“Do you mind if I call you again?” The reporter sounded young, and thorough. “You’re about the only contrarian voice I can find. I get really tired of talking just to CREA.” So, pity the poor business writer whose job it is to slap lipstick on a media release from the real estate cartel and peddle it as news. And on a day like this. At least he called.
In case you missed, it the realtors are forecasting a 4% price gain for houses in Canada this year, which makes things sound almost normal. Like 2006. As usual though, it’s meaningless hype. First, stripped of the delusional self-lubricating Vancouver market, prices are barely pacing inflation. Second, CREA bases its latest release (issued May 9th) on March numbers. But as this dangerously quixotic blog has pointed out in recent days, April sucked. Sales crumbled YoY in places like Toronto and Vancouver, with prices falling in major centres such as Victoria and Edmonton.
More profoundly for anyone waiting to buy or mulling a sale, this market’s a sick puppy. Demand is falling, but so is supply. Prices are still rising in most places as the greater fools chase flirtatious listings. It all means real estate gets more unaffordable at the same time as household debt mounts, even as interest rates scrape the bottom. In other words, house of cards.
A question I had from a few media types today was simple. Does the CREA forecast backfill the notion that Canadian real estate is now immune to what happened to the south? To most people it sure looks that way.
I mean, holy crap, consider the latest from the USA: 28% of all American homeowners are now under water as house values fall the most since the Lehman Brothers collapse of 2008. That’s 16 million households – way more than all the families in Canada combined – who live in houses with negative equity. Many of those families will never see their homes rise in value enough to even equal their mortgages.
Prices are forecast to drop another 9% this year, bringing the national crash to about 40%. In fact, the current pace of housing deflation is 1% a month.
And there is now irrefutable evidence the government just made things worse. The Obama administration spent $22 billion giving out cheques to new homebuyers, trying to reflate the market. That helped house prices rally – until the money ran out. Then all those dewy-eyed new buyers discovered they’d just been buggered by a classic sucker’s rally.
So now there is a double-dip happening, which means real estate values have fallen to a second point of despair. The bottom won’t come this year. Maybe next. That will mark six full years of a bear market, which could then bounce along the bottom for years more.
This confuses people, of course. US prices have dropped now for 57 consecutive months. Canadian prices continue to climb. To simple minds, this means we’re doing great – which is exactly CREA’s prime audience.
But price is now our enemy. A SFH in Toronto averages $760,000, and three hundred thousand more in Vancouver. In sleepy Victoria, you can’t buy squat for less than seven large and even salty Halifax now sports a clutch of seven-figure houses on the way to the blood-curdling Armdale Rotary.
But household incomes are flat, debt’s at historic levels, manufacturing jobs left for China and the fat dollar is tanking exports and tourism. Yes, we are doing quite well compared to the brats in Greece, but this is an economy which is growing at half the rate of inflation. In other words, we’re all falling behind. So why are ridiculous and unattainable real estate prices lauded? Cannot reasonable people see this is unhealthy and unsustainable?
Of course not. At least not as long as the realtor cartel has its way with our minds.
Truth is, were interest rates at traditional levels, Vancouver shacks would not have appreciated by a third in the past year, nor would hordes of crazed young buyers have camped out in front of GTA sales trailers. Instead, we’ve have a subdued market with more buyers, more sellers and way less risk. The average down payment might not be 7%. Property virgins might stop being terrified of losing out. House horniness might not have enslaved a lusting nation nor turned desire into greed.
But, it happened.
And if you think for a moment bloated prices mean we have more predictability, more stability, more security than our suffering American friends, you’re wrong. We just lost our way.
173 comments ↓
dude that is really terrifying.
Still no answers about why there are so few sellers in this market. With all the retirees I would have figured some cashing out and moving to cottage country would be happening but it doesn’t appear to.
On an unrelated note, it’s funny how hanging out with the dangerously obese makes the morbidly obese seem vaguely attractive.
Is it really the norm that inventory falls at the top of a bubble? this confuses me, i would think that we need more inventory before prices start to collapse
CREA estimates have been a lot closer to reality since 2008 than the ones on this blog.
Vancouver teachers receive layoff noticesNotices went out to 187 teachers
http://www.news1130.com/news/local/article/223936–vancouver-teachers-receive-layoff-notices
If there was a supply problem than why than does MLS return this message?
“The search criteria would return more than 500 properties, the maximum the system can display.”
What does TREA mean? There are too many houses for sale therefore they are too tight to fit on one map?
Hi Vancouver,
The stock market needs higher and higher prices to sustain a price rally. When prices go higher and the volume thins out, stock prices ALWAYS tanks. Once the price begins collapse the volume often does pick up.
On Twitter by
Bionic Liberal
I’m just waiting for someone to say “Garth Turner for Leader” and see heads spinning…
Garth that picture is unbelieveable!
A number of SFH (single family home) listings in the GTA have recently seen price changes: almost all of them lower. I don’t have stats on this, simply what I noticed from the listings I have been viewing. If anyone has data on this, it would be much appreciated if you shared it.
Cheers!
#3 Garth, would you explain this?
Done last week. — Garth
#2 Wondering
“On an unrelated note, it’s funny how hanging out with the dangerously obese makes the morbidly obese seem vaguely attractive.”
Wow that was my first thought exactly.
Who of those is DA’s….oh nevermind. :-P
Plan Du Nord: 8- Billion of Private and Public Investment in Quebec
http://business.financialpost.com/2011/05/09/quebec-unveils-us80b-plan-for-undeveloped-north/
Hey Garth, does this bode well for housing in Quebec?
Why would it? — Garth
Still no answers about why there are so few sellers in this market
Most SELLERS in Calgary and Edmonton that have bought between 2005 and now, need to present a cheque to the bank to complete the sale. Almost all of these buyers when fees are calculated in are underwater.
Thats about 100,000 mortgage debtors in both Calgary and Edmonton.
“Truth is, were interest rates at traditional levels, Vancouver shacks would not have appreciated by a third in the past year…..”
Gee, I am glad I sat out a potential 33% gain in Vancouver last year…
I am more glad I sat on the sidelines since 2008 with the expectation that the end of the Olympics, the introduction of HST, the ongoing recession, the crippling historically high debt loads, the April 2010 mortgage changes, the March 2011 mortgage changes, rising interest rates would all prompt a crash of the Vancouver RE market.
Sure glad, I missed out on a potential exponential increase through a measly 5% down payment. Nothing like renting all those years.
Oh well, I am sure the crash of 2020 is around the corner. Better yet, lets go with the crash of 2012 is line with the Mayan calendar – that should get more viewers here.
I don’t remember you asking me for permission to buy. If you want to gamble on housing, man up. — Garth
Beer goggles would NEVER soften the horror show of todays photo.
No financial gain over the life time of home ownership, according to study.
http://www.businessinsider.com/actually-you-dont-even-make-money-over-the-long-term-with-a-house-2011-5
As with most things in life, things need to be put into PERSPECTIVE.
To get a proper perspective at just how big the lady on the left is…………………………look at her feet in comparison to her body.
Pension Membership Takes Heavy hit in Private Sector
http://www.theglobeandmail.com/report-on-business/pension-membership-takes-a-heavy-hit-in-private-sector/article2015191/
Don’t count on gettin’ them govt pensions, most Canucks were stupid enough to vote for Harper, watch a third of govt employees get axed…
When is some of that hot horny asian money going to make its way to skatch??
Can you spell “Seller’s strike”?
We can’t use old ideas and concepts to understand todays markets.
Sellers are people, and people have been always manipulated.
In a recession-depression people stop buying thinking that later the price will be lower. Sellers think (made to) the other way.
What happened to “tumbling” stock markets? It’s all manipulated.
Neither stocks, ratios or others matter today. Access to credit is the answer. Without credit China’s economy will die. And, that … forget it!!!
Hope F and the boys can soft land the sucker…
The Lady on the left?? Compare the size of her feet to the size of her body.
I would liken everything above her ankles to “crushing debt load” and her feet as “ability to pay” .
That is, if someone is seeking an analogy from the pic……..
I notice that alot of realtors that run blogs here in Vancouver and were quasi bearish went silent. I note that they now have a couple of listings each. I suppose posting negative comments on April stats would irritate their new clients
the one in the right…..no bad, no bad at all…..
Better house horny than chubby chasers.
Ay, caramba!
You know Garth, I’m one of the 98% that don’t comment on a regular basis but your photo today left me with such unbalanced emotions; I don’t know whether to laugh, feel sad and sorry, or just cry. ugh~! (My apologies to anyone battling obesity but this aught to have an effect)
So, if there’s a deeper meaning intended, my interpretations could be; don’t buy more house you can afford, or people will find comfort if all their neighbours houses are over-sized, or the market is bloated beyond normality, or let it all hang it baby .. cause there aint no gong back~!
Five paragraphs devoted solely to the Ameriacan real estate market. How utterly irrelevant.
Fully 20% of the entire mortgage market in the U.S. before the collapse was sub-prime and NINJA loans. In contrast the sub-prime market in Canada peaked at about 1%.
It will take a very long time to work those sub-primers out of the market – especially after the Obama hand-outs.
You’re embarrassing yourself again. Canada’s 5% down, teaser rates and liar loans are all offered by the major banks, and replicate the subprime mentality, with similar potential consequences. And surely you must be aware that most current underwater American homeowners never had a subprime loan – they simply held homes and saw values fall below loan levels. That could happen here in a matter of months, given what we have done with debt and prices. — Garth
#2 wondering
LOL
Greece bonds selling at 21% interest.
Love to see that happen in Canada, once we start tanking, it can be reality
“Why the housing market is caught in a liquidity trap”
“FORTUNE – In textbook economics, lower interest rates typically spur higher investments. Money is cheap. So the assumption is that people, banks and companies will spend more, therefore helping the economy grow.”
http://finance.fortune.cnn.com/2011/05/09/why-the-housing-market-is-caught-in-a-liquidity-trap/?iid=HP_LN
Why do most Canadians keep thinking that their housing market will not change?
In my opinion, house price index is an indicator of inflation,house price is rising just because of cheaper money which leads to inflation.
On the other hand, house price / income ratio is an indicator of true income. Our true income is falling just because of our global competence is falling.
toronto and gta is booming. Not enough housing and now is the time to buy. Compared to other cities like ours we are 30-40% lower. Buy now and you will make a fortune. I guarantee you. And where can you get cheap mortgages like today. Dont be fooled by the bubble baloney. We are in a boom and it has no ending. Trust me its a sure thing.
You cant lose. Buy asap.
Sales down 17% YoY last month. — Garth
The CREA is getting desperate, they should be forced to affix a disclaimer on every press release due to blatant conflict of interest. I’ve never understood why RE industry has been given carte blanche to give what amounts to financial advice with no oversight. Whats really scaring RE agents is the fall in demand Garth has been pointing to. The CREA has been its own worst enemy, by pumping the bubble they’ve stretched affordability and slide in sales is the result. Not a smart move if you are working in a commission based industry. Bad time for a RE agent to be forced into a career change – you don’t see many metrosexuals working in the oil patch, maybe MacD’s or wallmart is a better choice. If any RE agents read this blog be sure to properly thank the CREA for screwing you.
