 pm

#130 PR. Glad to see you have learned about fractional reserve banking. You may have noticed that is my moniker. The fact of the matter is that fractional reserve banking does not enslave you forever. In fact, in wise hands, it can make you a fortune. Enslavement occurs not because of fractional reserve banking but through reckless borrowing on the part of consumers. Rates have never been as low as they have these past ten years and there have been fortunes made by those who knew how to borrow and crystallize their gains. It is so easy to point the finger at the “evil banksters” as though they forced people to borrow at gunpoint. It is debt fueled conspicuous consumption that is the problem. It is the materialistic have it now society that has created this debt orgy. I know all the gold bugs will come out of the closet and state that fractional reserve banking has led to this mess but I do not agree. For the record, despite my pseudonym, I am not a banker.

#133 The American on 04.16.11 at 7:02 pm

At #97: 45North, exactly. As China begins to implode, which it is now doing, and additional stresses are already being seen in areas such as Richmond, the buying frenzy with HAM stops. As everyone knows, that is all that has been keeping up the false values of RE in Vancouver. Like I said, when China’s RE market takes its fall is when the buying in Vancouver ends. Additionally, many of the properties in Vancouver are second, third, or fourth homes for many of these Chinese. As their businesses take a downturn, the secondary properties are the first to go.

#134 BrianT on 04.16.11 at 7:28 pm

#133Fraction-You don’t understand the difference between the macro and micro situations. For the economy as a whole, it is a major problem, for any individual speculator it can be great-in fact, your gold bug comment is absurd because this group has benefited as much as anyone from the absolute mess that has been and is being created.

#135 Marie on 04.16.11 at 7:43 pm

Garth,

Can you please repost this on this blog? The stakes are high, and people who respect you should know what Harper is like.

http://www.garth.ca/weblog/2009/04/29/me-vs-stephen-harper/

#136 tiedattutu on 04.16.11 at 7:50 pm

I have the utmost respect for you Garth, but I seriously doubt the numbers you gave. A little bit of Hoyian hype on this one. Things are definitely slowing in Chinese RE, but they are not in crash mode yet.

I sourced the stats. Check them yourself. — Garth

#137 Nostradamus Le Mad Vlad on 04.16.11 at 7:51 pm


4:46 clip US preparing for nuke leak.

CC “Climate experts still have not even succeeded in delivering the physical proof of the claimed “greenhouse effect”. Botched.

Not Desperate Housewives They have other things to do. Currency Comptroller “Trabnslation: “This is an election-year wrist-slap to wave in the media, but it won’t restore a single stolen house to its rightful owner.” wrh.com.

Dictatorship “Chicago school bans students from bringing homemade lunches, even though they may be healthier and cheaper than school lunches. There is no room for freedom-of-choice in a collectivist system.

2:11 clip Someone has their priorities mixed up. More for war, less for basics. 3:44 clip How to boost the economy. Slash services, boost military.

2:25 clip IMF — Disease (yes) or cure (not bloody likely!).

Silver + Inflation causes GW, AIDS — all kinds of nasty things. War on Economy Incl. the west’s overall economic picture.

Asteroid “An asteroid as strong as 15 atomic bombs whizzed past earth last night at just ten times the distance of the moon.” Predicting the Future See preceding. How can anyone predict an asteroid hitting the planet?

Stuxnet “The real question is that since the reactors at Fukushima used the same Siemens’ controllers Stuxnet attacks, and since Stuxnet was known to be loose in Japan near Fukushima last November, and given that three of the 6 reactors did not properly shut down as they were designed to do when the quake struck because their controllers did not operate properly, did Israel and the United States, in their blind hate against Iran, unleash a nuclear hell on Earth for us all?” wrh.com. As shown in previous links, HAARP also played a role in the ‘quake. Have they conveniently forgotten Guantanamo, or any of their other hiding places?

Updated pictorial tours of foreclosure cities. 4:35 clip US economy not in great shape.

5:19 clip ‘Net neutrality — not.

Depopulation “They are both major disasters to the health and safety of all humans, and the only people arguing over which one is worse are the paid PR drones of the oil and nuclear industries.” wrh.com. Smallpox “Why would anyone want to retain samples of a virus, long since eradicated from the earth, and use those samples to mutate and experiment with? For what purpose? What are they planning as the end use? And whom would they be thinking about using it on?” Depopulation.

Obama Second term?

Italy receives a nice chunk of oil from Libya, so it is not about to bite the hand that feeds it.

#138 randman on 04.16.11 at 8:08 pm

#122 Hoof

Your post re: Bre-x and Nortel

What was your point?

Are you trying to connect stock scams with real Bullion?

I fail to see the connect

If you’re trying to say gold is in a bubble…

Read my post again and again then read The Big L post

repeat until you get it!!!

#125 Industrial Guy

No you cannot eat gold anymore than you can eat
real estate,stock certificates or any other investment you care to name

However you can burn those and paper money for heat

Which will probably happen as our economic system collapses…

Guess that trumps gold :)

#139 jess on 04.16.11 at 8:26 pm

Greece Reit?

Greek and international banks will create real estate investment portfolios grouping the assets and four of them will be presented by 2012, according to the presentation. The first will be put forward in June.

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aCLZkDCt0aC4

#140 jess on 04.16.11 at 8:28 pm

The decision to turn the fund’s investment into gold bars was influenced by Kyle Bass, a Dallas hedge fund manager and member of the endowment’s board, Zimmerman said at its annual meeting on April 14. Bass made $500 million on the U.S. subprime-mortgage collapse.

April 16 (Bloomberg) — The University of Texas Investment Management Co., the second-largest U.S. academic endowment, took delivery of almost $1 billion in gold bullion and is storing the bars in a New York vault, according to the fund’s board.

#141 randman on 04.16.11 at 8:40 pm

Delusional. — Garth

Hmmm..really? me or Ayn?

“Destroyers seize gold and leave to its owners a counterfeit pile of paper.

This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values.

Gold was an objective value, an equivalent of wealth produced.

Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it.

Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims.

Watch for the day when it bounces, marked, ‘Account overdrawn.’”

