Housing’s little joke

Three days ago, on the 56th floor of a downtown Toronto tower, three dozen people waited expectantly for the CEO to stand and speak. It was a private event. They were about to hear from the guy who runs a major Canadian bank, which shall remain nameless but really likes burgundy.

“It was interesting to say the least,” says our blog mole, “and here is almost an exact quote…

“If I was to show you a chart of outstanding residential mortgages in this country, which were about 600 billion a few years ago, and now stand at over a trillion, you would swear you were looking at the growth of U.S residential mortgages before the crash.”

Just to refresh your memory, here is what has happened to American house prices since peaking in the summer, five years ago.

Of course, nobody expects this to happen in Canada, right? And maybe it won’t. But as I’ve oft said, we don’t need a US-style housing dump to have lasting consequences. Even a mild 15% correction is enough to put hundreds of thousands of people underwater.

BTW, folks in Britain also thought they were immune from a US-style plop. This week came news that 80% of those UK homeowners who bought since 2006 can’t sell. Why? Their houses are worth less than their mortgages.

Anyway, flash to Ottawa. Brother Mark Carney had another whiz into the wind this week, saying risks to the economy are now “elevated” because too many homeowners won’t be able to manage their debt loan once rates start to rise. And that could cause merry hell here, as it did to the south.

Or as he so pithily put it: “The growing vulnerability of this sector increases the risk that a shock to economic conditions would be transmitted to the broader financial system via a deterioration in the credit quality of household loans.” And that is exactly what that bank boss was referring to on Monday – Bay Street is preparing for a real estate crap storm, even while Main Street keeps borrowing.

But, of course, real estate’s local. The bust has already started to spread in some communities, while others are still pummeled by those greater fools. We have two live reports:

“I am a transit operator for BC Transit in Victoria. I can’t wait to see the real estate numbers for June. I drive set routes and so I see all the for sale signs popping up. I drive by hundreds of homes for sale and have seen 2 sell! I think F’s moves to stem the tide of lemmings (newbies) throwing themselves into the real estate market here has had an effect. Unfortunately, my friends thought I was crazy when I said we were in the final phase of a RE bubble. Many drank the Kool-Aid. One poor couple over bought and then decided to have a child. Well their child turned out to be twins! They put their place on the market soon after their blessed arrival and it sits languishing after 2 price drops. They think they are $50,000 under water if they sell at their new asking price. Sad thing is they haven’t factored in the cost of selling the place or moving costs.”

But in Toronto – at least some hot, sweaty parts of it – the virgins of leverage just won’t quit. Yesterday I told you about Drew’s buddy who moved from Vancouver, went house-hunting, and promptly found himself caught behind enemy lines in a brutal bidding war.

Drew gives this update:

“Here’s the follow up report from my friend who escaped Vanloser…

1.  Agent just called… Final tally was 15 offers. Probably won’t know until tomorrow what the house went for, but we expect 100k over asking price. So I said SCREW IT and just rented a house instead.
2. Ok, so got an email from my agent this morning. The accepted offer was $120k over asking. Someone obviously got caught up in the emotion of it all and seriously overpaid.. crazy!

“Maybe he read your blog, or maybe I just have smarter friends than I thought.”

How do you know when the end stages of a market are at hand? I’d say wild swings like this are a tip-off, as the emotional pendulum careens from greed to fear. Some markets are cooling faster than Justin Bieber while others flame. In places like the Oakangan sellers can’t give properties away, while in pockets like Lesleyville desperate young buyers are waiving both home inspections and financing clauses, so they can buy shacks with SS and GC tops.

So, let’s summarize: Bay Street’s convinced homeowners will blow themselves up, and is stocking tunafish. Mark Carney warns of elevated risks and too many horny house buyers two weeks running. Buyers in hot markets grow more reckless while in others they vanish. Meanwhile in countries most like us, real estate’s achieved the popular status of gonorrhea.

Houses will surely become one of the worst-performing asset classes of this decade. The residue of this post-crash era will be mountainous debt and a mangled middle class. And to think it all can be avoided, with five simple actions.

That, and the winners of our weekend contest, tomorrow. Get your hair done.

172 comments ↓

#1 Dorothy on 06.22.11 at 9:02 pm

I’m quite sure that with the notable exceptions of Vancouver, Toronto and parts of Saskatchewan, your already preaching to the converted. Because whether people want to admit it or not, the RE markets are definitely melting in most parts of Canada.
Like you, I don’t expect a crash. More of a slow melt. But I agree that any kind of a significant drop is going to hurt a lot of people, namely the newbies and the speculators.
I don’t really feel sorry for the speckers, but the newbies are going to have a long road to hoe to recover from this experience. And that’s not a good way to start out in life.

#2 ballingsford on 06.22.11 at 9:02 pm

First! Loving all the dimply pimples on MLS. Burn baby burn!

#3 Mark on 06.22.11 at 9:09 pm

Good thing those “Bay Street” bankers can redeem most of their mortgage assets, for 100 cents on the dollar, through the CMHC, and use the proceeds to write new mortgages at dramatically higher interest rates and risk premia, once this mess finally blows up. Essentially converting all of that ‘home equity’ into banker/bank shareholder equity.

Yet moron contributors to this blog spout nonsense such as “short the TSX” when banking fundamentals in Canada have almost never been better.

#4 Average_Joe on 06.22.11 at 9:17 pm

Is there a housing chart with 8, 20 and 200 period moving average ?

#5 Mr. Reality on 06.22.11 at 9:19 pm

Every time i read this blog i think of my friends in San Fransisco that are paying a house worth 50% less than when they bought it………….

Coming to a town near you. They never thought it would happen to them – “everybody wants to live in California” they said. Not anymore

Mr. R.

#6 Uki_7 on 06.22.11 at 9:19 pm

I am the First !

#7 M.M. on 06.22.11 at 9:22 pm

Here sitting with my girlfriend, worried about my future, my neck is killing me, I’m unemployed and yet all these things you speak of on your blog convince me that all will be well… Now for another percocet… Ahh, normal.

#8 ucatzoduro on 06.22.11 at 9:33 pm

Jane and Finch area of Toronto is still waiting for bidding wars.

#9 Kitchener1 on 06.22.11 at 9:35 pm

The truth is that the banks, CMHC, Carney and F have all seen the charts, they know the math, they know patterns, they understand the metrics and they have all been screaming about the risk.

Its the reason that its easier to get a loan approved thru CHMC then it is for one of the big 5.

In terms of RE– we are on very fragile ice right now. Senitiment is at the extreme and anything can cause it too reverse, and I mean anything.

Interloan banking is getting tight in China and EU, look at the various libor charts. A Greece or EU soverign debt crisis would be enough, a small flash crash of 1000 points or more in the DOW would be enough, Crude at 120 for 45-60 days would be enough to tip it.

#10 Serge on 06.22.11 at 9:37 pm

Anecdotes from the past 10 years is all that can justify the market continuing upwards.

#11 tigerbaby on 06.22.11 at 9:37 pm

> The people doing the bailing out have nothing to do with CDS. Greece is a bottomless pit. It makes no sense for Germans to keep bailing it out.

allow me to elaborate a bit …
it’s cheaper to bail Greece out than to bailout the banks that would go bankrupt from CDS payouts + Greek debt write off.

> If you believe Greece will be endlessly bailed out, then you must also be buying Greek bonds …

except I can’t predict the future CDS market. Governments are trying to get a hold of the CDS market, and once it’s under control, the Greek umbilical cord can then be cut.

so a corollary is that people should stop waving around the 600 trillion (or however much) that is the CDS market. the real cost of the CDS market is the cost to prevent the payout condition. I reckon it to be somewhat below QE + QE2?

> You think people who have the wealth today are bothered one bit by inflation?

not the ones who deploy their wealth smartly …

> would you rather be paid with money worth more every day, or worth less?

what matters is how much people are willing to pay me, not how much I rather be paid.

realistically given the population and educational increases, each person’s share of global productivity tend to decrease (unless you constantly improve yourself). so either you take pay cuts in nominal terms, or the money supply increases, but in the end your fair share of purchasing power is the same …

a simplistic view to be sure … I’m all ears for corrections

> Who benefits. Follow the money.

would you please elaborate on that? Thank you.

#12 Paul on 06.22.11 at 9:40 pm

To the transit driver….thanks for the bbq on the CUPW picket line on Tuesday. so so so solidarity.

#13 roy stacey on 06.22.11 at 9:42 pm

Could the melt be starting? Global Warming, or just ovr-heated horny house porn lovers?
Gotta love the house-bound who can’t dump their places.
See ya when the sellers & Banks get desperate, always want to exercise those Vulture Wings.

#14 Alex on 06.22.11 at 9:45 pm

Hi, noteverything is so rosy in Toronto. Had a little chat with a guy who worked for flipper for the pas 2 monts renovating his 3 condos (which he bought on corporation), well short story he can’t sell ALL of those. I can’t really say why but before hte guy never had any problems flipping his projects. Another HVAC chap whom I know very well said to me yesterday that not that much work this spring, there is some but not like past years.

#15 ottawabusdriverman on 06.22.11 at 9:50 pm

I’m a transit operator in Snottawa. I drive set routes also. Six months ago a for sale went up in a neighbourhood and it was gone in a day or two. Now its not uncommon to see a for sale sign stay put for 2-3 weeks.
My friends say real estate wont come down here. We have the federal gov’t employing people! Meanwhile all they have to do is read the newspaper to find out the govt’s laying people off right now.
I know better because I take the time to read this pathetic blog every day.
Can’t wait to hear what the five simple actions are. Thanks Garth

#16 Crazy on 06.22.11 at 9:51 pm

What Carney isn’t telling Canadians is that he will assist borrowers by inflating their debts away.

#17 mid-Ontario on 06.22.11 at 9:51 pm

From my June 18th submission “I better get my thoughts together as I am keen on a free book….”
The rest was brilliant. Sorry if you missed it folks.

I can just taste that free book.
Hair booked for tomorrow with my hairdresser who never listens to me and Garth.

#18 rightiswrong on 06.22.11 at 9:55 pm

glad to see our funandance minister is taking housing serially

#19 Gord In Vancouver on 06.22.11 at 10:00 pm

Thanks for the great post, Garth.
I now give your posts priority over the mainstream media.

#20 Cato on 06.22.11 at 10:00 pm

Bay street has a significant advantage going into this undwinding with Canada being so late to table. This trend in mortgage growth is something anyone at executive level would be watching on a weekly basis. The banks clearly saw the bubble developing and simply stepped aside. There can be only one answer why. The banks have nothing to fear from the bubble deflating and government was simply too inept to protect the taxpayer from irresponsible behaviour.

Everyone seems to think those working for central banks are smartest guys in the room. They aren’t, they are the dunces of the graduating class who couldn’t cut it in the real world and had to scurry back to safety of a government job. Sure, the title sounds prestigious but they only get to draw a civil servants wage while compatriots become fabulously wealthy on Wall Street. Sharks don’t care about titles, its money that counts.

There is no excuse for brother Carney. He had the benefit of hindsight after watching western housing implode around the globe. Time to dust off the dunce cap, someone needs to sit in the corner.

#21 Smoking Man on 06.22.11 at 10:01 pm

Garth as always you are right but your timing is off.

Two more years of real estate milk before the cow gets electricuted on the fence

did I speel electricuted wright?

LOL

#22 T.O. Bubble Boy on 06.22.11 at 10:04 pm

Definitely not a surprise that Victoria would be one of the first dominoes to fall.

Victoria = Arizona or Florida in the U.S. (the place where retirees go to live & golf). And, both AZ and FL have seen some of the quickest and biggest drops in housing prices.

Now, you just need the laggards like Vancouver (Calfornia) and Toronto (New York) to catch up.

#23 Smoking Man on 06.22.11 at 10:07 pm

What a deseptive little chart…..sort of.
Ya it’s true, that happend in the USA. but other than Hong Knog East, Vancouver, the rest of Canadas chart looks nothing like that. A slow even assent.

Us home prices doubled in two years, In Canada it took Ten years of about 4% per year.

Before we crash expect a huge spike up…. I can’t beilive my sold his condo…

Loser………

Your numbers are hideous. Like your kid, apparently.– Garth

#24 Kimi on 06.22.11 at 10:16 pm

#5 Mr Reality .. you think of your friends in San Francisco and I also think of my friends who bought in the US a few years ago when they thought it hit bottom and tried to convince me to buy … but low and behold: It’s still going down.
PS. .. I won’t be getting my hair done .. a little bit messy… is alot more fun.

#25 Guy_in_Regina on 06.22.11 at 10:19 pm

“Brother Mark Carney had another whiz into the wind this week”

LOL!

Credit is cheap, but Mark Carney’s talk is CHEAPER!!

#26 nonplused on 06.22.11 at 10:26 pm

The banksters better stock up on their canned tuna promptly because it seems the only solution the Japanese have for Fukushima is to let it all wash into the Pacific ocean. If they loose all 4 troubled containment ponds in addition to the 3 cores they have almost certainly already lost, the total release could be as high as 20 times Chernobyl.

And the thing is, they don’t even know how to clean it up. They can’t really do anything until the material no longer requires water cooling, which is a year away. Even once they get to that point, there will still be far too much radioactivity in many locations in the plant for workers to spend any considerable amount of time. They don’t have the luxury the Russians did of mobilizing hundreds of thousands of people to work for 30 minutes each collecting the debris and lobbing it back into the building for burial.

