Chris read here that the average price of a detached house in the Kingdom of 416 plopped last month by more than $123,000. So, he asks, “Is this the end for 416? I sold my Leslieville home back in April and will look to rent for at least 18 months do you think I’ll be able to buy my old house for what I paid in 2004 by then? Or do we fall back to 2000 prices?”
Another blog regular, a residential appraiser working for a smallish Brampton firm, read the same reference. “Month over month fluctuations are what morons and charlatans focus on,” he said. “Not only are you consistently wrong, you have now taken to spreading total bullcrap to back up your bogus thesis. It would be shameful, except for the obvious fact that you have none.”
See how much fun having a blog is?
Well, this got me thinking about the average SFH in the 416 area of the GTA. So I had a closer look at the last four months of stats published by the Toronto Real Estate Board, the world’s largest real estate cartel.
In May, TREB said: “The strong sales reported for the first half of May reflect the positive economic outlook for the GTA. With the number of jobs increasing and earnings growing, it makes sense that households remain confident in their ability to purchase and pay for a home over the long term.”
The SFH average price was $774,046.
In June, TREB said: “The spring has always been the busiest time in the resale market, but the results for May and the first two weeks of June represented a marked improvement over last year. Low mortgage rates have kept affordability in check and buyers have felt confident in paying for a home over the long term.”
The SFH average price was $744,747.
In July, TREB said: “Low mortgage rates, rising incomes and good news on the jobs front have kept consumers confident in purchasing a home in the Greater Toronto Area. In fact, home buyers are much more confident than they were this time last year when concerns around the HST, interest rate hikes and new mortgage lending rules had temporarily put a damper on home sales.”
The SFH average price was $720,808.
Last week TREB said: ““The unsettled situation in financial markets over the past few weeks did not appear to sap the confidence of GTA home buyers during the first half of August. Revised forecasts for future Bank of Canada interest rate decisions coupled with the recent announcement by the US Federal Reserve, suggest that interest rate hikes in Canada are on hold at least until sometime in 2012. This is a positive for affordability and should help sustain buyer confidence moving forward.”
The SFH average price was $597,963.
So, from its high in May until now, that average detached home in the middle of Canada’s biggest real estate market has lost $176,083, or 22.7% of its value. If this were the stock market, it would be called a crash. In fact, from its recent top to its bottom, equities declined just 16% (before rebounding yesterday) – a fact which earned screaming headlines and an influx of doomer zombies to this pathetic site.
As you can see, for the last four months the benchmark SFH has been on the decline, and recently took a precipitous dive. During that time, how did the real estate board report this to consumers? Ah, actually, it didn’t. Instead buyers and sellers (and the media) were subjected to an endless supply of sunshine as the realtors reported increased jobs and salaries, an improving market, rising confidence and now the certainty of sustained low interest rates. During this period the board also gave the impression of endlessly rising sales and prices. The MSM did what it does best. It repeated.
And that bit about no mortgage increases? Forget it.
The nation’s biggest mortgage lender (RBC, now followed by BMO) just plumped its variable-rate mortgages by a fifth of a point – a tough blow because borrowers have recently been stampeding back into VRMs. That comes amid the unfounded belief (promoted by organizations like TREB) that mortgage rates will remain rock-bottom in Canada for a very long time, in the wake of a decision to freeze US rates. So, the bankers are doing what bankers do – padding their bottom line. Anyone who thought mortgages would stay at 3% for the next two years needs some serious nookie.
So will Chris be able to buy back his Leslieville home at ancient prices? Beats me. But we’re going in that direction.
As for the real estate appraiser – a licensed professional who sets property values in his own community and upon whom people rely for fairness and impartiality – well, no wonder he thinks I’m a moron for telling you these things. He doesn’t want you to know. He’s a flipper.
‘Appraiser’ tried to post this comment here in March. So much for ethics.
Last house I flipped cost me $30,000 deposit which I took from my HELOC. It averaged out to 2.15% interest rate (annual) for the 18 months that the builder held it (most builders don’t pay interest on deposits).
Closed the deal and sold the house within one week to a GTA police sargeant and his wife for $55,000 more than I paid. Interest on the HELOC and all closing costs including RE commission were tax deductible. So while all you geniuses were listening to Garth and bragging about 18% investment returns, I didn’t need a calculator to figure out my ROI. Liked it so much I’m doing it again. Bought 16 months ago, closing in November – builder already selling same model for $75,000 more than I paid.
Wanna bet I win again Garth?
Yes I do.
142 comments ↓
Hey y’all! Another theory why Vancouver house prices are sky-rocketing: Drugs.
http://www.vanmag.com/News_and_Features/Does_the_Illegal_Drug_Trade_Drive_Up_Housing_Prices?page=0%2C0
Wow, seems hard to believe with those numbers that the media wouldn’t have reported something, anything. Now I feel even better about unloading in Nov.
Garth,
Where is a guy to put his hard earned cash? Not real estate, not in bonds as the top has to be near, and now not in stocks as per the San Fransisco Fed report attached. Buy gold, silver and related stocks or stay in cash, forget the regular stock market and bonds for the next decade……..all because of the boomers, no less!!!!
http://www.frbsf.org/publications/economics/letter/2011/el2011-26.html
Follow that advice and, yes, it will be Freedom 85. — Garth
Garth, are we finally due a correction this fall?
Wow very interesting stats! Does anyone have the info for 2010 month to month from May-Aug?
Update on my friend who bought the condo I told her not to: she’s doing renos in the 20 yr old condo and apparently it’s “costing her more than she anticipated”. Ripping out the entire bathroom and kitchen and floors and now doors and jams etc. She’s cancelling the camping trip we have long weekend to look for this stuff and to move in by “early Sept because it’s costing me money the longer I wait” which make NO sense considering she lives at home for free.
Oh well, fun times!
#1 Squeeks
Nothing new.
It should be noted that there were no drugs (or immigrants loaded with cash) in Florida, or California, or Nevada. Only world class cities like Vancouver have a problem with drugs.
‘Appraiser’ is a pimp. His talents of timing the market are inconceivable. I know him on Ben’s site. He’s more of a troll there though.
Garth, has there been a single story in the Toronto papers about the $150,000 drop in prices since May?
In all fairness, Garth, price declines from May through August are an almost regular occurrence in the GTA. Looking through the data back to 2004 (guava.ca is great for this) there were May-to-August price decreases in all but one year (2009).
Not of this magnitude. But feel free to ignore me. Most do. — Garth
So much for buying for the long term:
http://www.torontosun.com/2011/08/23/canadians-are-house-hoppers-survey-finds
Over a third who had no intention of moving (after nestling into their “forever house”) are in fact moving? Say it isn’t so, I thought you could plan your life ahead decades!
There goes 5% of your house value each time you move.
Garth – I just found your blog, and I like it. I am Canadian living in California (and consulting) since 1998. Sold my Toronto house long time ago. In California, I refused to buy, and just rented a nice house on golf course. I tried to warn sheeple around me not to buy a house in the San Francisco Bay Area. No one listened to me. The real estate dreams are like crack. Now everyone regrets. Many empty houses, even in the best ‘hoods.
I follow Canadian real estate statistics for a while. Big crash is coming folks. It is not just about the R.E bubble, it is Peak Credit, peak baby boomers, etc. The Canadian goverment juiced up the RE, in order to keep the economy going – through asset inflation. It was OK when it worked: wealth effect, incresed money supply, etc. Now it doesn’t work, and it is time to drink the toxic Kool Aid, that goverment brewed.
There is a phrase about stock market, which ‘eats like a bird, and shits like a bear’. The same applies to the real estate, even more. Time for roller coaster to return to the ground level. Enjoy the ride.
May-August average price drops for the GTA (416 and 905, all home types) for the past 5 years:
2010: $446,593 –> $411,012 (-8%)
2009: $395,609 –> $387,921 (-2%)
2008: $398,148 –> $364,886 (-8.5%)
2007: $382,787 –> $361,890 (-5.5%)
2006: $365,537 –> $338,192 (-7.5%)
With May 2011 at $485,520 and Mid-August 2011 at $440,150, that’s a -9.5% drop… somewhat worse than the seasonal norm, but not that far off what normally happens to average prices every year.
Yes Mister Turner, you a jerk.
A jerk for educating people in finance and investing. A jerk for trying to help people avoid make one of the biggest financial mistakes of their lives. A jerk for analysing the numbers and not the emotions around home ownership, and other assets classes
Moshe Milevsky (Aug 20 2011, How Long Can Home Prices Keep Rising) he is a jerk too. “Sadly, that pie (wages) has grown a mere 10 per cent over the decade, while housing prices have more than doubled.
How dare people like you ask these sort of compelling question. My wish is to only be surrounded by you jerks as you have saved me a lot of money.
