Long ago, when rabid Chinese still stalked Richmond and little Jack Layton didn’t matter, a smart woman listed her small house in Vancouver. Purchased four years earlier in the fives, she went big and asked $1.1 million for it. On open house day the place was mobbed, and soon there were 13 offers. She picked the one from an ‘investor’ who leased it back to her and her family. Now she lives in the same house, has a million dollars and makes $75,000 a year from her investments.

So, I asked her yesterday, how’s it goin’?

“All is well,” she said.  “But a couple of neighbours have been questioning us about how we could possibly move into the realm of being renters at such an awkward time in our life.  Awkward defined as subjecting ourselves and our defenceless small children to the uncertainties of renting in the same school catchment area.  It’s true, running all the way to the bank, while still living in the same house, is a bit awkward.

“Truth be told, one awkward thing is coming to terms with the fact the house and its problems are not mine anymore.  For example, I can’t tell you how many dandelions I’ve dug out of the postage stamp sized backyard in the past 4 years, I am sure over a 1000.  I don’t know if I should ignore them now, or let my OCD get the best of me.  (Or call the landlord.)   I am really struggling with how to deal with this issue, if I let the yard overgrow with dandelions, people might know our dirty little renting secret! I am so happy NOT to be in the market anymore!”

Praise be. Another soul saved.

It’s hard to argue with this logic: harvest the ridiculous capital gains some real estate has produced. Invest to generate serious cash flow. Have your assets pay the rent. Live in the same house. Screw the dandelions.

There’s more proof the wheels are coming off. Not just in Vancouver, as I showed you days ago. Everywhere.

Like Montreal, where you’d think real estate would keep motoring along now that the separatists have been handed their collective ass. And that city’s cheap by comparison with more cosmopolitan and romantic places, like Kamloops. The average price of a SFH is a lowly $265,000, compared with $760,000 in godless Toronto.

And still, the plunge is also being felt there. Sales in April crashed 18%, making the 12th month in a row of declines. And this was accompanied by an 18% surge in listings, which suggests Montrealers have a little more on the ball than many other Canadians.

Meanwhile, remember all that hype about the hot Asian money streaming into the atmospheric mud flats (called Richmond) near the Vancouver airport? Well, kiss that goodbye.  The place, a local realtor tells me, “is now a disaster.” Only one in four houses is selling (it used to be eight in ten), and inventory is exploding – close to 1,000 listings in this one community. “The Richmond market,” says my source, “is definitely showing the most extreme effects of what happens when demand goes away.”

And what about all those horny Mainland Chinese with their bulging moneybelts and Kim Jong haircuts? You know the ones – the scary guys who were supposed to make real estate values go up forever. What happened to them?

Well, blame the Japanese earthquake, says local real estate huckster Cam Good – the guy who created a media sensation by hiring a helicopter to bomb suburban White Rock with pointy incoming Beijing investors. The Chinese are now afraid Richmond might liquefy in a quake and are moving to higher ground.

That, of course, is as lame as realtors in Winnipeg blaming spring flooding (the city is dry) for a 13% plunge in sales and an 18% decline in listings. Maybe house prices in the Peg have simply topped out and met the point of resistance. And perhaps those people in Richmond who spent $1 million on a lot in March (which could turn into goo) now realize they were zoomed.

Maybe real estate in Canada is actually like real estate in most countries similar to ours: toast.

Like Britain, where a real estate boom (like ours) yielded unsustainable prices (like ours), leading to market stagnation (soon like ours). The central bank there slashed interest rates (like here) which helped cushion housing prices from a US-style crash (like here). But now with the economy crawling along, wages aren’t rising enough to meet real estate values (also like here). So (like here) sales are crumbling.

In fact, Brits have their bloomers in a knot because it now takes 4.4 times the average income to buy the average home. That’s close to the 4.6 mark at which American real estate keeled. Meanwhile Toronto’s at 8 and Vancouver 12.

So, you can carry on thinking Canada’s invincible. Or, like the smart lady paying her house rent with her million, you can duck and cover. Elvis has left the building.



#1 Young Old Fart on 05.10.11 at 8:36 pm

only pure luck would have me first……

#2 ayn rand on 05.10.11 at 8:38 pm

2 fat pics in a row….what’s up Garth, your skinny jeans getting too tight??

That’s a perfect male torso. — Garth

#3 Young Old Fart on 05.10.11 at 8:41 pm

I guess I am lucky…..

#4 S.B. on 05.10.11 at 8:46 pm

Latest downtown TO condo realtor smoke. In summary: prices always go up; you can make an easy 20k once the building is registered; a greater fool is always standing by to hand you a capital gain windfall; a drop in sales volume is a good thing. Realtor class dismissed!

March continued the upward trend in sales, as 9200 units were sold on TREB. This number was 11% lower than March of 2010 which was a record. In April we are expecting about 9600 sales which will again be lower than last year’s record number. In spite of what the media reports, this market is very strong – what separates it from last year are really two factors: first the poor weather in comparison to last year’s spring; and secondly, a lack of listing inventory – new listings in March were 19% lower than in March a year ago. When the weather improves and listings increase, we expect to see 2011 sales on a monthly basis move ahead of 2010 perhaps by May or June at the latest. No one is forecasting that except us!

The downtown condo market presents a different market. Here condo sales in March were 6% higher than March of 2010. This trend will continue for the balance of the year. The reason of course is that so many new condo projects are being registered and are entering the resale market. The question being asked is can the market absorb this many new units? The answer is yes!! The sale-to-listing ratio downtown for condos was 48% this March versus 55% last March – not much of a difference when you factor in all the new condos entering the resale market.

This month, we tracked sales at a newly registered condo – the Vibe at 100 Western Battery in Liberty Village. It was built by Monarch and was just registered at the end of 2010. The first unit we tracked was a two-bedroom/2 bath unit with parking sold by the Developer in 2009 for $390,000. The identical unit, at 838 sf, sold in January and February of this year for $424,000 and $425,000. By March the unit sold for $433,000 or $515 per sf. A smaller unit at 611 sf – a one-bedroom with parking sold at the end of 2010 for $305,000 (probably as an assignment). Two identical units sold in February this year for $322,000 and $324,000 or $530 per sf. The point to be made for buyers is that assignments are cheaper and once the building is registered prices usually go up by $20,000.

#5 Mean Gene on 05.10.11 at 8:49 pm

#6 sue on 05.10.11 at 8:55 pm

my bf’s house is listed this Friday and I am trying to keep my mouth shut when he gleefully declares it will be sold in less than a month for his price because “Everyone wants to live in Dundas”.

needed: 1 miracle, stat.

#7 not 1st on 05.10.11 at 8:56 pm

A contrarian view on RE. 12 reasons why it will hold up better than predicted, not including nutty places like VC an TO:

1. Bankruptcy and loan default much harder to do in Canada.

2. Income requirements for Canadian mortgages more strict. Any loan I ever had needed concrete proof on income and debt carrying capacity. My credit score was always checked and needed to be above 650. There are no liar loans in Canada.

3. Boomers with no money generally will hang on to main shelter rather than sell it for quick cash. Both of my grandparents didn’t have much money, but they held their primary residence until they were well into their 80s. Shelter was most important. Boomers are also healthier longer and can handle house maintenance longer than their parents could.

4. Inflation is built into our economy for more than 40 years since we left the gold standard and RE is tied to construction and commodities and land which are in a multi-year bull cycle and is generally supportive to prices and with the U.S. embarking on QE3 and beyond, inflation is here to stay, even if we have a brief deflationary downturn first.

5. RE is an inter-generational asset for many minorities. They put 3 generations in one house and every body contributes to the mortgage and then ownership of the asset is split between more and more members.

6. Generational wealth transfer. Many older people are becoming more concerned with how the next generation will eke out a living and hence are willing real estate to their kids rather than selling it.

7. Stay at home adults and re-bounders. The economy has forced younger people to live at home longer or return home to get on their feet.

8. RE with equity can be converted to an asset without ever selling it. A reverse mortgage or HELOC can be used to invest many things; equities, preferred shares, flow through shares, trusts, ETFs. Renting out a basement suite or garage for storage can also provide cash flow. Starting a home based business can provide cash flow and a tax deduction.

9. The new trend is towards owning real things again, like 50-100 years ago, not fiat money or paper products backed by nothing. Stocks and equities are just faith in some company many of which are headed by people who will eventually kill the company due to greed. At the end of the day a real asset is tangible – it can’t be taken away from you so long as you make your payments. A stock can go to zero in a day, read: Enron. Land always has value an just like stocks you should ignore ups and downs and hold on for the long term.

10. Interest rates are not going to rise in any substantial way. Yes a couple point rise is inevitable, but most people can absorb that by cutting down on smokes and booze and lotto tickets. Interest rates are not going back to 1980 levels because it will bankrupt the U.S as their interest payments on debt would near 50% of GDP. Not going to happen.

11. In the U.S., defaulting is no big deal. No shame or remorse. Many of the people who got loans for houses thought they would get to live somewhere nice for a few years and so what if the bank took it back. No skin off my teeth. In Canada, I think we take things more seriously and will do whatever it takes to make that payment. Where I come from, bankruptcy is not a desired result, nor is admitting you can’t afford your mortgage.

12. A house functions as more than shelter for 90% of people out there. Its their space to make their own, a refuge from the outside world, a place to raise a family, to settle into a community, to put down roots to become part of something. Renting is transitory, a period of life that people don’t want to be at for long. Did anyone really have a good experience while they rented? You are crammed into a building with 10 other noisy annoying residents that don’t respect anything. The landlord never responds to requests, the rent goes up without notice. People with families don’t rent unless they are poor. Imagine trying to tell your kids you have to move apartments every couple years. Home ownership is a bastion of control. I would rather the banker hold a loan over my head than deal with rental frustration ever again.

So many myths collected in one handy place. Thanks. — Garth

#8 An Cat Dubh on 05.10.11 at 8:58 pm

Just watch CHBC Kelowna and they had a segment on real estae values dropping. The real estate industry rep they had on said prices dropped 15% from 2008 and now is the time to buy. (that sounds familiar). The usual excuses, including boomers are working longer to save up. They still have to find even greater fools in Alberta and elsewhere so they can retire in KLO. No mention of the foreclosures or empty condos. The news station said prices are not expected to rise for a year or two. Yeah right CHBC. But the main stream media never lies or misleads ever. ;). They never seem to mention Garth as far as I can recall when he speaks in Kelowna.

#9 Jim on 05.10.11 at 9:06 pm

Its not the tsunami. Its buyer exhaustion.

#10 r on 05.10.11 at 9:08 pm

wrong picture. spider man is amazing. iron man is invincible.

#11 realpaul on 05.10.11 at 9:10 pm

If Richmond experiances liquifaction due to an earthquakes……’s entirely possible. Some Canadian geologists and historians have tied a native myth ( an oral tradition) together with some remnant Japanese paintings that suggest that sometime in the past (the 9th century to be exact…1200 years ago) there was a earthquake that affected the Queen Charlotte Islands.

The geologic evidence is inconclusive…the oral traditions of the natives are sketchy and the Japanese Tsunami depicted in the paintings could have just as well originated off the Japanese coastline as well as off the far side of the world…thats us.

But yes….if you are the type of civic servant who’s looking for a way to beef up government revenues in your department for additional staffing of unioned pensionable bodies…the ‘Big One’ is just the theory for you.

The reality is that the Cascadia Plate lies far off the west coast of Vancouver Island and there is no evidence that any seismic activity ha ever affected the lower mainland.

Now …having said that I have seen the sub soils maps of the Richmond delta and the fact is…there isn’t a lot of bedrock. It’s more like rivulets of sand and clay. BTW…as a bit of fun…..did you know that the Richmond dyke occurs only on three sides of the community? If there ever was a flood condition from a Pacific tsunami the water would rush up the river towards New Westminister (where there is no dyking) and flood back ot ( as tsunami’s do) thus filling Richmond with water like a bowl of Tom Yum Goong. The water…unless it defied the laws of physics could not drain away…unless they blew the existing dykes….wasn’t that fun?

It makes you wonder about the quality of the civic servants we pay so much for doesn’t it.

The ‘big idea’ has again escaped the lemming like population of Chinese. Here’s why….if the City of Richmond was rendered uninhabitable because of liquifaction, sea bed spreading or cosmic tilt….the higher ground would be instantly expropriated …..force majeur….escheat to the crown…taken away without compensation. Would they be whining about that for a hundred years as they still are about the head tax?

#12 Chaos on 05.10.11 at 9:11 pm


Gas is a buck forty in Toronto…

Poor bastards…they never saw it coming.

Maybe now we’ll have an investigation into why gas always goes up 3 cents on Friday morning.

#13 JO on 05.10.11 at 9:12 pm

Ponzi scheme slowly coming apart. Rate of growth in mtg debt (YOY) has been slowing for a couple of yrs now and will no doubt head to 0 within 6-9 months…prices ought to collapse 8-10 % within 3-6 months after….lets hope Carney raises rates at least .50 % before year end although i am not sold on it…money supply has been far in excess of GDP for years and rates at even double where they now would still be too low…but the gov’t is smart enough to know the societal mountain of debt must keep growing or else it is game over…

Sad thing is most grade 8 students with a basic understanding of compound math can easily see that no mountain of debt can grow indefinitely definition, money supply/debt cannot grow faster than GDP forever…there will be a period of stagnation (best case, least likely), or more likely a period of contraction where society deleverages…asset prices collapse and unemployment zooms…

Avg buyer of the last 4-5 yrs will see an ugly picture in down 15-20 %, prop taxes up 30-40 %, all other costs up 30-40 % and rates likely on the way up…monthly payment on renewal up 2-300/month..

