Doomed

If you want the job done, get a guy with a beard. While untold numbers of satisfied women know this, on Tuesday it also swayed Wall Street. Mossy-chinned Ben Bernanke, Fed head, declared interest rates would stay in the dirt for two full years and QE3 might appear at any moment. Investors swooned, stocks shot skyward in delight (cheap money means more corporate profits and higher share prices) and calm befell the land.

Of course, this started making Washington look a tad like Toyko – where the Japanese have battled deflation for more than a decade with a three-pronged plan. Prong one, bail out the banks at all costs. Prong two, spend billions of tax dollars on stimulus. Prong three, drop rates to zero and keep ‘em there. Sound familiar?

Time will tell if it works better in America. Let’s hope so. The Japanese stock market is 70% lower than it was, and real estate is worth 60% less than 25 years ago.

Actually I have no worries about North American financial markets in the long term. Innovation, efficiency, technology and global reach will have large-cap companies in the money, with enough new small-cap IPOs to keep the party going. But real estate still looks to me like the suicide bomber in our midst.

Predictably, Beardy’s decision to stay rates had people running to this blog to predict interest costs will never rise in Canada, and housing horniness will continue without end. But that’s not going to happen. It doesn’t matter where rates go.

There are five reasons real estate is more unsustainable now than it was a few months ago.

First, volatility. It kills consumer and buyer confidence, and volatility is going to be with us for at least a couple of years. The housing market has traditionally croaked about six months after stock markets stumble. It happened in 1987, in 1998 and again in 2008.

Wonky financial markets almost always breed corporate decisions which cost people jobs. Families uncertain about their financial futures don’t buy houses, unless they contain an idiot. It doesn’t matter what mortgages cost if you might not have a paycheque to cover.

Second, debt. It’s up 7% since the year began, for god’s sake. Survey after survey finds Canadian freaked out about having no retirement savings while 40% can’t pay their monthly bills. The housing bubble, as I’ve said, rode up on the back of debt, not higher incomes – and a huge amount of that was borrowed at rock-bottom emergency interest rates. So the fact rates will stay low is no fuel for real estate.

Third, recession. Not ours, theirs. But it won’t even take that. Just a slow-growth, high-jobless, dragged-out recovery in the US is enough to derail us. A weak America means a weak Canada. And while that country will recover and repair, this is obviously going to take years. Years of lower consumer consumption, meaning depressed oil prices, fewer exports of BC lumber and empty tourist shops on the Halifax waterfront.

There’s no reason to believe incomes will rise, small businesses will multiply or hi-def TVs will be flying out the doors of Best Buys in Mississauga or Langley. No depression. Probably no recession. But no way cheap interest rates will stem cheaper house prices.

Fourth, exhaustion. Cheapo mortgages, lax lending standards, no-money-down loans, cash-back bank deals, pushy parents, sycophantic reporters, HGTV, peer pressure and sheer house lust have done the trick. Now 70% of Canadian families own a house – a level never achieved in the US even at the height of the insane real estate bubble when schnauzers were getting equity loans.

Face it. We’re saturated. Borrowed raw. Tapped out. There’s a serious shortage of fresh virgins, and way too many wrinkly, disgusting old people with all their wealth in a house. This gig’s done.

Fifth, price fatigue. Houses in almost every major Canadian city are unaffordable to the average family – unless they load up on record amounts of debt. And most won’t, for the four reasons stated above. Mortgages can go to zero, without a material impact – a 416 SFH at $800,000 or a routine Van special at $1 million is still out of reach, and will be until the economy’s booming again, years away.

So, prices will fall.

Trust me. My chin’s a tickler.

 

229 comments ↓

#1 DoomedinSask on 08.09.11 at 9:56 pm

First!

I thought we were trying to grow up on this blog. Even in Saskatchewan. — Garth

#2 OttawaMike on 08.09.11 at 10:03 pm

For all your beard related information:
http://www.thebeardly.com/

Smoking Man Rules and I’ll bet he does not even have a beard!

#3 chris on 08.09.11 at 10:07 pm

Global newes just reported an upcoming real estate boom and sustained house values going forward because of super low interest rates for the next 2+ years as a result of the market turmoil and US cradit downgrade.
Hmmmmm – just watch out for the next wave of bidding wars in Van and TO – wtf ???

#4 Better Off. on 08.09.11 at 10:09 pm

So, Ben Bernanke furnished with his womb broom manufactures a dead cat bounce today.

This blogs starting to scare me again.

#5 tigerbaby on 08.09.11 at 10:12 pm

“likely to warrant exceptionally low levels for the federal funds rate for an extended period” vs “likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013” …

what’s to get excited about? is there really a whole lot of difference between the two? ultimately FOMC will make adjustment as required regardless what was “likely to warrant” in previous meetings …

Also it looks like US treasury bonds is still the most “risk-less” of them all, regardless of any ratings. I guess AA+ is the new AAA!

#6 westcanguy on 08.09.11 at 10:12 pm

Wouldn’t it be your moustache??

#7 Hashnugs Inthebong on 08.09.11 at 10:13 pm

6th!!

#8 disciple on 08.09.11 at 10:14 pm

Eww…TMI, dude. Although, I have to admit my wife won’t kiss me unless I have some facial hair going on.

#9 ClaudiusEmperor on 08.09.11 at 10:16 pm

So it is clear:
The interest rate of the US dollar would be zero until at least mid 2013.
With the ‘quantitative easing’ causing at least 10 percents inflation per year…
It seemed the idea to buy swiss frank based ETF was the best thing that happened to me last year.

And the idea to buy US bonds is the most stupidest thing that could come to your mind.
The predicted equity market ‘increases’ would be simply driven by the inflation through ‘money creation’. There would be no bond buyers in the years to come, let’s make that clear. Central banks printing money and buying bonds, there is not really another idea around these days. The goal again is to burn the debt and support constant deficit through inflation. With 0 interest rates. Which will burn the savings of all diligent savers and screw the baby boomers and all pension funds (required to invest certain percentage of their holdings in government bonds).

The bond ‘market’ is not determining the interest rates any more as there is no really market these days. When we let the market work we see drops like the one from Monday. When the central bankers screw the market and the savers the stocks go up… Like today…

Can’t stand listening to the jokers like Warren Buffet, is he really buying government bonds at this point? I don’t think so. Prove me wrong. So what he says is basically a fraud. The guy is simply looking for suckers to screw as the real estate agents are screwing property virgins these days.

From this moment on I would disregard the US dollar and bonds as a complete and smelly garbage.

And I would not be so bearish on the PMs. As I missed the boat on PMs (thought of buying silver at 19 dollars). The question is really how to preserve the value of your savings. The stock market is a roller coaster driven by the Federal Reserve instead of the market forces. Speculants like George Soros with internal information make a killing every time at the expense of the savers…

…………………..

And then we call the poor English youth looters

#10 squidly77 on 08.09.11 at 10:17 pm

Benny and his jets have just informed the American people that their economy will remain depressed for at least two more years.

The bearded Clams appointment will be done at the conclusion of the two year period and the 2012 American Presidential elections will have been completed, the whole thing stinks of rotten politics. Obamas a huge fail not to mention a major disappointment.

The bearded Clams term is now essentially finished, QE3 is doubtful but not impossible.

#11 Debt's Dark Embrace on 08.09.11 at 10:18 pm

Like I said many times before, dating back to the beginnings of this this blog, they will do anything and everything to keep this bubble inflated. Interest rates have to stay low or we are all screwed.

#12 T.O. Bubble Boy on 08.09.11 at 10:19 pm

Don’t forget: trends change!

At some point, granite and stainless will be of interest to nobody. Just like Poker, Dan Brown novels, MySpace, Palm Pilots, and MuchMusic showing actual music videos – the mindless trend of HGTV and W Network home reno shows will end.

#13 shanks on 08.09.11 at 10:20 pm

lol Garth, out of all the doomer websites, this one is the best!

#14 Ralph Cramdown on 08.09.11 at 10:20 pm

A Toronto condo builder is offering to hold a 2nd mortgage for 10% of the “purchase price” at 0% interest (as if living in Regent Park wasn’t reward enough). The kicker – you have to pay the amount plus 10% of gross appreciation if you sell, and you don’t have to repay it if you sell at a loss.

Was this money ever really there? Discuss.

#15 Dontcallmeshirley on 08.09.11 at 10:20 pm

Follow the money Garth.

Where does all the capital going into gov’t bonds ultimately land?

The money is not going to be placed with entrepreneurs starting up companies.

It will find its way into residential mortgages.

#16 westcanguy on 08.09.11 at 10:20 pm

I thought we were trying to grow up on this blog. Even in Saskatchewan. — Garth

Garth, Have you checked out house prices in Saskatoon and Regina. No growing up here, yet.

#17 Kilby on 08.09.11 at 10:21 pm

I do worry that the real estate Cartel and Global TV will use this opportunity to encourage young buyers to go for the big mortgages which they can’t afford just because of the interest rates. I hope “fatigue” has set in and people start focussing on other aspects of their lives and have a little money to spend on other things….

#18 Smoking Man on 08.09.11 at 10:22 pm

Being dumb and stupid….has it’s advantages……

You know on yesterday’s post I tong lashed a dude who likes to take swipes at my posts, thinks I am an easy target cause I appear dumb and stupid, especially the way I write.
Says he never reads my posts just skims over them, it’s beneath him. Ya right…..

Well truth be told I am stupid and dumb, I really am, and I have discovered that it is the god given secret to success….Most of you at this point are going huh, alright we want some??

I was so dumb and stupid growing up that I did not know my place on the society hierarchy, did not know rivet bucking was a not a carrier, I was the best rivet bucker around.

Most important I did not know how to self impose restrictions on myself based on education, job, status, or money. etc…So I grow up a free spirit void of “O you can’t do this because”.
I was always “hell ya lets do it”.…….I don’t have plan I never did and I never will……Some times it’s heads, sometimes it’s tails……But its darn fun……….

To go trough life with a plan and a goal, and a measuring stick all the while racing toward the day you die to me is like being water boarded…

Some of you suggested I should write a book. I could hire some obedient collage kid to ghost write something for me, it would be damn good. How much fun would that be. That would take all the fun out of getting smashed and typing what ever pops into my crazy little brain on here. Right now this is great fun for me till the next thing comes along. Whatever that is who know who cares. I don’t even post on the globe and mail any more, or my blog, many of you on here are out there, I feel right at home here. Thanks for this pathetic site Garth.

And remember Bat Man’s Ears, they can make you rich………

Happy trading tomorrow kids……….Buy hard or stay home……………..

Sorry to have to predict this, I feel for you kids, but USA will not raise rates for two years neither will Carney. And we all know what the tax farm cattle are going to do….

So you choice now is to wait it out till 2014 or make a fast buck.. Your call……….
Heads or Tails……is always the question

#19 M3 on 08.09.11 at 10:23 pm

I wonder if I should show up to work in a month after my study leave ends in a beard, bespoke suit and a pipe.

If anything, it sounds fun.

Want a picture Garth?

#20 moremiles on 08.09.11 at 10:25 pm

May I have your permission to print these five points to show the doubters in our midst. You are hitting the nail on the head each time.

Email it to your mother-in-law. — Garth

#21 Gerge on 08.09.11 at 10:25 pm

How long have you been saying prices will fall? Obviously interest rates aren’t going to rise significantly any time soon.

Can you read? — Garth

#22 Mr. Reality on 08.09.11 at 10:27 pm

Flawless in your realistic assessment of real estate in Canada Garth…..

I see a sucker’s rally heading our way in the markets. Classic pattern developing.

Mr. R.

#23 Kilby on 08.09.11 at 10:29 pm

City of Vernon B.C. Population 36,000 (In the sunny Okanagan)
177 active listings of residential properties.

July 11/11 to August 9/11

10 new sales in the last 30 days!

#24 squidly77 on 08.09.11 at 10:29 pm

Oh yeah I almost forgot, investing in American banks is now essentially dead money if not lost money.

With interest rates near zero American banks will have little incentive to originate loans and mortgages it also reduces or eliminates all panicky human emotions of the urgency to buy real estate. This will extend the American housing bust for years. U.S. real estate if it wasn’t before it is now a really dead duck.

#25 DoomedinSask#2 on 08.09.11 at 10:30 pm

Second!!!
Love your blogs GT. Sometimes it makes me want to curl up in a fetal position and loose sleep but that is what is reality’s all about.

#26 Love this Blog on 08.09.11 at 10:30 pm

http://howestreet.com/2011/08/secretly-broke-australia/

The bust has struck Ausland

#27 C ROCK on 08.09.11 at 10:32 pm

This add appeared in the local weekly freebie: Own a new home in the Wack for just a thousand a month (oac). $399, 900 HST included.

http://shopping.thenownewspaper.com/ROP/ads.aspx?advid=1502404&adid=11474038

Yeah don’t axe me how that’s possible, I’m just another blog dawg here.

#28 T.O. Bubble Boy on 08.09.11 at 10:32 pm

Speaking of price fatigue, since when did semi-detached 3-bdrm homes on 16-ft wide lots (with unfished basements) sell for $800k???

http://www.realtor.ca/propertyDetails.aspx?propertyId=10923364&PidKey=-1707793905

A 25% down ($600k) mortgage @ 3.5% with a 25-yr amortization puts the monthly mortgage payment at $3,000 before any property taxes, insurance, maintenance, or other costs are added.

THAT is price fatigue.

#29 East Van on 08.09.11 at 10:34 pm

If you go into a forest looking for ceders you will see a lot of ceders. You may, however, miss seeing a lot of firs and pines and maples.

Garth has been looking for a R.E. crash for years now, so he sees them everywhere. Unfortunately he appears to have missed a lot of other stuff going on – ie. the stock market crash.

To me it seems that people who have invested in a home have done rather well, while many people tell me that their retirement nest eggs have evaporated in the stock market.

