Eye on the ball

On the day Barack Obama went to Vegas a TV reporter stuck his mic in the face of a guy in the crowd. “It’s tough on my generation,” the boomer said. “We were always told a house was the safest possible thing to put money into. Now I’m looking at retirement. And it was a lie.”

Another day. More millions and billions trying to breathe life back into an asset which has destroyed the American middle class. The average US house price has fallen by just 17% – but that was a big enough financial bomb to blow up the richest economy in the world. Why? When the fuse of inflated prices was lit, families had run up the greatest debt load in history, betting big that real estate would always rise.

This should have more Canadians on the edge of their seats, with the little fuzzies on the back of their necks vibrating. Those people who pooh-pooh a “US-style’ house collapse as being improbable, impossible and imbecilic in this country invariably paint it as a 70% free fall of the kind which hit hoods in Phoenix and Vegas. But equally destructive has been a 16% decline in Seattle, a 13% drop in Boston or a 15% slide in New York and San Francisco – all wealthy, vibrant cities with million-dollar fixer-uppers.

In those cities, as in Toronto, Calgary or Vancouver, credit was easy, money cheap and lenders accommodating, five years ago. People were able to secure properties with little or nothing down using perps like Eddie, the subject of yesterday’s post. So, sans equity, house prices didn’t have to fall far to destroy their finances. Because most people put most of their net worth into one asset – a house – a decline of even 15% was enough to ripple through the entire economy.

Today one in four families is under water. That’s why Obama went to Vegas. Another bailout – this time a plan to let people who owe more on their mortgages than their homes are worth refinance their loans to get a lower rate and cheaper payments. “This will save me a few hundred bucks a month,” another guy told the media. “But what problem does it solve?”

None. Because Mr. Market is bigger even than Washington. An estimated $2 trillion in federal money has not resuscitated real estate – the most of emotional of assets. Without love, it croaks.

I mention this because 9% isn’t all that far away from 17%. A new report by the pointy heads who work for National Bank Financial says that if mortgage rates rise by 1% to 1.5%, housing prices will decline that much. Indebted households can’t absorb more debt charges, unless incomes start shooting higher. And guess what the odds are of that?

Now, in fairness, the bank figures this will not happen until 2013, which seems a tad rosy. That optimism stems from a belief mortgage rates will stay close to current levels for about a year, before trending higher, thanks to a lousy economy. That presumably means Canadians will continue to pile on debt buying houses – at least in the places where urban mass delusion is so popular.

Some people come to this blog and have a tantrum when I break the news house prices in Kitsilano or Leaside won’t be falling by half. This is as childish as bank economists who dismiss a potential 15% price correction because it’s not ‘US-style.’

Actually, it is.

One of the worst things you could have done in 2011 was buy a house in a bidding war in the GTA or the Lower Mainland, in Winnipeg or Saskatoon. One of the best things would have been loading up on bank stocks or an exchange-traded fund pacing the TSX or the S&P seven weeks ago. We’ve just had another great example of how smart investors do the opposite of what their mothers-in-law urge.

It’s all about risk. Remember, risk rises and falls with price. In the polar opposite of what most folks think, assets falling in price represent value while those spiraling higher grow more dangerous. This is augmented when the suitors are using borrowed money, destined to be paid back at greater cost.

You may not think a lot of Americans. Being prejudiced, most Canadians don’t. Too bad. We have much to learn. There, but for the grace of a few basis points, go we.



#1 Your Mom on 10.24.11 at 9:47 pm

Do as i say not as i do.

#2 timmy on 10.24.11 at 9:48 pm

Nice Job Garth. Keep it up!

#3 shanks on 10.24.11 at 9:48 pm


#4 Your Mom on 10.24.11 at 9:51 pm

That is one nasty hemorrhoid that guy is sportin’.

#5 Dan in Victoria on 10.24.11 at 10:11 pm

Geez Garth, get them to mute their phones ahead of time…..

#6 Tim on 10.24.11 at 10:15 pm

My stock portfolio dropped more than 15%. So after a 100 percent run-up, there may be a 15% drop in real estate. This would make anyone who bought in Vancouver even three years ago still come out ahead. How is a 15% drop in Vancouver on a million dollar house going to make any difference to people trying to get into the market? If this is the expected order of magnitude, then I guess most renters will keep renting, and anyone who can make their mortgage payments will continue to do so

As I have said (repeatedly) some markets will tank, some slip a little. And balance that portfolio. — Garth

#7 Helpful Advise on 10.24.11 at 10:17 pm

We are Wall Street. It’s our job to make money. Whether it’s a commodity, stock, bond, or some hypothetical piece of fake paper, it doesn’t matter. We would trade baseball cards if it were profitable. I didn’t hear America complaining when the market was roaring to 14,000 and everyone’s 401k doubled every 3 years. Just like gambling, its not a problem until you lose. I’ve never heard of anyone going to Gamblers Anonymous because they won too much in Vegas.

Well now the market crapped out, & even though it has come back somewhat, the government and the average Joes are still looking for a scapegoat. God knows there has to be one for everything. Well, here we are.

