Bad day

About the time slam-dunk economist Nouriel Roubini was forecasting a one-in-three chance of a global meltdown, Mike’s buddy was trying to close some condo deals. He works for a development company in hallucinogenic Vancouver, where a private event was held for 40 or 50 clients of a top real estate agent.

“My friend was helping with the admin work for the contracts for that day,” Mike explains. “He mentioned there were two couples that were on the fence to sign. So the real estate agent sat them down and told them to put down the 5% ($20,000) now and that later when the condo site is at 95% sold, she will do them a “favour” and resale it to another buyer for $100,000 profit. She told them they would make a $80,000 profit in one year. They signed.”

Speculation, powered by greed.

It’s a disease now, in case you hadn’t noticed. Recently I gave you evidence that between 40% and 50% of all new condo sales in the GTA are being made to “investors.” That’s the nice word for speckers and flippers, people whose sole motivation for buying a unit they can’t even carry with market rent, is the expectation of rising value. Worse, they expect the gains to be almost immediate.

Last week I sat with a guy who does nothing but design websites for new condo developments in Toronto – and he’s swamped. One client just started marketing a new tower in Scarborough – to be finished in two years – where 70% of the units are being sold to people with no intention of living there. “It is,” he said, shaking his locks, “a giant futures game.”

Sarah and her husband were walking home from the Canucks game late Friday night.

“We came across people who looked like they were homeless camped out in front of the Salt Condos sales office.  We had a good chuckle and thought of you. Would have taken a picture, but it was too dark!,” she said.

“By ten am Saturday morning the line up had increased all the way up the block.  The one thing these people had in common was that they were all Asian.  So, is this true, is this foreign investment really the ones driving up the prices, or is Concord paying these people to line up in the middle of the night? Because if you’re lined up at 3 am you’re likely to be buying one if not more of these tiny condos!  As we crawled into our cozy rental in downtown Vancouver we laughed at the greater fools falling into the trap…just will make it easier for us as we diligently stash our savings away to wait for it all to fall. Love your blog!”

Asian, Caucasian, foreign or domestic – that hardly matters, Sarah. What actually bound these people together, had them sleeping overnight on concrete, was the conviction they were going to make money. Raw speculation, with a tinge of panic and the patina of competition. Making otherwise normal people queue in the dark, buy real estate in five or seven minutes, and walk out with nothing but a sales brochure, a signed offer and a bucket of endorphins.

People who lie for a living often say our real estate market is distinguished from the scuzzy American one because we buy properties to live in, not to trade. They say it’s this lack of speculative activity which gives us stability and staying power.

This, of course, is crap. Sustained low interest rates and rising prices have created the same casino atmosphere which was rampant in Florida, Arizona, Massachusetts or southern California in 2006. People here routinely buy beyond their means, convinced rising prices will save their ass, or they purchase solely for the purpose of selling again for more.

That’s speculation. The inherent risk is that the conditions which created rising prices will change. Whether you’re buying shares in the Royal Bank, a five-ounce silver bar or a condo in Richmond Hill, it’s the same risk. But real estate is unique on three counts – it costs a hell of a lot more, most people today use at least 90% leverage, and when things change it can turn icy and illiquid. There’s always an instant market for stocks or precious metals. But a house can sit for months, or years, in bad times.

Could such times be on the way?

Nouriel Roubini says quite likely. He calls it the perfect storm – an American budget crisis, combined with slowdown in China, a European debt crisis and the destruction of Japan – enough to stomp out global growth. Combine that with too-high energy costs, rising interest rates in Asia and a $3 trillion stock market decline in the last six weeks, and it’s clear risks are piling up.

Roubini, by the way, forecast the 2008 financial crisis. He’s worth taking note of. If the guy’s right again we’re in for several years of stagnation, unemployment and disappointment. No crash or depression. Just a Japan-style melt. (Real estate values have fallen by two-thirds in post-bubble Japan over 15 years, despite zero interest rates.)

But you hardly need a Roubini.

Those people around you, in the queues, on the sidewalk, at family dinners, should be all the evidence you need. So much risk, so little disregard.

So many fools.

198 comments ↓

#1 Benjamin on 06.12.11 at 9:46 pm

One Millionth!

#2 TurnerNation on 06.12.11 at 9:53 pm

This month’s Toronto Life mag contains a blurb about a Bloor West area four bedroom house which sold for 200k over asking, at over 1.2 million!

#3 The One on 06.12.11 at 9:56 pm

Roubini = Credibility

Helmut Pastrick = Shill!

Too bad you’ll hear more from a pumper like this than from Roubini.

http://www.theeconomicanalyst.com/content/helmut-pastrick-and-twilight-zone

#4 rental monkey on 06.12.11 at 9:58 pm

@198 Victoria Tea Party ~ with that little rant, I bet you are real fun guy at the party. Oatmeal? Seriously, you’re probably the guy that gets laughed at because he brings the budge chips to a party and doesn’t even bother with dip!! Live a little. It’s about four extra bucks on a dinner for two. Oh wait……that’s a bag of raisins. Hahah!

#5 Tim on 06.12.11 at 9:59 pm

We have a much different economy than the US. We haven’t gutted our middle class to the extent the US has- give Harper some time to do so…

The condos will tank, as most of them are poorly built, small and you can hear your neighbor fart, plus they have ridiculous monthly fees, which only increase. Due to their shoddy construction, tiny size and sheer number of them in the Lower Mainland, these will drop like lead weights once sentiment turns. However, I can’t see single family homes falling nearly as much as there are fewer of them, they own the land, and there are fewer high ratio mortages. Condos, however, are a tinder box… Can you say Yaletown is goin’ down?…

#6 Tim on 06.12.11 at 10:00 pm

The lemmings in the line ups must be the Asians, you know, independent thinkers

#7 Tim on 06.12.11 at 10:03 pm

Germany and France are already starting to recover, and their economies are much bigger than Greece, Portugal and Ireland. The US, at least in terms of the business cycle is starting to recover. Many companies have huge amounts of cash on their balance sheets and are trading at very low multiples. It is definitely not all gloom and doom like you make it out to be…

#8 nonplused on 06.12.11 at 10:04 pm

Nice post today Garth.

When people expect a $100,000 gain on something that costs $400,000 in 2 years, normally that would imply hyperinflation. Expectations are for prices to rise dramatically, so get out of cash and leverage up.

However, I don’t think wages are going up much beyond CPI. So it’s hard to imagine with the cost of raw materials and energy through the roof where the extra money to keep the real estate side of things inflating at 12.5% per year is going to come from.

The good news is that with all these investor owned condos coming on line the “owner’s equivalent rent” component of CPI should stay reasonable.

#9 Slow Learner on 06.12.11 at 10:05 pm

I don’t know if the fat lady is about to sing, but she’s warming up.

The condo financing is getting sketchy on the left coast. The less reckless banks have left the party, and the development companies are swimming in the sketchier end of the financing pool.

The go-ahead for many (most?) condos now depend on the hype to pre-sell and get the next phase of financing. If these sales start to fail, it’s over.

#10 Joe on 06.12.11 at 10:08 pm

Gawd it’s going to be bad. I can’t look.

#11 Harry on 06.12.11 at 10:11 pm

Roubinini may be right again, so that will lead to low interest rates for years.

Here in Saskatoon, even if world growth slows down, our resources will still be needed from around the world.

Low interest rates and demand for our resources will keep prices slowing rising here in Saskatchewan for the foreseeable future.

Not only is there a worker shortage, the Saskatoon Home Builders Association have said there is going to be a land shortage come fall as demand for developed land has outstripped supply. Saskatoon is still cheap compared to the national average.

No bust here.

Yes, there’s a real land shortage on the prairies. Pass the Kool-Aid. It must be awesome. — Garth

#12 Patiently.....Waiting on 06.12.11 at 10:13 pm

My 6 words to all my high flying friends who mock me because I dont believe this is sustainable, “you can’t escape gravity on earth”.

#13 Terry on 06.12.11 at 10:13 pm

First greed , then FEAR!

#14 not asian on 06.12.11 at 10:22 pm

Can someone please explain to me how this realtor can “promise” these buyers sitting on the fence a $100,000 profit after 95% is sold? Why would the developer allow this? Would it be an assignment of the contract? In which case, does the developer get a cut or a fixed fee? Does the realtor get a fee? What if nobody takes the bait and they can’t sell it for $100k more? How does this work? I’m sure all of us would invest $20k to get $100k in 12 months. Is it guaranteed in blood by the realturd? So this is how these presales get sold. It isn’t real.

#15 The One on 06.12.11 at 10:33 pm

@11 Harry

“Not only is there a worker shortage, the Saskatoon Home Builders Association have said there is going to be a land shortage come fall as demand for developed land has outstripped supply.”

Greatest…..comment……ever! I laughed so hard I think I peed a little. That was a joke, right?

#16 GarthIs#1 on 06.12.11 at 10:33 pm

Carney is at Bilderberg according to this list:

http://www.bilderbergmeetings.org/participants_2011.html

#17 the_apocalyptic_one on 06.12.11 at 10:33 pm

Some possible reason why prices are not declining even though the cost of living is much higher than in 2008 when prices first started to crash is that there are too many new buyers out there with less than 2 years in their residence. These people will not list unless their backs are right up against the wall, meaning they are maxed out on their credit. So there has been a dearth of listings but I believe that is beginning to change. Then with only 0-5% down, these people have little or no equity in their homes unlike in previous meltdowns when 20% or more was the norm. So even if they list they cannot drop prices much for they will not be able to eliminate their debt even after they have sold. In previous meltdowns people took their 20-30% haircut but managed to become debt free having learnt a very expensive lesson; not so this time, the lesson will be learnt but the debt will remain. I am sure this is causing much sleeplessness across Canada and not much action between the sheets but the dam has to breaker sooner now than later. I noticed a flood of new listings in North York Region (N. of Stouffville Road) where I go riding frequently; seems like dozens of new listings have sprung up in the past week.

Despite Garth’s wishful thinking about the stock market going up forever, the world is headed for a systemic Financial failure. Since it has never happened on global scale ever (the great depression did not have global consequences), the world is headed for uncharted territory. So I would say that there is not a person who can accurately predict how things will work out since there is no precedence for the present conditions to accurately predict the future. So the stock market may double in nominal terms or it may just lose 80% of its present value. In the event of a systemic failure all presently known models go out the window. Nah it will never happen! Until it does!

There will be no systemic financial failure, nor will stocks (or house prices) mindlessly ascend. But, enjoy stocking up on tuna and rubber boots. We can have a Maritime orgy if you’re wrong. — Garth

#18 Slopetester on 06.12.11 at 10:35 pm

Like Garth, Roubini has been dead wrong on Deflation, and on Gold! As quoted below in June 2009 by Reuters:

Roubini .. said the current price of gold looks overextended as deflation is likely to outweigh any risks of inflation in the near term.

“For the next two years, deflationary pressure is going to be dominant, and it is going to become a time bomb down the line if and when we keep monetizing large deficits. It may be too soon to hedge with gold,” he said.

“Unless we have high inflation, or…other risks like depression, gold looks toppy,” he said.

http://www.reuters.com/article/2009/06/16/us-financial-summit-roubini-commodities-idUSTRE55F4YM20090616

#19 jas on 06.12.11 at 10:36 pm

Hong Kong Home Sales Tumble on New Down Payment Rules

Sales at 10 of Hong Kong’s biggest private residential developments fell 58 percent at the weekend from a week earlier after the government raised minimum down payments and deposits for foreign buyers

http://www.bloomberg.com/news/2011-06-13/hong-kong-home-sales-tumble-after-government-raises-down-payments-on-loans.html

#20 Drew on 06.12.11 at 10:37 pm

If the BOC doesn’t raise interest rates, this bubble could go on for years. I never thought Carney would start increasing them before, but something has to prick the bubble. He must want the bubble to at least stop inflating.
I figure a 1% increase should do it.
I read somewhere where he was speaking at an engagement where he said off the record that interest rates aren’t going up anytime soon. That was strictly off the record. He must be so scared.

#21 Bill Gable on 06.12.11 at 10:37 pm

Once again – I couldn’t stand it….boots on the ground, I was all over the West End here in YVR – that’s for you, obvious :-) – and the Open Houses were everywhere – including the Condo Building we live in.

An agent was in our building from 2-4 today – I asked the concierge, politely (we are pretty tight) to give me his impressions of the 2 hours the Agent was here – “They had two couples, both Asian”, and they were here for only a short time (* 1000 sq feet street level for $1.1 million) – and so that was a bust.

Just across the street (*the place that has a sold sign on he lawn for four months) – Open House – $420 K for 757 square footer in a frame three story – a real candidate for rain screen fix…and there was NOTHING going on.

Yaletown update – check craigslist – there has been an explosion of listings of “furnished” boxes – with ridiculous prices. These pieces of garbage were flung up so close together, you can see the colour of the eyes of your neighbour in the next building.

They are all Miele and granite and for 600 sq feet = they want $2500 bucks a month. I just laugh my face off.

The Roubini article goes hand in hand with some of the numbers coming out of the emerging disaster in China…and then add this nugget – Japan, the entire Island, may be rendered uninhabitable, because of three core meltdowns at Fukashima.

Holy Canoli – with all this happening, we still have people using Helocs to buy Audi convertibles, and taking trips to Maui Wowie.

I think we have a generation of people that will wind up living hand to mouth – because they got sucked in, thinking ZIRP was real.

The Banks have shuffled the risk of many of these crappy mortgages to CHMC and so – let’s see how Flaherty, the mental midget, in more ways than one, deals with this beauty.

When Carney gets back from the Bilderberg schmooze, I have a feeling he is going to be working on his speech on higher rates.

For Gosh sakes – read Mr. Turner, read everything you can, and if you can – don’t listen to the bullfeathers from the Cam Goods of this world.

You want to have a future?

If you have your entire life tied up in a stupid Condo or one of the Vancouver fall downs – try and find a greater fool and get out.

Ignore morons that think renting is stupid. *That would be you BPOE – The idiot owner that rents us this million dollar condo is subsidizing us at around $1700 a month – THANKS – and hope your other properties in Shanghai are doing well.

As if.

#22 jas on 06.12.11 at 10:41 pm

Economy stuck in waiting room

http://money.msn.com/currency/economy-stuck-in-waiting-room-fleckenstein.aspx

#23 T.O. Bubble Boy on 06.12.11 at 10:45 pm

Quote of the day (from a couple featured in a Globe and Mail personal finance article):

“We never lost money on a property sale, but we built up about $47,000 in debt from various legal fees, mortgage fees and property transfer taxes.”

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/sell-your-home-or-stay-put/article2050112/

As for today’s topic: just wait for all of the condo “investors” in Toronto to start rushing for the exits — it will be ugly. A great business idea would be to start a discount RE agency that specializes in lower-cost comissions for condo sellers in downtown Toronto.