The market fell 6.6% on Monday and recovered 5% on Tuesday. Is that a crash where you come from? — Garth

#30 MathTeacher on 08.09.11 at 10:34 pm

Something to think about … Perhaps in this video one can see the near future of Canada’s real estate market

The Big Squeeze: Secretly broke in Australia

#31 squidly77 on 08.09.11 at 10:34 pm

Somebodys as mad as hell.
http://www.dylanratigan.com/2011/08/09/dylan-ratigan-mad-as-hell-his-epic-network-moment/

#32 Gerge on 08.09.11 at 10:36 pm

Vancouver housing starts up 25% first 7 months of the year vs last year

http://www.vancouversun.com/business/Metro+Vancouver+housing+starts+cent+this+year+CMHC/5228517/story.html

60% were condos, and 100% of those went to speculators. Not good. — Garth

#33 somejerk on 08.09.11 at 10:36 pm

interesting that at one point today the funky apple company was worth more than the evil xom; that things built in china are actually worth more than the stuff sucked out of the ground… strange times

#34 'kin loving it on 08.09.11 at 10:37 pm

Keep up the great, great work Garth.

If you will recall the foothills lottery home in Calgary that was won and then listed for a $1M about a month back.

We have an update.

http://www.realtor.ca/propertyDetails.aspx?propertyId=10897040&PidKey=-698472588

#35 Best place on meth on 08.09.11 at 10:41 pm

The stock market rallied today because it had to.

Heli-Ben and his announcement that ZIRP will continue had nothing to do with it.

And I love the smell of dead cat in the morning.

#36 wonderwoman on 08.09.11 at 10:41 pm

Very well summarized, Garth. I have been telling everyone who thinks that the low interest rate will continue the housing market frenzy that we are way over extended on debt and that the low interest rate has done all it’s damage. With stock market volatility and fear returning, good luck to the Canadian housing market.

However, I’m not sure about calling boomers wrinkly, disgusting old people.

#37 JohnnyBravo on 08.09.11 at 10:41 pm

As I commented on the previous post, with today’s FOMC announcement, the Federal Reserve has proclaimed, “Yes, we are Japan.”

Along the same lines…

Back in 2004 Bob Prechter, the Elliott Wave and Socionomic guru, devised an allegory titled “Jaguar Inflation”to explain what happens when an economy becomes saturated with credit. You can find a re-print here: http://mises.org/daily/3329

Basically, using Jaguar cars as a metaphor for credit, Precther illustrated how, at first, credit can stimulate an economy. But the more credit the banks dole out, the more and more, cheaper and cheaper credit they must create to keep the economy growing. Eventually, the economy becomes so saturated with credit that no one wants any more, even if it’s free. At that point the game is over.

Welcome to the jaguar economy.

#38 Harlee on 08.09.11 at 10:41 pm

I’m going to ride the stock market like driving my pick-up over a muddy prairie trail.Find the groove and keep on going until you reach your destination. (Forget housing,it’s a total washout). If you city folk have never done it,you don’t know what you’re missing…:-)

#39 Sherri on 08.09.11 at 10:42 pm

I wrote in late May asking whether or not to sell & rent. Well.. we’re on the market as of today. Hopefully our timing is not too bad!

#40 Another Jerk on 08.09.11 at 10:43 pm

“The housing market has traditionally croaked about six months after stock markets stumble. It happened in 1987, in 1998 and again in 2008.”

As I recall, the subprime crisis began in 2007 — before the 2008 stock market crash…

Not in Canada. — Garth

#41 ottawalive on 08.09.11 at 10:44 pm

If interst rates don’t rise i think real estate party will go on aleast for two years

#42 DoomedinSask on 08.09.11 at 10:44 pm

I thought we were trying to grow up on this blog. Even in Saskatchewan. — Garth
—————————————————————–

Even in Saskatchewan? Ouch. I thought we were going to weather the storm and come out on top smelling pretty here according to the local media! I don’t want to grow up yet.

#43 Utopia on 08.09.11 at 10:45 pm

That was an outstanding post Garth.

You hit almost every nail dead-on its head and have reviewed the end of this markets insanity from the perspective of one who has seen it all before.

I agree with you too. According to the economists at a few of our large banks,…..they agree with you too. This country is in debt to the eardrums and buying power along with fresh new blood has withered in the face of the new reality.

Fear now stalks the foyers of some mortgaged McMansion and the minds of every sorry sober debtor who’s job is on the line. Count a few thousand of our trusty public servants amongst them.

The US is slowing. Most Canadians understand this means pain for our country. It is not like China or Europe or any other region will save us either.

We are set for a significant assert deflation and in many respects it will mirror the American experience.

You have done an outstanding job in warning any who would listen, Garth. I can well imagine that thousands have heeded the warning and got out with their skins intact and are looking forward to their creamy moments of housing lust after the coming correction.

But that is enough sex talk for one day. I did, after all, just buy two knitting machines and my masculinity has been somewhat compromised as a result.

I might grow a beard for the occasion.

#44 Brad on 08.09.11 at 10:54 pm

Sweet baby jesus! How long can this bloated RE pig keep bloating for? Someone stick a fork in it already.

#45 Smoking Man on 08.09.11 at 10:57 pm

#24 squidly77 on 08.09.11 at 10:29 pm

That was a damn good post was thinking the same thing, had the bearded one said, up 1/4 the fence sitters might have paniced and bought………We saw what happend here…..

#46 Nemesis on 08.09.11 at 11:00 pm

Hey, the hospitalized nonangenarian groom is ‘beardless’ (moustache only), GT.

Are you trying to pull a fast one?

PS – Have you ever considered a goatee, ‘stache and hipster ‘burns, GT? It could be just the look for you. Very Mephistopheles, in a good kind of way.

#47 Smoking Man on 08.09.11 at 11:01 pm

#43 Utopia on 08.09.11 at 10:45 pm

Why would anyone not be in debt up to there ears. Money is almost free…You can leverage at 2.5 and easly find returns in the 10% range.

Hello!!!!!!!!!!!!!!!!!

#48 cata on 08.09.11 at 11:02 pm

well Garth, I am tired of waiting the impossible….tomorrow I will apply for my house dream mortgage because prices will stay and money is cheap! See you later aligator!

#49 Snowboid on 08.09.11 at 11:03 pm

#4 Gerge…

When the spin cycle causes the machine to shake it means it is out of balance – time to stop and get out before everything blows up! (I know my attempts at humour are pretty lame, but it’s no worse than the MSM)

Snowboid

P.S. Garth, dagnabbit, you promised to use the picture with my teeth in!

#50 bigboy on 08.09.11 at 11:04 pm

OK, #34, if I won a house, what difference does it make if you sell at one million or 846,000? Only if you had a ton of debt! For me I’d sell at what the market would bear, get out and invest. Having said that I don’t have any debt. $800,000 would look good to me. Don’t look a gift horse in the mouth!

#51 John on 08.09.11 at 11:04 pm

Well balanced post Garth. The economy and market should behave in the way as you have described, in the long term.

But the economists should stop living in fantasy land for creating false hope with words such as jobless recovery or growth recession.

#52 waterloo Resident on 08.09.11 at 11:04 pm

Garth, you really should be careful of what you say. You said: (“Houses in almost every major Canadian city are unaffordable to the average family – unless they load up on record amounts of debt. And most won’t.”)

Well, here in Waterloo the company ‘RIM’ is laying off thousands of people, yet a house just down the street from where I live sold for $387,000 ! Its a very tiny 3-bedroom house, it was listed at $323,000 only 4 days ago and sold in only 4 days at 20% over list !

The used to be lots of ‘for sale’ signs over the last few weeks, but now when I drive around most of them are gone and the ones that are still there now have “SOLD” plastered on them.

So whatever you are saying, thats just not coming true, not here in Kitchener and Waterloo, there are bidding wars on homes here.

Is Waterloo a major Canadian city? — Garth

#53 Ryan on 08.09.11 at 11:08 pm

Prices are not only going to fall. Prices are going to fall NOW. Prices will be significantly lower by the end of 2011.

#54 BrianT on 08.09.11 at 11:08 pm

If the USA could figure out how to run a current account surplus year after year for decades it could be “Japan” as every MSM analyst thinks it automatically becomes by following ZIRP. The US dollar is going to be trashed-it has basically been announced publicly at this point-it isn’t even up for debate. When Japan did this idiocy they had a huge trade surplus buoying the yen-the US has nothing of the sort to support the dollar.

#55 Last Man on 08.09.11 at 11:11 pm

“if your dad doesn’t have a beard you have two moms”

#56 Best place on meth on 08.09.11 at 11:12 pm

The real estate cheerleaders seem to be dancing a jig today that interest rates in the US will stay at zero for 2 more years and are mocking the bears for saying that rates had nowhere to go but up.

Then I thought to myself, wait a minute – the cheerleaders were also shouting from the rooftops that rates would soon be going up.

Because they were attempting to scare people into buying real estate immediately.

Now they’re out of customers and nobody cares about low interest rates anymore.

Not too smart, those cheerleaders.

#57 Steevo on 08.09.11 at 11:12 pm

Great post! Have to disagree on one point. “It is” the dreaded big “D”. (for many of the reasons discussed in this post)

We (U.S., and therefore Canada) are now Japan 2.0.

Beardy said Japan didn’t act soon enough. But he is now following exactly what they did because the Fed is out of options.

Housing will fall, and equity markets will be range bound for years to come. Interest rates will be non-existent.

Look for further bailouts of Freddie, Fannie, BAC, Citi, etc. (Don’t forget FDIC and FHA).

#58 Steevo on 08.09.11 at 11:14 pm

Oh ya, forgot. Short gold.

#59 R on 08.09.11 at 11:17 pm

I’m one of the other 30% who doesn’t own a house. Many people, who grew up listening to their boomer parents real estate advice, consider that to be the equal to having utterly failed in life.

I shall celebrate my non housiness.

#60 Jake T. on 08.09.11 at 11:19 pm

Since the world bankers and governments don’t want to give no interest to bond investors and savers I hope the world becomes Japan. I hope that tomorrow world stock markets fall 30%,40%,50%+. If every saver bought gold, sliver etc. and did not buy bonds,gics,t-bills etc. let’s see if interest rates would go up.

Who let you in? — Garth

#61 nonplused on 08.09.11 at 11:19 pm

Nice post today Garth, a bit of a rehash but this is important enough that it bears repeating.

ChairSatan Ben’s proclamation that savers will burn in hell until at least 2013 probably adds to the likelihood of a slow melt rather than a big drop wouldn’t you say? I know that was your forecast all the way a long (correction, then muck). Do you think the correction might be less pronounced as a result? This gives Carnival Carney lots of breathing room to be slow with Canadian rates.

As predicted the markets bounced back big with the news that the Bernank doesn’t mind intervening until the printer blows a gasket. But I don’t like where this is going, so I am keeping my hedges for now, even “The Hedge That Can’t Be Named”.

I think the analogy Garth used today with Japan, although not original, definitely bears consideration. (Most of my ideas aren’t original either. An original thought is a hard thing to generate. Your “artist” has drawn that same tattoo a hundred times. Garth, do you have any tattoos? But anyway, Japan…) One important lesson from Japan, as Garth points out, is that domestic assets like real estate and stocks (shares of domestic production) can continue to languish in the local currency even as the local currency languishes on the world market. So while prime real estate in downtown Tokyo might be off 75% in Yen and more than that in dollars, the price of international commodities in Japan like oil and gas are most certainly not. Liquefied Natural Gas landed in Asia and Europe is nearly 10 times as much money per mmbtu as the North American market currently trades. And I thought the heating bill was still high! The furnaces are off, so it’s all hot water, but it’s still $120 this month. About half of that is actual fuel, so $60. Can you imagine paying $660 a month for hot water in the summer? It’s coming. Along with winter heating bills in the $4,000/month range. But don’t worry, we have lots of land locked gas, and it will take years and years to build LNG liquefication plants to export it. So what’s coming here is probably only a fraction of $660 and $4,000, and over 10 years, but it will be enough to make the mortgage on the McMansion look like just one of the bills in 10 years time.

Of course if natgas prices rise, so will electricity prices, because gas is on the margin right now and they are trying to shut everything else down, except wind and solar, which are “cute” but don’t scale to the problem, at least as of yet.

The good news is that North America is once again one of the cheapest places to make fertilizer and plastic from natgas and ethane. For now. (Well, for a while, but not forever.)

I might buy some more XEG though, I don’t see oil demand dropping as much as the market is forecasting. Right now they are very backed up at Cushing, which is bad for Alberta, but LLS is still trading with world markets (which is bad for Ontario and Quebec). But the disconnect is a problem that will find a solution. Even if the US Government won’t allow Keystone to go through in a blatant attempt to create a separate domestic market in the US North East and Midwest that is priced lower than world markets (on the backs of Canadian producers), the products themselves are quite mobile and might find there way on to trains.

All the auto dealers are offering “Employee Pricing” or “Free Diesel Upgrade” again. I think that fits in with the point of the post today. People are taped out and are not buying. Also, the auto companies (especially GM) have been “channel stuffing” nearly all year to artificially increase profits, so now they have to get the inventory off the lots. Short..Auto..Makers. The fate of big ticket items is closely related to the fate of the housing market.

#62 bbcoq on 08.09.11 at 11:21 pm

As a sideline sitter since the spring (sold house-now renting it back) I am bearish but the market action on houses-being steadily, systematicaly bought up here in the VCR burbs tells there is more going on-asked a realtor at an open house what their thoughts were: “Right now at least, here anyway it does not matter that the regular guy cannot afford the average house-right now there are enough buyers coming from China, Taiwan, HK, Iran, Korea, Philippines etc etc that VCR market may go for a good while longer-does it make sense, no but that is the way it is right now”
Translated, we are in a bubble, who know how long it will last.

#63 Snowboid on 08.09.11 at 11:21 pm

Okay, it must be too hot here today in the Okaynoggin – it was # 4 Gerge at one point then it became # 32 Gerge.

I need another glass of Ehrenfelser, excuse me.

#64 Alex on 08.09.11 at 11:30 pm

Best post in recent memory, and much needed. And you know, I simply don’t give a crap anymore what real estate prices do. They can drop hard like they’ve already done virtually everywhere in BC *apart* from select areas of greater Vancouver (a point lost on Global, assorted pumpers, and the Cam Goods of the world), or they can quintuple. I have sold, taken my profit, and am now renting for much, much, MUCH less than I’d be putting out had I bought again.