Go ahead and continue to take us down, but you’re only going to hurt yourselves. What’s going to happen when we can’t find jobs on the Street anymore? Guess what: We’re going to take yours. We get up at 5am & work till 10pm or later. We’re used to not getting up to pee when we have a position. We don’t take an hour or more for a lunch break. We don’t demand a union. We don’t retire at 50 with a pension. We eat what we kill, and when the only thing left to eat is on your dinner plates, we’ll eat that.

For years teachers and other unionized labor have had us fooled. We were too busy working to notice. Do you really think that we are incapable of teaching 3rd graders and doing landscaping? We’re going to take your cushy jobs with tenure and 4 months off a year and whine just like you that we are so-o-o-o underpaid for building the youth of America. Say goodbye to your overtime and double time and a half. I’ll be hitting grounders to the high school baseball team for $5k extra a summer, thank you very much.

So now that we’re going to be making $85k a year without upside, Joe Mainstreet is going to have his revenge, right? Wrong! Guess what: we’re going to stop buying the new 80k car, we aren’t going to leave the 35 percent tip at our business dinners anymore. No more free rides on our backs. We’re going to landscape our own back yards, wash our cars with a garden hose in our driveways. Our money was your money. You spent it. When our money dries up, so does yours.

The difference is, you lived off of it, we rejoiced in it. The Obama administration and the Democratic National Committee might get their way and knock us off the top of the pyramid, but it’s really going to hurt like hell for them when our fat a**es land directly on the middle class of America and knock them to the bottom.

We aren’t dinosaurs. We are smarter and more vicious than that, and we are going to survive. The question is, now that Obama & his administration are making Joe Mainstreet our food supply…will he? and will they?

The above is an email flying around between capitalists this week. — Garth

#8 Carp on 10.24.11 at 10:19 pm

I did the opposite my mother-in-law and rented the big house instead of buying it and dropped a bunch this summer in a balance fund. I love the dividends… That alone (and no taxes being paid) justifies the rent to smart people.

#9 Mr. Lee on 10.24.11 at 10:19 pm

In case anyone missed it, inflation rates for September (core) were above the BofC’s target rate. While this is a fact so too the increased amount people spend to service debt. Now a betting man may wager that MR. Carney will delay raising rates until 2013….perhaps, or will the fear of inflation or stagflation prompt him to blink????

Given a choice between job growth or inflation control………..who wants to bet?

#10 Ping Pong on 10.24.11 at 10:31 pm

The middle class collapsed on the weight of its own success:

But, according to JP Morgan, now may be the time to buy a US house:

#11 Tim on 10.24.11 at 10:40 pm

A fifteen percent decline on a million dollar house will have no effect on renters waiting on the sidelines, and little if any effect on people who have bought at least three years ago

#12 Smoking Man on 10.24.11 at 10:47 pm

Garth you are starting to remind me of a Shark that smells the blood in the water…….Your swimming faster

Your posts are getting more aggressive, more confident, more sure….

Really starting to like you.

Do we get to talk on the call or just listen?

SM is listen-only. — Garth

#13 Boombust on 10.24.11 at 11:03 pm

Why not 50% off in Vancouver? It’s happened before and it will happen agian, IMO…

#14 Shot Ski on 10.24.11 at 11:17 pm

Thanks for the invite Garth, for those of us that live out west and have jobs if the call, archived or podcast?

#15 Not 1st on 10.24.11 at 11:28 pm

Yup, gotta love those awesome ETFs. The one I bought fell 2 dollars a share since August 1st and still hasn’t gained its value back. But in the meantime, i got a lovely dividend payout of 4 measly cents a share.

Did your pooch pick it for you? — Garth

#16 Deano on 10.24.11 at 11:32 pm

Well Helpful Advise…that was unbelievably lame. What made it worse was that you couldn’t even write it yourself.

4 months off? Teacher in the US? Yeah right, teachers I know there (I used to teach in the US) start at 24k a year in many states. That’s after 5 years of university. They all work 2nd and even 3rd jobs. It’s 3 months off as well…

I like capitalism…the old fashioned kind. The sort where Wall Street fuelled REAL innovation, not the kind of innovation that gambles with other people’s money. The gigs up. You’re going to lose in the long run.

#17 InvestorsFriend (Shawn Allen) on 10.24.11 at 11:34 pm


Right, Obama was announcing a refinance program for those underwater…

My understanding is that most Americans take 30 year fixed rate mortgages, at rates about equal to our five year rates in Canada. One mystery is how that is possible.

But another mystery is the American refinance right.

In Canada if you want to refinance you pay the lower of 3 months interest or an interest differential.

In Canada due to the interest differential it usually makes no sense to refinance a five year mortgage even if rates fall a lot. If after one year rates have fallen a lot and you want to refinance to a new lower five year rate, the bank will charge an interest differential equal to ALL your savings over the four years remaining term that you are trying to refinance out of. So might as well wait until your mortgage is open at the end of the five years. That is fair enough, it is the deal you signed on for.

BUT in the United States it seems that most people with 30 year fixed rate mortgates had the right to refinance when rates fell. (I am not talking about underwater mortgages, I am talking about a simple situation where they signed for 30 years at 7% some years ago and later the 30 year rate dropped to 5% and so they refinanced). They do have to pay some fees to refinance. But the fees are FAR FAR less than the interest differential. And their mortgage had to be in good standing with equity in the property.