That’s what happens when you speculate with massive leverage in a societal Ponzi scheme…fools.

#14 Simon Giannini = Real Estate Scumbag Extraordinaire on 05.10.11 at 9:13 pm

Garth! Wow!

This guy is your absolute FOIL: Simon Giannini.

For those who don’t know, he’s the host of Toronto’s NewsTalk1010AM, “The Real Estate Show”.

Check out his house porn propaganda lies (i.e., podcast) here:

His April 16th, 2011 show is particularly scary–self-described as “Canada’s trusted source for real estate information.”

Some amusing quotes from it:

“Population is growing…and pricing is going up.”

“Will house pricing continue to go up? Absolutely.”

“Average incomes are going to be $300 000 – $400 000 when his kids grow up.”

“We’re in a steady market.”

“The power of leverage is the secret.”

“Every time you buy real estate…it is an investment: that’s reality”

“First time buyers can buy with zero-down…it gets done every day.”

“Our kids are going to thank us for buying into the market…on their behalf…and even if you don’t have kids, buy into the market now…for your future.”

“We’re going to need 40 000 new homes a year because of the migration of people coming into the GTA…so believe it or not, we actually have a shortage of condos today.”

“The kids today are growing to be smarter and sharper…and making money faster…which gets them into the real estate market sooner.”

“We have such a conservative banking structure…that they will not give out [undue] financing…”

“The middle east is sending their kids to Canada…[to buy real estate] because there’s no bombs here, folks!”

“The reality is…the supply is huge, but the demand will [still] be there.”

“Because of the power of leverage, the opportunity for investing in a market, as stable as the one we have in the GTA, is really an all-green light: It’s a go!”

“As good as things are in Canada, there’s a large percentage of people who really can’t qualify for a mortgage–and that presents an opportunity for investors.”

“It’s a problem that’s turned into an opportunity: For the altruistic side of us [investors], we’re really helping out families get into the market.”

And, finally, my personal favourite:

“Here’s a very simple example: Because of the power of leverage, we can now buy a $300 000 property, with a basement apartment…and at the end of the day, you’ve got income of about $2000, and you’ve got total expenses of about $1500. So, you are making $500 a month. BUT, that’s not where the money is: The money is in the fact that over time, the home is going to go up in value. Conservatively, you will make $100000 in less than five years. How does this happen? The values are going up…it really is that simple.”


Hope you enjoyed the show!

#15 Jim on 05.10.11 at 9:14 pm

Its not HAM, its fear of HAM. It’s HAM hype.

#16 Carp on 05.10.11 at 9:15 pm

I’ve been seeing some clips on the news about the Chinese RE conventions buying Canada – I actually was doubting me until my wife told me my mother-in-law wanted to jump back into Richmond after actually losing money in West Vancouver RE and has a nice place to stay for FREE … WTF? That brought me back to reality …

#17 kc on 05.10.11 at 9:18 pm

watching the morning news today… no big deal, however, a commercial did catch my attention…. the pitch: buy into the great green outdoors… buy into a new set of digs for 300K in Abbotsford area (Vancouver suburb east valley). First time I had seen a commercial for a new building set of gated communities. Times must be getting tough for selling new builds if they have to buy air time.

#18 The InvestorsFriend (Shawn Allen) on 05.10.11 at 9:31 pm

Your Mission, if you choose to accept it, is:

A modest but paid for house… by age 40 to 50

An investment portfolio at least equal to the value of the house (by age 55)

An investment portfolio or pension large enough that working is optional past 60…

The sooner you can save and become relatively financially independent, the sooner house price fluctuations become something to take advantage of rather than to fear (move up to a bigger – still paid for – house on better terms or buy a cottage on better terms – for cash, or just sit on your wealth and grin).

#19 Dr. WAYNE on 05.10.11 at 9:32 pm

Young Old Fart … you aren’t lucky … you’re simply stupid.

#20 Hovering on 05.10.11 at 9:32 pm


this blog has become quasi religious (for me)

#21 gutcheck on 05.10.11 at 9:41 pm

Yes, Winnipeg Realtors did not have much good to say about the April market. Usually they go on and on, gushing about how great the market is. They always mention price increases. Not this time. They blame it on flooding which did not amount to much at all in the city (Bad outside the city). Amazing how they twist the truth. They can spin a good story.

#22 Cory on 05.10.11 at 9:56 pm

what’s the saying “the market can stay irrational longer than you can stay rational”?? or somethinglike that. Seems this is what’s happening. People still say I’m an idiot for selling and renting, yet my very liquid net worth is on a nice steady incline.

In Calgary median prices have INCREASED about 40k or so since Feb. Listings have gone up noticeably as well. I wonder if it is residual mortgage approvals from March 18 since I believe the approvals are good for 90days? so that would make an official crash date of June 18. I would assume prices will finally start correcting then?

#23 CarolMel on 05.10.11 at 9:57 pm

#7 Wow. Where do I start? Do I bother?

I rent. I’m not poor. I don’t plan on telling my kids anything. Why would they ask? Why would I move every two years? My landlord responds to my requests and in fact just installed a new front door, new window at the back, fixed flashing around the patio door and insulated and drywalled the garage. How many times did I ask? Once. I like my community. I enjoy my neighbourhood. There are not 10 other people in the house, just one other family and we all get along just fine.

Bankruptcy is plenty easy to do in Canada. Go sit in bankruptcy court, it happens about once a month in Supreme Court/Court of Queen’s Bench, depending on your province. Majority of people there are on their second and third bankruptcies.

So your grandparents are holding onto their house and so now ALL the boomers are. Okay. Sure.

Intergenerational living arrangements. Fair enough. Sounds a lot like the “everyone in the L.M. has a suite to subsidize their mortgage” argument. What happens when the arrangement breaks down, people get married? Die? Divorced?

No shame or remorse in the US in bankruptcy. Really? But in Canada we feel great shame. I guess we’re all Protestants then.

Your house value can go to zero in a day. Read: November 2008.

Interest rates aren’t going up and when they do we’re going to cut down on smokes and booze. Well, first hole in your argument is that of all we are such a stoic group of Protestants, so there’s no way we smoke. That would be shameful if we did.

Now that I’m done ranting at you I realized you’re a troll here to get a rise out of people like me. No one actually could believe all that crap you wrote. Cognitive dissonance kicking in yet? Oh well.

#24 Prof ANON on 05.10.11 at 10:00 pm

I’m calling Poe’s law on #7 Not 1st's_Law

#25 Forgot my name on 05.10.11 at 10:04 pm

So my girlfriend and I are renting, but the landlords have put the house up for sale, which is a pity as we really really like not only our apartment, but the street we live on. Of course, the new owners might want to keep up, but having said that it is kind of fun moving to a new neighborhood, renting. We could buy, but we dare not!

I didn’t want to comment to them, but the current owners have already purchased a new house….not sure if that was a good idea. We shall see, tomorrow offers will be taken and my girlfriend and I will find out if we need to find a new place or not.

#26 BPOE on 05.10.11 at 10:09 pm

Richmond aka Richman is highly desirable. World Class, clean air and the best restaurants in the world period. The dyke system is world class and can never be broken so fears of earthquake liquification, sea level rising etc will never happen. The place is known for it’s good luck. Again, look at the big picture. Richmond had MASSIVE gains. If you bought a house in Richmond 5 years ago for 400k, last month it was worth over 1 million. A slight correction and it’s worth 950k NO BIG DEAL. Folks, I’m going to let you in on a little secret when it comes to Real Estate. You only make or lose money when you sell. Of course the American and his minions will disagree. According to his flock it’s impossible to make money in Real Estate. Gotta laugh at his “sub prime” sermon. This is CANADA not the US. We do not have sub prime never have never will. The term doesn’t even exist North of Blaine.

#27 Bolo on 05.10.11 at 10:11 pm


You are the MAN. Have been a daily reader for about 6 months now. Sold our one year old home (to some greater fools) in the forsaken town of Stouffville, ON. Wife and I are going to rent for a while in a brand new condo unit in Toronto. Made a decent profit on the sale as well.

Will be cutting our commute time into work down by a whopping 50 – 60mins one way, savings in gas by a couple of hundred a month, and no more 407etr either.

Going to enjoy the ‘freedom’ as we just kick back, relax, invest, and watch everything else unfold over the next little while. This should be interesting.

#28 Cash is King on 05.10.11 at 10:12 pm

Hey! It’s Madrid’s spiderman. Yes, for 1 euro you too can have your picture taken. For 2 euro, he’ll remove the cigarette from his mouth. Camps out in Plaza Mayor…but then again, all spanish towns have a Plaza Mayor.

How do I know it’s Madrid’s spiderman….Balanced portfolio, low debt and no princess of a wife.

#29 Dodged-a-Bullit-in Alberta on 05.10.11 at 10:16 pm

Greetings: #25 BPOE===Arsehole!!!!

#30 Phil on 05.10.11 at 10:17 pm

Vancouver sales/listings has been consistently above 50% in the last few months. There will be NO price declines at this rate, unless listings explode, which they are not. Wait till 2012??!!

Realpaul, is the bedrock of Delta ie)Ladner, the same as Richmond?

#31 not 1st on 05.10.11 at 10:19 pm

#22 CarolMel

Don’t fight the contrarian view. When everybody lines up on one side, which is whats happening, then the opposite position can’t be ignored and sometimes is the right one. Some of what I said holds true and while I am no RE pumper and things need to correct, I don’t think its the house of cards everywhere that Garth claims. I’ve owned RE in 3 provinces so I know some of the underlying trends.

#32 Mr.Lee on 05.10.11 at 10:32 pm

If the only thing that keeps our economy going is inflated home ownership, then we are in big trouble.

#33 squidly77 on 05.10.11 at 10:40 pm

If the only thing that keeps our economy going is inflated home ownership, then we are in big trouble.

Indebted people are in a world of trouble.

#34 wes_coast on 05.10.11 at 10:50 pm

My realtor contact confirmed the same for Richmond. Money was flowing in via relatives in China. Now its all dried up overnight.

#35 Blobby on 05.10.11 at 10:55 pm

Im in my mid 30s.. I earn a decent wage – a 6 figure sum… Which whne joined with my wifes wages – is quite a sum we bring in.

.. But yet i’ve never owned a home (and it’d take prices falling significantly for me to even be remotely interested). I love having the freedom to up and move, and if work in my current city (or even country) dries up – i can just up and move with a months notice.

If my place needs repairing, the landlord fixes it. If I get bed bugs (yes it happened to me) and i need to get an exterminator – the landlord pays for it… As far as im concerned renting is GREAT!

So I’m confused when i read one of your posters above saying ” loan over my head than deal with rental frustration ever again.”

Im confused.. What “frustrations” are there with renting?

And im being serious here. I’ve spent all my adult life in rented accomodation and have never thought “gee, my life would be so much better if i had a mortgage and was tied to this same spot for the next 30 years” (especially when i’ve never lived in the same place for longer than 3 years – average about 2.).

I’ve never seen the downside to renting. So Im hoping someone who covets a big loan could explain to me?

I have freedom to move around
I have someone who repairs stuff for me (for free)
Im spending less money
I have more disposable income to put into investments

So i’m quite frankly confused.

PS: You may be wondering why im here if im not desperate to buy (presumably hoping that garth is right).. Well I like to follow this stuff as i’m worried about the knock-on effect all this idiotic overborrowing people are doing will have on the economy (and subsequently my investments/business).. Especially now the tories have a majority….

#36 NotAGreaterFool on 05.10.11 at 11:05 pm

No new mortgage rule changes: Flaherty

In the depths of the crisis Canada’s banks remained strong partly because of steps taken by the government aimed at boosting liquidity such as buying more than $70-billion of home loans from lenders. Ottawa also increased the limit on the volume of mortgages banks could sell into the Canada mortgage bond program.

Critics say that one unintended result was that banks were encouraged to make more home loans, which helped push up prices in the market.

But Mr. Flaherty said he does not believe there were unintended consequences from the government’s emergency support for the banks.

#37 US Investor on 05.10.11 at 11:16 pm


I want to respond only to your point 11. The rest I leave to other dawgs.

In the states, people are a proud bunch generally; I only wish they would do what the lending institutions would do in their position – walk if upside down! But by and large they don’t. They do however struggle to make mortgage payments under severe distress after jobs are lost and cash flow dries up. Foreclosure is the ultimate home wrecker and for most it is not a choice. If you can’t pay, you can’t pay! People need to understand this simple point, as the future Canadian RE deflation will have serious social consequences. It’s not just about losing money on some discretionary asset you’ve been playing on TD Ameritrade in between episodes of Glee. It’s about telling your kids to pack their stuff up and get ready to move into your sister’s basement because you lost your job, can’t find another one, and are being kicked out of your home. Pride, morals, determination, good citizenry be damned – you’re out.

By the way, I remember moving to Vancouver in the early 90’s to start Grad School. At the time the economy was in rough shape all over, I had spent a couple years making 5 bucks an hour early shift stocking groceries with an Economics degree. I was shocked when I moved to Vancouver and there were all these able bodied guys like me, not willing to work for minimum wage, loafing on government checks. I had never met healthy educated people so shamelessly accepting public hand-outs in my life.

#38 e on 05.10.11 at 11:20 pm

Garth, are there any advantages to getting married at 26 rather than, say, in your 30’s? In respect to financials… My girl is pressuring me, but I’m broke as a joke.

#39 Jon B on 05.10.11 at 11:26 pm

If anyone is interested in learning Richmond’s fate when the big one hits, check out the big map at the Fraser Discovery Center at New Westminster Quay. It lists the regions of the lower mainland and how the shaking will affect the ground. Richmond will be underwater. Dykes will serve no purpose when the island shakes.

#40 debtified on 05.10.11 at 11:31 pm

It is not different here and it is not different this time. The sooner one realizes this, the better off one is.