Of course this disaster is already out of the MSM in North America and most North Americans think the story is already over. (Isn’t it handy to own a news station if you are GE?). Zerohedge.com is covering it periodically. Fairewinds.com is the best place to get expert commentary, Arnie Gunderson puts up a video about once a week discussing the developments of the week and related information. Enenews.com has sprung up as a repeater site and catches many of the media stories from the English and Japanese speaking world.

Car air filters in Seattle are capturing reactor particles from (I assume) Fukushima already. The EPA has shut down their monitoring stations, or at least removed them from the web. Likely they haven’t shut them down but the theory is those stations were built to monitor what the Russians and North Koreans were testing, not to panic the public over a meltdown. Word is iodine from the reactor has been found in milk as far away as New York, although not at levels that would be cause for alarm.

This is going to be by far the worst industrial accident in the world so far.

#27 Bobby on 06.22.11 at 10:27 pm

I certainly have to agree with the Victoria Transit driver. Driving around on errands, I too noticed a large number of For Sale signs. A lot more than normal. Many were on street corners, pointing to a number of homes for sale on that street. Lots and lots of condos for sale.
No, the economy is not that great. Many of the car manufacturers are offering employee pricing due to dismal sales. Looked at getting my boat serviced today and enquired about boats for sale. Agent said it was a buyers market with prices too low so no money in it.
Stayed downtown on the weekend and got a great discount on a suite. Hotel wasn’t that full.
It is going to get ugly out there!!

#28 Ronaldo on 06.22.11 at 10:38 pm

Was visiting at a friends place in Vancouver where 1936 model shacks are selling for 1.2 mil….her daughter half dozen of her friends came over (professionals, mid 30s to 40, most with pre-schoolers, all recent homeowners, within 4 years). Sitting back and listening to the conversations of these young people it became clear that they all had something in common. Large mortgages and illusionary equity, and NO MONEY.

#29 Tom from Mississauga on 06.22.11 at 10:44 pm

Banks in bidding war for TMX, oh the irony…

#30 Mark on 06.22.11 at 10:47 pm

“Bay street has a significant advantage going into this undwinding with Canada being so late to table. This trend in mortgage growth is something anyone at executive level would be watching on a weekly basis. The banks clearly saw the bubble developing and simply stepped aside.”

Banks stepped aside years ago in the Canadian market; mortgage risk at Canadian banks, more or less, hasn’t grown since 2008. All of the paper being written nowadays is CMHC backed, or just renewals.

#31 nonplused on 06.22.11 at 10:48 pm

I forgot the “so what” part, which I better get to before people start beaking-off as a result of denial.

The “so what” part of Fukushima is that it is a true “black swan” event in the manner that Taleb meant. People didn’t know this could happen before. (Before the discovery of Australia all swans were assumed to be white, and black swans were not part of the mental landscape – except for native Australians.) In many countries it is not uncommon for 30 to 40% of the electricity to come from nuclear power (hello, Ontario!). Depending on the total fallout (figuratively and literally) and the long term consequences, current uranium based nuclear technology could become viewed in a very negative light, and shut down. If that happens (and I think it will over the next 5 to 10 years), there goes your GDP growth, with or without peak oil. Natural gas might temporarily stop the gap a bit, but not long term and replacing a dangerous nuke with a less dangerous gas plant is a broken window exercise; it does not produce economic growth even if the expenditure shows up in GDP.

#32 Boycott on 06.22.11 at 10:49 pm

The average downpayment required currently in US to buy a house is 27%…. Wow. It was just 2% a few years back. No wonder the prices are back to mean. Canada is currently at 5% and if you look harder you can even buy for zero down… Now tell me that its not a bubble ! Boycott Now !

http://www.facebook.com/pages/Canada-home-buyers-boycott-now/203937936304340

#33 BrianT on 06.22.11 at 10:52 pm

#16Cr-Your little plan worked wonders in the US-just ask any resident of Lost Wages.

#34 DML on 06.22.11 at 10:54 pm

Modern American ghost town.

http://video.cnbc.com/gallery/?video=3000029123

#35 Sumadartson jr. on 06.22.11 at 10:56 pm

5 Simple Actions 1 Sell 2 Move Away 3 Marry Rich 4 Come Back 5 Buy in Rosedale

#36 poco on 06.22.11 at 10:59 pm

Of course, nobody expects this to happen in Canada, right? And maybe it won’t. But as I’ve oft said, we don’t need a US-style housing dump to have lasting consequences. Even a mild 15% correction is enough to put hundreds of thousands of people underwater.

15% correction and more is already here in some properties.

for all the posters (last post) doing the math on a 10% drop (50k) and rise in interest rates on those fictitious properties, why not try these on for size.
besides the actual loss from buying to eventually selling, I wonder what the total will be, adding in all the associated costs of buying and selling these places

these 3 condos are situated in Coquitlam at 555 Delestre
#1202—bought in June 2008–374.4k—now at 308.9k
negative 65.5k (v886442)

#203—bought in Aug 2009–481.74k—now at 394.9k
negative 92.84k (v882730)

#1801—bought in June 2009–518.8k—now at 380k–unbelievable eh !!!!–negative 138.8k (v873989)

percentages don’t always give the true picture–the negative cash value usually hits home—and these condos still sit unwanted—check out the rest for sale in this building and other highrises in the area–do a few comparables–you’ll see where this market is headed

#1 Dorothy-what would you call these 3 –a slow melt or a crash???—no they’re not all this drastic but even a 5% drop for many buyers in the last 2 to 3 years will put them underwater and here in the tri cities we’ve had a substantial drop in housing values in the last year.

see–F and C do know something

#37 Victoria on 06.22.11 at 11:01 pm

I just spoke to a guy today who said his investment advisor told him RE will go up in Victoria. He has seen Alberta license plates.

So we are okay!

#38 Dad on 06.22.11 at 11:06 pm

Son, this is your father.

Rent, Save, Pay off Debt, Diversify, Stay Single.

And call your mother.

#39 Utopia on 06.22.11 at 11:25 pm

“Bay Street is preparing for a real estate crap storm, even while Main Street keeps borrowing.” ~~~ Garth Turner
————————————————————————————-

Let us be even more blunt Garth. Bay Street is preparing for a made in Canada recession that is totally discordant with the economies of most of our trading partners.

We are behind the trend now and sure to be amongst the last to see a recovery as our own housing correction begins almost 5 years after the American meltdown began.

That means declining bank revenues just for starters. Stock values that plop on reduced earnings and plenty of disappointment all around.

Bay street should worry. Then take cover.

#40 Lisa on 06.22.11 at 11:31 pm

New Contest:
5 free dog food sandwiches to the first 5 people who claim “First!” in the comments section!

#41 45north on 06.22.11 at 11:34 pm

Bay Street’s convinced homeowners will blow themselves up, and is stocking tunafish.

I said that the banks were filling in their moats

https://www.cibc.com/ca/personal.html

burgundy?

#42 MO on 06.22.11 at 11:36 pm

Many say the US housing bottom isn’t in yet. In fact, today I read something that said NYC could see another 40% decline?!? Not sure about the context of that statement.

Anyhooo…it looks like QE3 is an inevitability now…

Jim Grant vs Brad Delong on merits of QE3: http://www.planbeconomics.com/2011/06/22/jim-grant-vs-brad-delong-on-qe3/

#43 Toon Town Boomer on 06.22.11 at 11:44 pm

Saskatchewan is flooding, here,there & everywhere.
No crops in the field, some can’t work because of the rain. Just about everybody’s on strike. Ain’t a pretty picture.

#44 Gtaguy on 06.22.11 at 11:50 pm

I doubt there will be much raise in rates anytime soon while things look gloomier in the world by the day but I also don’t think rates rising will be the main catalyst for a RE drop. Only fear from the constant bad economic news and more layoffs will stop this freight train of house horny couples from getting off. Got my shelves stacked with beans thanks to easy money and mr chilli con carney.

#45 Utopia on 06.22.11 at 11:59 pm

#20 Cato said………

“The banks clearly saw the bubble developing and simply stepped aside. There can be only one answer why. The banks have nothing to fear from the bubble deflating…”
————————————————————

Sadly Cato, they do have a lot to fear.

They are over-leveraged and overextended as a housing correction commences. The damn fools did not know when enough was enough and they allowed the marketing teams to drive them into uncharted and risky lending practices in the search for continued revenues.

Profits before sanity. Ignorance before prudence. Pride before the fall.

One will be over the barrel when things get rocky. My opinion only. Despite government supports the banks still have considerable vulnerabilities and risks to contend with. We witness daily the heavy advertising they are doing to attract business for Lines of Credit as just one example.

They clearly do not get it. I can only assume it is ignorance and arrogance at the very top and feelings of being bulletproof in a world that adores Canadian Banks.

So they drank the Kool-aid too.

They are in for a surprise though and some top brass will surely be terminated once the chickens finally come home to roost and profits run down the toilet. So many golden opportunities to shield their product lines and minimize risk to their revenues were wasted that it will be a really sad spectacle to see their profits drop later as an outcome of poor planning and failures within their organizations.

Some good bank shorts coming though. A special one will take one hell of a beating on the markets. I will just leave it to you to figure out who that is.

#46 Nostradamus Le Mad Vlad on 06.23.11 at 12:04 am


The chart is self-explanatory, and all the tea in China won’t change anything. The west, through its own greed is in a major dump, but most haven’t realized it. They will soon enough.

“Bay Street is preparing for a real estate crap storm and that could cause merry hell . . .” — Not only here, over most of the world.
*
Links in. QE, which is to start again shortly in the UK, may have repercussions; Allied Irish Bank has ‘defaulted’; BoE needs more QE; Eurocrats training their kids to keep the game going; Af’stan Desperation and the IMF elites; Anything spewed foorth from govt. shills must be taken with a pound of salt; Greece Fool some of the people some of the time . . .; No SS Most of the world doesn’t have SS.

Armageddon How convenient — “Ed Note: This followup to reports of a recent Russian plane crash seems oddly coincidental. Three top officials of Russia’s main nuclear reactor design company, Gidropress, were killed in the aircrash along with two other senior nuclear engineers …” Yaya Canada; QE3 Is it a lifeboat or torpedo?

Economics and Illusions The real war versus a physical war; Global War is a racket, primarily designed to keep the US economy on life support, but there are other problems — Fort Calhoun Two feet of flood water already in. Agenda 21 moving at top speed in Mexico, where drug wars happen more frequently than 7-11 stores; Fort Calhoun As predictable as Fukushima; Straight from the Horse’s Mouth US Social Security — empty in 13 years; Libya Precision guided coercion is a myth.

#47 GOTJ on 06.23.11 at 12:20 am

Wow, that guy has got to be your number one fan Garth … he actually carved an image of your face on his head!

#48 Tim on 06.23.11 at 12:21 am

People keep making parallels to the States in terms of overbuilding. I can’t believe how many ugly hi rises have sprung up in Vancouver, especially downtown where they’ve ruined the skyline. Does anyone have stats as to how many of these are owned by speculators? They say Phoenix and other areas overbuilt, yet they didn’t say that until the market tanked. So how much have we overbuilt in Vancouver?

#49 Koolaid Drinker on 06.23.11 at 12:25 am

http://www.deathandtaxesmag.com/108229/federal-reserves-ben-bernanke-on-economy-i-got-nothin/

We are screwed!!!!

#50 Realtor in Van on 06.23.11 at 12:43 am

Garth and commentators do make some valid points. Here is the flip side of the coin which is obviously missing.

Overall, let’s not forget the reason for our economic volatility is the “system” itself. A monetary system built on inflation is bound to have cycles. The wealthy usually spend down cycles accumulating assets for pennies on the dollar. Hmmmm…

Second, while you’re here raving about doom and gloom speculators are devising ways to make money. Sometimes they win big but believe me they sometimes lose big as well. What do you care? If it is sky high Vancouver prices due to vast foreign investment that make you mad, contact your MP. Politicians are the ones allowing a virtually unregulated flow of foreign (mainly Chinese) investment into the country. Don’t forget about artificially low interest rates. Don’t be mad. If you truly believe in your point of view, just wait and take advantage of the opportunity when it arises.

Which leads to my next point aimed at all the owner-occupiers rather, than investors. I have noticed many of the naysayers on forums and blogs are usually renters who have, for years, either stood on the side lines missing opportunities and/or have been priced out of a housing market. When the market is HOT, I hear “it’s a bubble I tell you” and when it cools, the response is “we are not even close to the bottom”. Get off the fence. Too many people are willing to listen to their mailman (no offence) for real estate advice rather than relying on the advice of a trusted real estate advisor (yeah I know, shameless plug, but it’s true).
All that being said, we are due for a correction in Vancouver. If you think you’re a genius for predicting the obvious, you’re not. Once foreign investment subsides, so will prices. I am currently advising home owners who are looking to “time the market” to sell NOW. However, make note, if you have been sitting on the sidelines for the past 2+ years (from bottom of the recent real estate market until present day), prices have increased 20%+. So, a speculated 20% “crash” puts you back at square one. While the whole time you have missed out on the benefits that come with owning real estate asset(s). But then again, IF a sudden and steep crash occurs, I will probably hear, “prices will keep dropping”. Anyone else see a pattern…

#51 Kevin on 06.23.11 at 12:46 am

For anybody who is interested, I compared the US and Canadian markets over the long term with some economic measurements. Canada really is not that different.