Does anyone know why the Americans are able to refinance out of 30-year fixed rates? My suspicion is that perhaps all or most Fannie Mae and Freddy Mac mortgages come with that refinance option built in. Either that or there are Federal rules that obligate the bank to allow the refinance.

Does anyone know? I have never seen this discussed. It seems we just accept that in America they can refinance and in Canada we basically can’t (unless we pay an interest differential that makes it a waste of time).

Or maybe the refinance right is in their constitution, right after the right the bear arms? (apropo the picture, there is however no right to bare butts)


#18 JoeMainStreet on 10.24.11 at 11:38 pm

>>>> Helpful Advise – “We are Wall Street.”

So arrogant, so primitive.

I thought that they actually smarter , now it seems I was wrong.
Obviously they really scared by Occupy movement.
(if the text is not fabricated by opposite side)

#19 Andrew from Saskatoon on 10.24.11 at 11:54 pm


Why get into a bad market? If the market is so awful, the obvious solution is to snub it. People who complain about being priced out of the market remind me of women complaining that their husband beats them. They persistently try to change the sleazebags, just as they do the sleazemarkets. What they really should be doing is walking away. Let the charity cases wallow in their own bed of poop.

I’ve been renting for nearly 4 years and I love every aspect of it. Not a damned thing to worry about. No risk, no surprise expenses, and I actually have a chance of seeing my living expenses fall amid an economic crisis and exploding borrowing rates. I can actually afford to put about 1/3 of my income into my mining stocks. How could it be any better?

There’s this prevalent superstition in society that renting is throwing money away. Guess what, folks. There’s no such thing as a free lunch. It costs money to maintain, heat, and power a property. Deal with it.

#20 nonplused on 10.24.11 at 11:59 pm

I can’t drop in on your conference call tomorrow at 5PM ET (7 Mountain?) because I’ll be on the ice with Timbits. Are you going to podcast these things? Sounds like that would be a natural next step. A link on this site would suffice for me.

(Don’t worry haters, I’m just an assistant. My job is merely to remind the kids which cone to go around next and keep the puck “in bounds”, and occasionally locate the parent of the kid who has to go to the bathroom. No coaching on portfolio allocation, peak oil, peak taxes, peak debt, gold as plan B, or the nuances of marriage, divorce, and housing. I leave the coaching to the coaches and the managing to the managers.)

Oh and about the sobbing boomer, boo hoo hoo. What about the 20 somethings who spent $100 large on an education in “anthropology” and now can’t even get a job as a restaurant hostess?? These young people don’t even have a house, let alone one in which their “equity” isn’t going to pay for 20 years worth of semi-annual cruises. The debt bubble has made a victim of everyone who wasn’t either trained by a grandparent to avoid debt and be frugal (lucky me) or figured out that debt was bad on their own (I am sure there are a few). But even I am feeling overwhelmed by the cash burn rate required to live these days at the “typical” lifestyle, and I am in the 10%. Its inflation, folks, despite that debt (and soon) assets are deflating.

We are approaching a generational inflection point. What’s on the other side is anyone’s guess. Hopefully we all remember a few facts:

“Governments are always and everywhere a wolf and not a sheep dog.”

“Governments will always provide services at a higher cost, with less skill, and at lower levels of service than the private sector can do the same.”

“There is no such thing as a free lunch.”

“Governments are the most efficient organization that exists for the purpose of making war. But that is because the private sector is too humane and risk adverse, and won’t do it.”

“All governments always lie all the time.”

“Prohibition doesn’t work. It merely enriches pushers, pimps, organized crime, corrupt legal enforcers (both police, legal, and executive), while criminalizing everyone else.”

“Minimum wage laws mean fewer jobs. Any interference in the markets by the government means less.”

“Governments can only ration, they cannot create.”

“The first rule of economics is scarcity. The first rule of politics is to ignore the first rule of economics.”

#21 Morry on 10.25.11 at 12:02 am

a 10% haircut would be healthy. We have planned for it and we are looking forward to it.

#22 Nostradamus Le Mad Vlad on 10.25.11 at 12:02 am

“We were always told a house was the safest possible thing to put money into. Now I’m looking at retirement. And it was a lie.” — So much for a house — bricks and mortar — being an investment. Same is also true about get rich quick schemes. Like politicians, they are a lie waiting to be uncovered.

“. . . a decline of even 15% was enough to ripple through the entire economy.” — 15% is a nice round figure — not too much or little. What if the figure is 37%? There are more forces than RE at work. Subtract a few more mfg. plants, idle a few million more and this continent is french toast.
#8 Carp — Very smart. Be careful — it may catch on!
The US Fed Well, it’s bigger than a juice box; Why is Libya broke? To borrow from the IMF and become debt serfs like us! Plus 3:32 clip; 32:48 clip Gold / Silver manipulation; Inflation Up globally. Add on new and higher taxes, stagnant wages / unemployment, 4closures and HELOCs — and we’re in great shape; 80 Years Later “The Great Depression was caused by the Federal Reserve and their owners, the biggest Wall Street banks, aiding and abetting reckless speculation, greed and extreme risk taking with mountains of debt.”; Homeless and pets in Kelowna.