The downside is steeper than any possible upside. The potential reward is not enough to justify the risk. There is no better time to cash out and not cash in.

Get out now while you can. The longer one remains in denial and delusional, the bigger the certainty of one becoming the Greater Fool.

#41 Fool me once... on 05.10.11 at 11:32 pm

#11 realpaul,
Curious where you get your information from to defend your extraordinary claims? Surely you pontificate with such authority that I can only speculate at the number papers you’ve published regarding your research in geological activities on the west coast. Indeed. A wise man once said “better not to say anything and have everyone think you a fool than to open your mouth and remove all doubt”.
There is much research conducted by the local academic community backed by indisputable scientific proof regarding the many catastrophic seismic events that have taken place over the millennia. I would be happy to recommend various publications should you be interested.

#42 bridgepigeon on 05.10.11 at 11:41 pm

20 Hovering
More like a cult…without the spaceship rescue.

#43 Tim on 05.10.11 at 11:51 pm

Doesn’t matter, Canadians don’t want to live in Richmand anymore

#44 Cognizant on 05.11.11 at 12:09 am

My wife and our school aged kids rent in GVA, and have so for the last several years. By my calculations the landlord is subsidizing us to the tune of $800-900 per month. Plus they installed a nice new dishwasher a few months ago and a new washing machine the year before. I mow the lawn when I feel like it and when I’m not too busy watching our investment portfolio grow.
Were paitently waiting for the 35-40% correction we expect in the next year or so, and then might jump in. Bank pre approved us for an amount that seriously spins my head so we could buy an awfully nice house tomorow, if we wanted too. We ain’t poor and we ain’t hurting.
But I do feel bad for all my neighbors slaving away for a house they can’t even afford to maintain. And I feel bad that they have no investments other than their plain-Jane suburban tact home and no financial plan other than hoping that hyper-inflating home values continue on into the stratosphere.
And if prices don’t correct I’m just fine with having the landlord pay a big chunk of our monthly housing costs – until I’m in a retitrement home, I guess.

#45 Househunter on 05.11.11 at 12:12 am

There’s more proof the wheels are coming off. Not just in Vancouver, as I showed you days ago.

Richmond, yes. The real estate is sunk there. Vancouver, no. I think it’s misleading to say the wheels r coming off. Prices are stable and no signs of it falling …. Until the rates start to rise. That is gonna happen like teenage sex. All talk, nothing really happening.

#46 Debtfree on 05.11.11 at 12:15 am

@ PA thanks that’s the most interesting thing I’ve read here from the dog’s (poe’s paradox) screams rein . Though some of notfirst’s rings true .

love the sarcasm Garth . On a good/bad day one can smell the scent of money ( pulpmill) all the way to salmon arm ..alas montreal has no pulpmill . Kamloops does with a mile high stinkstack. Montreal has french girls, alas I only have one ..thank god .

#47 BPOE on 05.11.11 at 12:26 am

Read between the lines folks. Interest rates are going down

#48 RumbleGuts on 05.11.11 at 12:33 am

“So many myths collected in one handy place. Thanks. — Garth”

lmfao-even funnier than the article!

#49 earlymidlifecrisis on 05.11.11 at 12:48 am

Hey #7 ‘not first’ made some good points in #12 on the list. There are a lot of advantages to owning vs. renting and they’re not all financial. $ is not the only factor at play in the value of owing a home. I’m not arguing that prices aren’t too high or that one shouldn’t be financially balanced but c’mon- it’s not fair to discount some of these points. Money is not the only thing in the world. happiness accounts for a lot. It’s a very personal decision. Some can be happy renting and investing, some can not.

#50 reality guy on 05.11.11 at 12:57 am

Yep they are laying off teachers, shutting down school because of poor attendance and people not starting families like they use to.

More pink slips to come as government has to cut cost if they want to cut debt as they purposed in the budget.

Then that idiot who thinks we can have wages of 300,000k

Man you can employ a whole army of chinese or mexican people for that wage. We live in a global ecomony. Look at the computer industry outsourcing to china, india, and russia.

Our help centers now employing people in India, they were even thinking of having fast food drive thru orders taken by people elsewhere.

Its a grim reality. So when you think about wages shooting for the sky, think of the consequences.

#51 UK lurker on 05.11.11 at 1:28 am

I live in England Garth, and you are being only partly truthful about the slump here. In some parts of the country prices are crashing, but in wealthy, high demand areas, they are holding their own…like San Francisco in the US, or Vancouver etc. I suspect that eventually Kensington and Hove will go down, but it takes a long time. 4.4 times income is also a myth, where I live it’s about 8-9 times, which is why I rent. Sales are evaporating and the market has frozen as first time buyers go on strike and sellers won’t shift their prices. I have friends selling two bed apartments at $500,000 and wandering why all the viewings don’t yield an offer. It won’t be long before they realise they should have dropped their price earlier. They are in denial after buying near the 2007 peak, and being on the edge of negative equity.

I should be moving to Canada in August, just in time for your market to go tits up. What do you think about the prospect for the dollar? Should I leave my deposit money in the UK until the pound goes up, or move it over at the current rate?

#52 Ky on 05.11.11 at 2:21 am

Garth – When you are comparing the avg income to avg house prices multiples, you really should compare cities to cities, not cities vs country average. That skews the reality somewhat. In your post, you have compared Toronto and Vancouver vs. UK and the US. You are comparing apples versus a basket of fruit. If you look at the multiples for London and Boston, for example, you’ll see that they are alot higher than their respective country averages. London average house is about £400k, greater Boston is $300k (2x US avg). The interesting thing about London is that it is probably more akin to Toronto, but fast forward one year. No crash here, just a slow downward drift that was preceeded by slowing volumes. Ask any real estate agent here, and they’ll say “stagnant” – no desperate buying, but no desperate selling either. The latter is why prices aren’t crashing. I think it’s a comparison worth looking at (specifically for the 416 of GTA). Buyer and seller apathy.

London has 12.5 million people and is the crossroads of the world. Toronto, not so much. — Garth

#53 Dom_Now_in_Zürich on 05.11.11 at 2:32 am

What a lark….wonder how many pumpers will use this type of article to say the GTA prices will rise forever. What is amazing is that anyone who actually lives there would believe this crap. Toronto is one of the most congested, mis managed and ugly cities in the world. Certainly can’t hold a candle to real global cities.

#54 Houston on 05.11.11 at 2:32 am

Ball bags. Just picture them, right now, out there getting all their dox together for a loan application on a one way ticket to foreclosureville. Good luck and God’s speed.

#55 keny65 on 05.11.11 at 3:00 am

Yeah about being handed our collective ass…I would be wary of that if I were a little royalist bitch scared of loosing it`s colonialized peasants.We just showed Canada that we are still able to unify and galvanize our vote to change the political landscape in Canada and if our little adventure with the bionic man doesn`t work we can jump in at any time on the Quebec party train wich is strong as ever and the only party realy relevant to the seperation or join the more radical branch of seperatism the RRQ.You monarchist`s should get your head out of Kate Middleton`s ass for long enough to realize that the royal family is an underground nazi movement pushing eugenics and depopulation of the peasantry…Canadians should rally with Quebecers to oust these criminal`s against humanity,but instead you jump on the queen`s bandwagon and wave your little bullshit flag…don`t worry your time is coming…the reason Canada hasn`t crashed yet in real estate is that Canda is being turned in some sort of club med for the elite during the economical apocalypse by your favorite theocratical prime minister.When shit hit`s the fan in Canada,beware!…because this will mean that the”best place to be in the world”has begun it`s descent into new world order hell…internment camps for all those people squeezed out of credit or without a gun…and if you think your white skin will save you…think again! The royals are looking out for their own…the anglo-saxon elite.I`m a white skinned acadian and not considered white to the kkk(wich came to n-b in the 60`s to counter the great french menace)or to the royal family.Wake up people…in this brave new world it is not french against english or black against white but increasingly the elite against the rest of us…the time is coming when you will have to choose between the people or the corporations…but wait,aren`t corporations people too.Yes and that is why we are collateral for our broke governments selling out to the new world order.Join the freemen movement and be free…who ever heard of anything as ridiculous as owning land!!!Who works the land owns it…money is a symbol and nothing more,supported only by our collective insanity…

Aw, sounds like you want your own princess. You can have Celine Dion back. We’re done with her. — Garth

#56 Daystar on 05.11.11 at 3:33 am

#11 realpaul on 05.10.11 at 9:10 pm

Earthquake potential in Richmond… not possible…. ’cause realpaul sez so……… blames self claimed hype on civil servants….. and unions ….. runs down Chinese again ……. and again. Good God, its like I’m reading a cheezy character right out of a D rated 5 minute short produced on two bucks. ;)

#57 SquareNinja on 05.11.11 at 5:27 am

It’s so funny that the Realturd mentioned Chinese not wanting Richmond anymore, due to liquefaction, Tsunamis, and other funny reasons.

I actually met someone with HAM on the streets the other day, who said she didn’t want Richmond, due to concerns mentioned above. She was looking more into Vancouver proper… somewhere that UBC students might want.

To balance the anecdotal evidence, I also met another HAM, who had just closed on a $980,000 Richmond (North Steveston) rancher-style bungalow. 1,500 sq. ft., maybe 40×120 lot… owns multiple “investment” properties and wants to rent this one out for $2,500/month.

The common thread I see here is that both are only after capital appreciation, and both think that real estate goes up forever.

#58 Montrealer on 05.11.11 at 6:22 am

Glad you’re talking about Montreal! The numbers are as bad as everywhere else, even worse than everywhere outside BC according to some data.

Another thing to consider is that in Montreal (well, province of Quebec), average income is lower, and taxes (goods and income) are much higher, so the disposable income to pay for the house is less, making the ratio higher.

#59 Oh! Canada on 05.11.11 at 6:35 am

Oops. Someone forgot to mention that the median price for SFH in Montreal was up 6% in April.

Doesn’t jive with the doom and gloom narrative – so was omitted?

That was a YoY number and, in the context of an 18% sales decline, utterly meaningless. Like the bulk of your posts. — Garth

#60 Guan-Di on 05.11.11 at 6:37 am

@Househunter: “That is gonna happen like teenage sex. All talk, nothing really happening.” You and I had very different teenage years… But you are right, it will happen like teenage sex: quick, painful and loaded with regret.

@earlymidlifecrisis: Typo or Freudian slip: “$ is not the only factor at play in the value of owing a home.”

#61 BrianT on 05.11.11 at 7:07 am

#49Early-Owning, not renting is a status symbol for most women. It is not a status symbol for most men-in this regard it is similar to marriage, a status symbol for women yet not for men. This is separate from the actual internal or financial benefits of either.

#62 BrianT on 05.11.11 at 7:10 am

#45Househunter-Teenage sex is like Prison sex-the sex you want you don’t get and the sex you get you don’t want.

#63 SMOKING MAN on 05.11.11 at 7:12 am

.#47 BPOE on 05.11.11 at 12:26 am
I also called interest rates going down.

Talk about FUN.. I was just called to attend a focus group getting paid 150 bucks, it’s going to the food bank.

TD want’s to know why I closed all my accounts. Personal and two buisness.

Back in 2008 I had a HELOC at prime + 1 my rate was 2.25% I used the entre sum in investments. Was getting around 8%

The buggers overnight spiked it by a full 1 percent, no warning, they just did it.

I wrote tones of letters to the VP’s not one responded.

Bring my list to the group…. Can’t wait
fn bankers

#64 2deep on 05.11.11 at 7:15 am

In the U.S. right now they estimate there are 2000 suicides each year due to stress and inability to cope with the recent financial downturn. We are a long way from invincible.

We hunted down Osama for his murdering of 3000 people on 9-11, why not the same for the creeps that poisoned our world economically? (rhetorical, I realize there are too many)

Be supportive of your friends and communities, isolation and self preservation will not be the answer when the crap hits the fan. It’s time we all started taking care of each other instead of stepping on each other to get ahead.

#65 grantmi on 05.11.11 at 7:24 am

You know this is not going to end well!!

Desperate UNEMPLOYED home owners carrying the paper for bankrupt buyers…whose credit has been shot by the big banks!!

It’s near folks!!

Home Sellers Step Up as Last-Resort Lender to Poor-Credit Buyers

May 11 (Bloomberg) — Sue and Douglas Reed knew no bank would give them a mortgage — not with a bankruptcy and two foreclosures fresh in their credit history.

They turned to Hilarie Walters, whose childhood home on 15 acres (6 hectares) in Marshall, Michigan, had been on the market since 2009. The unemployed single mother of twins agreed in December to sell the property to the Reeds for $105,000. She also consented to a risky payment plan that in effect makes her the couple’s mortgage lender.

#66 Carruthers on 05.11.11 at 7:27 am

#12 Chaos wrote: “OMG…Gas is a buck forty in Toronto…

Poor bastards…they never saw it coming.”

Driven along the 401 lately dude? The majority of non-commercial vehicles are either pick-ups or SUVs…usually with one occupant.

If they never saw it coming then I would suggest they weren’t paying attention. The writing’s been on the wall for a long time.

Cheap energy is not a right. Better get a Civic while they’re still cheap.

#67 Fractional Reserve on 05.11.11 at 7:47 am

No 22 Cory.

I believe this is what you were trying to say.

The market can stay irrational longer than you can stay solvent.
John Maynard Keynes, (attributed)
English economist (1883 – 1946)

#68 PEI Red on 05.11.11 at 7:52 am

#7 Not First is delusional – couldn’t even read all the comments.

No “Liar Loans” in Canada? Look at any mortgages granted to someone self-employed, a lot of mortgages processed through mortgage brokers and government backed purchasing programs. Anyone the got into the market in a VRM in that past few years is essentially also in a “liar loan”.