Comparing the United States and Canadian housing markets with some economic measurements
http://saskatoonhousingbubble.blogspot.com/2011/01/comparing-united-states-and-canadian.html

Real House Prices
Median Multiple
Price to Rent
Affordability
Ownership ratio
Debt-to-income
Outstanding Mortgage Credit Growth
Inflation
Population Growth
Residential Investment as % of GDP

#52 Stampede Sam on 06.23.11 at 12:48 am

Like many others have stated Garth, I check in on this blog not just for information on the real estate situation, but also to enjoy your writing style. Anyone who casually throws the word ‘pithily’ into a sentence knows his way around a keyboard. I think it’s about time you published a novel.
By the way, could you please start deleting all those annoying ‘first’ idiots?

#53 old gringo on 06.23.11 at 1:19 am

So, I have got to wonder just how much the gov’t can cover on CMHC mortgages when this unravels?
Then, just how much will they need to raise (already high) taxes to cover their shortfall.
This will be interesting but painful.
Selling and leaving Canada is a tempting idea…..we did and love it.

#54 The InvestorsFriend (Shawn Allen) on 06.23.11 at 1:22 am

Latest Canadian Mortgage Delinquency figures are in. These are for April.

http://www.cba.ca/contents/files/statistics/stat_mortgage_db050_en.pdf

No chance. Only 0.43% of mortgages or just 1 in 232 is delinquent by 90 days or more at the moment.

Given all the people who have chewed off more mortgage than they can swallow this is a puzzle.

I think the reason is that most people have a line of credit. So anyone who has trouble paying the mortgage can just borrow more money on their line of credit.

The bank sees the payments are current and are none the wiser to the problems unfolding.

If house prices tank then a lot of people may decide to go bankrupt rather than pay $400k mortgage on a house worth $300k.

Another reasonn for the low delinquencies is that so many people have taken the lowest possible interest rate. But that is a floating rate. If it floats up 1% they will quickly be in touble, many of them.

Oh well, keep watching. Bound to be entertaining.

#55 Thetruth on 06.23.11 at 2:12 am

Scared of 2012?? If in Canada, you should be scared of 2018!!!!

In exactly 6.5 years, the number of people turning 65 years of age WILL EQUAL the number of people turning 20. Every year afterwards, the 65 group will eclipse the 20 age group by wider and wider margins. What does this mean? Many things;

1) Pensions. Ya right, do the Math! No rioting except maybe the Vancouver seniors.

2) Changing retirement age to 67 just postpones everything. Too late to change whats coming.

3) No growth in labour force = No increase in number of tax payers = static income tax revenues = user fees for public services.

4) No growth in labour force = higher per capita taxes = huge mess.

5) Real Estate outside Vancouver and Toronto is toast during the next protracted correction if it is not an income generating property (farm, commercial plaza, apt. building).

6) Gov policy will increase number of young immigrants (doing it now via the Canadian Experience Class)…but they will go to the main cities. Birds of a feather flock together whether you like it or not.. This will create other issues i wont mention.

Demographics don’t lie. Interest rates at ‘zero’, HAM investments, and CMHC 5/35 can’t stop what’s coming . However, Immigration (Legal/illegal) is the wildcard IMO.

#56 Thetruth on 06.23.11 at 2:14 am

Your next book for the above post?

#57 Vancouver_Bear on 06.23.11 at 2:46 am

Hey, BPOE and Mikey the real….youknow…. this video is for ya – http://www.youtube.com/watch?v=hlG6aVySaPM

Add to that child poverty
http://www.youtube.com/watch?v=HALzrqE7l4k

Add Riots because of Stanley Cup loss
http://www.youtube.com/watch?v=N9hPJwY4stw

Add BC gangsters
http://www.cbc.ca/documentaries/doczone/video.html?ID=1856375371

This city is not changing for better, unfortunately it is changing for worse than you can imagine in your worst dreams.

#58 Aaron - Melbourne on 06.23.11 at 3:06 am

Meanwhile in countries most like us, real estate’s achieved the popular status of gonorrhea.
***********************************
Australia resembles that remark! Many would still, as they say “hit it”, presumably because they are COMPLETELY in the dark and have the house lust hormones coursing through their veins.

But it sure doesn’t stop the spin. Instead of the Canadian TFSA model the Aussie Govt paid a token nod to “affordability” and came up with the First Home Saver Account. Its been a total flop downunder (hehe).

Pretty clear to see why.

http://theage.domain.com.au/first-home-buyers/first-home-deposit-within-reach-20110622-1ge5z.html

http://www.ato.gov.au/Individuals/pathway.aspx?pc=001/002/066

http://www.choice.com.au/reviews-and-tests/money/banking/saving-money/first-home-saver-accounts.aspx

#59 Whistle punk on 06.23.11 at 4:17 am

Once things start falling it will keep falling for how long who knows. All it is going to take is a little shove over the edge once one starts pulling on the rope the next one tied to it will follow.

Get the summer over with and people will start to see oh we are in trouble. The reality will start to set in when they can’t afford to have any fun this summer. The cost of food, the cost of fuel, the rising costs of everything else.

Here is where the real kick to the nuts happens when they get the idea of lets put our house on the market to try get out of debt. The realtor gives them the awesome news that nothing is selling and oh by the way the house is lesser in value than what you paid for it.

Already happening in the community I live in, people are wanting to put their place up forsale and finding out the good news. Prices are dropping and nothing is moving.

For British Columbia tourism is a big industry if tourism is slow and not busy you will see many people claim bankruptsy. Many people have turned to tourism based businesses to make a living as there isn’t anything else left.

Oh ya this is going to end well.

#60 Tony on 06.23.11 at 4:30 am

Ottawa could fall as much in price as Vancouver does maybe more.

#61 TS on 06.23.11 at 5:13 am

H and F love new housing for the taxes, employment and these two reasons. This is why nothing is being done on debt loads. Ah the wealth affect.
Makes H and F look good as their banker friends get wealthier…

But GDP also measures output that’s paid for with borrowed capital — a consumer who buys a boat on loan, or a company issuing bonds to build a power plant — which has the misleading effect of shifting future GDP to the present. When we factor in the balloon of total credit market debt since 2008 — all that borrowed money that fuelled output — we end up having to discount GDP by around 10%.

http://business.financialpost.com/2011/06/21/uh-oh-canada/

#62 MB on 06.23.11 at 5:26 am

Dear Garth,

If banks can loan real money based on the overinflated perception of their reserves then it only makes sense that people will spend real money based on the overinflated perception of their assets.

For every action there is an equal and opposite reaction.

Sincerely,
MB

#63 golden boy on 06.23.11 at 5:33 am

Smoking Something wrote: Prices doubled in 10 years @ 4% a year.

That was funny.

#64 Bill Gable on 06.23.11 at 5:41 am

Squigg and BPOE are probably doubling down – go for it guys – nowhere to go but up.

Forget working and saving. Buy a couple of glue and chipboard houses built by crack heads. Hell a million plus = cheap!!!!

You will be RICH. ALL that room to fill with furniture bought with the HELOC, and heck, why not a new 76 inch plasma to watch cartoons and Premier Snooki try and speak in sentences!
After that – a nice round the world trip on the Queen E. = no sweat, put it on your charge card.

Oh, sorry – Murray Rothbard, on line one – its for BPOE.

He doesn’t like Squiggy because his spelling is so poor.

See if you can understand anything he says. He will speak REALLY slowly and in small words so you won’t get all confused.

Who says a Grade three education doesn’t make you an Economic savant!

#65 House on 06.23.11 at 5:47 am

It seems the crack cocaine for this bubble is coming mainly from CMHC not the Bank of Canada. Prices would be more inclined to correct if they had proper lending rules than even a two per cent increase in rates. In the US wasn’t it the unsustainability of the lending rather than rates that brought on the decline.

#66 David B on 06.23.11 at 6:25 am

Meanwhile South of Border from our greatest business partner this:

BY JON HILSENRATH AND VALERIE BAUERLEIN
Federal Reserve officials see the U.S. economy settling into a disappointingly weak recovery this year and next, and say they have done all they are prepared to do to spur growth for now.

The bleak picture contrasts with the booming global economy, which is complicating the decision making of the Fed, but lifting the fortunes of U.S. companies abroad.

The central bank’s policy makers substantially downgraded their projections for U.S. economic growth and unemployment, which they released Wednesday after a two-day meeting. “We don’t have a precise read on why this slower pace of growth is persisting,” Federal Reserve chairman …

(WSJ)

No near for more explanation ….. start stashing peanuts! but wait it is different here in Canada … the King is in charge and stands atop the Canadian Shield eh!

#67 fancy_pants on 06.23.11 at 6:35 am

pic transcription:

“Oh, woe is me! I should have listened to Garth!
I will bear his image on my head and wear sackcloth and mourn.
Oh my contrite heart! My pentinence is unbearable!
Bankruptcy and tribulation will follow me all the days of my life, and I will not dwell in a house forever.”

#68 T.O. Bubble Boy on 06.23.11 at 7:30 am

Canadian Mortgage Trends gives an overview of the CMHC Mortgage Consumer Survey…
http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2011/06/2011-cmhc-mortgage-consumer-survey-1.html

One of the key stats is at the very end:
81%: of mortgagors have some form of savings (RRSPs, TFSAs, non-registered investments, etc.).

So, 19% of people with a mortgage have ZERO savings or investments? Talk about all eggs in 1 basket.

I have no idea how this rates vs. previous years, but I wonder if the crash of 2008/2009 created such a fear of markets that a signifcant number of people simply sold out completely and took whatever they had left and put it into things like home renos (because of the home reno tax credit)?

#69 mississaugaboy on 06.23.11 at 7:39 am

Scary enough, the unit I am renting now in my building sold for $360k+ this past 2 months and that price has been the going “price” for my unit.

Last night I check and the same unit in my building on the top floor JUST got listed for $40k less than the going “price”. I KNOW there is no major correction where I live now so this person is an idiot, their agent is an idiot or something is super wrong with this unit.

Tempting as it is to purchase this unit, I think I will sit this one out.

#70 TurnerNation on 06.23.11 at 7:41 am

If you wish to see something really scary…look into the eye of the head of NATO. Possesed.

http://tinyurl.com/6gjf45x

“We sincerely regret the loss of life when we dropped WMD onto people”.

Remember, the current WW3 is wholly against civlllians. Sure we’ll be given propaganda names like Rebels, Insurgents, Combatants, Human Shields.
But in the end the work will be done: WMD will be used. And we’ll stand by and let it happen. History has proved it. Look into his eyes, his will be done.

#71 MikeT on 06.23.11 at 8:07 am

spoke with an acquaintance who works at a big-4 bank in TO. He told me the majority of the mortgages they give out are not for new sales, but for refinancing old mortgages. Banks basically steal clients from each other… He knows it first hand because he actually works in this business.

#72 Hoser on 06.23.11 at 8:15 am

Most house horny buyers don’t even know who Mark Carney is, let alone pay any attention to his warnings.

#73 Ben Rabidoux on 06.23.11 at 8:27 am

Garth,

It looks like signs of debt fatigue are starting to show up. Mortgage arrears are up in a major way in BC and Alberta, while credit card delinquencies are back on the rise and well above their average from the past decade.

http://www.theeconomicanalyst.com/content/debt-perception-dichotomyor-why-road-financial-hell-paved-good-intentions

House prices float on a sea of rising debt. Remove that and there is a lot of dead air between current prices and underlying fundamentals. It could get ugly.

#74 Utopia on 06.23.11 at 8:34 am

“If I was to show you a chart……” ~~ Quote by unknown and annonymous Burgundy bank CEO who shall remain nameless.
—————————————————————————-

And then I though…holy crap. They are just figuring out the charts now. I guess nobody does projections anymore. They just figure this stuff out as they go. As in, after the fact.

Hey baby, it’s not news until we have actual data points to work with. Until then…well…it is just speculation and blather. We like our crisis management model. Keeps us on our toes. And the staff are much more motivated when they are worried too!

What is wrong with the picture?

#75 BrianT on 06.23.11 at 8:35 am

#26Non-You aren’t putting the event into perspective. Look at the coal pollution in China, or the toxic GOM.

#76 MikeT on 06.23.11 at 8:36 am

@50 Realtor in Van: no wonder people, in general, don’t consider you guys professionals. You don’t even know how percentages work.
If you have 100$ invested and it went up by 20%, it is worth 120$. Then, if it goes down 20% it is worth 120$ * 0.8 = 96$.
Capiche?

#77 Ex-Cowtown on 06.23.11 at 8:43 am

Perhaps all of this housing nonsense in the western world had one central cause:

Housing was never included in inflation calculations.

And maybe it should be. That would have stopped this insanity before it even started.

#78 TS on 06.23.11 at 8:52 am

To: #69 T.O. Bubble Boy on 06.23.11 at 7:30 am
So, 19% of people with a mortgage have ZERO savings or investments? Talk about all eggs in 1 basket.

From February 25th to March 25th 2011, CMHC completed an on-line survey of 3,512 recent mortgage consumers — all prime decision-makers — and the result is a unique perspective on attitudes and behaviours.

CMHC has conducted this survey since 1999. As your trusted partner in mortgage loan insurance, we trust that you can use these findings to identify opportunities and build stronger relationships with your clients.

So roughly 20% have qualified with no backup. Every dime they had went into the downpayment and closing costs. That is the game. Take every available penny you can out of the purchaser. I wonder if CMHC realizes they just substantiated how much risk they are really taking on. Apparently not….

#79 Utopia on 06.23.11 at 9:04 am

#52 Stampede Sam said…..

“…could you please start deleting all those annoying ‘first’ idiots?”
—————————————————————————————–

But Sam, If all the “first” idiots got deleted this site would cease to be the juvenile playground it is and we might actually start to take ourselves seriously.

