Imagine

Three months ago scoring a home equity line of credit was a snap. Swagger into your branch. Talk about your house. Show some leg. Get a loan. And not just any loan – but one at prime, with interest-only payments, for maybe 40% of your home’s value. Perfect for those people wanting to diversify from real estate into financial assets, while getting a tax-deductible borrowing to boot.

After all, what could be simpler? Borrow at 3%, invest for 8%, have your portfolio pay your loan while you get to claim the interest write-off.

But F made this strategy tougher the same day he killed the 35-year mortgage. HELOCs are no longer insured by CMHC, which means the banks are suddenly worried about risk.

So what?

So this week I helped a couple with $2 million worth of security get a $350,000 investment loan, and we needed personal lubricant to wiggle the deal through. No more prime – now it’s a full point higher. No more simple loan with interest-only payments. Now it’s an amortized borrowing with principal repayments. And every year these people have to reprove that they qualify – even though they could pay the sucker off with 15 minutes’ notice.

You see the difference CMHC insurance makes? Bankers man up real fast. They learn again what risk means. And it scares the poop out of them.

Now just imagine if Ottawa started to unwind CMHC insurance on mortgages. Imagine what lenders would do if a young couple without any savings walked in and asked for a $500,000 mortgage on a $525,000 house, if the taxpayers were not there to wipe away the threat of loss. They’d be banker road kill.

This is what’s happening in the US these days, where lending standards are far stricter than here. When Freddie Mac and Fannie Mae (American equivalents to CMHC) collapsed two years ago, it spelled a quick end to no-verifiable-income mortgages, no-money-down financing and teaser interest rates – all of which still flourish in Canada. Now risk matters. So Oakies don’t get to buy McMansions any more. Or hormonal young couples with good jobs and no savings, for that matter.

This is why the ‘it’s different here’ argument thrown up so often to justify Canadian house prices is bogus. America is living the consequences of too-east credit. Canadians have yet to taste them. They will. Because if F can do it to home equity loans, he can do it to home mortgages. And he should.

CHMC has a debt limit now of $600 billion – roughly the size of the national debt. Of course, the bulk of the loans  insured are high-ratio and high-risk – the stuff the banks wouldn’t touch at today’s interest rates without this backstop. South of here they’d be called subprime. We call them normal.

Why might Ottawa consider CMHC changes as a way of cooling off housing and dampening runaway household debt? Like in demented, self-lubing Vancouver?

Because it works. And it would spare the Bank of Canada from having to raise interest rates so high that the rest of the economy is drop-kicked in the fight against housing inflation. It would certainly stem the speculative casino mentality which has gripped much of the real estate market, and redirect income and savings into more productive areas – like saving for a pensionless retirement.

By doing what the US has – shifting risk back on to the lenders from the taxpayers – this change would drop housing values in short order (as it has done in the States), and remove a major reason why living costs are going up and standards of living going down. Rates could stay low enough to encourage business borrowing and job expansion, and we’d all get to enjoy house-horny Mainland Chinese buyers losing their cajones.

Has such a move been considered in the big, white, ugly Ottawa building where F’s staff hangs? You bet. In fact word is the removal of CHMC backing for home equity loans was a test balloon to see how the lenders would respond. It went exactly as expected.

Bankers became pricks. But in a good way.

202 comments ↓

#1 Crazy on 05.11.11 at 9:20 pm

Perhaps I was first, perhaps not.

#2 BPOE on 05.11.11 at 9:21 pm

Looks like Canadian homeowners are in fine shape. A small percentage are using their homes as ATM. In Richmond owners buy with cash .
****************************
Fifteen per cent of Canadian homeowners took money out of their homes last year, at an average amount of $30,000, new data showed Wednesday.

#3 curious on 05.11.11 at 9:23 pm

first

#4 Crazy on 05.11.11 at 9:24 pm

Money should be hard to get.

#5 Mr.Lee on 05.11.11 at 9:27 pm

Bravo Mr. Turner.

You speak the truth, why should the tax payer subsidize the housing and mortgage market. Want a Free Market…then take the risk like a true Capitalist not a Corporate Socialist. I hope the F and C discuss the elimination of CMHC and impliment it soon. Viva the Free Market and Rist. Prudence should rule the day.

#6 Hovering on 05.11.11 at 9:27 pm

you got someone on the inside Garth ?

I sent you a an Op Ed piece today written by John Vogel (Christian Science Monitor (insert joke here)).

http://news.yahoo.com/s/csm/20110511/cm_csm/383057

basically he argues banks and house lusting virgins are responsible for the American housing crash. He suggests ways to fix the problem (some seems crazy to me) but I like his opinion that owner’s should have to prove the house is their principal residence and that the cost of the mortgage et al. would amount to a max of 30% of your income.

Imagine. Sniff, is that Kitsilano burning ?

#7 disciple on 05.11.11 at 9:30 pm

first!

#8 BPOE on 05.11.11 at 9:31 pm

Tsur Somerville, the genius of Vancouver Real Estate as opposed to Shiller states there is no need to fear prices in Vancouver deflating. Some areas have had huge gains like west side and Richmond and could have a temporary correction. Folks, this is what I have been saying for months, nothing moves up or down all the time. Trend is intact going much much higher long term.

Hey American you willing to wear a Vancouver Rocks Seattle Sucks t-shirt if your 40% correction doesn’t come true or if interest rates go down by Xmas?

#9 Special-K on 05.11.11 at 9:32 pm

Good plan F, shut it off before meltdown.

#10 sam on 05.11.11 at 9:34 pm

Garth do you believe F would really remove the CHMC insurance? I don’t see that happening in this lifetime. I would be happy if he tightened up a bit more, but I don’t think F and his team will ever drop remove CHMC from the housing equation.

Also his latest news release said he has no plans to further tightened mortgage standards.

#11 rain8 on 05.11.11 at 9:34 pm

Can someone please explain to me the purpose of CMHC. Why should the taxpayers be responsible for those who are unable to meet their obligations? What was the original thinking behind this policy?

#12 BPOE evil twin on 05.11.11 at 9:35 pm

It’s alive it’s alive and FIRST !!!

#13 Bolo on 05.11.11 at 9:35 pm

Good points. Can’t wait to see what will happen in the end.

#14 e on 05.11.11 at 9:39 pm

Garth, I’m 26, I’m an actor, what do I do? Get famous?

#15 Dragula on 05.11.11 at 9:40 pm

First!

#16 raincouver on 05.11.11 at 9:43 pm

The cracks are showing in vancouver. Just look at west broadway, commercial space opening up like crazy. No businesses opening but they keep building more condos..Wtf. Hope everyone wants to buy a concrete box, and can find somebody to take it off their hands in the future. The shit is hitting the fan, duck and cover.

#17 DJH on 05.11.11 at 9:44 pm

….without (?) this (CMHC?) backstop. ?

#18 HouseBuster on 05.11.11 at 9:47 pm

The cracks are appearing. 2003 prices will be here soon and you can take that to the bank!

#19 Prufrock on 05.11.11 at 9:54 pm

It should happen, but didn’t F just say yesterday that he wouldn’t be tinkering with mortgage rules anymore?

#20 domain on 05.11.11 at 9:57 pm

Oh god I hope CMHC is wound-down and set ablaze…I’ve been saying this for 3 years now.

How on earth can anyone expect banks to have good lending standards when they cannot possibly lose in the lending equation for Mortgages and formerly HELOCs. In a scenario like this with CMHC at your back, I don’t know any business person who would not take advantage of this from the banks perspectives; a license to print money would not be refused. Eventually you would convince yourself that you are doing nothing wrong, and business would proceed.

Next on the block should be Government Student Loans. Let’s pop the post-secondary education bubble and bring the free-market back to post-secondary education.

Then public pensions and wages. It will come, just look south for your roadmap…

#21 Blobby on 05.11.11 at 9:58 pm

http://www.cbc.ca/news/canada/british-columbia/story/2011/05/11/bc-turner-real-estate.html

The comments make me laugh.. you can almost smell the panic of the home owners desperately trying to discredit the messenger..

#22 Jan Etter on 05.11.11 at 10:00 pm

I see your point that CMHC backstopping mortgages has led to risky lending, but wouldn’t F be prudent to phase in the changes gradually with increased down payment requirements, larger premiums, etc. so the economy, which is so dependent on the housing sector and the illusion of wealth bolstering consumer spending, doesn’t burst the bubble but gradually deflate it?

#23 Vancouver on 05.11.11 at 10:03 pm

question for you Garth,

I’m in a similar situation as the woman in your last post. I sold a Vancouver residence and have invested the money in the market, the investments (mostly Canadian dividend stocks) are yielding me enough money to live off of.

I’m also in the process of trying to get “permanent residency” in the U.S., ultimately I want to live somewhere cheaper and warmer than Vancouver. I won’t work in the states, I’ll just be living off my dividend income and probably just renting.

I realize that if I am a permanent resident in the U.S that I have to file an income tax form every year, but I’m not sure if the U.S would tax my canadian dividend income? and if so would they tax it at the same rate as regular income? cause that would suck.

It’s my understanding that in Canada you can make roughly $50,000 a year in dividend income (so long as that’s your only income) without paying any income taxes. I could live off $50,000 a year but if the U.S taxed it by 25-30% then I’m not sure I could do it.

any idea?

#24 JohnnyBGood on 05.11.11 at 10:05 pm

Two things to remember if/when the gov/banks (remember, they are one and the same) begin to unwind what became the ‘new abnormal’:

1. Actually having money as a prerequisite to purchase a home used to be normal. It will be again.

2. Homes are only worth as much as bankers are willing to lend.

#25 bigrider on 05.11.11 at 10:08 pm

Get real Garth. CMHC dismantled by Ottawa ?? The backlash from the cabal of the RE whores would be overwhelming. The biggest industry in Ontario, construction/housing sales would be devasted.

No CMHC means 40% lower prices easy.

I only wish what you wrote today to be true but a pipe dream only I’m afraid

It does not need to be dismantled to effect big changes. — Garth

#26 City Slicker on 05.11.11 at 10:12 pm

Garth check out this 60 Minute video segment (15min actually) about the fraud and robo signing in the US. I think you did a write up about similar things in Canada. Pretty eye opening:

http://www.jsmineset.com/

Video should be the top of the blog still.

#27 Not Fooled By Property Spruikers Hype on 05.11.11 at 10:13 pm

Housing interest rates in Australia are currently around 7.85% (Was under 4.75% at the height of the GFC)

Now in a clear sign that things are getting worse & have reached a tipping point. Developers are now offering a 3.99% interest rate Fixed for 4 years to shift stock of Apts that are not selling.

This is a 4% discount on interest rates for 4 years (16% discount in other words) to anyone prepared to take one of their lovely apts off their hands.

Strange even after giving a 40% discount late last year on Apts they were unable to shift , Developers are now forced to go one step further & offer a interest rate of just 3.99%!!

So now other developers with stock to shift have to compete & offer rates of 3.99% as well.
(Slippery Slope springs to mind)

But ask yourself why would you do this if you thought we were in a booming economy? (WA is in the middle of a Mining Boob led by China)

Developers are not fools they are not in the business of throwing money away they are doing these deals now because they know it is only going to get worse.

Have a look at this link:

http://nfbpsh.blogspot.com/

#28 Cmon on 05.11.11 at 10:14 pm

Aw cmon. Flaherty just said yesterday that he wouldn’t make any other changes.

http://www.financialpost.com/m/blog.html?b=business.financialpost.com/2011/05/10/no-new-mortgage-rule-changes-flaherty&s=Opinion

Remind me what he said about income trusts. — Garth

#29 Guy_in_Regina on 05.11.11 at 10:15 pm

Yeah, but F just said he ain’t gonna do it. If he was even remotely considering tightening the rules he wouldn’t have poo-pooed it publicly. But maybe the majority has him feeling cocky!