Bravo
You know you are doing something right when they need to resort to personal attacks. Keep up the good work Garth. So glad you got thick skin.
–
“Surprise. So, the bankers are doing what bankers do – padding their bottom line. He doesn’t want you to know. He’s a flipper.”
This is another term for criminal banxters, like GS, JPM, BoA, the US Fed, etc.
All those numbnuts will keep the ponzi scheme going as long as they can, or until the SAF and NMF get really pissed and, with Yellowstone and Toba, explode with delight and blow their balls off.
That will sort humanity out!
*
Germany Is the US the next domino to fall? Japan gets cut When does Moody’s get cut? America is rotting, China is rising; What if? All options are on the table, as dubya once said; US$3 mln. / minute Ever wonder why the US has so many wars going on, under the guise of helping NATO? Oil Surely you jest UK govt. Looting their citizens of just about everything.
Is this one part of that US$3 mln. / minute which could lead to a dirty paper trail? July 8, 2009 “Interesting how fast things change…”; Zombie Banxters Variations of The Borg; UK govt. Looting their citizens of just about everything.
Mongolia Look out — here comes the broke US; 0:41 clip Damage after ‘quake Colorado ‘quake as well; US threatens Eritrea al-CIAkayda (the toilet) is in the process of being flushed; Dicatorships The US, UK and NATO member countries are dictatorships. The MEast countries are not. So why are we there?
‘Quake / ‘Cane Is HAARP involved? Probably; Libya Someone’s not telling the truth, so don’t count on m$m to help out; A Decade Of War following 9-11; Russia and China; Hurricane Season is almost here (‘quakes and volcanoes are extra); BART Police state’ 9/11/11 Hmmm. Not sure of this; Top 10 List of greatest FBI failures; 3:25 clip More evidence that this whole ME is a well-organized sham; BP Pix More trouble.
#3 Freedom 85
On of the best ways to make money used to be arbitrage. The Sarlos & Zuckerman fund specialized in that segment of the market. This isn’t for amateurs but is as close to a sure thing as there is. All you do is buy stock in the takeover targets after a takeover has been announced with all the conditions. Your profit is the difference between what you bought the shares at and the buyout price. You need experience in knowing the percentages of what deals will go through and what ones won’t. It helps if you have a seat of the Toronto stock exchange commissions can break such slim margins.
Good research Garth we’re starting to see the significant hard numbers.
Hope you have an update on Calgary soon again.
@#1- One can easily see how that could be the case around here. The only problem with that article is it’s quotation of the ‘data’ from the fraser institute. Their ‘research’ is consistently skewed and what they post as facts are often inaccurate.
This selective reporting of data to the public is now bringing the main stream media dangerously close to becoming party to the commission of a crime. The system does not work ethically if ethical behavior is not seen to be more profitable. This means that unethical behavior must cost dearly. I suspect there is recourse in the courts available to the public at large for the at best skewed and at worse criminal misrepresentation of the facts by various stakeholders. One can not on one hand say that people choose to do what they do when on the other hand they are given blatantly false information and interpretation upon which to base their choice upon.
May-August average price drops for the GTA (416 and 905, all home types) for the past 5 years:
2010: $446,593 –> $411,012 (-8%)
2009: $395,609 –> $387,921 (-2%)
2008: $398,148 –> $364,886 (-8.5%)
2007: $382,787 –> $361,890 (-5.5%)
2006: $365,537 –> $338,192 (-7.5%)
With May 2011 at $485,520 and Mid-August 2011 at $440,150, that’s a -9.5% drop… somewhat worse than the seasonal norm, but not that far off what normally happens to average prices every year.
————————-
if the above is true, then no, the drop in price in Toronto isn’t a big deal. It’s not telling a much different story than other years.
The interest rate thing, that’s a whole other story.
I did not calculate the average price drop for all kinds of houses across a region of 6,000,000 people. It was for detached homes in the 416 – a much more telling number. — Garth
actually, $774,000 to $597,000 is pretty significant. None of those stats from previous years show a percentage drop close to that. This drop is more than double the worst of those years on a percentage basis.
Garth, it’s not just RBC that increased mortgage rates; BMO has raised as well. Likely that the others will join in too.
http://ca.finance.yahoo.com/news/Royal-Bank-BMO-increase-five-capress-2468898936.html?x=0
Tuesday August 23, 2011, 8:01 pm
TORONTO – Royal Bank of Canada (TSX:RY) is raising its variable rate mortgages for homebuyers in a move that reflects higher costs of borrowing in the bond market.
Canada’s largest bank said Tuesday it is hiking the rates charged on its five-year variable closed mortgages by a fifth of a point, effective Wednesday.
That will put that rate even with the bank’s prime rate of three per cent.
Bank of Montreal later joined Royal in raising its five-year variable closed mortgage to three per cent which, in the case of BMO, represented a 0.15 percentage point increase.
Garth, I think you’re wrong about interest rates rising. The US Federal Reserve is now dictating international monetary policy and is serving as the lender of last resort for the world’s banks. Until enough US growth returns to cause inflation to be a concern than interest rates won’t move much. Sure rates for different risk classes of assets will rise and fall but Government bond yields for “safe” havens will remain low into 2013 or until the Fed raises their overnight rate. This should continue to support housing in Canada but not be a big boost (see high prices and a diminishing pool of marginal buyers that tend to move the market). However if we get another financial crisis from the Europe contagion and it hits employment and incomes, then watch out.
The Fed does not set Canadian rates and the BoC is vitally worried about excessive borrowing. Rates will rise here prior to in the US. — Garth
Garth,
FYI, the last 10 years, I’ve been in gold and cash and my returns far exceed anything the regular market has provided, either stocks or bonds….
So Freedom is coming much sooner than 85 but I worry about the folks who don’t look after their own money and allow others to do it for them.
When it comes to my money, I trust me and only me…
#18 re Fraser Institute – example please
Perhaps the best post ever.
The TREB and some flipper scum both caught with their pants down and a smokie between their lips.
Priceless!
Good lord. I have no problem agreeing that a real estate slowdown or correction is ahead, but the argument in this posting is seriously screwed. You are comparing two different samples (sales in May and sales in June), and unless those samples are a significant portion of the total number of houses in the 416 (which they aren’t) and are drawn randomly (which they definitely aren’t), you have no business drawing any sort of conclusion by comparing them, even if you failed statistics 101. In fact, the huge, jaw-dropping correction you describe was just imagined out of thin air.
Furthermore, I can assure that in the market right now, there is definitely no crash. Down the street from me in BWV, a high-priced semi just collected 10 offers. Anecdotal this may be, but I know people looking to move in the area who haven’t been able to even *present* an offer because the properties they like have been too competitive.
Like I said, a slow down is inevitable, and an ugly correcetion is a definite possibility, but the conclusion you’ve drawn is even more head-slapping wrong-headed than the typical TREB slop.
I compared numbers reflecting every single detached home sale during a period in which the public was told (and you believed it) the market was advancing. You refute it with the sales experience of a single home. Some logic. — Garth
Garth, This May to August repeating pattern of price decline is interesting. Is there a similar January to December price pattern that repeats each year?
Some quick comparisons for Victoria and Kelowna:
Of course the August stats will tell the real story, but just did a comparison of Average and Median prices. I took the highest point since Jan 2010 and compared to the July 2011 stats.
Kelowna SFH:
July 2010 (high) Av – $513,310 Med – $463,451
July 2011 Av – $490,364 Med – $434,000
An average drop of 3.85% and a median drop of 3.98%
Victoria SFH:
Jan 2010 (high) Av – $711,392 Med – $674,000
July 2011 Av – $519,652 Med – $480,000
An average drop of 26.9% and a median drop of 28.7%
Kelowna Condo:
July 2010 (high) Av – $255,966 Med – $265,000
July 2011 Av – $229,461 Med – $216,950
An average drop of 10.35% and a median drop of 18.13%
Victoria Condo:
Mar 2010 (high) Av – $344,020 Med – $316,250
July 2011 Av – $306,506 Med – $281,000
An average drop of 10.9% and a median drop of 11.1%
So the SFH situation in Victoria is much worse so far than Kelowna, condo average drops are about the same but the median in Kelowna is 7% worse.
Of course the stats can be interpreted differently using other months than highs and lows – but I thought this was interesting.
The most interesting ciomment that TREB actually made in their Mid-August report was:
“However, it should be noted that new listings grew at a slightly greater pace than sales. A better supplied market in the second half of 2011 will result in prices growing at a more sustainable pace.”
New listings have been piss poor this year until now keeping prices up in the process. If they continue to accelerate for the rest of the Fall along with the backdrop of a recession that could be the perfect storm. I don’t think it is any coincedence that the August 416 number is plummeting so far the same month new listings are finally starting to rise.
TREB does what they need to do, they articles does not suppose to be impartial.From the other side we have Garth.