And to whoever thinks low interest rates is the saviour of the real estate market, my god, wake up and look around. Un-freaking-believable.

#65 Jake T. on 08.09.11 at 11:32 pm

I hope the TSX drops 100% tomorrow. Capital gain that!

#66 Kitchener1 on 08.09.11 at 11:33 pm

#52 Waterloo resident

what are you talking about man? prices out here are actually dropping. I have seen quite a few homes langish on the market. Seen them drop the price for 319k-300k etc.

still tons of for sale signs up.

Check MLS and look at the inventory numbers, not good.

#67 SophieZombie on 08.09.11 at 11:34 pm

When residential properties is too expensive for criminal activities, is it a signal that Lower Meth Land houses are over priced ?

http://www.vancouversun.com/news/Housing+crash+lures+marijuana+growers+RCMP/5220954/story.html

#68 JohnnyBravo on 08.09.11 at 11:35 pm

#54 BrianT on 08.09.11 at 11:08 pm

“…the US has nothing of the sort to support the dollar.”

…except the following:
• The US dollar is the world’s reserve currency
• The US is the world’s largest economy by far
• The US has the world’s largest, most powerful military
• The US has the largest hoard of gold (over 8000 tons) of any country, by far. Heck, they even hold the gold of other countries.

Oh, and: Europe, the world’s #2 economy (if you consider the entire Eurozone) is stagnating while its financial system is disintegrating. China’s ponzi, hyper-inflationary, fake RE, corrupt debt-laden economy is about to implode. Just wait. Japan is having new wounds inflicted on it, while it still has not recovered from its bubble bursting over 20 years ago.

The US is ugly. But everyone else is uglier.

Oh, and The Chairsatan has just announced deflation as far as the eye can see (or at least until 2013). When deflation occurs the reserve currency goes up, not down.

#69 Bill Gable on 08.09.11 at 11:38 pm

Post quality – outstanding – enjoyed nonplused, in particular.

Lots of sad looking Realtors in vancouver. This past weekend, the Open Houses were doing tumbleweeds again.

Think some folks have pulled their properties, but it’s hard to tell, the West End is eerily quiet.

#70 Markey on 08.09.11 at 11:41 pm

#55 Last Man – hey, some moms have beards!

#71 Jason on 08.09.11 at 11:42 pm

Great post Garth, best I’ve read this summer!

#72 Helicopter Ben on 08.09.11 at 11:43 pm

“Actually I have no worries about North American financial markets in the long term. Innovation, efficiency, technology and global reach will have large-cap companies in the money, ” – Garth. ………. I dont think innovation helps the states all that much any more as the jobs just get shipped East anyways, so no jobs on the horizon, Technology seems to cuts jobs as fast as it creates it as well. Interest rates staying low allows them to pay their bill and keeps everyone in the stock market, but this isnt enough to stop Deflation and no politician or central banker wants this on their watch so QE3 is 100% guaranteed at some point, with out it we will all be in the bread lines.

#73 kc on 08.09.11 at 11:43 pm

25 DoomedinSask#2 on 08.09.11 at 10:30 pm

Second!!!
Love your blogs GT. Sometimes it makes me want to curl up in a fetal position and loose sleep but that is what is reality’s all about.”

More than doomed in sask…. not trying to offend but you might want to also curl up with a dictionary in the fetal position, or sleep with one eye open and a night light.

#74 Victoria on 08.09.11 at 11:52 pm

Chris,

Every place but Victoria. I want to sell my house and it seems to go up every place else but Victoria.

#75 vyw on 08.10.11 at 12:03 am

Toronto and Vancouver SFH markets have strong demand, low supply. Add in low rates for the next 2 years => bubble asset which needs to inflate further. Based on fundamentals, family income, local economics, this doesn’t make sense but how about other bubbles: NASDAQ in yr 2000, Nortel, housing in US, etc.

The money sloshing around will find another bubble. Other markets are topping out or correcting but Toronto and Vancouver will continue to climb.

#76 Rich Renter on 08.10.11 at 12:11 am

Your wrong and the real estate party will continue.

#77 HouseBuster on 08.10.11 at 12:20 am

Is Waterloo a major Canadian city? — Garth
———————

Is Waterloo even a city?

#78 Paul on 08.10.11 at 12:21 am

If Canada can’t control interest rates how can the US? We’ve been warned time and time again by Mark that rates are going up.

#79 BC Bring Cash on 08.10.11 at 12:22 am

Welcome to Bernanke’s US Feds QE 3 after that QE4 and so on. Check out how the Wizards in the US are going to fix their ECONOMY.
http://www.youtube.com/watch?v=gnkMmUsi4Gc&feature=player_embedded

#80 View on 08.10.11 at 12:26 am

“City of Vernon B.C. Population 36,000 (In the sunny Okanagan)
177 active listings of residential properties.

July 11/11 to August 9/11

10 new sales in the last 30 days!”

I’m not sure about your source. http://www.omreb.com states in July 2688 active listings in North Okanagan which includes mostly Vernon. Total sales where 127. Could you please verify your source!!

#81 uk lad on 08.10.11 at 12:41 am

snapshot of us markets.

in march 2000 the s&p 500 traded at 1,527.

on 8 august 2011 the s&p 500 closed at 1,119

down 27%in eleven years.

faith is good but facts tell the truth.

(will not mention golds performance over same period)

never try to fight a trend, you will always loose.

#82 Timing is Everything on 08.10.11 at 12:42 am

The market fell 6.6% on Monday and recovered 5% on Tuesday. Is that a crash where you come from? — Garth

Fender bender…No crash.

Oh ya…Tuesday did follow Monday and if I’m not mistaken, the sun rose on Tuesday morning too, in the east! Will wonders never cease.

Somebody on this pathetic blog asked, “What will the markets do on Monday?” They did not asked about Tuesday. Now they know what happened both days.

Wednesday still follows Tuesday…Right?

————————————————
I’m still having visions of Canadians buying still more debt.

Another sno cone, sir.

http://www.youtube.com/watch?v=a01QQZyl-_I&ob=av3n

#83 Utopia on 08.10.11 at 12:44 am

#47 Smoking Man to #43 Utopia

“Why would anyone not be in debt up to their ears. Money is almost free…You can leverage at 2.5 and easily find returns in the 10% range”.
—————————————–
Excellent point my fellow smoking friend. You are correct that money is cheap and earning yield is easy.

Sadly though, few use their sorry heads well enough to know the gift that has been given them and instead of capitalizing on this once in a lifetime opportunity they instead squander the whole load with consumption and home buying.

I really could not agree with you more actually and I easily recognize you are a pretty sharp tack. It is hopeless though trying to tell anyone about easy opportunity when we cannot even get past the basics of risky investments and life-long debt obligations.

Guys like you work the money and make out well. Few are following your lead. Our friend Garth here has been advising for eons to shun real estate and invest in earnings, dividends and income.

Financial assets. The more liquid the better.

Guess how many of the blog dawgs here are actually paying attention though? Then guess how many have hired a good financial advisor?

Scant few, that is for sure. They wing it on random news snippets instead of knowledge and strategy. Most seem paralyzed by fear while others are just glued to Doomer TV and the crap that infests the blogosphere.

Then they come here and blather nonsense. Can’t get through to them at all. They will deny for example that Gold is seriously overbought and due to correct. But that is not my problem anymore. We have peace here now.

Do you read the comments though? Half are crazy as rabid bat-shit near as I can tell. Some others are pure genius on the other hand (you know who you are) and I won’t miss a night reading them.

So cheap money breeds fast and easy opportunity. You earn the spread by borrowing at less than the inflation rate here and buying Greek bonds paying 31% there. Risky stuff pays unfortunately. The spread is the easiest game around.

Until it ends.

Who knew though that you should not waste your privilege by locking yourself into a lifetime of fixed debt servitude at low rates destined to eventually rise higher?

Some knew. You are obviously one of them.

Got a smoke?

#84 Laurenda on 08.10.11 at 12:48 am

#52 waterloo resident

1 Toronto, Ontario 4,753,120
2 Montreal, Quebec 3,316,615
3 Vancouver, British Columbia 1,953,252
4 Calgary, Alberta 988,079
5 Edmonton, Alberta 862,544
6 Ottawa–Gatineau, Ontario/Quebec 860,928
7 Quebec City, Quebec 659,545
8 Hamilton, Ontario 647,634
9 Winnipeg, Manitoba 641,483
10 Kitchener, Ontario 422,514

Waterloo is generally more expensive than Kitchener for housing (unless you’re in Hidden Valley), yet Kitchener is tenth on this list… just wondering what does and does not quality as a “major” Canadian city?? I hear an awful lot about Victoria, Richmond, etc. but don’t see them on the list – just saying. Everyone in KW seems to think we’re a strong hold, (as does everyone in TO, Van, Vic, etc), but during 2008 housing prices in KW didn’t dive as deep as other “major” cities… RIM is on its last legs, what is sustaining our prices – students? profs? google and opentext?? Discuss.

#85 Chris in Langley on 08.10.11 at 12:56 am

Langley is now a legitimate place now that Garth has mentioned it in his blog… and all you guys probably thought we were only famous for being the CIA headquarters!

P.S. – We done got more rednecks with big ass trucks that Alberta done, Yeehah!!!

#86 Lead Paint on 08.10.11 at 1:07 am

Why is everyone talking all this economic crap on a beard blog?

#87 Utopia on 08.10.11 at 1:13 am

#54 BrianT said……

“When Japan did this idiocy they had a huge trade surplus buoying the yen-the US has nothing of the sort to support the dollar”.
——————————————

Don’t be ridiculous Brian.

What you and so many others here always seem to forget are US strengths. You always just focus on weakness and the debt picture as though that is all there is to the scenery.

You could not be more wrong.

Do you even know which country has the worlds largest economy and is still (surprisingly) the biggest manufacturer and researcher?

Do you know who’s land grows much of the food production for the world and is absolutely essential to Asia and Africa as the globes largest grains exporter?

Are you aware that same country is actually a commodity nation much like Canada and can easily pay all its obligations on that simple basis alone? In spades Brian. Few nations are as wealthy as America in the fields of finance, raw resources, energy, education, technology and agricultural business.

Possibly none.

At their lowest point they still stand well above most others. That is why the dollar is not truly risk and it is why bonds rose on fears despite the downgrade by S&P.

Perhaps you also heard they are first amongst nations in nano-technology, aerospace, pharmaceuticals, software, semi-conductor design, military advances, long range commercial aircraft, biotech, genetics and even new energy efficient patents.

Oh yeah. Forgot. You like G**d. You just missed out on all the really juicy bits that came between a shrinking dollar and the doomer end-of-days.

You know. Like the good stuff that actually makes money.

#88 Thetruth on 08.10.11 at 1:33 am

Interest rates going nowhere folks…as predicted :) over a year and a half ago!!

My bet that Canada’s currency would lose value against the US$ paid immense dividends this past week. Especially with 100-1 leverage!!

Time for a vacation!! Oh, I left today! rewards…

And regarding Van RE… immigration is going to do wonders!!! But hey, don’t take my advice. I apparently just make things up LOL.

#89 BPOE on 08.10.11 at 1:41 am

Folks, don’t believe everything you read. Get in your car and drive around Richmond, BC. Fact is houses are being bulldozed with whole neighbourhoods being rebuilt with monster homes. The cash is flooding into BPOE. Don’t believe me. Come down and take a look for yourself. Only Canadians are tapped out. We’re not too interested in the few coins they have in their pockets. BPOE is geared towards the Big Boys

#90 chris on 08.10.11 at 2:40 am

Hey Garth, is Vancouver a major canadian city?
I ask this because every time i drive to work to the west side of Van i see nothing but a sea of SOLD on 95% of the homes listed for sale there.

Am a little disapointed about your forcasting so far.
Take care.

#91 VanCity Girl on 08.10.11 at 3:04 am

My mom is trying to sell a condo in Richmond. 2 months on the market and nothing. Not a soul. Already dropped the price twice. It’s a newer condo in central Richmond. So where are all these Asian buyers? Can Cam Good please bring some over cuz we ain’t seeing any.

#92 BigAl (Original) on 08.10.11 at 3:36 am

Canada’s real estate correction could’a, should’a, would’a, happened by now but hasn’t.
There’s one huge elephant in the room that this blog does not address. That is the inherent corruption and collusion in the system by the banks, government, media, and other players.

I know it sounds conspiratorial, but hey, its true. What, no conspiracies have EVER happened at top levels in ALL of history? Especially when the wealth of national treasuries have been involved? Give me a break.

The rational attempts to analyze and predict on this blog and elsewhere are meaningless without taking into account the corruption and collusion, instead of pretending they don’t exist. Is it really a free market we’re dealing with, with full transparency and free flow of reliable information?

I know this blog and posters have taken the view that even if its corrupt, so what, and profit from it if its ‘legal’. Well, there’s lots of things I could profit from that are ‘legal’, like opening a body rub parlour, or strip club. Or sell ripoff RESP schemes that rob kids and parents of their money. Or engage in predatory lending. So it goes with banks and their stocks…if you slap lipstick and a suit on a pig, its still a pig.

And sleaze is sleaze.

#93 Lou on 08.10.11 at 4:54 am

Over here in Chester NS.
Been waiting for a few years now to move to Vancouver island. Been waiting for a price drop in them pricey houses over there. Fishing’s much better over there. I’m going to take your advice Garth, I’m going to grow a beard. Maybe that will better my chances of getting a deal.
Capt Lou reportin frum the south shore.

#94 Ben on 08.10.11 at 5:53 am

Yup, Ben pushed down the gas pedal on the stock market. What are you going to do? Buy a T-Bill or a term deposit? lol
Margin costs virtually nothing for the next two years. The risk is on!