I’d like to hear more on why inventory is dropping. I’m not sure I buy the “too scared to list” take.

#30 BrianT on 05.11.11 at 10:17 pm

#11Rain-The purpose is to increase debt (specifically mortgage debt). The goal is to shift the risk to the shmuck taxpayer, away from the banks.

#31 Hoof - Hearted on 05.11.11 at 10:24 pm

The funny thing is so much new product coming onto the market in Richmond…

Beside the Olympic Oval ……mid town….multi -family of all types…..I see this as a slow motion disaster .

#32 Hoof - Hearted on 05.11.11 at 10:26 pm

#25 bigrider

Did you live through the 1980’s boom bust ?

Also what purposes is served building units that end up like ghost cities?

Just for sake of construction jobs?

EVERYONE suffers when supply exceeds demand….look at Detroit…

#33 Mark on 05.11.11 at 10:27 pm

Popping a bubble gently is easier said than done. Does anyone think the Fed in the US intended for the economy to implode as it slowly rose rates to control inflation?

Check out this clip that illustrates how fast the US Housing bubble grew and then imploded:

http://www.planbeconomics.com/2011/03/24/housing-bubble-in-2-minutes/

#34 Jon B on 05.11.11 at 10:28 pm

Anyone remember the days when the aquisition of money had to be “earned”? How did money every become a product? How did taking on massive debt become socially acceptable and normal? If this mess ever normalizes to normal again, there are going to be some seriously screwed people.

#35 squidly77 on 05.11.11 at 10:29 pm

Just raise the credit score and enforce the 5% down mandatory down payment, no announcement necessary.

#36 Jsan on 05.11.11 at 10:29 pm

The PC’s pumped up the housing market via the CMHC to give the economy an artificial and very phony sugar hit. This is absolutely identical to what the US did after the Tech/Internet stock market meltdown of 2000 and than 9/11. Fed Chairman Alan Greenspan came in with ultra low interest rates which he kept way too low for way too long and Fannie Mae/Freddi Mac (the US equivalent of the CMHC) started handing out loans to anyone with a pulse sort of like what the CMHC does. This created the US housing Bubble and subsequent crash.

Why would the PC’s knowingly pump up housing at the same time the US housing market was tanking? Because they wanted the one thing that they have lusted for ever since they became politicians, A MAJORITY! What better way than to drive up housing prices and give 95% of the population the impression that our economy was strong for reasons other than “The Wealth Effect”. They now have their Majority and they now have to bring housing prices under control. As Garth said, what better way than to tighten the CMHC lending rules.

I heard an interview of a fellow from the Fraser Institute last year. He said without question the government has to get out of the mortgage insuring business. And yes, he also mentioned it would have a big impact on the price of houses meaning they would drop significantly. But they have to do it sooner than later as there is nothing that will kill our future economy faster than having this and the next generations wallowing in absurdly high mortgage debt.

#37 Hakuna Matata on 05.11.11 at 10:32 pm

Let’s hope it goes through and brings a bit of sanity back to the world… But won’t it poleaxe your golden goose of preferred bank shares?

Why would that happen? — Garth

#38 American Werewolf on 05.11.11 at 10:32 pm

“the genius of Vancouver Real Estate”

Nothing to fear? Sounds like a real “genius”. LOL

#39 BCing You on 05.11.11 at 10:33 pm

According to this article in the National Post (May 10), there will be no changes to mortgage rules.

http://business.financialpost.com/2011/05/10/no-new-mortgage-rule-changes-flaherty/

I’m sure he meant every word. — Garth

#40 not 1st on 05.11.11 at 10:34 pm

#23 Vancouver

You want to move permanently to the U.S.? Are you nuts? That nation is about to enter their second near death economic experience and you want to set up shop there?

Why don’t you just rent a property in Phoenix for the winter and keep your canadian citizenship. You will love the 115 degree weather and I guarantee its going to be a lot cheaper to live there shortly.

#41 Tom on 05.11.11 at 10:36 pm

Hey Garth,

Lower house prices mean less tax revenues. Why would the fed want this when our growth has mainly been in housing? In other words, why would they kill the goose that lays the golden egg.
Is this too simplistic of a theory?

TIA

#42 George on 05.11.11 at 10:37 pm

Hey there Garth . Brilliant is all i can say , i could not agree more , but these are points that i said to myself time and time again . Interest rates can stay where they are , likely should go up a bit , but increasing down payments and other strategies that are now being used in some countries (israel is one country in the news regarding this ), to prevent a speculative type crash that occured in the states are happening now , but not in canada . Very sad indeed . All anyone has to say to themselves is “would banks agree to these terms if there was no CMHC and they were carrying all the risk” , of course the answer is no.
My only question i have for you is , “will harper wake up” ?

#43 Marigolds and Lavender on 05.11.11 at 11:00 pm

People who rent instead of owning their own homes pay taxes too. They pay the same Federal tax rate on income as property owners except they do not get any of the deductions allowed those who have property.

Taxpayers are responsible for the obligations of CMHC. Renters are therefore also on the hook if CMHC gambles do not pay off with an anticipated expanding economy and rising GDP.

Renters as an outcome are clearly subsidizing property owners. They get a fair share of the invoice should CMHC’s largesse fails but do not get the benefits or the deductions.

That does not seem quite fair to all tax payers.

#44 Reg on 05.11.11 at 11:04 pm

#11 rain8
Can someone please explain to me the purpose of CMHC

———————

I think it was created to make housing more affordable for the lower-middle class, by making mortgage pmts lower, over a longer period and lower down pmt. But it has actually done the opposite by driving up demand and prices.

I don’t think they should get rid of it. What they should do is make some rules. i.e. It should not used to upgrade to a mansion, or buy investment properties, or to borrow against your house so you can invest it and make a higher return then you pay. Things are just getting out of line and nowhere close to what it was intended for. The whole thing is now just a big joke, and the young, entry level purchasers that actually could of used it (before it got out of hand) are now scr#wed because of it.

#45 Tim on 05.11.11 at 11:09 pm

“CHMC has a debt limit now of $600 billion – roughly the size of the national debt. Of course, the bulk of the loans insured are high-ratio and high-risk – the stuff the banks wouldn’t touch at today’s interest rates without this backstop. ”

So you’re now saying the bulk of the loans insured are high ratio, high risk. Any data to support this?

What else do you need insurance for? Duh. — Garth

#46 Tim on 05.11.11 at 11:10 pm

With the home ownership rate at an all time high in Canada around 70 percent, how much will changes to loans affect the market, if most try to hold on to their properties?

#47 not 1st on 05.11.11 at 11:13 pm

Still betting on the U.S.? Ha, that would involve sanity returning to washington. See you at DOW 8000 soon.

http://jimrogers1.blogspot.com/2011/05/jim-rogers-raising-debt-ceiling-will.html

#48 Marigolds and Lavender on 05.11.11 at 11:43 pm

#8 BPOE

“Tsur Somerville, the genius of Vancouver Real Estate as opposed to Shiller states there is no need to fear prices in Vancouver deflating.”
*******************************************

Don’t be a silly twit “Best Place on Earth”. You know better than that. I think it is obvious that Tsur Somerville has a personal agenda.

He owns Lower Mainland property and cannot therefore be regarded as an independent and uninterested third party voice on the issue of Vancouver real estate. Tsur has something to lose by speaking negatively against his own home market.

That should be obvious to all.

He does in fact have a very good reason to be biased. So let us go elsewhere. Let’s instead seek the opinion of an outsider on the issue. Someone like say,…oh maybe Robert Shiller who is a Yale Professor incidentally (no small feat) and also a PHD. He can hold more than just a small independent candle to the Tsur Somerville comments I think.

Guess what he says about Canadian real estate….here, have a good long looky look –>—->——>>

http://saskatoonhousingbubble.blogspot.com/2011/02/robert-shiller-predicting-housing-bust.html

#49 ted23 on 05.11.11 at 11:43 pm

Garth ! now your delusional.

CMHC is not going anywhere soon. Without CMHC the banks would not lend as easily and the economy would be very tight. CMHC is here to stay, perhaps with tighter lending rules, no cash back, 10% down. Also as far as I know not one penny has ever been taken from The Tax Payer for CMHC losses. The insurance premiums CMHC collects from borrowers have in the past and currently support all claims. The equity in the Canadian Real Estate market is substantially more valuable than the obligations that CMHC carry.

Its an insurance company operated no different that any other insurance Company

#50 Tom from Mississauga on 05.11.11 at 11:55 pm

Classic political play, F may mention in 2 weeks again that he is not touching CMHC insurance just to get it in the news. People talk about how important it is, like we are now, then the flip flop. Tah-dah 25 year mortgage is now the max (or whatever, I am not smart to really know).

#51 Off-Gridder on 05.12.11 at 12:01 am

Friends of mine were told by their local house insurance company that they just bought the oldest house in the kootenays. They just bought two 140 year old log cabins from the mining days. They were somewhat renovated to create a house. I went to BMO with my friend when she applied for approval the mortgage. I queried if it would be worth them putting a larger down payment to rid the CMHC insurance cost. The bank lady responded and said, “a mortgage with a house of this age can only be done under CMHC at our bank.” Basically this house did not meet their lending policy requirements. But magically CMHC makes it all better … And approved they were at near top of the market!

#52 Nostradamus Le Mad Vlad on 05.12.11 at 12:12 am


“Bankers man up real fast. They learn again what risk means. And it scares the poop out of them. Now just imagine if Ottawa started to unwind CMHC insurance on mortgages. They’d be banker road kill.”

Imagine if there’s no heaven or hell. Where would these banxters go? Probably GS, JPM or Chase Manhattan, and we would be left holding the bags again.

“. . . like saving for a pensionless retirement.” — That’s what TPTB want — a continent, such as Europe, entirely dependent on them. It’s a pity we can’t grow a set here, like Iceland has, and tell C-H-F, banxters and many like them to go play with themselves.

That would give them an enormous ego boost and be very enlightening to see that some things actually work!
*
A COMEX Crash in silver, Greece is falling and Pyramid Scheme. Inflation — Real or a figment of the imagination?

Yo Yo Currencies Both are worthless. Link in. Forbes predicts a return to the gold standard within five years. May be sooner if China and Japan act otherwise.

Numerology Lemuria, a.k.a. The Lost Continent of Mu which covered the Pacific. Remnants are Easter Island, Cook Islands, Fiji, the Hawaiian Islands, etc. Link in. Italians getting nervous as well.

Flooding Rumors for the US.

American myths about Canada.

Must Be Nice and Oil Supplies up.

Why the US will fight to keep Pakistan. Clear map of region incl.

#53 Phil on 05.12.11 at 12:13 am

Garth, he made the promise about income trusts before an election then flipped his stance, so he had a motive. Why would he make those comments yesterday then flip? There is no motive. Doesnt make sense.

#54 ron on 05.12.11 at 12:15 am

Seriously…what is with all the ‘first’ posts? This has the potential to be a quasi-intelligent site. Stop being such gomers…what are you, 5?

#55 ron on 05.12.11 at 12:27 am

The quality of comments on this site has steadily declined over the last 2 years. It’s gotten to the point that I only scroll through to see where G has commented. Here are the facts:
* listings up -check
* sales down – check
* delusional sellers – check
* dwindling buyers – check
* rising interest rates – check
* increasing gomer comments – check

P.S. if you’ve ever said ‘first’ and you are not 5, you are a gomer.

#56 DJH on 05.12.11 at 12:35 am

You’re welcome.