3:11 clip Gadaafi was going to do the same as Saddam — drop the US$. Iran has already done that; China’s msm reports. The west’s m$m are bought, paid for and controlled; The Vatican “Oh yes, a bigger version of the Federal Reserve, IMF and ECB all rolled together will just make everything all better, won’t it?” wrh.com; Lawyer’s Campaign He probably has an ulterior motive for this; 25:07 clip “Press TV is being banned in the UK.”; Wine, Roses and Chocolate-Covered Strawberries The last supper before wipe-out time; Fairytale But it makes for good reading.

High Alert FF time, to distract from the economy? Plus here is the reason — NATO preparing WW3, and Nuke 9-11 Rupert Murdoch Reminds me of Alicia Keys’ song ‘Falling’; US$20 Trillion “This global warming nonsense has always been about money. Even though CERN proved that the sun controls Earth’s Temperature and despite 4 heavy winters in a row, the carbonazis are all lined up with their plans to have the government force you to buy their “green” products, with the only green being the high profits they will make from products that give you less while costing more.” wrh.com.

UK This is interesting, if only for the fact the EU are planning to start a new United States of Europe while leaving the pommies on the sidelines; Chicken Coops gaining in popularity; Jawed Rebirth Yes, it’s Bruce, the mechanical version of the real thing. Or is it the other way around?

#23 Harry in Saskatoon, no bust here, maybe next year, or the year after on 10.25.11 at 12:07 am

While you may be right on many fronts about housing, debt and investing, one of the best things you could have done is buy a home in Saskatoon this year. Why?

Prices have hit a lull for a few years but housing starts, sales and prices are all up from last year. inventory is down.

-Fastest growing population AND economy in Canada.
-Low unemployment and with many jobs here.
-Average price is just over 310G’s, low compared to national average.
-With mining and energy expansion near the city, over 700 engineers are expected to be hired within 18 months. You can add support staff to that as well.
-Low interest rates will be here for quite some time but so will the appetite of Asia for our resources.
-Most people are afraid of the stock market. Housing is deemed safe and stable. Investors and first timers will put their money in housing.
-The stable and forward thinking Sask Party will win the Provincial election in November. This is good for housing.

I believe this site will be entering its 5th calendar year calling for a crash or slow melt. I do see at the top of the website it says “the fool who follows is ‘The Greater Fool'”. Who is that directed at? So far it is not recent home buyers.

But it’s still Saskatoon. — Garth

#24 the Phantom on 10.25.11 at 12:14 am

Garth, fellow bloggers and lurkers…

I thought that I would comment on #7 “Helpful Advise”

I think that what the people that wrote this were trying to say was “Helpful Advice”. Possibly they meant the former, I don’t know. I would like to take issue with one of the comments couched in that little diatribe however.

I appreciate that teachers make good money. However when I worked as a teacher in the public school system here in Wpg #1 a few years ago, I worked 70 to 80 hours/week doing lesson planning, assessments and gathering/preparing the resources for differentiated instruction and assessment. The range in ability for a three/four multi-age classroom was from grades one to four between Math and ELA; there were three IEPs, two in grade four who were at the time reading and writing at a grade one level and those two students as well as two more students in grade three were functioning at a grade two level for Math. There were another eight Adapted Education Plans (AEP’s), three ESL or EAL learners (two Spanish and one Mandarin), three diagnosed with ADHD and two of those three had co-morbidities of ARND, one child with a hearing impairment and a partridge in a pear tree: there was more but it all doesn’t come to me right now. In the two weeks leading up to the deadline for report submissions (to the administrator or Principal) you could easily add another 15 to 20 hours those weeks preparing reports, reviewing accumulated assessments for each child and writing anecdotal comments for each student that aptly describes the child’s temperament and abilities in the areas of ELA and Math. I had students that could decode words but were unable to retell the story or answer questions about it so then there had to be comments that would reveal that the skill for comprehension was “Developing” as opposed to “At Grade Level”. These are legal documents and one doesn’t capriciously work through an extensive and accurate report for a child in ten minutes or less; we also don’t “deliver a report card in 33 minutes or its free” either! While I won’t disagree with the position that these investment brokers could easily teach grade three competently, teaching only grade three with 21 perfect students all from upper middle class backgrounds in a two parent families with no substance abuse issues, poverty, behaviour issues or other social ills is rarely something that teachers enjoy. If these Wall Street people feel they could do it professionally and only within a 40 hour work week, then my response is “Have at ‘er!”

Teachers are well paid, no doubt about it especially once you’ve worked ten years and are at the top of the salary scale but teachers do NOT get overtime for what they work…it is a salaried job and when I taught, as late as 2006, my take home after taxes, benefits and pension was deducted, was $2368/month. Granted it was an entry wage but I made nearly as much at an industrial manufacturing job four years earlier when I worked 40 hours/week. Anyway, I am NOT trying to play the world’s smallest violin here but merely wanted to provide a response to the belief that teachers get overtime for the additional hours they work, that they sit on their fat asses all day doing sweet f _ _ k all for a King’s ransom in wages…the system doesn’t work that way. Did I like teaching better than factory work? Absolutely! Were there non-monetary rewards that made the job worthwhile (like when a struggling student suddenly exclaims, “Oh now I get it!”)? Again no question about it! But the premise that we work 40 hours/week for $70,000/year is rubbish. Thanks for that inclusion Garth; it gave me something to mildly rant about tonight!!!

the Phantom

#25 Van guy waiting on 10.25.11 at 12:26 am


Are you now saying in Delusional Van & TO the prices will be sticky until rates rise? Rates low, debt accumulates from more buying?