And that would be nuts!….. More squirrel?

#80 maxx on 06.23.11 at 9:05 am

Garth-

I’ve laughed and learned much from this blog.
When I must rush out in the a.m., I always take the time to have a peek at the pic of the day…always provokes a chuckle, guffaw and sometimes a groan…and I always take away something from your commentary.
Many of the bloggers are erudite and have obviously a background in finance and to them I offer my gratitude.
Great job Garth!

#81 Utopia on 06.23.11 at 9:12 am

#50 Realtor in Van asked….

“Anyone else see a pattern…?”
—————————————————————————

Yes, I see a pattern. You are an idiot. Just like most Realtors.

#82 disciple on 06.23.11 at 9:27 am

#59 Whistle punk…nice post, made me laugh out loud my colleagues are probably wondering what’s up with disciple?…

#71 TurnerNation…totally agree…War is the end objective of a debt-fiat money system. Interesting is your assertion that we are already in WW3…I guess China and Russia just haven’t accepted it yet…I guess more provocations are needed by NATO in Africa and Asia and Eastern Europe for that matter. Don’t piss off the US, or they’ll bring “democracy” to your country!

#72 Mike T…great observation, yes, in fact, refinancing is simply consolidating MORE debt into one place=greater control of the masses. All major banks are different heads of the same Gorgon body, and they have their “mortgage brokers” that serve up tasty dishes for them daily. Did I mention I find central banks unnecessary?

UTOPIA – Please, if you would be so kind, explain to me how banks generate revenue and why or how this would be affected by an economic slowdown. Enlighten us…

#83 Mr. Reality on 06.23.11 at 9:41 am

#74 Ben Rabidoux on 06.23.11 at 8:27 am

Thanks for the post. Good rea. This will teach Mark why “morons” are shorting the TSX and everything under the sun right now………..

I’m starting to think a slow deflation will not happen. Things are setting up for a crash IMO.

Mr. R.

#84 Kimi on 06.23.11 at 9:45 am

#51 Kevin … thanks for that site. I passed it on to a few people I know.
#80 Utopia … More squirrel? LOL! Good call.

#85 Utopia on 06.23.11 at 10:00 am

#32 Boycott on 06.22.11 at 10:49 pm

“The average down payment required currently in US to buy a house is 27%…. Wow. It was just 2% a few years back.”
————————————————————————————-
Not sure where you got the data. I hardly doubt it though. Yesterday I warned explicitly that a housing correction will result in the loss of credit for many who currently believe they are eligible to borrow.

Good ratings scores will not be worth a damn then. The mere ability to carry a debt on payments will not be good enough anymore either. Why? Because income is not assured when recession hits. Jobs are not guarantees. Banks will again want solid proof that you can repay debt.

Most will see it in good time.

Those of you readers who are older will easily recall that during the days of tight credit we needed to provide solid evidence of assets before banks would loan us money. Real guarantees that proved we were worthy of loans. They called us “Credit worthy” in those dark days when we came through with the goods to back our word.

We were loved by bankers.

That meant showing them we had real savings. Preferably in the bank which was doing the lending. At the height of the interest rate crisis in the early 80’s you could not borrow to consume even if you could back your fresh debt dollar for dollar.

You needed more. A lot more. Real assets. Solid income too.

Some of the fools out there are going to get a great big wake-up call soon. The day is coming when they will apply for a loan, a line of credit, a mortgage……and they will be turned down.

Worse news yet, the branch manager of the bank will be demanding something that most people in this country have never even heard of before.

Collateral.

Oh, what is that? We don’t need no collateral. We don’t need no education. We get money for nuthin honey. And hey. The chicks are free too. Right?

The TV said so.

#86 debtified on 06.23.11 at 10:02 am

#38 Dad on 06.22.11 at 11:06 pm

Son, this is your father.

Rent, Save, Pay off Debt, Diversify, Stay Single.

And call your mother.

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

Done! How’s heaven?

#87 Industrial Guy on 06.23.11 at 10:05 am

We’re setting up the dominoes for a second major recession

Today’s Toronto star has an article by Tong Wong about desperate Canadians. Poor darlings are caught in the jaws of the Dragon of Debt and housing costs are replacing savings in the household budget. OK … OK, I know …. we have beat this lame horse to death in this blog. I guess, the main stream press is just catching up.

The national debt to personal income ratio rose to 147% in the final quarter of 2010. In the article, there’s a reference to “future proof” mortgages.
Yeah, we all know that the only future proof mortgage is the one you don’t have. Sell now .. if you can.

http://www.moneyville.ca/article/1013410–rising-housing-costs-squeezing-savings

This is a perfect example of how some Government experts can’t walk and chew gum at the same time. In Ontario, they usually rise to the senior ranks of places like Hydro One and Ontario Power Generation. These two organizations and the Ontario Energy Board are dedicated to making electricity unaffordable to an entire province.

The Government of Ontario’s FIT (feed in tariff) program pays outrageous rates to small generators of “Green” electricity. Of course, they need to pay these rates because of the cartel like behaviour of the solar cell providers/ installers has driven up the cost of each installation to dizzying heights. Every FIT installation requires the approval of Hydro One. Now you would think this organization would expect a reasonable number of Ontarians with spare land might want to take advantage of this program. Think again…. They’re swamped!! …. Hydro One has gone to the equally incompetent Ontario Energy Board and asked for extensions on these approvals. The REAL problem is … Hydro One doesn’t have a budget to hook up all these FIT installations. It’s an election year. A budget will magically appear.

Budgets are not something either Hydro One or OPG do well …The Beck extension in Niagara $600 million over budget. The Darlington Nuclear facility’s original budget was $4 billion dollars. The final cost …..$16 Billion dollars. The last major re-tubing exercise in Pickering quickly escalated from hundreds of millions to over a billion. You would think such huge cost over runs would have resulted in hundreds of managers losing their jobs ….. and you would be wrong.

Just to demonstrate how slow these two organizations are … we meet 73 year old Wray Taylor, of Strathroy …. A guy who assumes that once he received his approval … he could go to his financing company, buy the solar equipment, install the solar equipment and get in connected to the Hydro One lines in a reasonable time. He had done it before ….. Building the solar cells, installing the unit … well that’s the private sector so it happened quickly …. Installing that few hundred yards of wire to the grid …. ask Hydro One. He’s still waiting.
http://www.thestar.com/business/companies/article/1013569–hydro-one-swamped-with-solar-proposals

The rising Canadian dollar and rising provincial electricity costs have quickly eroding any competitive edge manufacturing companies in Southern Ontario have had. No jobs = a market flooded with for sale signs ….. It’s a simple enough formula.

#88 AG Sage on 06.23.11 at 10:15 am

#50 Realtor in Van
The big difference is the mailman might say something unexpected and thought provoking. A realtor only ever says one thing, endlessly, which, despite your dancing around it, pretending otherwise, you said too by the close of your post. Yawn.

#89 all capital letters on 06.23.11 at 10:15 am

Garth, can you please tell me why the graph (of inflation adjusted U.S. home prices since 1890) excludes new home construction?

Does new home construction not add to the total inventory in a market, and thus put deflationary pressure into the market pricing of existing inventory? If so, why would any home built after 1890 be ever included in the graph? I don’t see how there is not decremental skewing of the data in the graph, even factoring in the emotional response by some buyers to “heritage architecture”, by removing components of the market. Is it not almost equivalent to the data manipulation we see coming out of CREA?

A little help here please…. is there some reason I’m overlooking???

cheers.

#90 Bobby on 06.23.11 at 10:17 am

#50 Realtor in Van,
Unfortunately my friend, the real pattern is that it is in your interest to have people buy or sell in any market. If they don’t, you don’t get paid. That is the reality of commissioned sales. Moreover, you are the supposed expert after the fact. Yes, prices have risen so some people have been left behind. What if they had fallen?
Your advice is useless. Enough said.

#91 clem on 06.23.11 at 10:30 am

70 mississaugaboy on 06.23.11 at 7:39 am
Scary enough, the unit I am renting now in my building sold for $360k+ this past 2 months and that price has been the going “price” for my unit.

Last night I check and the same unit in my building on the top floor JUST got listed for $40k less than the going “price”. I KNOW there is no major correction where I live now so this person is an idiot, their agent is an idiot or something is super wrong with this unit.

Tempting as it is to purchase this unit, I think I will sit this one out.
————

incredible how there many people still misunderstand “listing price” and “sale price”.

comparisons using both are not very helpful.

you better sit this one out. it’s called a bidding war.

#92 disciple on 06.23.11 at 10:30 am

Gentle readers, please be aware that the current monetary system is seriously flawed, destined to fail, and is unnecessary. It is your ignorance that allows it to continue. But it’s only partly your fault…you have some very cunning enemies who do not share your desire for a fair and equitable world and only a fool or traitor would deny the truth of the deception.

You have tried to honour the counsel and tradition of your ancestors. You work hard, work smart, gain an education despite all the hurdles, start a family, accumulate paper currency, invest those paper currency units in tangible assets like a home, vehicle, business etc…improve your lifestyle, elevate your standard of living, donate your time and energy to worthy causes, and help to teach the younger of your flock what you have learned through your experience…

But there is a problem. Eventually, you will know it, even if you have denied it all your life, even if you have avoided acknowledging or discussing it with anyone. Even if you have been blinded by bread and circuses and the multitude of worldly distractions.

The problem is…DEBT…Debt is foisted upon you through various means, mostly psychological. It is done in third-world villages much the same as it is done in the high-stakes derivatives of the scandalous insurance industry in New York.

Debt=Slavery. Debt is unnecessary. It’s promotion is based on the myth of scarcity. Debt is the reason for the fall of the Roman Senate, the oppression of the Dark Ages, the instigation of agricultural and industrial Slavery of the 17th through 20th centuries, the prominence of the divine right of Kings. Debt is the reason for the start of all modern wars. It is a tool wielded without mercy by your real rulers, your real enemies.

Debt has many names to hide behind, all pointless and unnecessary. If we do not realize what the problem is, how can we fix it?

There is no reason AT ALL for you or your government to borrow money from a private central bank. Think on this and you will see that all evil emanates from this one act. This is the basis for all of the problems in the world. It is so simple yet you will not hear this ever spoken during your free education. Perhaps a future leader of this country will read this on this blog and perform the Kennedy maneuver without actually getting assassinated. I have a dream.

#93 Boycott on 06.23.11 at 10:38 am

86 Utopia on 06.23.11 at 10:00 am#32 Boycott on 06.22.11 at 10:49 pm

“The average down payment required currently in US to buy a house is 27%…. Wow. It was just 2% a few years back.”
————————————————————————————-
Not sure where you got the data. I hardly doubt it though.

—————————————————-

Here is the proof. It was on CBS news. See around the 2 min mark.

http://www.youtube.com/watch?v=ABy-Or0RX7o

#94 VICTORIA TEA PARTY on 06.23.11 at 10:44 am

#11 tigerbaby

SPR, CDS “INSURANCE” AND BOTTOMLESS GREECE PIT: ANOTHER BUSY DAY IN PARADISE!

What a day on the world’s stock markets. It’s all down!

“tigerbaby”; you’re comments on the CDS monster are most interesting. I hadn’t been thinking of the Credit Default Swap”collapsing stock market escape insurance policy machine.”

Indeed, if the elites ever did pull that trigger, then it would be a mess out there; I guess, because this has never happened before.

Excuse me!

It already IS a mess out there, CDS or no!

Look at the markets, with lots of bailing everywhere, even in vaunted Canada, with its endlessly wealthy real estate “owners” and HELOCers all having a wonderful time! To hell with reality, they’re saying; that concept just left town!

BUT I DIGRESS, WE DO HAVE A CDS PROXY MACHINE

It’s called the Strategic Petroleum Reserves, and its trigger was pulled today. Why? To keep the devastated Mr. and Mrs. Middle Class America and the Kids off the barricades is why!

The American elites want the folks to take a break, from their personal financial devastations, and motor down the endless American avenues of broken dreams, suburbs and malls, and go to the Tumbleweeds Park in Tucson where they can then catch the 3:10 to Yuma!

If that cheaper gasoline boondoggle doesn’t spur economic growth, and how can it, QE 3 can always be cranked up. That’s also another theoretical CDS insurance policy; theoretical because the first two QEs haven’t worked worth a damn, except for the insolvent big banks!

It seems only Washington has yet to realize that the “traditional” American Way of Life has left Dodge and that a new depression is now FULL ON.

OVER IN GREECE AND IN DOWNTOWN EUROPE

The traditional ways of life for the Greeks and the perfumed suits of the EU offices in downtown Belgium have ALSO JUST left town.

The BBC is showing more Athens street demos ahead of new austerity measures to be crammed down those peoples’ throats next week.

The Eurocrats meet, meanwhile, behind closed doors, in Brussels, worried sick about what could happen if the street protesters push the government back into a corner and default finally occurs.

At that point the CDS machine could kick into action, tigerbaby; and, if so, then all of that fancy Victoria too-big-to-fail real estate will look like shredded pulled pork on Diners, Drive-ins and Dives.

That joint BTW is just up the street from the Heartbreak Hotel where Big Ben and the lads will be meeting, in Jackson Hole Wyoming, in August to try and sort out the world’s economic mess.

Good luck with that!

#95 kilby on 06.23.11 at 10:55 am

#36, Victoria
Don’t count on Alberta license plates being a sign that real estate is well and good in Victoria. Most people thinking of moving to Victoria have to sell their houses somewhere else and don’t want to or can’t cough up another $400K to make the Island their home.