#57 Michael Castanaveras on 05.12.11 at 12:43 am

CMHC should just re-instate the price ceiling. Take an average of the cost of housing across Canada (factoring in square footage and lot size). Make the average house price the limit for CMHC insurance. Re-index the value each year. That would reset Vancouver and Toronto prices ASAP, but leave everywhere else with plenty of room to grow.

#58 Yawbawdy on 05.12.11 at 1:00 am

@ #39 & #28

Notice that CMHC is not mentioned in either of your articles. Mortgage rules and mortgage insurance rules are not necessarily equal…devil’s in the details.

#59 Only The Bankers Laugh on 05.12.11 at 1:10 am

I love the housing economy. Don’t take away the free honey and milk

When I talk to my company payroll and accounting in India, when my estimating team quotes on Canadian Oil Sands projects with 80% back office engineering and when all of the systems are manufactured in China and Ireland (but soon to be China), it is scary to see what Canada will be 40 years down the road. We have manufacturing hollowed out, young engineers taking minimum wage and a degree not a guarantee on a job but everyone is betting on housing as their saviour to put them over the top to retirement. It could be a big one if things start to crumble especially in no job Vancouver. Imagine graduating with a $50K job at top of your class and buying there? Wow, unfortunately, their parents are guiding them into it as they did so well in real estate.

Only the Bankers Laugh, Suck and Blow

#60 Investx on 05.12.11 at 1:11 am

Amazing post, Garth.

#61 Bestest place on the smallest part of earth on 05.12.11 at 1:13 am

CHMC’s action is unethical. Make it viable for those who could not qualify for a loan by shifting the risk on the tax payer. The test for this theory is the bank’s behavior.

The minute you shift the risk to their balance sheet they stop lending.

I suspect playing with that lever will become all too tempting when stimulus is pulled away and inflation slows again.

As you assess, this may be the only solution to manage the consumer debt (including consumer and mortgage debt) issue without threatening growth and increasing dollar strength by increasing interest rates.

As a layman I could easily spin how by changing a past position is better than to stick by it and kill the recovery momentum. I’m sure a half baked gov’t spin doctor would do a million times better job – so would rate this as quite likely and appropriate…

#62 Bob on 05.12.11 at 1:17 am

A realtor I know in Victoria, BC recently moved to a smaller office with smaller expenses. Do people do that when their businesses are growing?

#63 Bestest place on the smallest part of earth on 05.12.11 at 1:22 am

I have to admit, I am seeing BPOE as a source of comic relief.

If Richmond sunk into the sea, he’d be spinning how real estate prices will go in the surrounding areas as they now are waterfront properties.

Good thing about blogs is that it gives all a voice, some are rational and built on fact and analysis others on conjecture and speculation.

BPOE, everyone I enjoy your posts, they crack me up. You must be a comedian, at least you come across as one. I’d call the show “hoindsoit is elways 20-20 and becuz of dat tomarru will bi lik yezturday”

#64 Gimli Son of Gloin on 05.12.11 at 1:43 am

The Housing Bubble bursts on a speculator. Parody using a clip with Hitler as the real estate investor. He bought a house to flip, faces foreclosure, and now wants to get bailed out.

http://www.youtube.com/watch?v=bNmcf4Y3lGM

#65 Jimbo on 05.12.11 at 2:17 am

Vancouverites see house prices rocket ever higher and convince themselves it is because everyone wants to live in “The Best Place on Earth”. The ever higher prices alone provide them with sufficient evidence to support this myth.

But I consider myself to be a free thinker. I was born and raised in Vancouver and have traveled enough to know that there many more desirable places to live in the world. Summer can be nice here, but you pay a huge price with darkness and rain the rest of the year. The cost of living and housing makes it a struggle for most families to enjoy even a middle class lifestyle, and there aren’t any major employers (such as Boeing and Microsoft in Seattle).

I have seen many friends who were stuck in a rut in Vancouver for years, move to the US where their standards of living immediately jumped dramatically.

So why? Why the high prices here?

I am starting to believe that the truth is that prices are high only because Canada is a noted global oasis for people with questionable money. And Vancouver, being closest to the Far East, is the most convenient destination. I believe that many people would prefer to move to sunnier climates in other developed nations, but simply can’t get in… or fear a detailed review of their backgrounds and assets if they do. The Internal Revenue Service in the US, for example, is know to carefully scrutinize global assets – going as far as demanding Swiss banks to to open their records.

Nobody can convince me that this moldy, wet, dark, congested, over-priced, crime-ridden hellhole called Vancouver is heaven on earth. And after 8 consecutive months of non-stop rain, if I could convince my wife to move away from her family, I’d be packing up and leaving for good tomorrow – and buying twice the house for half the price somewhere else.

#66 Jody on 05.12.11 at 2:58 am

I wish the idiot feds wold dismantle the CMHC, that would be awesome, I’m tired of kissing the ass of banks as a taxpayer, they need to take some risk, scumbags. I thought they were a private business, apparently they aren’t. I don’t see it ever happening though, the CONservatives are not conservative, especially fiscally, they spend just as much as moronic LIEberals, just on different things. Oh to be rid of those federal arseholes, a fantasy I pray to come true.

#67 Aussie Roy on 05.12.11 at 2:59 am

Aussie Update

IMHO every bubble RE market in the world has one thing in common. Banks valuations are calculated on recent sales, meaning that valuations are effected by greater fools. If banks where to value properties at their income producing potential (rental yield) then a debt fuelled bubble could not happen.

Prices are only what banks are willing to lend and consumers are willing or able to borrow.

Australians looking for relief from high home prices found little help in last night’s budget, with some groups saying the lack of action on housing affordability was ”absurd” and ”nonsensical” as household costs rise.

http://www.smh.com.au/business/federal-budget/budget-worsens-housing-affordability-says-hia-20110511-1ei7z.html#ixzz1M7bY8Qyj

THE Commonwealth Bank expects one or two rises to the official overnight cash interest rate in the next six months – and will pass them on to customers.

http://www.news.com.au/money/interest-rates/cba-on-track-during-fragile-recovery/story-e6frfmn0-1226053964752#ixzz1M7bj1Mw7

Paying off the mortgage versus minimising tax

http://smh.domain.com.au/home-investor-centre/ask-noel-paying-off-the-mortgage-versus-minimising-tax-20110511-1ehv9.html

Australias largest mining state needs govt to increase first home owners bribe to get its RE sector off the mat.

http://www.theaustralian.com.au/business/property/double-first-home-buyer-grant-to-give-state-a-lift/story-e6frg9gx-1226054181121

#68 R on 05.12.11 at 3:44 am

I think that preventing the banks from shirking due diligence by lending to any body with a pulse and offloading risk to taxpayers is a sound decision.

#69 Deliverator on 05.12.11 at 5:02 am

HELOCs are no longer insured by CMHC, which means the banks are suddenly worried about risk.

Will somebody PLEASE explain to me what HELOCs have to do with “making housing more affordable for Canadians”? They should never have been insured in the first place!

#70 bob on 05.12.11 at 5:13 am

So Garth, say you are right. Say RE will crash or correct or whatever other term you use “fashionably” from time to time. RE prices will go into a “soft landing” bank & mortgage loans are tougher, repo’s are up folks are behind their payments, etc etc etc etc. What’s next?
Are you going to be happier, and a big round of “I told you so’s”? Most of your clueless followers here will raise their cans of squirrel ragoo and pat each other on the backs as Canada is knocked back to the stone age?
At the end of the day, what will be the benefit?
Or should I head your advice now, sell my house, sell everything I have except for the shirt on my back, rent, eat squirrel meat and see what happens next?
Or you’re just gonna do what it is you always do and delete my comment?

#71 john m on 05.12.11 at 6:42 am

From what i understand CMHC has around 600 billion in potential liabilities for which they have collected around 3% in fees (18 billion). What is even more frightening is the HELOC’s being part of that. All thanks to the Harper government’s quest for power, their relaxed rules and the worn out philosophy that housing always goes up. IMO with our faltering economy i think bad things are already happening behind the scenes at CMHC? What i find even more shocking is the voters selecting this group of incompetents to bring us out of the financial mess they themselves created.

#72 Montrealer on 05.12.11 at 6:51 am

I vote for 15% down, 25 years max and no more cashback or separate-loans-for-cashdown schemes… This right there would stop nay young person with zero money from buying.
The biggest problem is really the 5% down (which can be zero easily), with zero down, you can get VERY big mortgages with a $70k family salary (we’re talking $450k+)… it’s ridiculous

#73 james on 05.12.11 at 6:54 am

http://www.youtube.com/watch?v=TwmM5Nb6hiE

This documentary is great for financial novices to understand why the banks do what they do.

#74 bigrider on 05.12.11 at 7:05 am

#32- Hoof hearted.

Yes I did live through the eighties bust. I had a condo at the time. Ended up selling it in 1998 for a $10,000 loss. I wouldn’t touch RE in the GTA with my worst enemies (if I had one) money.

I am surrounded by RE believers. They say nothing is going to change so long as immigration to the city continues.

I also think too much at stake for Ottawa to change CMHC rules.

I am frustrated to see RE as strong as ever in the GTA. Inexplicable ???????????

#75 Andrew toronto on 05.12.11 at 7:07 am

So Garth would these possible new rule changes also not affect , those that have to renew especially those that borrowed there brains out.. will they not have to meet the stricter conditions by the banks has well going forward?

#76 smw on 05.12.11 at 7:17 am

#70 bob

Holy shit your a drama queen.

#77 pbrasseur on 05.12.11 at 7:18 am

Garth – You are correct to say that in theory it’s better to fight household debt with CMHC regulation changes than having later to raise interest rates though the roof which would kill the whole economy instead of just one sector, housing.

But I wonder if the governement will be trying to bite more than it can chew here. The economy in an incredibly complex affair and trying to engineer it can be quite foolish (that’s what free market are normally for…). But in a way they have no choice, the CHMC does exist, it is screwing up the notion of risk and that is structurally changing our economy, something has to be done about that.

The Feds want housing to cool not to stop, the reason being that housing is such an important part of our economy and it support consumption which is an even bigger part. So I presume if more CMHC changes come they won’t be so drastics.

What the Feds want is a “soft landing”, easier said than done really, because when (not if) the housing tide turns nobody knows how fast and how far it’s going.

Frankly I don’t know either. One thing I do know however is that – soft landing or not – this housing debt binge will have been bad for the Canadian economy in more ways than we can imagine.

#78 bigrider on 05.12.11 at 7:19 am

I thnk CMHC should continue to operate as is. No changes however,

I think the govt should allow for the insurance of loans for financial asset purchases. Let’s call it CELC (Canadian Equity Line Corporation). You can buy a million dollars worth of stocks/ETF’s etc. for 5% down or 50 grand.

Hello TSX 100,000 hello RBC shares $800 a piece LMAO

#79 pixelwhiplsh on 05.12.11 at 7:25 am

@ bob #70
Seems to me that these are Garth’s musings. Doesn’t say he’s advocating anything other than his take on how the real estate world will unfold here. Nothing about happiness when this thing goes pear shaped. No wonder your previous comments have been deleted. Squirrel is best enjoyed fresh, not canned.

#80 smw on 05.12.11 at 7:30 am

http://www.newswire.ca/en/releases/archive/May2011/12/c3831.html

Article says it all about the future of the real estate agent in Canada. Hope you loaded up pre-2011 cause people aren’t going to be paying you 3% to 5% commission to color between the lines anymore.

#81 bigrider on 05.12.11 at 7:43 am

BTW- Just for everyone’s interest here.

A large builder who starts with “M’ will be selling a condo project at Yonge and Eglington, east side of Y south side of E. Expect sales office to open Sept/Oct. Starting prices just under $600 a sq ft with plenty of under 600 sq ft units. Connected under ground to subway.