#95 timo on 08.10.11 at 5:56 am

http://finance.yahoo.com/news/Tumult-on-Wall-Street-apf-4029540155.html?x=0&sec=topStories&pos=main&asset=&ccode=

panic saving.

http://www.telegraph.co.uk/finance/personalfinance/savings/3520578/Prepare-for-an-era-of-deflation.html

#96 Imstupid on 08.10.11 at 6:21 am

Hi Garth

I agree with your 5 points with regards to price decline in real-estate. What I don’t agree with is the innovation required in the US to avoid a Japenese style lost decade. The innovation required would nothing less than a new industry, I don’t think that will happen. I’m sure we will see scences like the market downturn play out over and over during the next few years. The fed will respond until they have no more tools to prevent the market from declining. The truth is that the level of consumer spending in the US was based as in Canada with credit not income growth. The US will recover but only when all those with bad credit due to walking away from homes are able to borrow again with normal interest rates until then good luck.

#97 mid-Ontario on 08.10.11 at 7:24 am

Cracks in world as we know it continue to show up in England today with lawless youth looting and firebombing. If this spreads to NA, look out. In part, this is the result of a lackluster economy. Exactly what the bearded one predicted for the US for an indefinite period of time.

Rumours persist that a certain police chief of a large metro city has been asked to fly to Britain to teach the locals how to round up theatre patrons using plastic bullets, clubs and mace to pad arrest numbers. Finding and ripping the prosthesis from a “terrorist” may be a challenge this time around though.

#98 Dave on 08.10.11 at 7:44 am

The U.S. WILL BE NOTHING LIKE JAPAN.

Sure they’ll be and is deflation right as we speak… priced in gold (currency you can’t print). Priced in gold and silver everything is down, including gasoline at the pumps which is close to lows priced in silver not seen since the 20’s.

Secondly, Japan is a creditor nation with a trade surplus, while the U.S. is the world’s largest debtor nation. Japanese citizens have had a higher savings rate while U.S. citizens are completely broke. The vast majority of what Japan owes are to it’s own citizens.

Totally different economic circumstances.

And if you still say that United States is still the strongest economy? Their GDP is nearly 73% consumption. Consuming goods and not producing relatively anything is a huge fundamental imbalance that won’t be solved anytime soon with easy monetary policy and huge fiscal deficits.

If you think the U.S. will anything like Japan you are dreaming too much about sunshine, lollipops and rainbows.

Time to start reading some Austrian economics, Garth. You know, real economics.

Yes, let’s emulate Austria! — Garth

#99 househornyhousewife on 08.10.11 at 7:44 am

Garth,

You are absolutely correct about our housing market eventually following the rest of what is happening .. it simply cannot live isolated within that bubble forever.

However, I can tell you that over here in some parts of Québec, sellers are still hanging on to their 2006 asking prices in the hopes of nabbing some unsuspecting sucker who hasn’t been living on this planet for the last half a decade (unlike Vancouver and Toronto, our housing market has been much slower since before the infamous crash of 2008 .. just don’t tell the real estate agents as they prefer to live in ignorance).

In the meantime, many of these inflated properties are sitting on the market collecting dust with no one interested in even visiting them at those prices. I am sure that it is only a matter of time before sellers will be forced to lower their expectations if they truly want to sell and get on with their lives.

The only other choice is to leave the thing on the market, keep throwing away money on interest on the mortgage and wait until the property has some serious maintenance issues which require even more cash. How stupid can one get ?

I just don’t understand how people can be in such denial about what is truly happening. Face reality and deal with it !

HHHW

#100 SaraBeth on 08.10.11 at 7:47 am

The Fed can say anything they want right now…it is not written in stone. I suspect that interest rates will creep up over the next two years…they can always change their mind claiming that the situation has “evolved” or whatever…

#101 Steven Rowlandson on 08.10.11 at 7:51 am

Let me guess. The guy in the hospital bed spent his whole life working and investing to try to buy his first home so that he could get married and start a family.
Every step of the way he kept on getting jewed by the stock market and the real estate prices went up faster than he could save and at long last he gave up trying and decided to get married and have sex for the first time just before he dies. Just like a salmon.

#102 Ret on 08.10.11 at 8:08 am

I wondered how long it would take his secretary to find the old boy’s financial statements.

#103 T.O. Bubble Boy on 08.10.11 at 8:14 am

I have to laugh at this one… just a few days too early for all of these eager beavers:

US Mortgage Volume Jumped Last Week On Rate-Driven Refinancing

Refinance activity soared 30% to the highest level of 2011, according to the MBA’s weekly survey.

Apparently scare tactics do work! How many of these people would have re-financed if they knew that (even with a debt downgrade) bond yields are down, and variable mortgages will remain flat for 2 more years?

#104 Aaron - Melbourne on 08.10.11 at 8:17 am

#86 Lead Paint on 08.10.11 at 1:07 am
Why is everyone talking all this economic crap on a beard blog?

**********
great comment. I laughed so hard I keyed!

#105 T.O. Bubble Boy on 08.10.11 at 8:19 am

Here is one difference between the US and Japan: the US is home to most of the world’s multi-nationals, which own and/or sell to virtually every other market on the planet. As the US dollar tanks, and US consumer sales continue to slump (assuming Bernanke’s free money doesn’t spark a new consumer debt party), this simply changes the mix of revenues for these companies — more international, less domestic. Yes, the US is the biggest market, and you can’t grow if your biggest market is slowing too fast — but the hope for most companies would be to try and hang onto a status quo in the US and keep acquiring/growing internationally.

#106 Love this Blog on 08.10.11 at 8:32 am

#23 Kilby said “City of Vernon B.C. Population 36,000 (In the sunny Okanagan)
177 active listings of residential properties.

July 11/11 to August 9/11

10 new sales in the last 30 days!”

Gotcha beat my friend. Watrous/Manitou beach Sask, 2 small communities, side by side. 3 miles apart. 41 listings on MLS for a population of about 2600 combined. Everyone still living in la la land, wanting the moon for their properties. Not including a handful of private listings. It’s “different here” too…..lol.

#107 MoneyMyHoney on 08.10.11 at 8:39 am

#21 Gerge
Interest rates, are not going to go up anytime soon. Instead they are going to go down. Read this: http://www.moneyville.ca/article/1037066–interest-rates-may-be-set-to-fall?bn=1

It now goes counter to what Garth has been saying for a long time.

Read my post above. Then talk. — Garth

#108 Linda on 08.10.11 at 8:41 am

#87 – Utopia: Great post; you’re right!

#109 BrianT on 08.10.11 at 8:47 am

#92Big-IMO your comparison to strip clubs and body rub parlours isn’t a fair one-when someone walks into a strip club or body rub place they basically get what they pay for-the whole operation doesn’t rest upon a basis of institutionalized fraud. A better comparison would be the old shell game practiced on the streets of NYC.

#110 BrianT on 08.10.11 at 8:53 am

#87Ut-Very convincing-#1 in all areas-whatever you say. We can assume that things are going just fine down south as you proclaim-it is the critics that are the problem, not ununfunded liability of about 1.3 million per taxpayer (at last glance). We’re number one-we’re number one-just keep saying it like a mantra and everything will be fine.

#111 arctodus on 08.10.11 at 9:02 am

The raw unadultered ignorance of reality on this blog is mind boggling.

Garth cannot tell the difference between technological innovation and energy availablity,….everyone thinks that the economy is driven by demand and that pixie dust supplies never ending motive force,…..even the fricking “doomers” think that if we could just adopt Austrian economics and a gold standard we would all be saved…..

utterly and completely clueless

Let me tell you something about North American “Innovation and ingenuity”…lets pick something basic….say agriculture…..we are so damn “efficient” that it takes us 10 calories of petro input energy to produce 1 single calorie of food energy…hell even your Bubba’s garden out back produced a net gain of 2/1 for her efforts…..

now factor in a pulsing never ending rise in energy costs…..forgetaboutit……now multiple that dynamic by virtually ever single endeavour we do in modern society….??

But ya’ll keep tilting at windmills and investing in your fantasies.

Hey, I just found out we all die, too. Bummer. — Garth

#112 bigrider on 08.10.11 at 9:03 am

Smoking man.

I guess with interest rates heading lower, buying a condo in T.O like the new Greenpark project at yonge and davisville as a flip is a no brainer move.

Only a few left on that one and they have all been sold, almost 100%, to insiders on speculation alone.

#113 Utopia on 08.10.11 at 9:06 am

In reality, yesterdays comments from Mr Ben Bernanke offered very little that was new or novel. He merely changed one or two words in his usual speech.

What he did give us was a low interest rate time-line with which to work though. That means we all have a second chance to change our ways before the interest rate pain begins.

I suggest we use the time productively now.

Meanwhile, up here in Canada, the TD is sending a more worrying signal. I think this quote from one of their economists is one we can take to heart and begin to act on.

“The housing market and the Canadian economy as a whole are more susceptible to an economic downturn than they were at the outset of the 2008-2009 recession, said Diana Petramala, an economist with TD Bank.

“Households aren’t starting in a position where they have a strong ability to take on more debt (and) continue spending despite the economic downturn and help drive a recovery,” Petramala said.

“I think at this point . . . households would start to ease on their rate of borrowing and probably cut back on purchases.”

Any continuation of stock market volatility could weaken consumer and business confidence, meaning that households may hold back on big ticket purchases like home buying and developers could be jittery about new builds, she added” ~~Canadian Press
————————
What needs to be added to that? It jives with this site very nicely too.

If you have taken advantage of low rates to get real estate appreciation it is now time to consider crystallizing profits and move into other asset classes.

Few will do it though judging by how Australians are responding to the very clear signs of a housing bust down under. It must be human nature to live in denial and refuse to act when time is short.

In any event. Bernankes time-line is a gift. Use it well.

#114 KIM on 08.10.11 at 9:07 am

The game is rigged. If We lived in a free country where free markets were allowed to run free of intervention We wouldn’t have a housing bubble. Garth what’s the point of working and saving and thinking how to invest and save when stupid people without money are laughing? Why didn’t they allowed the free market to correct the housing bubble in 2008? I know so many people who are so stupid and broke but they live like kings on debt and I live with money within my own means. Are We now living in a 1984 world?

#115 thinktank on 08.10.11 at 9:09 am

I agree with a NUMBER of previous posters Garth – KUDOS on each point – one of your best – your ability to cut through all the crap is what keeps me coming back even if I dont agree with everything you say – you stand your ground – nothing worse than a flip flopper.

On the markets (and I KNOW you will disagree with me on this) if ANYONE doesnt believe that markets are manilpulated beyond comprehension – just look at yesterdays rally into the close. Hell even CNBC acknowledged that the average investor (or trader) was going against machine trading. That was 95% algo program buying across huge institutions and the rest were traders like myself along for the ride. Remember this – as easy as they rallied the markets yesterday – they can do the same in reverse to the downside. Hell we just witnessed it for the past 2 weeks. If everything were so great to cause a 600+ point bounce from the lows yesterday …. why are the futures a DAY LATER down -100+ points again this morning ?? Did I miss some breaking news ?? No – its pure market manilpulation, dark pool trading, market makers sleeving orders . Heres the thing … I make my living off of trading so I personally love the swings and volatility … but it is further evidence why BUY and HOLD has gone the way of 56k dial up internet connection. Just look at what the past 12 years has generated in a buy and hold portfolio (equities) – 12 years !!!!!!!!!!!!! my favorite saying of all time “actions speak louder than words” … take a look at your OWN buy and hold portfolios and calculate your average annualized rate of return ….. yeeeessh .. and Garth said hes glad I dont manage his money … right now a GOOD trader is worth his weight in gold in this market and thats saying a lot given what gold is curretly doing !

#116 BSkinner on 08.10.11 at 9:11 am

So US rates staying low for 2yrs, expect BoC will follow in kind. No disincentives for Cdns to indulge (in housing or consumer spending). While this is good for the economy today, where is this going to leave us 10, 15yrs from now?

Does anyone have a responsibility for watching out for and taking action for the collective good of Cdns? Gov’ts seems to only think in 4yr stretches. Plus they get skewered if they try to be like “Premier Dad of Ontario”.

#117 Utopia on 08.10.11 at 9:12 am

#110 BrianT on 08.10.11 at 8:53 am

There are always problems everywhere Brian. Even in the US. The world is not ending though. I am honestly far more concerned about the Chinese property bubble and the negative outcomes for the global economy as Asia slows than I am worried about America where, despite all the debt woes, there is stability and domestic cohesion. Try to think positive. You will feel better.

#118 Bottoms_Up on 08.10.11 at 9:27 am

#52 waterloo Resident on 08.09.11 at 11:04 pm
———————————————–
There are bidding wars in the tri-city because people are crazy.

A $387,000 house is NOT affordable to the average family.

Thus, your example supports Garth’s quote.

#119 Devil's Advocate on 08.10.11 at 9:33 am

#23Kilby on 08.09.11 at 10:29 pm

City of Vernon B.C. Population 36,000 (In the sunny Okanagan)

177 active listings of residential properties.

July 11/11 to August 9/11

10 new sales in the last 30 days!

10 new sales in the last 30 days! I call B.S.

Drawing an approximate four mile radius around the center of the City of Vernon encapsulating all those listings within and thus not including such outlying areas as Armstrong, Lumby or Oyama there are currently 589 active listings of single family residential units not 177.

In the last 30 days in that area there were exactly 58 sales of such properties averaging a sale price of $465,017 on a list price of $484,872 after an average 94 days on the market. The most expensive sale was a 5,708 square foot, 6 bedroom, 8 bathroom home which sold for $1,840,000 on the list price of $1,950,000 taking 345 days exposure to the market to achieve that sale. The least expensive sale was a 1 bedroom, 1 bathroom home of 530 square feet which sold for $130,000 on the list price of $140,000 after just 1 day’s exposure to the market.

Please Kilby, if you are going to publicly quote facts and figures at least ensure some reasonable degree of accuracy.

#120 Bottoms_Up on 08.10.11 at 9:34 am

#34 ‘kin loving it on 08.09.11 at 10:37 pm
——————————————–
I love how the square footage is listed to 4 decimal places! hahaha

It’s like saying:

“We’re giving you a raise. Your new pay will be $10.8999 per hour”

Makes you feel rich eh?

#121 timo on 08.10.11 at 9:36 am

utopia , +100

we are in deflation, cover your ass and stay out of debt.