Bad times are coming to the rust belt as well. One of the few supposed “benefits” of the Fed action is to increase US manufacturing competitiveness thanks to USD weakness. The US has no interest in competing with China due to wage disparity, US lawmakers are instead setting their sights squarely on bleeding jobs from Canada.
Time to wake the country up from its stupor, canadians aren’t any different then the other hairless apes on the planet. We’re quickly entering an economy that will be the best of times for some and financial murder for others.
Well, this is what happens when a market goes “no bid” in trading parlance. Typically the depth on the offer disappears too, with just a few offers testing the waters to see where they will get lifted, if at all.
Statistics always have to be reviewed in context. For example, at the rate things are going only one house is going to sell in Vancouver in July, but it will go for $2.5 million dollars (probably a really nice one and actually a bargain), but BPEO will declare victory as that will be the average price for the month.
Financial Crises 2.0 should set in by September based on the withdrawal of QE by the Fed and the hopeless sovereign debt crises in Europe. Greece and the other PIGS are not going to solve their debt problems by borrowing more, and the local population is not going to have any more of this “austerity” talk. Restructuring will be the final result once all other avenues have been fully explored.
#2 Wondering
I think the market has gone “no bid”, where people kind of suspect that they won’t get many offers at their list price so they are waiting for better days. That and a really long winter have kept houses off the market. We’ll have to see how it looks in June.
#5 Gord in Vancouver
That’s happening in Calgary too. But not like New York, where I read they are looking at axing 6000 teachers. Mind you New York is super big.
But not one teacher would have to loose their job if the unions would quit demanding raises in the middle of a financial crisis. I am personally still 13% below where I was in 2006 and for a while there I was 40% below. From other people I’ve talked to, my experience was extreme but not unusual. Except for public sector unions of course. Private sector unions did not take pay cuts either, but they saw layoffs as a result.
And what of the students these teachers are educating? My ear to the ground sounds like it is the worse period for new grads since maybe the 90’s. But they can still get mortgages even if they don’t have full time jobs, despite what Jim’s nice letter to me I got today claimed. I know new grads working contract positions who have not one, but two houses.
#15 squidly77
Agreed, that is probably also affecting the number of listing. But the foreclosures are trickling in. And with 1% of Calgarians 3 months or more behind, we should see a small wave by fall. That is if the banks stop sitting on them.
#20 Tim
Most Canadians may be stupid, but we get the government we deserve. We can either do it Harper’s way, or wait a few years and be Greece.
In my opinion, “civil servants” are not owed anything. They got those outsized pensions by striking instead of just quietly accepting higher paying jobs in the private sector (there weren’t any of course), and the hapless politicians who had immediate re-election desires were hapless to resist the extortion.
Government employees should have defined contribution plans that go into an RRSP just like the rest of us.
Mmmmmmm…..sexy…!
Garth,
The visual is, uh, disturbing. “Miss Bloated Vancouver Market” is the one on the left, correct?
On another note, I came across this video of a Morgan Stanley investment guy giving some tough love, seems like a guy after your own heart.
http://www.flixster.com/actor/andy-samberg-videos/snl—morgan-stanley-10010206
“delusional, self lubricating” – Garth
Wonderful turn of phrase. Accurate and imaginative. You sure know how to pick’em.
Once again, an amazing photo!
I know a guy who is on welfare and bought a home. Both he and his wife have part time mcjobs and a welfare cheque – believe it or not, it’s totally legit. somehow they qualified for the mortgage. if that isn’t sub-prime, I don’t know what is…
BTW – he has refinanced twice, and now owes 25 on credit cards. He just asked me what I know about bankruptcy…..
how is it that everyone I know, including a couple on welfare, owns a house???
Dropping the rental rate AND free flat screen, that seems unusual in Victoria. Perhaps indicative of an excess of rental properties :-)
http://www.usedvictoria.com/classified-ad/FREE-NEW-FLAT-SCREEN-TV-WITH-LEASE–BEAUTIFUL–QUIET-2BDRM-GREAT-LOCATION_14742662
#20 Tim,
Get ready for a complete shutdown of this country by labour in the near future.
Garth,
That picture says it all. The party is over and all that is left are the fat chicks. For all the people that think prices are only rising in the Lower Mainland are going up, they should do some research on what has been happening in the Fraser Valley since 2008 (especially Chilliwack, Mission and Abbotsford). Values are less now than they were in 2008 and are only going down. This trend is slowly making it’s way west (you can already see it in Maple Ridge, Langley and Surrey). Won’t be long before it makes it’s way over the Fraser River.
#16 Glad….
Gee, I am glad I sat out a potential 33% gain in Vancouver last year…
I am more glad I sat on the sidelines since 2008 with the expectation that the end of the Olympics, the introduction of HST, the ongoing recession, the crippling historically high debt loads, the April 2010 mortgage changes, the March 2011 mortgage changes, rising interest rates would all prompt a crash of the Vancouver RE market.
Sure glad, I missed out on a potential exponential increase through a measly 5% down payment. Nothing like renting all those years.
______________________________________________
oh mr glad, don’t be sad—just pull out your money and buy one of these places –they’re selling them for a bargain–below 2008 prices
v872576–804-288 Ungless–bought Feb 08-490.5k–now at 479k
v883258–42-2495 Davies–bought Aug 08–379.9k–now at 368.9k
v843953–402-2477 kelly–bought Sept 08–353.9k–now at 319.8k
v872925–514-121 Brew –bought nov 08–319.9k–now at285.5k
so looking at these Mr Glad you can be right in the thick of things–you can even pretend it’s 2008 again and watch your equity go to the moon over the next few years. NOT!!!!
do some research and quit whining-we’re all in the same boat–unlike you, i count the money i didn’t lose, by not purchasing in 2008
#32 brainsail,
You asked, “Why do most Canadians keep thinking that their housing market will not change?”
The answer is Disconfirmation Bias. This is defined as the tendency to accept supportive evidence of a belief uncritically, but to actively refute or discount evidence that challenges that belief.
So long as CREA and the MSM keep telling them that all is well they will believe it because they want to believe it.
Garth,
That picture says it all. The party is over and all that is left are the fat chicks. For all the people that think prices are only rising in the Lower Mainland, they should do some research on what has been happening in the Fraser Valley since 2008 (especially Chilliwack, Mission and Abbotsford). Values are less now than they were in 2008 and are only going down. This trend is slowly making it’s way west (you can already see it in Maple Ridge, Langley and Surrey). Won’t be long before it makes it’s way over the Fraser River.
There was a dead cat bounce in American real estate but with the recent fall in the value of the US dollar Americans will get become poorer. Falling wages and higher prices for most things imported can only mean housing will continue to fall in America.
GAAAAA!!!!!! My Eyes!!
To the 500 men who line up daily around a gritty block on the Downtown Eastside, the Franciscan Sisters provide an oasis of calm and kindness.
The soup, sandwiches, sweets and free clothing handed out every day at 385 East Cordova come with the admonition that recipients must be polite, watch their language and not bud into line.
Almost everyone abides by the rules.
All that will come to an end in August, when the Franciscan Sisters of Atonement who have occuped the eastside convent since 1926 plan to leave.
There are no new, young Franciscan nuns preparing to take their place.
“Anyone who shows up can get food, but they have to show respect for others, and themselves, and in return we treat them differently from everyone else, in their lives, we accord them respect,” said Sister Marianne Rohrer.
There are four Franciscan nuns who live at the convent, Sister Marianne, Sister Elizabeth Kelliher and two actual sisters, June and Teresa Schlereth.
Sister Elizabeth is 87 and the Schlereth sisters also are in their eighties.
“The young women graduating college today have big debts so they have to work and can’t make a commitment (to be a nun),”said Sister Elizabeth.
“Everything is going so fast in this world, no one can make a permanent commitment anymore even to each other, it’s the throwaway generation.”
> Read, rinse, repeat >
http://tinyurl.com/4434lrr
Interesting article by Janet Tavakoli, one of the few persons in the finance industry that has not been caught stealing money http://www.huffingtonpost.com/janet-tavakoli/warren-buffett-and-the-bo_b_859491.html
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“. . . the realtors are forecasting a 4% price gain for houses in Canada this year, . . .” — Wasn’t it Goering or Goebelles who said that, “If you tell a lie long enough, people will believe it?” So it’s the same old, same old BS.
#28 Alberta Renter — “. . . don’t buy more house you can afford . . .” — Hit the nail on the head. Too much unnecessary debt leaves one bloated and up the creek without a paddle.
*
Pension Shortfall UK Nine trillion pounds? Just a guess, but si senor! Greater reason to max. out TFSAs in penny stocks, then cash out when they reach double digits. Greece still screwed.
1:10 clip New flood warnings down south. New Entitlements Land a govt. job, then sit back and watch the entitlements roll in!
EU Spends and EU Wastes. See a connection?
Greece Ownership and Bringing Back the Drachma vs. the Euro.
Flashback to 1985 Two short clips, no story and comments are good. ND tells DC to stuff Obamacare right where the sun don’t shine.
FEMA Exercise May 16-20 on NMF line. Three Spillways open at once? And NMF “. . . the scenario is that 3 EMPs are detonated at 3 separate locations and they take out most of the USA’s power systems and everybody’s electronics at home.” — Whether true or not, this is an interesting perspective. Controlled Demolition of the economy goes with the controlled demolition of the US, then Canada.
Illegal Immigration Obama is getting more (and new) support. Jobs Well educated young adults, but few jobs esp. with a declining population.
Obama One and Obama Two. See how easy it is to connect all the dots?
Zombie Spain and Financial Knickers in a twist and shout.
2:53 clip Recall the US$2.3 bln. that mysteriously disappeared on Monday, Sept. 10, 2001? Obama is in the process of finding it (gasp!), to add to his re-election campaign! Demise Just what TPTB ordered. Dismantle the auto industry, and put most, if not all sheeples, locked up in cities. This is why those new 30K new condo units in Toronto will be changed to rentals.
Shadow Govt. underground storage facilities, and The World’s strongest banks are . . .
When prices start falling, people will start losing their jobs – and in the most bubbly markets that will amount to major lay-offs. What do architects, engineers, contractors, real estate peddlers, developers, marketers, and house porn producers do when the music stops?
“In Canada, people can’t walk away from their houses like in the states”. O.k., then how do they pay their mortgage when they lose their jobs and nome are to be had?
Another interesting tidbit that convinces me the market has already turned and Canada is heading into a 10-20 year painful patch that will spread through the economy like mountain pine beetle, is that housing starts are falling fast up there. Another similarity with the US experience – developers pulled projects off the boards in 2006 – long before the public knew anything was wrong.
#16…Glad
In 2008 the market declined approx 20% in Vancouver.
So 1 million lost $200,000 the decline lasted for 6 months, at 30 days a month, on average, this equalled Real Estate loseing $1,000.00 per day. That pays for a lot of rent in my opinion.
No denying that you’re right on target today G-Man. I would like some latitude on the ‘fat dollar’ conspiracy though. In fact the USD is plunging. Our government has been selling Canada’s dollars by the hundreds of billions to keep the Canadian dollar at this level, afraid that it would be much higher if market forces were allowed to have their way.