Some of the people I know, with connections ,have already locked in there purchases ahead of time. The hype already is unbelievable. I have same opportunity but Im passing.

If a crash/decline is coming no signs yet I’m frustratingly afraid.

The people lined up outside a sales office will be the last ones to see what’s coming. — Garth

#82 S.B. on 05.12.11 at 7:43 am

Oh oh, that “store of value” Silver is down another 7% today!!

This sick commodity bubble is collapsing, taking many metalheads and greater fools with it:

http://finviz.com/futures_charts.ashx?t=SI&p=d1

#83 Sid on 05.12.11 at 7:57 am

23 Vancouver. Go see an accountant, at 50K dividend you will pay some tax. I know I paid 5K on 60K a few years ago. And yes, the Americans will want some tax too. You do realize that if you move to the US you lose your Canadian health care, CPP, and any other federal benefits you get here. You need to spend at least half the year here.

#84 Patiently Waiting on 05.12.11 at 7:59 am

The Conservatives own responsibility for the economy for the next four years…maybe eight years or more. They have to think a little more long-term now. They want to limit the damage which they’ll have to repair. I agree with Garth on this.

#85 Gord In Vancouver on 05.12.11 at 8:19 am

By doing what the US has – shifting risk back on to the lenders from the taxpayers – this change would drop housing values in short order (as it has done in the States), and remove a major reason why living costs are going up and standards of living going down.
_______________________________________

I’ll believe it when I see it. The federal govt. still sees high housing prices as an economical way of saving baby boomers who didn’t save enough for retirement.

And who will the Boomers be selling to, at inflated prices? Nonsensical. — Garth

#86 bigrider on 05.12.11 at 8:30 am

Garth’s response to Bigrider at #81 _”The people lined up outside a sales office will be the last one’s to see what’s coming”

You have no idea how much I want you to be right. I am so sick and tired of the RE is better than liquid financial assets mantra.

By the way, three of my closest friends will be spec buyers of those condos at Yonge and Eglington.

Need new friends. — Garth

#87 Paul on 05.12.11 at 8:32 am

Garth, get ready to defend yourself. Don’t think this has been posted…..

http://www.cbc.ca/news/canada/british-columbia/story/2011/05/11/bc-turner-real-estate.html

#88 Mr. Reality on 05.12.11 at 9:11 am

Anyone watching commodities?

#89 john m on 05.12.11 at 9:17 am

#68 R on 05.12.11 at 3:44 am

I think that preventing the banks from shirking due diligence by lending to any body with a pulse and offloading risk to taxpayers is a sound decision…<<<<<<<<< more like trial by error because Harper and Flaherty are the ones that started it in the first place…so there is really nothing sound about it at all…they screwed up and now are trying to cover up!

#90 GregW, Oakville on 05.12.11 at 9:27 am

Hi Nostra, This is not sounding any better at all. Some have already guessed this was the case.

Tepco: Fukushima Fuel Rods Are Fully Exposed. May 12
http://www.bloomberg.com/news/2011-05-12/japan-suffers-setback-at-fukushima-after-no-1-reactor-s-fuel-rods-exposed.html

#91 Hoof - Hearted on 05.12.11 at 9:32 am

bigrider….

No IMHO now that Harper has his majority, now is the time to crank back the CHMC and be ” conservative”.

The pimping and pumping cannot go on forever.the best solution is to attempt as soft a landing as possible, even if it will end up as a crash.

So many other logisitics and demographics wlil come into play as more Boomers retire , pernsion plans health care….that clusterf*ck wave is coming.

#92 Dontcallmeshirley on 05.12.11 at 9:32 am

CMHC isn’t the only game in town. Genworth and other new competitors will step in and mop some / all of any insurance action CMHC doesn’t want.

That’s a good thing. Private insurers beats a government nanny. The insurance will cost more though – also a good thing.

I only wish Conservatives would act like conservatives and enact market competition for banks, insurers, telco, cableco. Seems their idea of “market competition” is essentially squeezing hospitals busting unions.

#93 Fuzzy on 05.12.11 at 9:32 am

Bankers are pricks? Really? This just in … the sky is blue.

#94 AG Sage on 05.12.11 at 9:45 am

#44 Reg on 05.11.11 at 11:04 pm
#11 rain8
>Can someone please explain to me the purpose of CMHC

It was formed to assist returning veterans in financing housing. The market did need a boost (massive housing shortage), as did the incoming pool of buyers. It morphed into a service to assist households on the edge of affordability, presumably to keep them from paying unwieldy risk-based rates (imagine, if you will, getting a mortgage from a payday lender). Turns out if your loan terms are good, your default rate is lower across all credit statuses.

All of this assumes the government has an inherent interest in promoting affordable home ownership at the margins. That is a separate debate. Let’s assume the government does have an interest for a moment, why are they suddenly 40% of the market? Since eliminating them is too hard to conceive of, start with asking why they have expanded so far beyond their charter.

The easiest rule change would be to apply a cap. There is no reason for the government to be backstopping foreigners, or those dreaming of flipping a house to foreigners, in a speculative bubble at $1.5 million a pop in the name of “affordable shelter.”

#95 Hoof - Hearted on 05.12.11 at 9:45 am

JAPANESE PUSHING UP PRICES OF U.S. COMMERCIAL PROPERTY

http://www.nytimes.com/1986/12/15/business/japanese-pushing-up-prices-of-us-commercial-property.html

#96 Daystar on 05.12.11 at 9:46 am

Ideally, banks should not be subsidized by taxpayers dollars in this nation. It ended badly in the U.S. and it will here, its a question of time.

CMHC’s conception, as some will remember, was initially created generate affordable housing. Banks wouldn’t touch household debt based on home equity back in the day, so our feds stepped in. Think post war days when our guys returned from WWII. Government stepped in when our banks wouldn’t and thus, the humble origins of our crown corp CMHC began.

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

Things undoubtedly have changed. CMHC’s founding principle of housing affordability has been perversed by our current government to generate a wealth effect for self interests (majority government) and to argue that our current majority government didn’t generate a housing bubble or created the highly unaffordable market we see today for Canada’s “best interest” would be to argue from either an incredibly naive point of view at best, or an ignorant and/or self interested and lying point of view at worst. One need only look at the history of CMHC’s regulations to see why that is.

However, regardless of our current majority government’s motives, be it to create the “wealth effect” we see now for the average vote or to get the RE industry, media and banking industry onside for election support (as Mulroney says, can’t win without Bay St.) or all three, (and apparently it worked) Canada has a serious housing problem, housing has become highly unaffordable in major markets and current credit markets are highly over exposed to interest rate sensitivity risk whether people want to point fingers or not and there is no painless way now to fix it.

Lets consider for a moment, a scenario of a Canadian housing collapse triggered by interest rates.

Considering the past self interested motives of our current majority government, (they had other far better choices to make to win our trust) its not a stretch for me to see Harper & F trying to privatize CMHC only to bail CMHC out shortly after it goes bankrupt but thats me, I tend to think the worst. I see naked self interests and expect a pattern, so… CMHC gets sold to chosen fall guys in the corporate board room with all of them knowing it will hit the skids within a year from sale. The Conservatives could then blame CMHC’s demise on failed private practice instead of failed Conservative government polices.

Naturally, CMHC would have to be bailed out by the feds assuming housing collapses regardless of who it CMHC gets sold to. In essence, under this imagined scenario, CMHC’s privatization was never really intended to work, public debt would swell from the ongoing CMHC bailout and our Canadian banking institutions would walk with past profits, the best thing for the shareholders who chose a quick buck over long term security and the best thing for the ongoing Conservative narrative spin.

The wealth transfer from public tax dollars to corporate banks will be complete with all those former public tax dollars subsidizing housing/banking and bailouts only to see bank shareholders/investors take whats left of the profits… before they too, dry up and why?

Because housing is now doomed in this nation unless we want to immigrate double (yes, I’m guessing on the numbers, throwing it out there) what we are now to reduce housing supply to a trickle which is no quick fix either as supplies would be tight in a highly unaffordable climate and no matter how one slices it, its bad for banks with so much exposure to household debt regardless of who owns the risk.

Lets keep in mind that if housing collapses in Canada, even though banks have for the most part been insured by CMHC against mortgage losses as well as HELOC’s til’ this year, the drag of negative equity, personal bankrupcies, major drops in consumer spending and housing itself (RE is responsible for 20% of our GDP alone) would bode ill for the service industry, business in general, future mortgages/personal loans and in short, banks in Canada.

Lets do the math. A 20 to 40% correction could mean a 4 to 8% drop in our GDP in just one sector spread out through 4 to 6 years (timed with a commodity correction, this could get ugly for Canadians).

Outcome of such a scenario assuming a housing collapse escalates within two years and CMHC is privatized before it really hits the fan coupled with a collapse in commodity prices? Very much like the ongoing outcome of Spain.

But lets say its all in my head (I do tend to think the worst, not making a very good cheerleader for the self interested powers that be, truth be told). Y’know, CMHC remains as a crown and the Harper party still calls the shots and a housing collapse won’t happen anywhere near the extremes the U.S. example has shown. F shouldn’t have to do much more than he already has with CMHC regs. If he tightens more, it only exasterbates the collapse. A slow melt is far more preferable (less shocks). Interest rates will cool the market on their own and F knows it.

But lets say my darkest worst fears for this nation hold true and the U.S. dollar rises while commodities collapse (think tidal wave) and interest rates rise forcing a snowballing housing collapse in Canada accelerating into next year and panic and despair drips all over the Canadian housing market come 2013. Has F considered the privatization of CMHC? Oh, God yes. We would be fools to think it hasn’t been considered. Will he? They need to shop around for a financial corp to take the fall and that might not be so easy. Maybe if it was a foreign corp… maybe if he loosens regs, yeah, maybe but my point is that if F/Harper were to privatize CMHC, they would have to do it before CMHC turns quarterly losses or their government takes on the full blunt of the blame for what follows next. They simply couldn’t media spin their way out of it, no matter what they tried if they unloaded CMHC too late.

It really is an interesting scenario to contemplate.

Thing is, if interest rates took a rapid spike in the same fashion that killed the U.S. market in 05′, I’m not so sure that even if they wanted to privatize CMHC, they would have the time.
http://en.wikipedia.org/wiki/File:Federal_Funds_Rate_1954_thru_2009_effective.svg

Notice the personal bankrupcy rate spikes generated by rising rates U.S. consumers couldn’t adjust to in the link below.

http://www.abiworld.org/statcharts/PersonalBankruptcyQuarter.pdf

In 2005, there were 2.1 million personal bankrupcies in the U.S. In 2009 there were 1.44 million bankruptcies, 32 percent increase from 2008.

Bankruptcy filings still trail the record 2.1 million in 2005, when 630,000 Americans sought protection from creditors in the two weeks before revisions to federal bankruptcy laws that October made it more difficult for individuals to erase debt. These revisions mirror the same recourse loan bankrupcy laws we have here in Canada (I urge you to look at the U.S. bankrupcy chart one more time, notice the sharp fall on the chart as a direct result of bankrupcy law revisions).

http://www.mybanktracker.com/bank-news/2011/01/05/personal-bankruptcy-filings-reached-5year-high-2010/

Even with tigher bankrupcy laws introduced in 2006 (much the same as we have here in Canada), there were 1.52 million bankrupcies in 2010. Recourse loans only delayed the inevidable.

But its different here, right?

http://www.bcrealtor.com/d_bkcan.htm

I mean… the U.S. had 12 full quarters of teaser fed rates to our lowly 9 (and counting). Doesn’t that make us different? Its not like the U.S. ever had a city with homes flipping for a mil on average. Doesn’t that make us different? ;)

#97 squidly77 on 05.12.11 at 9:48 am

#87 Paul – from your link the prof said

He said it’s “very, very dangerous to make predictions” based on a short time-line.