#24 Peter on 06.12.11 at 10:47 pm

All any buyer is interested in is the easy usually tax free money gained from a sale. Instead of changing rates I think the gov should change how taxes are paid and collected on capital gains earned on the sale of properties and change the minimum hold time on not paying capital gains from the current one year to five years. Regardless of who buys or sells it, less than 5 years there is an automatic tax withheld on the difference between the buy and sell price. Bye bye
casino atmosphere.

rich foreign investors,

#25 Brad in Cowtown on 06.12.11 at 10:56 pm

Calgary a “good time to buy”…

http://www.youtube.com/watch?v=d_a0W5Xl750

(anyone know if that babe is single?! wowzers)

#26 BC Bring Cash on 06.12.11 at 10:58 pm

#11 and Garths comment re land shortage.
Land shortage #11 Harry in Saskatchewan. Shortage on the prairies. Yea right! There is not a land shortage in the BC lower mainland either. (The Vancouver area)
The so called land shortage is always politically manipulated to benefit friends of City Hall. In a Country so thinly populated like Canada availability of land is only artificial. Lots of space to live and bury the dead unlike Hong Kong for example. This Country will not have a land shortage likely ever.

#27 Peter Pan on 06.12.11 at 11:00 pm

“He mentioned there were two couples that were on the fence to sign. So the real estate agent sat them down and told them to put down the 5% ($20,000) now and that later when the condo site is at 95% sold, she will do them a “favour” and resale it to another buyer for $100,000 profit. She told them they would make a $80,000 profit in one year. They signed.”
——————-
If it was such a sure deal, the RE agent would have done it himself/herself. I can’t believe people (suckers) like this never ask themselves the simple question… “If it’s such a good/sure deal, why doesn’t he/she do it?” 95% of scams would be thus avoided…

#28 Questioning Leverage on 06.12.11 at 11:00 pm

Ran into an asian couple and realtor in the elevator of my building this weekend. Get this – the women said she was afraid of heights and would never live in a high rise – while eyeing the purchase specs for an apartment on the 33rd floor!

#29 Grim Weeper on 06.12.11 at 11:04 pm

http://www.bloomberg.com/news/2011-06-13/hong-kong-home-sales-tumble-after-government-raises-down-payments-on-loans.html

#30 john on 06.12.11 at 11:08 pm

If one expects real estate to correct and stocks to correct, would sitting in cash (literally) be a bad idea?

#31 jas on 06.12.11 at 11:13 pm

BOC, if serious about putting brakes on RE runaway, have to give the shock treatment with two increments in IR, each of .5%
Increments of.25% are not going to be effective. They’ll fly over the heads…

Come on Carney, give ’em the shock treatment.

#32 Nostradamus Le Mad Vlad on 06.12.11 at 11:14 pm


“Bad day in hallucinogenic Vancouver . . . Speculation, powered by greed. It’s a disease now . . .” — Which of the greedy, diseased seven days would that be? All of them?!

“So much risk, so little disregard. So many fools, a giant futures game. . . As we crawled into our cozy rental in downtown Vancouver we laughed at the greater fools falling into the trap.”

Ah yes, the greater fools. Ask BPOE and Mikey the Realtor when 1989 repeats itself again, what it’s like to be up to their eyeballs in debt, with inflation on the horizon and stagnant paycheques.
*
#11 Harry — “No bust here.”

Herb, does this sound like Hairy S. from Garth’s old political blog? There is no escape from stupidity!
*
HST Trickery Daisy Mae and An Cat Dubh — what do you make of this? We’re dealing with politicians, remember, and one of the first things a politico in training learns is to lie while keeping a serious face.

1:09 clip 50 secs. into the clip, you’ll understand why the red light is in use.

Economic Problems? Yes, we’ve got all sorts! Leading to — Ummm, we messed up and Fraud. Gooogglygosh! You’re joking, right?! China — Becoming an unstoppable force? With the US and most of the west close to, or flat broke (hence all the wars), the odds look pretty good, esp. when they cash in all the US debt holdings. Ouch! Energy prices up in UK, then here I suppose.

Chaos — 3:08 clip NASA warning employees about upcoming shenanigans. Second link (1:01 clip, click inside the red text box on the right) talks about a brown dwarf star approaching, and NASA Two. Plasma waves across the sun. Black Holes Wanna head on in? You take the left, I’ll handle the right!

Crazy Cuckoo “As the currency presses go berserk, billions are poured down the toilet in Libya, Iraq, Afghanistan, Pakistan and… the point is to enrich the munitions manufacturers, gain geopolitical advantage and to nail down stolen resources, which can’t be properly delivered because those who live in the Graveyard of Empires are going to be working with a vengeance to blow it all up.”

Brownie Camera Original pix of Pearl Harbor (b&w). Text after pix.

Monatomic Gold Never heard of it, but apparently, it exists.

Heatwave Arizona wildfires have moved into New Mexico.

Putting Blame Elsewhere The Stuxnet virus was created by the CIA and Mossad to take Iran’s nuke facilities down (back up again), but the virus escaped and screwed Fukushima’s computers up, so obviously they will try to pass the buck.

#33 $froma$ia-Your CA$H is TRA$H on 06.12.11 at 11:15 pm

Garth,

They’ll just cut more trees down and make more money to flood the markets. There wont be a collapse, theres plenty of trees left.

Garth, you’ll be wrong as long as theres trees still standing. Go ahead and worship that raibow money.

Your cash is trash.

Garth is WRONGWRONG till the rates finally move up…

If your cash is trash, send it over. — Garth

#34 $froma$ia-Your CA$H is TRA$H on 06.12.11 at 11:16 pm

SHOW US THE RATES!

#35 Boycott on 06.12.11 at 11:20 pm

Carney to talk about real estate tomm.

http://www.theglobeandmail.com/report-on-business/carney-to-weigh-in-on-housing-market/article2057571/

#36 OkanaganInvestor on 06.12.11 at 11:29 pm

The problems in the United States are far worse than generally known, as Dr. Willie indicates in this excerpt from a recent article:

‘Paul Craig Roberts served in Reagan Treasury Dept, and also worked as editor at the Wall Street Journal. He knows about what he speaks. He described the horrendous economic situation for the USEconomy. He puts blame on Wall Street and US Corporate executives who use Asian labor in outsourcing, rendering the US nation of workers poor. Even astute analysts like Roberts all avoid the 1970 Vietnam War effect and 1973 OPEC Embargo effect that produced big deficits and serious price inflation in the US, forced the break of the Bretton Woods gold standard, and lifted the entire wage scale to where it became uncompetitive and vulnerable to globalization. Roberts discussed the secondary inflation effect, a common Jackass theme. The bankers and political leaders do not wish to see wages rise, since it would complete the systemic price inflation effect. Instead, they watch the rising cost structure, led by food & gasoline most visibly, and attempt to obstruct wage gains. My analysis has pointed out that the leaders in preventing wage gains are advocating and promoting lost income, personal ruin, and deep poverty of the middle class. Roberts instead calls it the Graveyard Effect from a desire to install lower US labor rates in order to compete with the BRIC nations, the emerging market nations. He went so far as to accuse our leaders of trying to promote debt slavery managed within a growing police state.”

http://www.gold-eagle.com/editorials_08/willie060811.html

Higher wages are needed to sustain higher real estate prices when interest rates are already at historic lows and that includes Canada.

#37 Ulsterman on 06.12.11 at 11:41 pm

As much as we make fun of the lemmings camped out in Vancouver, there are many who have been doing this for 6-8 years and making loadsa money.

Certainly the risks doing it today would appear to be sky high, but then we were saying that a few years ago too. Are we saying that THIS time it’s different? I sure hope so.

#38 Joe on 06.12.11 at 11:52 pm

#5 Tim — Completely agree with you about the shoddy construction. We had a leaky condo problem from the ’90s condo construction. Has there ever been this kind of mass building of wood structure condos? Apart from them burning to the ground faster than you can grab your coat I imagine there will be issues and special assessments. I lived in a leaky condo that required $80,000 in assessments for rainscreening…and on goes the litigation years and years later. I have a friend who tried to sell her townhouse and had a few offers, but everyone dropped them like a hot potato when they saw in the strata minutes that there were complaints of the building shaking from time to time. They’re going to rent it out instead of selling.

#39 poco on 06.12.11 at 11:55 pm

#25-Brad in Cowtown
Calgary a “good time to buy”…
http://www.youtube.com/watch?v=d_a0W5Xl750
(anyone know if that babe is single?! wowzers)
______________________________________________check at 2:27 of the clip—ring on her left ring finger

#40 Trailer Park Boys on 06.12.11 at 11:58 pm

#25 Brad in Cowtown

Well west of the Rockies men are men and sheep look nervous.

If the women ain’t married …..they play linebacker for the Eskimos or Stampeders

#41 Kim on 06.13.11 at 12:14 am

#5 Tim “condos will tank’ … ‘can’t see single family homes going down much’.
About 1/3 of Canada is nearing retirement and cashless. Meaning down sizing … meaning single family homes for sale … maybe single family homes will tank … aaah Hell Tim, I can’t do the kid gloves thing with you… It all gonna tank. Splash!

#42 ottawan on 06.13.11 at 12:15 am

Update on what is happening in my district of Ottawa (district 72) There were 22 listings on June 10 and suddenly today there were 27. There were also a whopping 8 price reductions. This is for single family homes which is the only area I am tracking. I have been tracking them for the past couple of months each day. I predict that real estate will drop some in Ottawa in the survey for June.

#43 Kitchener1 on 06.13.11 at 12:15 am

90% leverage

90% LEVERAGE

Garth, where would the DOW and all equity markets be at right now if retail investors would be allowed to invest with 90% leverage?

i reckon north of 100k easily.

thats it right there folks, easy leverage is what make the market go up, margin calls is what make to drop. there coming soon

#44 Thetruth on 06.13.11 at 12:16 am

Just being Devil’s Advocate Garth;

Japan has had negative population growth over the last 15 years while ours, well…, lets just say the floodgates are wide open. We are the #1 when it comes to immigration per capita rates IN THE WORLD. And they’re coming to the cities. Guess which ones?

Not a significant difference?

No. — Garth

#45 Harry on 06.13.11 at 12:42 am

Garth and the One, it is no joke. Too much rain last spring stalled too much land development in Saskatoon for city lots. The city has also been slow at developing the land as well. By fall, three development areas of city lots will be fully built, leaving only two for the whole city for home building, with no new ones slated for start up for a couple of years.

There is no land shortage on the praires, but there is a shortage of land that has been developed for city lots. Demand has outstripped supply. This is the place for jobs and people are moving here and this will continue.

Seriously, this is what the home builders association is saying. I think they have a good handle on the market. This years sales and prices are way above last years levels.

I know that Saskatoon is susceptible to a slowdown in housing just like any other place. But with low interest rates, resources, job and population growth continuing here for some time, there will be no housing crash in Saskatoon any time soon.

#46 Living In Edmonton on 06.13.11 at 1:00 am

SO many fools… so little time
I live in Edmonton. Seeing many historical houses in an awesome Mature higher end Westmount location here in the city going from $244,000 & $269,000. Great value pricing starting already! Prices per sqaure foot in EDMONTON for both Condos & Houses are sitting at 2006 levels. Vacancy Rates for rentals sitting at nearly 5% NOT including the Thousands of privately owned houses & condos bought by investors that are “trying” to be rented out. CMHC ONLY counts the actual “rental” certified buildings. They NEVER inclide all the condo buildings and houses being rented out even though some condo buildings are over 50% rentals.

#47 Devore on 06.13.11 at 1:18 am

#14 not asian

These sales trailer people are salesmen. They can, and will, tell you anything and everything. Only thing that matters is what the contract you sign says. And it doesn’t say anything about your floorplan and measurements, never mind a 500% return in a year.

#48 Devore on 06.13.11 at 1:19 am

#7 Tim

Many companies have huge amounts of cash on their balance sheets and are trading at very low multiples. It is definitely not all gloom and doom like you make it out to be…

Yeah, you should point out some of these “many” cheap companies. Since, you know, there’s so many of them.

#49 VIVA the LIFE in Fort MAC on 06.13.11 at 2:25 am

Love your blog Garth. I`m 24 and have lived my whole life in Vancouver. I`m an electrical engineer and just recently relocated to Edmonton and flying in and out of Fort McMurray. Don`t get me wrong, I feel for vancouverites that have been priced out of their own city. However, most of these people break under the pressure and either buy or rent a ridiculously overpriced piece of concrete.
Is it me or why doesn`t everyone just grow a `set` and take matters into their own hands. MOVE and make more MONEY!!! I have absolutely no family/friends invested in either Edmonton/Fort McMurray, yet the decision was pretty easy to make. Yes, I have a gf of 3 and half years… but at the end of day you have one shot at life. Why waste your life trying to make it in a place where the economics are on CRACK.

#50 Mr Buyer on 06.13.11 at 2:40 am

Bill Gable 21…Japan is completely inhabitable except for the area around Fukushima. I am 400km away and our radiation levels remain unchanged from levels before the disaster. Everyone is working. It is business as usual for 95% of the islands and 99% of the population. Production levels are increasing everyday. Add this nugget I may win the lottery but I will not bank on it. The meltdowns are still contained and most of the contamination is now water born (yes that is correct, the 40 year old Fukushima reactors were designed and built with concrete containment structures as opposed to Chernobyl which vented directly into the environment. These containment strucutres are leaking contaminated water from their basements, most likely through piping, the plan is to eventually close the cooling loop). I am not trying to suggest that this is a good situation but I will let you know when the country is no longer habitable, I promise. Did I mention I may win the lottery but I have decided to continue working 60 to 70 hours a week until I do.

#51 Mr Buyer on 06.13.11 at 2:41 am

The area devestated by the Tsunami is still a wasteland but clean up has started.

#52 Daystar on 06.13.11 at 2:59 am

#3 The One on 06.12.11 at 9:56 pm

Helmut who? Lets bring on Roubini!!
Roubini on a day for fools:

http://www.youtube.com/watch?v=G-5fYzJL0yg&feature=related

Roubini, April 27th 2011

http://www.youtube.com/watch?v=2Oqnm5ICwjA&feature=related

World economic forum 5 parts, part 1:

http://www.youtube.com/watch?v=r2GlM-nyNnA

part 2:

http://www.youtube.com/watch?v=nB2ILS-laIU&NR=1

part 3:
http://www.youtube.com/watch?v=EBJKIJBNnL8&feature=related

part 4:
http://www.youtube.com/watch?v=DnqBx5o7Ktc&feature=related

part 5:
http://www.youtube.com/watch?v=ry-23t12y7Y&feature=related

I would advise readers to take the time if they can spare it, to listen to what these men have to say about the world economy and its upside/downside risks. Japan’s earthquake & public debt, U.S. housing trending lower (at least til’ the end of 2012 in my view), European sovreign debt crisis, Chinese asset bubble, high oil and food prices driving inflation (with Chindia in particular at risk to high food prices driving inflation there), middle east instability, England, France, Australia and now Canada entering housing deflation… the downside risks are very real.

http://www.project-syndicate.org/commentary/roubini38/English

#53 Utopia on 06.13.11 at 3:17 am

#11 Harry wrote…

“Not only is there a worker shortage, the Saskatoon Home Builders Association have said there is going to be a land shortage come fall as demand for developed land has outstripped supply. Saskatoon is still cheap compared to the national average.