-Ayn Rand (h/t Jesse)

#142 Oasis on 04.16.11 at 8:41 pm

#96 TheBigLebowski on 04.16.11 at 2:05 pm
__________________________________________

the way i figure it, in 1980, the US had about 140 B monetary base, and 261.5 M OZ gold holdings. Gold shot to $850+/oz, but for most of 1980, averaged $590/oz. that’s not very far off the $535/oz if the US were to back it’s MBase with gold.

today, (let’s argue they still have the 261.5 OZ gold holdings), MBase is currently at 2400B. that would value gold at the region of $9200/oz

as the world looses confidence in America, i would aruge we’ll see gold rise to the level where it’s monetary base can be backed with it’s gold holdings.

#143 Ronaldo on 04.16.11 at 9:08 pm

#83 Wetcoaster – “The money is most likely dirty money escaping the now apparent Asian crash-in-process before the bank shuts down their HELOC accounts or forecloses on their ghost condos built on thin air.”

Or maybe its like a blogger suggested a couple blogs back that maybe the Chinese Gov’t is buying up all those million dollar houses in Richmond and Vancouver West.

Just read that the Chinese government reserves just reached 3 trillion dollars. That’s a lot of cash to try and get rid of before it becomes worthless isn’t it?

Let’s do a little figuring here to see what they could buy with all that surplus cash. Well, they could buy 3 million homes worth 1 million each. That would certainly keep the old bubble going in Canada right?

Or, I know that they would love to buy up the entire 147.3 million oz. of gold in Ft. Knox currently worth about $220 billion dollars. That would leave them with 2.8 trillion.

Or, they could buy up 6 of our big banks, BMO, RY, TD, BNS, CM, NA for 300 billion. But that would leave them with 2.48 Trillion. That was the last reported estimation of their reserves just before the latest report of 3 trillion.

Or, they could just keep building vacant cities. Kinda gives a person an idea on just how much money is floating around this planet doesn’t it? The U.S. itself is going into deficit 1.5 trillion per year. Could be the reason that gold and silver are rising as quickly as they are. And to think that the U.S. dollar used to be as good as gold. Times are definately going to get tough for a whole lot of people.

Great post Garth.

#144 Thetruth on 04.16.11 at 9:33 pm

Rest my case… as people seem to be getting the message!

559,000 new people came to live in Canada last year through various avenues. Mostly came to Vancouver and Toronto.

As soon as they set foot on Canadian Soil, they are considered a permanent resident. Statistics aren’t kept on how many immediately buy houses (politically correct reasons). They are grouped together with the rest of us.

Then money flows from overseas (they sell RE there) and buy here. That’s why RE prices to income ratio does not matter. It is different here because we got CHAIN immigration….no doesn’t exist elsewhere!

50,000 people a month equals demand! rest my case.

PS I’m not a realtor.

#145 Billy on 04.16.11 at 9:44 pm

BPOE

My relatives live in Richmond and I make a trip their once a week. I am telling you right now….houses are not moving as much as 2 months ago. More and more signs come up each and every week that passess. If the Chinese are lining up, why are these homes not moving.
Please take a drive around Terra Nova, an affluent area with many homes above a million…….they ain’t movin.

#146 realpaul on 04.16.11 at 10:02 pm

We saw a good example last week of how the government attempted to control asset prices by instructing the bumboys at G&S to ‘paint the tape’……it didn’t work as well as the last time this happened in ’08 when the ‘repricing scheme’ caused a calamity of selling into a vacuum and had to be covered up with excuses that blamed everyone else except the assholes who had perpetrated the mess in the first place.

“On the week, the June gold contract at the Comex division of the New York Mercantile Exchange rose 0.801% to settle at $1,486 an ounce. May silver gained 4.61% to settle at $42.571 an ounce.

Inflation data helped to cement gains this week, analysts said. Chinese inflation gauges rose strongly again and the overall U.S. producer and consumer inflation readings rose, but remained sub-1%.

“Inflation pressures are starting to build,” said Stephen Platt, analyst with Archer Financial Services.

If market participants continue to fixate on the inflation story, metals could see further gains. However, there is an opposite view that commodity prices are getting to be too high. Goldman Sachs, for instance, said for the short-term – three to six months – that it is underweighting commodities because most price targets have been hit. For the 12-month view they remain bullish on commodities.”

These dangerous manipulations of the market should be made an international issue and disallowed under law. Instead …governments should be forced into strict budget guidelines wherein they have no latitude to spend more than revenue allows. The so called ‘credit crisis’ was entirely manufactured as an attempt to ‘reprice assets’ because they had become too expensive for governments to borrow against. The inflation of commodity assets exposes the fallacy of the currency economy and we as investors are under constant attack by this ‘systemic risk’ from governments working in tandem to enforce atrificial economic models on the free market.

#147 ontheshoreline on 04.16.11 at 10:04 pm

Local Brentwood Bay spec house:Built into a hillside with underwater streams,basement has flooded numerous times.All sorts of cute “details”consisting of flat plywood roofs covered in tar,drain by evaporation?rock retaining wall that fell apart from the water pressure from previous mentioned underwater streams.make an offer?

#148 Jody on 04.16.11 at 10:20 pm

I can’t explain the system any better than this guy, even my fellow redneck hicks from Alberta should be able to understand this.

the movie “Oh Canada,” on YouTube

http://www.youtube.com/watch?v=i1HfKIvmZGU&NR=1

#149 Pr on 04.16.11 at 10:28 pm

#133 Fractional Reserve
Yeah, we need banks, and we still have good bankers. Its the evils ones who use the system the problem. The people have been misled, but they are not dumb, they are discovering via internet and talk radio who is responsible for the mess and… they are taking names.

#150 Mike on 04.16.11 at 11:31 pm

According to the stats from guava.ca GTA inventory in March was at the lowest in 7 years. Prices the highest in 7 years…. median price highest in 7 years. Days on the market second lowest in 7 years. NO sky falling YET..

#151 out of work realtors on 04.16.11 at 11:35 pm

Is it me or majority of posters are out of work realtors? With sales down ten months in a row is it any wonder they have that much free time. What will realtors blame for lower sales in April? The weather? Hey realtors want to place a bet? I bet sales for April 2011 Will be at least 10% lower then April 2010 for the GTA.

#152 out of work realtors on 04.16.11 at 11:43 pm

Bpoe , thetruth , the realist and the many other Re pumpers/realtors have so much free time all thanks to ten months of falling sales. This month of April which a realtor buddy has told me is way below last April sales. Can you realtors answer why sales are falling hard month after month?