Somerville also said that previous interest rate hikes have done nothing to bring down housing prices in the Lower Mainland.

Doesn’t CREA make INCORRECT short term price projections monthly?

Trying to think when we last had a BOC interest rate hike.

#98 landlessinvan on 05.12.11 at 9:58 am

I’ve been dying to ask this question of Garth for the past few years, and especially now as the US dollar drops further. I have money in Norwegian and Swedish bank accounts right now and have been watching for a good time to move the monies back to Canada. But, I don’t know if it’s even a good idea right now, considering that Canada’s real estate (and economy) are about the take a beating. But more than that, have you ever noticed that the loonie is stuck like glue to the the US economy, so it seems to me if the US dollar continues to drop, the loonie will eventually follow it down, in order for Canada to remain competitive on exports to the US. So, am I stupid to bring my money back to Canada, invest in REITs and preferreds? Or should I continue to ride the crest of prosperous Scandinavia and invest here, where my earnings will be taxed 30%?

#99 Cash is King on 05.12.11 at 9:59 am

This is what I do not understand.

If F does what the US did “By doing what the US has – shifting risk back on to the lenders from the taxpayers – this change would drop housing values in short order (as it has done in the States), and remove a major reason why living costs are going up and standards of living going down.”

Would that not result in a partial US like meltdown? If banks become “pricky” about new mortgages, do they not become “pricky” about renewals…especially if your upside down?

Yes current mortgages are insured by CMHC but all those house horny virgins who purchased homes in the last 5 years will become non-virgins, horny for F’s head on plate or placing Harper’s ass in defeatedvill come next election.

#100 landlessinvan on 05.12.11 at 10:02 am

#23, the US taxes world income; yes you will have to file, as far as I know.

#101 grantmi on 05.12.11 at 10:35 am

#3 curious on 05.11.11 at 9:23 pm

first

1st Moron of the day!!

#102 grantmi on 05.12.11 at 10:38 am

#7 disciple on 05.11.11 at 9:30 pm

first!

also… a 1st moron of the day!

#103 grantmi on 05.12.11 at 10:40 am

#12 BPOE evil twin on 05.11.11 at 9:35 pm

It’s alive it’s alive and FIRST !!!

and another 1st Moron of the day!!!

#104 grantmi on 05.12.11 at 10:41 am

#15 Dragula on 05.11.11 at 9:40 pm

First!

and yet again.. another 1st MORON of the day!!

#105 Industrial Guy on 05.12.11 at 10:47 am

The Canadian Real Estate Association says 447,010 homes were sold in Canada in 2010. It’s down from 2009 .. buy respectable.

So basically, if the Canadian Association of Accredited Mortgage Professionals report yesterday is correct …. a 1% rise in interest rates over the next 12 months could cause almost 900,000 new for sale listings in Canada.
That’s two years of inventory folks!!!!!

This is not going to end well at all!

#106 poco on 05.12.11 at 10:48 am

#82 S.B.
Oh oh, that “store of value” Silver is down another 7% today!!

This sick commodity bubble is collapsing, taking many metalheads and greater fools with it:

http://finviz.com/futures_charts.ashx?t=SI&p=d1
_____________________________________________

actually silver rallied this past few days from the lows of last week–it was over $39 two days ago–so it only lost some of its’s gains from earlier this week when you say 7%–it’s actually up over $1.00 from its’ overnight low today
look at the miners –slw– sso–paa–they’re all up right now while silver is down –go figure!!!!!

Gamble, gamble, gamble. — Garth

#107 Chaos on 05.12.11 at 10:58 am

The final nail in the property coffin…

A buck forty, forty-five, fifty gas.

That’s reality.

#108 Cato on 05.12.11 at 11:04 am

#92 Dontcallmeshirley – Genworth is still gov’t guaranteed. If guarantee were removed we’d find them turn tail fairly quickly as they have in the US. At the moment the industry is just a license to print money on backs of cdn taxpayer.

#82 S.B. – Silver is not a store of value as its not a monetary metal, its an industrial metal. The only monetary metal is Gold – its a store of value because its been chosen by central banks to serve as a currency reserve. This is necessary because the US is heading towards currency crisis and world is losing faith in US political process to deal with deficit. Silver market got ahead of itself and we have one group of billionaires slitting throats of another group of billionaires. At these levels I’d be a buyer of physical but go figure, no-one I’ve checked has bars to sell.

#109 American Werewolf on 05.12.11 at 11:11 am

@ bob “At the end of the day, what will be the benefit?”

Education benefits the people who are potentially the last victims to buy into the ponzi scheme.

Its going to happen anyway. Might as well save some souls in the meantime. The sooner it happens, the easier it will be to recover from it.

#110 BPOE evil twin on 05.12.11 at 11:17 am

Post 100 – 104 grantmi

We have triangulated your position. You are in the presale line-up right next to CrowdedElevatorFartz

#111 bigrider on 05.12.11 at 11:21 am

#105 Garth response- “Gamble Gamble Gamble”

Silver Wheaton production costs are $8 an ounce. Most analysts using $18 silver as a valuation metric currently.

Earnings per share 86cents and pays a dividend around 11.

Maybe a gamble but one where your odds are obscenely in your favour.

#112 Timing is Everything on 05.12.11 at 11:25 am

Well now, I guess we may as well nuke ’em all…Why stop there?… And life in Canuckle-ville will just move on. Stroke of a pen.

Voters? We don’t need no stinkin’ voters!

Imagine.

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

Looks like I picked the wrong week to quit sno-cones.

#113 realpaul on 05.12.11 at 11:32 am

The hidden truth about Vancouver being the bedbug capital of North America has been hidden. But if you look at the Bed Bug Registry you see that the real problem extends to all classes of building, commercial, residential and now…….public.

http://bedbugregistry.com/metro/vancouver/

St Pauls hospital confirms that bed bugs have been spreading a superbug. They carry a bacteria that enters the skin after the bed bug bites. Now…..the realwhore community doesn’t like this one bit ( no pun intended) but the fact that Vancouver is now dangerous to your health should be an eye opener to international investors…even though the local pimps have done their best to keep this out of the news.

http://www.globalregina.com/entertainment/Paul+links+bedbugs+superbugs/4771993/story.html

#114 Vancouver on 05.12.11 at 11:39 am

Sid
“23 Vancouver. Go see an accountant, at 50K dividend you will pay some tax. I know I paid 5K on 60K a few years ago. And yes, the Americans will want some tax too. You do realize that if you move to the US you lose your Canadian health care, CPP, and any other federal benefits you get here. You need to spend at least half the year here.”

would I really lose my CPP?

#115 RentinginRosedale on 05.12.11 at 12:05 pm

#113 Vancouver on 05.12.11 at 11:39 am

You don’t lose CPP when you move to the USA. You earned it you keep it. However, if you accumulate some Social Security credits while in the USA, you can collect Social security also.

#116 Thetruth on 05.12.11 at 12:13 pm

No mortgage changes in the next five years. End of story.

Maybe some benefits to come for homeowners in the next five years. End of story.

Government will do everything in its power to prevent a housing correction. Immigration, interest deductibility, etc.). End of story.

#117 Silver Wheaton on 05.12.11 at 12:17 pm

Excuse me for pluggin Vector Vest but best money I ever spent. They have a SELL recomendation on Silver Wheaton and the stock is currently overvalued. Nice call Garth, gamble, gamble, gamble.

Here is what they say about SLW’s Value: “Value is a measure of a stock’s current worth. SLW has a current Value of $22.40 per share. Therefore, it is overvalued compared to its Price of $32.65 per share. Value is computed from forecasted earnings per share, forecasted earnings growth, profitability, interest, and inflation rates. Value increases when earnings, earnings growth rate and profitability increase, and when interest and inflation rates decrease. VectorVest advocates the purchase of undervalued stocks. At some point in time, a stock’s Price and Value always will converge.”

SELL IN MAY AND GO AWAY! If you stay long you may have nothing left come September.

#118 Thetruth on 05.12.11 at 12:17 pm

HELOC’s

Those that bought homes years ago and took out a HELOC for a new car or kid’s education will always be better off than a new homeowner. Why? Old HELOC’s are insured thus lower interest rates for these people for decades!!!! New Heloc’s are like a regular loan.

And who said not to buy a house in 2008? When people do their ‘math’ analysis on homeownership, they fail to take into account many things.

Canada is a place where those who get into an industry first will be rewarded. Regulations will be put on latecomers…case in any industry.

#119 Alex on 05.12.11 at 12:18 pm

#70 Bob: Typical lament of a homeowner who sees the writing on the wall and gets all huffy about it. “Clueless followers?” What a smart and logical way to begin your bearish argument! Congrats!

And yes, Boob, that’s precisely what Garth has been suggesting – that you sell “everything you have except the shirt on your back.” Your reading comprehension skills are truly…unique.

#120 Thetruth on 05.12.11 at 12:26 pm

#80 SMW

I can’t believe the ignorance of people when it comes to realtor bashing on this blog.

Let me say this: it is easy to become a realtor and takes about a month of studying and one multiple choice test.

People in other careers become one when it suits them.

Also, the people that need realtors are the ones that post on this blog and bash them. They think that it must have took a lot of hard work to become one. They say things like ‘they’re going to be out of a job soon”, etc. I laugh and cringe when comments such as these are posted.

#121 eaglebay on 05.12.11 at 12:31 pm

#89 john m

The Harper Government was a minority government.
Don’t you get it. They had to have the support of the other parties. Duh…..

#122 Timing is Everything on 05.12.11 at 12:33 pm

#112 realpaul

Ya so, bedbugs exist. What’s your point?

http://bedbugregistry.com/metro/toronto

http://bedbugregistry.com/

#123 Uncle Scrooge on 05.12.11 at 12:33 pm

US article but Candians need to ask the same questions.

http://www.marketwatch.com/story/keep-your-house-from-becoming-a-retirement-burden-2011-05-12?pagenumber=1

#124 eaglebay on 05.12.11 at 12:42 pm

#110 bigrider

Silver Wheaton does not produce silver. They are not miners. They purchase silver (hedge) from other miners that are mainly into gold or copper or…
Check it out.

#125 eaglebay on 05.12.11 at 12:47 pm

#110 bigrider

Silver Wheaton does not produce any silver.
They purchase (hedge) from other miners that produces mainly gold, copper, zinc or…
How can their cost be $8.00 an ounce?

#126 BPOE evil twin on 05.12.11 at 12:54 pm

#120 Timing is Everything

Bedbugs Vote NDP

A blood sucker is a blood sucker

#127 Cross-border tax guy on 05.12.11 at 12:57 pm

If any curious readers wish to know the real tax implications of visiting, living in, or working in the United States they should consult with a tax professional rather than relying on speculative drivel posted here. Tax professionals in the United States come in three flavors – Certified Professional Accountants (CPA), attorneys (JD) and Enrolled Agents (EA). It should be reasonably easy to find one who has extensive experience with joint Canadian -United States taxes. An initial consultation will frequently be free. A tax professional should be able to give you an accurate outline of your possible individual tax situation.

#128 Devore on 05.12.11 at 12:59 pm

#86 bigrider

By the way, three of my closest friends will be spec buyers of those condos at Yonge and Eglington.

Hope you don’t take your investment cues from guys lining up for presales.

#129 Sid on 05.12.11 at 1:00 pm

Vancouver, my response was based on what I had heard. I looked up online and found that yes you keep your CPP but your OAS and guaranteed income supplement may be reduced. Sorry about the misinformation.