We suppose to be smart enough and read between lines to make our best move.
I’m not sure that these coarse area-code metrics on house prices are meaningful. 416 is a pretty damn large area — certainly large enough to have a fair amount of price variance within its boundaries. And if different neighbourhoods tend to sell at different times of the year, that can paint an inaccurate picture of housing trends. Take 2 imaginary neighbourhoods within the 416: Uppercrust and Ghetto, with Uppercrust averaging 750K, and Ghetto averaging 250K in April. In April, 66 houses sell in Uppercrust and 33 sell in Ghetto. Why the difference? I don’t know, make one up. Average sale price: $583K. Suppose in May, the value of houses actually increases $5K across the board, but now the proportions are flipped, and more sales occur in Ghetto. Average sale price? $421K — what looks like a huge drop, despite a global increase in actual sale values.
With a large heterogeneously priced region, differences should be calculated matching month-over-month sales within comparable neighbourhoods.
Hmmmm…I just did a cursory glance at the TREB numbers dating back to 2003. The greatest variance from May – August in the 416 for detached is around $30,000. In some years it actually went up in August. So we are talking 7% tops lower from May – August since 2003 and 22% this year depending on how we finish. I just get the feeling when the full month stats come out the number is going to magically be much closer to $700K. Mid-month numbers aren’t a very reliable indicator of the full months figures.
Great work on the site lately Garth. You have absolutely nailed it on some of the topics lately.
Does anyone know where the stats on guava.ca are from and whether or not they can be verified? I don’t know if those charts are accurate, but if they are, they certainly don’t paint a picture of impending year over year price declines.
The only serious year over year correction seen within the last 5 or so years happened when the world was about to crumble at the end of 2008 and early 2009. As seen in those data, there was a surge in inventory, reduction in sales, resulting in a large change in the months of inventory from about 2-3 (the norm of this data range) to about 8.
Simple economics. Supply is high (inventory), demand is low (sales), and thus prices drop. You can clearly see from these graphs that it was about August 2008 when the MOI started to deviate from the norm. Looking at median (better than average) price, the first decline in year over year values was October 2008, about two months after.
The MOI then elevated and remained elevated until about April 2009, with year over year price declines lasting until about April/May 2009.
These trends closely follow the rise in inventory/drop in sales that occurred in the US housing crash. The MOI in the US is still very high, which is why prices are still falling. Clearly it’s simply one metric (albeit the almighty “supply and demand” metric) and can’t be used as the sole determinant, if these data are accurate, it is hard to see any statistical evidence of year over year price declines coming in the near future. Furthermore, the total days on market for listed properties is currently lower in 2011 than in any time since 2007. I would really like to know whether those charts can be verified with data available to the public.
I’m a believer that Garth will be proven right within the next couple of years, but sadly the data doesn’t seem to show it. Like in 2008, it might take a serious “event” to scare the sheeple into their senses.
Patiently waiting for sanity to return to our shores,
TB
re:T.O.Bubble Boy post #12………. more like %23
I’ve been reading this blog for 1.5 years but over the past 2-3 weeks I have sensed.
Rule #1: The market will turn downwards:
When bulls make up any bullshit to justify the lofty prices and bears are doubting themselves and are considering jumping in with the bulls.
You can just feel the anxiety in the blog postings.
Great work Garth
#26dave in Victoria on 08.23.11 at 10:25 pm
Perhaps the best post ever.
The TREB and some flipper scum both caught with their pants down and a smokie between their lips.
Priceless!
================================
Careful there…I believe our host is a flipper. But I think what Garth rallies against is people being herded into real estate who can’t afford, calculate, or assess the risk involved. The 5% wage/salary slave, bloated credit card and loan balances, etc. If you’re paying cash, done research, picked the right market, the right house, etc I don’t think there’s a problem there if you can afford a possible loss.
The media should be thrown in jail…
2003 prices are on the way. Sooner than you think!
Where can I download this data? I need links, Garth, or my pumper friends will lump me in with the tin-foil set.
Links might not save me, actually, but you do what you can.
Remember the good ol’ days of HAM bidding up Kitsilano and Richmond homes? Richmond stumbled after tsunamis freaked everyone. And now Kits is showing signs of a serious wobble. Only three (3) homes sold in Kits between July 22 and Aug 21. And only 15 during the prior 4 weeks.
http://www.yattermatters.com/2011/08/kitsilano-nose-dive/
Now granted, it did finally stop raining during this period for the first time since last September and as a result the beaches are packed, but three houses in 4 weeks!?
SANTA GARTHA. We the property bereft implore you.
The Mexicans have ‘Santa Muerte’, the Saint of Death … to bless their nefarious exploits.
I think we have our own Canadian version ‘Santa Gartha.’ who in opposite, blesses the prudent and warns us incessantly of impending doom. Pretty good track record so far Dear Saint Garth.
‘Santa Gartha’ is the Canadian Saint warning of real estate death. Like all Saints in good standing I like our Santa Gartha, because he, like Cassandra, has warned, and warned, and we never listen, or excuse , or ignore. or only listen selectively. Tsk, tsk … were such shlubs.
When we, the unwashed, finally rest in realty hell a few years from now don’t cry tears of sorrow because you did not listen or claim you didn’t hear
Viva Santa Gartha, Viva Morte Domicilia, Viva los dineros.
Not only is ‘Appraiser’ going to lose on his flips, he’s going to take a major hit to his regular income when the appraising business tanks with the market. No wonder he’s whistling past the graveyard.
In an irrational market, irrational traders make the most money. Then the market corrects and they lose it all and more. It won’t be different this time.
http://www.youtube.com/watch?v=HEheh1BH34Q&feature=related
real estate always goes up because we are running out of space?! ;)
#23 Phil Herr on 08.23.11 at 10:11 pm
—————————————
Garth is right, I heard it from the horse’s mouth (MC) on t.v. a couple of days ago. He explicitly said that the BoC has a mandate to keep inflation as close to 2% as possible, and will raise rates if warranted, regardless of the situation in the US.
Right now Canadian inflation is within the 2% range so there will be no immediate raising of rates. However, with the US keeping rates low, thus likely stimulating their economy, this could spill over into Canada as higher inflation.
Therefore, the US keeping rates low may actually drive interest rates higher in Canada faster than would otherwise occur.
Canadian inflation is 3.4% – above the BoC target range. — Garth
It was for detached homes in the 416 – a much more telling number. — Garth
—————————————————–
Is it possible that such a drop is a function of the type of home being sold (low vs. mid. vs. high end), and the type of seller (astute vs. clueless vs. estate)?
For ANYONE who is thinking about investing into Gold or Gold-ETFs, I think it would be wise for you to just wait about a month or two before investing, we seem to be at a periodic peak. Look at this 3-year chart and you can see for yourself:
http://stockcharts.com/h-sc/ui?s=HBU.TO&p=D&yr=3&mn=0&dy=0&id=p39181747215
Notice how every 6 to 8 months (on average) there seems to be a “PEAK” in the chart? Well, it seems that wear at such a peak right now and Gold should fall for about2 months, then it will be a good time to buy it once it gets cheaper. Gold / Gold ETFs are one of the BEST investment choices in times that we are in but sometimes prices get ahead of themselves, sort of like they’ve done now, so just wait until around the middle to end of October before buying either HBU.TO or UGL (these are two ETFs, one Canadian, the other in American dollar denomination).
Signs of a market top in Vancouver #102
Two people you’ve known for a long time have decided to change careers from well paying technical trades and are in the process of finishing their RE license.
If only realtors.ca returned more than 500 results so I could find out the fluctuation of realtors month over month. I’m willing to bet a litre of 91 octane that the increase in realtors is proportional to the increase in property prices in the Lower Mainland.
It is often very hard to explain to RE pumpers that BoC rates can remain rock-bottom and low, but banks may very well, backstopped by the CMHC taking care of any defaults, develop a revulsion for lending to the market at low spreads.
The BoC rate may very well stay flat or decline in the next year or two, but mortgage rates go up on account of the spread. Banks can also increase, arbitrarily, the “Prime” rate to further extract equity out of borrowers who sign “Prime”-linked contracts, since “Prime” is set at the sole discretion of each individual bank, and is not indexxed to a market rate or an official BoC policy target.
Someone tell me where to get these stats for Vancouver. I want to look at the west side prices over the past 20 years. Thanks
Do you think we could get the standard error on those averages – you know, help us determine if these are declines or just “month over month fluctuations?” Is it too much to ask?
Victoria is flat-lining (and I am using a different metric to measure activity – not $’s and different than that used by realtors and the public), but again those averages don’t help for month to month assessment because no body is reporting the spread around the mean. Kind of leaves one scratching ones head trying to figure out why people think they need to use the “average.” And then those really learned relators start making noises about the median price, as if that means anything. It certainly dosen’t make the user look any smarter…
Without the spread, I suspect using the total $ spent on real estate month by month would be just as informative.