No bust here.”
========================================

Too funny Harry! I have heard the same nonsense peddled by those buying lately. They heard it from a Realtor and then try to pass it off as a logical rationalization for buying right now. They know better too. They have lived on the prairies all their life yet still manage to embrace one of the stupidest lines ever used to sell property out here.

But lets get real.

Last weekend I looked at a brick house just a 45 minute drive from Saskatoon. A friend owns it, wants to sell and invited me down for a look. Says the annual taxes of 750 dollars are too much (!).

Anyway he wants eight grand for the place. It even comes with its own vault as it was once a bank pre-depression 1930’s that went bust. I thought, Wow, now that might make a great bunker. Affordable as hell too and literally within commuting distance of Toon town.

Meanwhile, the pumpers and house humper’s are hard at work trying to convince even seasoned prairie folk that a land rush is on. Hey they don’t make the stuff anymore. But come on! When acres run less than 1000 bucks almost within sight of town you know they are bullshitting.

Houses meanwhile have reached nosebleed levels here too. At least in relative terms as the typical home is now 5.2 times the average income if not more. It is really off the charts compared to the cities historical norms.

So there you have it. You can buy a place cash for about the equivalent of just a few months payments and live in the country or you can drink from the cup of local Realtor lies and sell your soul at the alter of stupidity and greed. It is surely going to be ruinous for many.

Oh, and PS. Don’t bank on commodities staying perpetually high. If China does slow the speculative money will scuttle away like a crab on the beach and hide under a rock until the economy looks less dangerous. Saskatchewan is still a boom/bust economy.

#54 THE TITANIC on 06.13.11 at 4:00 am

Yep…just reading the blog out here in chillaxed Maui tonight. Renting out a sweet pad on the beach, costs me the same as the scaffold surrounded leaky condo I rent in Van. Glad I dumped my Van properties. If you own, sell now! The Van story is a myth… I met the elusive EVERYBODY out here. EVERYBODY never mentioned a thing about wanting to move to Vancouver. Oh yeah and for all the skids in BC that deal in the dope trade for a living…you can do that out here too!

#55 Utopia on 06.13.11 at 4:24 am

So how insane are people getting on the prairies? Take a look at this place (you know you wanted to see an aerial view of the Saskatchewan prairies from a few thousand feet in the air today, didn’t you)?

The lots in South Country Estates are selling for between 100k and 150k. Granted, they are small acreages (2 to 7 acres each) and are fully serviced. Sounds like a real bargain if you just limped in from Toronto or Vancouver. And it is only ten minutes from downtown Saskatoon to boot. Happy days.

But look at the photo. Does it really look like we are going to be short of land here anytime soon? I just laugh and laugh at the insanity of it all. Fools and their money will usually be parted. Hey, look. I think I see cattle in that photo. No wait, those are sheep. Hahaha.

http://www.southcountryestates.ca/

#56 Utopia on 06.13.11 at 4:29 am

#21 Bill Gable on 06.12.11 at 10:37 pm

“Once again – I couldn’t stand it….boots on the ground, I was all over the West End here in YVR……and the Open Houses were everywhere”
——————————————————————–

Good one Bill. So what are the stats on new listings there looking like lately? Your comments sound anecdotal but suggest a flood of new sellers coming to the market. If you are right then the market is going to be doomed sooner than many expected.

#57 Utopia on 06.13.11 at 5:05 am

#18 Slopetester on 06.12.11 at 10:35 pm

“Roubini has been dead wrong on Deflation, and on Gold!”
————————————————————–

Slopetester, perhaps you slept through the last two years and did not notice the level of global economic stimulus applied to the problem nor notice the level of Quantitative Easing in the US. Even China did a stimulus of it’s own that some believe was bigger in relative terms than that of the US when considered in terms of average incomes there.

Roubini was right. But Fed intervention changed the projected course of history and instead drove a commodity fueled inflation boom instead.

#58 BrianT on 06.13.11 at 6:01 am

#57Utopia- Today Mish debates ZeroHedge on the 600 Billion QE2 shipped to foreign banks. Here is what he doesn’t touch: QE2 was sold to the public and the clueless politicians as necessary to revive the US domestic economy, specifically lending. In fact, all the US taxpayer money was used to put a big bandage on the global financial system. Six hundred billion dollars is a large sum of money-were a domestic program proposed costing as much e.g. high speed rail, the debating would go on forever, with much MSM coverage and debate. It would probably be of far more benefit to the economy, but that isn’t the only thing at this point-we are at the point where literally gigantic sums of money are being taken with zero oversight by anyone hired by the public to do so, and as the MSM ignores it, it is growing in size and audacity. Defenders will say-things are so bad that there is no choice. If that is the case (quite possible) then you cannot have it both ways-we are definitely in uncharted waters, not just economically but politically also.

#59 The American on 06.13.11 at 6:15 am

Garth, I’d like to point out one thing: Any market where speculation is exceeding 40% is in a most treacherous territory. Miami was hovering around this number, and well, we all know how that ended, especially in the condo markets. Well in excess of a 50% correction there. Sounds unbelievable? Look to Orlando where it has suffered excess of a 60% correction. Seattle, as usual, was late to the flipper/speculation game in the U.S. In fact, many people deemed it to be untouchable as our city really started late by about three years. Thankfully, this served us well, relatively speaking. Additionally, Seattle had a strictly-enforced 10% cap on speculation within the downtown core condo market only after about 24 months of wild buying frenzies, much like the frenzy you describe in your post today. Seattle was one of the only cities to incorporate this kind of policy. This also accounts for the reason you do not see tower after tower after tower of green glass, all looking the same, much like one would find in the style of Social Realism.

That 10% cap that was put into place cooled off our market faster than a Texas thunderstorm, and it nixed about 50% of the new towers that were in the pipeline to have been built within 24 months. I’m thankful it was put into place as we did not suffer the fate of cities that were ripe with speculation like Miami, Orlando, Tampa, Phoenix/Scottsdale, San Diego, Sacramento, and San Francisco. These places that are now deemed dead could “only go up!” Still, though, we see what even a 10% cap on speculation brought to our fair city of Seattle – a 27% correction for the greater area. Of course, this number lessens as you begin nixing the ‘burbs, but still it is a frightening number.

Unfortunately, there were buildings already being built (not in the design/permitting phase) where some of the speculation had begun, like Escala and Olive8. So, it was buildings like this that were already in the making that created the glut of inventory in downtown Seattle, and it literally seemed to happen over night when the market collapsed. Everything was cooking along at lightening speed. All of a sudden, it wasn’t. It seems like only yesterday. Today, however, about 70% of the excess inventory has been snatched up, but only after about 1/3 of the price was shaved from yesterday’s “values.” We still have another 30% to go before its all taken. Yes, its been a painful four years indeed.

No market with the kind of speculation you have described can sustain itself, and the higher the speculation is within the market, the more profound the negative implications on that market will ultimately suffer. There is a direct correlation with frequency in market speculation and decreasing values and length to “find bottom.” The higher the speculation rate is, the higher percentage in market correction will be experienced over a longer period of time. There is no soft landing.

#60 SMOKING MAN on 06.13.11 at 6:16 am

Many posters on here are saying please Carney Raise interest rates, prick the bubble please…… Come on Mark my whole identity as to being a smart person depends on you crashing the market so we can brag to family at Xmass dinner. Ya see I was right all along ha ha it crashed I told you it would. I am so smart.

Not a very rational way of thinking but hey no one is perfect

Carney will never do it for a long while. Central banks only spike rates on wage inflation not on price inflation, No evidence on wage inflation yet. Once the wage inflation hits you can’t easily put the genie back in the bottle, price inflation can be easily crushed by people not buying creating an over supply causing prices to tumble.

The first thing to look for before a Canadian Crash is for the US economy to start booming again. Sounds counter intuitive but trust me if you come back and read this post in 2014. You will say holly how did the Smoking Man know. People will be unloading safe Canadian investments and buying US, at the same time the booming US Economy will put pressure on wage growth in Canada which will cause the bank to go nuts with hikes.

Until then the real estate cow in Canada is the best thing going with lots of good returns to come.

#61 bullion.bunny on 06.13.11 at 6:16 am

No crash or depression.

You must be smoking pot. We are in a depression right now! The next crash should happen in the fall. How many more pension funds do you think gov’s can raid?

http://www.businessinsider.com/ireland-seizes-7-billion-from-its-pension-fund-to-boost-employment-2011-6

#62 Cow Man on 06.13.11 at 6:18 am

# 11 & # `15 and Garth:

The point being, SERVICED land! The government controls the amount of serviced lands available. It keeps the party going. Doesn’t matter if we are speaking of the GTA or Sask.

#63 Rocket Boy on 06.13.11 at 6:35 am

Some just keep preaching the end of the housing bubble – I’ll keep preaching that the sun is about to burn itself out – (which obvious, in time, will)…. day after day, month after month, year after year and I hear the same old tune in here – most don’t get it – real estate, the government gets it – investors get it – its our last economic engine – once that goes – we have nothing else. So it will continue to move forward, it will defy logic – and money will be made!

Those who call for interest rate hikes – pleazzzzzz, that’s not happening for at least 2 years. All Carney can do, is send out warnings that debt levels are too high – thats it –

So, those who can share some real hard facts, not stories of how they heard people talk in an elevator about buying a hundred units – as if –

Lets have those who work the front lines write in here – I am more interested in reading facts, and stop reading from those who sit in their moldy, cold, rented basement apartments and hope that the rest of society will suffer the same fate they are currently experiencing –

We need car salesman, real estate agents, bankruptcy staff, loans officers, accountants … they will paint the true picture of what is happening.

PS – Garth, your still doing a incredible job – too bad you get alot of fictional writers in here.

#64 bigrider on 06.13.11 at 6:37 am

Hey why you picking on condos in Richmond Hill? It’s different here, absolutely no building lots, houses double and triple what they were worth 10 years ago and everybody wants to live here, especially the Asians cause ‘Rich mon hill” get it?

Also, Nouriel Roubini predicted further declines in March 2009 ,in fact predicted an S&P of mid 600’s back then just before recovery.

Also, all I have said above..mileage may vary.

#65 Mortgage girl on 06.13.11 at 7:04 am

Garth I read your blog faithfully everyday. What about all these foreign investors herein TO? I’m doing 5 private deals for condos right now and they are all foreigners. They were telling me 50 percent of the condos purchased are bought by foreign investors. The attitude is “where else do you invest your money right now, safest market”. Seems like a pretty high percentage to me.

All investors (speculators), and not intended to take up residence? Are you a mortgage broker/agent? — Garth

#66 Patiently Waiting on 06.13.11 at 7:16 am

37 – Check the latest monthly stats for REBGV. In the last three years, most condos in Vancouver have had lower price increases than inflation. In many areas, they are actually down in price.

Anyhow, all those pre-sales speculators should be welcomed by bears. They are funding more supply.

#67 Ben on 06.13.11 at 7:28 am

http://campaign.r20.constantcontact.com/render?llr=orkbnrcab&v=00177_hio5ARRGHtZMPh4yDqTuB6WM1qulT8wHZzR6k_28NMBM6bbCqysxT8vtuFLJIIhfX7Zpxp-tNiKCZpEZkKzoQCqOWYOiOrVav04UgT5w%3D

We live in a world where value no longer exists. Be it a diamond ring or a 10,000 sq ft mansion, nothing tangible in today’s existence is worth anything.

When you can create as much value as you want out of thin air, you create an economy full of false hope. There’s a reason why worldwide food prices are higher. There’s a reason why you’re paying more at the pump. While each scenario has its own implications, they all end up back at the printing press.

That leads us to what has been happening in the markets: light volume, whether we move to the upside or downside – in particular, the Canadian markets.

This past week, the markets were once again down with low volume – down for the sixth straight week. The buyers have taken an early vacation, leaving panicked sellers without anyone to sell into and thus forcing many stocks – particularly the juniors – down further. Bid support has disappeared.

Despite being down for the sixth straight week, we’ re down less than 7% with no major technical support levels broken. The markets look oversold and I think we’re moving closer to the bargain entry points I’ve been looking for. Sooner or later, the stink bids I told you to put in a few weeks ago (see Age of America Over?) will be filled giving you some great bargains to ride out until year end.

While there will be bargains, that also means the overall markets may still have further downward pressure. Especially when Federal Reserve Chairman Bernanke looks so defeated.

Last week I said, “With all of the money spent through all of the US’ loose fiscal policies, nothing has changed.” On Tuesday, Bernanke reiterated those statements causing the markets to fall even further down south.

In his Tuesday speech, he said that seven months after the central bank began a historic round of monetary stimulus, growth in the broader economy has been disappointing. But with the amount of money printed and no real results, Big Ben has planned to stay on course, ending stimulus on schedule this month and keeping monetary policy steady for the immediate future.

Bernanke has finally admitted what we already know. The recovery has fallen short of the central bank’s expectations by a number of different measures. Six out of ten leading indicators are bad and the other four appears to be getting worse: Unemployment is high, and anyone who has found work must accept lower wages than they previously earned. Home prices are falling at a newly accelerating rate (see The Greatest War in History), making homeowners more vulnerable to default and foreclosure. Manufacturing is down and oil is trading at levels reminiscent of 2008, when months of record-high fuel prices helped drag the economy into recession (combine that with OPEC’s recent objection of raising supply.) All obvious points that I have mentioned in previous letters.

The central bank’s ability to boost the economy, or its willingness to attempt to do so, has reached a limit. Or has it? Was the amount of money being spent really used to bolster the economy or was it used to bolster the wallets of the Fed by lending as much money as possible to the world’s most powerful nation?

Bernanke has made it clear that there will be no QE3…yet. But before we make any judgements, let’s not forget that after QE1, he hinted there wouldn’t be a need for QE2.

The truth is, the next QE, be called QE3 or something completely different, will eventually happen. But before it does, America will need to feel the pain. Without pain, there will be no political will.

Canadian Housing Market

I am calling for a Canadian Housing bubble. While the markets have slowly climbed, especially in Western Canada, it has all been false hopes provided by foreign investors.

Sellers are beginning to feel the pressure of trying to sell at peak prices. Homes being listed now are taking months to sell, as opposed to days. New homebuyers are being forced into other markets. The peak is here.

Within the next 3-5 years, I am calling for up to a 25% dip in the Canadian real estate market.

Leading indicators are already telling the story. Building permits posted an unexpected 21% decline in April. The value of building permits issued in Canada in April unexpectedly plummeted 21.1 percent from March on weakness in the powerful province of Ontario. The month-on-month fall was the largest since the 23.7% drop recorded in January 2006.

Its not just Ontario experiencing a fall in both residential and non-residential real estate.

The total value of permits fell in seven provinces with Ontario – which accounted for over a third of all permits issued in April – posting by far the largest decline of 41.9 percent. Compared with April 2010, total building permits declined 19.7 percent, with residential permits down 7.8 percent and non-residential permits down 35.2 percent across Canada.

While these are just short term statistics, I believe we’re about to see a decline in housing prices sooner than later.

#68 TurnerNation on 06.13.11 at 7:29 am

Rest assured those fine folks at Bilderberg meeting have but one goal in mind: increase quality of life and freedoms for Joe Six-Pack and Sally Lunchbucket.