#153 Devore on 04.16.11 at 11:51 pm

#133 Fractional Reserve

I know all the gold bugs will come out of the closet and state that fractional reserve banking has led to this mess but I do not agree.

Fractional reserve banking has led to this mess. Central banking and fiat currency allows for easy politicization of money. Once control of money supply is centralized and becomes a matter of policy, it will be manipulated to meet political ends. Unless you’re aware of some responsible democratic government anywhere on the planet that doesn’t cater to special interests.

These pie in the sky schemes that rely on wise men to do the right thing always fail. The people in charge aren’t imbued with magical qualities, as is the popular belief. They’re just like you and me: self-interested and self-serving.

#154 Maxamillion on 04.16.11 at 11:56 pm

#136 Marie

Everyone should read that post. We all know now what happens if you don’t follow Harpocrites rules, he calls the RCMP on you.

#155 Utopia on 04.16.11 at 11:56 pm

#120 realpaul

“The persistent, obvious and apparent inflation both locally and globally is met with indifferance by the chief real estate pimp Marc Carney”.

———————————————————-

Nonsense Realpaul,

There are significant deflationary forces at play in the global economy right now and Mark Carney is responding to those.

First, the Euro Union is staring down the barrel of growing austerity measures which tells us that consumption could take many years to recover. There are quite a number of nations there swimming in debt and debt-service costs that suggest real growth will not be achieved for some time to come. Low interest rate policies are preferred as a result.

Second, the current commodity boom itself which is bringing us the inflation you mention may turn out to be a little fickle from time to time. A correction is in the cards right now and this will surely reduce the inflation pressures at least temporarily.

Third, we cannot forget that Quantitative Easing will end in June (just two short months from now) and unless it is renewed (not likely) then the primary impetus behind the commodity boom we are experiencing will have come to an end. Again, this will weigh on commodities and we can expect a correction in many. Oil prices in particular may be impacted if the US economy is seen to be slowing again.

Fourth, we are now witnessing a credit crunch in China and a cooresponding real estate correction. The numbers are quite simply stunning. We await more details and a clearer picture of the situation there but this is MOST DEFINATELY presenting a deflationary headwind for the entire globe as Asian growth is expected to begin slowing.

Fifth: Due to the upheaval in the Middle East and North Africa the economic outlook there is not yet stabilized. Markets prefer predictability and this is not giving investors confidence. Thus, growth and investment there is also stalled for the time being until the smoke clears and new stable regimes established.

Sixth: Canada’s largest trading partner is still not feeling well and real estate prices continue to decline despite Herculean efforts to stem the bleeding. Again, deflation in assets is more than offsetting any small inflation pressures.

There are many other reasons to be concerned. In aggregate though the world is looking much more likely to experience a return to recession that resurgent growth and recovery.

The Bank of Canada takes these factors and many, many more into account when setting domestic rates. This does incidentally include forecasts for the strength of our housing markets and economy along with predictions for the value of our Loonie and current account balances.

Not an easy task. Can you pimp it better?

#156 The American on 04.17.11 at 12:03 am

At #145: TheTruth, are you kidding me? First, Canada receives only about 240,000 immigrants per year. Where do you get your information? That is hardly “the truth.” I can back that up if you’d like. You made a false claim that Canada has 559,000 people immigrating there a year. You also are claiming that this inflow will sustain values because others will continually move in. This is ridiculous.

Let me break it down for you… Every year, 1,800,000 people immigrate to the U.S., or 750% more than is received in Canada. If any country has CHAIN immigration, it is the U.S. By default, you are also saying this inflow of people in the U.S. will sustain values or keep values high. Well, apparently it doesn’t. Unbelievable.

Nice try…

#157 Hoof Hearted on 04.17.11 at 12:06 am

#139 randman

Keep things in perspective.

Gold and other precious metals have a real world value.
Gold has above average conductivity…Platinum is good for catalytic converters..bada boom bada bing….

If one is living in the 1960’s when the US $$$ was tied to Gold Standard …. well I am simply throwing in a personal objective view.

We are in an era whereby the “black hands” are manipulating classic beliefs (ie RE always goes up) to herd and milk the masses.

Are you watching that show on History /Discovery channel re the Alaskan Gold miners….who are degrading the Alaskan environment to get a few ounces of gold ?

They are literally in soft porn orgasm mode if they can fill half a cup with raw gold flakes.

WTF is this society doing? …

It’s hard core RATIONALE is seriously in clusterf*ck mode.

#158 Nostradamus Le Mad Vlad on 04.17.11 at 12:41 am


“The End Is Night” — See very last link(s). Not really, but it’s a good harbinger.
*
1:49 clip No sound, starts automatically. Cat and dolphin — whoda thunk it?

Ten Housing markets at risk of collapse. Add in various cities in Canada with melted butter.

Five Years Still no end. Housing Rebound may never happen; goes with cycle changes.

Japan ‘Quake Map “All 1,016 of them, so far, in chronological order and position on the map.” Morgan Stanley Guess hi-rises in Tokyo are radioactive.

Slobberer Yes indeed. Hillary Clinton is drooling / slobbering over ‘free trade’ with South Korea.

Food Crisis May end up being larger than originally thought.

Minestrone Soup or How Politicians are Created from a Thousand Soggy Hot Wet Noodles.

Syria’s Next Then Thailand and somewhere in between, a large asteroid or comet hits us.

Oil To Peak Or Not To Peak? That is the question, and the answer lies within the link (Shakespeare’s Tom and Jerry, mid-27th Century.) What was that about AfPakLibya and the rest of the ME? Ah yes, stealing someone else’s livelihoods.

China trims US bondholdings. BRICS going to use local currencies.

Teleportation Gene Roddenberry was so far ahead of his time with Star Trek. He would have an understanding of this. Roswell — Area 51, and Hawthorne Army Depot is. The following link — Insurance Claims for ‘quakes — ties in nicely, esp. the second para. HAARP will play a role somewhere, as citizens are expendable.

“Coinciding with the emergence of this ‘anomaly’ on April 10th, this report says, were violent near-surface earthquakes that have as yet not subsided and have led to earthquake expert Graham Kent, the Director of Nevada Seismological Laboratory at the University of Nevada Reno, to state his “growing concern” as hundreds of quakes continue to shake the region. The Tonopah Test Range (TTR), known as Area 52, the Hawthorne Army Depot (HWAD), which is the largest ammunition depot in the world, and the recently named Homey Airport, otherwise known as Area 51.” Unconfirmed This may have something to do with all that’s going on.