From yesterday’s exchange:
Garth: “mortgage worth three-quarters of its value actually takes 64% of a family’s take-home pay”
Alf: “It’s actually 75% Garth.
(1/2)/(2/3) = 3/4
Garth: “No. The calc was from pre-tax to after-tax.”
——
Welcome to the realm of primary school arithmetic.
M= mortgage
A = after tax income
B = before tax income
A = 2/3 B,
M = 1/2 B = (1/2)/(2/3)A = 3/4 A
=> Garth wrong = > Garth will censor this comment
Too bad we didn’t have these kind of drops in Calgary. Although it is trending downward as well, (the average SFH in May 2011 was $489,482 and in July had dropped almost 7% to $455,849) I have a feeling they will be stabilizing through the fall. I have been a daily reader on this site for years and although your predictions have made an ass out of me in the past, I still believe there will be a correction coming…but forecasting when it will happen is like timing any market-a near crapshoot.
Junius
Previous post
You’re a lawyer. Ask your immigration lawyer buddies about actual immigration numbers.
And you’ve lost all credibility in my eyes especially after yout threatening post regarding the US President. I’m sure Garth still has that post.
#132 Junius previous post
Listen buddy. You’re a Lawyer at a firm with Immigration services provided by your colleagues. So I’m sure you got access to facts.
Also, you lost credibility in my eyes when your post basically threatened a world leader about 6 months back. I’m sure Garth still has the post. Surprised a lawyer would say such things. Who are you? Really?
Aussie Update
BANKS are offering discounts up to 1 per cent off their standard variable mortgage rates to stimulate the home loan market ahead of the crucial spring selling campaign.
http://www.theage.com.au/business/buying-a-house-get-a-discount-20110821-1j4ox.html#ixzz1VwAYTj9Q
Australia can’t avoid the fallout from the end of the 40-year debt bubble.
So the world has some debt problems. Is it any wonder?
Consider this: if all the world’s debt were repaid tomorrow, the financial system as we know it would not exist. In our sophisticated monetary world, money equals debt; assets equals debt; and credit equals debt.
http://www.smh.com.au/money/borrowing/critical-crossroads-20110816-1iv5y.html#ixzz1VwAmD1Fo
MELBOURNE median house price soared by 30 per cent between the beginning of 2009 and the middle of last year.
This extraordinary growth in prices was due to a surge in first home buyers’ activity unleashed by the first home owners’ grant boost.
http://www.theage.com.au/business/property/house-price-spike-linked-to-first-home-owners-grant-20110821-1j4ny.html#ixzz1VwB3eBzi
ONE of the few bright spots in real estate amid a three-year global slump, Australia now faces falling home prices and fears of overbuilding.
A downturn in Australia’s real estate market will add to concerns of a two-speed economy in the resource-rich nation.
http://www.theaustralian.com.au/business/property/falling-home-prices-threaten-20bn-in-annual-foreign-investment/story-fn9656lz-1226121311571
Move along, nothing to see here, the fundamentals of the Aussie housing market are strong. – LOL.
The TREB, in fact all “REB” have “high moral commission ethics” I call it. Only ethics that suit their wallet/purse apply. You can report a realtor to the xREB but expect nothing to be done. You might as well report a slimy car salesman for selling too many POS cars to old ladies to his boss.
Ok, now for my point:
1. I wouldn’t bet against Garth, it’s not very good odds to win.
2. It is amazing how fast and how much T.O. has fallen (and I like that city). Might even move back there when housing is lower too (and buy a house). For now, the TREB should get some guts and report the facts.
What 2012 will bring?
Fear and Greed. It works in both directions. Greed to sell at the highest amount, Fear to sell at falling prices. Falling prices are in fact the best of the two for buyers and sellers as it makes homes more affordable for both. (but don’t tell TREB that, they only make more $$$ if prices go up).
The numbers are a bit too good to be true. Garth is using mid-month numbers. August 2010 mid-month was significantly higher than 2010 end-month (probably anomalous: based on 2011, mid-month is usually a good predictor of end-month). Using end-month, August 2010 was -16% vs March 2010 (588867 vs 698378). Mid-month August 2011 was -23% vs mid-month May 2011 (597963 vs 774046).
From peak to trough, 2011’s decline is indeed 7%-points greater than the -16% from 2010, but it’s a bit misleading to quote mid-month May 2011 (peak) to mid-month August 2011 in isolation (assuming August is trough, if 2011 follows 2010 seasonality). OTOH, I guess Garth’s point was really that he is no more misleading than TREB … which I think I am willing to believe.
#19Buyer-It is certainly possible that the MSM hasn’t gotten much worse-the reality is that without the Internet we wouldn’t know anything on any subject (or rather we wouldn’t know anything the MSM didn’t want us to know, unless we were directly or indirectly invloved or had access to inside information). I can remember when information from the Net was ridiculed and the MSM was felt to be the authority-how times have changed.
When it comes to credibility, residential real estate appraisers are lodged somewhere between insurance adjusters and used car salesmen. As for this particular wingnut, he should at least have his mickey mouse licience suspended for 3-6 months, for a blatant conflict of professional interest (did I just call him a professional…oops…how about a breach of self serving ethics). That is not likely though, as TREB is just one more “self governing cartel” in this country. Maybe, he’ll learn his lesson when his flip…flops….Oh, as for his comment that “Month over month fluctuations are what morons and charlatans focus on,” what does he think TREB focuses on in its’ monthly reporting (but only when they can manage to fraudulently massage the stats into a positive)….see how professional an extra 2 week course makes you.
Gamblers are vocal in their success and silent in their losses.
Q on 08.24.11 at 6:16 am
When it comes to credibility, residential real estate appraisers are lodged somewhere between insurance adjusters and used car salesmen.
They are not valuers at all IMHO but pricers, here is why.
Its been the same the world over, so called valuers do no more than look at recent sales in the area of interest and use these bubbled numbers to come up with a so called value on the property of interest. They are hooked by the myth that price and value are the same thing, they are not.
How about we actually value homes, based on their potential rental return (or savings made by the owner). You could never get the crazy so called values, these valuers come up with in both our countries using this method. Under this valuation method it would be almost impossible to expand a bubble. Values would be directly linked to a properties potential income (or savings made by buying it).
No fantasy valuations, no fantasy loans.
Under this system if you wanted to buy a property above its “rental valuation” that is fine, but you would have to stump up the difference between the valuation and its purchase price. Not really a problem for most upgraders. Of course entry level homes would be much cheaper.
You can also see under this valuation method house prices would mainly keep pace with, wages – rents.
It doesnt remove speculation altogether but it would be better than the current “pricing valuation” used heavily influenced by already bubbled prices.
Wages support house prices not emotion and debt.
I follow your blog on a semi-regular basis and have no problems with your comments on the real estate market. I think you’ve done a service to the community in educating the public about the real estate market. Especially when it comes to how CMHC can manipulate the marketplace. I wouldn’t judge all appraisers from the comments of one that is clearly smitten with his/her luck. A lot of people have made a lot of money over the last several years in real estate – that doesn’t make them experts, it just means that they know how to follow a herd. An expert can make money in real estate, but they also know when the risk outweighs the rewards.
“It speaks to the Island the GTA has become”
I’m living in the twilight zone.
http://www.moneyville.ca/article/1043796–milton-boom-pushes-halton-home-sales-to-a-high
Did “The Appraiser” report his capital gain on the flip to the CRA? – I wonder…
Can we still refute metalheads on the weblog?
This opinion puts fair value of Silver closer to $12:
See the charts on:
http://www.minyanville.com/businessmarkets/articles/silver-silver-indicator-silver-purchasing-power/8/23/2011/id/36514
Canada coped just fine with a high dollar, now that it is down a little, the BoC has room to raise rates.
Regardless of trade, they need to protect us from ourselves, as we (well…most) seem to be locking themselves into a lifetime of debt.
BrianT on 08.24.11 at 6:08 am
#19Buyer-It is certainly possible that the MSM hasn’t gotten much worse-the reality is that without the Internet we wouldn’t know anything on any subject (or rather we wouldn’t know anything the MSM didn’t want us to know, unless we were directly or indirectly invloved or had access to inside information).
————
I’m not sure. Maybe we’d have 1 single profitable publication keeping the other ones honest instead of having so much noise and cacophony.
I just get the feeling that the web is impeding on our need to mobilize.