Grandparents didn’t use their homes as ATMs and constantly refinance.

Sure some minorities focus on securing property for their families, but their kids are growing up in house horny Canada and are drinking the kool-aid.

Intergenerational asset transfer? Are you kidding most 80 year olds are remortgaging to bail out their 50 year old from credit card debt and over extended mortgage payments. (Trust me, I worked in the financial industry and saw that insanity almost every day.)

Get a grip on the rose coloured glasses and rip them off, sure the world won’t be pink, but at least you’ll see more clearly.

#69 Mtl RE Observations on 05.11.11 at 7:54 am

Thanks for mentioning Montreal, Garth. While the price of the average SFH is lower than in other cities, the market is still insane here and things are starting to give outside of the city. People are asking $260K for a 500 sq. ft. box in the sky in the downtown area. Yesterday I mentioned how only 4 properties had been sold in the past 8 months in Ste. Agathe. This weekend when we were visiting family in the suburbs of Laval, we noticed that townhouses and condos in three new developments were sitting empty. When we went into the sales office last summer to inquire about the projects, the sales person whispered to us that the developer was desperate and to make a low offer. One year later, and they’re still empty! Ouch.

#70 Oh! Canada on 05.11.11 at 8:03 am

“That was a YoY number and, in the context of an 18% sales decline, utterly meaningless. – Garth”

So now an annual increase in price of 6% is “useless.”

The 18% sales decline was in comparison to an all-time record in April 2010. By comparison, that stat is close to meaningless, since last year was an anomoly in many markets (including the GTA), due to the mini-recession in 2009.

Near-record sales volumes are the signs of a robust market.

The sales to new listings ratio in the GTA (a closely watched market indicator, by those in the know) is forming a trend line indicating rising prices. Go figure.

Learn to read. It’s a useful skill. ‘Meaningless’ is not the same as ‘useless.’ And Montreal’s sales decline is now 12 months long. Have fun with the lipstick. — Garth

#71 Mikey the Realtor on 05.11.11 at 8:17 am

Posting a picture of me in costume would have been more appropriate around October, wouldn’t it?

RE will be stagnant for a while and then it will start to go up, I’ve met people who are living day to day but won’t sell at any cost. Forget it folks, RE will only go higher in the next few years. All the Garth followers are going to be the ones holding the bag.

#72 Anna on 05.11.11 at 8:35 am

According to MLS there are currently 810 listings in tiny Oshawa – how can inventories be low???

#73 MM on 05.11.11 at 8:44 am

#36 “Critics say that one unintended result was that banks were encouraged to make more home loans, which helped push up prices in the market.”

That does explain why the bank was so eager to approve us for much much more than we asked for – take the profit, pass the risk to the next fool (the tax payers)

#74 pjwlk on 05.11.11 at 8:45 am

Hey I’m not an expert or anything but looking at the most recent GTA data at Guava ( I just don’t see a slide in Real Estate coming any time soon. I don’t buy the current we’re at the top because of reduced inventory and reduced sales theory. That is contrary to everything I’ve read and learned about the workings of any market. Something else must be going on. When you add in the fact that the average person on the street still believes that there is no problem in Real Estate at this time, you simply just don’t have a leg to stand on with that argument. As somebody once noted, “The market can remain irrational longer than most can remain solvent”.

Again, looking at the Guava GTA data ( and comparing 2008 to 2011 there are virtually no similarities other than the general annual cycles. April 2011 sales at 9041 are in the middle range of the years charted, while inventory (17466) is at the lowest of all years charted. That to me would indicate, along with the average and median prices being above all other years, that demand is higher than supply. The April 2011 “GTA months of Inventory” and “GTA days on the market” both being at or near the lowest of all the years charted would also support that conclusion. That I think is a classic market, not the current theory I’ve been reading about here.

I don’t believe GTA prices will be going downward until the public sentiment changes and until we see a clear indication that supply is greater than demand, similar to 2008 as shown on the charts. BTW thanks to person(s) who put together the data and charts at Guava, who ever you are. They definitely help keep things real.

#75 Dave M on 05.11.11 at 9:17 am


If you think the separatists have been handed their collective ass you either weren’t paying attention, or don’t know a thing about Quebec. The NDP didn’t exactly campaign here on being a strong federalist voice.

The separatists just moved their vote to a party that runs outside of the province. There’s still the same number of them, and they’re still separatists. If you think sovereignty is dead, wait until the next provincial election. The collapse of the Liberal vote isn’t exactly going to hurt the PQ (and all the other, smaller parties are sovereignist too.)

#76 Daisy Mae on 05.11.11 at 9:21 am

FINANCIAL NEWS: “Mr. Flaherty said he’s already intervened to toughen mortgage rules three times in the last few years and there’s no need for further action as conditions in the market are finally moving in the right direction.”


#77 bigrider on 05.11.11 at 9:23 am

Paucity is not my strong suit admittedly.

No one wants housing prices to decline severely more than I do(yes I own a home outright)

However there is no sign of a pending decline ,let alone a collpase in prices here in TO. Everyone is the construction and sales industry I talk to can’t keep up.

Frustrating. I am so sick of hearing about the merits of RE investing over financial assets.

Bring on the RE crash already !!

#78 RenterinMississauga on 05.11.11 at 9:24 am

#7notfirst, in answer to point #12:
we are having a great experience as renters. We are in our late 20’s, have two young kids and we have a nice income. We rent a 3 bedroom detached home in a nice neighborhood in Mississauga and couldn’t be happier. We enjoy all the perks of living in a family home (space,garage, backyard, location, etc) minus all the headaches. For example, a few months ago, the kids’ bathroom had a ruptured pipe that leaked down to the family room. All we had to do was call the landlord and within the hour someone was here fixing it. We don’t worry about cutting the grass in the summer, nor snow removal in the winter. It all happens magically without my hubby or I lifting a finger. The neighbors are great too.

A couple of years ago, with a new baby on the way, I desperately wanted to buy a house. I found this blog and decided to put my urges under control. A lot of our friends became homeowners, and now, many of them wish they hadn’t being that a lot of their income is just being consumed by their homes. Luckily, we don’t have that problem, we have a beautiful (rented) house that we can enjoy for a lower monthly cost that if it was our own. We are very happy renters.

#79 Daisy Mae on 05.11.11 at 9:25 am

Re: #36

Financial POST, not Financial News (see above re Flaherty ‘tightening’ rules…)

#80 The American on 05.11.11 at 9:26 am

These people from Canada were lucky…

#81 not 1st on 05.11.11 at 9:32 am

Maybe I should recount my rental experiences. That would involve memories of the next door neighbor who cooked something akin to rotten road kill every night, or the guy who smoked so much dope that it rolled right out from under his door each night into my place. Or the guy who thought playing indoor basketball above me was cool. Or the other guy who used to bang his girlfriend all night long until she howled like a wolf for the entire complex to hear.

Thats renting, unless you are talking about renting a higher end SFH somewhere then those rents are much more than apartment blocks because they can be. Calgary basement suite is about $800/month. 2 BR apt is $1200-1500. Plain jane junker SFH is $2,000. Luxury abode is $3,000 and higher. Once you start paying $2,000 – $3,000 a month in rent, doesn’t owning make more sense? Or are we talking about $800/month suites for single guys that are never home?

Maybe marriage is the missing point of view from Garth’s theory.

#82 bigrider on 05.11.11 at 9:34 am

F*&^ in Gauranteed if I throw my hands into the fire and buy a piece of RE in T.O the market will tank the next day…

I may have to do just that to finally be rid of the goons around me telling me that ETF’s are for suckers and rental RE is road to riches.

F&^% in hate my cultural background sometimes..(pasta every night at mama’s house..LOL)

#83 bigrider on 05.11.11 at 9:36 am

What the F*ck is it going to take to get RE prices in TO to fall just 20% to shut all the F&^%ers up around me …

#84 Kenny on 05.11.11 at 9:43 am

#74 pjwlk: looking at the most recent GTA data at Guava ( I just don’t see a slide in Real Estate coming any time soon

There is nothing in those charts to indicate that there would be such a decline in October of 2008. Everything was tracking normally up to the September stock market crash.

#85 Kenny on 05.11.11 at 9:46 am

#76 Daisy Ma

F isn’t tightening mortgage rules because C will do it for him by raising interest rates.

#86 smw on 05.11.11 at 9:49 am

#76 Daisy Mae

Translation is there is no need to mess around with mortgage rules to buy public sentiment, we have our majority.

#87 not 1st on 05.11.11 at 9:53 am

I follow the advice from my grandparents before the blog dawgs out there. They came to this country with nothing, homesteaded on the bald prairie and lived through a lot more than most people can imagine including the great depression.

Their mantra was always own and control what you need in life, but own only what you can afford.

Renters are like the new 21st century sharecroppers who now shout “I have liquidity” from the roof tops while central banks devalue that paper cash and equities everyday. Priced in gold, the U.S. greenback has lost 90% of its value and the stockmarket hasn’t gone up in 10 years. There’s your beloved liquidity.

I think you belong on the bald prairie. — Garth

#88 adele on 05.11.11 at 10:12 am

Garth are you spiderman? Its just that we don’t see you two at the same time ,and I was just wondering….
fyi Garth its actually ‘bill’ using the wifes computer this morning as the keys fell off mine. ….

#89 Junius on 05.11.11 at 10:17 am

#47 BPOE and #63 Smoking Man,

Only you 2 insane pumpers could read that article and come away thinking it means no rate rises. Did you actually read the article? It relates entirely to the CMHC rules.

The brainless leading the brainless.

#90 squidly77 on 05.11.11 at 10:17 am

Mr. Flaherty said he’s already intervened to toughen mortgage rules three times in the last few years and there’s no need for further action as conditions in the market are finally moving in the right direction

He’s done more than you think, we are almost back to where we were in 2004 all that needs doing now is full enforcement such as clamping down on 5% down and full proof of income and a raise of the credit score required, those clamp downs would require no announcement.

#91 Marigolds and Lavender on 05.11.11 at 10:20 am

Over time I have noticed a common theme of a certain group who write in to this site. These are people who have regrets about not buying houses during the past two years.

They are sometimes angry they did not take advantage of a rising market as they see friends and family enjoy the (theoretical) windfalls of a market top.

So they write in.

They say things like “Turner, you were wrong, I should never have listened to you” or “I lost money by not buying last year and look at me now, still renting a basement suite”.

My recent favourite; “I warned my family about what you said. Thank God they did not listen to me”.

The common theme is that a good opportunity was lost. They see the spectre of never being able to afford to get into the market because the big purchase was delayed.

Sometimes these people are Realtors who think they see an easy opportunity to knock down the advice. Their last flimsy twig of proof is to point to the Vancouver and Toronto markets (two of the most delusional and delirious markets in the Western world right now). “See, they drone on sarcastically, prices are still going up. Two years have passed. You don’t know what you are talking about, man”.

In almost all cases it is about blame. Rarely do the writers acknowledge that most Canadian real estate markets are already suffering multi-month sales declines and some are currently experiencing outright price reductions.

The writers conveniently tend to forget that mortgages run for 25, 30 and 35 years. They also neglect to note that two years of “theoretical” lost profit opportunity is nothing compared to the potential of a full decades negative equity.

Mostly these comments just point to the inexperience of the writers. What they are commenting on goes to the heart of timing. Very few people do that really well.

Even for those who get timing 100 percent right it can sometimes be chalked up to plain dumb luck. Like the luck of ignoring sage advice and then having perfectly timed both a purchase and subsequent sale at the exact market top to both get in and get out with the maximum profit. Funny stuff!

Recognizing a major trend can keep you from making serious investment mistakes though. The bulk of evidence tells us that real estate cannot be sustained where it currently sits. That means losses are ahead in most regions of the country.

Some markets, sadly, will stay irrational for a bitterly long time. Nobody can predict that. None stay in bubble territory forever though and we know with certainty that ALL bubbles eventually burst.

All….not some, not a few, not three or four….ALL burst in the end.

These exceptional markets like Vancouver only make the final correction an even harsher experience as prices finally revert back to the mean. They make fools of all the people who write in to this site and cry pathetically “Turner, you were wrong, you are the real fool”

To you people who keep complaining about the advice while ignoring that the national trend is now tilting towards price declines it may be worth reminding you that nothing has really been lost by having stayed out of the markets during their frothy peaks. The longer term downside in most of Canada’s housing markets is still much greater than further upside potential.

Using Vancouver, one of the worlds most outrageous and extreme cities for price distortions as a gauge of proof does nothing to better your case after the fact either.

And don’t forget, if you didn’t sell, you didn’t profit or take that fat capital gain to the bank anyway.

Now grow up.

#92 vreaa on 05.11.11 at 10:20 am

Manufacturing Exclusivity in Vancouver – “Purchase these hot condos prior to everyone else.”

Faking rarity of product at The Village.

#93 squidly77 on 05.11.11 at 10:20 am

I forgot to mention that BOC will be raising interest rates soon and bond market yields are set to soar.

#94 Junius on 05.11.11 at 10:21 am

#76 Daisy Mae,

You asked what F means when he says, “conditions in the market are finally moving in the right direction.”

Less lending and less stress on the CMHC. Market is cooling so no need to cool it further.

#95 Mister Obvious on 05.11.11 at 10:24 am

Another day of miserable spring rain in la-la. On the positive side though, the RE market has come to such an exquisite point of robust fragility. It’s what keeps me tuned in.

#96 Bast on 05.11.11 at 10:57 am

#81 Not1st – Also not my experience with the Calgary rental market. Have been in the same apartment complex in Sunnyside for nigh-on 17 years now. Two-bedroom for $1,050. If you can get past the red shag carpet in the hallways and a few lingering avocado green appliances, this is a excellent building. Quiet, long-term tenants – no hassles and well managed. Why buy? I’m not going to – not in this market….