Now…where do these hundreds of billions of dollars come from when the Canadian government ‘shorts’ the national curency? From the taxpayer of course. Its all piled up on the national debt…already well over the trillion mark. If you’re counting thats a per capita debt in excess of the US by far. Maybe thats why Canada has been spoken to by the IMF twice in the past eighteen months.
How do they drive the $C down? They buy the USD and increase of ‘foriegn exchange reserves’…but this is absurd as the rest of the world is dumping the USD like its on fire. Every USD our government buys loses money for the Canadian treasury!
So for all those dinosaur jobs in southern Ontario that the Liberals were so desperate to protect and the miniscule manufacturing and export business left in Quebec after Trudeau outsourced all the manufaturing jobs with his ‘sustainable development’ policy, the only reason I can think of for Harper to have kept buying the USD during his minority government and driving the national debt into the stratosphere was to pander the public while the ‘majority government quest’ was in full swing.
What happens now is another question. I’m sure that having to eat losses that total in the hundreds of millions every year from forex puts are not going to save those few union jobs in Ontario for much longer.
The debt and deficit are swelling. Ontario’s car manufacturers have lost 2/3rds of the work force in the past twenty years. Are the 6000 jobs that are left worth the billions Canadians have to pay to keep them?
Garths definitely brought the sexy tonight.
Were it not for BoC counterfeiting via ridiculous & artificially-low credit costs, people would be forced to SAVE up the money to buy a house. Or borrow, from savers and investors, at market-determined rates.
In any case, 90% of today’s home”buyers” would be RENTERS. Which is what they should be.
The media and real estate industry are still using the terms VALUE to describe housing and PRICE to describe gasoline, as if housing was some kind of investment and gas a consumable….go figure. The opposite is, ironically, closer to the truth.
Same way the MSM likes to talk about the “value” of the dollar and the “price” of gold. Bass ackwards.
Short-sighted and stuck in the ’90s? Yes. What if this time IS different? Homebuyer thinking is so far behind the times…
Maybe people shouldn’t have credit scores….
They should have credit pictures.
That would be worth a thousand words.
As the Sun sets and the moon rises, some of you people (mostly real-turds) who populate this sorry blog will come to see the error of your critical ways as housing prices begin their correction back to the mean.
See, We are not really different than the Americans.
We are not special in Canada.
We do not have asses that smell like Marigolds and Lavender.
We are not immune to the basic laws of economics.
We do however have prices that are reaching extreme levels.
We do have astonishing levels of personal debt.
We do suffer both myopia and pride in ownership.
We are certainly on our way to a corrective phase.
We have seen sales fall nationally for 10 months.
We have high levels of ownership (overbought extremes).
We have a classic rising market with falling sales.
We are therefore, in fact, guaranteed a correction.
It might even be a nasty one. Nobody knows for sure.
It is coming a lot sooner than you think though.
So get ready. It is already too late for most to bail out.
Garth,
Hope you caught real estate wonder boy Don Campbell on BNN today. I swear he wants to be called Nostradamus, as he predicts in exactly 24 months there will be a bidding war blitz in of all places. Edmonton !! 24 months !!
Imagine all us dummies sitting back investing our money in sound investments while our own home grown Wizard of Oz shows us gut wrenching images of townhouses and duplex’es with up and down suites netting you $680 a month in the safety of the Alberta tundra !!
But the clincher is this Garth…. no downside !! Yes, you heard it right, no fricking downside risk at all !!! Alberta banckruptcies don’t compute into Dandy Don’s self claimed extensive economic calculations, nothing but blue sky baby !!
Once again BNN pumps out the same old industry BS with no hard questions, just the usual kiss ass. Pathetic !
All I was trying to say in the previous post is that it should be obvious to anyone who is really paying attention that our own Canadian market is now under considerable stress.
Perhaps we are not in a bubble like tulip-mania or the South Seas experience but there is no question we need to now acknowledge that risk has arrived and it is debt (personal debt) that will define the outcome for many.
I am really surprised by the many who write in here daily and deny that a problem exists. I assume most of them are just playing devils advocate.
They cannot really be serious that everything is A-OK though when both history and reams of statistical data prove beyond a shadow of doubt that we are headed for trouble where credit is concerned.
Why is that something that any reasonable Canadian should mock? Some of you people are fools, shooting the messenger while torching the message.
You really don’t get it.
—————————————————
I mean that in all earnestness. You really don’t get it.
#21 not first,
When is some of that hot horny asian money going to make its way to skatch??
It’s already there… check the farmland prices around regina and saskatoon over the last 3 years… heard 200% price appreciation
People are buying there for a reason…figure out why… buyers are not stupid!
#19- There’s no way I would have taken on a roommate to buy more stock or invest more. But when the crap hit the fan and there were owner bills to pay I made the sacrifice. Ownership can be a very good forced savings plan given the right circumstances. But that’s just me, I’d rather see the dentist that have to deal with investing. Maybe this blog will help me….
#22 PLP
Oh, it’s different this time. We always think so, because we like to believe we are special. That just isn’t so.
I suspect the limited listings are the last of the left side of the parabola. Then there is an inflection point and prices begin to fall. And then fear begins to sneak up on greed and a gentle sashay toward the exit increases in tempo.
In my lovely section of Victoria I am seeing listings go up 2-5 a day on a search which, in January, had 320 houses. Now it has 460 and that does not include the houses which are off MLS but still on the realtors’ websites.
Prices are starting lower and then dropping. Not US style but lots: after a month of no interest 839 becomes 798 and still it sits. And over 1m – well there are rich fools but not many.
Victoria is gaining downside momentum. And the first glints of panic are appearing in the eyes of the people who bought in 09 and 10 at the tippy top of the market.
Hey Tim #20, we could axe half and it still wouldn’t be enough. Let me guess where you work. Hmmm, the puppy mill. If government could create prosperity then why doesn’t everyone just work for the government. You’re a leach.
PS…think about this…..Flaherty cancelled the income trusts in Canada because foriegn buyers were owning Canadian equity and as Flaherty said ‘not paying tax in Canada on the generous payouts’…..but he lets millions of Chinese nationals buy real estate in Canada and not pay tax on the capital gains. This ‘oversight’ of Jimmy’s is more destructive than any force he has unleashed against Canadians to date. The fact the Chinese nationals are displacing Canadians out of their homes is far more damaging than the income tax the equity owners were paying when they patriated their income. The Chinese get rich off speculation here and pay zero tax to the government and as immigrants create a net drag on the entire economy. Whats gives Jimmy?
@ Oh Canada!
“Fully 20% of the entire mortgage market in the U.S. before the collapse was sub-prime and NINJA loans. In contrast the sub-prime market in Canada peaked at about 1%.”
======================
And if you recall, the “sub-prime” heyday happened back at record low interest rates of 6-7%. The subprime market grew as prices rose–monthly payments became unaffordable (compared to monthly wages) and it created an alternative way for potential buyers to qualify for credit who could not do so normally.
Of course the US had this big nasty “sub-prime” problem that Canada doesn’t. But the dirty little secret here is Canada doesn’t need it to give money out to unqualified borrowers. Canada isn’t trying to qualify people into 30 year fixed rate loans at ~7%. Canada already was giving out 35-40 year loans at 3% to borrowers who could only scrape 5% together.
In Canada, “subprime” is simply the norm. It went mainstream. So the nasty term doesn’t really exist up North but the nasty habit is just as bad, if not worse.
I tell you…as someone who has gone through the process of qualifying in both places (in Canada without even having 2 years of tax records), it was a breeze in Canada compared to going “prime” in the US at around 2004 (bubble height time). Canadian lenders will give me twice the money at half the rate with a shred of the paperwork that any US bank would of given me in 2004. Absolutely insane.
Dear God, my eyes!
I have a simple question that was asked many times before but was not answered. How can one shorts the real estate market in Canada? Specifically, is there any financial instrument specifically designed to short the residential real estate market in Canada?
If Bank of Canada continues with their politic of dissociation of what happen in the real estate because of those 2% interest rate, people have to write to them, Are shut this place down, and come back to gold and silver standard, no more manipulation and mess like Vancouver and Toronto etc. The price inflation of real estate a cross Canada is because of the bank of Canada in combination the losing standard of the government.A place to live is now is a place of enslavement to the bank. And the Canadian say nothing! softy people!
For the umpteenth time, low down-payment mortgages are NOT sub-prime. How can it be argued otherwise, when the residential mortgage default rate in Canada is 0.45% ?
Sub-prime loans in the U.S simply ignored the 5 C’s of credit, namely, character, capacity, capital, collateral and credit. The quality of underwriting in America was another ‘C’, however, Criminal.
It is disingenuous to constantly perpetuate the myth that the Canadian mortgage market is of poor quality and is any way equated to the lending debacle in the U.S.
People naturally gravitate towards those who share the same “beliefs” as they do. Most don’t even realize that they do this. Coffee definitely didn’t taste the same this morning after that pic!
http://business.financialpost.com/2011/05/09/strong-housing-forecast-for-canada-report/
The Propaganda just doesn’t end!!!
For the umpteenth time, low down-payment mortgages are NOT sub-prime. How can it be argued otherwise, when the residential mortgage default rate in Canada is 0.45% ?
_______
Canada, you are not getting it. Garth is saying that 35 & 40 year mortgages with 5% down that were peddled for 10 years are the EQUIVALENT of the sub-prime, bad character/credit/NINJA loans that went on in the U.S. Its not called sub-prime here but the effects are still present.
Its only because of a couple small differences in Canada that we have earned a slow melt instead of a U.S. style crash. You can’t walk away as easy up here, the income requirements were more thoroughly checked on and there was a real backing economy in most places, still is.
While this pot boils, it won’t boil over until interest rates increase.
Obvious economics for most but let me amuse you anyways. Increased rates would increase the RE supply (by those who can no longer afford to make payments and are forced to sell) which in turn will put downward pressure on RE prices.
Over time this downward pressure will snowball (fuel itself) as many greater fools inch ever more towards their “underwater” mark who in turn will be forced to sell which will in turn increase supply more fueling a new wave of price drops. At some point the sentiment on RE changes and we simply buckle up while autopilot sends prices back down. Nothing new under the sun here.
A concern I have entertained is maybe they continue to hold rates low hoping for a slow drain of this bubble citing reasons that may or may not be objective.
For me; I’m hoping for higher rates and easier pics on the eyes.
I understand that your photos are a metaphor for an over-sexed, bloated real estate market, but I just puked in my mouth a little!
Hey I like fat chicks. Fun so long as your friends don’t see you.
I’m getting tired of the thin, busty ones I’m always with.
Somebody’s gotta do it. — Garth
I can imagine this wide-eyed cub reporter’s growing Rolodex of sources for pithy RE quotes and bon mots:
– BofC rep.
– VP of Big Bank.
– CREA Prez.
– “Bunker Dude”
His editor yells at him: “I can’t print this – we’re trying to run a respectable business publication here! Not an end of the world report”.
“But Sir, he’s authored several books, and…”
“I don’t care!”
: )
((Sub-prime loans in the U.S simply ignored the 5 C’s of credit, namely, character, capacity, capital, collateral and credit. The quality of underwriting in America was another ‘C’, however, Criminal.))