#159 tiedattutu on 04.17.11 at 1:23 am

Garth,

I checked all the top experts on China like Dr. Michael Pettis and not a peep about the RE crash. I guess he could be considered mainstream, but he’s usually such a straight shooter, and is on the ground in China. It would be curious if he failed to mention such an event. There is, however, no doubt that China has a RE bubble of grotesque proportions. There will be no mythical soft landing. Be that as it may, love your blog and appreciate what you are trying to do. I am in RE in the US and know exactly what you are talking about, and what a complete disaster RE can become. In fact, disaster just does not do justice to the situation here. Its a total wipe out, and Canada has no magical immunity.

#160 Onemorething on 04.17.11 at 2:00 am

Like I said before, Real Savy Asian investors were out of the BC market SO last year.

Also said was the repatriation of funds back to China as the SHITE hits the fan.

Friends those 100,000 plus factories in just Southern China alone which shut their doors in 2009-2010 never re-opened them, factory workers offered subsidized pay to go back to the farm started in 2008.

The Central Govn know a thing or two about turning the big tanker quicker than you would think however this time the run up in RE is OUT OF CONTROL!

There is no way when 70% of GDP is government spending and initiatives, for them to manipulate a soft landing.

A little GOLD, more SILVER and Cashed up in CHF puts me in the VIP seats ready for a China mess, AUS RE dump, further US RE dump and good old CAN dump by end of this year.

All, you better be socking it away for the remainder of the year as its going to get really messy!

#161 April on 04.17.11 at 3:28 am

Brad #146 from Fridays post. I absolutely agree with you re The American versus BPOE. Also I agree with the American’s comments on Vancouver desirability, or lack of. He also seems to have a good handle on the Van RE situation.

#162 betamax on 04.17.11 at 6:04 am

#142 randman: “Hmmm..really? me or Ayn?”

Both. Purple prose don’t make it so. You may as well join the Flat Earth Society.

#163 miketheengineer on 04.17.11 at 7:30 am

Garth et al:

I saw this link to blog, that describes what it is like in Japan.

http://www.themodernsurvivalist.com/?page_id=936/general-discussion/sirusblacks-updates-from-japan/page-5/

I thought it was interesting, thought you would too.

Mike

#164 Northern_dirt on 04.17.11 at 8:15 am

#135 Marie

Garth,

Can you please repost this on this blog? The stakes are high, and people who respect you should know what Harper is like.
……………………………………………………………………………..

Interesting read. Too bad Harper would have to turn into an actual werewolf for me to consider him worse than any of the other 2 party leaders he’s running against. Not happy with the cons.. But would be less happy with the libs and id have to be committed before I vote NDP..

#165 Northern_dirt on 04.17.11 at 8:25 am

#29 bsallergy

The chinese are famous for their financial acumen,
……………………………………………………………………………..

I would consider casino gambling a bad financial move..
(the Chinese Son of a family who bought my parents home in the GTA back in 2002, lost all the money his parents were sending him from MLC to pay for the house before they came over.. they lost the house) Yes I know anecdotal, but if you ran a census at Casino Rama, or saw the number of these chartered buses that pick people up from the pac mall enroute to Rama, you’d find it fits my story.

Also, when did people living under a communist dictatorship (granted the economy has moved towards capitalism in the past 15 years) make good economists?
I can understand Chinese from hong kong who’ve had many generations of laissez faire to cut their teeth on the money in the free market game, I just think their land-locked cousins have some world experience lacking.

#166 TS on 04.17.11 at 9:14 am

To:#144 Thetruth on 04.16.11 at 9:33 pm

Than why are other countries with larger immigration flows like the U.S. and U.K. real estate markets under performing?
Immigrants need jobs and like anyone within a few years may consider purchasing housing.
The recently arrived and many of our younger generation I know are struggling to find a decent paying job. Most have 2 jobs to make a living wage. As our employers are now pre conditioned for obvious reasons to not hire full time workers. Once the competition starts doing it everyone has to do it. We are quite frankly on a race to the bottom that is being held together by low interest rates and credit. The housing wealth effect (same with the stock market) are unstable.
People with a one career job are very fortunate for now….
They do not see where things are going until it happens to them….

#167 Utopia on 04.17.11 at 9:20 am

#156 The American

“At #145: TheTruth, are you kidding me?”
———————————————————-

Great rebuttal. TheTruth is spitting fiction on a regular basis and it is good to see others are paying attention and challenging the nonsense. As you suggest, high US immigration levels are not the saviour of real estate markets in your country (or the economy either for that matter).

#168 I pity the fool who drinks soy milk on 04.17.11 at 9:26 am

Utopia,
You’re not MC are you?!?!
joking.
I nearly ran into the governor at the museum of nature last spring. He was there with his kids. We locked eyes for like half a second, which seemed a lot longer at the time. It took every bit of class I could muster (haha) to not ask him if I should buy a home or wait. Anyway, apropos of nothing.

#169 Whattodo on 04.17.11 at 9:57 am

@ 156 THe american:”Let me break it down for you… Every year, 1,800,000 people immigrate to the U.S., or 750% more than is received in Canada. If any country has CHAIN immigration, it is the U.S. “……

However in USA, they have at least 60 cities to decide where to live….in Canada we have just 3 or 4 at the most! and that is what keep demand very high…..nice try you too.

#170 Utopia on 04.17.11 at 10:31 am

#168 I pity the fool who drinks soy milk

“Utopia,You’re not MC are you?!?!”

———————————————————–
Nope. Better looking but not nearly as rich (or smart).

#171 Kim on 04.17.11 at 10:40 am

Why are so many realtors on this blog? It’s easy to understand sales have been down for almost a year now but that dosn’t explain why realtors would come on this blog? Maybe realtors have run out of greater fools and worry that the biggest housing crash in Canadian history will become to obvious to spin. You hear stories of people having trouble selling their home/condo even after many price reductions. You even hear stories of people going bankrupt and walking away from their underwater homes in Canada. Just a heads up people the realist , BPOE , thetruth ,mikey and many others are here to spin and lie. If sales where good they wouldn’t be here.