#130 Ozy - New found TIP on investing on 05.12.11 at 1:06 pm

Gold and silver are qualified investments in tax-deferred accounts such as RSPs and RIFs. Certificates can be held within a Self-Directed RSP at ScotiaMcLeod Direct Investing.

http://www.scotiamocatta.com/products/faq.htm#Why_bar_charge?

#131 BrianT on 05.12.11 at 1:11 pm

What is up with these doomers and metalheads (as another poster terms them)- 127 tons in the quarter http://www.zerohedge.com/article/central-banks-purchase-127-tons-gold-q1

#132 bryan35 on 05.12.11 at 1:24 pm

128th !

#133 fancy_pants on 05.12.11 at 1:26 pm

great post.
now this would be a suitable alternative IMO if the political scientists refuse to raise rates.

#134 john m on 05.12.11 at 1:30 pm

#120 eaglebay on 05.12.11 at 12:31 pm

#89 john m

The Harper Government was a minority government.
Don’t you get it. They had to have the support of the other parties. Duh…..<<<<<<< it was their idea and they initiated it and anyone with half a brain knows full well how they pushed things through…DUH…….Always someone else who is at fault or "they did it too"…only nit wits support nit wits :-)

#135 bigrider on 05.12.11 at 1:31 pm

#116 Silver wheaton- what valuation for silver is vector vest using? My guess is $18.00 an ounce since most analysts are using such figure

#124 Eaglebay- you are correct and I do know that. What I meant to say is there average purchase prices are in and around $8.

By the way, I am not here to pump this company at all. I just think it is a good ‘gamble’ right now for a longer term investor.

#136 fancy_pants on 05.12.11 at 1:34 pm

#98 Cash is King on 05.12.11 at 9:59 am
…all those house horny virgins who purchased homes in the last 5 years will become non-virgins, horny for F’s head on plate or placing Harper’s ass in defeatedvill come next election.

Ya, and if you tell your kid he can’t play 150hrs of video games during the week he may want your head on a platter.

Sometimes tough love is the best love. It must suck to be a horny house virgin – Allowing your lust and hormones to think for you can come back to bite you.

#137 Vancouver on 05.12.11 at 1:38 pm

thanks Sid and RentinginRosedale for answering my question

#138 Dr. WAYNE on 05.12.11 at 1:46 pm

Some psychological observations … those begging for recognition by stating ‘first’, were all ignored by their mothers, presently have no life, and probably use an umbrella with a broken spline. Similar traits exist for those who type ‘tomes’ that no one will actually read.

The only comments worth reading are those Garth responds to … the rest are, for the most part, irrelevant … like my post … but I got it off my chest.

#139 bigrider on 05.12.11 at 1:48 pm

Silver Wheaton at #116.

Question. I too was considering purchasing vector vest.

How accurate have you found them? What are a couple of buy recommendations they currently have?

Other than SLW what are some of the sells?

Thanks

#140 kilby on 05.12.11 at 2:01 pm

Leasing in 1 year old waterfront condo in North Vancouver. 186 units, 144 still not sold. Most of sold were to overseas buyers and are leased out, some to very young partiers. Holes punched in lobby walls, vomit in common room last weekend. We pay $1,600 per month for $500K unit, some are rented for $1,400. Great place to RENT, I love it….But would never purchase, at least not for another year or three. One pre sale unit is for sale at $75K less than the pre sale cost and it is not selling.

#70 Bob. Don’t take it so personally, you don’t have to agree with Garth, he just throws out musings and we take what we feel we need to….Some have bigger lessons in financial management to learn than others. Many on this blog are financially secure and happy with what they have accomplished but love to share their thoughts, a lot of which are pretty well informed and pragmatic.

#141 BC Boy on 05.12.11 at 2:14 pm

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.

http://www.moneyville.ca/article/989683–some-homeowners-at-mortgage-tipping-point

These will become your marginal sellers when 1) job market weaken and 2) their fixed rates are up for renewal in a higher rates environment.

We have 12 – 18 months left in this dying RE bull market.

#142 smw on 05.12.11 at 2:25 pm

#119 Thetruth

Opinions are like ass holes everyone has one and some stink more than others.

If you think for one second that people who have all the majority of their net worth in one asset, and when it comes time, are going to continue to pay 5% commissions for a sales rep, your only kidding yourself.

I believe most boomers(and home owners with negative equity) when the time comes and they realize housing isn’t the golden goose that pumpers have made it out to be, they will opt out for flat fee commissions versus eating cat food.

The article I linked in my post says it all.

– 62 per cent agree that paying a five per cent commission hurts their personal net worth;
– 86 per cent believe it’s more important how much money is left once all the fees and commissions are paid on the sale of the home than the actual selling price; and,
– 82 per cent of Canadians are interested in learning more about selling their home for a flat fee rather than a commission.

Read the above numbers and weep. Nobody was talking about unemployed realtors, I understand the defensive posture you have to take but best you get back to work and keep pumping, there are approximately 16K homes for sale in Vancouver proper.

And I best be off studying for my realtors license, I only have a month.

PS Zillow coming to Canada “REALTOR” soon. (Like how I used REALTOR instead of REAL, thought so)

Your best buddy,

SMW

#143 Timing is Everything on 05.12.11 at 2:28 pm

#112 realpaul (again)

Hmmm, according to realpaul’s own source…and I quote…

“Toronto is the bed bug capital of Canada, with 2270 reports.”

http://bedbugregistry.com/metro/

Just, you know, putting it out there….but who gives a rat’s?!

#144 disciple on 05.12.11 at 2:29 pm

Money does not exist. Money is not wealth. You came into this world with nothing, you will leave with nothing. All else is illusion. And the legal counterfeiters aka banks hypnotize you with this illusion. Wake up!

Enough already. I have to gas the Hummer and you’re bumming me out. — Garth

#145 disciple on 05.12.11 at 2:35 pm

The sooner we and our posterity realize that everything should be free, because indeed it is anyways, then and only then will we move on as a family of human beings.

#146 disciple on 05.12.11 at 2:40 pm

You are chasing an illusion called money. Arguing about whether our controllers will lash us with interest rate hikes or continue to slyly feed us with the poison of cheaper money (something that does not exist anyway) is like watching slaves argue amongst themselves about what they think their master will feed them tonight. Break free from your chains instead of arguing about things that won’t make this world better for our children.

#147 David on 05.12.11 at 3:04 pm

HELOC’s are the poison darts for the housing bubble.
Equity extraction was the invisible shadow that ultimately sunk the entire US housing bubble.
Even in staid old midwestern Minneapolis almost 30% of homeowners are in a negative equity position and in Central Florida it is almost 60%. In Phoenix the number is biting at 70%.
There is no quick fix for the agony going on south of the border and expecting a better outcome in Canada seems like Hallmark Card optimism.

#148 renters rule on 05.12.11 at 3:07 pm

well, some Van people may think it is the best place on earth…… but Van could not even crack this list

http://ca.news.yahoo.com/blogs/good-news/city-opportunity-toronto-ranks-2-world-183856718.html

#149 Live Under Your Means on 05.12.11 at 3:10 pm

Tories back off campaign pledge to show a surplus by 2014-15

With the election results barely a week old, Conservatives are muddying the waters around a central – and surprising – campaign pledge.

http://www.theglobeandmail.com/news/politics/tories-back-off-campaign-pledge-to-show-a-surplus-by-2014-15/article2018983/

What did you expect? – LOL

The revised 2011 budget that the government will present next month will not show a surplus by 2014-15 as promised in black and white in the Conservative campaign platform, even though the government insists it still intends to deliver on the election promise.

MORE RELATED TO THIS STORY
Get handle on deficit, Flaherty warns U.S.
Flaherty’s budget a safe bet – but no sure thing
Budget’s hidden math adds up to big cuts down the road
Finance Minister Jim Flaherty says he needs time to consult economists and to draft a clear plan to deliver the extra savings Prime Minister Harper promised during the election campaign.

“We will do the strategic and operating review and we will book [those savings] once the review is done. That will get us to balance a year earlier, but is not part of the upcoming budget,” Chisholm Pothier, Mr. Flaherty’s spokesperson, said on Wednesday.

#150 disciple on 05.12.11 at 3:10 pm

#115…
Why do you assume that your gov’t acts in the best interest of its constituents? Gov’t has been usurped long ago by your controllers to exploit its constituents as much as non-humanly possible. Perhaps a US-style meltdown will finally convince you of this? Or how about forcing you or your children to kill people in other countries? Wake up!

#151 Jim on 05.12.11 at 3:12 pm

Who is more pathetic?
The “firsts”, or the ones that are upset by the firsts?
Or me, because I will never get these 9 seconds back?

#152 disciple on 05.12.11 at 3:13 pm

I am an optimist! Yet I know that doom and gloom awaits us. Do you think this is contradictory? Not at all. 1930’s Depression was a TRANSFER of wealth, not a loss thereof. Do your research quickly before it’s too late. Stay liquid, get out of debt NOW!

#153 VectorVest on 05.12.11 at 3:16 pm

VectorVest currently has 228 buys, 1287 sales, and 1828 holds. They have been advocated for weeks that prudent investors should not buy stocks at this time. Their market timing indicator has shown a weakening market for several months. Cost $9.99 to trial for 30 days. Best stock analysis software on the market. I use to use Vision from Decision plus for 15 years and have switched to VectorVest this past year. Todays buy could be tomorrows sell in this market so don’t wish to pump anything.

#154 disciple on 05.12.11 at 3:16 pm

Sorry, everyone, for the diarrhea of posts, I was feeling poetic today…lol…

#155 disciple on 05.12.11 at 3:24 pm

G-man, I’d be curious to know how much the total bill was to fill up your Hummer :)

I bet you are, you sanctimonious wingnut. — Garth

#156 Abitibidoug on 05.12.11 at 3:28 pm

Garth;
You have sound arguments of why the real estate market in Canada is overpriced but periodically evidence to the contrary arrives. What do you think of this article?

http://money.ca.msn.com/banking/homebuyersguide/gallery/gallery.aspx?cp-documentid=28685507

Is it for real, or just further evidence the greater fools are still alive and well?

#157 Domus Pauper on 05.12.11 at 3:29 pm

Garth,

I want to sell and then rent back my house. I don’t want to move.

Where and how do I find HAM-type “investor” to buy my house, rent it back to me, and give me no troubles for a couple of years?

I live in the GTA in the non-HAM area, and don’t speak any Chinese. How do I look for a Greater Fool? Posts on Kijiji didn’t produce any bites.

#158 Hoof - Hearted on 05.12.11 at 3:33 pm

Metro Vancouver Land Cartel

http://landtricks.tripod.com/index.html

QUOTE;
I know quite a few people have an idea or suspicion about the collusion in price fixing (like the
oil companies do with gas prices) that goes on with the main established developers (mainly the UDI ones but some are only GVHBA members) but not the details of how its carried out – even I only know some of it because its clever and kept secret. This is also carried out elsewhere in the Lower Mainland and parts of BC but I don’t think to the extent and success it has been in Surrey/Langley. In Richmond it has not really been successful in the city centre because too many Asian developers jumped in. Also it doesn’t work with smaller projects as the smaller developers can do them so its not possible to control those.

It all really started in 1991 when Surrey had its “Suburban Lands Review” identifying all the new future NCP development areas. That is when the big developers with the lead of Progressive Construction got together and divided all the areas up for joint ventures and options and staked their claims to purchase land so as not to compete with each other as there was such a surplus of land all at once available for future development. This was a smart move (though it was illegal) as there was enough of a pie for everyone. They also sold the idea to the City of Surrey that NCPs should be self funded so that this way the large developers could control development and shut out the smaller and midsized developers – who would be left with the scraps and had no control over the timing of development.