#26 LS in Arbutus on 10.25.11 at 12:35 am

In the long run I think the West side of Vancouver has closer to a 50% correction than a 15% correction, particularly for the upper end of the market. When, on Vancouver’s West side you have more SFH listed at $2 million or greater than those for $2 million or less, something is terribly inflated.

In fact, tonight’s tranche of prices on Vancouver’s west side for SFH, realty link:

$1 million $2 million 4 million 195 listings!!! or 23% of total
Total 849 listings, 100%

Regardless, as Garth points out, even if it’s ‘only’ a 15% correction, on $1 million that’s $150,000 and on $2 million, that’s $300,000. That’s a lot of money if you bought at the top.

Oh yeah, I forgot, houses only go up, particularly on the west side, so in 10 years, those numbers will be double of triple what they are now.

#27 LS in Arbutus on 10.25.11 at 12:40 am

The distribution of Vancouver West side prices was supposed to read:

Less $ 1 million, 13 listings 1.5%
Greater than $1 M and less than $2 M, 213 listings 25%
Greater than $2 M and less than $4 M, 441 listings 52%
Greater than $4M 195 listings, 22.5%
Total Listings 862, 100% of West side.

#28 The thing in the basement on 10.25.11 at 12:44 am

4 Mom – that’s not a ‘rhoid, that’s a Cling-on.

#29 Not Wondering Anymore on 10.25.11 at 12:53 am

Dear #7 Helpful Advise

The moment you, as Wall Street, along with your financial buddies, accepted bailouts from the communal resources which were created by the very ones you so thoroughly disparage, you ceased being a capitalist and became socialists -negating all your other arguments and pitiful swagger as moot.

It’s payback time for your ilk (with interest).

#30 lokoutbelow on 10.25.11 at 12:55 am

That leverage really hurts when the asset (houses) prices begin to decline. You are underwater before you have a chance to take another breath. A decline of 15%, which we are already seeing in Lotusland listing prices is enough to wipe out all your equity. Gotta love that leverage.

To top it off, mortgages in Canada are full recourse, unlike the United States where you can walk away and give the keys to the Bank, of course after you have exhausted all of the Government benefits. So the Canadian banks have every right to go after the shirt on your bank to recover the outstanding balance.

#31 Angus Mackay on 10.25.11 at 12:58 am

“One of the best things would have been loading up on bank stocks or an exchange-traded fund pacing the TSX or the S&P seven weeks ago. ”

7 weeks ago the TSX was at 12387, today it’s at 12162. That just doesn’t seem like sound advice.

Both the TSX and S&P 500 are way down YTD, the only thing that stands to get them back to positive by years end is the announcement of QE3.

#32 Ben on 10.25.11 at 1:00 am

Here’s America’s five worst housing markets:

No. 5 – Altamonte Springs, FL
Percentage change: -41.3
MSA: Orlando
Population: 41,496

The fortunes of Altamonte Springs, like those of Orlando, have risen and fallen with the economic boom and bust. The median home value in the city is $86,300, according to the Zillow Home Value Index, and on Sept. 30 the median sale price was $66,900

No. 4 – Lehigh Acres, FL
Percentage change: -42.2
MSA: Fort Myers
Population: 86,784

Lehigh Acres is a “census-designated place” in the Fort Myers MSA. The area experienced a boom in new housing in the first years of the century, peaking at more than 7,500 new homes built in 2006, according to the New York Times. In 2009, sale prices of homes in Lehigh Acres were 80 percent off their peaks. Foreclosures have soared in the area, and unemployment in the county rose to 9.8 percent, from 3.5 percent in 2007. The median home value in the city is $63,700, as measured by the Zillow Home Value Index, and the median sale price as of Aug. 31 was $65,200.

No. 3 – Trenton, N.J.
Percentage change: -46.0
MSA: Trenton
Population: 84,913

Like many former industrial cities, Trenton has seen its economic base dwindle dramatically since the end of World War II. Despite being the capital of New Jersey, the city fell on hard times as manufacturing jobs declined and many residents relocated to the suburbs. Crime has been a persistent problem. In 2005, it was cited as the fourth most-dangerous city in the U.S. with a population between 75,000 and 99,000. The median home value in the city is $60,700, according to the Zillow Home Value Index, and the median sale price at the end of July was $38,000.

No. 2 – Pontiac, MI
Percentage change: -47.4
MSA: Detroit
Population: 59,515

Falling within the Detroit metropolitan area, Pontiac is a former manufacturing city whose the economic base eroded along with the decline of the U.S. auto industry. Once the home of General Motors’ (GM) primary truck factory and the now-defunct Pontiac brand, the city entered into receivership in 2009. From 1970 to 2010, the city’s population shrank 30 percent, to 59,575, according to the 2010 Census. The Zillow Home Value Index puts the city’s median home value at $33,800, and the median sale price as of Aug. 31 was $24,000.