#172 Daisy Mae on 04.17.11 at 11:02 am

Industrial Guy on 04.16.11 at 5:44 pm

“Randman Can you eat gold? Or burn it for fuel? In times of social upheaval. Things people need to survive are valued.
Cases of canned food, hunting rifles and ammunition will be currency. ”

*****************************

Read Garths’ AFTER THE CRASH, specifically Chapter Six — ‘Choices’ — he outlines various possible scenario’s, how to plan and prepare for possible eventualities.

#173 The American on 04.17.11 at 11:25 am

AT #172: BINGO! You nailed it right on the head. Realtors did the exact same thing in the U.S. with respect to the real estate blogs. The realtors were nowhere to be seen on the blogs when times were good. However, once the tides turned, the realtors came out of the woodwork trying to disassemble the new sentiments and understanding of how the market was changing.

Sales are dropping to their knees like a cheerleader on prom night.

#174 The American on 04.17.11 at 11:32 am

At #169: Wattodo, the immigrants to the U.S. have a choice of well over 60 cities, but it is only 12 they immigrate to (NYC, Boston, Orlando, Chicago, San Diego, San Antonio, Dallas, Houston, San Diego, Los Angeles, San Francisco, Seattle). Nice try right back at you.

Fine then… I’ll use the U.K. as an example. The U.K. has vastly smaller amounts of both land and cities to chose from which to immigrate than Canada. However, the U.K. STILL receives higher amounts of immigration by far every year to their small country over that of Canada. It didn’t work out too well for them either, did it. Nice try.

#175 bigrider on 04.17.11 at 11:39 am

#169-Whattodo.

Really foolish of you too believe that the reduced lending standards, looser lending standards at CMHC and historically low interest rates of the past decade have not been the fuel and only reason that has propelled RE prices higher here in Canada.

Shame on you for mis-leading those who would be vulnerable to your RE salesmanship propaganda.

You can really hurt the virgin buyers out there with your nonsense.

#176 Fractional Reserve on 04.17.11 at 11:43 am

For those of you who have commented that fractional reserve banking has led to the mess we are in, please provide your alternative for our banking system. Also, Garth, could you weigh in on this issue or even address it in a future blog. I know you have, on several occasions dismisssed the idea of returning to a gold standard. Your thoughts on this matter captain.

#177 BrianT on 04.17.11 at 11:44 am

#166TS-The reason for the out of control debt situation in the USA is that from a macro perspective the USA economy is huge destroyer of capital, i.e. a money losing enterprise. The top line (revenue i.e. GDP) has been held together through continual debt accumulation, in the same way any money losing company could continue to expand and reward upper management as long as it had access to continual and increased borrowing, however, the whole enterprise is a sham and logically would be expected to eventually collapse.

#178 bigrider on 04.17.11 at 11:45 am

75% of Canadian tax payers file a return with less than $50,000 in earned income yet we are to believe that 1miilion plus for a home in a decent part of T.O that went for 500k 7 years ago is completely normal ??

Give me a break.

In defence of RE agents, my friend who is one tried to discourage a couple form buying a $430,000.00 condo with only $50,000 down. Tried to convince them to consider something that cost less but to no avail.

This little money down scenario being replayed over and over again, everywhere.

#179 wetcoaster on 04.17.11 at 11:46 am

“The chinese are famous for their financial acumen”

Ever walked into the River Rock Casino and taken a look around ? Not too many white guys. Like maybe 10% max on a good day. Such financial geniuses alright, trying to take on the house when the house always wins.

Foreigners are always the last ones in at a market top. The Japanese invasion in the 80’s was the same. We all thought we would be toiling as slaves at some Toyota/Sony assembly line as they took over all the US banks and invaded North America. Wrongo.

#180 bigrider on 04.17.11 at 11:49 am

Correction on #174 Bigrider to Whattodo.

Perhaps my comment was better directed at Realist or BPOE. Anyway, no anomosity meant for anyone, after all this is supposed to be a site to explore various points of view.

#181 BrianT on 04.17.11 at 11:53 am

Smith might be right on this one-Bill Gross is the ultimate insider and his recent bet on major interest rate increases should be listened to IMO http://www.financialsense.com/contributors/charles-hugh-smith/setting-up-for-the-con-of-the-decade

#182 Shocked Reader on 04.17.11 at 11:55 am

DAAAAAAAAAAAAAAAAAAMMMN! Whoever The American is, he’s armed with a tonne of great information and he doesn’t let anyone get away with bullshit. Cudos to you and thanks! Maybe he really is Shiller.

The American, more links please? Why don’t we get those here?

#183 wetcoaster on 04.17.11 at 12:00 pm

“Why are so many realtors on this blog? It’s easy to understand sales have been down for almost a year now but that dosn’t explain why realtors would come on this blog?”

It’s no secret they are scared shitless,they love their easy money and don’t want it to end and have to actually go out and find a real job that takes beyond a 3 month online course.

As well their industry heads have already stirred up the troops like some hard core union leader to take on those government bastards who wanted to end the 35 year sucker mortgages. It was their bread and butter to keep the sheep ringing their phones and they lost, in spades.

Real estate agents are a threatened breed in an internet world, and will use all tools available to them to shut down any one like Garth who speaks economic and financial sense. The party is over, and the fridge is empty, but tell that to the alcholic and what kind of response would you think you would get ? “Hostility” would be an understatement.

I expect to see this real estate agent vigilante behavior ramp up even more as sales continue to slow, and the name Garth is mentioned more and more in initial inquiries for their services, including in their nightmares at 3 in the morning.

#184 jas on 04.17.11 at 12:13 pm

#157 Hoof Hearted
WTF is this society doing? …

good question. Very good question
——————————————–

#156 The American
you’ve said “Every year, 1,800,000 people immigrate to the U.S.”
are you sure? that is 18 million a year! No way.
I think this is not a realistic number even if you count the illigal ones.

#185 jas on 04.17.11 at 12:16 pm

#156 The American
you’ve said “Every year, 1,800,000 people immigrate to the U.S.”
sorry, it is 1.8 million and that is realistic
but do you breakdown of what percentage is legal?

#186 S.B. on 04.17.11 at 12:37 pm

To all who are overweight with bullion: if the ATMs close there will be only three types of urban currency: Booze, Smokes, and toilet paper.

I’d imagine the addicts will pay $1-2 per cigarette to start, and $10/beer. A roll of TP will be worth $5, easily.

Metal? Good for nothing.