#122 disciple on 08.10.11 at 9:37 am

#77 Housebuster…

Is Waterloo a major Canadian city? — Garth
———————

Is Waterloo even a city?

——————————————-

What is a Waterloo?

#123 Bottoms_Up on 08.10.11 at 9:38 am

#14 Ralph Cramdown on 08.09.11 at 10:20 pm
———————————————–
If the builder is holding the mortgage, then they probably have it as an asset on their books. It’s above my head but they probably aren’t banking on prices dropping….(so whenever the unit sells, they will get paid).

It would also be interesting to know what they consider a ‘loss’ to be (i.e. gross condo price or factoring in all fees associated with selling?)

#124 Daisy Mae on 08.10.11 at 9:42 am

Yesterday you said: “…..because companies are profitable, the economy’s expanding, emerging markets still emerge, technology is rampant….”

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

But if we’re saturated with debt, experiencing high unemployment, with wages stagnating — todays blog — how can the economy expand?

I believe someone yesterday asked this question. It is confusing. (??)

#125 Daisy Mae on 08.10.11 at 9:53 am

shanks on 08.09.11 at 10:20 pm “lol Garth, out of all the doomer websites, this one is the best!”

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

Quite the contrary. Garth is trying to arm us so we’ll be as knowledgeable as possible.

There’s a huge difference between giving in, giving up –and meeting challenges head on.

#126 Devil's Advocate on 08.10.11 at 9:54 am

#91VanCity Girl on 08.10.11 at 3:04 am

My mom is trying to sell a condo in Richmond. 2 months on the market and nothing. Not a soul. Already dropped the price twice. It’s a newer condo in central Richmond. So where are all these Asian buyers? Can Cam Good please bring some over cuz we ain’t seeing any.

Apparently she has not dropped the price enough as clearly she was way overpriced at the onset and unfortunately now, due to her blind greed, has missed her greatest marketing opportunity. The cost for initial overpricing is a necessity to underprice in order to garner the attention of a discerning buyer’s market.

Oh and the Asians buyer gig is winding down not to mention it never included the condo market quite so much.

#127 panopticon singularity on 08.10.11 at 9:59 am

Is Waterloo even a city?

most waterloo residents think they live in the center of the universe, unfortunately no one else has realized that yet as evidenced by the reaction here.

i have about a dozen friends that work in the “high tech” sector, doing very low tech things like accounting, hr and “marketing” (whatever that is).

the belief seems to be the party will never end here, everybodys got at least one house and one investment property, cars, boats, atv’s you know things that only go up in value.

not sure whos buying houses here there arent very many good jobs, most manufacturing has either gone bankrupt or severly downsized.

it was masked by RIM until now. everyone looking in from the outside is waiting for the other shoe to drop, that place is a train wreck.

one plus is the traffic is alot better since the RIM layoffs.

#128 cory on 08.10.11 at 10:00 am

#77 House Buster
#122 Disciple

What’s whit the putdowns for Waterloo?

It’s a great city and a wonderful place to live.

#129 disciple on 08.10.11 at 10:03 am

#92 Big Al…very few know better than I the extent and breadth of the corruption in our world. It is systemic. Not limited to any one field of knowledge, for the evil ones have their shadow emissaries in every facet of society, whose only job is to slowly turn the screws of fascist control over every detail of our lives…
BUT…
That does not excuse you from the moral obligation to serve your fellow man. In your battle against evil, if you truly desire to win, you will realize the battle is with yourself, the struggle is within. You create the world, you are the system. Therefore, if it is corrupt, it is your fault. Together, let’s start changing it. You can begin by investing yourself for the next two years in some REIT ETF’s: XRE and/or ZRE.

While your assets grow, so should your resolve to acquire knowledge, not for the enslavement of your fellow humans, but for their liberation. Our real enemies do the exact opposite, and they are ever so clever. There are more of us, than there are of them. British politicians are discovering this as we speak, and blaming it on “bad parenting”. I laughed out loud with that one.

#130 The American on 08.10.11 at 10:07 am

And here it is…

http://finance.yahoo.com/blogs/daily-ticker/p-slammed-u-downgrade-174205361.html

#131 WaterlooResident on 08.10.11 at 10:09 am

To hell with this crazy blog, damn the horses, I’m buying a house !
Well, I’m just placing the down payment that I’ll be making, its my lady friend “Michelle” who is actually ‘buying’ the house.

Here is the situation:

– I’ve been living with my lady-friend in a rented house now for about 2 years, we’re not much more than just friends, and we are not romantically involved or anything like that.

– I rent the 3 bedroom house in Waterloo for $1,300.

– I pay the rent for the entire house, I let Michelle stay at my place for free (rent-free).

– December 1st the rent on the house will be rising to $1,500 per month.

– I’ve talked to the landlord and he refuses to budge, he has told me that if I’m even a minute late on the rent he will start eviction proceedings, even though I’ve never missed a month’s rent in the past 3 years.

– Michelle works for the Government as an accountant, she is currently earning $54,000 per year and with a $15,000 down payment (5% down) she qualifies for a $275,000 mortgage.

– I told her that if she buys a house with HER income, I will move in and rent her house from her for $1,500 per month, guaranteed for the next 2 years!

– She has NO savings, and her credit cards are maxed out, so I told her I’ll pay her the $15,000 + $10,000 closing / transfer costs if she signs a legal agreement to pay me back when she sells, PLUS 25% of the capital gain in the house when she sells.

– If the house prices fall in the next few years I will help her to declare personal bankruptcy so she can simply walk away from the house, and I will walk away from the $25,000 that i lent to her.

– With interest rates staying at EMERGENCY LOWS for the next 2 to 4 years, houses will be guaranteed to rise 30% – 50% more from the levels they are at now.

– So in 4 years she’ll sell, I’ll get 25% of the gains , and Michelle will get 75% of the gains.

– If there are no gains, well just walk away from the house, and I will go rent another house for $1,500 and she can live with me in a spare bedroom for free again.

#132 the Phantom on 08.10.11 at 10:27 am

Morning All:

Time will tell what transpires south of here. I suspect that the only choices that Mr Ben B has is to either inflate or die. My inclinations (based upon previous actions of the fed) tell me that they will inflate although QE3 may likely be brought forth under a different name or heading.

The one question I DO have though for those who possess more macro-economic finesse or acumen than I do relates to the presence of low interest rates. If rates remain low for a considerable stretch of time, do we not run the risk of encouraging inflation or hyper-inflation. Comments from other bloggers with savvy are appreciated and I’ll check back here from time to time to see what’s been posted…

the Phantom

#133 Jake T. on 08.10.11 at 10:27 am

the Dow Jones is down 321 points but it is not enough it should drop 3210 points. Ha!Ha!Ha!Ha!Ha!Ha!

Make a contribution to the discussion or buzz off. — Garth

#134 BPOE on 08.10.11 at 10:27 am

Chris,
Sometimes a persons ego gets in the way of seeing the reality of the situation. Along with housing never going down in Vancouver we are seeing right before our eyes the destruction of the American dollar and the rise of gold. A TRUE balanced portfolio in the NEW REALITY is Vancouver and Gold. Anyone owning this two pronged balanced approach to investing has made out like a bandit. Do you want a balanced portfolio of stocks which are GUARANTEED to give sub par returns? Folks, this is not doom and gloom these are FACTS QE3 is happening and this will only fuel Vancouver and the gold market. Investors like Warren Buffet are FINISHED. Within a few months magazine covers will declare the old coot has lost his magic touch. This is a FACT.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
90 chris on 08.10.11 at 2:40 am
Hey Garth, is Vancouver a major canadian city?
I ask this because every time i drive to work to the west side of Van i see nothing but a sea of SOLD on 95% of the homes listed for sale there.

Am a little disapointed about your forcasting so far.
Take care.
.

#135 Daisy Mae on 08.10.11 at 10:32 am

waterloo Resident on 08.09.11 at 11:04 pm

“The used to be lots of ‘for sale’ signs over the last few weeks, but now when I drive around most of them are gone….”

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

People gave up….the listings expired.

#136 BrianT on 08.10.11 at 10:35 am

#117Ut-To the contrary, you are the poster that is perennially negative in the extreme. You feel that investing in precious metals is somehow “wrong” because an authority figure convinced you of this, yet it never occurs to you to question this childish mindset. Is that what you define as positive thinking?

#137 bill on 08.10.11 at 10:38 am

jewed steve ?
how about niggered or chinked or honkied?
what a jerk

I did not catch that reference. It would have been deleted. My apologies for missing the racist and wholly unacceptable remark. — Garth

#138 disciple on 08.10.11 at 10:44 am

#129 cory…sorry, no hard feelings, I’m sure it is a great place to call home. You know, this just underscores another point I wanted to make regarding the sentiment that not all locales in Canada will feel the lash of the housing downturn. They will. It doesn’t matter if you think prices are reasonable in your area, as your home is only worth as much as someone will be willing to pay for it, so if a buyer can find a better home for a little more somewhere else, you’re out of luck.

Personally, I would buy real estate near a university or college in a pleasant town (does KW fit the bill?) for the rental income, but as a scientist, I need to be where not only innovation is rampant, but also where there are a multitude of cultures and gene pools. That last part is what is holding back Germany and dare I say, KW? Diversity is the key to the future of this country, we have to be able to market ourselves to the rest of the world.

#139 timo on 08.10.11 at 10:53 am

http://www.cnbc.com/id/44084807?__source=yahoo|headline|quote|text|&par=yahoo

hmmm? we want your gold!

In the euro zone, Germany is reported to be pushing Italy and Spain to sell their gold reserves.

#140 Calgaryillusion on 08.10.11 at 10:58 am

Exactly how much exposure do Canadian banks have to European banks and Italian sovereign debt? Garth, you have to admit that Europe is a very big black swan here

Nothing we didn’t know. — Garth

#141 b on 08.10.11 at 11:00 am

Rates may go back up sooner than Ben says, he has been wrong with just about everything.

For many many many months you focused on interest rates like they were the harbinger of real estate.

Today for you they are a thing of the past and everything else including your cousin’s hair style is the reason house prices will drop.

LOL what a switcheroo.

House prices will drop, but mainly because the financial system is insolvent, the printing presses will continue to bite purchasing power and folks will have to choose between mortgage payments and eating.

Meanwhile what is the gold to TSX ratio?

#142 The InvestorsFriend (Shawn Allen) on 08.10.11 at 11:00 am

BASHIN’ WARREN BUFFETT

Number 9 ClaudiusEmperor bashed Buffett…

As usual in such bashings it is based on attacking him for things he did not say.

Buffett said U.S. credit was safe and he does and would buy Treasuries all day long. This is short term stuff. He parks money in treasuries. He can’t just leave $40 billion in the office safe!

As to U.S. goverment treasury bonds. Right he is not buying. Berkshire holds little of those.

From memory (I looked it up last week) it is about 2 to 3 billion out of around 40 billion in fixed income. He reduced long treasury bonds to a small percentage years ago. He (Berkshire) does have a fair chunk of mortgage backed securities and some U.S. agency bonds. In general he has said he does not want to buy long term bonds. The exception is he buys some high yield bonds that he feels have better credit than the credit raters think. He has never relied on credit ratings. He is his own one-man credit rater.

Go ahead and bash Buffett but how about bashing what he really says and does, not what you think he says and does.

Berkshire Hathaway, he started buying in the early 1960’s at around $8 per share and took control in 1967 or 1966 at under $14 per share. Those same shares today trade at around $100,000. Book value on those same shares has gone from about $18 to about $98,000.

Berkshire trades at just a hair over Book value today.

Ignore the wisdom and question the integrity of Buffett at your own peril. When stinkin’ rich old investors speak, I LISTEN. You should too.

I am betting Buffett will announce more opportunistic investments before this current market crash is over.

#143 The InvestorsFriend (Shawn Allen) on 08.10.11 at 11:02 am

Minor correction, Berkshire trades at about $104,000 right now. I thought I saw $101,000 last night but that was not correct.

#144 Better Off. on 08.10.11 at 11:06 am

Like I said last night it was a dead Kitty bounce.
Bear back on.

#145 RL on 08.10.11 at 11:10 am

Out here on the West Coast last night the big story on the 6:00 PM News was the US freezing interest rates for two years – right from the “get go” the reporters and “experts” being interviewed went onto trumpet how this was positive for the Real Estate Market in Canada.

No analysis on the down side of this move, no comment on the long term ramifications this will cause or why the worlds biggest economy needs to make this type of statement.

It is sad that a desperate move like this by the country at the center of the universe is met with elation by the few who will now go out and use it has leverage to encourage more people to go out and purchase homes at an inflated price in a “hot rising” market.

Where will this end and what are we doing to our children.

#146 Pr on 08.10.11 at 11:23 am

Very informative this part: The housing market has traditionally croaked about six months after stock markets stumble. It happened in 1987, in 1998 and again in 2008. Will see if history repeat it self. Brace for impact!

#147 Kilby on 08.10.11 at 11:27 am

#119 Devil’s Advocate and #80 View

Checked the Okanagan Mainline Real Estate Board again this morning. Don’t know about a “4 mile radius” being drawn around the City of Vernon? That would include a lot of Coldstream. I was specifically referring to just listings in the “City of Vernon” The entire North Okanagan…Lumby, Armstrong, Enderby, Silver Star etc..Have over 2,500 listings. But they are not within the City of Vernon…

City of Vernon (only)
Residential (only)
August 10th
178 active listings on “hot sheet”.
July 12th to August 10th….9 completed sales.
2 condos, 7 SFH.
Bottom price condo on market for 392 days, asking $114,200, sold for $110,500.
Top sale, SFH. Ridgewater Court, Turtle Mountain, on market for 5 days, asking $599,000, sold for $592,000

#148 bill on 08.10.11 at 11:33 am

hey Garth I know that man .you do the good work

#149 Live Under Your Means on 08.10.11 at 11:38 am

#97 mid-Ontario on 08.10.11 at 7:24 am

Rumours persist that a certain police chief of a large metro city has been asked to fly to Britain to teach the locals how to round up theatre patrons using plastic bullets, clubs and mace to pad arrest numbers. Finding and ripping the prosthesis from a “terrorist” may be a challenge this time around though.
…………

Good one.