Growing up in Victoria in the 60’s we always watched out for the “Yellow Plate” cars from Alberta who always show up on the Island every summer, just like in the Okanagan.

#96 Utopia on 06.23.11 at 11:16 am

#83 disciple on 06.23.11 at 9:27 am

Most demand for new loans has already been brought forward, Disciple. There is little in the way of new business in the mortgage market for banks to capitalize on. Eligible and qualified buyers are shying away from debt in many markets now (Vancouver and Toronto excepted) and are shunning home buying at current high prices. Home ownership rates have peaked at 70% in this country and the only real avenue of profitable lending business is the Line of Credit market which saps equity from existing home-owners with asset strength. The profit curve of banks is going to go into decline as expansion in new lending opportunities dries up. They cannot therefore sustain profit margins of the past nor will they all be able to report growth based on current business models. Profits are set to decline for those who do not adapt quickly. As profits fall, so will stock valuations. Investors are quick to sell lagards. Flat earnings are nothing to brag about despite the fact the companies continue to be profitable on existing business lines.

So short the banks. In due course (of course).

#97 Dorothy on 06.23.11 at 11:17 am

I think #50 has a point when he says that there are some people who either can’t or won’t buy RE no matter what is happening in the market. And I also think he’s correct when he says many of those people post on blogs such as this one.
Such people don’t buy in an “up” market because prices are so high they can’t afford to. But then they don’t buy in a down market either, because they are convinced prices “haven’t reached bottom yet”. Then, once the market begins to improve again, they don’t buy because it bothers them that they could have bought 6 months ago for less.
Such people are destined to be perpetual renters no matter what the market conditions are. And I agree with #50 that they need to make a decision to either get off the fence and get into the market or forget about buying RE and move on in their lives.
There are lots of alternative vehicles to place your money, but spending your life wishing for something you’ll never have because of your own fears and/or prejudices is just plain foolish.
As for the rest of us, if you want a home to live in (as opposed to using it as an investment) then find one you like and bargain hard. Because it IS a buyers market right now, and interest rates are low, so it’s not a bad time to buy provided you don’t pay too much. If Garth is right and it takes 15 years or more to see house prices rise again, do you really want to rent for the next 15 years and then get into a mortgage when your 15 years older than you are now? No-one knows what interest rates will be 15 years from now, or the cost of houses. Do you really want to put your life on hold for that length of time waiting for something that is unknown?
A principal residence is NOT an investment, it is a home. A roof over your head that you can call your own. Your own private retreat from the rest of the world, where you can relax and be “king” of your own castle. Home ownership is much more than just “dollars and cents”, it has an emotional component to it as well.
So if you’re at that stage in your life when your ready to buy, and you have the financial wherewithall to do so, then I recommend you shop around and consider taking the plunge. Just remember to drive a very hard bargain. Don’t even consider paying the currently overinflated list price.

#98 Chaos on 06.23.11 at 11:35 am

Today I’m reminded of the Praying Mantis…

The male Mantis cautiously approaches the female, who greets him with open arms(so to speak)(come on in, you can buy this house)

The male makes himself at home(so to speak), lounging in the sensuality of the bedroom(so to speak) of the females tender embrace.

Negotiations commence(so to speak) concerning the male taking up residence in the female’s home (so to speak)and the male observes that there are benefits to be had by taking a leap and making a commitment.(so to speak)

The terms and conditions of the contract are worked out(so to speak) and the male moves in(so to speak)

The male makes himself right at home(so to speak) and begins to immediately enjoy his new home(so to speak)

The female quietly encourages the male to enjoy his new home(so to speak) and reassures the male that he has made the right decision in making this decision to commit and put all of his eggs in one basket(so to speak)(or all of his basket in her eggs)(so to speak)

After a while the male actually believes in his prescience and good luck in his investment and begins to relax just a little as the euphoria of his new home(so to speak) is overwhelming his caution.

At this point the female slowly turns her head and with her dreamy eyes lulling the male, forecloses(so to speak) on the male’s franchise(so to speak) and begins to consume his equity(so to speak)

While the male has lost his head (so to speak) during this transaction(so to speak) the female after a mild contractual disagreement allows the male to remain as a tenant(so to speak) until the last of his equity(so to speak) is used up(so to speak)

This process(so to speak) is the basis of all commerce(so to speak) concerning the Praying Mantis.

There is one little piece of information that is held back
from the male, a non-disclosure if you will…

“It’s not going to end well…” (so to speak)

#99 Kitchener1 on 06.23.11 at 11:36 am

HAM?

http://www.marketwatch.com/story/china-central-bank-finds-officials-stole-billions-2011-06-17

interesting indeed. by the way, these are the “offical” numbers from the PBOC, so its probely understated.

#100 Joe h on 06.23.11 at 11:38 am

I listed my home 3 weeks ago. We have had 2 showings.
Have I missed the boat. We just reduced 20K as now more listings have come out lower than ours. We purchased a home but on request of the Realtor did not put clause of selling our home. Can we get out of this deal as we are getting very worried now. Garth let me know as I contacted my lawyer and is looking into this.
All the Realtor say is keep lowering the price.

#101 disciple on 06.23.11 at 11:42 am

UTOPIA…
“The profit curve of banks is going to go into decline as expansion in new lending opportunities dries up. They cannot therefore sustain profit margins of the past nor will they all be able to report growth based on current business models.”
——————
I’m sorry in plain English please…how does the bank lending money make them profit? Are you speaking of interest ALONE? But profit equals revenue minus expenses. You are forgetting about the principal amount loaned out.

There is a reason I am stretching out your logic…I intend to show you and the other readers that a bank misrepresents their loaned out money as an asset, while it should be a liability…This is where the scam is born.

#102 BrianT on 06.23.11 at 11:44 am

#98Dorothy-Yours is the perspective of the vast majority of women-renting is “putting your life on hold”. Houses are for women, which somehow is a politically incorrect statement. The vast majority of men have zero interest in being a “king” of a castle-they want to have fun, have enough spending money and have a rewarding sex life-that is it. Guys continually post on this site how they love the freedom of renting and don’t understand how “people” need to own a house-“people” don’t need to own a house, but the vast majority of women do.

#103 jess on 06.23.11 at 11:44 am

…don’t worry our finance minister will sell some infrastructure …ontario can sell off the lottery streams and make the 401 a toll. Buy some q forward – death derivatives and cat bonds.

Industrial Guy- “pass through pricing”
This happens regardless public or private

i wonder if they have been checking the invoices?
http://www.law.cornell.edu/supct/html/historics/USSC_CR_0457_0731_ZO.html

The $642.35. toilet pan supplied by Lockheed

Whistleblower Fitzgerald, found that the depot that served C-5s could make it for a few dollars. John Dingel, House Energy and Commerce Committee, investigated and Lockheed repriced the toilet pan at a “policy price” of $325.00 .The Generals renegotiated the price down to $286.75. The Air Force analysts admitted that they made up the cost numbers. Lockheed relented and had a “clearance price” of $1.(truthout .org )

#104 Devore on 06.23.11 at 11:46 am

#27 Bobby

No, the economy is not that great. Many of the car manufacturers are offering employee pricing due to dismal sales. Looked at getting my boat serviced today and enquired about boats for sale. Agent said it was a buyers market with prices too low so no money in it.

A large part of the car deals we are seeing these days has to do with the persistently high dollar. Dealers will start throwing in 0 financing, free options, etc, and if the exchange rate persists, they’ll just outright drop prices. Not saying low sales aren’t a factor, but there’s multiple fronts the industry is being attacked on. You don’t hear so much about people importing from the US anymore for example.

#105 mississaugaboy on 06.23.11 at 11:51 am

#92

You’re right. I’m not touching it with a 10-ft pole. My mom was like “buy it!”. Hells no, I just got out of the housing market, setting up my investments and am enjoying the rental life.

Should have made sense since this place has an open house. I shoud check to see when they are “accepting offers” lol.

#106 kilby on 06.23.11 at 11:56 am

#98 Dorothy

Would be some pretty hard bargaining to get reasonable prices now…What about summer 2012? We do like being homeowners and don’t regard a house as an investment but being liquid after selling this March (one of very few in our Okanagan neighbourhood) We are waiting until next summer to make our next move to mid Vancouver Island where on our daily “realtor updates” showing all residential listings that are new, sold or have price changes, of the current 210 listings since January 17th there have been 6 sales in total, price changes daily but still only $10K to 20K each time, I recognize all from last year…Long way to go.

Sorry Poco, meant #37 regarding Alberta plates seen in Victoria.

#107 DM in C on 06.23.11 at 12:03 pm

#99 Chaos

You’re a douche (so to speak).

#108 Bobby on 06.23.11 at 12:03 pm

For#101 Joe h,
You have a contract. However, you are only obligated to sell if a buyer brings you a full price offer with no conditions.
Of course the realtor will want you to lower the price as that will help facilitate a sale if there are lesser priced homes out there. Remember if the price is reduced by $50k the loss of commission to your realtor is only $750.
You say you have a purchase contract also. Again, it is a contract so you are obligated to pay for the new house, unless of course you have some conditions that have yet to be completed.
I would suggest you start by getting some good advice. No, that doesn’t mean asking your realtor!!

#109 Devore on 06.23.11 at 12:15 pm

#78 Ex-Cowtown

Why should asset prices be included in CPI? I mean, maybe they should, but why, and what would that mean?

As for housing, rent is included in CPI. Rent is the cost of housing, a service. House prices are the cost of houses, which are asset.

#110 debtified on 06.23.11 at 12:21 pm

Wood Buffalo (aka “Oil Sands Country” or “Canada’s Sugar Daddy”)
Economic Update Winter 2011

http://www.webcitation.org/5zeyhCw1t

Economic & Population Summary:
– Sustained growth in the last 10 years (below average during economic downturn) ;
– Positive growth is forecasted

Labour Market Summary:
– “Despite a recession and the delay or cancellation of several oilsands construction projects in 2009, tight labour market conditions are still a characteristic of the Wood Buffalo/Cold Lake region. With increased oil prices and bitumen production forecasts for the region, significant activity is expected to continue in Wood Buffalo.”

Housing Summary (2010 vs 2009):
– Housing starts is 30% lower YoY primarily due to a 67% decline in MFH (SFH increased 20%)
– Resale activities increased 5.8% in YoY; forecast increase to pick-up
– Average price increased (2010 prices – SFH: $676,074, MFH: $419,602), approaching historical highs reached in 2008; expected to increase by 5% over the next two years (see chart in link provided above for more details)
– Rental vacancy increased, approached 10%, in 2010; forecasted to decrease
– Rental rate decreased, on average, 13% YoY; no forecast provided but I will continue to rent and expect to pay less

#111 Devore on 06.23.11 at 12:28 pm

#101 Joe h

Have I missed the boat. We just reduced 20K as now more listings have come out lower than ours. We purchased a home but on request of the Realtor did not put clause of selling our home. Can we get out of this deal as we are getting very worried now. Garth let me know as I contacted my lawyer and is looking into this.

Did you put in a financing clause? Will your bank give you a second mortgage to carry two houses?

If you had no conditions, you either go through with the sale and rent out your first house, keep lowering the price until it sells (hopefully you have enough equity to not lose money), or walk away from your deposit (and potentially open yourself to legal action).

#112 smoking man on 06.23.11 at 12:29 pm

My first lomg trade this month. YLO. Yellow pages. Its a dog but 3.15 and a div at 5 cents. 20 present yeild. I could not help myself.

#113 Utopia on 06.23.11 at 12:34 pm

#98 Dorothy on 06.23.11 at 11:17 am

Oh thanks Dorothy! I just about split my gut reading your post! You are the highlight of my day. It was hysterical reading. Too funny for words. I mean that in all sincerity. Really sweetheart, it was too good to be true.

HaHaHa…………..So Realturds do still live here at Greaterfool.

#114 Mister Obvious on 06.23.11 at 12:39 pm

#101 Joe h

“…We purchased a home but on request of the Realtor did not put clause of selling our home. Can we get out of this deal as we are getting very worried now…. “
———————–

Joe, this is one of the more disturbing posts I have read here recently. If your realtor was a doctor, he/she could be reported to the college of physicians and surgeons for malpractice. Unfortunately, realtors face no such professional accounting.

It was terrible advice not to include a “subject to sale” in your purchase agreement. Especially in this climate of imminent collapse. Shameful.

I wish you the best, Joe. Others take heed.

#115 Utopia on 06.23.11 at 12:40 pm

#102 disciple on 06.23.11 at 11:42 am

Go back to school. Mess up your mind a little. Learn something new.

#116 garrulous squirrel on 06.23.11 at 12:51 pm

Admiral Bernanke officially announced the end of QE2 yesterday and that explained why the markets have crashed in the weeks leading up to the announcement and continue to crash post speech.

The government will continue to buy back an unspecified amount of debt…..but on the margins…….debt has become unsustainable in the US of A. Public debt is destroying small and big governments ability to keep the lights on.

So what you ask? I’d remind you to look at the ten year bond for guidance at this point. Debt issuance will still grow in quantum leaps and bounds by local and federal governments….globally. Who will fund it?