#97 Junius on 05.11.11 at 10:58 am

And so it ends here in Canada. After nearly a year of the air coming out the bubble is now bursting across the country.

I have been a believer in the bubble since mid 2009. My turning point was sitting in front of a mortgage broker offering me a 7 times income mortgage on my six figure salary. However they could “get me more”. I was shocked but told that “everyone was doing it.” Indeed.

It had been years since I had even considered getting a new mortgage. It shocked me into looking deeper into what was happening and this Blog was one of the many things I found to keep me from making the worst decision of my life. It helped me change gears, learn to invest, cut my debt and live a life in a resilient place.

Those of us who saw this earlier and took steps to prepare can take some comfort in that fact. However the ramifications of this burst are going to be widely spread across all of our society and hard for all of us.

Let’s not forget that this is a man made phenomenon. Starting with our banksters and the politicians that they own they have created this situation for reasons greed and greed alone. The RE industry and just their stooges and henchman. This fish rots from the head down.

Our current PM and his henchman F have used housing to gain themselves a majority gov’t. Remember that they had a choice and an example to the South to learn from when they started relaxing the CMHC rules. They need to wear the coming Tsunami because they contributed to it for purely selfish reasons.

#98 Junius on 05.11.11 at 11:00 am

#22 Cory,

The quote is from J.M. Keynes – “the market can stay irrational longer than you can stay solvent.”

Very applicable to housing bubbles.

#99 Marigolds and Lavender on 05.11.11 at 11:01 am

#82 bigrider on 05.11.11 at 9:34 am

F*&^ ing Gauranteed if I throw my hands into the fire and buy a piece of RE in T.O the market will tank the next day…

See my previous post bigrider. All the warning signs are out there. You might weaken and buy because your Italian relatives are pushing you but think it through for a few moments.

It does not even matter that prices might go up for six or eight months more, because the ride down will wipe out all your gains anyway. The probability of prices declining are much higher than the probability of prices increasing at this stage of the game.

How do I know that? How can I say that with any confidence at all? Read on……

*Average prices are at all time highs. (that alone should stop you dead in your tracks and cause you to think hard)
* Price to income ratios are at extreme levels
* Low interest rates are irrationally low. They have in fact never been so low. That will end. It is 100% guaranteed. As rates rise, home prices will decline.
* It is cheaper to rent than buy in every major city in Canada now. It is cheaper to rent than buy in most medium and small towns too. Think that through for a moment. Does it tell you anything at all about what a good decision might be?
*Incomes in real terms are not rising. So what is really holding up high prices then? Low interest rates of course. See the previous sentence.
*Australia, the only other Western nation similar to Canada and one that is also built around a commodity dollar has just hit the real estate end game. We (Canadians) are literally the last man standing in the Western world right now with frothy prices for homes. Do you seriously think we are special enough to get through this with zero correction? Do you think we can do it if commodities are about to go into decline and Stimulus is being withdrawn?

* I could go on all day. I won’t. Here are a few other risks:

Overbuilding of condos in key markets.
Retiring boomers and the big demographic bulge.
Irrational exuberance with no foundation anymore.
Public sentiment is now going negative on housing.
Extremely overbought levels (not different than stocks).
Very low average savings rates amongst Canadians.
The highest debt/income levels amongst the G20.
Rising bankruptcy and insolvencies.
Jobs markets where part-time work is increasing.
Consumption (65% of our economy) in decline.
Manufacturing being devastated by the high dollar.

Need more reasons to rethink buying a house right now?

#100 Cellar Dwellar on 05.11.11 at 11:10 am

@#26 BPOE

#101 Steevee on 05.11.11 at 11:11 am

Marigolds and Lavender,

Very well said. Thanks for posting.


#102 Cellar Dwellar on 05.11.11 at 11:16 am

@#26 BPOE
“….Richman is highly desirable. World Class, clean air and the best restaurants in the world period. The dyke system is world class and can never be broken so fears of earthquake liquification, sea level rising etc will never happen. The place is known for it’s good luck. Again, look at the big picture. …..”
RICHMOND is WORLD CLASS ????? Bwahahahahahaha Oh my god my stomach cant take it Bwahahahahhaha

And your recommending buying a $1 million dollar house there because the “restaurants are the best in the world” Bwahahahahahahahahahahahaha

And the Dyke system is world class and will never break. Tell THAT to the 25,000 Japanese that thought their dyke were strong enought you smug IDIOT !
I truly hope you live in Richmond. So you can eat your words while treading water in Georgia Straight.

Seriously are you Tom Vu’s illegitimate son ? You sure sound like him… Non stop drivel.

#103 dddd on 05.11.11 at 11:29 am

vancouver east report here (comm dr area)….

who says a house can’t be liquid? as it has been for the past 10 yrs around here any decent SFH can be sold WAY faster than a car or a pet. Only the real junkiest overprices places don’t have multi offers the first weekend of showing – a nice reno’d small sfh just went for 1.3m (EAST of nanaimo st!) faster than Action Direct takes to settle a trade . ppl buying here are prof types with plenty of salary and savings and profits from selling a condo. It seems they are not struggling w mtge payments. btw it’s 0% HAM in this area, but the HAM has pushed all these prof ppl from the west side to the east.

most ppl in van don’t want to sell because they don’t want to move anywhere else. we love it here. most of us are from ON,NS,MB,etc and we are NOT going back.
van city has a very small # of sfh compared to the metro region (15%?). Very few choose to live in bridge crossing suburbs by choice so there is always about 75% of the sfh owners in the area who are waiting for their chance to live on the right side of the bridge/hwy traffic hell.

in 2008 there was no real drop in this local area either. the ppl who sold then are very much priced out ,for now at least, and may have a long wait if ever to get the same prices – one family i know is now on it’s 2nd rental place since then – moving every cpl years is not a stable life for us or our kids. the older neighbours who came here 30-40 yrs ago don;t move either, they stay until the ambulance carries them out for the last time.

we have extensively reno’d and customized our home (0 mtge)and our nearby waterfront rec property(0 mtge) to meet our exact needs/prefrences. try getting a wood stove, a dog door, skylights, a huge sundeck etc put into your rental and see how much freedom you have.

rentals round here are gone even faster than sales. the empty suite in downstairs is great storage but in a pinch could be rented for double what it was 7 yrs ago, plenty to pay all the house expenses and have lots left over.
btw holding costs are about 500/mo where renting an equal(ish) place would be around 3500.

i can see prices in the distant burbs taking a hit, but demand for a place in the city remains very, very strong. until langley or ladner get some oceanfront beaches and downtown falls into the sea i don’t see this ever changing.

places in small town bc without lake/ocean front are and have been nearly free – low demand. the severely limited stock of houses in the city core will never be enough to come close to meeting the demand from bc and the rest of canada.

as a kid in 1980 i came on a trip to van w my parents for a business group meeting, i still remember the shock and disbelief of all the adults when they saw a blah bungalow on the west side selling for 320k – they all said it was way too high and surely not sustainable. only about 4-500% appreciation since.

#104 Chaos on 05.11.11 at 11:34 am


We’ve had gas @ a buck forty in YVR for about 3 weeks now.

Today gas is a buck forty-four.

In Vancouver:

We have the most gangs
We have the biggest underground drug economy
We have the most expensive houses
We have the most non-resident owners
We have the largest population of hopelessly homeless living in poverty
We have the worst traffic
We have the most drug addicts
We have the largest personal debt load
We have the largest service economy
And we have the highest price for gas


#105 ian on 05.11.11 at 11:36 am

Garth – we convinced my mother-in-law not to buy when she sold her North Toronto last year and temporarily rented our furnished walk out basement. Cheap for her, allowed her to settle her mind,and kept her close to her grandson which helped us a lot when we worked late. Last year she made 40K from the house investments. Travels continuously because she has no house worries and an extra 40K buys a lot of plane trips. definetely a win-win.

#106 pbrasseur on 05.11.11 at 11:41 am

Garth – Not sure about your Montreal vs Toronto numbers for SFH, maybe if you are talking Montreal greater area, otherwise I think prices in the city itself are much higher.

In fact the ratio price/income is similar in the two cities.

Anyway the market will tank and sales are down here (MTL) too.

#107 Tim in Ottawa on 05.11.11 at 11:48 am

So I live in Ottawa.

My wife and I bought a regular, plain, somewhat small two-storey three bedroom SFH in 2004 for $240K. Now, it’s likely “worth” about $320K. We now have a kid, and would like to live in something bigger, but then I ask myself “What are we really losing out on by staying put?” Our lives are perfectly comfortable (our storage room is crammed, but we make do). We are actually saving money each month for the first time in forever. Our mortgage will be paid off in under 10 years.

We just looked at a house listed at $370K, and damn-near put an offer in on it, but I got cold feet (maybe smart feet?). Anyway, a $370K home would add about $70K (plus more in interest) and a few years to our mortgage. So we could continue to live in comfort and enjoy my relatively financially-worry-free state of mind, or we could’ve taken the plunge, upped our mortgage, reduced our disposable income, reduced our future savings…and all in the name of…a bigger house that would just require more time and money to heat, electrify, maintain, and whatever.

The fact that, given the above info, we almost bought the house just speaks to how emotional house purchases are. It’s easier to see yourself living in a prettier/bigger house than it is to see yourself retiring earlier, taking more vacations, actually being able to pay for your kid’s education, etc…. And all that without talking about the potential looming housing plunge (not to mention high gas prices).

Anyway, I’ll try to continue to stay sane for a few more years if you continue to preach, Garth. Thank you kindly for an entertaining, informative blog.

#108 maxx on 05.11.11 at 11:49 am

#14 Simon Giannini = Real Estate Scumbag Extraordinaire-

Scaremongering on this level ought to be an indictable offense- it is fraud, plain and simple.

When almost any means are legal in order to funnel stupid money into the spin-cycle, it is by no stretch of the imagination a healthy basis for a sustainable economy.

#109 dddd on 05.11.11 at 11:53 am


as things have been up so much i do not predict there will be any big gains in the next 5 yrs, but the high demand areas will likely go sideways at worst (fyi richmond is NOT a high demand area outside of offshore money – swampy traffic snarled sprawling inconveniently located bridge isolated mess of a place I say!)

other bits – stocks may have have begun the big slide back to sub 9k dow – have gone to all cash. when qe3 (or whatever thinly veiled substitute) is announced look for more gains in gold. us govt budget is in a bigger than gigantic hole and digging fast. printing trillions to pay the bills is no way out. how can the usd survive endless printing?

You should have quit when you were ahead. These comments are without merit. — Garth

#110 Marigolds and Lavender on 05.11.11 at 12:03 pm

#38 e on 05.10.11 at 11:20 pm

Garth, are there any advantages to getting married at 26 rather than, say, in your 30′s? In respect to financials… My girl is pressuring me, but I’m broke as a joke.

Hitch her before she wakes up.

#111 kilby on 05.11.11 at 12:10 pm

#7 (Not First) Interesting thoughts, a lot of them make sense and I know of many in these situations, well written. I still won’t jump into this market for a year or more.

#112 DM in C on 05.11.11 at 12:12 pm


Calgary basement suite is about $800/month. 2 BR apt is $1200-1500. Plain jane junker SFH is $2,000. Luxury abode is $3,000 and higher. Once you start paying $2,000 – $3,000 a month in rent


I think you’re pulling those figures out of your ass. Not my experience in the Calgary rental market at all. Rented one smallish house in Royal Oak — $1500/month. Excellent neighborhood, no issues.

Now in Tuscany going on 4 years. Rent a beautiful 2 story front garage fully finished place that would list at $500k+ — $1850/month. 22% of my net monthly income.

The $3k a month you speak of? Haven’t seen it here in Calgary, unless you’re only looking at Mount Royal, or an acreage.

And we’re married, two kids. Renting is awesome right now, and I’m teaching the boys the same — buy if and when the time is right. And it’s not right now.

And surprise surprise, this is coming from the only female in the household.


#113 not 1st on 05.11.11 at 12:19 pm

This blog is so skewed its frightening. One class of assets, namely houses, is totally a house of cards ready to crash around your ears if you don’t sell immediately. Then somehow magically stocks and equities are perfect investments and everything is butterflies and rainbows at the NYSE and the DOW is going up because of corporate profits. This is the biggest joke in history. The DOW is going up because of QE, NOTHING else and its about 5,000 points over valued and almost doubling in 3 years. But in Garth’s world, this isn’t a bubble. There are bubbles everywhere else according to him.

Let me make this perfectly clear in math terms for you people who can understand and out the pieces together:

– The U.S. economy is 70% debt fueled consumer spending
– The U.S. just went through an economic near death experience in 2008.
– The U.S. is trying to print its way out of this crisis
– The U.S. has unpayable debt burden of more than 100 trillion (source: U.S. debt clock)

Two Paths to the same result:

1. U.S. will technically default in 1 months time, either by raising the debt ceiling or by not raising the debt ceiling – same message to creditors – U.S. can’t pay its bills. Dollar crashes, new round of QE, etc = forced austerity by the market on the country = less consumer spending = DOW gets hair cut.

2. U.S. bites the bullet and makes substantial cuts, near 300 billion, raises taxes and interest rates, avoid default but creates austerity on american people by gutting spending. Dollar stabilizes, fed stops printing, but jobs and wages don’t come back = less consumer spending = DOW gets a haircut.

Seriously Garth, why don’t you tell your readers the TRUTH about equity markets before you get a bunch of people selling their home to buy in at the peak of the market.