Randy I occasionally leave the park to see what homes are going for in good ol Toronto. Here is what you can get for almost a cool million Canadian loonies in the wonderful burb of Etobicoke. These homes have not declined in price over the summer.
http://www.torontomls.net/PublicWeb/CL_PM.asp?link_no=196266173.519052&t=p&fm=F
Randy, let’s get the hell out of this overinflated area and back to the trailer park and our lovely $25k homes. Pass me a drink while your at it Randy…
Looking at various housing affordability measures, I am a believer that a RE correction is on the radar. It’s hard not to see that there are, at the very least, a lot of local bubbles.
However, I think these bubbles may deflate more with a slow pssst and not a pop unless a major trigger/event is presented that quickly flips society’s sentiment switch on RE. That type of event could be a sharp rise in interest rates, a 9/11 type event in Canada, major earthquake, etc. something to jolt sense back into people. But when it hits, hang onto your housecoat as it will go fast.
But hey, you don’t have to listen to me because when it comes to RE I am not ‘normal’, given that holding a large mortgage is the new norm in the Canadian landscape. Our must-have culture and society of entitlement is living on borrowed $. A RE day of reckoning is at hand.
#61Turner-This isn’t coming from a “metalhead” but that is one of the stupidest articles I have ever read. Anyone making a bear case for silver should be able to put together something stronger than that joke. According to that moron, USA real estate is a viable proxy for the global economy-it is like he thinks it is still 1961 and Ozzie and Harriet are on the boob tube.
WARNING: The following info will be the first time for most of you hearing about this and it will be potentially disturbing…courageous and pure of heart need only continue…
Why do I harp on about mind control all the time on this blog? I believe the human mind to be the next frontier. As usual, your real rulers are way ahead of you in this regard…Here’s a good example:
The name Britney is a derivative of Britanny, which further derives from Britannia. Britannia was the term used by the Romans to refer to the Roman province covering much of the island of Great Britain. Britannia was personified as a goddess by the Romans. She is depicted as holding a spear, hence Britney Spears or Britannia’s Spear. In a similar vein, there were a group of Spear-Shakers who compiled what is known to us as the works of Shakespeare, containing a glut of hidden meanings and mind-control triggers.
Here is the goddess herself accidentally transformed during a video interview into an altered state by what is referred to as a “trigger”. In this case it appears to be the word “weird” which she herself speaks…
http://www.youtube.com/watch?v=DMpguv7st7s
What the hell was that? — Garth
http://www.federalreserve.gov/releases/h15/data.htm An interesting chart on U.S. interest rates..check out the Bank Prime Loan and Conventional Mortgage rates on a monthly basis…
#27Matt-Yes-the reality is that very expensive properties (over 1.6 million) have slowed to a crawl compared to May 2011. This is the main reason for the dramatic average price drop.
I just get the feeling that the web is impeding on our need to mobilize
——–
The last time we got the concentration of wealth we have today, we got the trust busting.
But we also had people working together to get what financial institutions would not give them. That’w when we got the caisse pops, the mutuals, the cooperatives. Canadians baned together.
Today, nothing of the sort is happening. It’s all about taking care of number one because n one will.
I’m still scratching my head, trying to find a way to get Canadians to work together. I just can’t figure out what needs to get done to create that movement.
The Cooperatives…
Something tells me they’ll have to understand that the bank is not their friend before anything changes.
Sorry for the mistakes.
I just get the feeling that the web is impeding on our need to mobilize
——–
The last time we got the concentration of wealth we have today, we got the trust busting.
But we also had people working together to get what financial institutions would not give them. Then we got the caisse pops, the mutuals, the cooperatives. Canadians banded together.
Today, nothing of the sort is happening. It’s all about taking care of number one because no one will.
I’m still scratching my head, trying to find a way to get Canadians to work together. I just can’t figure out what needs to get done to create that movement.
Something tells me Canadians will have to understand that the bank is not their friend before anything changes.
Garth, When will the 905 follow for a correction in Markham?
Shane
With sales crashing and prices following is it any wonder why so many realtors are on this blog. They know housing is in the biggest bubble in history. Don’t fall for realtor propaganda and don’t buy. Housing market getting worse each month. Only two month out of 14 were good. Now We are going bad again.
During the nationwide real estate fraud in the US before the crash, crooked appraisers were an integral part of the price-pumping.
It’s well known that many RE agents are in the business so they can act on insider info ahead of the public for the benefit of their own RE investments. They also game the system, including making under-the-table deals with bidders in order to goose prices and commissions.
Real estate is a dirty, dirty business. All it needs is a better organized, hierarchical system of tribute and they would put the mafia to shame.
Don’t trust anything they (agents, mortgage brokers, appraisers, builders, etc.) tell you.
#62 Bigrider said:
“It speaks to the Island the GTA has become”
I’m living in the twilight zone.
http://www.moneyville.ca/article/1043796–milton-boom-pushes-halton-home-sales-to-a-high ”
—-
That article depresses me abit. I sold in Milton in February. It was a Mattamy 2br 1338 sq ft Village Townhome in Hawthorne Village that I bought in January 2009 for 254,000. I sold in February for 319,000 k. 8 showings on the first day listed, 2 competing offers. Apparently I set a new record in terms of the price I got for my model of home.
After reading the above article I went onto MLS. My model of home in the same neighborhood is now selling for 335,500 k. That’s a 15 grand increase in six months.
Insane.
http://www.realtor.ca/propertyDetails.aspx?propertyId=10988260&PidKey=1453400583
This is the 3BR version (same house but one extra room … my version cut out the extra room and had an ensuite instead). Worth 15k more though???
I had more upgrades too.
Looking at the listings even the smaller townhome starters are going for 300,000. These are townhomes between 1000 – 1200 sq ft, originally sold 2 years ago for 220 – 240 k, 3 – 4 years ago for 200k. It really blows my mind how quickly they have gone up in value.
X and a high dollar
might be good for the few but the high swiss dollar is causing
A high swiss dollar causing cross border shopping in Germany. Shoppers can claim the sales tax back.
Not so different
http://www.budapesttimes.hu/index.php?option=com_content&task=view&id=17373&Itemid=221
Consumers were bombarded with television and radio advertisements offering cheap consumer credit in the form of home-equity loans denominated in euros or Swiss francs
Swiss Franc Exposes Risks To Hungary Banking Sector, Sovereign …
http://www.creditwritedowns.com/
OK… looked at the RE prices in our old upscale neighborhood in Calgary. In the past couple of months, lots of houses for sale where two years ago there were none to an odd one.
Neighbor down the street from our old digs has his house for sale. Been for sale a while. When we sold (2 years ago) wife and I thought that if we sold ours and paid $250K to boot it would be a smokin’ deal taking his house. Instead we sold out and left. His house is dropping and from the looks of it he may end up selling out for the same price that we did (or maybe less if the trend continues).
His house is almost twice the size of our old one, well appointed, excellent layout and a fantastic location.
Talked to my wife about buying a house where we live now. After looking at that and the carnage in our old neighborhood, seeing the unsold big houses magically appear as rentals in our new market (Van Isle) the answer was “No….no…no!”
Good Article about The U.S. Unemployment Situation, Heres A Quote – “There are more unemployed than the combined populations of Wyoming, Vermont, North Dakota, Alaska, South Dakota, Delaware, Montana, Rhode Island, Hawaii, Maine, New Hampshire, Idaho and the District of Columbia.
If they were a country, the 13.9 million unemployed Americans would be the 68th largest country in the world, bigger than the population of Greece or Portugal (each of which has 10.8 million people) and more than twice the population of Norway (4.7 million.)” http://theeconomiccollapseblog.com/archives/wake-up-america-10-very-obvious-reasons-why-the-devastating-u-s-jobs-famine-is-going-to-suck-the-hope-right-out-of-america
#77 JohnnyBravo…but they’re all so pretty and handsome and well-dressed, I never would have suspected that RE is such a dirty business with insider and under the table deals. (and this is disciple speaking)…My understanding has always been that as a RE agent/broker you cannot legally flip houses or in any way or degree subtly or not, defraud clients based on insider info. Is this not the case?
In many ways I am new to the RE scene, only stumbling upon this blog through sheer luck, just before selling my overpriced real estate holdings, as Garth had laid out the evidence for an upcoming correction, I had been tiring of the whole home-ownership experience and wanted to get started on something new with my meager concentration of wealth and get it out of that asset class. Glad I did. But now I am beginning to understand what a racket it was. Perhaps the venom directed at the industry players is understandable…
I received as a gift, a huge, well-framed print of a Group of Seven painting from my mortgage broker a few years ago after inking a deal on a home, and I remember thinking: this must be worth several hundred dollars, the mortgage broker business must be lucrative. I mean, this thing would cover half a wall in my living room, had to hang it with what seemed like landscaping pegs, and the frame itself, if dismantled, could have been used as crown moulding for the room…
#82 disciple on 08.24.11 at 10:08 am
And my son believes that the Tooth Fairy traded one of his lateral incisors for money last night.