BOC Carney has no control when the bond rate in the private market starts going up one or two percent per quarter. Mortgages could scream up double that when filtered down to the lowly mortgage consumer. Reality is that rates could be 10+++% by the end of this year or the middle of next. Little Canada has been playing the same game of silly buggers in the debt markets….issuing it’s paper and buying it back on the backs of the taxpayer. Remember how few times anyone has said anything about the soaring national debt? Its all been about the deficit. One can be adjusted through higher tax and austerity……the other has to be paid back with blood….guess which ones which? Now do you think Carney isn’t hip to the game? His announcements around personal debt have been warning the sheep that they are to be fleeced…..and not to blame him.

But……………..the sheeple are so stupid….and short term thinkers by nature. They are taking on as much debt as can be borrowed….because ……tomorrow never comes.

#117 Devore on 06.23.11 at 12:53 pm

#113 smoking man

My first lomg trade this month. YLO. Yellow pages. Its a dog but 3.15 and a div at 5 cents. 20 present yeild. I could not help myself.

It could work. They are having major issues, and could be cutting dividend. You don’t think it’ll stay at 20%? I sold YLO shortly after they converted from income trust. Took a small hit, as expected, but was not bouncing back, so off with their heads.

However, they may be recalling one of their preferred series soon. It’s a sick company.

#118 Tim Rikerad on 06.23.11 at 1:16 pm

Globe and Mail Reports:
Monthly home ownership costs higher than renting.

Analyst Michael Smith said the high monthly cost of owning compared to renting comes as a “somewhat” of a surprise given that interest rates are at historic lows

http://www.theglobeandmail.com/report-on-business/economy/housing/monthly-home-ownership-costs-higher-than-renting/article2072257/

#119 randman on 06.23.11 at 1:19 pm

Cato#20

You may be right about the central bankers intelligence levels, but…..

The other side of the coin is that they know exactly what they are doing according to some grand master plan….

But , then that just makes me sound like some conspiracy nut!!!

#120 Silentblogger on 06.23.11 at 1:24 pm

Hey Dawgs,

Saw this bounce across the wire a few moments ago and thought it relevant to any discussions – sorry for repeats if someone beat me to it but don’t have time to check…

and it is BNN so take it for what you will…

http://www.bnn.ca/News/2011/6/23/Monthly-home-ownership-costs-higher-than-renting-.aspx

#121 Thomas on 06.23.11 at 1:25 pm

This is directed at Toon Town boomer – es all the things you say are true….but it does not matter -all people in Saskatchewan care about is their GOLF COURSES!

#122 45north on 06.23.11 at 1:26 pm

garrulous squirrel: Reality is that rates could be 10 % by the end of this year or the middle of next.

10% interest rates would be the end of life as we know it

#123 Vancouver_Bear on 06.23.11 at 1:39 pm

#68 Mikey the Realtor on 06.23.11 at 7:11 am

As Mr. Reagan said “the best social program is a job”. I have a good one and work for the best company on Earth.
What about you? Realtor is not a career but rather a kind of societal parasitism, even worse then BC gangs.

This “peaceful city” made it 6 times onto the list of the World Famous riots – http://en.wikipedia.org/wiki/List_of_riots

On the list of Canadian riots we were the champions 17 times(Toronto – 2, Montreal – 4): http://www.vancouversun.com/news/Never+never+Vancouverites+have+long+history+rioting/4992164/story.html

BPOE, Mikey…. please forward this to your HAM infestors…..this city is changing to worse. Another economic calamity and it’s 1887 or 1907 all over again, the only difference that crowds are be bigger and cause more damage.

#124 bigrider on 06.23.11 at 1:39 pm

Oh My God ,now I can say I have seen it all.

For all you rags to riches wishful thinkers please visit “flipschool” link below.

http://www.flipschool.ca/

Saw the principal Ian on In tune with real estate .

Get rich fixin and flippin houses.

T.O has gone house flip f-in nuts !

#125 Dorothy on 06.23.11 at 1:58 pm

#103
I disagree. I personally would have no problem renting; it is my husband who doesn’t like the idea. And I’ve spent the last 2 years trying to convince my son to hold off buying until he has a decent down payment. It’s been an uphill battle, but he hasn’t bought yet so I must have been successful.
The fact is that there are those who are ready to buy a house and settle down, and there are those like yourself who are footloose and fancy free and enjoy that lifestyle. And there’s nothing wrong with that, although I disagree its defined by gender; there are females who feel that way as well.
My point was that for those who DO want to own their own home one day, this may not be a bad time to start looking around PROVIDING their financial house is in order. Which means no debts and a decent down payment (as in a minimum of 10% down and preferably larger), plus a secure employment situation. With the exception of certain areas such as Vancouver and Toronto, it’s a buyers’ market right now, and anyone who HAS to sell will be forced to consider lower offers. That fact, combined with current low interest rates, should make home ownership attractive for many.
#101
You should report your Realtor to your local Real Estate Board for unethical behaviour. Do it in writing and keep a copy.
#107
List prices don’t mean a thing. Selling Prices are what count. And whenever there’s lots of inventory without many sales it usually results in serious sellers being willing to take lower offers. Try throwing in some lowballs and see what happens.
#114
Despite what you think, I’m NOT a Realtor; just someone whose lived long enough to know that a Buyer’s Market combined with record low interest rates is such a rarity that it’s a good time to start throwing in some lowball offers if you seriously want to get into home ownership. If you can’t get anyone to bite then you don’t have to buy. But sitting on the sidelines waiting for list prices to drop could also result in a missed opportunity.
I don’t advocate buying with only 5% down, because that leaves you too small of a cushion against market fluctuation, besides which the mortgage would be so high that you’d be house poor, but for those with a decent down payment this may be a good time to start looking for that first home you’ve been after. My only caveat would be to take as long of an amortization as possible at today’s current interest rates because I think that by this time next year they’re going to be a lot higher.

#126 jess on 06.23.11 at 1:59 pm

repatriation holiday 2004
Greenspan’s ceteris paribus…

september 2004 – 7years ago
Oil prices hit a record $49.40 a barrel last month but have since dropped back to the low $40s.

“Despite the rise in oil prices through mid-August, inflation and inflation expectations have eased in recent months,” Greenspan said, although he added it was extremely difficult to say what impact high oil prices were having on the economy.
On the issue of the government’s swelling budget deficit, Greenspan warned of the importance of a balanced budget in the long term. He appeared to offer implicit backing to Mr Bush’s tax cuts, however.

“If we cut taxes, we will, other things equal, increase economic growth. I … would much prefer to have both lower taxes and lower spending, but of necessity a balanced budget.

“Others may choose higher taxes and higher spending. I think that would make the level of economic activity less, but that’s a debatable point.”
========================

A second “repatriation holiday”
..a bill full of so many tax breaks for special interests that one observer called it a “bacchanalia of Caligulan proportions.” The bill, which many Democrats and Republicans supported, prompted one business lobbyist to confess to a reporter that the policy process had “risen to a new level of sleaze.” One of the most outrageous breaks in the bill was an amnesty for corporate tax dodgers, a measure called a “repatriation holiday” by its supporters.

A second “repatriation holiday” was proposed as “economic stimulus” in 2009, but Senator Schumer, like most Senators, voted against it because of data summarized by the Congressional Research Service showing that the 2004 measure did not create jobs. In fact, the research showed that the benefits went to enrich shareholders rather than to job creation.

Now Senator Schumer has switched positions again and is supporting a second repatriation holiday.

How the Repatriation Holiday Would Help Corporations

In theory, U.S. corporations pay U.S. income taxes on their profits no matter where they are generated. But they are allowed to “defer” (not pay) U.S. taxes on their offshore profits until they bring those profits back to the U.S. (until they “repatriate” the profits), which may never happen. (A separate provision ensures that these profits are not double-taxed if taxes are paid to the foreign government.)

A tax holiday for repatriated profits would allow them to bring these profits to the U.S. and pay no taxes, or pay a very low rate. (The 2004 measure taxed offshore profits repatriated during the holiday at a nominal rate of just 5.25 percent instead of the normal 35 percent corporate income tax rate.)

Another Repatriation Holiday Will Cost the U.S. $79 Billion in Tax Revenue

According to the non-partisan Joint Committee on Taxation, a repeat of the 2004 repatriation holiday would raise some revenue during the first few years, but then reduce revenue by a larger amount over the rest of the decade, resulting in a net loss of about $79 billion over ten years.

The analysis also shows that a repatriation holiday that is slightly less generous to corporations (one taxing repatriated offshore profits at 10.5 percent) would cost about $42 billion over ten years. …
http://www.ctj.org/taxjusticedigest/archive/2011/06/chuck_schumers_amazing_double-.php
http://www.ctj.org/pdf/jct_repatriationholiday.pdf

#127 Nemesis on 06.23.11 at 2:07 pm

Nostradamus Le Mad Vlad (you Entertaining MischiefMaker, you!) in answer to your query on a previous thread (you wanted a phase transition time-line)… Hmm.. Tricky one. QuantumFractal, complex conglomerate systems are intrinisically incomprehensible to solitary individuals (even gifted ones – albeit aggregrated analysis seldom fares better, for that matter). Being lucky helps. A lot.

The best I can do for you is this: future Historians – borrowing a turn of phrase from the economic history of Britain – will doubtless refer to this season as, “The Summer of Their Discontent”… and it all unravels from there.

“It is a mistake to think you can solve any major problems just with potatoes.” – Douglas Adams

#128 poco on 06.23.11 at 2:08 pm

#50 Realtor in Van—-a couple of excerpts from your post

Second, while you’re here raving about doom and gloom speculators are devising ways to make money. Sometimes they win big but believe me they sometimes lose big as well.
—————————————————————
pretty tough to speculate in a downward housing market—take a look at post #36—i believe these were speculators who drank the cool-aid of prices only always going up–so you are correct that they do lose big when they lose (there’s a lot more big losers than just those three)
you know that this is far more reaching than anyone’s saying–especially realtors–even a couple of realtors i deal with don’t see or understand the significance of the minor price drops here in the tri-cities–it’s putting hundreds of homeowners underwater
go ahead check it out –see how many (after paying realty fees and associated costs) will lose money on their purchase—and these are owners who bought in the last 2 to 3 years–start with condos –the first to fall—
you see,many areas didn’t get that big 20 to 30% increase as good old Van did
—————————————————————
you said
I am currently advising home owners who are looking to “time the market” to sell NOW. However, make note, if you have been sitting on the sidelines for the past 2+ years (from bottom of the recent real estate market until present day), prices have increased 20%+. So, a speculated 20% “crash” puts you back at square one. While the whole time you have missed out on the benefits that come with owning real estate asset(s). But then again, IF a sudden and steep crash occurs, I will probably hear, “prices will keep dropping”. Anyone else see a pattern…
—————————————————————
SELL NOW–good on ya —as long as you don’t turn around and sell them something, after selling–oh ya –you have to eat too
this 20% up and 20% down is just a bunch of bullcrap–location- location- location–many areas didn’t get that big price increase after the downturn of 2008—or if they did, it didn’t last very long—
why don’t you give us the price increases and subsequent decreases for Port Moody from the uptick to now–it might really scare you –especially look at the highrises and the Klahanie development
I sold two years ago-my house is presently worth slightly less than i sold for–(from comparables in the neighbourhood)–soon to be worth a lot less—tell me please –what are the benefits that come with owning real estate–oh ya –“building equity”–what a joke now!!!
so i rent and do my homework– will get back in when the time is right–from the price drops i’ve found in the properties i want, i am sooooo far ahead by renting—- and yes, i do see a pattern and it ain’t pretty

Mr realtor–i did a little research into the hot Vancouver market in the last 6 to 7 months—can you tell us the present DOM for the condo market–can you tell us how long these have been on the market and any price drops
V#887689 103-4463 w 10th ave
V#849419–403– 3611 w 18th ave (may have a new number by now)
and bloggers , check these two addreses out on the mls map–take a look at the comparables–price differences is amazing–i think someones keeping secrets–maybe vans’ not so hot after all
lots more like these

#129 poco on 06.23.11 at 2:25 pm

#98 Dorothy–are you married to #50

#130 Ret on 06.23.11 at 2:32 pm

My sister-in-law bought in Sebring in early 2007 for $210,000 in the survey with all car names for street names. She married a Floridian. They thought that they scooped the place because Zillow had it as high as $272,000 in 2005-2006.

They got bear trapped. Zillow.com shows a sale around the corner from her for $99,000, less RE costs of course. Her place is Zillowed at less than $100,000 and still dropping by the month. The slow melt that just won’t stop.

#131 FIIIIIRST on 06.23.11 at 2:33 pm

FFFFFFFFFFFFFFFFIIIIIIIIIIIIIIIIRRSSSSSSTTTTTTTTTT

#132 VICTORIA TEA PARTY on 06.23.11 at 2:34 pm

#117 garrulous squirrel

Your following two paras:

“…The government will continue to buy back an unspecified amount of debt…..but on the margins…….debt has become unsustainable in the US of A. Public debt is destroying small and big governments ability to keep the lights on.

So what you ask? I’d remind you to look at the ten year bond for guidance at this point. Debt issuance will still grow in quantum leaps and bounds by local and federal governments….globally. Who will fund it?…”

…ARE KEY to delineating this awful financial situation we continue to swim in, and in some cases, drown.

SO, IN CONTINUING THIS DISCUSSION, JUST WHO WILL BUY THAT ONGOING TSUNAMI OF DEBT?

At this time, there are still Chinese, Japanese and some other suckers out there.

But they are on a short list that will get shorter. By summer’s end, especially if QE3 is launched by Uncle Ben, this onslaught of paper may just get so amazing huge that there will be NO APPETITE AT ALL no matter what the interest rates will be, and they’ll be junk for sure if they go double digit (Note please: Greece!).

If so, then what?