So, don’t buy US equities. There’s a plethora of other assets which (unlike houses) pay you to own them. You need some Valium. — Garth

#114 scibidubadebumbado on 05.11.11 at 12:22 pm

#11 Realpaul
They still have the head tax. It’s just called an “immigration fee” of last I heard $900.00. in addition to a myriad of other costs of immigrating like English exams and call center costs to have a call center examine your application before submitting it.
I don’t even get why a head tax is considered racist. In those days they weren’t politically correct but no harm was meant. There should be a decade limit to apologizing for past so called “racism”. I see it as a cash grab from our “softie aplologist” Canadian culture. New immigrants know how to play us.
No one calls the Japanese, “racist”, but I nor anyone not of Japanese blood origin can become a citizen there even the thousands of descendants of Korean comfort women who are born there. Try to become a Chinese citizen and see how far you get!

#115 Devore on 05.11.11 at 12:33 pm

#81 not 1st

Sounds like living in a crappy condo. Aren’t those full of owners too? Cross your fingers and hope nothing bad happens when you’re having your open houses.

#116 Devore on 05.11.11 at 12:36 pm

#76 Daisy Mae

there’s no need for further action as conditions in the market are finally moving in the right direction.”


= sit back and wait for the overleveraged to bend over.

#117 Devore on 05.11.11 at 12:45 pm

#87 not 1s

Their mantra was always own and control what you need in life, but own only what you can afford.

You know, all those people in the US that are now underwater and cannot afford to move for any reason, they bought what they could afford too. I’m sure their grandparents would be proud.

Virtually no one on this blog is saying to never buy a house. Go ahead, buy a house, when it makes economic sense. By definition, it is not always a good time to buy. Is today a good time to buy?

Priced in gold, the U.S. greenback has lost 90% of its value and the stockmarket hasn’t gone up in 10 years. There’s your beloved liquidity.

That’s funny, I’m up every single year for more than the last 10 years. The stock market has done just fine. It’s called diversification and sector rotation. You know, Investing 101. You’ll never make money hand over fist, but you won’t lose your shirt either.

#118 bigrider on 05.11.11 at 12:50 pm

#99 Marigolds and Lavendar to bigrider.

Marigold, my posts today were all sarcastic. I am a homeowner ,no mortgage. I have more of my net worth in financial assets. I have been on the blog for quite a while. No intention of buying more RE in any form whatsoever.

I am surrounded by those who believe the stock market and all financial assets are a waste of time. Yes it is a cultural issue to some degree. My rants today were simply my frustration in the fact that I live in one of two cities in the world that continues to bloom when it comes to RE and the fact that those around me continue to be proven least in there mind.

I am extremely bearish on the prospects of RE going forward. I simply lack the “paucity ” ,I guess , to wait for this impending decline.

#119 Alex on 05.11.11 at 12:52 pm

If anyone’s still interested (and I hope you are), Global TV just responded to the second of my CRTC/CSBC complaint letters. Again, it denies any improprieties.

HOWEVER, two things to remember. 1) Each CRTC complaint, if valid and acted upon *by* the CRTC/CSBC, is treated quite seriously throughout the process and necessiates not only a response from the media outlet in question, but also forces at least *some* of the higher-ups within that organization to deal with it and, hopefully, think about their questionable practices. 2) Because I’ve expressed my DISsatisfaction with the two Global responses to date, my second complaint has gone into a file with my first complaint, and the whole thing will soon be in front of a CSBC board for their ultimate judgement.

Meanwhile here in the eastern suburbs of Raincouver, the price reductions just keep on coming. I follow, via realtor “hot lists,” Langley through to Chilliwack – in other words, most of the Fraser Valley. And folks, anyone who tells you it *isn’t* coming apart is a BPOE. Yesterday, even more so than usual, my inbox was overflowing with price reductions. A torrential downpour it was.

And that’s not even counting the Okanagan, where I’ve been fed a steady diet of price reductions for months now and where the word “tanked” doesn’t even begin to describe the current housing environment.

So again I say, anyone who claims the correction isn’t already here needs to lift their head from the sand and look at the periphery. Prices are *still* too high, but the trend is clear and it’s getting closer.

#120 NorthOf49 on 05.11.11 at 12:53 pm

Looks like the US Feds are getting out of insuring the $750K+ mortgages. Not good for higher end US housing, or as the mortgage broker puts it – “We’re looking at more price drops, more foreclosures,”

Federal Retreat on Bigger Loans Rattles Housing

Of course, NAR will be lobbying heavily against it.

#121 bigrider on 05.11.11 at 1:10 pm

To Everyone on this Blog:

An informal survey:

Question -What do you believe is more likely.

A) Real estate values double in next ten years in T.O and Vancouver


B) Equity markets TSX/S&P double in next ten years.

Please post your answers

#122 abc on 05.11.11 at 1:27 pm

OMG F himself acknowledge the downturn direction of housing.

F : Mr. Flaherty said “he’s already intervened to toughen mortgage rules three times in the last few years and there’s no need for further action as conditions in the market are finally moving in the right direction”.(which is downward).

F: Come on people buckle up. Hiiyaaa…

#123 CarolMel on 05.11.11 at 1:28 pm

#102 cellar: “I truly hope you live in Richmond. So you can eat your words while treading water in Georgia Straight.”

You make me laugh! Hahahaha. That’s funny.

#124 Toon Town Boomer on 05.11.11 at 1:29 pm

#99 Marigolds and Lavender
Amen Sister! You speak the Gospel Truth & I couldn’t agree with you more. I shall be saved.

#125 Glad on 05.11.11 at 1:30 pm

Well bears, look at all that wonderful market volatility.

Looks like interest rates may be going down now, especially once the QE funding dries up. And the feds just told us no more mortgage changes. All good good news for the RE market.

Looks like those realtors, and all their supposed lack of knowledge of bonds and interest rate determinants, were right with multi-years of low, low, low interest rates.

We are in year 3 of low “emergency” rates.

Lol, I still remember all the bears here saying interest rates would rise to the moon, with their little analogies to the 1980s spikes.

Oh, that one brings a smirk on my face. Of course, the less than 1% interest rates on all those bear war chests is even more amusing.

Oh well, crash around the corner eh? Maybe 2020.

#126 candy on 05.11.11 at 2:07 pm

Documenting the descent in Ottawa:

26 year old but smart looking 1200 sq. ft condo in much in demand Carlingwood area in Ottawa sold yesterday for 20% below peak (of Sept 2010).

Although it had been listed for over 6 months, there is an uproar of disapproval shaking the building.

“How could they, after we just spent 100 grand landscaping it?”

Money well spent!!!!!!!!!, I say.

#127 realpaul on 05.11.11 at 2:10 pm

#114 Scib….What we have in Canada…after thirty years of political indoctination of leftist Liberal tyranny is a layer of socialist mediocrity so thick that its going to take at least a generation or two for the society to recover.

Don’t worry….anything you say…if it doesn’t conform to the Liberal Party line…will be attacked as ‘rascist’ or ‘bigoted. You are not allowed to disagree under the mediocre doctrine of the left. The goons and drones who have been machined by the Liberals propaganda will continue to haunt the discussion in Canada for a time. They have swilled the kool aid to such an extent that they have no individual or unique thoughts. I’m sure you notice that the knee jerk reactions of the left are reptitous to the extreme. The recent election assures us that this politically engendered nonsense and the fallacy of Liberalism is not what people want. Think of it as listening to a herd of dinosaurs bellowing into the twilight.

#41 Fool…….yes please……post the definitive evidence of a major earthquake affecting the lower mainland. I already said that it was 1200 years ago ( according to the geologists) since the last geologic referance. Indeed possibly over the millions of years…certainly plate shifting 5 million years ago……but nothing that is relevant to real estate values in Richmond in this or probably several other lifetimes…..if at all. Currently there is no ‘evidence’ except in the ‘oral tradition’ of the natives and a few stripes of irregular colour in the mud banks of western Queen Charlotte Islands…as I said…….indicating a disturbance of unknown magnitude some 1200 years ago. And both those sources are subject to question.

The scare tactics used by the union zombies and scammers who want us to blow our brains out shitting money on the problem are not warranted nor is a panic in order or nessecary…..however it is entertaining to see the lemmings dropping crap trails every time the bimbo’s on the News Hour make a pre paid pronouncement. The fact that the public listens is….telling…..sad.

But by all means 2012 is coming and there are several asteroids currently in Earths gravitation pull…….lets all freak out!

#128 MikeT on 05.11.11 at 2:13 pm

@121 bigrider:
BOTH, but double (digits) down…

#129 Big D on 05.11.11 at 2:16 pm

#91 Marigolds and Lavender

Good post. Totally agree on the whining about not timing the absolute peak. These people should also recognize the tremendous risk they would have taken to see these gains. I highly doubt too many of them were willing to put their money where their mouth was when the financial crisis hit. Imagine if when the govt pancaked rates, masses of people didn’t decide it was a great idea to take on more debt and buy a house? Prices could’ve slid badly then and kept going if people were spooked.

Fundamentals have not been driving the market. It’s been emotion and the herd mentality. Good luck forecasting that with any precision.

I remember being on the inside of the dot com bubble. My company went public and had a billion dollar valuation and only 20 million in revenue. I knew it was completely backwards but it still took 6 months for the masses to decide it was about 100x overvalued. When everyone you know is a paper millionaire you too behave stupidly.

When everyone wants to believe something, they do.
Hindsight is always 20/20.

#130 SMOKING MAN on 05.11.11 at 2:16 pm

#89 Junius on 05.11.11 at 10:17 am

Being Brainless is a gift it’s what seperates basment dwellers form guys with big boats…..

#131 Daystar on 05.11.11 at 2:25 pm

#91 Marigolds and Lavender on 05.11.11 at 10:20 am

Excellent points. I even visualized a nanny slap on the derriere while reading them. The scolding was comparable to that of a mothers deserved reaction to her child caught playing to close to a fast flowing stream. Nicely done!

Just to add further to your points, there have been good gains in the housing markets over the last 5 years as any chart will easily show. Heck, real estate has been a winner for 20 years now. Thing is, everything that has been fueling this 20 year long general climb in this nation:

– A rocky start from a nasty early 90’s real estate correction or starting at rock bottom prices. (a major point, a great time to buy in but where are buyers starting now?)
– Rising incomes
– Fast growing GDP
– high interest rates gradually falling
– low mortgage terms
– gradually lower fed/provincial taxation biting into disposable incomes (from 94′ on)
– gradually loosening CMHC regs peaking in late 08′.
– loosening bank mortgage regulations

Where are we now? (you’ve touched on them)

– starting point at record RE valuation highs
– incomes flatlined, potentially falling with commodities falling.
– GDP potentially shrinking and flat for the next 3 or 4 years.
– Interest rates at rock bottom lows with nowhere to go but up.
– – mortage terms peaking at 08′ to 40 years with nothing down, presently reduced to 30, with a paltry 5% down. This is a far cry from 20 year, 25% down regs we faced 20 years ago.
– governments producing record runaway deficits. Tax increases are now inevidable.
– CMHC regs likely to stay as is, allowing for an inevidable correction.
– bank practices to get stiffer amid a housing correction, combined with Canada leading household debt among G20 nations.

The borrow and ride the equity wave era of housing is over and the age negavitve equity has begun. People who enter in this market either have money to burn, or they are total fools. It disappoints me to hear readers blame Garth for their “potential” lost opportunities as well. Readers should take note, real estate is not the only investment game in town. Commodities have made millionaires of daring investors in the markets (that too, soon to turn negative) that left investors in real estate with 50% gains look like fools compared to equity gains in the markets. I’m not making this stuff up.

Real estate is an attractive investment in the sense that it likely is the only investment that one can borrow money on its own equity to make potential equity gains and there are advantages to owning that go without saying. Freedom to not have to move because a landlord sells (or moves back in) or improve the home or please the home maker go without saying… but owning carries its risks and I have yet to see owning a home carry as much risk as it has to this day concerning equity losses. The market approached bubble territory, government/banks were directly behind it, people selling out made money, others took out second and third mortgages to finance their higher standard and the ones selling in a rising market did ok, but all things do come to an end and it will guaranteed end badly for those who bought at or near these valuation peaks. My thoughts are that we will see pre 05′ RE values again and if I’m right, there will be a great deal of sad people out there. I hope for their sakes, I’m wrong, but…

It came to an end and is still ending badly in Japan, U.S., Spain, Portugal, Ireland, Iceland, France, Britian, Italy, Dubai, to a lesser extent Germany & Northern Europe, is just coming to an end in Asia (Especially China, Singapore, & Thailand) and Austrailia and will come to an ugly end here. People will look back a the numbers and see April as the end of our bubble in Canada, of that I have no doubt.

I know, its a long post again, but one final point. I don’t think people have any clue as to just how high interest rates can go over the next 5 years. I’ve heard bloggers comment on how it can’t hit double digits in the U.S. or Canada because our national debts are too high to sustain such levels. Such thinking is foolish. Potential for double digits rates over the next 5 years does exist (here in Canada especially but in the U.S., due to the size of their money supply, less likely) Sustainability or lack thereof gets priced in and often, such prices swing wildly or exaggerated regardless of sustainability in mind. Someone has to buy fresh debt in the bond markets and most know that a bailout or restructuring of some kind will happen in most worst case scenarios, or governments will raise their taxes sky high in the middle of a recession and try running on air as one of of their other two other options or maybe just one option of the two that are left, bailout or bankrupcy. Either way, its fear vs greed (surpisingly, when vultures circle, both show up at once) and often the pendulum swings too far, too fast even if only temporarily and I will remind readers once again… 2 missed payments and the house is gone. Pay attention to what Garth has to say about switching from VRM’s to terms in the coming months, its about to become a hot subject before years end.