Not “Criminal” in any legal sense. Lenders who used traditional underwriting standards for certain groups were picketed and accused of redlining. So laws were passed to change that. The Community Reinvestment Act legally forced lenders to loosen their underwriting standards.
When it comes to housing, a healthy market is a dull market.
The housing market in a sane and rational world should track a combination of rents, inflation rates, new household formation, comparable rents and median family incomes.
If there is any misalignment of fundamentals then the market should correct accordingly. Bubbles by their very nature are not about fundamentals. Ultimately there is huge price to be paid.
The CREA can not make a convincing argument that the housing market was driven by fundamentals when they postulate a 4% increase in housing prices this year. This idea stretches credulity.
I am by no means a Garth fanboy (fundamentally disagree about the metals), but today’s blog is a work of art. I tip my cap …
I am a firm believer in the notion that economic stupidiy deserves to be punished. It will give me a perverse sense of satisfaction to watch this house of cards unravel, except for the collateral damage it will do to the wider economy.
The plus side is that my family is in a great position to weather the storm (own a fully paid off condo in Europe; rent in Canada; zero debt of any kind).
These will be interesting times.
Oil went down 15% last week, and gas went down 5%
Oil recovers by 5% and Gas goes up 10% not fair huh.
Who cares, drive less little people.
This is how a ga zillionaire thinks.
Going to go out and buy a new truck as no one is buying trucks right now. Can you say LOwwwwwwwwww Balllllllllllllllllll
For now can’t say the same for Real estate in Toronto, it’s still a sellers market…….
“The Chinese get rich off speculation here and pay zero tax to the government and as immigrants create a net drag on the entire economy. Whats gives Jimmy?”
Have you ever heard of property taxes. Have you heard of real estate agents that earn fees and pay income tax on them? Have you heard that it is possible to LOSE money speculating?
That picture is awful.
#77 Evangeline:
What was criminal to me about the U.S. sub-prime fiasco, was that the crappy loans that were tehnically legal when issued, were then knowingly re-packaged and sold all over the globe as high-grade investment vehicles; with the blessing of Wall Street as well as all of the rating agencies.
That’s ‘gotta be a crime.
Your initial premise is, as others have shown, flawed. — Garth
Froogle Scott on Seismic Upgrading.
Don’t miss it….
http://wp.me/pcq1o-2e0
Jobless rate, global uncertainty to test Tories’ economic strategy
“Prospects for Canada are also complicated by expectations that spending by debt-burdened consumers could slow in 2011 and by the shut-off of the Conservatives’ two-year, $47 billion emergency stimulus program.
The end of economic pump-priming by Ottawa “will act as a dampener on the recovery in the next several years,” said BMO Capital Markets deputy chief economist Doug Porter. “The challenge will be growing in that kind of environment where governments around the world are cutting back.”
“Besides phasing in corporate income tax cuts worth $14 billion by 2012, the Conservatives in recent years have provided a wide range of investment incentives for business, including easing taxes on small business and manufacturers. In all, tax cuts for business by the Conservatives total an estimated $60 billion by 2013.
Despite this, business investment in Canada has continued to trail other industrialized countries —to the point where both Flaherty and Bank of Canada Governor Mark Carney have pointedly talked about the urgent need for more spending on machinery and equipment by companies.”
“Corporate balance sheets are flush with cash,” says Royal Bank’s Wright. He said some of that cash will go for acquisitions, dividend payments and share buy-backs. “But there should still be some left over for investment,” he said.
But many are not convinced, with some Canadians saying the government would be smarter to tie tax incentives directly to company investments to ensure that corporations don’t just pocket the extra profits.
Speaking of corporate tax cuts, Canadian Association of Social Workers spokesperson Fred Phelps said it would be one thing “if corporations turned around and invested those funds into the economy.” But he said that hasn’t been happening in recent years. “What really has driven us out of the recession,” he said, “is spending by households and government, not business.”
http://www.thestar.com/news/canada/article/988468–jobless-rate-global-uncertainty-to-test-conservative-economic-strategy
IIRC, I read an article a few weeks ago stating that Stats Can found that reducing corporate tax rates has had no real effect on job creation. Wish I could locate it now.
Garth’s response to Bigrider at #75- “Somebody’s gotta do it”
I got my wet suit on and a bottle of 100ml blue pills. Send me in !
Seal team 6 leader, over and out !
SMOKING MAN The reason gasoline prices are rising? We’re being ENRONed. It’s commodity speculation by the super rich that’s pushing up prices.
In the USA, derivatives marketer CME Group is raising margin requirements for energy futures in an attempt to curb this blatant market manipulation. I guess they are trying to forestall new Government regulations.
Canadian 30 Year Olds are Screwed – Kurt Rosentreter
http://www.kurtismycfo.com/eNewsletter/Canadian%2030%20Year%20Olds%20Are%20Screwed.pdf
At #66: American Werewolf, you are 100% correct. Your point mirrors what I’ve said for months. In Canada, “subprime” is the norm by American standards. Banks and governments would never admit it and consumers would never believe it. Canadian banks of done 0%-little money down, amortizing 35-40 years (now only 30 years), with rates set for 5 years, qualifying buyers with “stated” incomes or “ninja” loans. THIS IS THE DEFINITION OF FRIGGIN’ SUBPRIME LENDING! Its different there how? Well, on a percentage basis, Canada has been the largest offender of subprime lending.
And yes, American Werewolf, I agree with you that it is significantly easier to get a loan in Canada than what it was in the U.S. I had property in Vancouver I purchased 7 years ago (sold it), and the banks there were just ALL TOO HAPPY AND ANXIOUS to hand me over the dough, qualifying me for nearly 40% MORE cash than I would ever have been approved for in the U.S. And, the “requirements” for proof of work history and income verification were a complete joke. The banks are getting away with murder. It is going to get incredibly nasty.
#36 nonplused on 05.09.11 at 10:49 pm
In my opinion, “civil servants” are not owed anything. They got those outsized pensions by striking instead of just quietly accepting higher paying jobs in the private sector (there weren’t any of course), and the hapless politicians who had immediate re-election desires were hapless to resist the extortion.
……………………….
I am a retired ‘silly servant’. I paid big bucks into my retirement plan and paid union dues – no choice. I did not have the right to strike, and many times waited 2+ yrs (during inflationary periods) before our contract was settled. Then we’d receive a 2-3% increase & a lump sum back payment which would hit us in taxes. During that 2+ yr time frame, management rec’d salary increases based on what the govt. anticipated they would have to settle with the union.
I rec’d a 1% increase in my pension cheque last year & IIRC it will not increase for the next 4 years. During those years that I contributed to a DBP, I did not have much room to contribute to an RRSP.
My husband works in technology for a school board, is not unionized, (and has no desire to be) and does not have a DBP. What he’s discovered is that, even without a union, the school board confronts major hurdles getting rid of ‘certain under performing’ employees. Sometimes it boils down to ‘ethnic, political, and who you know’ issues.
Garth,
I read your book about 2 years ago. I believe in your projections but I can’t help but think that you were wrong back then. I should have bought, gained the appreciation and then let the prices drop. In some places in the GTA, housing has gone up so much that even with a correction, I might have been better off buying 2 years ago. Now as I wait for prices to drop, I’ll end up buying a house that was the same price 2 years ago. I feel like an idiot for telling some of my friends and family not to buy back then but it’s a good thing that they didn’t listen to me. What was the point in waiting so long? now i’m stuck hoping that prices will go down.
It always amuses how many people think real estate moves in price with the same rapidity as stocks. It’s taken the US market six years to seek a bottom. If you’d bought in 2009 or now, no matter. You’ll be in the same position in 2012. — Garth
#77 Evangeline on 05.10.11 at 7:47 am
>Not “Criminal” in any legal sense. Lenders who used traditional underwriting standards for certain groups were picketed and accused of redlining. So laws were passed to change that. The Community Reinvestment Act legally forced lenders to loosen their underwriting standards.
Oh good, perpetuate the banker’s BS so they don’t have to deal with real regulation. I hope at least that you’re a paid shill, otherwise you are just helping the U.S. get screwed over once again, next round, just for the hell of it.
Fact: 80% of subprime mortgages were issued by institutions that did NOT have to meet CRA.
Fact: 14 out of 15 of the top subprime mortgage issuers did NOT have to meet CRA.
Fact: Mortgages underwritten by FHA/Fannie/Freddie (originally, not the backdoor bailouts no one seemed to notice later) had half the foreclosure rate of those collateralized directly by Wall Street.
I dare you to find one mythical picketer photograph that isn’t from 1977 when the law was enacted, let alone one with the 500,000 people in it that would have been needed to get the media in the U.S. to have broadcast even 15 seconds of such a protest.
CRA (which you clearly have zero clue about) is not a hard and fast law. It is advisory. It is one of the most flexible on the books. I DARE you to actually read up about what you are blathering on about. Bailout Nation, by Barry Ritholtz would be a good start.
At #69: Oh! Canada, oops, I mean BPOE… The five Cs of “credit” are not ,”character, capacity, capital, collateral and credit” as you put it. The five Cs of credit are character, capacity, capital, collateral and CONDITIONS. Hmmm, did you purposefully miss that up?
Canada is, for the most part, purely subprime lending by all means of the definition. 0%-no money down, stupid low rates less than what was ever seen/experienced than even in the U.S., longer-than-normal amortizations, rates resetting every 5 years, and stated income. You say tomato, I say bullshit. Hell, you’re giving $500,000 loans to waitresses who work at Whitespot. How would I know? Because she was bragging about it and the new little condo she was “finally” able to buy for herself while she was pouring me my coffee. Spare me the, “we’re different” speech.
End of semester was a week or so ago. Since then, I have had two students talk about their great job opportunities only to ask me later if I would by their houses. They seem to be having trouble getting what they are “worth”. What a way to start out of the gate. Oops for them.
#87 Industrial Guy on 05.10.11 at 9:09 am
I have an account with CMC markets, derivative tarding. Where I bet on commodities.
On the super rich
If Can’t beat them, then join them :)
Then again Calgary Steve with a majority, and the guys in the big hats just can’t help themselves.
IMO CNQ SU buy these something tells me the next 2 1/4’s will be huge!!!!!!!!!!!!!!!!!!!!!
Couldn’t help but notice this little point of interest from CBC this a.m. re escalating fuel costs:
“Dwight Archer was the only person filling up at a pump on Wellington Street West and Spadina Avenue at 6:30 a.m. He drives into the city from Milton to work a night shift at a downtown hotel.
“It hurts,” he said. “It honestly hurts, it’s painful, but like I said, what am I going to do? If I don’t fill up, I don’t drive to Toronto and I don’t make money to feed my family. So it’s something I have to do.”
The link follows – but I think you get the gist……
http://www.cbc.ca/news/canada/ottawa/story/2011/05/10/gasoline-price.html
Enjoy your day all…………
I personally know of several people here in Fort McMurray who qualified for (and awarded) over $700K mortgage loans even before they could qualify for Canadian citizenship.
I remember I was dead broke with no credit history when I landed on this country. It was tough getting a credit card with $1K limit, let alone getting a mortgage.
These same folks with $700K mortgages are not able to cover their monthly expenses without having to rent out their basement. To me, you can call it whatever you want, that’s sub-prime.