I disconnected Shaw and the MSM from my bank account this morning. No more $85 per month to watch incessant commercials and stock pumping drivel from the likes of BNN. Join the revolution and hoist an antenna.
http://www.theglobeandmail.com/news/technology/tech-news/tvs-digital-switch-boosts-appeal-of-cord-cutting/article2139422/
#52 and #53 thetruth,
You are a liar. As with your other posts you make these assertions without any evidence whatsoever.
If I made such a post then find it. Total BS.
You consistently post opinions as facts and lazily ask the other people to go find the facts to support your opinions. This is why you have no credibility.
If you want to make a post on your opinion why immigration levels will rise or why the gov’t should expand the immigration programs then fine. However you don’t do that.
Every few days you make another assertion that the reported immigration numbers are not true. You state your opinions as fact and then don’t support the facts. Even when faced with factual information you simply dismiss it in a conspiratorial way because it doesn’t fit your beliefs. Why don’t you go work for Fox News?
Now you lie about me when I point it out. Pathetic.
Garth you should be commended on hosting this blog for sure but you must be a glutton for punishment.
Good luck convincing anyone in the GTA that their home is/was/will be/ a worse investment than the stock market.
Complete lack of belief in the financial markets coupled with a euphoric worship of RE is the average Torontonian.
Gold Bugs do you hear the falls yet?
Bring on a re crash, however lets play devils advicate
Aug stats might not be telling the big pic……
What my take is only small homes sold bought by new bees skewing the ave price…..
Folks with bucks are on holidays who tend to buy the bigger homes… prices always fall off after the spring market.
you will know if there is traction if this months ave is less than last years ave.
Batman said US banks are in deep do do…
TREB NEEDS A CLASS ACTION LAWSUIT
Garth:
Your research into TREB’s past monthly RE reports is stunning.
Why?
Because this cartel, as you correctly describe it, is habituated by liars whose scale of nerve is, well, unnerving.
Consumers who don’t do their homework are getting royally screwed by this outfit. Constantly.
There’s gotta be a class action suit SOMEWHERE in that swamp.
Buying real estate, no matter how horny one may be, is probably a 10 out of 10 stress-inducing exercise for about 100 per cent of participants out there.
What these jumped-up consumers don’t need, is month-on-month shafts of sunshine finding their ways into places where darkness should prevail.
Where are all of those world-improving guvmint-types when it’s obvious as Hell that SOMEONE in that vast bureacucracy needs to take TREB out to ye olde woodshed and soon.
As for Vancouver, its RE industry, and the legions of victims it churns out every single day, is hopelessly entangled in its own self-generated Hell of hubris and ennuie. Believe me, the participants in that horrific circle jerk WILL get what they deserve.
And what will that be?
Why higher interest rates, and they may want to re-read this part of your piece:
“…The nation’s biggest mortgage lender…just plumped its variable-rate mortgages by a fifth of a point – a tough blow because borrowers have recently been stampeding back into VRMs. That comes amid the unfounded belief…that mortgage rates will remain rock-bottom in Canada for a very long time, in the wake of a decision to freeze US rates. So, the bankers are doing what bankers do – padding their bottom line. Anyone who thought mortgages would stay at 3% for the next two years needs some serious nookie…”
IN ADDITION TO THAT…
I’m also looking for a bursting international bond market bubble and the automatic interest rates hikes which will simply blow Vancouver’s real estate market to smithereens. Such an event would occur literally overnight.
Tread carefully you HAM-bones.
Some quick comparisons for Kelowna and Victoria:
I looked at the highest price point since Jan 2010 and the July stats from OMREB and VREB.
Kelowna SFH:
July 2010 (high) Av – $513,310 Med – $463,451
July 2011 Av – $490,364 Med – $434,000
An average drop of 3.85% and a median drop of 3.98%
Victoria SFH:
Jan 2010 (high) Av – $711,392 Med – $674,000
July 2011 Av – $519,652 Med – $480,000
An average drop of 26.9% and a median drop of 28.7%
Kelowna Condo:
July 2010 (high) Av – $255,966 Med – $265,000
July 2011 Av – $229,461 Med – $216,950
An average drop of 10.35% and a median drop of 18.13%
Victoria Condo:
Mar 2010 (high) Av – $344,020 Med – $316,250
July 2011 Av – $306,506 Med – $281,000
An average drop of 10.9% and a median drop of 11.1%
So the SFH situation in Victoria is much worse so far than Kelowna, condo average drops are about the same but the median in Kelowna is about 7% worse.
Of course the stats can be interpreted differently using other months than highs and lows – but I thought this was interesting.
SCARY, IF TRUE!
Here is a scary headline from the United States:
Home Prices Decline 5.9% in Second Quarter
That seems a surprisingly large plunge. That is scary.
BUT, Actually the headline is a lie, as the article under the headline confirms:
http://finance.yahoo.com/news/Home-Prices-Decline-59-in-bloomberg-3243534314.html?x=0&sec=topStories&pos=main&asset=&ccode=
In reality prices were down just 0.6% “IN” Q2. Prices were down 5.9% versus 12 months ago.
But a headline that states prices dropped 5.9% “in the second quarter” is more than misleading. It is a lie.
No one knows where house prices will be in 12 months. I suspect higher, but who knows?
It is irresponsible to trumpet a headline like this that is a lie. Cheap journalism.
Great post Garth. Each time I read this I smile and know I’m doing the right thing, rent and invest until I can truly afford a home as part of a balanced portfolio.
If this site didn’t scare realtors, so many wouldn’t be on it, they’d just ignore it. They know what’s coming, a crash and a return to common sense, and they’re afraid. Very afraid.
I got into it with a realtor one night who said that a mortgage was an “investment”. I explained that an investment pays you to own it and is liquid. A mortgage is a debt to a bank and a home is almost always illiquid. He came back with, “most people retire on their home”, I answered, “that’s because that’s all they have.”
Thanks Garth!
This what the biggest newspaper in Calgary considered to be news today
http://www.calgaryherald.com/business/Calgary+region+house+prices+forecast+rise/5299941/story.html
As I mentioned in a previous comment, the media is not about telling you the truth. It’s PR. Get over it.
Typically, published figures (such as a 5.9% drop in housing prices) are factually true within the parameters used. But you have to read the report carefully to discern exactly what the figures mean. (For example, are they taking about month over month, quarter over quarter, year over year, or something else entirely?)
It’s called “spin.”
Caveat lector.
#79 jess
Not just in Hungary. Also in Poland, as far back as a decade ago, many people mortgaged in Swiss francs. For a long time they lived like kings, because the money was so much cheaper so they built themselves mansions, but at some points rates were bound to normalize, or currency crosses to shift. They were only looking at the monthly payment, but not at the currency and interest rate risks down the road.
Another point about published stats and figures. As long as the reporter uses a credible source, they are off the hook if the data is actually false or incorrect.
This is another reason you can’t blindly accept what you read/see/hear in the media. Even when the reporter is trying to tell the god’s honest truth, the info could still be wrong, and often is.
In the end, it’s all just a show. Enjoy.
#90 IF (Shawn Allen),
You said, “But a headline that states prices dropped 5.9% “in the second quarter” is more than misleading. It is a lie.”
Clearly it is misleading or just poor math. A lie is perhaps a bit strong.
However are you prepared to hold the same standards up the mountains of misleading information and lies that pumped out regularly by the MSM and the RE industry? Most of the time when that happens people justify it for “putting a good face on it” or “acting in their interests.”
Two wrongs don’t make a right. Spin is spin either way. I think Garth’s post proves this point.
America real estate still sliding!!
http://tinyurl.com/3ege2c6
Garth, I need your help. I have no money, no job, no credit. But my wife needs a house bad. Can you help me get a mortgage to buy a house? Thank you
#70 disciple on 08.24.11 at 8:59 am
time to change the meds brother..I think you stumbled into the wrong blog again…
See Garth, this is the problem with you. Post #12 shows this is not too far out of the ordinary for seasonal fluctuations in the GTA. What is your counter-argument to that?
I find that you mainly reply to the idiots on the comment board and disregard the interesting posts, often backed up by data, that may conflict with your views. If you paid more attention to these posts we would have a much more interesting and useful debate.
I compared detached home sales in 416. The other post looked at all homes in the GTA. Not only were these two different sets of data, but the precipitous drop in detached home sales was out of the pattern. If you don’t find this interesting, well, so be it. — Garth
The nation’s biggest mortgage lender(RBC, now followed by BMO) just plumped its variable-rate mortgages by a fifth of a point-
So when I changed our fairly low 3.25% variable rate, two weeks ago, to a 5 year 3.89 fixed, the fingers were a little bit crossed. At my age, I’m no longer a gambler, and you have given, as far as I and hundreds of your devotees think, some very good advice over the years. When the fed came out with no increase in interest rates for two years, your advice and my solid belief in you did not affect me. And so one more of your predictions comes true. Interest rates will not stand still. Thanks, once again, Garth!