#150 Jake T. on 08.10.11 at 11:39 am

DELETED

#151 Form Man on 08.10.11 at 11:40 am

# 148 Kilby

here are the stats pulled from real estate boards and CMHC website for July 2011

Kelowna:
302 units sold
5332 units in inventory ( 17.6 months worth )
963 new listings
45 SFH starts ( 27% lower than July 2010 )

Kamloops:
186 units sold
2369 in inventory ( 12.7 months worth )
483 new listings
26 SFH starts ( 25% lower than July 2010 )

Vernon:
127 units sold
2685 units in inventory ( 21 months worth )
393 new listings
18 SFH starts ( 10% lower than July 2010 )

Experts consider 5-6 months of inventory a balanced market, with less than 5 months putting upward pressure on prices, and more than 6 months exerting downward pressure ( the U.S. nationally right now is at about 9 months ). Amazingly, local realtors are still describing the Okanagan market as ‘ balanced’. Need I say more……..

#152 BrianT on 08.10.11 at 11:44 am

#133Phantom-The game plan is to ideally have low interest rates, lowered wages and increased unemployment. Re inflation, the goal is to creatively understate it as much as possible. Hyperinflation is not like high inflation-it occurs when the currency is basically abandoned. You can start worrying when China abandons the peg and figures it is time to throw the dead weight overboard.

#153 cory on 08.10.11 at 11:52 am

139-disciple

Thank-you. No offence taken.

128- panopticon Singulairy

You are right, most people in Waterloo think that they live in the centre of the universe. I happen to feel the same way although I don’t live there any more. We moved just north of there to the country on a couple of acres though I have a few investment properties in Waterloo that do very well.

I grew up in Mississauga and my parents still live there. They are always pushing for us to come back because of the grandkids. There is no chance of that. If we ever move it will be back to the centre of the universe “Waterloo”.

#154 Smoking Man on 08.10.11 at 11:59 am

TSE down 1/2 a point not bad considering S&P and dow are selling off huge tsx venture is up….

Na na na na na ——– Bat Mam !!!!!!

never lies

#155 timo on 08.10.11 at 12:00 pm

RL on 08.10.11 at 11:10 am

It is sad that a desperate move like this by the country at the center of the universe is met with elation by the few who will now go out and use it has leverage to encourage more people to go out and purchase homes at an inflated price in a “hot rising” market.

Where will this end and what are we doing to our children.

but you know the truth and can prepare to take advantage of stupidity.

#156 Mythbuster on 08.10.11 at 12:11 pm

One day does not a trend make… :)

Quoting Garth: “Actually I have no worries about North American financial markets in the long term.”

You mean the long term, like, 100-200-500-1000 years??? Oops, in the long-term we’re all dead.

Jesse Livemore would say: “It is incredible how those who lose money in the bear market, feel great relief from a natural bear-market rally”.

Hey, all that happened yesterday was a normal rally that retraced just a fraction of the losses…

1) This is a Mama of a bear market – and Bernanke knows this
2) US$ is in the early stage of a MASSIVE BULL MARKET (deflation)
3) Bernanke can’t do a thing to re-inflate the economy
4) Obama, Bernanke, ECB, IMF are all ‘cooked’. Ponzi-Game is over.

Bear Market will end when it will be CHEAPER TO MANUFACTURE IN USA THAN IN CHINA. AND CHEAPER TO PROVIDE SERVICES BY AMERICANS THAN OUTSOURCING TO INDIA. ETC.

The is both a reason and a purpose to the Bear Market.

Capish?!

Actually that’s ‘capisce,’ and I do. Enjoy your cave. — Garth

#157 Silver on 08.10.11 at 12:16 pm

Ok so bought in Van 2003 at $315 thou…owe $168 thou
Assessment $785 thou.
Mortgage doubled up at $640 by weekly say $1200 month…
For the hell of it..we put it on the market as a silent listing…. $1.4 firm. Using a fairly well placed com. real estate agent (Third round with him,semi retired, been 33 years at this) willing to check with his contacts and take commercial com. on it if goes through at 4%? Would clear about $1.1 over and above current financial position . Not HAM friendly.
And could be it will happen…couple looked yesterday, hmmmm.
funny part is I know their agent too, and he comes from a respectable corner as well.
They also wonder if we are interested in a lease back for a year …. while they get permits.
no muss no fuss..very tempting to take it (the cash) now. And sit back for a min or two. And a very Long Vacation for sure.

Had it with methcouver’s bubblenomics.

your respected Thoughts Please….
Rae

Bail, of course. And never look back. The flash will blind you. — Garth

#158 Devore on 08.10.11 at 12:20 pm

#111 arctodus

say agriculture…..we are so damn “efficient” that it takes us 10 calories of petro input energy to produce 1 single calorie of food energy

Really? Did you know we can’t eat energy? I don’t know, maybe you can survive on the black stuff, or on solar energy alone (did you evolve photosynthesis?), but I don’t think most people can.

#159 45north on 08.10.11 at 12:22 pm

Disciple: What is a Waterloo?

an allegory for the housing market:

http://upload.wikimedia.org/wikipedia/commons/7/72/Battle_of_Waterloo_1815.PNG

Laurenda: thanks for the stats

Kitchener1: what are you talking about man? prices out here are actually dropping.

nonplused: LLS: Light Louisiana Sweet

Last Man: if your dad doesn’t have a beard you have two moms

pretty funny

BrianT Japan had a huge trade surplus but Johnny Bravo and Utopia have good points

Utopia: Fear now stalks the foyers of some mortgaged McMansions and the minds of every sorry sober debtor who’s job is on the line. Count a few thousand of our trusty public servants amongst them.

yeah like some with whom I work (figure that one out Smoking Man!)

Sherri: I wrote in late May asking whether or not to sell & rent. Well.. we’re on the market as of today.

I just did a double take. You’re selling. Hope you do.

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

‘kin loving it: thanks for the update

T.O. Bubble Boy: Speaking of price fatigue, since when did semi-detached 3-bdrm homes on 16-ft wide lots (with unfished basements) sell for $800k???

16 foot wide lot! you got to be kidding

squidly77: (like you were born in 77?) With interest rates near zero American banks will have little incentive to originate loans and mortgages

yeah why would they bother?

tigerbaby: what’s to get excited about? is there really a whole lot of difference between the two? ultimately FOMC will make adjustment as required regardless what was “likely to warrant” in previous meetings …

but SaraBeth said it best:

The Fed can say anything they want right now…it is not written in stone. they can always change their mind claiming that the situation has “evolved” or whatever…

If you want the job done, get a guy with a beard.

no prophet is without honour except in his home town:

http://www.ottawacitizen.com/business/Banking+better+times+Bernanke+hometown/5214631/story.html

#160 Kilby on 08.10.11 at 12:26 pm

#152 Form Man.
Funny how it depends how one asks for statistics. You are dead on, I get 2,523 for whole North Okanagan but if just input “All listings” for City of Vernon there is just 188 right now. Regardless, we sold our South Okanagan home on March 21st, 2011. Lake view in town, private 1/2 acre. Had lots of interest from locals but none could sell their homes to even offer. Professional paid market appraisal of $619,000. We sold for $497,000 in 7 months. Only a few of the others in our range have sold since. Glad to be out of the Valley and renting for a year before looking at the market again.

#161 GTA Girl on 08.10.11 at 12:29 pm

TO Bubble Boy: You are absolutely right in the insanity of prices for crap. I see it above Toronto. Semi-detach wasteland on open fields asking $600k. The twonhouses going for mid $500’s. Most who move in have small trade jobs, or retail.

In my area the majority of jobs are in homebuilding or offshoots. I’d roughly estimate 60% are. remainder rely on the residents with these jobs to survive ie…retail/food.

You look at the prices compare it to your own household budget and surmise that people are living with the water just lapping at their noses.

BigRider: I surmise that you are in the development industry. We probably know the same people. Don’t you see the danger in the spec condo market? Rents can’t cover costs. And I am hearing from those inside the industry, that there is no way any of them would buy the crap that is being built now. Workmanship is shoddy, building codes are being fudged, some will have concrete issues in times. The developers are becoming even more greedy with margins. One big glam condo has walls so thin that you can hear your neighbors clearly from all sides.

Thinking about purchasing a condo sickens me. People don’t seem to clue in that the swim up bar pool on the roof shown in artist rendering in sales brochures are not a guarantee. Even if built, the condo owners have to maintain and pay for it. And if the condo is mostly spec owned, renters will be using amenities. And if it is like the mess of the Mystic Point condos on the lake, beer bottles tossed from balconies, 20somethings partying at the pool till sick and drunk. Fire extinguishers let off in the elevator….paying %450k before tax, fees etc. to live in a frat house, doesn’t strike me as a wise investment.

Don’t even want to skip forward to think what some of these condos will be like in 7yrs. when parking garages leak, concrete starts cracking, roof goes, elevators go. and the roof top pools leak or turn green due to lack of maintenance.

If I ever bought a condo it’s be in a co-op building, like they have in New York. Screen buyers, maintain property and live with other who have pride in their purchase…no renters.

This is going to be a freaking mess.

#162 MoneyMyHoney on 08.10.11 at 12:29 pm

A few years back, those who threw all the money into gold were called speculators.
May be they were Seers not Speculators. Revere them.

#163 Kilby on 08.10.11 at 12:44 pm

#162 GTA Girl.
Interesting comments on living in a condo. We are leasing a 583 sq. ft. condo in North Vancouver. Right on the water at the foot of Lonsdale. Two 86 unit twin buildings,one is 40% inhabited and the other only about 20% Most of the 2 bedroom units ($700 to $900K) are leased or empty. Lots of 1 bedrooms are leased out, owned by speculators. Our one bedroom prices around $539K depending on locations in buildings. Great location and good looking buildings but very poor finishing, granite and stainless but so many blemishes due to poor workmanship. Not near worth the asking prices and that is reflected in the sales numbers. We had had problems with parties in the common room, need a $500 deposit to have more than 4 people in it. Break ins in storage and parking. Cigarette butts burning holes in patio furniture after being flicked off balconies. As the building fills with more rentals its going to be hard on the few owners that do live here who have invested a lot of money.

#164 45north on 08.10.11 at 12:46 pm

GTA Girl: paying $450k before tax, fees etc. to live in a frat house, doesn’t strike me as a wise investment.

If I ever bought a condo it’s be in a co-op building, like they have in New York.

go girl!

#165 Live Under Your Means on 08.10.11 at 12:48 pm

#99 househornyhousewife on 08.10.11 at 7:44 am

In the meantime, many of these inflated properties are sitting on the market collecting dust with no one interested in even visiting them at those prices. I am sure that it is only a matter of time before sellers will be forced to lower their expectations if they truly want to sell and get on with their lives.

The only other choice is to leave the thing on the market, keep throwing away money on interest on the mortgage and wait until the property has some serious maintenance issues which require even more cash. How stupid can one get ?

I just don’t understand how people can be in such denial about what is truly happening. Face reality and deal with it !
…………………..

Chatted with a neighbour Sunday. Son & DIL were visiting from Summerside. They had put their home on sale 6 months ago when the son transferred to PEI. Two or 3 mos. later his wife & 2 little ones moved & bought a home there. She was able to transfer and work from home. Neither work for the govt. Their house here has been on sale for 6 mos & is vacant – paying 2 mtgs, utilities, etc. Another neighbour’s BIL was the RE agent for 6 mos. and told me that the house didn’t sell due to the home being on the corner of a busy street. Shoot, it’s in a fairly new, relatively small development. I doubt there is that much traffic. I suspect they are asking too high a price & aren’t willing to lower it. They’ve just changed to a new RE company. They ‘moved’ up twice before within a few years. Second home was more for status – large & expensive. I know the area as it’s a street above us. The home they are trying to sell now is, in MHO, in a less desirable, but newer development than their previous 2 homes. Further to travel to work, etc.

Son’s parents plan on selling next spring and moving back to PEI. Will be interesting to see what it sells for.

Is it now the norm to sign a 6 mo. contract with a RE agent/company? I sure wouldn’t.

#166 Alex on 08.10.11 at 12:50 pm

BPOE, STFU unless you learn how to deal in reality. Richmond, long your Holy Grail, is dying. Approximately 2200 MLS listings in that silt-built city this morning – a figure that continues to accelerate as the days and weeks go by. And prices are…dropping. Two Richmond realtors I spoke with last week each guesstimated a drop of 10% in the past four months.

Nevertheless, half a cruddy duplex still runs in excess of $750,000. So really, BPODumb, what are you saying in your posts? That overpriced shacks in a city where prices are sinking, listings are surging, and rampant speculation has ended is a good move?

#167 Cookie Monster on 08.10.11 at 1:04 pm

Chip chip there mate, where you going with that bottle of petrol and burning rag?
I’m going to toss it through that store front sir!
Through the store front! What for young man?
Why, I’ve nothing better to do sir, nothing at all sir, nothing, I have not even hope.
No hope, oh, how can that be, when all we ever wanted was what’s best for you?
Thank you sir.
http://www.youtube.com/watch?v=MkZfwUj7geg

#168 Cookie Monster on 08.10.11 at 1:08 pm

That last link is slow, this one’s better.
http://www.youtube.com/watch?v=R_59q3FvPgQ

#169 timo on 08.10.11 at 1:21 pm

man the flight to safety is unreal.

http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield

people are running from europe.

#170 arctodus on 08.10.11 at 1:29 pm

#159
Really? Did you know we can’t eat energy? I don’t know, maybe you can survive on the black stuff, or on solar energy alone (did you evolve photosynthesis?), but I don’t think most people can.

Did you actually read what I wrote? If you did, then you apparently have no grasp on how industrial ag works……

#111
Hey, I just found out we all die, too. Bummer. — Garth

Cute Garth, but I do note that you never actually try and address the bedrock economic issue of our time. I believe it is because you do actually get it…and there ain’t no answer that is palatable to any modern western mind?