No. 1 – Homestead, FL
Percentage change: -48.8
MSA: Miami-Fort Lauderdale
Population: 60,512

At first glance, Homestead is a typical working-class Florida community that experienced a huge housing boom in recent years. Unfortunately, it is also typical in that many of those new houses are either unfinished, behind on their mortgages, in foreclosure, or abandoned. Homestead is unlike other Florida communities, however, in that it has seen the biggest deterioration in home values in this already economically-damaged state. Even worse, with a percentage drop of 48.8 percent, Homestead has the worst decline in home values in the U.S. The city was badly damaged by Hurricane Andrew in 1992 and never really recovered. Crime is also an issue: The crime rate remains above the state average. According to the Zillow Home Value Index, the median home value in the city is $76,000, and the median sale price was $96,400 as of Aug. 31

#33 Peter B on 10.25.11 at 1:14 am

Borrow, Boom, Bust and repeat seem to be the way are economy is working.

#34 Hoof - Hearted on 10.25.11 at 1:16 am

Developers in China slash housing prices


Chovanec, a professor at Tsinghua University’s School of Economics and Management in Beijing, adds that “one potential interpretation of this crisis is that China is entering the terminal stage of a bubble, and that what we are seeing are the early signs of a much broader collapse”.

“For the past several months, China’s official media have been touting official data indicating that while most Chinese cities are still seeing housing prices rise, a growing number of cities are starting to see a plateau or even decline in prices—evidence, they say, that the central government’s cooling measures are finally working,” he notes. “More significant, in my eyes, are reports — which began emerging in late August — that in several cities across China, prices in primary housing markets (developers selling to homeowners) have begun falling away from those in secondary markets (homeowners selling to other homeowners). The effected markets include not only 1st tier metropolises (Beijing, Shanghai, Guangzhou, and Shenzhen) , but also 2nd tier (Chongqing, Wuhan, Tianjin, Zhenghou) and 3rd tier (Ningbo, Foshan, Wuxi) ones as well.”

Chovanec mentions that one report mentioned a price gap in Beijing and Shanghai of 20 percent. Developers are dropping the price of their product because they need cash.

#35 Ghost of Tom Joad on 10.25.11 at 1:28 am

The global debt clock

Garth, old people (50+) like yourself are going to get their pensions probably (at least for a while – till you die or the dollar dies). For us gen Y and X… probably not a chance. Maybe I should learn Spanish and hit the road to one of them non-red countries — maybe one with Latin women – so hot!

Rockefeller Reveals 9/11 FRAUD to Aaron Russo:

#36 Cristian on 10.25.11 at 1:44 am

“One of the best things would have been loading up on bank stocks or an exchange-traded fund pacing the TSX or the S&P seven weeks ago.”

Your advice is called “timing the market” (or trying, rather). And it’s been proven again and again, by time and by any moderately successful investor, as a useless exercise in futility.

“The only value of stock forecasters is to make fortune-tellers look good.”
Warren Buffett

“I can’t recall ever once having seen the name of a market timer on Forbes‘ annual list of the richest people in the world. If it were truly possible to predict corrections, you’d think somebody would have made billions by doing it.”
Peter Lynch

But then again… what a wonderful thing is a 20/20 back vision…

Actually I suggested this at the time. You must have been busy selling. — Garth

#37 Onemorething on 10.25.11 at 1:56 am

“As of July 2011, average home prices across the United States are back to the levels where they were in the summer of 2003. Measured from their June/July 2006 peaks through July 2011, the peak-to-current
declines for the 10-City Composite and 20-City Composite are -31.0% and -30.9%, respectively. The
peak-to-trough declines are -33.5% and -33.4%, respectively.”

These have another 15-17% drop to go in my best guess before this crap is over in the USA. RE is just a symptom of the bigger picture, well used as the scapegoat and why Obama is chasing it to cover the asses of those who put him there!

#38 BPOE on 10.25.11 at 2:06 am

America is in such bad shape they need BPOE money. Now charging 5 bucks a person to fly to their country. US will make around 110 million a year. Americans can’t afford BPOE so there will be no such charge to come to Canada.
Only 16% you say to our southern rain barrel neighbour. Going much much lower folks. Meanwhile BPOE soars high
” But equally destructive has been a 16% decline in Seattle”

#39 Jody on 10.25.11 at 2:24 am

#7 Helpful Advise

Bad experience in school?

How about you rail against bankers, politicians, lawyers, sports stars, movie stars etc.? Go back to sleep please.

#40 Poor Professional on 10.25.11 at 2:47 am

Here’s my take on diversifying my investments and trying to make the most of my life…

I did not become a surgeon or lawyer or drywaller. I’m a technical draftsperson and I will make about 50-60 thousand dollars a year for a very long time.

I am moving to Saskatoon to be with my friends. I kind of like the city. It’s a little dirty and crime ridden, also beautiful and charming. Sprawling like Calgary II.

There is not an abandunce of decent rental properties. The ones that do exist… do they smell strongly of food? Have bedbugs? Deranged managers or management companies? Sure. Check all boxes. I’ve been looking for a while.

I have debt. I’ve only been working full time for 4 years. School, vacations, a new car, I took it all on. I have a lot of things I needed to make life worth living on a day to day basis. It’s going to take me 4 years at 500 a month to pay for it all while I still live.

After I buy food and gas, I’m going to rent a house in an old non-suburban neighborhood. Detached garage, 2 bedrooms, and
someone else’s infrastructure problems. I can fix bicycles and motorcycles and pump iron on the back yard.