#187 Ronaldo on 04.17.11 at 12:41 pm

http://www.grandich.com/2011/04/retirement-myth/?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=The+Grandich+Letter

Peter Grandich on the “Retirement Myth”

#188 eddy on 04.17.11 at 1:08 pm

Container guest house:

http://poppressed.com/features/container-guest-house-by-poteet-architects/

#189 Devore on 04.17.11 at 1:30 pm

#170 realist

Easy. Sales numbers are being compared to last year, which was an all-time record.

Except it was not. It was a good year, but hardly something to brag about.

#190 Ronaldo on 04.17.11 at 1:37 pm

#172 KIM – possible reasons that Realtors are now coming to this blog:

1. Way to much time on their hands now with the housing market tanking.
2. Looking for financial advice from Garth.
3. Hoping to get advice on where to find a job.
4. Hoping to change market sentiment.
5. Looking for prospective clients.
6. Nothing else to do.

#191 The American on 04.17.11 at 1:39 pm

At #186: Jas, no worries. The number I’m providing is not inclusive of illegal immigrants in the U.S. The 1,800,000 number I’m providing is the most conservative number I could find. In most reports, it is over 2,000,000 per year. Here is the breakdown:

Over 1,000,000 became legal residents of the U.S. in 2009
Over 1,000,000 became naturalized U.S. citizens in 2009

-2010 numbers have not been provided as of yet. But it is indicated that 2010 will be higher than 2009.

There are various ways to establish residency or become a U.S. citizen (application for natural citizenship, marriage, green card, etc.).

I prefer not to include illegal numbers as they would clearly skew data.

#192 Oasis on 04.17.11 at 1:55 pm

#187 S.B. on 04.17.11 at 12:37 pm

To all who are overweight with bullion: if the ATMs close there will be only three types of urban currency: Booze, Smokes, and toilet paper.

I’d imagine the addicts will pay $1-2 per cigarette to start, and $10/beer. A roll of TP will be worth $5, easily.

Metal? Good for nothing.
___________________________________________

no question you are correct that booze, smokes and canned food will be important.

metals, when the ATM’s re-open, money will be based again on metals.

#193 Condo is another world for Apartment on 04.17.11 at 2:18 pm

Gold is in a bubble.

Gold is only valuable to those who believe it holds value

Gold is a master of men, not the slave

Gold is not worth it’s weight in food, water or medicine

#194 SWM on 04.17.11 at 2:20 pm

Where does this idea come from that sales volume declines first then prices follow?

It’s posted here all the time but isn’t consistent with most markets other than US real estate.

Look at the Nasdaq in 2000 or the S&P in 2000 or in 2008. For that matter, look at just about any stock bubble burst. Volumes rose leading to the pop.

Wrong. — Garth

#195 Thetruth on 04.17.11 at 2:25 pm

#152 ….. I’m not a realtor. Opposing views doesn’t magically make one a realtor.

#156 American…

559,000+, I stand corrected. Jack Layton stands corrected. Read the interview link below (i can give other sources but links have been posted in the past).

http://www.cbc.ca/news/politics/canadavotes2011/realitycheck/2011/04/temporary-foreign-workers-why-so-many-all-of-a-sudden.html

And no, US’s CHAIN imigration is a joke compared to ours. Takes a spouse 1 day here to gain residency. In the US, it is 2 years. Takes a parent/grandparent 3-5 years to gain residency in Canada. In the US, it is over 10 years. All the wide range of categories (immigrant, skilled, temporary, etc)of the immigration system are used for one primary goal…family reunification.

I’m a third gen immigrant. For the first 60 years, approx 60 people came in through various sponsorships to Canada. In the last 20, almost a 1000 further sponsorships have been made as it is exponential.

And relatives settle close to other relatives. That is why we are diffferent and Vancouver and Toronto RE booms!

#166 TS

We have the highest per capita immigration rate in the World. Much higher than the US and UK.

#196 SMOKING MAN on 04.17.11 at 2:40 pm

184 wetcoaster on 04.17.11 at 12:00 pm

You say the party is over………….

Yet these charts say otherwise…….

http://guava.ca/indicators.html

sorry but the real estate cow still has much more milk..

#197 Industrial Guy on 04.17.11 at 2:47 pm

Randman, Daisy Mae …..
One of my kids was in Haiti after the quake serving with an NGO.
I stand by what I said …

#198 Ronaldo on 04.17.11 at 2:57 pm

http://www.reuters.com/article/2011/04/17/us-china-economy-rrr-idUSTRE73G0S420110417?feedType=RSS&ca=rsstmb More on China

Time to re-evaluate the portfolio again. Should be pretty interesting day on the markets this coming week. May be time to park some cash for awhile.

#199 Devore on 04.17.11 at 3:02 pm

#177 Fractional Reserve

Now you’re just changing the subject.

Do you believe a system that must grow geometrically just to break even and not fall off the tracks is sustainable? For how long?

#200 realpaul on 04.17.11 at 3:15 pm

Hmmmmmm…. I have to disagree with the 250K numbers posted on immigration allocation. In fact Minister Kenney just announced that we had welcomed 350K as well as an uncounted number some ‘special claimants who qualify under quota’s with our G20 partners who say that we have an obligation to act as a pressure valve in countries who can’t won’t solve their own issues. The war torn regions of the world produce hundreds of thousands of claimants every year that do NOT get added to the ‘official’ list of immigrants. If anyone hasn’t noticed the huge number of Somali, Afghan, Croat, Moldovan , Iraqi etc populations of women with sixteen snot nosed children walking starry eyed through the malls with sacks draped over their heads….well….you’re just not looking.

I know a guy from the PRC down the street from me who ‘qualified’ for immigration as a skilled worker…in fact he hasn’t worked for decades as an engineer in China….he’s in his late 70’s. But……as a ‘qualified’ immigrant he was able to immediatley sponsor his adult children and their brood of a dozen children between them and two sets of elederly grandparents……one who went immediatlet into a fine BC seniors care facility as soon as he landed….nice. The family…as I can count it…..has at least 14 members who all piggy backed off the one ‘immigrant.

If I take this as an example ( Oh and BTW…the old engineer is the only one who speaks a word of English) then if each of the 350,000 ‘immigrants’ has a dozen or more ‘family members’ tagging along as iin this case…then the actual immigration numbers have increased by a factor of 14 ! Making the immigration numbers more in the 5 million range. But….I’m sure the special interest groups…specifically those who lobby for more immigration…( groups that profit from the business of immigration) want to keep the truth from the mainstream media and lobby hard to keep it quiet so as not create a political quagmire.