#132 Pat on 05.11.11 at 2:43 pm

#38 e:
“Garth, are there any advantages to getting married at 26 rather than, say, in your 30′s? In respect to financials…”

Of course – if she has/makes more than you.

#133 Fractional Reserve on 05.11.11 at 2:44 pm

To all the gold bugs on this blog. Enjoy!

Utah now makes gold and silver legal tender.

#134 Pat on 05.11.11 at 2:45 pm

Garth: “Praise be. Another soul saved.”

And another one lost…
Net effect – nil.

#135 Vic on 05.11.11 at 2:49 pm

#121 bigrider

Adjusted for inflation, my guess is RE price will be 50%, TSX will be around 75% of what it is today.

Nominally, also very low chance of doubling as I believe inflationary episodes will be fleeting.

#136 Whistle punk on 05.11.11 at 2:52 pm

The market in Canada need to correct and it need to do so this year.

The correction needs to be like a Forest Fire burn off all the dead wood and start all over again with new growth.

#137 Ivan on 05.11.11 at 3:02 pm

Garth question: I am a greater fool, bought house in 2008. I believe what you are saying regarding real estate (however I dont think correction will be that much). I have the capacity of paying my house faster than first planned. My question is: should pay faster to save interest, or should I extended to 30 years and place more money into retirements. Thanks for your opinion.

#138 American Werewolf on 05.11.11 at 3:03 pm

How about neither. Collapse and stagflation for a decade.

#139 SMOKING MAN on 05.11.11 at 3:04 pm

Hey Garth did you ever think Tony Wong of the Star would post a headline like this

Homeowners maxed out on mortgages–homeowners-maxed-out-on-mortgages

Tony just switched to the wong team LOL

Reminds me of a city in the USA there was a street call Wong Way. They had to re name it because people keeped making U trurns and drive the wong way on a one way street.

#140 BrianT on 05.11.11 at 3:08 pm

Jeez-land of the grifters-$40000 a yr for health ins in Boston or Miami-what a frigging scam

#141 Rocket Boy on 05.11.11 at 3:17 pm

Very few have the slightest idea how the bankruptcy rules work in Ontario. Everyday people walk into the office, the one’s with minimal equity have no worries -and if they are seriously under water, call the bank, says thanks but no thanks I ain’t paying no more – they live “rent” free until the court documents are filed and notice sent – and guess what – you walk into the Trustee’s office and with a stroke of a pen – those debts are done- others with a workable level, just file a proposal and “buy back the realizable amount”… those who have a strong equity position just consolidate their unsecured to their secured debt – big deal –

Some paint such a dire set of events – reading info off the bathroom stalls doesn’t make you an expert ….geeezzzz!

#142 BPOE on 05.11.11 at 3:30 pm

Vancouver/Richmond prices EXPLODING not imploding folks. Just talked to a couple folks today 300K over ask and that ain’t no lie. No interest rate hikes No Subprime. Folks it’s looking great!

#143 Victoria on 05.11.11 at 3:50 pm


I am in Victoria and can’t find anything to rent. We need a house, 4 bedrooms (we have 4 kids). I didn’t realise people in Victoria were so against animals. Every house says NO PETS!!!! we won’t give up our dog and 2 cats. It is just a nighmare finding a place in the city.

#144 Cato on 05.11.11 at 4:01 pm

#121 bigrider – My view is long term commodities will far outpace most Canadian real estate. Commodities will follow demand, we are seeing a swelling middle class in most emerging economies and while this competition isn’t good news for western consumers its good news for western producers & investors. A house is a fixed asset tied to fortunes of the local economy, the economic activity in most canadian cities doesn’t justify current prices. Somethings got to give, either economic activity substantially increases (unlikely) or asset (home) prices need to fall.

Don’t let swings in commodities markets mask underlying long term demand. There is alot of money to be made off this volatility and there is a strong incentive by players like Goldman Sachs to keep the commodities markets volatile.

#145 Hoof Hearted on 05.11.11 at 4:04 pm

Re Richmond Tsunamis:

A while back one scientist described what would happen
in BC Lower Mainland.

Tsunamis created off the West coast of Vancouver Island would not have much impact in Metro Van, ie shielded by Van Island

However, the Fraser River deposits water and silt in Georgia Straight, between Metro and Vancouver Island.

This silt is piling up at the edge of an abyss…at the mouth of the fraser..
If an earhtquake happens, the silt being unstable, would slide into deeper water, create a massive displacement of water and effectively create a tsunami(if one understands physics of tsunamis.

This phenomenon happened in an interior lake,Washington State were a landslide into a lake created a similar phenomenon will masive devastion of trees etc around the lake.

Regardless. Cities re-build…San Francisco didn’t become a ghost town after quakes…

#146 Hoof Hearted on 05.11.11 at 4:16 pm

re Media:

IMHO, they act in a HERD (“heard”)mentality.

Once the BS pile starts to implode..they all jump onto the bandwagon of what the latest zeitgeist is.

To pump BS when some of their peers are into a contrarian view which is in fact, ” the truth”, would discredit them. Best join the crowd.

In addtion re Richmond…it is turning into Zombieland re sales….stagnation…

#147 Daystar on 05.11.11 at 4:30 pm

#126 realpaul on 05.11.11 at 2:10 pm

If anyone is rigidly brainwashed on this site, its you. A word easily comes to mind when I read your racist rants. Simple. Easily led and it shows. Pride, hatred & a twisted form of intellectual vanity no doubt spawned by a profound ignorance towards political issues and the needs of people in general is reflected in pretty much every word you type. You are in essence, too blind, deaf and therefore dumb to see how much you truly suck, a personification of the cliche’, “ignorance is bliss”.

Sadly, my own comments such as this one will bounce off you like rain on wax because you actually get some enjoyment out of put downs and negativity. It just feeds the beast, so to speak. I can hold up a mirror for you day after day, only to see you like what you see ’cause you live “where de snakes and de crocadiles live… y’know, de Nile…” and all the while readers will have to sift through the negativity spawned by a bigot and those trying to put a bigot in his place. (it can’t be fun for them)

So… I’ll speak it plain. Political rants smearing Liberal or Trudeau won’t defer or detract from the simplistic fact that you truly are a bigot of grand extremes. If it looks like a duck, walks like a duck, quacks like a duck, chances are high that… you won’t be able to hide who and what you are from anyone. A bigot is who you are bub and the sooner you recognize it for what it is and do something about it, the better off you’ll be or it ends badly for you as it does all… just… like you.

#148 Junius on 05.11.11 at 4:38 pm

#138 Smoking Man,

The Moneyville article is a good one. I am surprised it comes from CAAMP. This part is scary:

“According to a survey conducted by CAAMP and released Wednesday, 3 to 4 per cent of all mortgage holders, representing about 200,000 home owners, say they have absolutely no room for additional monthly increases in their payments.

Another 13 per cent of all mortgage holders representing more than 700,000 consumers said they could not afford their mortgages if they had to pay an additional $200 per month.”

So at 1% increase in mortgage rates could put 16-17% of mortgage holders on the brink.

#149 Bill Gable on 05.11.11 at 4:50 pm

> This wee beauty sounds like a page from countless posts, by your host.
So many people, and so little saved.

“As must be obvious to most financial advisors, Canadians are lousy savers. Four in 10 save nothing at all, while 61% of us save less than $100 a month, according to an Ipsos Reid survey released Tuesday by Toronto-Dominion Bank and ABC Life Literacy Canada. On average, Canadians put aside only $211 a month for long-term savings.

That seems pathetic but even that seemingly small amount works out to $2,532 a year. As a recent column showed, if you can save just $2,000 a year consistently over 50 years, get the 10% average return Canadian stocks have generated and grow it tax-free in a tax-free savings account, you could be a millionaire at retirement.

The new research is consistent with a TD Canada Trust poll last month that found 54% of Canadians found it a “real struggle” or “impossible” to save and 38% had no savings at all.”

#150 Abitibidoug on 05.11.11 at 5:00 pm

In response to #113: Patience is a virtue not a vice. If the U.S. does fall hard there will be good buying opportunities if or when it does for those waiting in cash. Of course, that will affect Canada (how could it not?) so there will be buying opportunities here too. In the mean time, be diversified and keep some cash on hand.

#151 realpaul on 05.11.11 at 5:02 pm

#144 Cato….right on. You have to keep the macro in focus at all times. Whats happened in every engineered downturn over the past ten years is this:

1) Announcement that a slowdown in China will curtail commodity demand

result…….Chinese government rushes in and buys the dip with both hands.

2) Announcement of a rate raise will curtail demand

result….Chinese government rushes in and buys the dip with both hands.

3) Announcement that silver run is toast because of announcements out of China and the COMEX coincidentally raise margin requirements

result……the Chinese government rushes in and buys with both hands.

4) They won’t be using as much oil

result…..the Chinese soveriegn funds rush out and buy companies producing commodities with both hands.

5) Uranium slowdown announced

result….Chinese companies invest in Uranium like never before and begin to stockpile massive supply.

Hey….I could go on….but really….do I have to? You’re not dumb….right. When will the retial sheeple catch on that this ‘ Chicken Little ‘ story is all made up by people who are manipulating the market for their own purposes. The macro indicates that there are more people, more industries, more…more…more..every single year……and guess what…they want some too.

Solution……when the newspapers are announcing the end of the world is nigh…….thats your signal to buy with both hands……like today. Hold your nose…turn off the TV….think it through….you’ll be glad you did.

#152 realpaul on 05.11.11 at 5:07 pm

#145 HH…btw…there is a full time dredgeing at the mouth of the Fraser and it moves along the shipping lanes across the Straits full time. The muck is transported inland by the millions of tons and mountains hundreds of feet high can be seen if you drive along the Westminister Hwy and look southwest.

#153 Jefferson on 05.11.11 at 5:38 pm

This is my first post. I’ve been reading this blog religiously for the past 2 years, recently I bought a house…but thats not why I’m writing. I’ve always found the complaints against your language, and strong objections to you perspective entertaining. But I have to say this time, you gone too far. I’m okay with funny (painful) innuendos, or even hot chicks for your daily blog pictures, but the last two days pictures have just been obscene. If this trend doesn’t change I will have to stop reading your blog. You may laugh, but you should take my threat seriously, as I’m sure I am speaking for all your followers when I say if another fat-ass wearing a lame spidy costume, or an eclipse in bikinis picture appears… this blog would become the proverbial cliff which all of us lemmings jump off to save ourselves from this visual torment.

Otherwise, keep up the good work.


#154 Cory on 05.11.11 at 5:39 pm

Ah yes. Thanks for the correction/clarification.

#155 Dave on 05.11.11 at 5:46 pm

#25 Forgotmyname

I don’t know where you’re located, but if you’re in Ontario and you have a lease, you can NOT be forced out of your rental unless you agree to it.

If your lease runs until say September 1, 2011, the new owner must abide by this.

This of course does not preclude you agreeing to terminate your lease (and hopefully receive a $ incentive to do so) and leave so that the new owners can move in, but you are not obligated to – in Ontario anyway!

#156 Mister Obvious on 05.11.11 at 5:50 pm

#153 Jefferson


#157 Debtisforever on 05.11.11 at 5:50 pm

Garth, you made the CBC radio news in Vancouver at 3:30 today! Usual story about how you think the Vancouver market is going to drop, then a counter-argument from your buddy Tsur. Nah…prices NEVER go down in Vancouver. Nothing to see here folks. Move along, move along.

#158 inexsucks on 05.11.11 at 5:51 pm

#121 bigrider on 05.11.11 at 1:10 pm
An informal survey:

My answer is C) all of the above + my income will also be DOUBLE.

#159 Behavioral Finance on 05.11.11 at 5:55 pm

“Priced in gold, the U.S. greenback has lost 90% of its value” – not 1st

That is pretty much irrelevant as goods are sold in currency not gold. Now if we went back to middle ages this may hold some water. Bottom line they are more pressing issues in the future like climate change, oil supplies, low quality food production, health care costs, retirement costs, water supplies etc.

#160 Industrial Guy on 05.11.11 at 5:59 pm

Will Dunning, chief economist of the Canadian Association of Accredited Mortgage Professionals. What a guy!!!!!
His just released study which says 200,000 home owners could not absorb any increase in mortgage payments!
More than 700,000 would be in serious trouble if the monthly payment increased by $200.00
How much on an increase in interest rates would push these home owners into the danger zone? For many, it’s less than one percent.
Take a sample home with a 450,000.00 mortgage, 25 years Amortization, let’s go short …. yearly renewal. Interest rate is 3.7% Your monthly payment would be $2,301.37
Increase the rate to 4.5% and the monthly climbs to $2,501.37 …. There’s your $200.00 more !
Slightly more than a .5% increase would start real estate Armageddon.
Sobering info .. isn’t it?

#161 S.B. on 05.11.11 at 6:03 pm

Oh dear that “store of value” :roll: silver is down 8% again today.

#162 S.B. on 05.11.11 at 6:06 pm

Bros. Ford are taking good care of their private unionized army/revenue generation squad. We little people get squat. Goon squad is required to keep little people at bay when austerity measures are announced. Our “heros” guard construction projects and write traffic tickets most of the time.–penny-pinching-doug-ford-defends-5-2-million-police-paid-duty-perk#article

Councillor Doug Ford usually jumps at the chance to save taxpayers money.

But disagreeing with most members of the city’s budget committee, the mayor’s brother defended spending $5.2 million to pay police officers to watch over city road and sewer repairs.

“I’m okay with that,” Ford said. “Is there room for efficiencies? Absolutely. But overall, $5.2 million for a billion dollars’ worth of work, I don’t think that’s too bad,” he said estimating the value of work done each year by the city to upgrade its roadway infrastructure.

This is a different tune from the one the penny-pinching Etobicoke councillor usually sings.