#171 Live Under Your Means on 08.10.11 at 1:36 pm

#138 bill on 08.10.11 at 10:38 am
jewed steve ?
how about niggered or chinked or honkied?
what a jerk

I did not catch that reference. It would have been deleted. My apologies for missing the racist and wholly unacceptable remark. — Garth

…………………………

I automatically gave you the benefit of the doubt that you had not catched that racist remark.

#172 Mug on 08.10.11 at 1:37 pm

Garth,

Can you summarize how many predictions have you ever made come true?

Too abundant to list here. — Garth

#173 Live Under Your Means on 08.10.11 at 1:39 pm

Oops – I think I should have said ‘caught’ instead of ‘catched’. Fingers are faster than mind sometimes.

#174 bigrider on 08.10.11 at 1:48 pm

BNN today hedge fund manager specializing in REITs said that with the U.S economy continuing to look more like Japan where Interest rates will remain low for many years to come, and cap rates for rentals at 5 then real esate will remain stable in Ontario and may even increase in price.

Your thought Garth or anyone?

Does that mean that such a truth also holds true for residential RE?

No. Commercial properties pay. Residential costs. No appreciation without increased affordability. — Garth

#175 Mister Obvious on 08.10.11 at 1:49 pm

#152 Form Man

That Vernon statistic is especially shocking. (2685 units of inventory @ 21 months). Vernon is really not very big. I know some folks trying to sell their mother’s home there. They have been waiting quite a while to “get their price”. Could be a while yet.

#176 vyw on 08.10.11 at 1:49 pm

#158
$1.1 million is alot. Lease-back, take care of the place, wind down, decompress – but be careful with investments. We’re in a war against deflation – if we lose, you still win.

#177 bigrider on 08.10.11 at 1:57 pm

#162 GTA girl to bigrider.

No not in the building industry but surrounded by those who are.

No , I am not buying an investment condo in that building nor any other.

What I am fearful of and what has been signaled by the bond market clearly, is that rates must go lower. If that is the case, then RE prices in Canada will probably increase and bubble will continue indefinitely.

Another frightening observation: If we are facing a Japan like scenario in the U.S where rates remain low for a prolonged period then so will Canada’s. What makes us different than Japan is the housing obsession we Canadians have will not cause a Japan like housing melt I’m afraid but simply re-affirm people’s belief that investing in housing is the ultimate investment.

After all if interest rates fall close to zero, I hardly think anyone here is going to care what size of mortgage they are carrying so long as payments are low.

It may, as terrified as I am to admit it because I hate the RE obsession, be different here afterall not because T.O or Vancouver is highly desirable but because Canadians are house addicts.

#178 Devore on 08.10.11 at 2:10 pm

#171 arctodus

Did you actually read what I wrote? If you did, then you apparently have no grasp on how industrial ag works……

Sure did! We’re converting stored energy into edible energy. You were bemoaning how it took 10 calories of oil to grow 1 calorie of food (I’ll just take your word for it), whereas your grandma only uses .5. Of course, your grandma’s garden is at least 50 times more labour intensive, so unless you’re into half the population engaging in subsistence farming again, I don’t think that’s the model going forward. We’ve got billions of people to feed here.

If I did not get your point, it is maybe because you did not make one, just spinning end of the world fantasies. I wish you doomers would just come out and say what you want to say, instead of beating around the bush all the time, hoping we follow your convoluted logic and assumptions to same conclusions on our own.

#179 refinow on 08.10.11 at 2:36 pm

#123 Mikey the Realtor.

nobody is jumping out of the stock market and landing in real estate.
Can you actually say that with a straight face.

i agree that Real estate will eventually be a buy again but not until we complete the cycle.

I hope you have suqirreled away a few commission cheques, becasue its going to be a long cold winter for the real estate industry.

#180 a prairie dawg on 08.10.11 at 2:44 pm

#163 MoneyMyHoney

Gold ain’t all that. Based on my average price for a small stake bought over the last 5 years it’s up 125% for me.

Yet my entire self-directed equity portfolio including losses is up 500% (not a typo) in less time than that. (2-3 years)

My managed bond fund is up 27% over the last 4 years, and my real estate is up 120% in 10 years.

My net worth would be lower today had I gone all the way with “gold fever”.

Diversify or suffer.

#181 BC Bring Cash on 08.10.11 at 2:47 pm

Here’s what Helicopter Ben really thinks about the US economy when under the influence of a little too much alcohol.
http://www.theonion.com/articles/drunken-ben-bernanke-tells-everyone-at-neighborhoo,21059/

#182 Dad on 08.10.11 at 2:47 pm

DELETED

#183 Live Under Your Means on 08.10.11 at 2:54 pm

I would NEVER again own a condo apt. or townhouse. Spent Sat. eve. at my sister & BIL’s for a BBQ with a mutual friend, and her family from Ontario.

Next morning 4 of us we sat outside talking about condo business. BIL has been on the board for a few years now.

Used to live in one of the townhouse condos & hubby & I had a major fight with the old condo board. Sis said to me Sat. “sure you’re glad you sold years ago”. Yep. About 14+ units are owned by a co-op. Lots of problems with the ‘renters’

#184 Smoking Man on 08.10.11 at 3:04 pm

O’ what is this? the TSE screaming back to life…………

See how it’s done kids…………..

Leason number 101……

News means absolutly nothing on its own, it’s how markets react to it that you need to observe…..

This moring when S&P 500 and Dow was selling off, the TSE was down but holding it’s own, another 20% of my easy money went in hard………

#185 thinktank on 08.10.11 at 3:16 pm

of all the blogs and sites I read through out the day …this is one of my favorites …Garth’s insights and humor are great and ao are the posts from readers like me … Keep policing the comments like a hawk Garth… racial slurs seriously piss me off and it degrades the value of the site and some (not all …lol) inisghtful commentary. I can guarantee I am not alone in this view … I hope whoever posted the one that got through gets a permanent ban by your webmasters.

#186 Snowboid on 08.10.11 at 3:19 pm

#164 Kilby…

Saw similar situations in Kelowna, near new condos downtown, good location near lake – but also poor workmanship (drywall seams showing, gaps in trim and baseboards – despite the shiny stainless and granite).

When we nearly walked though vomit coming out of the elevator on one floor (there were multiple rentals to look at) we passed.

It was one of two buildings, both finished, but the developer is neither selling nor renting the other one.

The complex we ended up in only allows 10% rentals at any one time, but that only works with buildings that already have a large owner-resident population.

#187 timo on 08.10.11 at 3:23 pm

http://timiacono.com/index.php/2011/08/10/debt-champions/

Double, double toil and trouble
Fire burn, and cauldron bubble.

http://www.enotes.com/shakespeare-quotes/double-double-toil-trouble

#188 jess on 08.10.11 at 3:30 pm

Lawmakers target “shell” companies Wyoming News
Aug 8 –

…”banning “nominee” officers and directors … Specifically, the bill would make anyone acting as a director or officer of a corporation or a nonprofit group assume all fiduciary duties of the role.”
=
Media changing public perception … television, radio and billboard advertisements will illustrate tax dodgers in a grotesque caricatural manner as parasites sucking resources from the social system and making no positive contribution to society.”

Italy’s Tax Evaders Labeled as Parasites
http://www.taxationinfonews.com

#189 Form Man on 08.10.11 at 3:32 pm

#161 Kilby

Good point about how stats are presented/obtained. CMHC has good detailed info on communities and regions all over Canada, but you really have to dig to find any info on cities smaller than 100,000. I still have not found all the data for Penticton yet, hence its absence from the list I provided. Interesting about empty condo buildings in Vancouver ( which supposedly has a shortage……….)

#190 Jim in the distant suburb of Vancouver on 08.10.11 at 3:38 pm

Bang on, Garth! No way this wrinkly, disgusting old fart who used to have all his wealth in a house but got out alive is going to buy another one any time soon!

#191 dd on 08.10.11 at 3:53 pm

#10 squidly77

QE is a given. Look at euro cental bank. They just bought up bonds for Spain and Italy. It they didn”t step in the rates would have been north of 6%. Furthermore the US Fed has said that rates will remain low for the next 2 years. How will they maintain such low rates? YA … QE.

#192 Cookie Monster on 08.10.11 at 3:54 pm

#179 Devore on 08.10.11 at 2:10 pm
The point is we depend on vast amounts of energy and products derived from fossil fuels to support our standard of living, meaning food production and transportation/distribution.
Is that clear enough for you? Maybe not.
So if you realize that it’s a limited resource, then our standard of living is also limited if we keep on doing what we’re doing, we must change or suffer.
Get it?

#193 Victoria Tea Party on 08.10.11 at 3:55 pm

#133 the phantom

Inflation is on the horizon because of the US’s essentially unrepayable debts (that’s why gold blew through $1,800.00 US an ounce!).

Ben and the Lads may still launch an “official” QE3 following their annual August retreat in Wyoming.

In the meantime they floated an “unofficial” QE# during Tuesday’s market madness which helped to influence a resultant 430 point increase on the day.

Wednesday’s Dow had a less anguine close which means investors are less enthusatic about this “new” QE3 idea.

Essentially what Big Ben PROPOSES, in light of the Fed’s promise to hold interest rates at current low levels for the next two years, is to invite unlimited borrowings by anyone with a heart beat, thus bringing eventual inflation.

Inflation, being the best pal of miscreant debtors, means lenders will get their money back with devalued Greenbaks.

So, how do you think China, Japan and the rest of them will look upon that ripoff?

They’ll seeth, and then keep on buying increasingly worthless American paper, because that’s just the way it is. It’s business not fairness.

However, before one gets too smug about such an equation and, thus thinking the US is monetarily and fiscally above the fray for all time, a pause, please. The US it isn’t THAT “special”.

But far be it for me to forecast the Black Swan repercussions that, history tells us, always tends to follow.

Permabear Karl Denninger, from his Market Ticker blog on Wednesday has this offering about the US debt monster’s approximate life-span:

“There’s more than thirty years of hard mathematical fact that all economic policies of the last 30 years in this country, irrespective of party, has in fact devolved into an utter mathematical impossibility when one considers the longer-run future.

This organized fraud upon the public by both political parties and their minions must end right now.

We are in the end stages of this Ponzi Scheme and are teetering on the edge of full-on collapse. If immediate action is not taken to stop the accumulation of yet more debt and piling up of more leverage upon that which cannot be paid we will go down the toilet.

It may be too late even now, but this much is certain: The path we are on leads to CERTAIN disaster.”

Check the results of markets this date. We did OK here in Canada, but it was just a gold/energy-caused head fake. Tomorrow will be another yarn, of course. It always is.

#194 Kilby on 08.10.11 at 3:58 pm

# 190. Form Man

Penticton today, just the city, not including West Bench, Apex or Rural.
666 listings. Is that a lucky number? Source is South Okanagan Real Estate Board.

#195 BrianT on 08.10.11 at 4:13 pm

It is time for the sheep to start hating the Americans, for the Americans have turned into doomers http://www.zerohedge.com/news/pessimism-hits-record-73-americans-all-time-high-think-us-headed-wrong-direction

#196 sss on 08.10.11 at 4:25 pm

Why everybody thinks RE prices skyrocketed and should go down? Yes they averagely doubled during 2003-2011. But didn’t other things do so? Gas prices tripled, food prices doubled, services prices doubled. The only prices which stick or go down is a consumer goods (read WalMart crap) made overseas – thanks NAFTA. But houses do not fall into that category. So nobody here complains about gas prices and food, yet they think RE should remain flat or fall, so they can scoop it for cheap, same as they shopping at WalMart.
Am not a realtor, but just own few properties in the epicentre of RE bubble – Richmond. By the way, none of my properties even doubled during these crazy years – may be 95% increase at most. But I don’t care. Yet, I would wish RE goes down as long as all other things will do so – is that ever possible?

#197 Mark on 08.10.11 at 4:49 pm

As a contrarian some stocks are soo cheap now..for example France telecom (defensive stock, company is doing will with stable revenues, high paying dividend stock), pays fixed dividend of 2$/1.5 Euro for 2011 and 2011, at current prices this gives a >12% return… Cisco has quite stable revenues, price has gone down for way too long with the last few weeks some very serious overshooting…

#198 CREA Circle Jerk on 08.10.11 at 4:52 pm

If the price action in the S&P and gold markets over the past couple of weeks – and especially the last 3 days isn’t signalling severe distress, I don’t know what is. The sovereign debt situation just keeps getting worse, with 3 major Italian banks getting halted for trading multiple times, and SOCIETE GENERALE (Huge French investment bank) taking a major swoon. Same goes for Bank of America which is severely undercapitalized and will need to issue a massive stock issuance. Just insane things going on right now.

The problems of 2008 not only haven’t been solved, their expanding at a rapid clip. All the bailouts do is create stealth inflation and off load risk off balance sheet. Again, commodities, precious metals and rare earths will be huge winners here, and stocks will only do ok as currency debasement continues. The bond bubble will eventually blow up, but it may take a few years. When it does it will make the early 80’s look like a pinic.

What bond bubble? You do not understand this asset class.– Garth

#199 CREA Circle Jerk on 08.10.11 at 4:55 pm

I should revise to say that precious metals will be the real huge winners here only, since gold is basically considered currency. Commodities and rare earth probably do ok, but are subject to more risk of slowing economies.

#200 CREA Circle Jerk on 08.10.11 at 4:57 pm

Please be very cautious buying precious metals here however as there could be a sizeable retracement. That retracement should be bought hand over fist until the ultra-liberal monetary policies by central banks all over the world abate. Sadly, that won’t be until the end game of ultra high inflation and currency destruction is upon us.

#201 Coho on 08.10.11 at 4:57 pm

Perhaps someone has already posted this link, but here is clip with Peter Schiff using the “D” word. He starts in at the 2:55 mark.

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

#202 GTA Girl on 08.10.11 at 5:01 pm

Beginning to wonder about people. If RE increases over and over for many years, yet annual avg income stalls or goes up a few % points, how would it be possible for people to afford any home purchase?

Based on some peoples skewed beliefs RE goes up 15% in Toronto/Vancouver markets every year, wouldn’t homes be roughly over 10+ times average income? Wouldn’t you need another bank loan just to pay your mortgage?