As they jet around in private jets, staying in 6-star hotels surrounded by bodyguards and servants, their mission will be done.

They just require a little more of our money. The trillions taken from taxpapers under the auspices of “Cold War”, “Space Race”, “Star Wars”, “War of Terror”, “Global Financal Crisis”, was not quite enough. Now, a “Global Warming” carbon tax is required.

Please, give them more time to improve our lives – they are trying so hard!

#69 dirty sanchez on 06.13.11 at 7:53 am

first!!!!!

#70 $froma$ia-Your CA$H is TRA$H on 06.13.11 at 7:59 am

“If your cash is trash, send it over. — Garth”
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
I’ll trade you my trash for your petty gold ;)

2% inflation a month Garth…..

$

#71 Ret on 06.13.11 at 8:14 am

We are amazed at the number of $55-65,000 Audi’s and Mercedes in the Burlington, Hamilton and Ancaster areas. Lots of high end boats and Harley toys too.

Canadians can’t stop themselves from blowing their brains out with easy credit. Housing is a huge asset bubble for sure, but there are lots of other smaller frothy asset bubbles creating the illusion of overall prosperity in the economy.

Governments only respond to train wrecks. Prepare to profit from the train wreck while CYA financially. It is only a matter of time.

#72 Daystar on 06.13.11 at 8:30 am

#60 SMOKING MAN on 06.13.11 at 6:16 am

“Central banks only spike rates on wage inflation not on price inflation, No evidence on wage inflation yet.” – Smoking man

You are wrong. Wrong about the year you give as well as a Canadian recession will be well underway before 2014. Ask me why if you want to learn something instead of brag about false conclusions based on fallacies.

#73 bigrider on 06.13.11 at 8:35 am

#65 Mortgage Girl

“There attitude where else do you invest your money..safest market”

Could you find out from these investors why they perceive T.O to be the safest market?

It might be to your advantage to figure out why they are so deluded.

#74 April Showers on 06.13.11 at 8:54 am

Is BPOE mildly retarded, or does he just enjoy being a complete lying jerk who cannot back up anything he says? My favorite is when he says things like “that’s a FACT” when in fact it is only an opinion. What a morAn.

#75 WINNIPEGER on 06.13.11 at 9:18 am

http://www.winnipegfreepress.com/breakingnews/Housing-in–crisis-123711449.html

Interesting and different prespective on why housing is doomed in Winnipeg. I wonder how many other cities will suffer the same fate for these reasons?

#76 Dark Sad Monster Bunny on 06.13.11 at 9:23 am

59 American – this policy sounds very, well, “un-american”. How did it work? How is it enforced?

#77 WINNIPEGER on 06.13.11 at 9:23 am

Winnipeg Free Press Poll—- closes tomorrow—results so far:

Poll Results

Have you ever had trouble finding decent housing?

Yes, finding a decent rental apartment or house
28% (519 votes)

Yes, finding a home I can afford to buy
15% (273 votes)

No, I’ve had no problem finding a good place to rent
6% (113 votes)

No, I already own a home I can afford
45% (840 votes)

I own a home but I can barely afford the mortgage payments
7% (128 votes)

Total Votes: 1873

#78 BPOE on 06.13.11 at 9:31 am

Folks what happened to the last prediction from Roubini in 2008 in terms of Vancouver Real Estate. That’s right folks it exploded upwards. What happened to a balanced portfolio? Folks you know the answer and the truth. If Roubini is righ then Gold and Vancouver are going sky high. You see folks Ive been saying for along time now interest rates aren’t going anywhere.In fact there is an announcement coming down the pipe in the near future that interest rates are going DOWN. Folks the Roubini scenario doesn’t bode well for higher interest rates. As well the Conservative Government will announce in the near future a plan to make foreign ownership even more attractive. Interest rates going lower, foreign ownership easier and a possible Roubini scenario all bodes incredibly well for BPOE. When the world crumbles everyone wants a safe haven. The prices in Vancouver attest to the safe haven of the world being BPOE

#79 This is wonderland on 06.13.11 at 9:32 am

Shane Koyczan: This is my voice.

Brilliant….

http://www.wimp.com/myvoice/

#80 Daisy Mae on 06.13.11 at 9:33 am

#32 – Nosty “HST Trickery Daisy Mae and An Cat Dubh —”What do you make of this? We’re dealing with politicians, remember, and one of the first things a politico in training learns is to lie while keeping a serious face.”

Exactly…..the government is deceitful and should never, ever, be trusted. Clark absolves herself of any responsibility for the wording of this question, so what does that tell us about HER? Remember….she’s all about ‘families’…. LOL

And one other question has been raised — who will oversee the count re the mail-in votes? Will the ‘yes’ votes wind up being shredded? Until this question is answered, I would not trust the final count.

One radio commercial has young people voicing their opinions — one smart ass says: “A drop in taxes is always a good thing.” (or something to that effect)

The kid fails to mention that the 10% rate covers EVERYTHING — many, many, many products/services that were once subjected to just the PST. Geez!

And the government is planning to issue $175 one-time cheques to low income/seniors….so do people ever wonder ‘WHY’? Could it be that our taxes are way, way up, thanks to the HST…and that it’s going to hurt some? Duh!

Ontario is watching this outcome?

#81 WINNIPEGER on 06.13.11 at 9:33 am

http://www.theglobeandmail.com/report-on-business/carney-to-weigh-in-on-housing-market/article2057571/

Mr Carney to give his opinion on the housing market to a sold out crowd in Vancouver on Wednesday…… mentions of a contrarian fringe in this article…..

Would love to hear this in person :-)

#82 BPOE on 06.13.11 at 9:35 am

Must be different out East. Vancouverites buy with cash. Even leased vehicles are bought with cash on hand. There is no credit bubble in Vancouver. The amount of wealth in Vancouver is beyond a Canadians dreams and imagination. Another reason shell shocked Canadian renters kicked to the curb look to the heavens and ask “how can it be so high”. Buying with cash, perceived value and the REAL DEAL
********************************************
Ret on 06.13.11 at 8:14 am
We are amazed at the number of $55-65,000 Audi’s and Mercedes in the Burlington, Hamilton and Ancaster areas. Lots of high end boats and Harley toys too.

Canadians can’t stop themselves from blowing their brains out with easy credit

#83 Daystar on 06.13.11 at 9:43 am

#18 Slopetester on 06.12.11 at 10:35 pm

You forgot to quote the last line of your link.

“Gold could spike again whenever there is rising risk aversion, he said, though noting that bullion prices had declined after the Lehman Brothers debacle in September last year.”

Doesn’t that go against your point? QE2 and large budget deficits have bruised the greenback, the currency gold is also priced in. Its not hard to see currency valuations as the driver for gold, but inflation hasn’t been a factor. Asset deflation has kept commodity driven inflation in check. Meanwhile, lets look at what gold competes with to see if its as shiny as you say.

http://www.goldseek.com/quotes/charts/5yeargoldchart.php

Gold has risen 60%.

But what about Copper?

http://www.kitcometals.com/charts/copper_historical.html

Copper is up 220%

Lead?

http://www.kitcometals.com/charts/lead_historical.html

Up 50%

Nickel? What did Nickel do…

http://www.kitcometals.com/charts/nickel_historical.html

Up 70%

Zinc?

http://www.kitcometals.com/charts/zinc_historical.html

70%

Oil? 45%. Aluminum 70%

Grains? Top of my head, doubled?

So… what is so sexy about gold? Metals in general have done well, but so have commodities overall since 09′!!!!!!!!!!!!!

What has Garth advised in this blog in 09′? Equities. Commodities. Its a matter of record. Go look. Was he right? Duh… In fact, if you want to rewind the starting point to what commodities have done since March of 09′, every base metal including oil has outpaced gold.

What has Garth advised for investing with less risk in 2010 and beyond? Financials. Fixed assets. Easy to see why, one merely has to look at the spreads to see it. Commodities won’t shoot for the moon forever and housing is toast. If you think either of these still have legs, you are about to learn some tough lessons. I still think gold will hit $1750 but it will be the only commodity rising against the grain from the summer on and that isn’t far away.

This world is so full of “gotcha” mentalities as it is, but perhaps I’ve been to easy on you. What’s your motivation, slopetester? What’s your point? Cherrypick facts from a vague link to make professionals look bad without taking in the big picture is petty (and in this case, dumb). Its about as petty as someone mocking your moniker as refering to your forehead (too easy) which is why I prefer simple facts. Stuff that someone like myself can whip up just to show you that karma can be instant… and brutal if thats the way you want to play it. (enter evil laugh)

http://www.youtube.com/watch?v=7edeOEuXdMU

#84 Daisy Mae on 06.13.11 at 9:44 am

Further to last…

So this falls back, really, on Harper and the ‘Cons’.

The HST really involves increased FEDERAL taxation on BC provincial taxpayers.

The $1.6 billion bribe to BC will be recouped in no time flat…

#85 Dr. Wayne on 06.13.11 at 9:45 am

Never underestimate the power of human stupidity.

#86 jas on 06.13.11 at 9:46 am

Nouriel Roubini says:
After next year, the bigger challenge in China is “to reduce fixed investment and savings and increase consumption. Otherwise after 2013, there will be a hard landing,” he (Nouriel Roubini) said

WTF is this?..what kind of treadmill we humans have got on to…?consume consume consume or else …

he may mave made predictions which came true but this idea of consume more …more and yet more…is total BS. Oh WTF has gone wrong?

http://www.bloomberg.com/news/2011-06-11/china-economy-at-risk-of-hard-landing-after-2013-nouriel-roubini-says.html

#87 AG Sage on 06.13.11 at 9:47 am

>#72 bigrider on 06.13.11 at 8:35 am
>#65 Mortgage Girl

Extremely curious as well. I’d love to feed you a few survey questions to give them. You know, for the benefit of human economic knowledge.

#88 Mr. Plow on 06.13.11 at 9:54 am

#55 Utopia

Re-read Harry’s post and see if you can pull out the part where he said “developed land”. I don’t think he once said that there wasn’t enough land on the prairies.

You talk like a smart guy, so surely you understand the difference between developed land and raw land.

All the land that has cows on it and $8,000 bunkers (which I assumed was the price for house only to be moved) is likely on raw land which could be anywhere from 5 years to forever from being developed.

The land you posted in your link is developed land that someone has spent money on to buy, get through city approvals, get permits, develop, service and bring to market. This process can take anywhere from 3-5 years depending on the city. So you can appreciate the costs involved in doing that. That is why developed land is more than raw land (per acre) and why there can be a shortage of one (developed land) even in an area like the prairies where there is tons of it.

Harry may or may not be pumping, I don’t know Sask. but you’re taking what he said and twisting it simply because he is a dissenting opinion on here.

#89 Contrarian on 06.13.11 at 10:00 am

Chinese people love to gamble. Just go to either casino rama or casino niagara and you’ll see buses coming in from pacific mall and chinatown centre.

Lining up to invest in a new condo is all part of the gambling spirit. These are not the cautious Chinese people of Toronto. Mind you, these are Canadian Chinese immigrants, not necessarily mainlanders (although there are some of them as well).

It’s a different lifestyle choice, perpetuated by films like God of Gamblers and icons like Johnny Chan. It’s sexy to win, especially if you win easily and big. If you lose, don’t dwell on it. Bet again and again.

#90 Bottoms_Up on 06.13.11 at 10:04 am

#42 ottawan on 06.13.11 at 12:15 am
—————————————–
There’s a FSBO in my Ottawa neighbourhood (trying to sell an entry-level house) that has had a few consecutive weekends of showing ‘busts’. They may have gotten their asking price 6 months ago, but now with the new 5/30 rule change the market has definitely changed. I know that I wouldn’t be able to qualify for my own house at today’s prices at 5/30.

And if people in entry-level houses can’t sell their house for what they think it is ‘worth’, then they don’t sell and the move-up homes don’t sell.

Lots of prices reductions going on, and not much inventory moving.

It’s quite interesting to take a look at mls at some smaller communities and see just how many houses are for sale. How many people actually want to buy a house in Brockville for example? There are around 200 places for sale….that’s gotta be 5 years of inventory!!

The future is going to be very interesting…..

#91 Mr. Plow on 06.13.11 at 10:09 am

#65 Mortgage girl

You are painting the exact picture that Garth is talking about. Speculators, flippers, whatever you want to call them they are awful for any housing market.

They make the market demand seem stronger than it is, leading to oversupply. They also artificially inflate prices leading to an eventual peak, then when prices no longer increase at a rate that is worth it for the flipper the “investment” disappears along with the artificial demand, what is left is the over supply which could take years to work through. Just ask Florida, Las Vegas, California etc… what the flippers did to their market.

True investors, buy property for it to make money for them over the long term. Not a short term hold and dump at an increased price.

#92 TS on 06.13.11 at 10:29 am

Ability To Repay Proposal Impacts Mortgage Underwriting

On April 19, 2011, the Federal Reserve Board requested public comment on a proposed rule under Regulation Z that would require creditors to determine a consumer’s ability to repay a mortgage before making the loan and would establish minimum mortgage underwriting standards.

http://www.foxrothschild.com/newspubs/newspubsArticle.aspx?id=4294967563

This article sums up how tricky (some might call it sophisticated or smart) mortgage lending became in the U.S.

#93 Daisy Mae on 06.13.11 at 10:31 am

A CBC blogger writes:

“I bought a computer monitor yesterday for $99.99. I was charged an additional 9 dollar ADS “disposal” fee. (essentially a tax) The HST was then applied to both the monitor and the ADS tax. The final bill was $122.07. So I paid just over 22 dollars on a 100 dollar purchase. If this is not an example of how we are all getting robbed by the government then I don’t know what is.

Today I returned the monitor and got my money back. I will get by with my old one until it actually dies and then will buy a used one.”

#94 Daisy Mae on 06.13.11 at 10:34 am

The ‘disposal fee’ does not go into government coffers — it is collected by the firm who disposes.

The HST charged on the ‘disposal fee’ goes to the government.

#95 J:LG on 06.13.11 at 10:40 am

“Behind every successful man stands an astonished mother-in-law”

Amazing.

#96 MikeT on 06.13.11 at 10:46 am

@92 Daisy Mae:
Toronto Hydro has a “debt retirement fee” of a couple of dollars on every bill, and it’s not my debt, as I pay them all in full. I called and asked for this to be removed, as I don’t owe them anything. They said it’s retirement of some older debt of the agency, and it can’t be removed.
The funny thing: I pay HST on the amount that already includes that fee. As all other Ontarians do, I presume.

#97 MikeT on 06.13.11 at 10:47 am

sorry, I meant Torontonians

#98 disciple on 06.13.11 at 10:51 am

I have a hockey game in an hour so only one post for now…I know you’re all disappointed…this little gem is from a document titled “Silent Weapons for Quiet Wars” original author unknown…

“The total goods and services represent real capital called the gross national product, and currency may be printed up to this level and still represent economic capacitance; but currency printed beyond this level is subtractive, represents the introduction of economic inductance, and constitutes notes of indebtedness.

War is therefore the balancing of the system by killing the true creditors (the public which we have taught to exchange true value for inflated currency) and falling back on whatever is left of the resources of nature and regeneration of those resources.”