That’ll look like brand new economic turf we’ll then be trodding upon. Does this presage out of control inflation, deflation, stagflation, collapse of the financial system as we know it?

Or will there be some grand plan to paper over the whole deal in a giant internationally-sponsored feel-good thang?
That could become known as Plan “A”.

PLAN “B”

My obvious solution is one I’ve been thumping about for a while now: cash in the stock market, wild food recipes at the ready, and kith and kin together under one roof.

ANOTHER SUGGESTION: Mr. Squirrel’s post belongs on your fridge door!

#133 Big D on 06.23.11 at 2:38 pm

#86 Utopia

Spot on! The credit pipes will be closed off and people will not know how to react. If you’re under the age of 40, you’ve never seen a tough credit market.

I don’t rely on my credit cards but living in the US, I saw my $30,000 credit limit cut to $2,000 on my Amex two years ago. The other one went from $30,000 to $10,000. All of this while still earning, etc.

If I needed debt to finance my lifestyle, it would’ve been over right there. It will make debtors heads spin when the spigot tightens up.

#134 Veej on 06.23.11 at 2:57 pm

The only actual study on the affect of Chinese buyers in Hongcouver states that 29% of buyers in Vancouver in the last 3 months were Chinese, foreign Chinese. Not the billion that already liver there.

Bob Rennie “90% of homes over $2M are sold to Chinese foreigners…”

Wow… and we continue to not only allow it but invite it.

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/whats-driving-vancouver-house-prices/article2072241/

#135 April on 06.23.11 at 3:10 pm

Poco – good on you. You’ve go the picture right. I see price drops in New West also.

#136 kilby on 06.23.11 at 3:18 pm

#126, Dorothy, regarding comment on #107.

In our price range ($400k to $600K) there has been 1 sale in the last 14 days (7 total, others all less) Original price $484,900. 127 days on market and sold for $449,000, about 10% less…..Hardly any sales this year, still waiting until next year.

#137 April on 06.23.11 at 3:21 pm

Dorothy, you sound like a realtor. This is not yet a” buyers” market. I would not jump in for a 5% or 10% drop in this market. Sellers usually ask more then they expect to get so a small reduction of 5/7% or so is normal. That doesn’t make todays market a sellers market.

#138 BrianT on 06.23.11 at 3:26 pm

590 Billion here and 590 Billion there and pretty soon you are talking real money-at this point bankers and politicians remind me of those kids in Vancouver smashing everything in sight-good thing the sheeple don’t see the resemblance http://www.dailymail.co.uk/news/article-2006539/Greek-debt-crisis-cost-UK-335bn.html

#139 jess on 06.23.11 at 3:45 pm

Is the cmhc libel
if the documentation is fraudulent?

CMHC’s approach reflects the premise that, although lenders have a key responsibility for fraud prevention, fraud will be reduced most effectively by CMHC working cooperatively with lenders, and not by penalizing them at claim stage. Accordingly CMHC’s pays 100% of eligible costs on all emili claims, the only exception being instances of fraud where the lender or their staff are involved.
==========================

News for paul allen fraudEx-CEO of mortgage lender sentenced to prison

Paul Allen, 55, the former CEO of Taylor, Bean & Whitaker, or TBW, … of making false statements and one count of conspiring to commit bank and wire fraud. …Reuters – 188 related articles
=====

Accounting Control FRAUD

According to court documents and information presented at trial, Allen and Ragland participated in the scheme from early 2005 through August 2009 by distributing materially false documents to investors in Ocala Funding that misrepresented the financial condition of the facility. The fraud scheme ultimately caused investors in Ocala Funding to lose more than $1.5 billion and Colonial Bank to lose $900 million.

According to court documents and information presented at trial, TBW began running overdrafts in its master bank account at Colonial Bank because of TBW’s inability to meet its operating expenses, which included payroll, servicing payments owed to third-party purchasers of loans and/or mortgage-backed securities and other obligations. In or about 2002, Farkas and other co-conspirators engaged in a series of fraudulent actions to cover up the overdrafts, first by sweeping overnight money from one TBW account with excess funds into another, and later through the fictitious “sales” of mortgage loans to Colonial Bank, a fraud scheme the conspirators dubbed “Plan B.” The conspirators accomplished Plan B by selling Colonial Bank mortgage loans that did not exist or that TBW had already committed or sold to other third-party investors. As Plan B evolved, co-conspirators at TBW also caused TBW to engage in sham sales of groups of mortgage loans, known as “pools,” that other entities already owned to Colonial Bank. As a result, false information was entered on Colonial Bank’s books and records, giving the appearance that the bank owned interests in legitimate pools of mortgage loans, when in fact the pools had no value and could not be securitized or sold. Neither Allen nor Ragland participated in the effort to cover up TBW’s overdrafts or Plan B. Additionally, the co-conspirators at TBW caused TBW to misappropriate more than $1.5 billion in collateral from Ocala Funding.

#140 Ben on 06.23.11 at 3:55 pm

0 Ben on 06.23.11 at 3:53 pm
Canada thinks it different here, just nice white strato clouds against a blue sky for ever and ever… LMAO

Greece just hanging on with a domino affect in the wings across Europe

The U.S. crumbling daily with more layoffs and chronic housing problems.

http://finance.yahoo.com/news/Layoffs-housing-data-point-to-apf-3793105661.html?x=0&sec=topStories&pos=2&asset=&ccode=

Wake up Canuck, we ain’t any different!!

#141 Sunny on 06.23.11 at 4:05 pm

Joe #101

Do you have any clauses in the contract? any one would probably work to get out of the deal, as long as you haven’t signed off on the clauses.
Even if you got financing just say it wasn’t the right financing, if you got an inspection clause that looked good get another that doesn’t look so good….you get the picture?

#142 Not an RE Agent on 06.23.11 at 4:07 pm

You can’t be serious or very good at math. If prices go up 50% and then crash 50%, you have lay 25% off your initial investment– not including interest charges, maintenance, repairs, surveys, legal fees and your favorite, RE agent commissions.

There are definite intangible reasons to buy a house (lust, short-term greed, perceived stability, female approval) but almost no tangible benefits over renting.

#50 Realtor in Van

However, make note, if you have been sitting on the sidelines for the past 2+ years (from bottom of the recent real estate market until present day), prices have increased 20%+. So, a speculated 20% “crash” puts you back at square one. While the whole time you have missed out on the benefits that come with owning real estate asset(s).

#143 Not an RE Agent on 06.23.11 at 4:08 pm

You can’t be serious or very good at math. If prices go up 50% and then crash 50%, you have lost 25% off your initial investment– not including interest charges, maintenance, repairs, surveys, legal fees and your favorite, RE agent commissions.

There are definite intangible reasons to buy a house (lust, short-term greed, perceived stability, female approval) but almost no tangible benefits over renting.

#50 Realtor in Van

However, make note, if you have been sitting on the sidelines for the past 2+ years (from bottom of the recent real estate market until present day), prices have increased 20%+. So, a speculated 20% “crash” puts you back at square one. While the whole time you have missed out on the benefits that come with owning real estate asset(s).

#144 totalchaos on 06.23.11 at 4:18 pm

#103 Brian T – You are an idiot. I’m guessing a lonely idiot as what woman would want you. The women I know are strong, educated and independent and in no need of the company of a misogynistic wanker. I can only surmise that your low opinion of women stems from the fact that that is the sort one finds at the bottom of the barrel.

#145 jess on 06.23.11 at 4:26 pm

sounding familiar

Sofia Sakorafa, an MP thrown out of George Papandreou’s ruling PASOK party after voting against the bailout package a year ago, estimates the Olympic Games cost Greece €27bn, vastly over the given €5.5bn budget Photo: AP
By Fiona Govan, Athens
8:50PM BST 23 Jun 2011

“The vast glass edifice was once the gleaming entrance where the world’s athletes signed in for the 2004 Olympics but it now stands empty, stripped of all assets including copper piping, electricity points and marble tiles.

“I don’t know why we’re here now,” said one guard smiling behind his Ray-Bans. “Thieves took everything of value, I guess we’re just here to stop the squatters moving in.”

Seven years after the outpouring of national pride and delight as Athens showcased its new public works to the world, the Olympic Village, 12 miles north west of the capital in the shadow of mount Parnitha, is now a symbol of national shame.

The housing development for 10,000 was the largest single property development in recent times. Designed as accommodation for athletes during the Games, it was then destined to be turned over to public housing. Hundreds of thousands of families entered a lottery for the chance to buy homes within the leafy complex. Now only half of the apartments are filled.

“We bought into the dream,” said Korinna Deligianni, a 41-year-old doctor who relocated to the new suburb from the centre of Athens in 2007. “When we looked around it was beautiful. I thought it would be a wonderful place to bring up my children, a safe environment with a village feel.”
http://www.telegraph.co.uk/finance/financialcrisis/8595360/Greeces-Olympic-dream-has-turned-into-a-nightmare-for-Village-residents.html

#146 braggart on 06.23.11 at 4:34 pm

141 Ben on 06.23.11 at 3:55 pm0 Ben on 06.23.11 at 3:53 pm

Wake up Canuck, we ain’t any different!!

Yes, we are: I just sold two condos here in Calgary; 15% up in as many months.

#147 CandleFish on 06.23.11 at 4:35 pm

I live in Kelowna. The empty lots behind our house were bought by some clever fellow in 2007 near the top of the last real estate binge. He’d like to sell them for over $300K each. No water, no sewer, no view. He’s totally shafted since you can now buy a house with a view lot for $500K. The Lesson: One good real estate deal can set you up for life. A bad one can finish you.

#148 Carney on 06.23.11 at 5:11 pm

#144 Not an RE Agent

LOL what a bufoon.

#149 Carney on 06.23.11 at 6:06 pm

Have fun with your Yellow Pages.
Sure it’s yielding 20% but at the rate the stock is descending, there won’t be much equity left. See you under a buck. Internet has taken all the business away
and this company will be obsolete in less than a year.

#113 smoking man on 06.23.11 at 12:29 pm

My first lomg trade this month. YLO. Yellow pages. Its a dog but 3.15 and a div at 5 cents. 20 present yeild. I could not help myself.

#150 Nostradamus Le Mad Vlad on 06.23.11 at 6:12 pm


#128 Nemesis — “Being lucky helps. A lot.” — Well it’s about darned time I got lucky! Not screwed, mind you — lucky is good enuf 4 me at my advanced age!
*
We had a delightfully soothing t’storm during the wee hours, just to remind us that all is right with this world which was followed by the sound of pouring rain.

Now it’s a full-fledged beautiful blue, sunny and warm day with rainbows galore dancing gaily around the sun. That is a rumor leaked directly from Rolling Stone, so it’s gotta be true!

All is well on the Wet Coast, with incoming megaquakes and tsunamis. Hell, the Okanagan will be beachfront property sooner than we know!

#146 jess — “sounding familiar” — Yep; that’s why the left coast needs a complete overhaul, not the least of which is to rid ourselves of these greedy politicos.

Just contemplating: The little dictatorial tin-god leader of this country proroged Parliament for XX months (can’t recall how long), ‘coz he couldn’t get his way so threw a tantrum.

‘Owzaboud if CUPW, the other strikers — hell, the entire non-elected populace thruout Kannaduhh Proroged their jobs for three months? As a man soweth, that shall he also reap, etc. All the politicians can support TROC for a while; bitter, but necessary medicine for the CPC.
*
Finally! Some politicos are beginning to see the light of day.

India “In less than 40 years India will overtake the US as the world’s second-largest trading nation, pushing today’s superpower into third place and Europe in to the little leagues, according to a new report by Citi.” Can anyone say the cycles are changing?

Inflation Chart(s) Yep, it’s goin’ up; Iceland’s Punishment? and 8:34 clip Bill Still on Ireland’s and Iceland’s banks; Monarchy Costs Bloody right it does; 9:01 clip To QE3 or not to QE3; that is the question.

Too Big To Fail or Too Stupid To Stop? Plus other links; 30K Tons of Gold If western banks don’t have it, who does? Politicos Russians have the right idea; War Money Where is the bottomless pit where all the money is thrown away? Gas Prices The US has the largest known reserves of oil in the world.

Sarkozy Let him eat cake! Democracy vs. Mythology Athens; China A new role model for the US;

Eight new nuke plants for the UK. Have they not heard of thorium? Illegal Rise up sheeple, and begin doing illegal things (like the IMF, NATO, the US, UK etc.); Gaddafi “THAT will teach him to have a state bank issuing a value-based currency!” wrh.com; Jim Cramer “Then there was Jim Cramer’s assurances that Bear Stearns was fine, not to mention Jim’s declaration that Fukushima was not going to be another Chernobyl! With a batting average like that, why does he still have a job?” wrh.com; Holland As compared to the US, this is ‘net neutrality; Bushehr Iran’s nuclear station, but for non-nuke purposes — jolly bad luck.