I also on finding a tall, beautiful, intelligent pale skinned brunette to join me in life. We will make robust offspring, and I will counsel them to become scientists and authors… long after I am dead, they will name buildings after these children of mine.

What about investing?! What about retirement?! What about renovations and vacations!? Turns out that I’m in good company with everyone else who can no longer afford these things.

When I get too old to cycle, too sick to put one foot in front of the other, when I am not there for my mate nor her for me, I will gather what faculties I have left and go take a long walk in the snow.

#41 milan on 10.25.11 at 3:49 am

You owe $23,571 … and counting

Is Ontario already bankrupt? With a $260-billion debt, $16-billion deficit alone in 2011, and neither Tim Hudak nor Dalton McGuinty willing to balance the budget until 2017, it is a reasonable question.

Based on McGuinty’s spending record, in 2017 we will be at least $330 billion in debt. Hudak offers no alternative. That is $23,571 for every man, woman and child in Ontario.

To suggest we could come close to paying this off is laughable. With annual debt payments of $10 billion already, who can see this situation getting better? The debt will rise, as will debt repayment. So too will spending on health care, as the baby boomers are rounding 60, and health-care costs skyrocket with age. Is it possible that at the age of 28, the best Ontario I will ever live in is now?

Todd Leggat, Hamilton

#42 Humpty Dumpty on 10.25.11 at 5:03 am

It’s all about risk. Remember, risk rises and falls with price.

So your saying, “what goes up could potentialy come down”. HD found that out the hard way..

If GM and the “American banks” (not being prejudice) are to big to fail, why must I accept the negative consequences of miscalculating my investing strategy.

Hmm… Maybe I’ll give Eddie a call and ask him if he has any new ideas. Heck, maybe we could meet up and join you on Tuesday..

“You may not think a lot of Americans.” Especially now.

5 bucks everytime I cross the boarder. See what I mean when they say buy US….
Maybe the mighty US military is purchasing 5 more MQ-9 reapers. Canadians may be a threat to their national security.

Theres already 5 of them flying around on the 49.

I suggest they build a nice 12′ high rockwall instead. It would be a mutual work bee. Great for our relations.

Keep the drones away please. And the drones in Washington. We have seen how successful they have been at managing their own.
Keep the 5 bucks and try your luck in Vegas.


#43 Jeff on 10.25.11 at 5:29 am

Is there a way you can record your weekly conference call (Tuesdays) and post it to your website? I’d like to make it but 5 PM is a tough time to make.

Keep up the good work.

#44 D on 10.25.11 at 6:19 am

15% drop can cut in many ways…

If a 15% drop in housing can cause people to run in fear away from RE as an investment thus to would a 15% drop in the stock market and unless you DO NOT need your capital from preferreds or stocks for many, many years then you are no better off (other than you can sell faster but still at the same loss).

Note: My advice is bias because I don’t need risk anymore, I have more than enough $ and for me captial protection outweights risk of loss.

To clarify: during the recent stock market melt, the preferreds of banks and quality insurers did not lose any ground, and continued to pay dividends. Unlike gold or equities. — Garth

#45 T.O. Bubble Boy on 10.25.11 at 7:05 am

Has anyone checked on the housing bubble in Turin, Italy recently? (last winter olympics before Vancouver)

#46 Sky on 10.25.11 at 8:10 am

@ Poor Professional #40

“When I get too old to cycle, too sick to put one foot in front of the other, when I am not there for my mate nor her for me, I will gather what faculties I have left and go take a long walk in the snow.”

Nothing beats a northern gulag like Canada for a planned hypothermic death. It happens here all the time. Unplanned, however.

Actually I’m with you. By far the biggest chunk of our health care dollars aren’t spent on health care at all. They’re spent on VERY expensive dying.

I’ve seen too many friends and family go through what passes for cancer treatment: surgery,chemo, and radiation. In other words- cut, poison, and burn.

Surgery is great. But no chemo or radiation for me. Other than the free chemo the northern hemisphere is getting from Fukushima that is.

Euthanasia laws suck in this country.The state owns your body to the painful,tormented, and bitter end.

#47 Moneta on 10.25.11 at 8:14 am

We are Wall Street
We are entering a new phase.

Last week my father and I talked about OWS and what was in the cards.

My thought were that the US is now a quasi police state where the right to protest has gotten limited. The only way it can be done without hundreds being sent to jail is to keep it peaceful and non-threatening. So OWS fits perfectly in that structure.

Of course the leaders, bankers and many others who benefit from today’s social structures want to cling to what they have or just don’t get it. And they find OWS annoying. My thought was that at one point, they would lash back. Well, this letter is just that.

IMO, OWS will naturally evolve into something much more aggressive and this letter is one more step in that direction.

#48 Ron on 10.25.11 at 8:44 am

“7 weeks ago”

The interesting thing I found is that many stocks were still at 52 week highs during the market “corrrection”, presumably because people were buying in due to the high dividends.

Artificially high prices supported by the masses…….mmmm…….where have we seen this before?

#49 TurnerNation on 10.25.11 at 8:45 am

Is blog dog Carney making an economic announcement today or tomorrow, I think?