A glimpse into your future…courtesy of your real rulers. Bill Gates (not his real name) has started it off with his poisoned vaccination scheme…

#99 Devil's Advocate on 06.13.11 at 10:51 am

#63 Rocket Boy on 06.13.11 at 6:35 am

They won’t have it. The sharing of such information as that you request of those in the trenches would only be ridiculed by the Blog Dogs as lies and SPIN. The Blog Dogs hear only what they want to hear. This is not a place for industry insiders. Such insiders, privy to the real story, are despised by the Blog Dogs as the apparent root of all evil even though that unwarranted blame is but a mere consequence of the Blog Dogs own melancholy over having then “missed the boat” and now impatiently waiting for their “ship to come in” as they check their watch repeatedly in angst and dismay over the SS Armageddon’s perceived delay.

I see things are going well in Kelowna. — Garth

#100 eddy on 06.13.11 at 10:54 am

China Wants To Construct A 50 Square Mile Self-Sustaining City South Of Boise, Idaho

http://www.thetruthseeker.co.uk/?p=28042

#101 pbrasseur on 06.13.11 at 11:04 am

“Roubini, by the way, forecast the 2008 financial crisis” – Garth

As did many others, even before him. He also predicted a bunch of other things that never happened. He has built his perma bearishness into a business…

Garth you are right about real-estate in Canada but at the same time you extrapolate too much from the news cycles…

My statement is correct. — Garth

#102 Jim on 06.13.11 at 11:09 am

BPOE.

79% of BMW Canada auto purchasers in BC use BMW financial services(lease or loan).
In May 91% of Ford Canada purchases were financed or leased in BC.
Look it up before you spew.

#103 Mr. Plow on 06.13.11 at 11:11 am

#74 April Showers

Yes just like the others who tell nice little stories about houses that have sat on their street for weeks, or chinese folks who come to look at a listing and leave quickly and they tell these stories like they are FACT when they are just opinion as well.

Not sure you have noticed, but regardless of what side of the fence you are on when it comes to the real estate market, very few people here actually post facts.

This includes me by the way.

#104 Mr. Plow on 06.13.11 at 11:12 am

DA…

Welcome back.

#105 Bobby on 06.13.11 at 11:15 am

I chuckled when I read the part about how the realtor will resell the same condo for a supposed huge profit. Realtors, like any commissioned salesperson, will say anything to make a sale.
Reminds me of looking at condos a few years back at Bear Mountain here in Victoria. Realtor said they were a great buy and it was time to jump in. I asked the agent how many of these empty condos he owned. His reply,” None, I got really burned in the last real estate bust.”
Enough said.

#106 Devore on 06.13.11 at 11:15 am

#44 Thetruth

We are the #1 when it comes to immigration per capita rates IN THE WORLD. And they’re coming to the cities. Guess which ones?

Immigrants are buying $1M SFH and $500k condos?

#107 biil c on 06.13.11 at 11:16 am

TSX hits below 12999.
Its begun

#108 mississaugaboy on 06.13.11 at 11:22 am

@ 92: MikeT

I think this was always there but they just split this out now for your bill to see.

#109 jess on 06.13.11 at 11:32 am

Mad Vlad – “technology is changing so quickly now”
National Supercomputing Center in Tianjin.

Tianhe-1A Is Ranked NO.1 On The … – Tianhe-1 Pflop Supercomputer – Applications
http://www.nscc-tj.gov.cn/en/ – Cached – Similar
============
12 May 2009
Thomson Reuters Partners with Bureau van Dijk
Providing Access to Databases for Transfer Pricing Documentation

The Tax & Accounting business of Thomson Reuters has announced a new and expanded strategic partnership with Bureau van Dijk Electronic Publishing (BvDEP) to provide transfer pricing professionals worldwide more choices for comparables data through its ONESOURCE Transfer Pricing Compliance Edition software solution.
======================
http://taxjustice.blogspot.com/

..”There is almost no empirical research on comparative transfer pricing systems in practice and workflow: “staffing levels on audit teams, case loads, throughput and back, life cycles and end states of typical cases, system costs per case, expected revenue per audit, etc….The overall TP policy brief is so “lawyer-driven” that it is almost impossible to tell a given country what the payoff would be from adopting system X Y or Z. And the OECD has insisted on the “one size fits all” version of ALS, with all the attendant costly processes. So, not surprisngly, most developing countries either have no TP laws at all, or don’t bother to really enforce them.

Or try this for size:

The OECD is hardly a role model for dispute resolution when it comes to transfer pricing: the US IRS now faces a backlog of some 800 transfer pricing cases involving cross border disputes, with most cases taking 3-5 years to resolve. [Data provided by tax expert David Rosenbloom.]
Or this:

Far from providing invaluable expertise, many of these private sector spokespeople — especially those from mining companies, big law firms, big accounting firms, and data companies like Bureau van Dijk (a big Dutch company that has a near-monopoly on the expensive “comparables pricing” data bases required to implement ALS — are mainly involved to push their own jaundiced private interests. The complete absence of comparability data bases for many developing countries was mentioned repeatedly as a practical obstacle to implementing orthodox OECD ALS regimes.

And this.

some huge MNCs may exist only because of their ability to arbitrage taxes and influence across borders. From this angle, the growth of MNCs may actually be a RESULT from transfer pricing and uneven taxation, not the other way around.

==========================
…”A red flag had been raised last year when Candover Investments, the stock market listed parent of the private equity firm, pulled a €1bn (£827m) commitment to a planned €3bn fund. The fund was abandoned and outside investors allowed to walk away, leaving Candover Partners, which manages the investments, to concentrate solely on two funds from 2001 and 2005….

Before the financial crisis, the private equity industry had found itself under intense scrutiny as the size of deals became steadily larger, peaking with the £10bn acquisition of Boots. The industry was condemned by unions and politicians alike, routinely criticised for loading businesses with debt and taking out huge dividends.” http://www.guardian.co.uk/business/2010/aug/31/candover-investments-winds-itself-up

Bureau van Dijk Electronic Publishing
DATABASES:
BvD Zephyr – Coverage of various deal types including M&A, IPOs, joint ventures and private equity deals.

#110 BPOE on 06.13.11 at 11:33 am

Anyone remember David Foot? Remember Boom Bust Echo. Mainstream media loved this guy was quoted in the papers all the tiem. Written in 1996 how everyone should get out of Real Estate because the boomers would be retiring and selling their houses. Is David Foot, Shiller? Could be cause they were both so very very wrong on Vancouver. My point is beare of media prophets who badmouth Vancouver as they are consistently proven incorrect

#111 biil c on 06.13.11 at 11:37 am

The chinese and asia buying spree is false. Chinese starting buying in California in the 80s . 90s and more in
2000 to 2011. It didnt help California real estate prices.
They are down 30 to 40%. In GTA homes under 600 are selling like hot cakes because of cheap money. Only problem is homes over 1 million are dime a dozen.
Take a drive in 905 expensive areas. Every third home is for sale. Why. Because they cant afford them.

#112 Utopia on 06.13.11 at 11:41 am

#87 Mr. Plow

Are you related to Harry?

#113 Chaos on 06.13.11 at 11:41 am

CRIKEY….

You gotta love it Vlad.

The brawn dwarf is on it’s way and we’re worried about real estate!

anyhoo. More importantly, tell me Vlad how is the cherry crop shaping up for this summer?

We may as well enjoy the small pleasures whilst we can.

#114 TS on 06.13.11 at 11:45 am

Fear and economic insecurity can affect the housing markets big time….

The Conservative government is planning to chop at least 6,000 jobs over the next three years, even before it draws up a more aggressive plan for erasing Canada’s deficit.

http://www.theglobeandmail.com/news/politics/ottawa-notebook/with-6000-jobs-on-chopping-block-budget-watchdog-warns-of-deeper-cuts/article2058469/

#115 Kevin on 06.13.11 at 11:55 am

I found Harry’s reference to the press release from the Saskatoon Home Builders Ass. http://www.saskatoonhomebuilders.com/docs/star-phoenix/283.pdf

“Based on strength in the province’s economy and the continued population gains, more homes are needed in the region and across the province. Saskatoon’s housing market and economy are an anomaly in comparison to other provinces that have been warned to brace for an economic and housing slowdown. Despite weaker predictions for Canada overall, based on the strength of the economy, the productivity of our workers and investment in businesses and housing, Saskatoon is predicted to grow substantially in 2011 and beyond.”

Yep, it’s different in Saskatoon! No worries here even though
-commodities have always been boom/bust, always will be.
– less than 2% of Saskatoon’s working population work in mining, resources will not save the housing bubble
– construction jobs as a % of the working population is near 9%. Long term average is 5.5% here.
– there are about 4000 less people working this spring compared to last spring according to stats can
-former mayor has sounded off on record spending and record debt for the city
-not 1 good reason why the median multiple should be over 3 times income, currently near 4.5, maybe higher
-I have done numerous calculations showing the housing market is 30% overvalued in Saskatoon
-but the city says it is an affordability crisis, so they implement a Mortgage Flexibility Support Program, effectively giving out free downpayments
-Affordability crisis is another name for housing bubble

Yep, no problems in Saskatoon!

#116 D Sanchez on 06.13.11 at 11:58 am

Garth,
It IS different this time

-S Harper
ps: you are still fired

#117 Devore on 06.13.11 at 12:03 pm

#89 Bottoms_Up

Takes a big man to admit he cannot afford to buy the house he already owns. This should tell people a lot.

#118 Devore on 06.13.11 at 12:06 pm

#90 Mr. Plow

They make the market demand seem stronger than it is, leading to oversupply. They also artificially inflate prices leading to an eventual peak, then when prices no longer increase at a rate that is worth it for the flipper the “investment” disappears along with the artificial demand

What does it do in markets where the supply is relatively inelastic, such as oil, or Vancouver SFH?

#119 new_era on 06.13.11 at 12:10 pm

“He mentioned there were two couples that were on the fence to sign. So the real estate agent sat them down and told them to put down the 5% ($20,000) now and that later when the condo site is at 95% sold, she will do them a “favour” and resale it to another buyer for $100,000 profit. She told them they would make a $80,000 profit in one year. They signed.”

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

No regulations on these cheap car sales people.
Investments advisors will never get away with saying crap like this.

Those people are idiots. I would of got it all in writing.
If I don’t get my 100,000 then I would sue the salesman ass off. If I take a lost then again I would sue their ass off and take their house and BMW.

Hey It sound alot like the way CMHC deals with responsibility.

#120 Abitibidoug on 06.13.11 at 12:16 pm

Garth’s analysis goes to show you that it is IMPOSSIBLE to predict when a bubble will peak and how far up it will go. Similarly, it is impossible to predict when and how far down the inevitable correction will be. For anyone who observes the bubble keeps on going and appears unstoppable they should keep in mind the saying: the bigger they are the harder they fall.

#121 Sampson on 06.13.11 at 12:42 pm

Advise?

Purchased a new home around Whitby, ON 2 years ago. The wife and I are considering moving back to Toronto ( I work downtown and she will mostly likely as well once her PHD is completed). We have spoken to two real estates agents and if we sold for the suggested list price, we would net $85k profit and have $325K in the bank. We would not buy in Toronto, just rent for a year or two. Is this wise?

Alternatively, we would stay where we are until my wife got a job and then move. The risk being housing prices could have corrected by then (hoepfully not as much as they have increased so that we would still net a prfoit from the sale of the house).

#122 J on 06.13.11 at 12:50 pm

@ #49:

“but at the end of day you have one shot at life. Why waste your life trying to make it in a place where the economics are on CRACK.”
——————————————————

Dear Viva, Let me answer your question with a question. Why would you waste your life in EXTREMELY COLD place like Fort MAC if at the end of day you have one shot at life and life is short!? Just for making extra $$$!!

Life quality is what makes it expensive. If one wants to live in the best city of Canada, gotta be ready to pay the price. Everything has a price TAG.

#123 VICTORIA TEA PARTY on 06.13.11 at 12:57 pm

#4 rental monkey

Dislike parties. Don’t eat chips (and the annoying dip). The four bucks goes to more oatmeal and raisins! The
raison d’etre, so to speak, for a full and happy life!

#124 disciple on 06.13.11 at 12:59 pm

Industries fall into three categories or classes by type of output:

Class #1 – Capital (resources)
Class #2 – Goods (commodities or use – dissipative)
Class #3 – Services (action of population)

Class #1 industries exist at three levels:
Nature – sources of energy and raw materials.
Government – printing of currency equal to the gross national product (GNP), and extension of currency in excess of GNP.
Banking – loaning of money for interest, and extension (inflation/counterfeiting) of economic value through the deposit loan accounts.

Class #2 industries exist as producers of tangible or consumer (dissipated) products. This sort of activity is usually recognized and labeled by the public as “industry.”
Class #3 industries are those which have service rather than a tangible product as their output. These industries are called (1) households, and (2) governments. Their output is human activity of a mechanical sort, and their basis is population.

#125 Alex on 06.13.11 at 1:02 pm

Check out this piece of sh*t from today’s Vancouver Sun, written once again by Brian Morton. We are told at the outset that recereational property is where it’s at, baby. Yet nowhere in the “article” is that thought prcocess supported. Ultimately, it’s a confusing mish-mash of garbage that doesn’t even make sense as an advertisement, which of course it is despite the Sun’s attempt to have its more ignorant readers believe it’s “news.”

http://www.vancouversun.com/business/Recreational+property+market+gains+steam+local+buyers+pushing+Whistler+sales/4937357/story.html

I have, as usual, already posted a comment. Which of course, as usual, will be removed.

#126 BrianT on 06.13.11 at 1:06 pm

Classic Peter Schiff: Schiff in 2006 explaining reality to some MSM bubblehead http://www.youtube.com/watch?v=wh4Q5uCeyKY

#127 Renting in leaside on 06.13.11 at 1:13 pm

Hi Garth, great blog! Have been waiting for this housing gas bag to spring a leak. Not sure if we are looking at a pin prick or a whoop cushion. Thought I’d pose this question to those smarter then I on the possiblity of making money using Tax Lien Certificates Debt Purchase or ending up with a bunch of foreclosed properties to unload.

#128 disciple on 06.13.11 at 1:22 pm

By allowing a central bank to issue credit at interest, you create a social welfare state.

The social welfare program is nothing more than an open-ended credit balance system which creates a false capital industry to give nonproductive people a roof over their heads and food in their stomachs. This can be useful, however, because the recipients become state property in return for the “gift,” a standing army for the elite. For he who pays the piper picks the tune.

Those who get hooked on the economic drug, must go to the elite for a fix. This is a fourth law of motion – onset, and consists of performing an action and leaving the system before the reflected reaction returns to the point of action – a delayed reaction. The means of surviving the reaction is by changing the system before the reaction can return. By this means, politicians become more popular in their own time and the public pays later.

They must eventually resort to war to balance the account, because war ultimately is merely the act of destroying the creditor, and the politicians are the publicly hired hit men that justify the act to keep the responsibility and blood off the public conscience.

#129 Devil's Advocate on 06.13.11 at 1:46 pm

I see things are going well in Kelowna. — Garth

Ya know… they really are.