======

Glad someone has admitted the obvious

#159 disciple on 05.12.11 at 3:40 pm

#154…
Do what I did, hire an agent and get out of RE faster than a fat pig running from a famished wolfpack. Time is running out…you will eventually be forced to move anyway, as that is the evil master plan that has been cooked up for you by your controllers.

#160 Patiently Waiting on 05.12.11 at 3:45 pm

154 – look up Cam Good. He claims to have the HAM connection. Let us know how it goes.

#161 Xindai Shan on 05.12.11 at 3:48 pm

I believe most boomers(and home owners with negative equity) when the time comes and they realize housing isn’t the golden goose that pumpers have made it out to be, they will opt out for flat fee commissions versus eating cat food.

SMW,

I enjoy your posts, but don’t get too worked up about this. The age of realtors and commissioned salespeople is galloping off in the sunset. There is no way an 18-24 year old of today is ever going to pay cent of commission for something they can get for free on the net. They won’t pay pennies for a song, so the thought that they will pay a realtor (or a car salesperson or anybody) commission is hysterically funny. Some savvy company will develop a social networking platform to trade houses. It will catch on like in months and realtors will be finished.

#162 tkid on 05.12.11 at 4:00 pm

G-man, I’d be curious to know how much the total bill was to fill up your Hummer :)

I bet you are, you sanctimonious wingnut. — Garth

That much, eh? Ow.

#163 EJ on 05.12.11 at 4:02 pm

#153 Abitibidoug on 05.12.11 at 3:28 pm

What evidence is in that article? It’s just another nonsensical pump piece from the CREAtins with nothing to back it up.

It amounts to “Prices will go up X% because we said so.” or “Price will go up this year and next year because they did last year.” Not exactly sound logic. Whenever any evidence is actually provided, it’s only something that affects the market positively. Anything that affects it negatively is ignored or discounted for some bogus reason, even if it completely outweighs the positive aspects. In short, you will never get an honest report from these shysters.

Anybody who listens to that industry for forecasting and advice is going to wake up with a sore arse in the morning.

#164 Don on 05.12.11 at 4:11 pm

“”” BPOE : Tsur Somerville, the genius of Vancouver Real Estate as opposed to Shiller states there is no need to fear prices in Vancouver deflating. Some areas have had huge gains like west side and Richmond and could have a temporary correction. Folks, this is what I have been saying for months, nothing moves up or down all the time. Trend is intact going much much higher long term.

Hey American you willing to wear a Vancouver Rocks Seattle Sucks t-shirt if your 40% correction doesn’t come true or if interest rates go down by Xmas?”””

He’s a real estate professor – dependant on funding from real estate associations – ‘Most’ professors live in ivory towers. They deal in theory and little practical reality. Point to LOGIC – not credentials. Lots of people have credentials and add little value to the reality of situations. And if he was that good – he should back his arrgument up with FACTS – you know the ones he expects his students to hand in.

BPOE you have too much invested in this market be it job or investment – if you believe real estate is always going up – WHY DO YOU WASTE YOUR TIME HERE POSTING. Unless you are worried about this blog gaining traction and the herd taking notice. This is an uncontrollable cycle, all booms bust sooner or later.

Not sure I why I am even posting about your ignorance, just keep your head in the sand and you’ll be alright. Ignorance is bliss till reality sucker punches you. (Just trying to eauate to your line of thinking)

I guess it is true – you can’t beat the stupid out of ignorant.

#165 Increasing that 1% on 05.12.11 at 4:14 pm

Attn: bigrider, and Original Dave if you’re reading

Just my meaningless observations:

You both appear quite distressed in many ways about not purchasing real estate. Maybe you should be trusting your ‘gut’- cause you’re obviously fighting it – a lot.

Maybe for your particular cases you are wrong. Maybe overall it would be better for you, and you don’t fit in the criteria– that no one really has– about who should and shouldn’t buy and where.
Your family and friends have been right in certain ways, the past couple of years, and they may continue to be–even given all these indicators of this and that the markets have continued to go up in certain areas–and the reality you’re seeing and Vancouverites were seeing, is there is no sign of slow down for these areas–even Garth says, at times, it will be a slow melt–soo, overall in YOUR life, you may be just as well to buy in your particular cases.
You are, and have been, gambling either way it seems, anyway. Not just gambling financially, but life-wise what makes you content…what is sh%$ worth to you..when you look back

#166 eaglebay on 05.12.11 at 4:32 pm

#136 bigrider

I agree. I also enjoy your posts. More so when you talk about investments in stocks.
You can try VertorVest for free. I was not impressed.
You’re probably better off doing your own DD.
The Casey Report is quite good and not too expensive.
Do you use stockhouse.com? If so what’s your handle?

#167 Rocket Boy on 05.12.11 at 4:32 pm

I gotta agree with Bob @#70 … I have no issue’s with Garth, this is his site – I came on my own accord – I chose to read what G-Man has burning in his loins …. but I do despair when some here are just hell bent on seeing the real estate market going into cardiac arrest mode –

Hello, you can’t have one without the other = a housing bubble pop is a economy is the death spiral … tens of thousands of misguided homeowners will not be able to walk away – they’ll be forever financially destroyed.

The health and strength of our nation is based on a functioning and productivety of our society – casting ill will because a friend, neighbour, co-worker, family member yaps about real estate is a pathetic reason to see our entire system come crashing down…

We are about to witness an event never recorded in human history and will go down as the darkest period in man-kind. I wish we can do the”soft landing thing” but worry that this will be abrupt, severe and anarachy on a scale never measured before.

I work in an industry that deals with finanically distressed souls – and those in here who chirp about that those should reap what they sow – probably have never seen what financial destruction can do to a person. Have you ever looked into the eyes of someone who lost everything – eyes tearing and they tell you in the most solomn tone that life is worthless…so for those who have their party shoes on and counting down our abyass – remember one thing – Karma is a bitch!

#168 CrowdedElevatorFartz on 05.12.11 at 4:43 pm

@#135 Dr Wayne.
I agree with your analysis. What is you guess on BPOE?
And then my infatuation with elevators, BPOE and repulsive emanations from my nether regions whilst BPOE curls before me in a semi fetal position acknowledging my superiority over all things Realtor…..?

#169 TS on 05.12.11 at 5:03 pm

#80 smw on 05.12.11 at 7:30 am
http://www.newswire.ca/en/releases/archive/May2011/12/c3831.html

Article says it all about the future of the real estate agent in Canada. Hope you loaded up pre-2011 cause people aren’t going to be paying you 3% to 5% commission to color between the lines anymore.

Duh! Don’t you think that propertyguys have a vested interest in this prediction and their “research” outcome?

#170 kilby on 05.12.11 at 5:18 pm

Hummer H-1 94 litres (not much)
Hummer H-2 120 litres (still not much)

Garth wouldn’t drive an H-3, too wimpy.

#171 JoshL on 05.12.11 at 5:22 pm

Rocket Boy,
It’s good to remember to have a little empathy for our fellow human beings. Even if their predicament is of their own doing.

I find most commentors in all sorts of blogs like to push their arguments to the extremes to make a point and “encourage” heated debate. I can’t speak for everyone, but I don’t want things to crash. However the longer they go up, the more painfull the crash will be in the end. So to that effect we’re better off to see some pain now (sorry no way to save everyone), instead of much more pain later. So why do our governments seem to craft policies to do just the opposite? Do they think that if they artificially keep the good times going just a little longer that some unknown event will come in and save them?

#172 ontheshoreline on 05.12.11 at 5:29 pm

Lining up for Yonge And Eglington?
For a little concrete box in the air?
Balconies facing bare walls 10 feet across the alleyway?
That never see the sun?
The constant roar of traffic.. a–hole Toronto drivers?
Where do I line up again?
I’m sorry..think I will go for a paddle in the bay instead.

#173 I pity the fool who drinks soy milk on 05.12.11 at 5:35 pm

I’ve been a daily reader for nearly two years, and I have to say, it’s getting kind of dark around here lately. Lighten up people, the sun will rise tomorrow. I miss Moneta’s gentle voice.

#174 Junius on 05.12.11 at 5:42 pm

Funny story. Home sellers in the US now turning to psychics. How many of them predicted a housing bubble anyway? LOL.

http://www.boston.com/yourtown/salem/articles/2011/05/12/real_estate_market_turns

#175 jess on 05.12.11 at 5:45 pm

Koch Brother Buys the Right to Interfere in Faculty Hiring at Florida State University
Kris Hundley, The St. Petersburg TimesReport
Koch Brothers Fueling Far Right Academic Centers Across the US
Lee Fang, ThinkProgressReport

…Meanwhile back in the UK
Private schools call in debt collectors to chase millions in unpaid feesEconomic climate leads to parents falling into arrears as heads talk of schools ‘clinging on by fingerips’ to stay open
Figures released last month by the ISC show that the number of pupils at private schools has fallen for the second year running. Student numbers dropped by 786 this year – a fall of 0.2%.
====================
what about those auditors ! people seem to mentioned the banksters but …

satyam fraud
http://retheauditors.com/2011/05/09/being-expedient-pwc-settles-satyam-u-s-class-action/

#176 Junius on 05.12.11 at 5:47 pm

#163 Don,

Tsur Sommerville has been a stooge for the Re: Industry for years. He hides behind his employment at UBC like it makes him credible when he is as shrill a supporter as anyone. The only decent piece he has done in years is the piece on the Olympics and how it won’t impact house prices directly. Of course, everyone knew that already.

As for your bet with the American the first part is silly. No market fell by 40% in such a short time. Vancouver will fall this far but it will take at least 3 years and perhaps 5 or 6.

As for interest rates, you will lose that one this summer. They will not rise quickly but they will start to rise by .25% and we will have at least 2 and possibly 3 hikes by Xmas.

#177 eltabarnacos on 05.12.11 at 5:49 pm

About silver:

Gamble, gamble, gamble. — Garth

It should read:
Demand, demand, demand. – Garth

#178 bigrider on 05.12.11 at 5:53 pm

#165-Eaglebay

Thanks for input on vectorvest. I use stockhouse infrequently and never post. Actually this is the only site I post to regularly. I really enjoy it actually.

I’m glad you enjoy my posts. I try to be informative sometimes and humourous and sarcastic at others.

#179 eltabarnacos on 05.12.11 at 6:02 pm

SELL IN MAY AND GO AWAY! If you stay long you may have nothing left come September.
____________________

Then why not play Tsx Bear and triple your money this year then buy everything at sale price and retriple that money in a couple years???

#180 Devore on 05.12.11 at 6:42 pm

#170 JoshL

Do they think that if they artificially keep the good times going just a little longer that some unknown event will come in and save them?

Yes.

Alternately, some other guy will take the fall if they are temporally far enough removed from cause and effect.

#181 Nostradamus Le Mad Vlad on 05.12.11 at 7:03 pm


#90 GregW, Oakville — Hi Greg. Seems Fukushima is toast, one way or the other. They are dumping millions of gallons of radioactive water in the sea, first to hit Hawaii the the coast.

Almost time for the SAF to have an overwhelmingly large belch, and send it somewhere else. Latest m$m on Fukushima and non m$m. High levels arriving this month. Cheers!
*
Hire more govt. staff while letting private go.

4:01 clip GS, JPM and others betting on Yuan?

Income Tax “The other half think government-induced homelessness is their patriotic duty. If the driver of a wagon keeps loading more and more weight into the wagon, then whips his horses to pull the load until they die, who is to blame for the failure of the system, the horses or the man with the whip and no sense?” wrh.com.

US Fed warns politicians, so it is clear that the US Fed runs the country and the WH is just for show.

Depop. from the UN.

Three min. clip “This is so much fun to watch…”

Chart and other info. World food prices holding steady.