#201 Increasing that 1% on 04.17.11 at 3:41 pm

Crane just being erected on Front nr Spadina, (walk to ‘Chinatown’!) road closed, KNF Canada, and Total, have claimed their space, like climbing Mt. Everest, raising more of those ‘boxes’ in the TO sky. Another one on York St nr Front, and ‘nother in area also ‘hoisted’ this weekend.
Hope those guys do get paid well- the ones on top of the very high scaffold type thing. Sure is no room for mistakes by ANYone. Hirises all around, busy streets..

#202 Worried realtors on 04.17.11 at 3:55 pm

We have realtor smokingman , thetruth , realist ,BPOE and the others posting during what should be open house time but the sad fact is they have no work as housing sales continue to crash. In a couple of months we will have 1 year of falling sales . Canada RE market is falling over the cliff just like the US housing crash. The peak of the US housing bubble had 70% “owership” and in Canada we are at 70% . First sales fell month after month JUST LIKE CANADA NOW and then prices crashed so hard and fast realtors couldn’t spin or lie (but they still did). Realtors in Canada are saying the exact same thing as realtors in the US . Bubbles ALWAYS POP! just like the dot.com bubble where all the experts laughed and said it was different. If I said $120 nortel was going to be worthless in 2000 everyone would laugh and call me crazy( I infact said NT would crash back to $20-30 and stay there). RE in Canada is going to CRASH 50-75% In the next 5-8 years. That is a FACT! Wait and see you out of work realtors just wait and see. Realtors are uneducated and have no understanding of economics. These people are simply sales people like car sales person. Carltors are just as worthless as realtors. One more prediction for realtors. Realtors will vanish like travel agents. Your days of criminal activity are numbered. LOL :)

#203 NameGoesThere on 04.17.11 at 4:00 pm

This is a major sign of a bubble, something called;
Bully offers
http://www.theglobeandmail.com/life/home-and-garden/real-estate/buying-and-selling/in-toronto-house-hunt-bully-offers-are-losing-their-bite/article1985387/

#204 morpheus on 04.17.11 at 4:13 pm

#170 realist on 04.17.11 at 10:07 am
#152 out of work realtors wrote: “Can you realtors answer why sales are falling hard month after month?”
_____________________________________________
Easy. Sales numbers are being compared to last year, which was an all-time record.

Another month goes by and yet another increase in home values. Oh well, I’m sure your crash is coming. Just be patient.

Perhaps ten years from now, house prices will be where they were three years ago, when you should have purchased. Hang in there. (70% of the people get it, the rest live in fear).

Back to the root cellar big ‘fella, the wind is ‘startin to howl.

******************************************

Wrong Realist. 2007 was the GTA record year at just over 93,000 and it has never been over 88,000 any other year ever. Only March, April and May were good months last year. The rest of the year was mediocre to piss poor. This month will be 12 straight months of sales declines. Sorry, no positive spin on that. Same thing happened in 1989. Sales plunged as prices continued to hit record highs. We all know what happened from 1990-1996. Not a sudden collapse, just a slow steady decline of 30%.

#205 Lorne on 04.17.11 at 4:16 pm

Vancouver Stands Out.
(actually, a little bit of honesty creeps in)

http://www.vancouversun.com/business/real-estate/Metro+Vancouver+stands+from+national+crowd/4625970/story.html

#206 Ronaldo on 04.17.11 at 4:17 pm

Condo Is Another World for Apartment – “Gold is in a bubble”.

How can something be in a bubble when the total amount ever produced only increases by about .6 of 1 percent per year and the total value of annual production (based on current price) is worth less than the net worth of Bill Gates and Warren Buffet combined? Unlike houses or condos which can be produced in unlimited supply as we’ve witnessed in the past 4 decades (at least some of us).

In the past year: Gold up 28%, silver up 133%, palladium up 125%. Which is in a bubble?

#207 Fractional Reserve on 04.17.11 at 4:28 pm

#201 Devore

I am not changing the subject. Several have stated that fractional reserve banking is the culprit to the mess we are in. I have asked for the alternative which nobody has provided. A proper fractional reserve banking system works. What happened over the last 30 years on Wall Street via the sub prime derivatives was not normal fractional reserve banking. That mess was invented because a properly functioning fractional reserve system will not allow the horrible abuses/fraud that were perpetuated by Wall Street. What transpired on Wall Street was fraud run amok. Our banks, the fractional reserve chartered banks of Canada survived the sub prime fiasco because they did not engage to any large measure (if at all), the nonsense being promoted by Wall Street. What do you propose our fractional reserve chartered banks change to, the gold standard?

#208 MikeT on 04.17.11 at 4:38 pm

@The truth: you can’t be farther from, well, the truth!
First, you get the permanent resident status when you enter Canada with an immigration visa, not when you just step on Canadian land.
Second, regardless of how many people enter Canada as students, temp workers, refugees, etc. – they are not permanent residents until they enter Canada with an immigration visa. The ones who are within Canada and applied for perm residence, and got the immigration visa MUST exit the country and then re-enter using the immigration visa. Thus, the number of new perm residents is the most reliable one.
Third, it takes an average of 1 year (and not 1 day, as you wrote) for a spouse of a Canadian citizen to get all the paperwork done before getting the immigration visa. Times may vary depending on the processing times at consular offices around the world.

#209 BrianT on 04.17.11 at 4:44 pm

#192American-Bringing in immigrants isn’t some sort of economic magic that solves problems. Yes, it can help to prop housing demand but all the immigrants need to be taken care of and the North American economy no longer has job growth and it likely will not be resuming. Look at California-it is broke and a lot of the fiscal problems are related to massive immigration. Ontario is a fiscal mess and we could bring in the entire population of Asia and it wouldn’t fix anything-however it would generate big money for those at the top of the pyramid.

#210 Hoof Hearted on 04.17.11 at 4:53 pm

You gold and precious metal bugs best sell NOW

The market is about to collapse…..

#211 MikeT on 04.17.11 at 4:53 pm

@202 realpaul: wow! you really are scared, arent’s you? Chillax, cause it’s not that bad. The number of new permanent residents includes the dependents of the main applicants, so if I immigrate with a spouse and 2 kids – the total number is 4 new permanent residents.