My agent says I’m losing out because homes in the Renfrew area of east Vancouver are selling like ‘hot cakes’. I decided to drive around and look and it appears my realtor is right. There are sold signs everywhere in the Renfrew area. BUT wait after some research I found out where these homes were all being sold to. They ended up on this one realtor’s website:
http://www.julianaho.com/ActiveListings.php/1
This asian realtor bought “20” of them with her partner and are building to suit potential buyers. I couldn’t believe my eyes I had to scroll back and forth on the 3 pages of listings and count twice to make sure I was not double counting.
I guess if no one else is buying the realtors may as well buy their own product. The scary thought is this is ONE realtor. How many realtors are there in BC?
Hey Garth
Aren’t these prices declines normal during the summer months?
Essex University Tax Justice Network Research Workshop July 5, 2011. Crawford Paper – MWednesday, August 24, 2011
Capitalism without capital – exploring the biggest bankruptcy in Canadian history -monetizing ‘Toxic Loans’ through taxations systems
The following presentation was given by Tony Crawford at TJN’s annual research workshop at Essex University this summer. The presentation reviews the extraordinarily complex tax sheltered investment products that contributed to the largest (CA$32 billion) bankruptcy in Canadian history. Tony is a British / Canadian advocate for taxpayer protection through a ‘Responsible Lending Act’.
#99 Peakoilist…I’m high on life, bud, no need for pharmaceutical products based on fluoride-LSD derivatives. Anyways, here’s the answer to the missing bees, who pollinate one third of the human diet:
http://viewzone2.com/lostbees.bayerx.html
This what the biggest newspaper in Calgary considered to be news today
http://www.calgaryherald.com/business/Calgary+region+house+prices+forecast+rise/5299941/story.html
———————————————————-
Garth when do you think a similar drop could happen in Calgary? How do we determine how the dominos will fall.
Im cracking up laughing at Garth’s response to #70’s post (and #99’s post about the med’s) ..
hilarious .. and I agree with both your comments … buddy … buy quality … not quantity if youre going to smoke that stuff … LMAO
priceless …
#99 .. it was YOUR comment that made me scroll up and click that link … LOL – kudos
oh ya .. I forgot to add … GOLD -100 or about -5.15% …
this could accelerate in the days ahead too … esecially if they impose new margin requirements going forward due to an increase in volatility (remember what happened to silver a few months back) I admit – I got out about 2 weeks too early … for this VERY reason … remember … stops are your best friend and if you know how … hedge your profits if you want to stay the course … look at PUT contracts on the GLD ETF if you choose to stay long your GOLD … good luck
What is radioactive residential real estate worth Garth?
I am considering the purchase of a giger counter so that I could discover what is and is not contaminated and I would like to cruelly reveal the truth to some real estate fanatics I know. Is Nuclear home inspecting an employment opertunity?
#46 Waterloo Resident – here is someone else’s take on this topic. http://www.thestreet.com/story/11228375/1/etf-in-focus-gdx.html
Canadian consumer confidence drops significantly in August.
http://www.vancouversun.com/business/Consumer+confidence+Canada+declines+significantly+August/5300481/story.html
#102 Patrick
The Vancouver market for last year has been nothing more than a series of rotating hot spots. Locusts descend on an area for a couple of months, prices go up 20%, then everything dries up. In some cases one would be well justified in suspecting a pump and dump operation.
Gold down $91 today. Oh yes, which advisor was it that said it was a great buy at $1850.
Remember the one that guesses right is the expert!
West 46th Avenue, 100 block
Fire on the 19th at a vacant detached house was sold by a war veteran who had since moved to a senior home. Buyer, originally from China, paid $1.3M for the vacant house. According to a neighbor, this Chinese buyer and his brother bought a total of 6 detached houses in the area, paying prices way over the asking prices. In the last 6 months, selling prices of SFHs in this neighborhood has gone up by over 52%.
http://tinyurl.com/3tyaju7
http://news.vanpeople.com/?action-viewnews-itemid-162026
http://tinyurl.com/3ep5ds5
No one, and I mean absolutely no one, is talking about green shoots anymore. Maybe the recovery is so strong, they’ve blossomed into mighty oak trees? Or maybe not. Here is TD warning about possible recession again:
http://www.cbc.ca/news/business/story/2011/08/24/td-canada-economy-recession.html
Re #112 Bobby
Gold down $91 today. Oh yes, which advisor was it that said it was a great buy at $1850.
Remember the one that guesses right is the expert!
======================================
Not a gold bug but where is a smoke there is a fire:
http://www.bloomberg.com/news/2011-08-24/gold-margins-raised-27-on-cme-s-comex-after-biggest-price-drop-since-2008.html
After raising the margins by 22 % on Aug.11 CME will raise them again another 27% at the close of the trading tomorrow. Aug.25
This may be another buying opportunity in the making.
And on the subject of TREB – they are changing the way they are going to report.
“Due to month-to-month volatility in sales and average selling prices, TREB will not produce monthly reports on a community-level basis. Instead, detailed community-level statistics will be published every six months.”
You may wonder why?
Putting margin requirments on gold doesnt change the fact they are Doing QE’s around the world, all they are doing is putting band aids on an open wound with these hikes
Spoke to another realtor today in the interior about my investment condo. Am only selling because I never use it and would now rather put the money elsewhere. It pays for itself.
One unit is for sale at a much lower price than the others. Turns out to be a foreclosure. Realtor said there were a number of foreclosures on the market, about 5, with a significant number of others coming soon. Appears recreational properties are on the skids. I mentioned the glowing reports from CREA and he too laughed. Said maybe Vancouver or Toronto, but in the smaller areas the market is in the toilet.
Maybe one should buy gold. Oops it crashed today too. Where are those advisors when you need one?
Great interview with Australian economist Steve Keen on the causes of the financial collapse and the current situation. One of the most level headed economists out there:
http://www.finnewsnetwork.com.au/archives/finance_news_network18501.html
http://online.wsj.com/article/SB10001424053111904279004576524893838118716.html?mod=googlenews_wsj
my even wsj is aware now
BC is aptly coined “best place on earth” by our visionary leaders. Investors and industrial pumpers are making buckets of cash flipping condos, houses … and now this.
Chinese students at SFU are selling their seats (registrations) to attend popular courses at the university. The standard asking prices vary from C$200 to C$500; a professor with good teaching reputation is factored in the pricing.
http://tinyurl.com/3bgg2d6
http://www.mingpaovan.com/htm/news/20110824/vaa1h.htm
Moneta @ # 73:
Quote : ” I’m still scratching my head,trying to find a way to get Canadians to work together ”
Listen up fool – what the world does NOT need now is yet ANOTHER bleeding-heart dreamy do-gooder liberal socialist income re-distibuter. Just take care of yourself Mr. Helpful. I doubt if you can even do that but just keep your nose out of everyone elses business and we will ALL be better off.
Capish?
Garth is right. Vancouver RE will correct. Nothing goes up in a straight line and frankly, the fundamentals simply do not support these price levels. I’ll let others debate/make-up the % drop, but ‘some’ of this blog’s readers’ should at least concede this. Vancouver (specifically) does have other factors which are extending the greed, preventing the fear and exacerbating the losses, when they inevitably come. IMHO they include:
1. Drug Trade – The underground economy is rampant. If you knew who was doing it, you would be floored. How many of these glorified bidding wars “buyer paid $100,000 over asking! yelped the agent” or pre-con condo deals are people looking to wash their money? A lot.
2. Foreign Students – The Gov’t allows foreign students to study in Vancouver – no big deal. But the Aha! moment is their room & board (ave. $700/mo/per student) is tax free. Yup! I sadly know people who have shoe horned 3-4 “students” into their 1 bed 1 bath dark bsmt. Math is Fun so, 3×700=$2,100/mo. (or) $25,200 per year TAX FREE.
3. Baby Boomers – Today Vancouver Boomers are leaving houses worth (worse case scenario) $700k. Boomers were responsible (unlike my gen) so it likely has little to no mort, lived through 22% interest rates and very likely drove (1) car and had (1) TV set for the majority of their working life. Garth, people are not even waiting for the parents to pass on anymore – they are talking them into 1 bed boxes so the kids can divide up the cash. 700k/2.5kids=$280k each.
4. HAM – It’s true we have Ham in Vancouver, but no where near the amount Global and Re/Max profess. Because real interest rate in Mainland China are pacing below inflation, people will always look to buy hard assets vs. stay in cash. Unfortunately, most Asian buyers are mistaken as non-residents, but are actually Canadian citizens from the Expo days.