Personally I think we are past the worst of it. And the worst of it here was little more than coming to the realization that 2007/08 were unsustainable. Of course that does not preclude some other financial disaster that might be looming over the horizon but that really is anybody’s guess… isn’t it?

For right now we have no complaints with this more realistic market as it is keeping us busy none-the-less. While there are indeed many an overpriced listing languishing on the market, those intelligently priced sell FAST and for a TOP DOLLAR not far so far off their past peak price.

#130 DM in C on 06.13.11 at 1:48 pm

Alex, #124:

Calgary Herald had the same thing — I think REMAX used a template and applied it to all markets.

http://www.calgaryherald.com/business/Alberta+recreational+properties+price+decline/4936548/story.html

#131 disciple on 06.13.11 at 1:56 pm

The general public refuses to improve its own mentality and its faith in its fellow man. It has become a herd of proliferating barbarians, and, so to speak, a blight upon the face of the earth.

They do not care enough about economic science to learn why they have not been able to avoid war despite religious morality, and their sanctimonious refusal to deal with earthly problems renders the solution of the earthly problem unreachable to them.

The last remaining variable for your real rulers has now been made predictable through four decades of Shock Testing. Shocking the prices of a commodity and noting the changes in the sales of all of the commodities.

Economic engineers achieve the same result by carefully selecting a staple commodity such as beef, coffee, gasoline, or sugar, and then causing a sudden change or shock in its price or availability, thus kicking everybody’s budget and buying habits out of shape.

They then observe the shock waves which result by monitoring the changes in advertising, prices, and sales of that and other commodities.

#132 Cato on 06.13.11 at 1:57 pm

The game is just about over, just need to play out the final inning. The latest stats on debt tell the story, Canadians aren’t using new debt to purchase shiny new toys or fun in the sun vacations – they are now using new debt to pay the interest on old debt. Once this dance has started the countdown to bankruptcy can begin. Stupidity and greed, it didn’t have to be this way.

The economic event that began a few years ago is entering a new phase, it won’t be pleasant. Roubini is a brilliant economist, but he suffers the tunnel vision that affects all flat earth economists.

7 billion humans live unsustainably on a planet with finite resources. If an event occurred that snuffed out large part of the population then we’d have a true economic crisis. What we have now isn’t an economic crisis, its an accounting crisis – its a debt crisis. Regardless of what happens to fiat monetary systems or markets those 7 billion humans will still wake up the next day and fight & struggle for a better life.

Western societies have taken far too much from the planet for far too long. In the past it was a fair trade, western civilization made vast contributions in moving the human race forward. This way of life, like our economy, was unsustainable. Western societies seem to be under impression we can produce nothing but debt yet continue to take what we please. That the current recession is just transitory, if we just throw enough money at the problem we’ll kick start the keynesian machine and everything will go back to normal. Its not going to happen, this economic model was always destined to collapse.

Its now time for western society to take a big step down in standard of living, while much of rest of the world gets a step up. The world will eventually find balance but its going to be a rough adjustment for the generation who grew up thinking lifestyle was an entitlement that didn’t have to be earned.

At the end of the day the world will be a better place, even though many will be financially wiped out. The bubble economy won’t exist anymore, nor will the bloated govt that goes with it. The path to wealth won’t be through chasing economic bubbles but producing real trade. The best and brightest won’t want to be lawyers and stockbrokers working on wallstreet but will become entrepreneurs,doctors or farmers because thats where the wealth of the new economy will be created. Until then the old monetary system has to die and what we are witnessing now are the last gasps of a dying economy.

#133 Nostradamus Le Mad Vlad on 06.13.11 at 1:59 pm


#36 OkanaganInvestor — Good link and accurate. The US debt and deficits (combined) now exceed their GDP. That’s where #61 bullion bunny’s post comes in — govts. have no choice but to raid pension and investment funds, to pay for their debts (incl. Canada).

#48 Devore — “#7 Tim — Many companies have huge amounts of cash on their balance sheets and are trading at very low multiples.”

Actually, Tim is right. David Crane ( [email protected] ) [The Business of Canada] has a column in today’s KDC headed “Businesses sitting on piles of cash”; Cdn. cos. have billions, US cos. trillions.

So why are they not investing? Mostly because of offshoring and outsourcing, eliminating unions and high-paying jobs.

This continent is fast becoming a service-sector place — McJobs and the like — whereas trades / industries are being sent overseas to new plants, where wages are substantially lower.

In some respect, both of you are correct, but we all end up being the big losers in this.

#61 bullion.bunny — “How many more pension funds do you think gov’s can raid?”

Ummm, the west is outta options now, so my guess is zilch. Of course, there is SS, CPP, OAS, GIS or, as Chaos says, a brown dwarf to wipe the cherry crop (and us) out!

#68 TurnerNation — “. . . they are trying so hard!”

So very true! Tax us here, there and everywhere — HST comes to mind, then an increase to swell Canada’s coffers.

Being invited to the Bilderberg Group reminds me of Grouch Marx’s infamous quote: “Please accept my resignation. I don’t want to belong to any club that will accept me as a member.” Simply because I couldn’t afford the notoriety!

#79 This is wonderland — Thanks for the excellent link. Unfortunately, many voices are being hushed up now. Read #80 Daisy Mae — “. . . who will oversee the count re the mail-in votes? Will the ‘yes’ votes wind up being shredded?”

Remember dubya in 2000 and 2004? All the ballots voting for Gore and Kerry were tossed into the trash? If a few good people in Newfoundland, PEI or somewhere else were entrusted to count the ballots, in full public view, chances are the Yes vote would win by a 3-1 margin.

#97 disciple — Bill Gates and his better half. Masters of Eugenics, looking at depopulation so they can enjoy (what the spiritual heirarchy refers to as) the ashcan of the universe (here).

Fine. Let them enjoy wrestling in a pig’s trough, but don’t wrestle the pig, as it always wins!

#112 Chaos — G’day Chaos! As far as I know, cherries are not too bad, but we’re getting a fair dump of rain this week.

Mind you, with the brown dwarf coming soon, we’ll be able to enjoy pre-heated cherry crumble, cherry pie (both with blueberries, strawberries and raspberries thrown in), topped with decadent french vanilla ice cream before we all explode on impact with said dwarf!

#108 jess — “Thomson Reuters Partners with Bureau van Dijk
Providing Access to Databases for Transfer Pricing Documentation”

I remember in the mid-90’s when I worked at the KDC, Thomson announced it was getting out of newspapers (except for the Globe and Mail), and was moving into the electronic database research field, providing sources for people who wanted them for research, business, plus a few other things.

Well, it seems to have been a good move. Look at dailies nowadays — plenty of them have closed the physical side (newspapers), and moved to a ‘net only service.

They sold the Okanagan Valley Newspaper Group to Horizon Publishing, a division of David Radler’s group. Radler and Conrad Black have done well for themselves, haven’t they?!

Thomson continues to do nicely without the papers. Not sure whether they still own the G&M.
*
Inflation Survive and thrive!

#134 thecomingdepression on 06.13.11 at 1:59 pm

Garth its called a DEPRESSION. Quit hiding the truth. Unemployment north of 22% in the US. 44 Million on food stamps. Real estate going down another 30-50%, administration admitting they need to use your pensions, city in Alabama had theirs taken.. citizens there dying, destitute and homeless. Restaurants, retail stores are closing like flies here in VANCOUVER..the list is endless. Its called a DEPRESSION..slowdown, recession, what a joke.

#135 robert james on 06.13.11 at 1:59 pm

#124 Alex A month or so ago “Remax Boy” aka B Morton stated that some prices have dropped by 60 % in Kelowna.. I e-mailed him and asked him to “show me” the 60% price drops in Kelowna.. He could not show me because he was just told that there were 60% price drops in Kelowna..Apparently some developer was trying to pump the market here.. Don`t believe a word this guys says..

#136 Herb on 06.13.11 at 2:07 pm

Sampson @ 120,

read just about any thread posted by Garth over the last couple of years and tell us why you even ask the question.

In plain language, cash your chips while you’re ahead and sit the next couple of years of real estate poker out. That’s what I would do, and in fact am doing.

#137 disciple on 06.13.11 at 2:08 pm

When the subject citizens are rendered unable to control their financial affairs, they, of course, become totally enslaved, a source of cheap labour.

Not only the prices of commodities, but also the availability of labour can be used as the means of shock testing. Labour strikes deliver excellent tests shocks to an economy, especially in the critical service areas of transportation, communication, public utilities (energy, water, garbage collection), etc.

Collapse of the currency occurs when citizens’ faith in each other is destroyed. Don’t you agree that this happened a long time ago? Judging from the comments on this blog anyway…What is happening all around you now is simply more economic testing and mind games before the great and terrible war.

#138 disciple on 06.13.11 at 2:14 pm

Diversion Summary
Media: Keep the adult public attention diverted away from the real social issues, and captivated by matters of no real importance.

Schools: Keep the young public ignorant of real mathematics, real economics, real law, and real history.

Entertainment: Keep the public entertainment below a sixth-grade level.

Work: Keep the public busy, busy, busy, with no time to think; back on the farm with the other animals.

Consent, the Primary Victory.
Psychological basis: When the government is able to collect tax and seize private property without just compensation, it is an indication that the public is ripe for surrender and is consenting to enslavement and legal encroachment. A good and easily quantified indicator of harvest time is the number of public citizens who pay income tax despite an obvious lack of reciprocal or honest service from the government.

#139 jess on 06.13.11 at 2:17 pm

Twyne’s Case (1602) Coke opined here that, “Fraud and deceit abound in these days more than in former times.”
http://en.wikipedia.org/wiki/Edward_Coke
=============================

#140 Slopetester on 06.13.11 at 2:18 pm

#83 Daystar on 06.13.11 at 9:43 am
What’s your motivation, slopetester? What’s your point?

My point is that Roubini and Garth, when analyzing Gold, MISS the Fact that extreme criminality in the paper markets is the ONLY reason both Silver and Gold aren’t $150 and $15000 today. Roubini admits that Gold “could spike” .. due to “rising risk aversion” … but NEVER asks WHY prices “declined after the Lehman Brothers debacle” ?? Gold should’ve spiked $100 a day after Lehman, and another $200 when Barrick allegedly “covered’ a 9.5Moz hedge book in Sept 2009. No, the really tough questions are left to the folks at The Gold Anti Trust Action Committee, and a handful of others like Eric Sprott and Ron Paul.

Roubini and Garth and many others fail to see the EVIDENCE of Gold and Silver price suppression, all of it led by the Central Banks. And worse, they fail to see the motive, that is, that freedom in the Gold and Silver markets would destroy their hold on the planet. Muzzling the Gold price is necessary to selling us all more warfare and welfare, more poverty and puss. Roubini instead uses charts and graphs to compare Gold with industrial commodities like Copper. If Gold traded on its industrial demand it would be $300 and ounce (and Silver would be $1000).

GATA is currently pressing the FED for disclosure on its Gold ‘leasing and swapping’ activities. In January 2008 GATA ran a full-page ad in the WSJ revealing the fact that US Gold reserves hadn’t been audited in 50 years. The ad contained a quote from Mr. Greenspan where he admitted to Central Bank INTERVENTION in the Gold market. The ad also warned of a coming catastrophe, 7 months BEFORE the so-called Lehman crisis. Despite this historic call the number of Bloomberg, Fox, and CNBC analysts that have called GATA for an interview remains at ZERO.

This is NOT a conspiracy “theory” Daystar …

I invite all to read The GATA ad here:
http://gata.org/node/wallstreetjournal

#141 Daniel on 06.13.11 at 2:18 pm

Imagine what the stock market would do if everyone was given 90% leverage.

#142 jess on 06.13.11 at 2:19 pm

The Financial Road to Serfdom: How Bankers are using the Debt Crisis to Roll Back the Progressive Era
Michael Hudson
http://neweconomicperspectives.blogspot.com/

…”fraudulent conveyance law -which says that if a creditor makes a loan without knowing how the debtor can pay in the normal course of business, the loan is assumed to have been made with the intent of foreclosing on property, and is deemed fraudulent.

When British speculators eyed rich New York farmland. Their ploy was to extend loans to farmers, and then call in the loans when the farmer’s ability to pay was low, before the crop was harvested. This was indeed a liquidity problem – which financial opportunists turned into an asset grab. Some lenders, to be sure, created a genuine insolvency problem by making loans beyond the ability of the farmers to pay, and then would foreclose on their land. The colonies nullified such loans. Fraudulent conveyance laws have been kept on the books since the United States won its independence from Britain. “

#143 maxx on 06.13.11 at 2:19 pm

#21 Bill Gable-
“Holy Canoli – with all this happening, we still have people using Helocs to buy Audi convertibles, and taking trips to Maui Wowie.

I think we have a generation of people that will wind up living hand to mouth – because they got sucked in, thinking ZIRP was real. ”

I know someone who has huge money problems- he likely has no heloc room left to borrow from. He always seems to be incessantly upgrading some part of his house….I think that he finishes a makeover and then begins another.
He’s solved his inheritance concerns by taking out a life insurance policy on his mother. (!)
Let them all quietly borrow themselves into oblivion, I say. Then they can all go running to Messers Carney, Flaherty and Harper when the collection agencies have them on their radars and their ‘phones ring non-stop.

#144 Cookie Monster on 06.13.11 at 2:22 pm

#153 45north on 06.11.11 at 11:10 pm
Cookie Monster: the speed of the wave field is very fast, say half the speed of light such that the voltage at any point on a 1000 mile conductor rises and falls very close in time, at say at half the speed of light.

the whole eastern grid then goes up and down 60 times a second in sync?
——
Yes. All the power generating stations are tied together in sync, so yes you can imagine that the entire North American grid voltage is rising and falling in sync at 60Hz such that the voltage is virtually the same everywhere relative to earth ground at all times.

#145 Bill Gable on 06.13.11 at 2:23 pm

OK – this is my RE story of the day – (* Mr. Turner will love this beauty) –

“A new report released Monday finds demand for recreational property, such as cottages, is up 78 per cent in markets surveyed across the country as consumer confidence returns and interest rates remain low.

The Re/Max Recreational Report found that British Columbia’s oceanfront recreational properties saw a 20 per cent price decrease in 2011. Sales in Western Canada are also well ahead of the national average.

“There’s great selection out there now,” Pamela Alexander, CEO of Re/Max told CTV’s Canada AM on Monday.

“You can find a starter property for around the $300,000 mark if you look long and hard – and not everybody has to look at a million dollar property out west.”

Alexander said that a strong economy and lower mortgage rates are contributing to the “perfect storm” in recreational property sales across Canada.

“I think another thing is that people are seeing really solid equity increases in their principle residences and looking to draw some equity out of that as well to buy a cottage,” she said.

ROFL.

http://tinyurl.com/632oxz9

#146 Q on 06.13.11 at 2:45 pm

What kind of an idiot blindly follows the biased (and bs’ed) advice of a realtor to invest their money. Most of these twits have a 10th grade education at best, can’t spell economics and are only selling real estate because; 1) a monkey has been able to make a good living at it for the past two years and 2) they’re too damn lazy to pick up the shovel they should be weilding, instead of a pen and some bad advice. Have any of you seen the pathetically moronic courses and exams they require to hang a shingle and call themselves experts? I could teach a retarded mouse to pass the exam in no more than 2 attempts…thereby bettering the average for these supposed “experts”. Well, they’ll get what they deserve and hopefully move in with the realtor that promised them an $80,000 profit, when reality sets in and they lose everything and find themselves homeless. The only upside here, is that most realtors are of the “more flash, no cash” genre, are stupid enough to believe their own BS and will follow their own inept advice into the gutter.