RE in the US sux, and now the realtors are crying foul.

#182 Observer on 05.12.11 at 7:16 pm

If F doesn’t do something, it will probably implode on it’s own and when it does, it will be even more ugly. In the mean time families are being priced out by froth.

#183 Communist conservatives on 05.12.11 at 7:24 pm

Rocket Boy #166

what you fail to understand is that these people could never afford these homes in the first place. I know of a family where two of them collect welfare and one collects disability( THIS IS NO JOKE). These people lived in government housing all their life until the Communist CONservatives allowed those who could never and should never get a mortgage with NOTHING down. Canada’s housing ponzi is the second biggest ponzi in the WORLD. Banks would NEVER give these people a 5000 credit card but when it’s tax payers money $350K mortgage is no problem. The Communist conservatives hate the free markets and believe free housing should be had by everyone. Are you a card carrying Communist conservative?

#184 ballingsford on 05.12.11 at 7:29 pm

Real Estate is interesting an interesting animal. You never know what species is going to attack next. CREA, Banksters, etc.

Anyway, here’s a joke my 3 1/2 year old son told me this evening. “Daddy, why do hummingbirds hum?”. I said “I don’t know.” (Because I couldn’t come up with an intelligent response to one of his queries about the wonders of nature that I try to teach to him.)

He says “Because they don’t know the words.”.

Maybe that’s why CREA and the Banksters spins such hype all the time. Maybe they don’t know the words either!

#185 Rene on 05.12.11 at 7:31 pm

Garth, qualifying for bank financing has been reduced to “Fogging a mirror”.

#186 young & foolish on 05.12.11 at 7:33 pm

All those high priced urban homes…. does anybody believe that people who buy them and will live in them for a long time (as people did in the past)? It’s a “pay as you go” world now. People rent money from the bank so they can “own” their nest … until 3 or 4 years later when they will likely sell. It works as long as prices go up.

#187 Communist conservatives on 05.12.11 at 7:38 pm

Good job card carrying Communist conservative voters. You’ve just ruined Canada. I think the CONs won because of immigrants who never lived when the CONs had their last majority and bye bye free trade. This is why the CONs opened the flood gates to immigrants. Only an immigrant would be foolish enough to vote for the Communist conservatives.

http://www.theglobeandmail.com/news/politics/tories-back-off-campaign-pledge-to-show-a-surplus-by-2014-15/article2018983/

#188 Abitibidoug on 05.12.11 at 7:39 pm

In response to #162 by EJ: That’s pretty much what I thought. When the inevitable correction comes these scam artists should be put on trial, and when found guilty (that’s inevitable) they all should be hanged in public, and the hangings be posted on Youtube for all to see.

#189 Behavioral Finance on 05.12.11 at 8:01 pm

not 1st

Jim Rogers doesn’t even live in the US anymore, so why does he care.

Private sector will do just fine, its the public finances that will be in trouble. Don’t forget that most US companies derive a nice chunk of their profits from outside US, but I am sure you already knew that.

#190 “I sold a Vancouver residence and have invested the money. I’m in the process of trying to get “permanent residency” in the U.S. I want to live somewhere cheaper and warmer.” | Vancouver Real Estate Anecdote Archive on 05.12.11 at 8:05 pm

[…] ‘Vancouver’ at greaterfool.ca 11 May 2011 10:03pm – “I sold a Vancouver residence and have invested the money in the market, the […]

#191 a prairie dawg on 05.12.11 at 8:55 pm

@ #172 I pity the fool…

I’ve been a daily reader for nearly two years, and I have to say, it’s getting kind of dark around here lately. Lighten up people, the sun will rise tomorrow. I miss Moneta’s gentle voice.

– – –

I’d like to prescribe a mood for you. Take 2 song plays, and post here in the morning. ;)

http://www.youtube.com/watch?v=jzrUqAtUcpU

#192 MikeT on 05.12.11 at 9:07 pm

!164 increasing:
please be assured that Original Dave will retire in much more comfort than yourself.
From the very little I know about him, I learned that he is a very smart young man who has a very good feel about where to invest, etc. He may have regrets, I don’t know about that, but regardless of potentially missed opportunities, he will have a very prosperous life. You can believe me, as I corresponded (very little) with him directly. You have a lot to learn from him. Take my words to the bank.

#193 Housing bubble = dot.com on 05.12.11 at 9:09 pm

Thetruth AKA TheRealtor is waking up to reality and the fear of going bankrupt is very real. Talk to any realtor in the know and they will tell you Some realtors are selling their homes since they can’t afford them anymore. Realtors are going bust since sales have crashed for one year now. The housing bubble reminds me of the dot.com crash since everyone at social parties talks about how much their house/condo is worth. Kinda like how much they all made in stocks? Are bells ringing in your head now? Remeber T.NT? If i told anyone of you at the party of 2000 that NT would be worthless in under ten years how many would laugh at me? If I tell you RE in Canada will crash 50-70% in the same amount of time would you still laugh?

#194 john m on 05.12.11 at 9:10 pm

Relax folks…”50 million dollar gazebo Tony” is going to make the oil companies accountable…. ha,ha ha

#195 realpaul on 05.12.11 at 9:58 pm

Bwahahahahahahahahahaa …not only are the CBC dilettantes ‘retiring’ as fast as shit through a goose but the wacko left south of the border is aghast at the Canadian public deciding to ‘throw the bums’ out and elect a responsible government. Five years of strident nasty hate directed against the peoples choice couldn’t fool enough citizens . Maybe the CBC has maybe seen the writing on the wall. Retired….or be fired…Bwahahahahahahahahaa !

http://news.nationalpost.com/2011/05/12/harvard-shocked-by-canadas-rejection-of-ignatieff/

But to have the ‘holier than thou’ wing nutz at ‘HAWVAWD’ tell us that our choice of Prime Minister is wrong????? Do they have any idea of how tyrannical the leftists have been for the past thirty years? Have they listened to the bombastic, strident, victimizing, one sided, self serving, country wrecking, tax raising, hate mongering, hollow, corrupt and decadent displays of disorganized nonsensical bafflegab that have been pasted onto the Canadian tableau over the past thirty years by the Cuban inspired Trudeau Liberal? Are they living under a freaking ROCK???????

Do the ivory tower loons up at HAWVAWD have to pay the outrageous taxes that have been foisted upon us in order for the Liberals to live a fantasy land of feel good politics. Do the professors there have a history of seeing our tax dollars pissed away on the frivilous and politically correct pandering that has been the hallmark of Canadian politics?

I’ve got a message for the over privelaged douc

DELETED — language.

#196 Increasing that 1% on 05.12.11 at 10:40 pm

#191. MikeT on 05.12.11 at 9:07 pm

“!164 increasing:
please be assured that Original Dave will retire in much more comfort than yourself.
From the very little I know about him, I learned that he is a very smart young man who has a very good feel about where to invest, etc. He may have regrets, I don’t know about that, but regardless of potentially missed opportunities, he will have a very prosperous life. You can believe me, as I corresponded (very little) with him directly. You have a lot to learn from him. Take my words to the bank.”
————————————————————
Oh, I’m sorry, I don’t believe we’ve met.
My point had nothing to do with their financial know-how in other ways, which I’ve never professed to be literate about. There are many other reasons why people buy real estate, that was my point–I was reflecting on what They have shared here over time about their frustrations–and giving MY opinion–As you say yourself “he may have regrets…” and yes, [you] “don’t know about that..”

#197 The American on 05.13.11 at 9:19 am

At #176: Junius. Exactly! No market feel by 40% in only 6 or 7 months. Again, this is BPOE’s futile attempt to discredit my 40%+ market correction forthcoming in Vancouver. I NEVER provided a timeframe in which the correction would begin and end (and I certainly wouldn’t have provided such a stupidly short time frame. Only BPOE would be so naive and stupid to make such and idiotic attempt to discredit me. And, BPOE, there you go again obsessing over Seattle. Why would I wear anything that states such a falsity? That would be just foolish, and I don’t want to be like you. Your 40%+ correction is coming, BPOE, and I think you KNOW it is already beginning to happen. The correction will take years…just as it has in the U.S. One last thing, BPOE, Canadian interest rates will rise at LEAST two more times before year end, and you WILL be getting a rate hike by summer of this year. Will you wear a “BPOE is a douche bag” shirt if I’m right?

#198 Westopia on 05.13.11 at 12:41 pm

Forbes predicts a return to the gold standard:

“A return to the gold standard by the United States within the next five years now seems likely, because that move would help the nation solve a variety of economic, fiscal, and monetary ills, Steve Forbes predicted during an exclusive interview this week with HUMAN EVENTS.”

http://www.humanevents.com/article.php?id=43439

#199 Van MD on 05.13.11 at 3:21 pm

Hey Garth, you’re famous now in Mainland Chinese news!
(Iask.ca is the largest simplified chinese (ie Mainland Chinese) forum/news/immigration info website in Canada)

http://www.iask.ca/news/vancouver/house/2011/0513/70878.html

(google translate: http://translate.google.ca/translate?js=n&prev=_t&hl=en&ie=UTF-8&layout=2&eotf=1&sl=zh-CN&tl=en&u=http%3A%2F%2Fwww.iask.ca%2Fnews%2Fvancouver%2Fhouse%2F2011%2F0513%2F70878.html&act=url )

“Ontario is also well-known former congressman financial and real estate experts Turner (Garth Turner), recently said that the indicators from the observation of the past two months, the Vancouver housing market will begin to decline. He said the Vancouver real estate prices but the sales environment is reduced, this “price of the amount of departure from the” situation in terms of real estate is not a healthy phenomenon.

Canada with the central bank is widely expected to raise rates in July this year, he believes these factors make Vancouver real estate’s “perfect storm” (Perfect storm) is already taking shape. i Ask . ca i Ask. ca

However, University of British Columbia (UBC) Professor, Center for Urban Economics and Real Estate Suomo Wei (Tsur Somerville) is Turner’s view of the reservations. He agreed with the Richmond and West Vancouver house prices soaring and other areas over the past few years, the price may be revised, but it can not be used to infer the overall market fell sharply.
He said the large temperature fluctuations in price and volume every month, especially in sales, if short-term phenomenon to judge long-term trend will be a very dangerous move.

As for interest rates, Suomo Wei said that higher mortgage rates on the wave of the Lower Mainland did not have any effect on the housing market, housing prices are still way higher.

#200 Van MD on 05.13.11 at 3:35 pm

Another thing Garth, you should consider hiring someone fluent in Chinese to “educate” the masses in these forums. One possible barrier is that if you look at their main page http://www.iask.ca , the colorful blinking advertisements at the top, 14 out of 18 are realtors/RE agencies!

I’m seriously considering creating an account just to give the balanced view. (several of those advertising realtors also comment on the forum, constantly pumping up RE to the new immigrants/chinese canadians. Often you see the “BUY NOW OF BE PRICED OUT FOREVER” slogan . Sigh.

#201 Vancouver_Bear on 05.13.11 at 5:36 pm

#41 Tom on 05.11.11 at 10:36 pm

Who said that property taxes will be lower? It easy to make them higher or leave the same even in the falling market…..instead of paying 1%….you will pay 2%-3%-5%-10%…..that’s the easy part. And you will pay it no matter how high it is or risk to be parted with your property, that’s what governments do. It’s your problem not theirs!

#202 Daisy Mae on 05.13.11 at 6:55 pm

Wikipedia: “Cash does not mean ‘cash’. Garth is referring to money markets…

“Trading in the money markets involves Treasury bills, commercial paper, bankers’ acceptances, certificates of deposit, federal funds, and short-lived mortgage- and asset-backed securities.[1] It provides liquidity funding for the global financial system.”