With vacancy rate toping at 10% recently, I sense an air of desperation on some of these landlords. Rent is still expensive relative to the rest of the country but it is now 20-30% less than three years ago.
There is only one thing certain about a boom; that is the bust that follows. In Ft.Mc., it’s only beginning.
>#83 Oh! Canada on 05.10.11 at 8:47 am
>#77 Evangeline:
>What was criminal to me about the U.S. sub-prime fiasco, was that the crappy loans that were tehnically legal when issued, were then knowingly re-packaged and sold all over the globe as high-grade investment vehicles; with the blessing of Wall Street as well as all of the rating agencies.
>Your initial premise is, as others have shown, flawed. >— Garth
This is the first thing Oh! Canada’s said that’s made sense.
Subprime ceased to be the trouble well over two years ago. Especially by dollar value, the biggest chunk of the mortgage crises was prime, alt-a or option payment. Those were issued to (gasp!) suburban middle class and upper middle class borrowers. (Sorry to break your dog whistle, Evangeline. I know you are clinging to it pretty hard there.)
http://www.doctorhousingbubble.com/wp-content/uploads/2011/03/foreclosure-by-loan-type-percent1.png
Overpaying for a house is all it takes to break the back of a household. The loan type simply determines how fast that happens.
Is not the Canadians that are buying houses. It is the Chinese. That is way prices don’t tank.
“Canada’s 5% down, teaser rates and liar loans are all offered by the major banks, and replicate the subprime mentality, with similar potential consequences….”
Prospera Credit Union in Kelowna, BC, is still offering low rates, cash back….and the young woman in the commercial exclaims: “NOW I can take that trip to Maui!”
Woopee!
#87 “The reason gasoline prices are rising? We’re being ENRONed. It’s commodity speculation by the super rich that’s pushing up prices.”
There have been speculators in the commodities markets for decades. The over-hype of this as the driving force in oil or gas price is a smoke screen. Propaganda repeated by stooges like McNab on CBC radio this morning.
If you buy it, you’ve done precious little research into the fundamentals. the information is all out there if you care to look.
We’ll continue to see dips in the jagged line graph, but the price trend will continue up and up, sapping what little interest there is left in Suburb RE, as commutting becomes prohibitive.
#101De-Once gasoline passes $1.80/litre serious pain will be dealt to the suburban sprawl development model of Southern Ontario IMO.
borrow borrrow borrow, credit and more credit
sounds like an advertisement for the banks.
When did going deep deep into debt become a good thing
http://www.ctv.ca/generic/generated/static/business/article2016440.html
and there goes Richmond B.C
http://www.coughlinteam.com/index.php?fuseaction=cPageGoTo.GoToDoc&DocumentID=76389
I just threw up in my mouth. The opening picture summarizes the house horny society perfectly. Just like taking on too much debt is harmful, so is taking on too much food. Maybe these ladies will q ctually benefit from rising food prices and have to cut back.
In french Some scary number for montreal and laval are getting in. http://www.cigm.tv/
At times like this I am reminded why I bought my silver (and gold) in the first place. I purchased them first and foremost as insurance against a corrupt banking system that I think the COMEX is merely a small part of. I also bought my silver not because I wanted to game the system, or make a bunch of money gambling.
I bought precious metals out of disgust with the treatment of savers, with the way that our financial and political “leaders” behave. I did not want my hard earned savings any place else, as I did not feel there was any place else left to go. And I am perfectly fine staying put where I am.
But the market moves of the last few days and weeks in silver are a reminder that speculators- both long and short- are still very much in charge of the silver price. Unfortunately (and it pains me to say this) recent events are also a reminder that most people still think investing in physical gold and silver is a joke. These monetary metals- like it or not- are still treated as gambling tickets or chips at a Vegas craps table. Has nothing changed since 2007 or 2008? Is it really just business as usual? Should we really all go back to buying amazon, or Netflix, or Junk debt, or residential real estate? Only time will tell.
And yet the real problems are still out there. We are only so many flash crashes, quantitative easings, currency accidents, or sovereign debt downgrades away from a large segment of the populace realizing the need to get out of Dodge. As a student of history I am prepared, whether or not I make a fortune in the process.
Are you?
#40
Simple: They don’t own their house.
#102 Brian T
At $1.80 a liter it is all over. 2008 will look like a cake walk compared to what will happen to our economy.
Anayslt right now are calling for $130 a barrel price.
If oil is now at $102 and were paying $1.39, then at $130 we should be paying in the ball park of $1.60 a liter.
my theory is that come late Sept/Oct we are going to see some huge corrections in equity markets. One quarter of sustained fuel prices at $1.40 and above will crater this economy.
Once the quarterly numbers start coming out things will get ugly.
#91 Analyst Analyzer on 05.10.11 at 9:39 am
Garth,
I read your book about 2 years ago. I believe in your projections but I can’t help but think that you were wrong back then. I should have bought, gained the appreciation and then let the prices drop. In some places in the GTA, housing has gone up so much that even with a correction, I might have been better off buying 2 years ago. Now as I wait for prices to drop, I’ll end up buying a house that was the same price 2 years ago. I feel like an idiot for telling some of my friends and family not to buy back then but it’s a good thing that they didn’t listen to me. What was the point in waiting so long? now i’m stuck hoping that prices will go down.
It always amuses how many people think real estate moves in price with the same rapidity as stocks. It’s taken the US market six years to seek a bottom. If you’d bought in 2009 or now, no matter. You’ll be in the same position in 2012. — Garth
=============
If you had a time machine and went back a couple of years, you also could have bought a blue-chip TSX ETF and made a hefty 30%+ on your money.
http://ca.finance.yahoo.com/q/bc?s=XIU.TO&t=2y
There are lots of “what if’s” in life…but as Garth has noted, one thing is certain….interest rates will go up, incomes will continue to stagnate, consumer debt will hurt, and invariably real estate will go down.
((Subprime ceased to be the trouble well over two years ago. Especially by dollar value, the biggest chunk of the mortgage crises was prime, alt-a or option payment. Those were issued to (gasp!) suburban middle class and upper middle class borrowers. (Sorry to break your dog whistle, Evangeline. I know you are clinging to it pretty hard there.)))
LOL!!! this is the first I’ve heard that someone in the middle class or upper class can’t be a bad credit risk. Or redlined for that matter.
@fancy_pants: “…as many greater fools inch ever more towards their ‘underwater’ mark who in turn will be forced to sell”
Why would they be “forced to sell” just because they’re underwater?
I’ve seen a lot of people make this fallacious logical leap – that just because someone’s home value dips below the outstanding mortgage, they’ll have to sell. But it doesn’t make any sense. Unless you’re actively trying to sell your home, then how much someone else would pay for your house is completely irrelevant.
As an example, consider new vehicle sales. Anyone who’s bought a brand-new vehicle, with a pittance of a down payment, has been “underwater” the second they drive it off the lot. Do they immediately turn around and try to sell it because – heaven forbid – they’re “underwater?” Of course not. Then why would homes be any different?
As long as you can keep paying your mortgage (which, presumeably, you could when you bought it, so if nothing’s changed, you can still do so), and you have no desire to relocate, then its current market value is completely immaterial. “Underwater” or in the black, it doesn’t matter at all.
When houses rise in value, the wealth effect makes consumers feel richer, and increases their spending. Conversely, homeowners who have no equity and excess debt feel poorer, and spend less. In a country where consumer spending accounts for 60% of the economy, this is serious stuff. It’s why negative equity matters. — Garth
#85 Live Under Your Means,
Good post (and love your moniker!).
This is the Con job the Conservatives have done to the Canadian public. They stimulated the economy through massive debt but acted like they were being responsible. Just wait until the CMHC debt bomb starts to be revealed.
People will begin to realize that costs, interest rates and taxes are only going up while wages remain flat or head down.
Within 2 years we will have a different political landscape in this country when people realize that Harper and Flaherty are frauds. We can only hope that the MSM doesn’t bury the lead on this story.
H and F – putting the “Con into Conservative.”
Garth, why dont you declare victory already….canadian real estate ihas been in decline for years now, it is rising below the rate of CDN monetary inflation. To a certain extent it appears housing in canada is still being used as a hedge on inflation, albeit unsuccessfully, im sure it will end in tears, as rates rise, employment falls, and currency induced cost push inflation makes life more expensive…..Gold will be the last man standing as the inflation hedge par excellance-unfortunately the public will have little exposure to gold…as they have sold the small bit they had to the pawn shop at gold $1100.
#40 Drew,
I don’t think it’s even possible to own a home and be on welfare, unless you’re on welfare disability (even then, highly unlikely). Your friends wouldn’t qualify for regular welfare at all if they had credit cards with available credit on them, or owned property. They must be on welfare disability. I know a couple of people who are on disability claims. They’re allowed to make an extra $500 a month working part time. Anything more gets deducted dollar for dollar, and I think they only get around $900 a month from social services, maybe $1,000 tops. How any bank would give them a mortgage is truly frightening.
I remember trying to qualify for a mortgage in 2003-2004 here in Vancouver with an income of around $38,000 and didn’t even bother finishing the application over the phone with the bank. I was looking at being pre-approved for around $100k, which would have been enough for a cardboard box if I was lucky, let alone a tiny studio apartment in the burbs. A year later I lost my job anyway, so it was a blessing in disguise.
If your friends did get a mortgage on welfare, it couldn’t have been out here in BC … or I sure hope it wasn’t!
#93 The American,
Agreed. The single greatest lie that circulates among Canadians is that we didn’t have sub prime loans and lending conditions were much more conservative here. They may not have been as bad as some of what went on in the US but they were horrid by traditional standards. Certainly equal to or worse than in Ireland the UK and see where they are now.
The only real difference is that our banking system is going to be better off because they already have the guarantee of the CMHC for most of their bad loans. This is going to keep the banksters afloat but will create a nightmare for the Canadian tax payers.
Stay tuned because the current is now on its way up.
The ‘condo’ is a Canadians last resort…..simply put ‘you’ve settled for perpetual impoverishment’.
http://www.vancouversun.com/Most+Vancouver+condo+buyers+prefer+house+survey+says/4758362/story.html
Why…….you ask……well foriegn buyers for one thing… using our willing sluts at the credit unions loaning money to non residents to speculate on local real estate. Couple that with the ZIRP and you’ve either got the cynical incompetance of a government blind to the day to day life of the average Canadian or……….it is a Machevelian play at social engineering that see’s the eventual marginalization of all citizens and the sea change that Canadians no longer have the right to occupy land in this country. That makes sense when I think back at the ‘immigrant first ‘ policies of the Liberal governments over the past thirty years. Wasn’t it reported just recently that Federal government jobs were reserved for ‘non whites’ and that ‘caucasians aren’t encouraged to apply’?
The civil servants ( all hired and appointed by the Liberals form the majority of the bureacracy) are all making big salaries, can’t be fired. have huge fat DBP’s think they are floating at 36,000 feet above the rest of us. All the silly ‘world is a village’ nonsense and how we should be ‘generous’ to the less fortuneate doesn’t affect them. They have it all sewed up…they makie hundreds of thousands a year…get pensioned off with millions and couldn’t give a shit about the rest of the population. They feel good about giving everything away to someone…..’more deserving’. After all …it doesn’t come out of their pocket.