#147 Jenn on 06.13.11 at 2:46 pm

After you read this article, maybe you can figure out where all these hot money come from,
http://blogs.forbes.com/gordonchang/2011/06/05/chinese-entrepreneurs-are-leaving-china/

#148 Hoof - Hearted on 06.13.11 at 2:48 pm

Do the drive on SW Marine from Granville to UBC

Did that yesterday……approx 15 for sale signs…one sold

One building site near Casa Mia looks like they stopped…barely at lock up.

This is traditionally Hot HAM High end area.

#149 Soylent Green is People on 06.13.11 at 2:52 pm

My ex the contractor told me a story last week about an asian fellow who flew into Toronto for the day and bought 8 stories of condos in a new development. Not 8 condos, but eight FLOORS. He was buying so many for a pool of investors / friends back home is the sense I got from the story.

My ex says this is proof you can’t go wrong in real estate, buy now!!!

hah ha hah ah ha

#150 Devore on 06.13.11 at 2:52 pm

#132 Nostradamus Le Mad Vlad

SOME companies are sitting on significant cash. It is not correct that all or many are in that position. I was not disputing that point anyways, only asking which companies are cheap, particularly on TSX, which is hardly cheap. Not grossly overvalued, but not cheap. Various analysts place it around 10-30% overvalued.

#151 BPOE on 06.13.11 at 2:52 pm

Whistler Operation LIFTOFF!!!

VANCOUVER – Canada’s recreational property market is gaining serious traction with local buyers providing a strong push to Whistler sales this spring.

#152 Slopetester on 06.13.11 at 2:55 pm

#83 Daystar on 06.13.11 at 9:43 am

“Those who do not acknowledge the central bank management of the Gold price have been embarrassed into silence of the subject”

John Embry: Investors Digest March 02 2007

#153 Hoof - Hearted on 06.13.11 at 2:59 pm

#128 Devil’s Advocate

Kelowna ?
C.mon….
…….it was never ment to be big City…it evolved from HAM money that created a diaspora in Lower Mainland $$$ since 1986

You have a maindrag that is a nightmare…
It just a bit higher end than Surrey’s King George Hwy, but not by much…

Okanogan is set up for a bigger collapse than California

#154 Cookie Monster on 06.13.11 at 3:02 pm

#207 JohnnyBGood on 06.12.11 at 7:46 pm
Photons are funny things, they’re everywhere from everything. When an electron just moves from one atom to another atom with out changing energy a photon is created just by its movement(magnetic field).

High energy absorption and emission of photons by electrons occurs when electrons jump valance positions, by change energy levels. This only happens when the photon is just right, too much or too little photon energy and no absorption by a given electron will happen. This is how you get colours since certain materials have very specific spectral absorption/reflection spectrum. White objects reflect the full spectrum, while black objects absorb the full spectrum, coloured objects reflect only parts of the spectrum to appear coloured, certain parts of the spectrum meaning certain photon frequencies/energy.

#155 westopia on 06.13.11 at 3:03 pm

Those of you looking to secure your wealth with gold – be sure to take possession of it. Kitco is getting nailed by Revenue Quebec (and I’m sure the CRA will be involved as well). This will be huge, if it isn’t already (lots of foreign media picking up the story).

http://business.financialpost.com/2011/06/10/revenue-quebec-investigates-massive-gold-fraud/

If kitco was holding your gold – best write a letter to your local TSO to get it. Good luck.

#156 Hoof - Hearted on 06.13.11 at 3:14 pm

#109 BPOE

Boom Bust Echo….

If I recall, it was a demographic analysis.

I don’t see any flaw in the reasoning….the only joker in the debt was before CMHC became involved to skew and delay the prediction and its logical conclusions.

Maybe Gov’t s read the book as a warning, and had to juice the system

#157 RL on 06.13.11 at 3:17 pm

The US is toying with Default (even the fact they are discussing it is funky), the unreported Chinese Debt is north of 50% of GDP (and we are worried about Greece), people earning $48,000.00 a year are paying $450,000.00 for a condo on the Left Coast – Things are good folks and Garth is wrong – NOT …

ht

#158 jess on 06.13.11 at 3:27 pm

U-turn?

Andreas Missbach of the Berne Declaration provides some fascinating details about why Switzerland’s positions on bank secrecy, tax fraud and tax evasion may be starting to look shaky.

In June 2008 the former UBS private banker Bradley Birkenfeld pleaded guilty in a Florida court to helping a client, property tycoon Igor Olenicoff, to evade taxes. Olenicoff had concealed about 200 million dollars in offshore accounts undeclared to the Internal Revenue Service (IRS).

One month later the UBS manager Mark Branson apologised, and admitted wrong-doing in a senate hearing. On that occasion UBS announced that the bank would terminate offshore private banking for its US clients and transfer all their accounts to their onshore branches in the US. But that was not really news: the bank simply reused a decision they had taken and communicated already in January, but which had gone largely unnoticed. Still, the apology was a sign that UBS was willing to cooperate….
http://taxjustice.blogspot.com/2009/02/guest-blog-swiss-ditches-and-defence.html

The Foreign Account Tax Compliance Act was passed by Congress last year and comes into force in 2013.

preserves secrecy with withholding tax”.
http://www.tagesanzeiger.ch/schweiz/standard/Das-Ende-des-Steuerstreits-naht/story/27164956

contrast
======================
Top 250 Delinquent Taxpayers
publishing the tax dodgers in california
http://www.ftb.ca.gov/individuals/txdlnqnt.shtml

#159 GTA Girl on 06.13.11 at 3:42 pm

Watched two financial ‘experts’ be interviewed on CBC few days ago. They were talking condos in Toronto. That 40-50% are owned by investors, never live(d) in their units. How 18,000 new condos will be finished by the end of the year.

Lady CBC interviewer then made logical assumption, that rental prices may become competitive and lower.

Experts got all huffy, disagreed. How can rental prices get lower when investors expect a return. Argued that rental prices will increase because investors will refuse to lose/subsidize their investment condos.

It’s as though logic has gone out the window. Have these ‘experts’ never heard of free market? Do they really believe rent prices will rise, as more units sit empty?

Is crack that readily available??????!!!!

#160 maxx on 06.13.11 at 3:49 pm

#89 Bottoms_Up on 06.13.11 at 10:04 am
“There’s a FSBO in my Ottawa neighbourhood (trying to sell an entry-level house) that has had a few consecutive weekends of showing ‘busts’…….

And if people in entry-level houses can’t sell their house for what they think it is ‘worth’, then they don’t sell and the move-up homes don’t sell.”

Have been tracking (litmus) entry-level listings for a couple of years and most prices asked for scream of overdose with RE industry fruity drink. Vinyl sided, semi-detached north of 295K, anyone? Wow, what a divestment.

#161 smoking man on 06.13.11 at 4:00 pm

Bubble heads. The tse is a tanking. As I predicted. On here for the record.
Bond yeils are free falling fixed rate mortgages will be cut huge this week and
Carney will he will try and talk down re in van this week but he has got to be thinking. I might need to drop the over night rate
Watch and learn little grass hoppers

#162 Devore on 06.13.11 at 4:05 pm

#158 GTA Girl

Experts got all huffy, disagreed. How can rental prices get lower when investors expect a return. Argued that rental prices will increase because investors will refuse to lose/subsidize their investment condos.

Maybe the TO “investors” should get in touch with our Vancouver “investors” to see how they managed to keep rents flat over 10 years while real estate prices doubled or more.

#163 Devore on 06.13.11 at 4:10 pm

#158 GTA Girl

I should also add that of course investors expect a return, but whether they get acceptable or expected return or not is what separates the amateurs who will lose their shirts from the pros who will make money and reach their targets like they always do.

“Expect” implies “entitled”, and that is just not how investing works.

#164 Mr. Plow on 06.13.11 at 4:13 pm

#111 Utopia

Thanks for keeping your post to me less than 500 words.

My answer to your question:

No.

Anything else?

#165 Form Man on 06.13.11 at 4:19 pm

#128 Devil’s Advocate

Sheer rubbish. Things are not going well in Kelowna. The worst is most definitely still to come. This person is either seriously deranged, or desperate ( or both ).

#166 vyw on 06.13.11 at 4:57 pm

Have you heard about flopping real estate:
http://moneyland.time.com/2011/06/13/the-newest-real-estate-trouble-flopping/

http://www.marketwatch.com/story/real-estate-scam-thats-devastating-prices-2011-06-10?reflink=MW_news_stmp

#167 Utopia on 06.13.11 at 5:00 pm

#146 Jenn

Interesting article, for sure. If there is truth to it then I smell a crackdown coming. Capital controls, threats of imprisonment, special levies and taxes on the wealthy would be just a start and would not violate any traditions there. China is still a command economy of course, and it has not yet thrown off its traditions of Socialism. Nor is it likely. There is a backlash coming anyway and most can see it. Not necessarily just from the Government but from those who remain impoverished within China. Lets keep in mind that much of the rural population is still dirt poor. They have incomes and lifestyles that rival those of the Third World. So while wee all crow about the great opportunities and business investments there we can never allow ourselves to neglect the threat that rising social discord could still blow the wheels of that economy. There is tremendous inequity. I am not surprised in the least that the Uber wealthy are working overtime at spiriting away the gains they made. Chinese politics has a long history of being fickle with those who have power. And make no mistake, this is more about power and control and the dear threat of a loss of control with the party itself than it is about actual wealth. I expect a reckoning and a backlash as the political leadership takes firm steps to stem the outflow of wealth.

“As a result of the stimulus program, about 95% of China’s growth in 2009 was attributable to investment, and almost all of the investment had come from the state.”
———————————————

Daystar: Great post man! I loved your comparison of Gold to other commodities. Some fool on the site today was actually trying to argue that nobody ever presented evidence with their statements. Apparently they are not a regular reader here.

#87 Mr Plow: The building is a brick bank with a massive walk-in vault and foot thick concrete walls. It is not being moved anywhere, I assure you. And no, I am not buying it. Did you wake up in a bad mood today?

#168 Popeye the sailor man on 06.13.11 at 5:30 pm

Here is a long drink of coolaid;

http://www.vancouversun.com/business/Recreational+property+market+gains+steam+local+buyers+pushing+Whistler/4937357/story.html

http://www.ctvbc.ctv.ca/servlet/an/local/CTVNews/20110613/bc_cottages_110613/20110613/?hub=BritishColumbiaHome

It is amazing how they can put a positive spin on everything, the wording chosen is that your dumb not to buy by using words like “astute buyers” unbeliveable.

#169 grantmi on 06.13.11 at 5:48 pm

http://bit.ly/kw4AUb

David Rosenberg is calling for a second Recession!!

#170 Otto Doppelganger on 06.13.11 at 5:48 pm

BPOE: We are amazed at the number of $55-65,000 Audi’s and Mercedes in the Burlington, Hamilton and Ancaster areas. Lots of high end boats and Harley toys too.

Canadians can’t stop themselves from blowing their brains out with easy credit.

———-

BPOE, you think Ontario is bad, you should see the streets of Vancouver…it’s a veritable Sodom and Gomorrah of expensive automobiles.

Hard to walk a block and not see a couple new Range Rovers, Porsches, you name it.

Gives you an indication of what’s important out here.

#171 Utopia on 06.13.11 at 5:49 pm

#124 Alex on 06.13.11 at 1:02 pm

“Check out this piece of sh*t from today’s Vancouver Sun”
———————————————————————-

Keep up the efforts Alex. With luck, some of the fools will listen. Sadly, most will not and instead will soon discover that the biggest heartache and the first casualties of a booming real estate market coming back down to earth are in the recreational property category.

How do I know? History of the last depression for starters. Evidence of the bubble burst in Spain and it’s effect on the market as the British bubble deflated. Or how about the current experience of our good friends South of the border?

Time shares at 85% discounts. Cabins on lakes with absolutely no buyers. Resort properties going bankrupt. Phoenix Arizona….full stop. A massive glut of RV’s and even trailer parks in campgrounds being wholly overtaken by transients, those on welfare in need of emergency housing and programs sponsored by States where the newly disenfranchised homeless are put up in what were previously holiday retreats, thus rendering them essentially worthless to the original investors plans of entertaining the silver-haired set and an expectation of solid long-term returns.

Vancouver housing may indeed melt but resort and recreational properties will melt down. The evidence everywhere else is conclusive, even shocking. Why should we be different?

#172 VICTORIA TEA PARTY on 06.13.11 at 6:10 pm

OUR UNIONIZED MIDDLE CLASS: DUSTED

Canada’s middle class and organized labour have been dubious bed-partners for decades now. Unions, at government behest, helped to expand the working classes to bring about civil “discourse” especially after WW2.

Thus were elevated millions of ordinary workers to where they had NO DAMNED BUSINESS BEING IN THE FIRST PLACE, in a vibrant middle class!

Why? Because the REAL middle class, has it entrepreneurial roots in the Industrial Revolution. Its members (mercantilists) employed a vast working underclass, during empirical expansions. Eventually the modern labour movement arose from those dark satanic mills.

As wonderful as it seemed, in the 20th Century, bolstering democracy through new workers’ rights and entitlements, was a plan that could only fail.

Why? Because these cosseted workers, of this new and dynamic “middle class”, were not trained to “be there.” Unlike their better educated nearby”elites”, so many of these former working class folks morphed into spoiled brats. All hat and no saddle. Noisy, bitchin’ unionized entitlement bunnies.

LIVING LIKE THERE’S NO TOMORROW

Fired up by the wonders of consumer DEBT, that creates a patina of wealth but hides only poverty, too many became too big for their financial britches. Now their pants are on fire (they’re broke)! This is called reversion to economic mean. IT EVENTUALLY HAPPENS!

LATEST EXAMPLES

I present to you our two LATEST fine examples of this dynamic of incipient middle class oblivion: unions’ job actions at Air Canada and Canada Post where respective pension plans are verging on failure because there are more retirees than dues payers into these plans!

So who’s to blame? Just look in the mirror. Why it’s old Mr. Attitude! Who’d a thunk? I thought it was Mr. Capitalism! Nope.

UNIONS: THE DEVIL YOU SAY

So, I don’t care much for unions whether they represent industrial strength private sector rock pounders or embittered public sector keyboard punchers and screen starers.

At the heart of Canada’s failed middle class is this nonsense of, union-promoted, JOB SECURITY, a code-phrase for maintaining our middle class at all costs because without one we are doomed to working class slavery. Truth is the rest of us can’t afford the middle class even if we’re in that club. Costs too much!

THERE IS NO JOB SECURITY!

So instead of living in the much-promised-by-labour “Land of Milk and Honey”, millions have ended up on the “Wrong Side of the Tracks!” Job security indeed.