Let’s not even take into account landlord/tenant act and applying for rent increases…which would make rentals absolutely unaffordable if they were to cover mortgage costs.

We would be living in Calcutta or Rio.

Somethings gotta give.

And I don’t think buying a overpriced new condo in a market where resales are 20% less is going to be a wise move.

Don’t see how this can last another 3 years….6mos maybe

#203 Devore on 08.10.11 at 5:05 pm

#193 Cookie Monster

Is that clear enough for you? Maybe not.
So if you realize that it’s a limited resource, then our standard of living is also limited if we keep on doing what we’re doing, we must change or suffer.
Get it?

Yeah, it’s clear, so why not say that to begin with? Why so angry.

Lets look at an example.

We have a bazillion years worth of natural gas reserves. Aha! you say, we only have a bazillion years of natural gas supply reserves at current rate of consumption, if we begin to depend on natural gas more, those supplies will dwindle. And you’re right.

But that’s exactly what you guys are saying. That 100 years from now the world will be pretty much the same, just with more people and less oil. Well, ok, that’s not a shocking revelation exactly. 100 years ago people said 100 years from now the world will be pretty much the same, except there will be more people and less firewood.

I’m sure they had doomers 100 years too. The world is always either ending or on the brink of doing so.

And hey, I’m as doomer as the next guy. But I am bullish on humanity.

1. We’re a very resourceful, curious, clever, enterprising, and smart bunch. 10 years from now we’ll be talking about things no one’s dreaming of yet. And,

2. Necessity is the mother of invention. This is why government mandating and throwing their weight behind specific technologies worries me, because that is directing innovation and progress via bureaucratic decree. If there is a need for an electric car, we will have an electric car. Or, more likely, something 10 times better.

So saying in the future there will be more people and less fossil fuel is not very exciting or insightful. Every day there are more people and fewer resources.

#204 A on 08.10.11 at 5:09 pm

Gold is not money.

Ok, back to Real Estate shall we?

You had to bring that up? — Garth

#205 bill on 08.10.11 at 5:21 pm

”When residential properties is too expensive for criminal activities, is it a signal that Lower Meth Land houses are over priced ?”

it must be tempting with acres of empty houses.
I would surmise in the confusion ,there might even be free electricity …weird how some places can get wired up and all in an environment that doesnt favour inspection like large sections of detroit and phoenix
it would seem as per garths advice they should sell canada and buy american.

#206 Burnt Norton on 08.10.11 at 5:27 pm

#111 arctodus on 08.10.11 at 9:02 am wrote:

“The raw unadultered ignorance of reality on this blog is mind boggling….everyone thinks that the economy is driven by demand and that pixie dust supplies never ending motive force…utterly and completely clueless…”

———————-

Is it possible to present opinions related to energy supply without disparaging the interesting discourse here and / or humanity in general?

Just wondering.

#207 GTA Girl on 08.10.11 at 5:52 pm

Posting again, Garth

Just read Toronto Realty Blogs latest post

http://www.torontorealtyblog.com/2011/08/land-ho/

The author/realtor’s argument being that Toronto is a safe buy for RE. Because land is no longer being ‘made’. He uses Utah as a comparison. Of open fields of farmland surrounding a town, and this was why home prices wont increase…too much land to develop.

This seems very suspect especially as I drive slightly north of Toronto to see farmers fields being eaten up by mass development. With new home prices being almost on par with existing home prices closer to the city.

The one comment on the blog stopped me short. The writer feels that the stock market is driven by emotion, solely. Whereas RE is a solid investment and not emotional….ok, I held myself back from throwing in my rebuttal. Because this was utter bs. Especially with recent over asking prices in the GTA. The writer then goes on to laud our banking industry for being lending prudent…again, I wanted to respond about how retail employees are receiving mortgages for $400k with barely anything down, but I held myself back.

I used to like this Toronto blog, but the author seems to be towing falsehoods ever since he himself bought a $1mill condo in a new build that a year ago he slammed for faulty work and bad customer service.

Too much spin, Garth. There should be a law.

#208 Cookie Monster on 08.10.11 at 5:56 pm

If there is a need for an electric car, we will have an electric car. Or, more likely, something 10 times better.
—-
ok, so you see the problem clearly, but just don’t seem to appreciate the severity of it. It’s worse than fire wood since trees can regrow within a few decades.

About EVs, nothing will be 10x better than electric cars. Run the numbers on the physics of electricity and we’re already near 90% efficient. When it comes to personal transportation, EVs are the holy grail, End Of Story. Not hydrogen, not biofuels, no miracles, nothing will be better than battery electric.

#209 steve p on 08.10.11 at 6:13 pm

not only is the debt enormously high but we have no means of paying it back as all the production has gone
it has either moved back to the usa factory as they are not at capacity or to china.
as garth says , this is not going to end well

#210 Nostradamus Le Mad Vlad on 08.10.11 at 6:48 pm

“Hey, I just found out we all die, too. Bummer. — Garth” — Not me. I’ve morphed to fall 2012 and seen that I’m still alive, the world is a mess and that the NWO has decreed that Tom & Jerry are doing double shifts as the presidents of the USA.

There is hope for mankind, and I will be jetting back in a few minutes to review my diet. In the meantime, here are . . .
*
Five pearls of Scottish wisdom to remember

1. Money cannot buy happiness but somehow, it’s more comfortable to cry in a Mercedes Benz than it is on a bicycle.

2. Forgive your enemy but remember the bastard’s name.

3. Help a man when he is in trouble and he will remember you when he is in trouble again.

4. Many people are alive only because it’s illegal to shoot them.

5. Alcohol does not solve any problem, but then neither does milk.
*
Liposuction with Botox led me into becoming The Bearded Lady. Well, this is unintended consequences. I tried and failed, so now I’m off to morph into a multi-layered bacon and oyster burger, uncooked to understand the full effects of poisonous botulism.

#211 Behavioral Finance on 08.10.11 at 7:05 pm

Who is holding gold at $1815 US? I would be surprised if a hedge fund doesn’t go under when Gold starts to get really volatile.

#212 Helicopter Ben on 08.10.11 at 7:15 pm

Yes you can eat energy and you do every day, even if you couldnt i dont get the argument, you cant eat gold, you cant eat stocks and you cant eat paper money. what will you ever do when you have all this paper money and no food? Barter is an amazing thing. There is a lot of good technologies out there that should of been used 50 years ago but are suppressed . and even if we switch over now it will take many decades to cross over as our whole infrastructure is based on oil, from cars to fertilizer. Electric Cars arent great for the Environment either as batteries in a large scale and the demand for electricity puts a toll on the earth as well. Hydrogen seems promising . Nature is all about balance, we are apart of nature, we are out of balance, there will be a correction. Nature is the Law.

#213 Goldenfox on 08.10.11 at 7:48 pm

Coming to a city near you or spare the rod and spoil the child

http://www.dailymail.co.uk/debate/article-2024284/UK-riots-2011-Liberal-dogma-spawned-generation-brutalised-youths.html

#214 Marie on 08.10.11 at 7:59 pm

Silly buggers. I’m an old small investor with no CPP to speak of and even I am simply sitting on the hanging chair breathing in some fine (finally) breaths of cooler air. Gawd it’s good to be old and in Ontario, mortgage free.

#215 Bill Gable on 08.10.11 at 8:09 pm

Some of the spelling and syntax used on this blog makes me wonder how well English was taught in our schools.
Holy canoli, er, holy dangling participle.

#216 Nostradamus Le Mad Vlad on 08.10.11 at 8:10 pm


Undersea volcano erupts off Oregon. Near the SAF or Cascadia Region? London Shoot on Sight? US Running Scared? Hmmm; Everyone is a Dr. Phil, and Rough Justice; Riots Never surrender (firearms); Obama Trying to turn sentiment against Palestine (except China and Russia).

US wars benefit weapons mfgs.; Obama Isn’t it your job to be looking after Americans? Fukushima Deception continues; Chile follows UK; Stealth fleet grounded.

BoA The reason why BoA so willingly agreed to hold toxic mtgs. in 2010, and BoA Chart Not pretty; Brit. govt. stealing bank deposits; Student debt bubble; 5:48 clip China, the IMF and hyperinflation; Gold Shorts Don’t understand.

Super Congress Cut SS and Medicare, military is ok; Nuclear Silver? That means gold is at warp nine; HSBC World’s dirtiest bank; Dollar falls “Memo to the Fed: you cannot “boost the economy” when companies are incentivized to offshore jobs, you keep printing absolutely worthless pieces of paper, and these wars without end continue!” wrh.com; When, not IF: When Italy and Spain go; Freeganism a.k.a. Dumpster Diving; France, then Germany?

#217 Bill Gable on 08.10.11 at 8:12 pm

Rave for Nostie. Take a bow, thou of such pearls of truth, and life.
We of the screwed over,salute you.

#218 Devore on 08.10.11 at 8:26 pm

#210 Cookie Monster

About EVs, nothing will be 10x better than electric cars.

It’s just an example. The point is innovation and technological advancement can come up with some pretty spiffy things. When time comes when “personal transportation” hits a wall, the concept of personal transportation will change. It’s changed before.

Energy is hard, but there are many efficiencies still to be made using existing technologies, and of course over time a whole lot will change. No one can point to what it will be, or how, or when, because that’s how it works, doesn’t it? Doesn’t make sense to wring your hands over it though. It will happen, over a long period of time, and we will adjust. Life will go on. It will be disruptive, like all major technological changes, and no, we’re not all going to have to “switch to it” all at the same time. Never happened, never will.

I have faith humanity will persevere, because it always has. And if it doesn’t, well, what are you gonna do about it?

#219 Dark Wettler on 08.10.11 at 9:11 pm

Probably too late now – nobody reads posts this far down. But for those who care, this would be a good time to exit your positions with any bounce in financial equities.

You’re right. Nobody reads this. — Garth

#220 Boombust on 08.10.11 at 9:21 pm

I did a little drive about today…here in beautiful PoCoMo…(suburbs of Vancouver)

Not much product is moving. VERY slow. I think this is it.

#221 WaterlooResident on 08.10.11 at 9:27 pm

#210: About electric cars: YES, you are correct there. The big problem is this; have you ever had a pair of rechargeable batteries? Have you noticed that after about 20 to 30 charges, they didn’t seem to want to hold their full charge anymore? Well, that’s what electric cars are like too. After about their 4th year instead of getting about 100 km on a full charge all you can get is 70 or 75, that’s the main problem with them.

Frankly, I like Compressed Natural Gas more than anything else. Oil is expensive but natural gas is really cheap right now, so running a car on compressed natural gas would be great but there’s no service stations where you can fuel on on that stuff, so its just a pipe dream for now.

#222 Timing is Everything on 08.10.11 at 9:32 pm

It’s gooood! Pressure’s off…..Not! HAAAA!

Don’t lose your job, kids.

“The debt problems in the United States and Europe have taken the pressure off Canadians with mega-mortgages and credit lines that are over the line. ” CTV

http://www.ctv.ca/generic/generated/static/business/article2125627.html
—————————————————

iPads trump oil…

http://tinyurl.com/3h2eat2

It’s all mixed up.

WARNING – 1978.

http://www.youtube.com/watch?v=0oxJDZaLmDg
http://www.youtube.com/watch?v=RJxuYfpi9QY

#223 WaterlooResident on 08.10.11 at 9:33 pm

Now back to Real Estate: if interest rates DO stay low for another few years, will this keep the housing market bubble continuously getting bigger and bigger, OR will it just stay put at the current size, OR will prices begin to fall under their own weight?

Anyone’s guess is as good as mine.

#224 wes_coast on 08.10.11 at 9:34 pm

BPOE predicting the downfall of Warren Buffette. Your credibility has just been downgraded to JUNK status.

#225 bigrider on 08.10.11 at 9:53 pm

Lower interest rates on the horizon.

Looks like the house humpers and debt bingers win.

So much for saving and investing into a balanced portfolio.

RE lovers. The Italians have it right.

#226 Cookie Monster on 08.10.11 at 10:27 pm

#214 Helicopter Ben on 08.10.11 at 7:15 pm
Some lithium ion batteries made by some manufactures are not bad for the environment at all, and they’re recyclable. Hydrogen is a hoax perpetrated by big oil, the propaganda was strong, a lost leader. Hydrogen will always be 10 years into the future.

#220 Devore on 08.10.11 at 8:26 pm
I have faith humanity will persevere, because it always has.
Me too, some of us will fare better than others, but as a species we’ll survive. The transition off oil for transportation fuel will be gradual then pick up pace rapidly, and it’s happening a lot sooner than people think. It will be exciting! WhooHoo!

#223 WaterlooResident on 08.10.11 at 9:27 pm
Modern lithium ion batteries do not suffer much capacity loss with cycling, what you’re describing is true for lead acid and nickel metal hydride type cells. Lithium ion can cycle for thousands of cycles at 100% DoD before fading to 80% of rating.

#227 Dark Wettler on 08.10.11 at 11:07 pm

Probably too late now – nobody reads posts this far down. But for those who care, this would be a good time to exit your positions with any bounce in financial equities.

You’re right. Nobody reads this. — Garth

More specifically, I meant that people don’t tend to read the comments after so many have been posted.

I’m here for you. Hug? — Garth

#228 Housing Starts Are Up; “My mom is trying to sell a condo in Richmond. 2 months on the market and nothing. Not a soul. Already dropped the price twice.” | Vancouver Real Estate Anecdote Archive on 08.10.11 at 11:17 pm

[…] “My mom is trying to sell a condo in Richmond. 2 months on the market and nothing. Not a soul. Already dropped the price twice. It’s a newer condo in central Richmond.” – VanCity Girl at greaterfool.ca 10 Aug 2011 3:04am […]

#229 Dark Wettler on 08.10.11 at 11:41 pm

Probably too late now – nobody reads posts this far down. But for those who care, this would be a good time to exit your positions with any bounce in financial equities.

You’re right. Nobody reads this. — Garth

More specifically, I meant that people don’t tend to read the comments after so many have been posted.

I’m here for you. Hug? — Garth

Sure, if it will make you feel better. Plutonic, you understand.