#212 Hoof Hearted on 04.17.11 at 5:06 pm

Try this a a Future Shock model.

Is the world in denial that the majority of its domestic population is aging?

Even Mainland China is being hit with this, via its in-house ONE Child policy.

If we consider this a globalized village, the merry-go-round /musical chairs must stop.

If each country simply engages in the immigration sphincter tightening up, then domestic policy is more predictable.

Like Realpaul said on post# 202……what is the wedge in the door that ONE IMMIGRANT in allows for more under this family . There must be a quantifiable average in place. What is it…5:1….10:1 15:1 ????

This circle jerk amongst nations must be ratcheted down…..looks like Aussies etc are clamping down ………charity begins at home.

This family unification goes all the way back to P.Herr Ultra-rot Turdeau…..it was a cheap vote buyer PERIOD.

It’s a slap in the face of those who built this country, form all corners of the globe, and are pushed to the back of the line by someone who sponsored others in.

#213 tkid on 04.17.11 at 5:07 pm

Hoof Hearted, the University of Texas just took physical delivery of a billion US dollars worth of gold. It’s hard to tell what direction gold will head in the next year.

I wonder what a billion dollars worth of gold looks like.

#214 realpaul on 04.17.11 at 5:21 pm

#212 Mike….you’re wrong. The number of immigrants does not include extended family to follow or the number of ‘special claimants’ that the government brings in under the UN Charter for Refugee’s. Funny how every refugee on the planet ends up in a G8 country though. And…..why does all the aid money going into the third world end up in the yaucht yards off the southern coast of Europe and into either UK or Swiss banks? Your statement is exactly what I was alluding to when I suggested that the majority of people do not understand this issue through the lax supply of information released and disseminated.

And yes….as a taxpayer…….these immigration fiddles scare the crap out of me. After all……who do you think pays for the entire game of services that support the ‘immigration industry’? It certainly isn’t the immigrants.

As I told you, I have first hand knowledge directly from a family I know quite well living a block away from me. They have yet to work a day…the elderly parents are off to the doctor almost daily…the kids are in ESL school programs and the adults are all being given free job training, English lessons and abundant support services and resettlement allowances. Whats in that for the taxpayers of Canada? Please don’t tell me that my neighbours are a myth.

#215 Ronaldo on 04.17.11 at 5:53 pm

#14 tkid – ”I wonder what a billion dollars worth of gold looks like.”

It would be a cube 3.5 feet x 3.5 feet x 3.5 feet or roughly one cubic meter….and would make a nice stand for your wide screen T.V. Problem though is that it would weigh 28 tonnes so some reinforcement would be required to hold this much weight.

#216 Hoof Hearted on 04.17.11 at 5:55 pm

Gold

http://money.howstuffworks.com/question213.htm

If you took all of the gold in the world and put it in one place how much would there be?

——–you will find that the annual worldwide production of gold is something like 50 million troy ounces per year.

——– Figuring out the total amount of gold that has been produced by man is a little harder. To get at some kind of estimate, let’s figure that the world has been producing gold at 50 million ounces a year for 200 years. That number is probably a little high, but when you figure that the Aztecs and the Egyptians produced a fair amount of gold for a long time, it’s probably not too far off. Fifty million ounces * 200 years = 10 billion ounces. Ten billion ounces of gold would fit into a cube roughly 25 meters (about 82 feet) on a side. Consider that the Washington Monument measures 55 feet by 55 feet at its base and is 555 feet tall (17 x 17 x 170 m). That means that if you could somehow gather every scrap of gold that man has ever mined into one place, you could only build about one-third of the Washington Monument.

#217 jess on 04.17.11 at 6:12 pm

QROPS Fraud
The Government has set up a specialist fraud unit to monitor transfers into Qualifying Recognized Overseas Pension Schemes (QROPS) due to concerns about fraudulent activity and irresponsible transfers.

HMRC has set up a specialist fraud squad unit to handle QROPS transfers after problens in Singapore and Hong Kong. Currently, New Zealand offers a QROPS scheme which IFA’s are promoting as allowing you access to 100% of your pension as an upfront lump sum payment after 5 years offshore if an expat is over 55. The spirit of a QROPS scheme typically is to allow only a 30% lump sum and the rest of the pension must be used to provide a pension income for life.

Gauke said: ‘The government has set out a clear strategy on preventing tax avoidance. We will not hesitate to take action to stop those who seek to take unfair advantage of unintended tax loopholes.
April 6, 2011
HM Treasury has plugged a loophole that let Hong Kong QROPS investors exploit a double taxation treaty with the UK.

=

HMRC fraud unit monitors rogue QROPS
February 28, 2011
Rogue QROPS offshore advisers offering pension-busting advice are coming under special scrutiny from HM Revenue and Customs investigators.

HMRC is monitoring the activities of some irresponsible international firms offering ex pats advice about switching pension funds from the UK to offshore schemes.

Investigators are building evidence against schemes thought to abuse tax rules with a view to removing them from the HMRC list of registered QROPS pensions.

Neil and Megan Gratton were hoping to save tax and avoid buying an annuity with their pension under a scheme devised by Malcolm Tune, a financial adviser later convicted of fraud.

Regulators in Spain and Dubai are also cracking down on advisers offering dubious offshore financial advice.
====

One of the most notorious closures was in May 2008, when all Singapore-based QROPS were suddenly de-registered by HMRC following allegations of abuse. Such closures leave QROPS users liable to hefty penalties for making unauthorised transfers abroad.

One reason why QROPS can be suddenly disqualified is because their initial inclusion on HMRC’s list of accepted schemes is based only on information provided by the schemes when they apply for QROPS status – meaning that some schemes calling themselves QROPS may not in fact meet HMRC’s criteria.

http://www.telegraph.co.uk/finance/personalfinance/offshorefinance/8357159/HMRC-establishes-specialist-team-to-tackle-QROPS-abuse.html

#218 BrianT on 04.17.11 at 6:13 pm

Morgan Stanley hands back the keys to the building and defaults on 3.3 BILLION in debt payments-these are the same grifters that have mouthpieces on the US media telling Joe Sixpack he has a “moral obligation” to pay his mortgage http://news.yahoo.com/s/nm/20110415/bs_nm/us_morgan_stanley_real_estate