I am overcome with sadness for these woman, as I just can imagine the heartache these woman go through by societies cruel and vicious view of those who “don’t look the norm”… it must have taken a lot of courage to be photographed knowing that others will just smirk and made comments on their physical appearance – to me it’s just as disgusting as making fun of someone because they are of another colour – why is it okay to hurt those who probably have spent a lifetime of hurt – human nature – a disgusting display – (and some in here have proven how disgusting we can treat total strangers).
I was thinking how brave these woman were – then thought, most in our society are so frightened to be seen in our true skin that we play this role of being rich, success, happiness when deep down its just to convince others and to a larger degree ourselves. That could be the underlying reason why the housing bubble has reached such epic proportions – lets convince our neighbours, our friends and family that we are living the “dream” that mass marketing has made us believe.
We live in dangerous times – and I fear that what I sense will come true – will test man kind – this won’t be any kind of run of the mill bubble burst – we are talking about biblical proportions that will leave scars like those that scared those in the depression.
The NEW AMERICAN DREAM.
to get a job.
Great entertainment for the price of admission, Garth.
Meanwhile, back at the circus…
“In the end, the pride of home ownership seems to be the reason most Canadians aspire to buy. As long as home ownership makes Canadians happy, you can expect the government to continue to subsidize it.”
http://tinyurl.com/68ak2hr
————————————————————–
http://tinyurl.com/2b8q8c9
‘Alright folks, just make yourself at home
Have a snow cone and enjoy the show’…
http://www.youtube.com/watch?v=CGssb5YKaNM
:)
despeculated – Of course there have been speculators in the markets for decades …. Now we have Super Speculators. Remember the Hunt Brothers and silver prices?
What makes Canada vunerable to price speculation is limited refinery capacity … some refineries have a virtual monopoly on gasoline production in their Province or region.
$1.40 + a litre gas will kill this recover at a time when our Governments are unable to consider any more stimulus spending.
There sure were a lot of shell schocked faces on the 401 this morning. Wait till gas hits $2.00 a litre … and then $3.00.
Garth! This is GREAT news for the economy! When home owners are no longer feeling wealthy, they will stop borrowing money from their house to go on exotic vacations, and instead spend time (and money!) in their area. This is fantastic news for all the waiters, dishwashers, maids, taxi drivers and masseurs who will benefit from it. They will then go on and buy their own houses with this new found wealth and confidence, keeping prices perpetually high.
Am I doing it right?
#115 Cardboard Box On The Coast
Although Drew is no doubt using some artistic license, so are you.
When I qualified for mortgage, just out of curiosity, in 2001-2002, the bank wouldn’t give me squat. I wasn’t really surprised. 5 short years later, they were happy to give me $450,000. I found that shocking. I did the math later, and decided I would have trouble servicing more than $350k, with $300k being a comfortable limit, which turned out to be exactly the case.
But wait! There’s more…
“State attorneys general are proposing a special fund, that could be as large as $20 billion, to help troubled borrowers stay in their homes.”
http://tinyurl.com/4y9chuh
#112Kevin-Comments such as yours are only spoken in RE markets where prices have climbed steadily. You hear this all the time in TO-“I don’t care what the value is-it is my home”. Try to find someone in Phoenix or Vegas who will spin that line.
http://www.winnipegfreepress.com/business/flood-hard-on-home-resales-121551119.html
Blaming poor house re-sales on the FLOOD! Non-sense!
Sales down 18% and active listings up 17% in Montreal. 12 consecutive months of decrease. Source: Greater Montreal Real Estate Board.
Personal Anecdote: My sister-in-law and her husband have been trying to sell their cottage in Ste. Agathe. They only had 5 visits in the last 8 months. More alarmingly, there have only been 4 sales in total (land and homes) in the area in that period.
Things that make you go hmmm.
#69 Oh! Canada on 05.10.11 at 6:00 am
#83 Oh! Canada on 05.10.11 at 8:47 am
——————————————————–
The issue for 5/35 Canadian property virgins is not so much related to any potential fallout from US-style repackaging of mortgages but rather the transactional disconnect between the lender and the borrower due to the off-loading of the lender’s risk to the general public via CMHC.
Win-win for the banks. HGTV sheeple? Not so much.
Any guesses as to the direction of that Cdn mortgage default rate over the next 5 years?
——————————————————–
#121 Industrial Guy on 05.10.11 at 1:15 pm
$1.38-$1.40 gas in Vancouver for a few weeks already now.
#107 – Anna
Great post on your reasons to own precious metals and i am sure you could add many more reasons.
Did you know that a Canadian 1966 silver dime now contains over $ 2.00 in silver?
I use the silver content in our former circulating currency as a bit of a barometer and test of the cumulative degradation of our money and society and i think the current move up in the price over the last year is telling us that the exponential money and credit printing and pumping is a terminal type act of desparation by TPTB in trying to keep and maintain their and the monied interests “rights” to own and control us.
Just like the current government running the lowest interest rates and easy unrestricted credit to anyone with a pulse to spend and spend without recrimination other than perhaps personal bankruptcy (which too is of no consequence these days).
The tide is coming in now so we will in due course see who is left standing.
Sign of things to come(?):
http://www.independent.ie/national-news/michael-noonans-plan-to-get-ireland-working-2643018.html
Oh yeah, “temporary”. Like income taxes. How do you replace/repeal something that brings in half a billion Euro a year? Instead, look for this program to be expanded in the years to come, in scope and size. Asset/wealth taxes are an obvious money grab and a way of the future for cash strapped governments.
The Irish had their chance to dig themselves out, but now they’ll get austerity, IMF-style.
#112 Kevin on 05.10.11 at 12:25 pm
My bad; worded poorly, homeowners being described as near underwater but forced to sell due to the higher interest rates for which they can no longer afford payments as they have no wiggle room to renegotiate mortgage terms.
107 Anna
It takes blood, sweat and sometimes tears to dig gold/silver out of the ground. So there is an intrinsic value inherent to them. Paper money can be created at the push of a button and are now just digital inputs on a silicon bubble . No real value and no effort to create . The average fiat money system lasts less than 100 years, we are in the 9th inning of the U.S dollar system and the first time in history where all currencies are unbacked. Well, currencies globally are backed by the U.S dollar which makes the entire paper system valueless.
Is the Edmonton real estate market really getting this bad?
http://www.thestarphoenix.com/news/Missing+Edmonton+realtor+identified+body+pulled+from+North+Saskatchewan+River/4759068/story.html
#114 Kevin on 05.10.11 at 12:25 pm
@fancy_pants: “…as many greater fools inch ever more towards their ‘underwater’ mark who in turn will be forced to sell”
Why would they be “forced to sell” just because they’re underwater?
I’ve seen a lot of people make this fallacious logical leap – that just because someone’s home value dips below the outstanding mortgage, they’ll have to sell. But it doesn’t make any sense. Unless you’re actively trying to sell your home, then how much someone else would pay for your house is completely irrelevant.
As an example, consider new vehicle sales. Anyone who’s bought a brand-new vehicle, with a pittance of a down payment, has been “underwater” the second they drive it off the lot. Do they immediately turn around and try to sell it because – heaven forbid – they’re “underwater?” Of course not. Then why would homes be any different?
As long as you can keep paying your mortgage (which, presumeably, you could when you bought it, so if nothing’s changed, you can still do so), and you have no desire to relocate, then its current market value is completely immaterial. “Underwater” or in the black, it doesn’t matter at all.
When houses rise in value, the wealth effect makes consumers feel richer, and increases their spending. Conversely, homeowners who have no equity and excess debt feel poorer, and spend less. In a country where consumer spending accounts for 60% of the economy, this is serious stuff. It’s why negative equity matters. — Garth
++++++++++++++++++++++++++++++++++++
Big difference between being upside down by 30% on a $30K car loan and being upside down by 30% on a $500K mortgage. -$141K to be precise.
You can always drive your upside down car from Richmond to Ft. Mac to get a job, but your upside down house has to stay in Richmond, but take heart, the $1 million assessed value tax bill, the maintenance and the upkeep bills are a moveable feast.
A good friend of mine (rags to riches and back several times over his career) once noted:
“You can sleep in your car, but you can’t drive your house”.
Upside down on a car won’t ruin your life or marriage or kill your career. Upside down on a house will do all of the above and so much more.
They should really call it Homeowner’s Herpes; once you get it it’s for life.
#104 Vancouver
–read that link—coquitlam up an average of 100k –boy they can say anything–what a bunch of crap–of the 92 price changes last week (tri-cities) 35% were in Coquitlam–all down–i have a friend who says he went to school with Bill Coughlan–it took him 3 times to get thru grade 8 math–be very careful with his numbers
that little piece is as bad as the Saturday Sun article by #1 pumper Cam Good–he says the Chinese are now worried about earthquakes in Richmond and are moving their attention to Burnaby and Coquitlam and the N. Shore -higher ground–driving prices up there — anyone see that– it was in the business section-page g3
“Although Drew is no doubt using some artistic license, so are you.
When I qualified for mortgage, just out of curiosity, in 2001-2002, the bank wouldn’t give me squat. I wasn’t really surprised. 5 short years later, they were happy to give me $450,000. I found that shocking. I did the math later, and decided I would have trouble servicing more than $350k, with $300k being a comfortable limit, which turned out to be exactly the case.”
I’m not sure what you’re referring to. At the time I attempted to get pre-approved I had about $7,000 in savings to my name, no car, zero assets. The woman at Citizens Bank said it looked like I was probably good for maybe $110k max, and asked me if I wanted to continue the application. We both agreed it was a waste of time, based on the price of real estate in Vancouver. If I had attempted to get pre-approved a year or two later I might have had better luck, but by then I was unemployed.
A harbinger of things to come…?
http://www.edmontonjournal.com/news/Body+missing+Edmonton+realtor+found/4758448/story.html
#118 Dinner by 7 on 05.10.11 at 12:55 pm
I am overcome with sadness for these woman, as I just can imagine the heartache these woman go through by societies cruel and vicious view of those who “don’t look the norm”… it must have taken a lot of courage to be photographed knowing that others will just smirk and made comments on their physical appearance – to me it’s just as disgusting as making fun of someone because they are of another colour – why is it okay to hurt those who probably have spent a lifetime of hurt – human nature – a disgusting display – (and some in here have proven how disgusting we can treat total strangers).
…………….
I may feel for them, but they chose to reveal themselves like that – no doubt for monetary reasons. I recall many years ago that one could purchase cards at the ‘IT’ store with similar images. In my mind, when I see overweight teenage girls walking around with skin tight tops and rolls of fat hanging above their skintight jeans, they should know better.
Oops to my previous post – should be in reply to #120 Dinner by 7 on 05.10.11 at 12:55 pm
Not sure how that happened.
Tales from the WC..
Vast reserves of cheap money & asian buyers have created a nutritious bubble for growing a t-rex sized golden goose with Re-Max stamped on it’s butt. Legions of frustrated consumers have been binge spending ever since the word ‘save’ was deemed politically incorrect by gov.