GREAT DEPRESSION 2.0 CONTINUING UNABATED

Paralleling these personal worker economic tragedies is the world-wide depression, now involving Canada’s KEY trading partners: US, UK, EU, Japan, China. If our trade slows down just a few percentage point from each of those, WE ARE DONE LIKE DINNER.

REAR VIEW MIRROR: MIDDLE CLASS DUST

So, with these latest labour disputes and the general economic malaise in mind, let’s review our middle class history through the convenience of our rear view mirror:

The Middle Class Dream has NEVER been TRULY attainable, because of endless consumer debt and other bad behaviors.

Unlike the Wall Street banks, consumers are NEVER TO BIG TO FAIL.

And fail they have until this huge economic correction is done and something BETTER arises from the ashes.

I cannot wish the posties and Air Canada workers good luck, because luck just left the building.

They’re on their own in a cruel world that can hire and fire in a heart beat. That is simply the way it has always been, one way or another.

STOCK MARKET SWWON

Meanwhile stock markets, repesenting the industrial middle class’ final straw now flirts with technical and fundamental oblivion. The FINAL FINAL of the Middle Class Myth is biting the dust.

BTW, I really don’t think the world’s environment can actually sustain larger middle classes, NO MATTER WHERE THEY RESIDE. It takes too much out of the environment leaving great damage in its wake.

This is where a new code word for middle class poverty comes into view. It’ll be around for a while, but not forever:

SUSTAINABILITY.

Get used to it.

#173 Cognizant on 06.13.11 at 6:36 pm

#121 J on 06.13.11 at 12:50 pm wrote:
“Life quality is what makes it expensive. If one wants to live in the best city of Canada, gotta be ready to pay the price. Everything has a price TAG.”

You don’t get out much do you? Dont get me wrong, Vancouver is a nice place but even Ft McMurray has it’s charms. This parochial thinking is what has fueled the Vancouver bubble. It’s a great place but it is definitely not the Best Place On Earth, especially if you can’t afford to put a decent roof over your head.

#174 realpaul on 06.13.11 at 6:36 pm

The observation that the 3am condo stalkers are entirely Asian is an example of the cultural disconnect that exists due to the enforced political correctness of multiculturalism. There is no way these people are being informed about Canadian society at large when in fact the government has forced the immigrants generally into ethnic ghetto’s in order to better herd them all at election time…..sad.

The Trudeau liberals decided that integration was evil….so now we have large numbers of people living on islands of despair and guided only by the ethnic divide of origin and skin colour. In fact the Liberals have proven themselves to have been the worst rascists of all by pidgeon holing people who came to Canada to enjoy freedom. Its no wonder the Liberals have been turfed into the garbage dump of political history….they made themselves irrelavent.

Your logic is matched only by your spelling. — Garth

#175 Mortgage girl on 06.13.11 at 6:58 pm

Garth I am a mortgage broker and I own my own brokerage which means I am a principal broker. 99 percent of my business is private money. My investors are off shore and experienced investors. They say 55percent of condos in TO are being bought privately. My main business is private 2nds and construction financing/commercial loans. I thought the ratio was pretty high. If it’s true it could impact TO like Vancouver. Just curious your thoughts on foreign investors here in TO. Thanks

#176 Nostradamus Le Mad Vlad on 06.13.11 at 7:13 pm


Funds lost Just as Rumsfeld et al managed to lose US$2 or 3 trillion on Monday, Sept. 10, 2001. ObL took it! Leaked studies Leaked by whom? And for what purpose or profit?

US in worse shape than Greece. China and Grece Things are not so rosy, it seems. French banks Thunderstruck? Souring Economy leads to a new high in US expats (they’re leaving). BitCoin Depression Everything has highs / lows. Alabama No pension zone. Economy “Illinois is so hard up for money that it’s studying the possibility of selling ads on state license plates.” Obama + Wall St. Soros bankrolled him last time; maybe he’s got to pay it all back. Ruthless on mtgs. Walk away? No, don’t take one. Dinosaur The m$m finally awakens from its economic slumber, but hardly anyone bothers with them anymore. 9:34 clip Bilderberg predictions, but they’re only predictions. Everyone can already see what is happening for themselves. BTW, I am The Easter Bunny incognito!

PsychoNutz Mass murder and economic slavery. War Games Let the games begin, in the South China Sea. Kannaduhhh FFs? They are not expected here, that’s fer sure.

4:46 clip Italians reject nuke power. Radioactive Mushrroms “Still radioactive in parts of Europe 25 years after Chernobyl.” wrh.com. CC? Or possibly we’ve been expelled from the solar system!

Nintendo hacking “I do not think it is a coincidence that these headline-grabbing hacker attacks are occurring now when Obama is pushing his cyber-security initiative. Nor do I think it is merely coincidence that the hackers are suddenly able to break the strong encryption used by their targets just as the BitCoin mining system becomes widespread.” wrh.com.

#177 Dark Sad Monster Bunny on 06.13.11 at 7:20 pm

59 American – found this

http://seattletimes.nwsource.com/html/realestate/2003675215_buildflip22.html

Interesting that it is instigated by the builder/developer. Looks like their worries include:

1) unanticipated inventory when flippers walk on their
deals and

2) sales competition from the flippers.

Doesnt look like its a compulsory city-wide policy, and not with the thought of social benefit, just a business-wise move to protect profits.

Garths buddy Brad Lamb made a big deal on one episode of kicking out a suspected flipper from his sales event.

#178 poco on 06.13.11 at 7:22 pm

98-Devil’s Advocate
They won’t have it. The sharing of such information as that you request of those in the trenches would only be ridiculed by the Blog Dogs as lies and SPIN. The Blog Dogs hear only what they want to hear. This is not a place for industry insiders. Such insiders, privy to the real story, are despised by the Blog Dogs as the apparent root of all evil even though that unwarranted blame is but a mere consequence of the Blog Dogs own melancholy over having then “missed the boat” and now impatiently waiting for their “ship to come in” as they check their watch repeatedly in angst and dismay over the SS Armageddon’s perceived delay.
______________________________________________
the SS Armageddon is very much underwater as are the hundreds of homeowners trying to escape home ownership
you have the real numbers if you are who you say you are (is it #1 realtor in Kelowna today? or is that another one of your delusional personalities) come on post some numbers for the dawgs.

I see it didn’t take too long for a recently new poster to this blog to call you out (164 Form Man)

This person is either seriously deranged, or desperate ( or both ).

enough said

#179 Devore on 06.13.11 at 7:48 pm

#177 poco

Sometimes it just takes an “outsider” to look at the situation with fresh eyes and immediately declare BS. No frog will jump into a boiling pot of water. Also no need to wonder what the Canadian RE bubble looks like to outsiders, we have plenty of first hand accounts right here.

#180 jess on 06.13.11 at 8:04 pm

…-but they all kept insisting that it was just an liquidity issue rather than insolvency.

These people sleep on the side walk to get in line not to buy a condo but to see the banker to modify their loans …

http://www.cbsnews.com/video/watch/?id=7361572n&tag=related;photovideo

===

The expert, Lynn Szymoniak, an attorney who specializes in white-collar crime, is widely considered on Capitol Hill to be one of the nation’s top experts on foreclosure law. When Deutsche Bank attempted to jack up the interest rate on the mortgage for her Palm Beach Gardens, Fla., home in May 2008, she contested the move, setting off an investigation which unveiled mountains of forged signatures and fraudulent bank paperwork associated with the foreclosure process.
================

Homeowner Equity Lowest Since At Least World War II…$6.6 Trillion Lost in 4 Years
Monday, June 13, 2011
Like a sandcastle at high tide, equity in the American housing market has swiftly eroded in very little time. Ten years ago, the average homeowner had 61% equity. Today, the percentage has plummeted to 38%. If this trend continues, 2011 will set the record since such records began being calculated in 1945. Millions of Americans are struggling to keep up with mortgage payments, and even those making their payments are losing equity because home values continue to decline. About 23% of all mortgage holders are underwater

http://www.allgov.com/Home

#181 john m on 06.13.11 at 8:10 pm

IMO Canada is a very scary state of affairs..our “technical recession” (as the Harper group called it) has not changed in fact it is getting worse.Billions upon billions of tax dollars being proposed for military spending for killing machines to teach far away dictatorships how to think…..when our own future is given little regard. Pretty impressive illusion of power from a little country with huge blossoming problems of our own created by the same.The real estate crash has already started behind the scenes..so many people tapped out for so long waiting for the impossible…it can not last and it won’t …..after all where is the light at the end of the tunnel?

#182 DM in C on 06.13.11 at 8:13 pm

Speaking of Kelowna — we rent a condo in Westside every summer for a week or two. This year I was informed that the ‘rental pool’ / owners are increasing prices from $299/night to $600/night for 2 bedroom. OUTRAGEOUS. That’s not including ‘resort fee’ and ‘parking fee’ plus you have to bring all your own food, on top of an eight hour drive from Calgary.

So I checked online. 18+ units for sale in that one building. One in admitted foreclosure. Looks like they’re trying to make up their costs on the backs of the renters.

I said no thanks. $8060 + taxes for two weeks. They’re not paying for their stupid purchase decision through me.

http://www.covelakeside.com

FYI, we took the boys to Orlando from Calgary in Nov and the entire trip was $3,100 — airfare, car rental and three bed condo all included.

Kelowna’s on crack indeed.

#183 Jim on 06.13.11 at 8:37 pm

Garth is BPOE.
How else to explain the absolute polarity?

#184 Utopia on 06.13.11 at 9:29 pm

#171 VICTORIA TEA PARTY on 06.13.11 at 6:10 pm

“OUR UNIONIZED MIDDLE CLASS: DUSTED”
———————————————————————

You have a very interesting mind “Tea Party”. I enjoy almost all your posts (even the really scary ones like you wrote today).

#185 disciple on 06.13.11 at 9:42 pm

mmm….these are awesome chicken wings…typed with one hand because the other is greasy…need a nice strong tea to wash ’em down…Canucks look sleepy tonight…boring game…didn’t get around to changing brake pads on the van…oh well tomorrow’s another day…at least no more mortgage payments for me…

#186 Gandalf on 06.13.11 at 10:49 pm

I agree with #18 Slopetester. Roubini has been a bear forever. May as well call him “Wrong Way Roubini”! He was also bearish the past 2 years with the market up 100%.

Also, Rosenberg called the last bear market fairly well but missed the subsequent 2 years rally as well. He was bearish all the way up and just a few month ago he turned bullish!

Listen to “Guru’s” at your own peril! If you want to learn how the markets really work based on global capital flows read the writings of Martin Armstrong, I think he’s one of the most original thinkers you’ll come across.

http://www.martinarmstrong.org

#187 disciple on 06.13.11 at 11:23 pm

Welcome dear readers to the netherworld of this blog, late in the night, where fascinating info is presented to those prudent enough to value true wisdom, free and unfettered by prejudice.

Topic of the day is…what causes earthquakes and other seismic activity….

The Earth is hollow, as are all planetary bodies of significant mass. A hollow sphere is the most stable form for a 3-dimensional object coalescing out of the stardust. Bucky Fuller proved this. If it were not so, and the Earth was indeed solid as we have been taught, even a tiny earthquake would tear apart the planet due to tidal effects.

Seismic activity is caused by the Earth getting larger, not by plates subduing one another. From where does the extra mass originate? From energy, of course, deep inside the Earth, probably an internal nuclear fusion sun, inner sun, which also causes the Aurora Borealis, when its light escapes through the opening at the poles.

Gravity then becomes a sub-surface phenomenon only. The French Geodetic Survey at the turn of the last century found that plumb lines suspended down mine shafts were further apart at the bottom than at the top, making the centre of Earth’s gravity not a single point, but a sphere encircling the Earth! How little do we know when we cannot even understand gravity…?

Next…robotoids…dopplegangers…and the coming clone wars…

#188 Waterloo-Resident on 06.13.11 at 11:25 pm

American prices went up and up and then crashed, but Canadian prices keep going up and up and up, without stop. WHY?

We keep talking that prices will soon fall, but they never do. WHY?

Is Canada some strange paradise for investors where land and home prices NEVER decrease, they always ONLY go up? And if so, then WHY?

#189 Dark Sad Monster Bunny on 06.13.11 at 11:34 pm

181 DM – Let me guess – you’re entitled, right?

#190 Snowboid on 06.13.11 at 11:35 pm

#128 Devils Advocate

Recently returned to our hometown (alternate universe to your Kelowna).

After looking at the rental market (unlike the Kelowna you live in) it was clear this is not the time to be buying here.

We literally had property managers falling all over themselves to rent us condos at rates that were too amazing to believe at first.

We saw sub-penthouse units in new highrises renting for $ 1400 all inclusive. Similar units are on the market for $ 750-800K.

Let’s just say in our alternate universe we crunched the numbers and decided on renting, we have no doubt in our universe corrections (such a nice term instead of crash) are on their way.

When the time is right, we may step back into the market, but don’t plan to borrow so don’t want to spend more than $ 500K

#191 macduff on 06.13.11 at 11:50 pm

Garth,
Why is it that financial advisors are so slow to change asset allocation when it is painfully obvious that the stock market is under pressure? I believe that in the near depression of 2008, the dominant strategy would have been to sell once the market had cratered by 20%, but my advisor felt I should hang on. Today, I nearly had to beg my advisor to re-allocate and he will do that tomorrow. There are no signs that the market will nudge higher any time soon. Even if I miss the bottom coming back up, I will likely also miss bottom going down. I really don’t believe buy and hold works anymore. Do you agree?

Get a new one. — Garth

#192 J on 06.14.11 at 12:39 am

@ Cognizant #172:
“You don’t get out much do you? Dont get me wrong, Vancouver is a nice place but even Ft McMurray has it’s charms.”

—————————

Trust me! I have been around more than most of people I know of. I was born in palm beach, grow up in Toronto and finished my post secondary education in Ottawa and doing more of studying in Vancouver. I’m pretty sure Fort Mac has lots to offer like any other cities in north america but Vancouver is definitely something else and again it’s pricey.
Its like comparing apples and oranges!!!

#193 “So the real estate agent told them to put down the 5% ($20,000) and that later, when the condo site is at 95% sold, she will do them a “favour” and resale it to another buyer for $100,000 profit. They signed.” | Vancouver Real Estate Anec on 06.14.11 at 7:47 am

[…] story from Mike, as told in a post by Garth Turner at greaterfool.ca, 12 Jun 2011 – “Mike’s buddy was trying to close some condo deals. He works for a development […]

#194 DM in C on 06.14.11 at 9:02 am

188 – DSMB

Entitled to what, exactly?

#195 Dark Sad Monster Bunny on 06.14.11 at 11:53 am

193 DM – you’re entitled to cheap holdiay rental in K-town of course!

#196 Haiku on 06.14.11 at 12:46 pm

#40 realpaul

It will be in our lifetime that we see the world swirling around us as we head down the toilet

Sure Paul, but what’s the upside?

#197 DM in C on 06.14.11 at 1:29 pm

Ah DSMB — no, I don’t like it that much. I’m entitled to spending my money on holidays where I see value, and there’s no value in Kelowna any longer.

#198 TurnerNation on 06.14.11 at 9:40 pm

Last!!! :) :)