#151 poco on 06.23.11 at 6:23 pm

#136 April —a while back i think you said you were watching an area up the hill from 8th and Mcbride in New West–i take that to mean up around the 400 E 8th (Cedar and Knox street area)—checked a few condos up there awhile back–same as many areas–owners selling for less than they paid 3 to 5 years ago
don’t know if these are still listed–
403–466 E 8th ave–has been listed since june 10 @179.9k-price drops to 166.k—bought in Oct 2006-165k–v879437

207–466 E 8th ave–listed at 229k—bought in Apr 07–222k v881825

205-335 Cedar–listed Jan11-179.9–now at 169.9–bought July 08–184k–v893674

314-316 Cedar–listed 208.8k—bought in Jun 07–195k v885637

302-415 Columbia –listed at 299.9k–recently dropped to297.9k–(2k drop = desperation) bought apr 10–290k

same scenario–everyones losing money on property they’ve held for many years–and this thing is only getting started
i don’t do as much or get many e-mails like Kilby still does, too much work (Summer ??? you know) i watch certain areas now and there’s not much moving in what i’m interested in
compare some of the prices sellers are asking to other units in the same bldg (sq ft. etc) don’t know whose got the rocks in their head –the seller or realtor
hope this helps

#152 Dorothy on 06.23.11 at 6:34 pm

#130
No, I am not married to #50.
#137 Kilby
If you can afford to buy now why not make some lowball offers and see what happens? If they counter you can re-counter, and so on until they stop re-countering. You’re the one in the driver’s seat, not them, so you’ve got nothing to lose and much to gain. If they don’t want to play ball, move on to the next house and keep going until you get lucky.
If one of the ones you offered on is still for sale 3 months from now, make them another offer at that time. Because it’s often the case that people will wind up accepting an offer that’s even lower than one they’ve already turned down in the past (when they get desperate enough).
I’ve seen a house in my neighbourhood in your price range sell for as much as $100,000 below the original asking price (it was for sale for over a year, and had 2 price drops in that time, but still sold for $50,000 less than the final asking price). If whoever bought it hadn’t made that final lowball offer, they wouldn’t be happy homeowners today.
I know there are some who will say if you wait maybe the homes will be even lower, but no-one knows that for sure, so it’s a bit of a gamble. And besides, if interest rates go as high as 10% next year (which some on this blog are predicting they will) you could end up worse off if prices don’t drop enough to compensate for the higher rate.
Listing prices right now are artificially high because most homeowners haven’t “woken up and smelt the coffee yet” but they can ask whatever they want – it doesn’t mean they’re going to get it. So go ahead and make some lowball offers, I think you’ll be pleasantly surprised.
.
#138 April
Whether or not it’s a buyers’ market depends very much on where you live. I live in the Okanagan, and believe me it’s very much a “buyers’ market” here. You’re quite right when you say sellers always ask for more than they want, but the few homes that are selling round my way are going for far less than the sellers anticipated. And the majority aren’t selling at all.
Serious sellers HAVE to drop their prices far more than they expected, and the rest are trying to wait it out in the hopes the market will improve. Personally I think that’s a bit of a forlorn hope, but everyone is entitled to their dreams. So yes, there are some homes owners who will definitely not accept lowball offers, but they won’t sell their homes either. In the meantime, it’s worth shopping around trying to find those who will consider a lowball because, believe me, they ARE out there.

#153 vatoDETH on 06.23.11 at 6:35 pm

The housing affordability problem
http://www.theglobeandmail.com/globe-investor/investment-ideas/lets-talk-investing/the-housing-affordability-problem/article2055854/

How bad could it get in the housing market?
http://www.theglobeandmail.com/globe-investor/investment-ideas/lets-talk-investing/how-bad-could-it-get-in-the-housing-market/article2055856/

Where’s inflation going?
http://www.theglobeandmail.com/globe-investor/investment-ideas/lets-talk-investing/wheres-inflation-going/article2060134/

The optimist’s view on housing
http://www.theglobeandmail.com/globe-investor/investment-ideas/lets-talk-investing/the-optimists-view-on-housing/article2055855/

#154 jess on 06.23.11 at 7:09 pm

entrepreneurial in terms of ripping off tax payers

CityTime project -modernise the municipal payroll system ?

In a “jaw-dropping” and “epic” case, an Indian-American couple here has been charged with raking in over $460 million in crooked cash through a record-setting corruption scam.

Authorities say the brazen corruption was part of a “massive and elaborate scheme” involving high-ranking executives at prime contractor Science Applications International Corp who pocketed $5 for every hour worked by 300-plus consultants.

CityTime was initially budgeted at $63 million, but has cost taxpayers more than $720 million to date.

NEW YORK (CNN) — A couple once celebrated for their business savvy in the tech world are suspected of fleeing to India after allegedly defrauding the city of New York of at least $400 million, prosecutors said.

Reddy and Padma Allen were indicted in absentia Monday in a federal court in New York in what prosecutors described as a “massive and elaborate scheme” to steal taxpayer dollars, U.S. Attorney Preet Bharara said in a statement.

Also on Monday, Carl Bell, a chief engineer for Science Applications International Corp., considered one of the primary contractors accused in the scandal, pleaded guilty to charges of fraud and accepting millions of dollars in bribes.

The three are the latest in a string of people indicated for their alleged role in the scheme. Eight other people have been indicted.

“The corruption on the CityTime project was epic in duration, magnitude and scope,” Bharara said.

The CityTime project is a New York City initiative meant to modernize a public payroll system for its municipal employees. It has been plagued by cost overruns and delays since it began in 1998.

Originally budgeted at $63 million, the still incomplete project has run up a bill of more than $600 million, according to the federal indictment.

Most of that excess is tainted with kickbacks and fraud, Bharara said.

Prosecutors say the couple ran a technology company, TechnoDyne, that systemically overbilled and intentionally caused delays in an effort to elicit additional funding.

The pair also created shell companies, drawing additional subcontractor dollars and depositing the funds into bank accounts in India.

Attempts to contact the Allens were unsuccessful.

Between 2003 and 2010, at least $400 million of the $600 million spent on the project had been paid to TechnoDyne, according to the indictment.

“The individuals primarily responsible for the project collaborated in an effort to overbill and otherwise defraud the city by exploiting their authority and influence,” the indictment says.

Padma Allen, 43, was recognized in 2010 as one of Ernst & Young’s entrepreneurs of the year in New Jersey as well as one of New Jersey’s Best 50 Women in Business by NJBIZ newspaper.

In a profile of her printed in IndUS Business Journal in June 2010, she noted the challenge of working on government projects.

“It is not easy,” she told the magazine. “It is a lot of paperwork and you really have to go by the book. … But the payoff is there.”

Prosecutors say the couple — who are American citizens — are currently in their native India.

#155 R on 06.23.11 at 7:10 pm

#37….Albertans aren’t that stupid…..Why would anyone buy real estate on a fault line. Probably better off buying a lot next to a land fill.

#156 TurnerNation on 06.23.11 at 7:23 pm

Isn’t it strange: CON govt orders Air Canada, a private company, back to work even though fights were still running as planned (management staffed the line).
I wonder if MPs missed the Business Class/Executive cabin and refused to slum it on Westjet?

But govt enterprise Canada Post has crippled the country and economy and is allowed to walk.

I’m awaiting a letter from CRA, and once returned I’ll get my tax refund. Also awaiting an insurance letter and my usual magazine subscriptions (yes, I still like hard copies). Was thinking of ordering something online, too, but I guess not.

#157 SmarterThanYouLook on 06.23.11 at 7:47 pm

The following are comments by Mark Carney:

http://www.bankofcanada.ca/2011/06/speeches/opening-statement-22-june-2011/

No rate hikes for a couple years. Cheap money for a long time to come.

Some people thought that lack of inventory and/or lack of sales would precipitate a fall in prices. Apparently these individuals ignored the fact that no such correlation existed.

Apparently, the lack of sales has led to higher prices as demand continues to outstrip supply.

#158 Patient in Vancouver on 06.23.11 at 7:51 pm

#98Dorothy
 I enjoy the irony that the main character, Dorothy, in the production The Wizard of Oz, is squashed by a house. 

My perspective on your point of view is that too few people have considered the reality of the financial implications of home ownership. There was a time when homes cost 3x annual salaries. They now hover around 10x annual salaries, that’s a lot of years of interest payments. 

Too many recent home purchasers who have viewed homes from an emotional vantage point, as “a private retreat” as you put it, will likely be squashed by the financial burden of home ownership. Unfortunately for many families the impact will include a lot of emotional pain.

My advice: dont listen to the RE Wizards, in all their incarnations. Stay out of the RE market until you can comfortably afford to weather the coming tornado. Or better yet, wait until it’s over.

#159 Utopia on 06.23.11 at 8:00 pm

#134 Big D writing to #86 Utopia

“Spot on! The credit pipes will be closed off and people will not know how to react”
———————————————————–
I think what will surprise them most is how fast it can happen. The kids really don’t have any idea what a tight credit market is all about. You might just as well speak to them in Greek with a Swedish accent. The response you get will be about the same. Just the idea that a bank might actually demand 20% or more of a down payment before even considering qualifying you for it’s mortgages will sound like crazy talk. Yet that is what seems to be happening Stateside already.

BrianT ———–Funniest comment I read all day. The one-liner at the end was priceless.

#160 eaglebay on 06.23.11 at 8:00 pm

#151 Nostradamus Le Mad Vlad

Don’t you ever have anything to say that isn’t negative or conspirational?
You’re setting yourself up for a heart attack or a major depression. You’re not that young.

#161 Utopia on 06.23.11 at 8:12 pm

#153 Dorothy on 06.23.11 at 6:34 pm

Sorry Dorothy. You really sounded like a Realtor on first readding. You used all the typical lines. Buy now or be priced out forever, Low interest rates, buyers markets yada, yada.

I tend to forget that there are a lot of people out there who have been so completely brainwashed by the misinformation that they casually repeat it not even realizing they are just reinforcing more of the same bad thinking. You actually do sound sincere enough though after reading more of your comments.

Stick around. The Dawgs here will surely enlighten you as to what a cynical game real estate is right now and why it is a huge danger to your financial health.

#162 BrianT on 06.23.11 at 8:38 pm

#145Total-I don’t have a low opinion of women, just a low opinion of you.

#163 ekstso on 06.23.11 at 8:46 pm

Is it Garth on the photo?

#164 crossboard on 06.23.11 at 9:32 pm

Hi Garth,

I posted your blog on a Toronto Chinese website, it was removed within 10 minutes.

#165 TurnerNation on 06.23.11 at 10:07 pm

161 eaglebay on 06.23.11 at 8:00 pm

Knowledge is power! Didn’t you suffer a fright when the lamestream media scared you with tales of fiendish cave dwellers from other side of the world, bogeymen who are comin’ to get ya?

“We know he has WMD!!”
“They will throw flowers at our feet, their children will sing songs of praise”.
“It’ll be a cakewalk”.

Every lamestream news “story” is expertly crafted for our consumption and more importantly our reaction.
I’ll bet you donated money to Haiti…how’s that working out – US military now occupies this important drug and human trafficing portal. Sleep well.

#166 MightyMouse on 06.23.11 at 11:31 pm

I just sold a call option on my house. Cash from sale will pay my mortgage for the next 4 years.

#167 Killer Chicken or Imploding Boomer? on 06.24.11 at 12:04 am

159 patient – it was the wicked witch of the east that Dorothy’s house squashed.

Now, If I only had a brain……

#168 Mark on 06.24.11 at 1:02 am

“That means declining bank revenues just for starters. Stock values that plop on reduced earnings and plenty of disappointment all around”

Are you crazy? What part of CMHC paying 100 cents on the dollar for defaulted turds of mortgages do you not understand? Going forward is an excellent environment for bank revenues and bank earnings.

#169 Realtor in Van on 06.24.11 at 4:47 am

Point is, most people on this blog are buying into fear mongering in order seek approval of other fear mongers commentating here. Pointing out the obvious yet too scared when it finally comes to fruition. Yeah, I’m guilty of not articulating my points well enough. That’s ok, I give up. You win. I’ll just keep learning from REAL LIFE millionaires who practice responsible, strategic real estate investing to build their immense net worth. If you have another way to do the same then great. Good on you. Become an expert, get into politics, write lots of books, create a website, start blogging and offer commentators a fabulous prize for agreeing with you…a copy of your book! Everyone here is content pointing fingers and talking down to others while being stuck in their own way of thinking and enjoying their tunnel vision. Ignoring any other point of view other than your own. If this apocalyptic crash does come (I believe Vancouver will only see a correction of about 20% max, rather than a crippling crash of 40%), I welcome it. I make a majority of my income from cash flowing real estate investments and any successful business worth a lick increases its market share during a recession. That means during the next recession I will increase my net worth much like the last. Getting more listings, while increasing my fees, and buying properties that WILL cash-flow. So you keep your “thought provoking” conversations with your mailman. I’ll just let him drop off my cheques and send him on his way. I’m moving onto greener pastures…literally. 

#170 David B on 06.24.11 at 8:42 am

BY MARK BROWN
LONDON—The cost of insuring Greek sovereign debt against default using credit default swaps fell early Friday, amid signs European leaders are nearing a deal to support the debt-laden country.

So there you go ….. and soon the USA will be back on track with new $ Trillions to spend … interest rates will remain low as the norm for years to come and housing will rise a moderate pace in Canada and all with live happy there after for ever. ?????

#171 bill on 06.24.11 at 1:41 pm

48 Tim :
I used to walk across granville street bridge each day to perform my various duties downtown..
I often wondered who owned all the apts/condos that were dark and curtains drawn as I trekked back to the wife and cats in kits….
many of them appeared to be uninhabited. I dont think that has changed much from a couple or three years ago.
I will take a look or take a photo if you wish. The buildings I am referring to are on the north side of false creek and bordered by cambie and granville streets.

#172 bill on 06.24.11 at 1:51 pm

Garth
did you get the photo of the lloydminster billboard? couldnt figure a way to get it on the blog.

motorcycle aficionado’s
please click on my name and check out the back of mcguinness’s leathers. … Mc and a glass of guinness.