Vancouver’s unlimited supply of offshore helium has kept the real estate balloon rising higher and bigger.. so much so that the former LML is now referred to as the ATAZ (asian territorial aquisition zone).
Like Bob said.. the times they are a changin’ (faster)
TAKE A LOOK AT THIS…
Website “Of Two Minds”, out of the US, has this attention-getter for Canadians who smugly believe that what’s happening south of the line can’t and won’t happen here.
You’ll have to go to the “site” to see the full piece, but here is some of this date’s posting, from “Of Two Minds.”
$6.5 Trillion Lost, One House at a Time (May 10, 2011)
The $6.5 trillion lost in the bursting of the housing bubble is not a “paper loss,” it is tragically real.
Is anyone surprised that housing continues to slide? According to this report, Home Market Takes a Tumble: Turnaround More Distant After 3% Drop, Steepest Quarterly Decline Since 2008, housing has declined in value for 57 straight months, almost 5 years.
Since the housing bubble topped in most areas in 2006…American homeowners have lost $6.5 trillion in equity in those 57 months.
As Garth’s photo indicates, the fat ladies are singing.
SPEAKING OF SINGING…
From Victoria comes news that the real estate market here is coming apart bit by bit. Coupled with an increasingly moribund local so-called economy (outside of the endless public sector service industries) this all reminds me of the do-nothing mid-90s when houses were cheap; they were going in some “respectable” neighbourhood for a quarter million and up (BTW the NDP ran BC at that time: fast ferries and the like).
So the fix is in. The day of reckoning is upon us and a slow economy will continue for some time.
THE TORY FACTOR…
Some of this economic decline will ALSO be the direct result of the recent federal election in which too many of the good burgers of the southern part of this island, voted in the NDP and a Green. No Tories.
Many of these voters MUST believe that they are exempted from the political realities of Canadian or any other “life”; and they’ll be yowling and bitching soon enough when it dawns on them that Federal Government Lolly ain’t coming this way for the next Tory term of office. If Harper wins a second term, and there are STILL no elections of Tories here, add on another full four or five years of FURTHER economic nothingness from Ottawa.
Sure as shootin’ the provincial government won’t be filling in the financial blanks, either. No Money! Another thing the Leftie Locals should know is that over the last 35 years or so, more and more of the provincial government has been distributed out of Victoria to everywhere else in BC, especially Vancouver and the Lower Mainland. This shall continue.
Garth’s right. We’ve got an odd little economy here, motoring along more on make believe that reality. The heavy industries of old left long ago. I don’t know how vanishing civil servants, coffee houses, half-staved realtors and home builders can “create prosperity.”
BRING IN THE FOGIES…
However, there is a surprisingly large clique of folks who dine on their pensions and dividends. They’ll be asked to spend a lot more, I expect. There are many of them and they are being constantly replaced, by other oldsters, as nature takes her inevitable course. The youth, meanwhile, will do what they did in the 90s; leave town.
The housing bust left thousands of empty, unfinished or foreclosed homes laying empty across the U.S. That means that there should be plenty of affordable housing, right? Wrong–not for renters anyway.
Over the past few decades, rental affordability has become a widespread problem in the U.S. as rent levels grew faster than renter income. Nearly half of renters pay more than 30 percent of their monthly income for rent, including 26 percent that pay more than 50 percent of income, according to a new report by Harvard University’s Joint Center for Housing Studies. For this report we identified and ranked the nation’s top 10 metropolitan areas by the percentage of tenants spending more than half of their income on rent.
http://realestate.yahoo.com/promo/the-10-worst-cities-for-renters.html
A surprising list, at least for me, with affordability being the key word, not price. Definitely skewed by demographics, income levels and underlying economics. People are struggling to cobble together 600 a month in lowly Toledo.
property virgins are about to turn into poverty virgins…
VICTORIA TEA PARTY,
Custom House/Western Union – is laying off 140 of their staff in Victoria. For a city this size I imagine that is huge. I think the 2nd largest employer (or 1st for that matter) is Thrifty’s.
I am getting at least 3 new houses a day on my Private Client Listing Service. Now this is for houses with 4 and more bedrooms. This is like it was in 2008.
VICTORIA TEA PARTY,
Driving around Victoria all I see is yoga, massage, chiropractors, more massage, holistic stuff, more massage.
I wonder how people make this work in these fields in a city this size with so much competition. It seems everyone is in massage, teaches yoga, does aroma therapy. Stuff with stones etc.
When the bubble bursts, won’t the CMHC be responsible for ponying up the losses the banks experience? In that case, wont the Canadian government essentially have to come up with loads of dollars to honor the insurance? And won’t this essentially collapse the Canadian dollar?
Just curious how thats going to shake out
#16 Glad…. on 05.09.11 at 9:50 pm
Since the fall of 08′, Ventures index bounced from a 694 low to 2100 where it is today. It peaked not long ago at 2450. The TSX bounced from 7800 to 12500. Commodities has outshined housing by roughly 3 to 1 in metals straight across the board and our markets are laden with commodity equities. Can you really make an argument holding any kind of water that housing was the best place for your money to be in the last couple years? Got a news flash for you, it wasn’t and proof’s in the pudding. Some RE markets never recovered from their 08′ levels but you would know all this if you took the time to look.
#54 realpaul on 05.10.11 at 12:20 am
All that debt you speak of will in time crash Canada’s curency as it is now compared to world markets outside of the USA. Surely you must know that this is the outcome of unsustainable debt and what will a low dollar do for manufacturing and all those union jobs? Uh-huh. (not that I agree in any way that this is the way to do it, purposely crash our dollar and risk a lost decade to stimilate one sector of the economy)
Blaming the Chinese for all our problems doesn’t work either. Our Conservative government is literally selling citizenships for 800 grand worth of investment into Canadian government funds. Qualifiers need 1.6 million of net worth as you also well know and its “welcome to Canada”. That money (and its big money) is coming into this nation whether future earnings are non taxed for 5 years or not and such contraditions make you speak out of both sides of your mouth. (not hard to imagine, from a bigot) Just sayin’.
Seriously, you are about the biggest mouthpiece the website below has going for it here and its not surprising since immigration/housing development/RE supply and demand are so closely linked:
http://www.immigrationwatchcanada.org/
Readers, its just another organization that spews misinformation for a twisted cause. Its run by racist bigots which should come as no surprise. As I’ve mentioned before, there are groups who work against Canada either to make a buck or impliment a twisted social supremist agenda (short for spewing hate speak) and this is one of them. Its a biggoted site that realpaul literally personifies. Sadly these days, one who shares the same twisted views can package their commonalities on sites such as this with a mere click of a button or blowhard fashion the way realpaul reflects. Read it for yourselves if at all interested.
http://www.immigrationwatchcanada.org/category/weekly-bulletins/economic-effects-of-immigration/
I find it personally interesting that people like yourself exist, realpaul. It makes me wonder how many others there are like yourself. I’m looking forward to a good, gory postmortem examination on just how twisted a heart and brain must be to adopt a belief system such as yours. You do serve a purpose of sorts, posing an interesting contrast to the greater truths of reality.
Its true, that immigration has its challenges in this nation and some things can and will need to change not only to preserve equality, but fairness as well. As an example, a cap on non taxed earnings for immigrants coming into Canada for the first five years would be good place to start but all the hatred the realpauls of the world offer literally nothing in terms of positive policy changes for the betterment of Canada. If anything, such hatred offers nothing but resolve against such positive change mainly because nothing positive as a rule comes out of negative people. Its just how she goes.
#40Drew on 05.09.11 at 11:12 pmI know a guy who is on welfare and bought a home. Both he and his wife have part time mcjobs and a welfare cheque – believe it or not, it’s totally legit. somehow they qualified for the mortgage. if that isn’t sub-prime, I don’t know what is…
BTW – he has refinanced twice, and now owes 25 on credit cards. He just asked me what I know about bankruptcy…..
how is it that everyone I know, including a couple on welfare, owns a house???
_____________________________________________
I couldn’t believe a family of three who collects two welfare checks and one collects disability were able to get a mortgage. Yes I kid you not and this is how banks in Canada have been conservative when it comes to lending. Also my BIL was able to buy back in 2006 with NOTHING down. This guys burns money faster then he gets it and the conservative bank gave this clown a 40 year mortgage with zero down. There are tens and hundreds of thousands of examples like this. The housing ponzi is nothing more then a house of cards and the bankers/realtors and every other criminal who pumped this scam up knows it.
Victoria & Victoria Tea Party
I just spent last weekend in Victoria. I go there often (my wife is from there) and its a lovey little town. But its certainly questionable what constitutes ‘the Victoria economy’
Of course, massage, aroma therapy and very expensive soap stores are huge draws. And then there’s the pubs and touristy stuff too. Don’t forget the droves of civil service workers. It is the capital after all.
I also noticed nobody is in a hurry to abandon their automobiles. I’m from Vancouver and believe me, I know hideous traffic and seriously overstressed road systems when I see them. In the last 10 years Victoria traffic has become very bad. I was caught in the infamous ‘Langford crawl’ on Sunday. That part of the visit was unpleasant, to say the least.
Anyway lots and lots of people seem to be thriving in Victoria and there’s apparently to be no shortage of cash for gasoline.
#146, #147 (Victoria)
So true, and that’s the conundrum. How can a private/public sector economy be viable with this huge real estate and body massage service industry? And I’m not trying to be amusing here. This is a serious question.
What so many recent arrivals porbably don’t know is that up until the early 1980s, Victoria had a viable private forest and fishing industry in and around its famous harbour. There was, in fact, actually water pollution!
Now, if you don’t mind a little salt, and Greenpeace-approved fish poop, you can practically drink the stuff, from your human-powered sea-going kayak!
HOWEVER…
This STILL remains a provincial government town and, as I’ve already written, there is no solace here because its footprint gets ever so gradually smaller and smaller.
At the federal level, some “stimulus” activity is going on at CFB Esquimalt, mostly.
But that won’t replace a collapsing real estate market, and ancillary services that includes “staging” homes, lawyers’ and accountants’ fees, landscapers and lawn sprinkler types, massage therapists; the whole pilot fish thing with those folks dining off the main real estate carcass, which is now dying.
GOT WHAT THEY DESERVED…
Victorians, through their primped-up opinion of themselves as being enviromentally “superior” to the rest of the world, because of where they live, got what wanted.
But those whose children can’t make a go of it here will have to leave town for a better life. So to those parents, who’ll one day may become grandparents, you got what got deserved, as well.
Now that these spendaholic conservatives have a majority I don’t expect they will slash spending and knock down the debt. Instead they will borrow and spend canada into oblivion. And as always they will encourage foriegners to come to canada and bid up real estate to the detriment of those entering the labor force and looking to buy a house and start a family.
On the other hand I am sure that certain seniors and boomers will be delighted to get rich on real estate sold to foreigners. As always the majority are always wrong.
I bought a house in Calgary recently after a lot of effort. I don’t think prices are falling in good communities.
–
#145 MikeT — “property virgins are about to turn into poverty virgins…”
Well put. If only these people would see beyond their eyelids, but alas, no; too complicated for them.
*
0:45 clip Spoof.
5:39 clip Massive unemployment arriving in US (and Canada). Convenient reason for the NMF and SAF to go ballistic, along with Yellowstone. That will bring CC such as we’ve never seen.