NONE of these will support prices long-term. When the realization that prices could and do fall, you will see a buyer’s strike and a stampede for the exists. Some of these are already happening. Brand new DT condo’s are advertised for less than their 4 yr old comparable are asking on MLS…haha (sorry). It’s is funny, but won’t be for the majority.
A major Canadian bank says the economy ground to a halt in the second quarter and could slip into recession if the United States continues to weaken.
In a report Wednesday, TD Bank estimated zero growth for Canada in the second quarter which ended June 30. The bank also said there’s a reasonable chance the economy actually shrank in the spring quarter.
“If a contraction is realized, worries that Canada’s economy has already entered a recession will increase, especially in light of the financial market turmoil that erupted midway through the third quarter,” TD said in a report.
Economists define a recession as two consecutive quarters that real gross domestic product shrinks.
Canada last slipped into recession in 2008-2009 after the Wall Street financial crisis sparked a global credit crunch that battered economies around the world and led to a huge restructuring in the North American auto sector, with the loss of tens of thousands of jobs……………..strange world we live in where a countries wealth is measured by how much they can borrow and the majority do to maintain their expenditures………….the end result somewhere down the road is not pretty IMO
Hi Garth, FYI
Complex Oil Market Complicates Global Economic Outlook. BY: Bill Sweet / Sat, August 20, 2011
Global oil demand grew 3.1 percent last year to reach an all-time high of 87,5 million barrels per day, despite dropping sharply the previous two years, Worldwatch reports…
http://bing.search.sympatico.ca/?q=ieee%20spectrum&mkt=en-ca&setLang=en-CA
Hi #108 StevenR.,
Were you thinking of the granite counter tops?
You might find the info at this link interesting.
http://bing.search.sympatico.ca/?q=ieee%20spectrum&mkt=en-ca&setLang=en-CA
Sorry, these links might work better.
http://spectrum.ieee.org/blog/energywise
http://spectrum.ieee.org/energy/nuclear
#122 Math is Fun
Don’t forget casino money laundering…
“The B.C. government says it plans to transition away from the use of cash in casinos in an attempt to crack down on money laundering.” CBC
http://tinyurl.com/3n8lep5
That is a pretty dramatic fall in prices… if it is sustained in the coming months, then I am sure it will make headline news. That being said, the photo you’ve posted is LOL funny!
westernman on 08.24.11 at 7:09 pm
Moneta @ # 73:
Quote : ” I’m still scratching my head,trying to find a way to get Canadians to work together ”
Listen up fool – what the world does NOT need now is yet ANOTHER bleeding-heart dreamy do-gooder liberal socialist income re-distibuter. Just take care of yourself Mr. Helpful. I doubt if you can even do that but just keep your nose out of everyone elses business and we will ALL be better off.
Capish?
—————
LOL!
After being out all day, I was really excited to see what kind of reply I would get to that post. As I sat down, I prepared myself from an angry derogatory reply from a Westerner.
I love it when I’m right but also when I’m wrong because it forces me to change my world view. But then again, maybe you’re a newfie posing as a redneck and just playing with my head.
westernman: addressing himself to moneta:
Listen up fool – what the world does NOT need now is yet ANOTHER bleeding-heart dreamy do-gooder liberal socialist income re-distibuter.
that’s harsh
the term western man refers to the sum total of western society, its tragedies, its triumphs and its beliefs. It includes political reformers from the Gracchi Brothers to Martin Luther King.
Moneta was referring to the Great Depression when unemployment rose to 25% and popular movements advocated redistribution of income. In her work she sees the workings of large financial institutions. In fact in her knowledge of modern finance, knowledge of English and French and knowledge of history she is the western man.
and westernman you not
to #85 Macrath:
I did this 3 years ago, and it always surprise me how little people know that you can have tenth of the HD channels over the year without paying enormously ridiculous fees to cable or satellite providers for watching commercials. My antenna cost me $15 …
Here is a TV interview with Satyajit Das, an Australian-based risk analyst, discussing the current economic malaise of too much debt and what it means for for us in the future… increased taxes, less government spending on health, increasing and moving savings into income generating investments;
http://www.nakedcapitalism.com/2011/08/satyajit-das-on-the-botox-economy.html
He has a similar outlook to our Garth and some of the issues tackled in Money Road.
regarding GLD, may consider buying with the drop, after friday, GLD will drop until the fed announcment but after that it should rise,, 2K is not unrealistic for gold. You may get it as cheap as 1648, but will make a profit still, gold rise isn’t totally done yet, nor is the market decline.
#99 Peakoilist…your moniker is Peakoilist, which blog is that again? Enough said.
#106 thinktank…what a useless post. By clicking on that link I just opened your eyes to a world you had never known existed before, and your response is to ridicule me. Typical and symptomatic of willful ignorance. Good luck.
@GregW, Oakville.
No Greg I was thinking of the radioactive isotopes that come from Fukashima via the rain and land everywhere the rain does. The strontium and cesium take decades and even centuries to decay. Then again there are about 200 radioactive elements produced by nuclear fission and if they are released into the environment they can be dangerous to human health for a very long time. Granite counter tops could be the least of your problems.
http://www.youtube.com/user/connectingdots1
Hi #135 StevenR, Thanks for the info video. Interesting might not be exactly the correct world to describe it.
Now I have two reasons that start with the letter “f” to actually spend the bucks to get a whole home RO water filter. (the one f is fluoride to be clear.)
I thought just one ‘f’ and Love cannel and other the stuff entering the water up stream, so to speak, was maybe a good enough reason to get an RO based whole home water filter.
They aren’t cheap. They do stop most stuff, unlike the ‘brita’ which only can take some stuff out, not ‘f’.
I’ll need to think about this. I know that some of Mississauga water is now being filtered with RO, but they are still degrading the water by adding ‘f’ stuff after that. (Some one need to look at the Ontario Safe Drinking Water Act in this regard! It forbids it by the way. But why fallow the law??)
I know that some flights from Asia are being diverted to try and avoid the stuff getting into the air that is seemingly showing up in your video link you gave. (I say seemingly because of the plastic bag he adds, and I wonder if that is were the stuff might be. Just wondering? Could some of the stuff he is detecting be from coal burning? More test of the sample need to be done to know if it’s from f. for sure.)
I did hear that the detectors on the east coast were picking up some of the fallout from f, in the couple weeks after it started, but the amount was so very small. I believe you get more exposure from the potassium in gator-add was the comparison in regarding that particular sample.
(I guess it’s a good thing we evolved with some background stuff like potassium. The stuff from f may or may not interact the same?)
The rain in your video link certainly is closer to the f source so I’d assume could be greater, but how much? The f fallout is not good at all and is still ongoing in July it seem according to the date on your video link. Is Canada checking the imported food and fish or are they saying don’t worry be happy? Just wondering.
I suppose getting exposed to some stuff for a short time might not do much, but getting exposed all the time for your whole life could cause an issue, maybe. If the reading in the video are from f, I’m not sure consuming the partials intentionally is the wises think to do, but what can you do really?
I wonder if anyone official in Canada is checking the rain fallout, not that there is much we could do to stop it. Should I be rinsing off my rain coat and boots after getting rained on? The guy in your video link seem to think so. How much is being taken up by plants and the food chain, and should anyone be concerned about the levels, really? I have no idea, but the stuff from f was never intended to get released into the biosphere in the first place, but it has and is.
(Didn’t above ground nuclear bomb testing stop due to concerns about fallout effects on life?)
As for the stuff that take a long time to decay, I understand it is the short lived stuff that is more worrisome than the long lived stuff. Is the short lived stuff still being made and released because the melted reactor cores are still fashioning some and can’t be totally stopped because they have partly melted together into a reactive blob and the reactors are no longer contained? Japans f is quit a mess with global and long term consequences, IMO.
FYI, I still like the EC-6 CANDU reactor design. But what do I know. Have I thought though all the options enough?)
John Lennon’s Imagine
Imagine there’s no Heaven
It’s easy if you try
No hell below us
Above us only sky
Imagine all the people
Living for today
Imagine there’s no countries
It isn’t hard to do
Nothing to kill or die for
And no religion too
Imagine all the people
Living life in peace
You may say that I’m a dreamer
But I’m not the only one
I hope someday you’ll join us
And the world will be as one
Imagine no possessions
I wonder if you can
No need for greed or hunger
A brotherhood of man
Imagine all the people
Sharing all the world
You may say that I’m a dreamer
But I’m not the only one
I hope someday you’ll join us
And the world will live as one
#131 Uki1 on 08.24.11 at 9:05 pm
to #85 Macrath:
I did this 3 years ago, and it always surprise me how little people know that you can have tenth of the HD channels over the year without paying enormously ridiculous fees to cable or satellite providers for watching commercials. My antenna cost me $15 …
………………
Correct me if I’m wrong but I think it is only feasible if you live in certain areas not too far from the the US border. If that’s not the case, I’d love to hear more about it.