The Fords campaigned to victory on a platform of austerity and Doug Ford has been helping lead the charge on cutting costs at the city — for instance, by going after councillors’ expenses, salaries and free food at council meetings. This ultimately saved $1.46 million for the city, which has a budget of $9.4 billion.

Councillor Adam Vaughan, a former member of the police services board, is bewildered by Ford’s attitude toward the cost of paid duty.

“I’m really mystified by Doug Ford’s comment that $5 million is a drop in the bucket; $5 million would have put every single TTC route back to full service,” he said.

The money could also go a long way to keep low-income kids swimming in pools and attending recreational camps this summer. This year, for the first time since its inception in 1999, the city’s Welcome Policy — which subsidizes low-income families who want access to recreational programs — has been capped.

The Welcome Policy, budgeted at $8.7 million for 2011, has not accepted registrants since March 25 because there is not enough money. The program will reopen to registrants on June 4.

#163 VICTORIA TEA PARTY on 05.11.11 at 6:08 pm


Sometimes it’s better for a Canadian politician to signal changes in our economic policy from afar, such as, hmm, Washington DC? Sure. Why not?

The Globe and Mail reported on Wednesday that our federal finance minister Jim Flaherty, “is appealing to fellow conservative legislators in the United States to get a handle on a (US) budget deficit that…is a risk to the global economy.”

The newspaper reports, “of interest to Flaherty is a Republican (House) plan to slash spending by more than $4-trillion (U.S.), including cuts to (US) Medicare…for seniors.”

Meanwhile US lawmakers also face the issue of whether or not to approve a new higher debt level by a mid-August deadline at which time expenditures will blow a hold in the current $14.3 trillion ceiling.

As the Globe reports (US)Treasury Secretary Timothy Geithner says he will breech the government’s debt limit…”and is imploring lawmakers to boost the borrowing limit to avoid a catastrophic default…Earlier this week, House Leader John Boehner said Republicans would raise the debt limit, but only if the…Democrats back spending cuts equal to the amount of the borrowing increase, or about $2-trillion.”

Flaherty told reporters that “there are lessons for U.S. politicians in the way Canada ended a generation of budget shortfalls in the 1990s.”

The subtext to the above is this: what will the Tories, who spent like drunken sailors to save their minority governments over the past five years, do now that they hold a healthy majority?

Austerity is the obvious course of action. And that is what Flaherty is transmitting to Canada with his Washington DC visit.

I’m sure the minister would also like some allies in his fiscal prudence exercise, but the Yanks may be the wrong folks to talk to, given their lousy track record to date. Maybe China could be a “friend” here?

I expect our budget, that still needs passage by Parliament, will undergo some kind of modifications even if they are only done at the cabinet (government) level.

So, about six months from now Canadians will be experiencing a winter of discontent they will remember for a while. With ever higher energy and food prices, along with the now well-established real estate decline and consumer debt levels this will be a trial for many.

I wonder what other indebted industrialized countries will be planning for their citizens? This will be interesting.

#164 Obama on 05.11.11 at 6:40 pm

China will likely follow the Japanese model

In 1980’s BC Gov’t opened up North East coal “Mega project” to cater to so-called Japanese demand.

However, the Japanese also sucked in other countries to supply coal.

Then the market tanked….and Japan was able to use leverage against these ” competing countries” to reduce the price it would pay for raw resources .

Then of course Japanese economy imploded.

China is likely doing the same thing, but because of its larger clout than Japan, may simply baiting all these companies sucking on the Chinese tit for a major butt shaft….then buy them up for pennies on the dollar.

History is full of warnings re the Chinese dragon…it not need be a military one….given WW III appears to be one waged economically via stealth fashion.

#165 Nostradamus Le Mad Vlad on 05.11.11 at 6:43 pm

Garth, why not consider hiring Wally as an “Engineer Extraordinaire”? You would continue to receive numerous hits, but all the comments would be self-deleting!
#105 ian — “. . . an extra 40K . . .” — That goes down very nicely!

#117 Devore — “I’m up every single year for more than the last 10 years. The stock market has done just fine.” — Same here. See #121 bigrider — None of the above, ‘tho I lean more toward B. #144 Cato — “There is a lot of money to be made off this volatility . . .” — Another great reason why I prefer Option B. My three bits’ worth.

#137 American Werewolf — “Collapse and stagflation for a decade.” — Good summation.


See what’s happening in Ireland and Greece, plus elsewhere due to austerity. This is what TPTB want — everyone fighting amongst themselves so, like vultures, they pick the good pieces of what is left over.
3:26 clip The Greeks have got it right.

Panic Halted No one knows anything anymore. Oh Oh “Read this carefully. This is a push by Obama to get the banks to go back into offering sub-prime mortgages. But this will simply repeat the last crash again. Until the high paying jobs are brought back, there is no way to fix the economy.” Methinx Knot! “$27 trillion in damage to the US economy, and the banks offer $5 billion for a get-out-of-jail-free card?” Negative Equity Catchphrase of the decade.

Big Brother and Pensions “Drowning in debt (Ireland) and faced with unpopular, unrealistic, ridiculously unpopular austerity measures, the government has announced that it will now tax private pension savings in order to raise 470 million euros (roughly $675 million) per year… a lot of money in a country of only 4.4 million people.” Possible Sept. Insolvency “In other news, the Morse Company, makers of telegraph systems, are citing poor sales as the reason they may be heading into bankruptcy.” 9:17 clip “He was already a billionaire when he began cheating the system…”

Fascism in Europe (and NA) “Make them bail out the banks. Force them. Flog them! That’s what serfs are for, dammit!”– Ben Voldemort, Chairmen of Federal Excess — 3:57 clip Syria = Libya. Gadaafi’s Gold-Backed Currency “Attack on Libya = making the world safe for debt-based fiat currency!”

GW in Wyoming, May 11, 2011. Every picture tells a story. The Rapture Hell, the UEFA Champions League final is on Sat., May 28 so the rapture has been postponed! 217 clip Skip Starbucks, help da banx!

Extinction Event? Speaking of ‘quakes . . . “net Interference US pushing to break China’s firewall. FEMA to seize locally-grown food in case of emergencies? Enter Monsanto.

#166 jess on 05.11.11 at 6:55 pm

“Getting the number is more like cheating on the test.”
Rajaratnam Guilty on All Counts in U.S. Insider Case

Who needs tax cuts have a dutch sandwich!

..”Google, for example, cut its taxes by $3.1 billion from 2007-2010 by an accounting wheeze known in the trade as the “Dutch Sandwich” in which the majority of foreign profits are channelled through Ireland and the Netherlands to Bermuda, slashing its overseas tax rate to 2.4 percent…”

…International banks, such as UBS and Deutsche Bank, have met problems after their attempts to pay staff tax-free bonuses through employee benefit trusts – which they had been advised were legitimate structures – were blocked by the courts. ..”
One of the ironies of legal certainty is that small businesses find it too costly to find their way around tax law, but big companies can afford to challenge Revenue & Customs. The Treasury is looking at introducing a general anti-avoidance rule, while a commission investigating tax avoidance, headed by Graham Aaaronson, is due to report this autumn. The Treasury Select Committee is also waiting for a slot in its busy timetable to tackle the issue.

The scheme involved a software company called MCashback. As part of the structures, investors put up 25% of the cost of buying software from the company, the other 75% coming from a loan indirectly provided by MCashback itself.

The investors then tried to claim a special software-related tax relief for the full 100% of the cash paid for the software, enabling them to get £40 off their income tax bills for every £25 they put up.

The supreme court ruled that they could only claim the tax relief for the cash that they invested.

Bill Dodwell, a tax adviser at Deloitte, said the scheme had pushed the bounds of credibility. He said: “The price paid for the software was just absurd. Investors were never going to repay the loans, either.”

The court’s decision ended a long legal battle over the scheme. It first came to the tax tribunals in 2007, the claims relating to the years 2003-4 and 2004-5.

The scheme was just one of many structured in the same way that collectively could have cost the exchequer up to £1.5bn, HM Revenue sources said.
guardian uk

#167 Hoof-Hearted on 05.11.11 at 7:12 pm

Keep in mind the lady is able to rent her abode back…but that may change.

HAM $$$ may become fickle and bail….and thus this lady can’t have her cake and eat it too.

Then they are back to the old run around and look for new place.

And she’ll have to drag her million with her. What a burden. — Garth

#168 eddy on 05.11.11 at 7:30 pm

Way off topic but fascinating: TERMINAL CANCER Cured with Baking Soda and molasses

#169 Debtfree on 05.11.11 at 7:44 pm

The earthquakes every day . If a big one hits anywhere in cascadia the whole of the fraser delta liquifies … it’s happened many times before .

#170 CrowdedElevatorFartz on 05.11.11 at 7:49 pm

Whoever is impersonating BPOE please stop!
It brings back painful memories of me jumping up and down on his stomach to revive him in the elevator.
All that happened was gurgling sounds that emanated from his mouth while gas frapped out of the “other” orifice that he used to use to communicate.
Either way, he’s gone. I’m lonely here in Richmond. Prices are dropping like an elevator in a highrise. So if anyone knows where I can send flowers to BPOE’s place of work ….. please let me know.

#171 Daisy Mae on 05.11.11 at 8:06 pm

READERS DIGEST: ‘Debt, Sweet Debt’ (January, 2011)

“Maybe it’s time for governments to stop encouraging Canadians to buy homes….indeed, the recession has prompted critics to ask whether, after all these years, governments should continue pursuing policies designed to increase home ownership…”

And Flaherty has the gall NOW to blow his own horn…and go on about how he’s ‘tightened’ up mortgage rules?!

#172 Barry in Pickering on 05.11.11 at 8:09 pm

You’ve been calling for RE prices to fall for 4 years now. And they haven’t. If they don’t fall soon, you may end up irrelevant and wearing the “greater fool” crown yourself!

Ps I should add that I also expect prices to fall. 

They have fallen substantially in many markets, with more to follow. Pickering is your problem. — Garth

#173 Daisy Mae on 05.11.11 at 8:24 pm

Marigolds & Lavender…

I’m impressed! Very well said.

#174 Daisy Mae on 05.11.11 at 8:45 pm

Junius: “Let’s not forget that this is a man-made phenomenon. Starting with our banksters and the politicians that they own they have created this situation for reasons greed and greed alone. The RE industry and just their stooges and henchman. This fish rots from the head down. Our current PM and his henchman F have used housing to gain themselves a majority gov’t. Remember that they had a choice and an example to the South to learn from when they started relaxing the CMHC rules. They need to wear the coming Tsunami because they contributed to it for purely selfish reasons.”

Harper and the Conservatives CAUSED the mess they’re now attempting to correct. Boggles the mind…

#175 John on 05.11.11 at 8:46 pm

BPOE. Does that stand for Big Putz On Enzymes? 7% of mortgages granted in Canada were subprime. More than three times that many were granted in the US relative to all mortgages. When are wingnuts like you going to understand that “not being as bad as” does not equal “good”?

#176 Hoof-Hearted on 05.11.11 at 8:48 pm


The ability to rent back the house you sold for $1 million is a luxury….not that common.

If she had to vacate, she may have gotten house horny and bought back in…

She didn’t. She left the horn with you. — Garth

#177 BPOE evil twin on 05.11.11 at 8:53 pm

BPOE demise caught on tape??

#178 April on 05.11.11 at 8:54 pm

Alex #119
Good for you Alex. I wish we could all sign your letters.

#179 Tony on 05.11.11 at 8:57 pm

#23 CarolMel
What the gomer on #7 fails to realize is when the last stooge or greatest fool is gone there can be no contrarian’s view. Both Brampton and Mississagua are tanking. The last greatest fool is in the past.

#180 bigrider on 05.11.11 at 9:02 pm

One of my closest friends just infuriated me. Buying a pre built condo in T.O yonge and Eglington area. His comments ” Can’t lose” ready in 2016 will be “worth much more by then” “600 square foot is a bargain and banks willing to gaurantee mortgage rate at today’s prices until then” ??

Can that be possible Garth?

Seriously , I pray every night for the price correction. I may have to buy an “investment property” just so I can single handidly tank the market.

#181 Hoof - Hearted on 05.11.11 at 9:08 pm

Diagnosis as disease

Very good article

When business is slow…lower the benchmarks, ….create cure = worse than the perceived problem.

#182 April on 05.11.11 at 11:45 pm

#172 Barry in Pickering. Yes home prices have fallen in the last 4 yrs. Where have you been? Garth forecast the 2008/9 decline which I believe was about a 15% drop. What started the bubble again …. for you to find out…..

#183 a prairie dawg on 05.12.11 at 2:30 am

There sure are noticeably more Realwhore© trolls on here lately from the decepticons at CREA.

They must really be getting desperate…

#184 lexington on 05.12.11 at 9:14 am

Toronto’s at 8 and Vancouver’s at 12. Yes, this seems high when compared to the national averages for Britain, and America at the peak of its real estate boom.

However, is it high relative to London, New York or San Francisco?

In 2005, home to income ratios in San Fran and New York City were about 12.64 and 10.34 respectively. I believe that is before the peak in 2006, so the peak ratios would likely have been higher.

Now after the crash, New York City’s price to income ratio is 8.5 (as of November, 2010), while San Frans’ is 10.2. So both New York City and San Fran have higher price to income ratios than Toronto AFTER the US real estate debacle.

I can’t find price to income stats for London, but wouldn’t be surprised if they were higher than Toronto’s. That’s post UK real estate debacle.

So perhaps Toronto is not in bubble territory, but Vancouver is somewhat overpriced by probably at least 20%.

#185 Saskboy on 05.12.11 at 4:45 pm

Dandelions are edible and you can make wine with them, so there’s no reason to complain too much about them.