5:12 clip “May 1 – Media reports Bin Laden killed; May 2 – U.S government orders millions of fresh Anthrax vaccine (Spending millions it can not afford)-
http://www.businesswire.com/news/home/20110502006929/en/U.S.-Governmen; and May 3 – Media reports Anthrax vaccine never tested on children and they would be first to receive it. Millions of Anthrax vaccine bought in 2007 has a shelf live of 3-4 years-”
Silver Up or down? Yin or Yang? Plus other Commodities.
Egypt Just in time for the May 16-20 NMF ‘quake drill.
China has come up with a bright idea for the US, but Uncle Sam has many other things to do.
War On Hyperbole Ernie, Bert and ObL. Egypt “Post-revolutionary Egypt has a new foreign policy, one very different from that of the ousted Mubarak regime, Doaa El-Bey investigates.”
Texas Secession Grinding its way along, albeit slowly. ATM Fees “Good reason to quit using banks altogether!” wrh.com. Quit using ATMs altogether.
Vaccines So big pharma makes drugs, the US govt. settles lawsuits. There is a law protecting drug companies from being sued now, but I’m not sure whether is applies here. Vaccines and autism.
Paper Tiger and Panic! Run Away! 5:41 clip. Snap! Crackle! Pop!
China Healthy trade surplus. Of course, NA doesn’t make anything any more; we just consume.
‘Net Censorship “So, hypothetically, I could link to a page of chocolate chip cookie recipes, then the recipe page gets hacked and filled with child porn, and I get arrested because I have a link to it?
“Don’t laugh. As part of the propaganda for the “Exon Amendment”, an early attempt to censor the internet the US Government was caught flooding the internet with porn, including into the cooking groups at USENET.” wrh.com.
Pakistan Does Billary even know where Pakistan is?
Fukushima “Now you know why General Electric (and the whole nuclear power industry) have been trying to downplay this disaster. Billions of dollars in lost reactor sales are on the line.” wrh.com.
Monsanto, free trade and other things.
Just to let you know we have rescued BPOE…..rumours of his demise were bogus.
We found him in the elevator of Osama’s condo….on a methane overdose.
He was trying to sell time shares…but given Osama’s persona non grata status….we feel any legal commitments BPOE or Osama made are null and void.
After aspiration via helium therapy we feel BPOE will be back to contribute to this blog
#149 Daystar…typical Liberal claptrap…..ad hominem attacks whenever the message doesn’t agree with your Liberal Party ideology. Oh I get it…everyones wrong except you….right? This idea that the world was run by a leftist elite from Toronto has come to a screeching halt.
The philosphy of Trudeaumania has been pushed through the schools for two generations and its not surprising so many people have fallen for that crap….as it was force fed down your hungry gullets. Trudeau got his marching orders from the Cuban communists who also influenced the EU formations in the 1970’s.
Well…the EU now admits quite publicly that that socialist crap was a huge mistake and they wish they could take it back. Canada is still suffering from the delusion imposed by a generation of thirty years ago that unfortuneatly remained in power far too long.
Its the braindead remants of the Liberal era that need a pasture and finally…..finally…we may have change for the better in the social and finacial agenda in this country now that the Liberal Party and it’s influence is dead. We just need to give the bums rush to the rest of the Liberal landmines still holding positions in the government bureacracy and judiciary. Once these country wreckers are gone for good we will see what the will of Canadians is and not the brainwashed pap of a dullard generation of zombies.
#139 a prairie dawg…
Obviously not exactly sure what you mean by your comment, but if you mean what I think you do that is a pretty disgusting thing to post.
#135 Mike L
Holy sh$t Garth! How is this stuff getting posted?
A guy kills himself, and losers here get to poke at the body and try and tie it in with their little dream that the real estate market is in a free fall?
Mister Obvious @ 151
LOL
The traffic problem is called the “Colwood crawl”
The “Langford Crawl” is what used to happen at the Westwind Pub on Friday and Saturday nights.
I have many, many, stories of that glourious watering hole. Some of them included myself and friends……
There was a reason there were no windows there.
One of the best was when one of our locals rode his horse in through the exit and up to the bar and ordered a beer.
Ahhhhh the good old days.Before all the trendy soap and coffee joints.
Victoria:
I love Vic, great place. But it really epitomizes the problems in the Canadian and U.S. economies. A buddy of mine grew up there and years ago, the inner harbour was a vibrant real live economic power, shipbuilding, lumber, shipping, fishing. Now all of that is gone, replaced by empty box condos owned by speculators and absentee owners that contribute nothing to the economy.
Strip out everything real and productive and sell it all off to land developers. No wonder the only part of the BC economy that functions is the grow-shows.
Chinese have stopped buying!!!
Mainland Chinese Have Stopped Buying In Richmond. Cam Good of The Key says it is because of Earthquake Risk.
http://www.vancouversun.com/news/Japan+ … story.html
BY BRIAN MORTON, VANCOUVER SUN MAY 7, 2011
Interest in Richmond real estate may be dropping – at least for now -among mainland Chinese investors.
The reason? Japan’s devastating earthquake and resulting tsunami in March, which killed thousands and flooded much of that country’s low-level coastline, is seen as something that could happen in Richmond’s low-lying areas as well.
A local earthquake expert believes the investors may have a point to be concerned, although he thinks the specific danger from a tsunami is minimal.
“The shine is off Richmond right now,” Cam Good, president of The Key, a Vancouverbased sales and marketing firm that’s focusing on a new wave of Chinese buyers, said in an interview Friday.
“I believe it will return, but it’s off for now. And that’s been true since the [Japan] earthquake. It was absolutely top of mind with most of the Chinese I talked to in China,” Good said of recent meetings with potential clients at his Beijing office. “They’re worried that a wave could hit Richmond and that they might suffer as they saw the Japanese suffer.
“We’re now seeing more listing availabilities in Richmond.”
Richmond and Vancouver’s west side have been extremely popular in recent months among mainland Chinese buyers and immigrants looking for a place to either invest or build a home in Metro Vancouver.
In some cases, Richmond lots have sold for well over $1 million as buyers compete with each other through multiple offers.
However, the phenomenon is now spreading to other areas -especially Burnaby, but also Coquitlam and West Vancouver -as overseas buyers look to high ground.
“Burnaby is higher ground, which is very popular with the Chinese right now,” added Good.
“There’s also been a little bit of interest in Squamish, because of it’s proximity to Vancouver and Whistler, both very famous addresses in the Chinese community.”
Earthquake expert Peter Byrne, a professor in the University of B.C.’s department of civil engineering, said in an interview that he believes an earthquake could greatly impact Richmond, but it’s the soil – not a tsunami – that is the greatest danger.
“Richmond is in the Fraser Delta and has a silty crust on top and loose sands below. The concern is that much of the sands underneath would liquefy.
“The danger is that the soil conditions are very poor. When soil liquefies, water escapes to the surface.”
Re/Max realtor Jake Moldowan, whose sales market includes Richmond, said sales to mainland Chinese have dropped sharply recently, but he hasn’t heard that earthquake fears are the reason. Instead, he said, he believes it’s more a reflection of savvy investing practices.
“That doesn’t necessarily mean some people [aren’t] deterred [by earthquake fears]. There’s still sales, but not to the degree of where it was before.” Moldowan said Richmond will always be a top choice for Chinese buyers, largely because there’s such a strong concentration of Chinese living in the city.
John Lichtenwald, the principal owner of seven Re/Max offices called Metro Vancouver Properties, said that he’s noticed a large increase in mainland Chinese buyers recently in Burnaby and the North Shore, although he doesn’t specifically know why.
“In Burnaby and the North Shore markets, up to 50 per cent of the buyers at open houses are from mainland China,” he said. “They’re savvy investors.”
Meanwhile, a report released by the province Friday says governments will need to work together to meet the challenge of climate change and rising sea levels over the next 90 years and beyond.
The report, Climate Change Adaption Guidelines for Sea Dikes and Coastal Flood Hazard Land Use, concludes that sea levels will rise faster and greater than previously thought.
As well, a new report on the March Japanese quake by Oregon State University concluded that the quake caused a significant level of soil liquefaction that surprised researchers with its widespread severity.
“We’ve seen localized examples of soil liquefaction as extreme as this before, but the distance and extent of damage in Japan were unusually severe,” said Scott Ashford, a professor of geotechnical engineering at the university and a member of the research team.
“Entire structures were tilted and sinking into the sediments, even while they remain intact. The shifts in soil destroyed water, sewer and gas pipelines, crippling the utilities and infrastructure these communities need to function. We saw some places that sank as much as four feet.
“Buildings that are built on soils vulnerable to liquefaction not only tend to sink or tilt during an earthquake, but slide downhill if there’s any slope, like toward a nearby river,” Ashford concluded.
ere is the Sun link which didn’t work earlier:
http://www.vancouversun.com/news/Japan+quake+Chinese+investors+wary+Richmond+agent+says/4744954/story.html
Sucks even more to live in Milton today. House prices are they affected by gas prices?
#29 Oh! Canada
They simply held homes and saw values fall below loan levels. That could happen here in a matter of months, given what we have done with debt and prices. — Garth
Until interest rates start edging up considerably, could, should, would are only hypothetical. Means totally squat.
http://www.calgaryherald.com/business/real-estate/Calgary+region+housing+starts+plunge/4751228/story.html
Someone here was using Rona as a housing industry barometer. Their stock is down from $15 to $12 this year, also plunging recently on this news:
Rona loses $16.8-million in Q1
2011-05-10 11:23 ET – News Release
Mr. Robert Dutton reports
RONA MAINTAINS STRATEGIC DIRECTION IN FIRST QUARTER
Rona inc. has released its financial results for the 13-week period ended March 27, 2011 (first quarter 2011). All figures in this release are in Canadian dollars and are presented according to IFRS (international financial reporting standards).
Financial highlights
Compared with the first quarter of 2010
Total sales decreased 4.0 per cent, or $38.7-million, and same store sales were down 12.6 per cent.
#151 Mister Obvious (regarding Victoria)
Guv
MoD
University Of Victoria
Camosun College
Medical/Hospitals (Services for old farts – retirees)
Tourism
Golf
WHL (next year)
Playground for the wealthy and educated.
Huge Walmart http://vimeo.com/13377232
BTW…Langford ain’t changed much…
http://www.urbandictionary.com/define.php?term=Langford
The Red-Head is HOT….just like the housing market! :P
If the Red-Head and Housing Market burst….what a mess!
Gas prices:
What happens if oil prices stay at $100 dollars a barrel BUT our dollar falls to 80 cents US?
World economy would humm along while only ours would hit the skids. That should be the real worry. Not demand destruction from real high oil prices.
Apparently poor April sales in the Fraser Valley were due in part to the Election!
http://www.fvreb.bc.ca/blog/index.php/2011/05/03/april-home-sales-return-to-balance-in-fraser-valley
#6 Supply
You say MLS only shows a maximum of 500 properties. Yes, but if you look at the top, the total number is displayed.
Canada has 240,000 residential properties in the MLS system as of May 10, 20111
I know a number of quality builders leaving the Okanagan for greener pastures. They say its dog-eat-dog bidding now and have moved north.