#50 sam.i.am on 10.25.11 at 8:47 am


I am closing a refi today, so have some experience. In fact, I have refinanced four times in the last 6 years, chasing rates lower. Going from a 15yr/4.375 to 30/4.0. Why? To free up cash flow that will be invested at a higher RoR than the mortgage rate. I believe this behaviour is one of the intended effects of the fed’s recent moves to reduce long term rates, and it will have a positive effect on the economy but that it’ll take time for the money to work through the system.

Mortgage rates are set in the bond market and roughly track the 10 yr yield.

To the question of how it’s possible for mortgages to be so easily refinanced in the US, I do not know the underlying mechanics but will try to find out. Not only can the mortgage be refinanced at (lower) market rates, but there are often no points and no closing costs. As rates fall, refinancing to a lower rate is like getting free money. It takes a few hours of effort but doesn’t cost anything. If you qualify, and many do despite media reports.

There are no penalties for paying early. Generally, it is recommended to make three payments before refinancing to avoid scrutiny as an equity stripper.

All the mortgage interest and property tax is federal income tax deductible, for now anyway. This means housing is paid with pre-tax income. Compare to Canada where it’s all after-tax (I know, there are ways to deduct mtg interest but it is not a straightforward line item on the tax form).

I have been looking to move to NS (hrm) for the last few years, but it’s been apparent for a while that the housing prices have gone up way too much relative to incomes. (plus, hst on land??? what a waste of money) Searching for answers is what brought me to this blog.

I only recently learned of the Canadian Interest Rate Differential penalty, and could not believe such a thing existed. The few people I talked to about it all accept it is ‘fair’ for the banks to charge an IRD. Wow.

#51 Shane on 10.25.11 at 8:49 am

Garth, If we can’t listen to your news cast today at 5PM will you give us a report on your blog?


#52 Stevenson on 10.25.11 at 8:53 am

Look where waiting and renting got you now. If you got into the bank stocks and TSX exchange traded funds you would of been better off? Really? Maybe we all should of bought apple stock when it was $6 a share too.

15%? haha that is merely nothing. Ever paid HST? If you bought last year in GTA or Van you would of covered that easily. Yes there are costs, but don’t forget equity vs paying that rent.

Also HAM in Vancouver. They make up of quite a large chunk of the RE purchases. Interest rates go up how much would it actually affect the cash buyers?

When you’re renting and think your living in the same place for cheaper. It really means you can’t afford that property in the first place.

Realtor trash talk. — Garth

#53 sam.i.am on 10.25.11 at 9:05 am

Beware Zillow

Don’t believe all the Zillow data is accurate. Houses in my own area are undervalued by about 30%? Market appraisal and comp sale data tells a different story.

#54 Junius on 10.25.11 at 9:12 am

#7 Helpful Advise,

What a load of crap. Amazing what some people can believe.

Too Repeat – Trickle down theory did not happen in America.

Thankfully “Advise” instead of “Advice”.

#55 The American on 10.25.11 at 9:16 am

Tav#11: Tim, would you care then to elaborate how that type of correction has fared for people in cities like San Francisco and Seattle? Care for me to take a stab at it? I assure you that it certainly has had great consequences on owners and renters alike. Rents have sky rocketed, and owners are stuck in a deorciating asset that in many cases is now under water as the banks permitted them to place little or no money down. Now, these owners are making tough choices to walk away and take a massive hit to their credit, or they are holding and draining their savings to keep afloat.

At #13: Boombust, Vancouver’s correction will be epic. Unlike what has been witnessed before.

At #17: InvestorsFriend, I am not following the question. Are you asking why Americans have this ability to finance at 30-years? Why Americans have the ability to refinance as many times as they wish? Or why Canadians don’t? First, it costs about 1% of the loan value to refinance. This can be higher or lower, but its a good rule of thumb. Second, it only makes sense to refi if the closing costs of the new loan are spread over the life of the loan, plus the new payment, are less the the previous payment. It can save hundred a month, or it could cost you hundreds a month depending on loan program and existing rate environment. At peak of market, half of the Americans were NOT choosing 30-year money. They were opting for the lower rates found in 3-year, 5-year, and 7-year ARMs (adjustable rate mortgages). This means the rate on the mortgage is guaranteed for either 3,5, or 7 years, and then it resets at the end of the selected term. The principle is amortized over 30 years. These are the loan programs that you basically have in Canada and also the reason why it is going to be even more difficult to keep the RE bubble inflated there. As you already know, the RE market in Canada is also propped up on life support with “emergency rates.” Not if, but when, rates reset there it is going to be one hell of an ugly mess. Your government and banks already know this. If rates were artificially kept low inevitably (as I know many bloggers here believe will happen, but it won’t), the long-term consequences to the Canadian economy would be horrific. The longer this behavior continues in Canada, however, the more the problem is compounding. The consumer debt levels now exceeding even Americans’ is too telling. Even the IMF is now taking notice. The longer this continues to go on in Canada, the more “creative” and aggressive your banks’ loan programs will become. When you start receiving daily notices in the mail from various lenders telling you to “Go ahead and take out a home equity line of credit! You’ve earned it!,” then you know it is all over and you better be prepared for what is coming. It is a real conundrum.

Anyway, back to the situation in the U.S… The rates did reset higher, and people couldn’t afford the payments on their lavish homes any longer. These short-term, cheap money ARMs are what caused the prices to explode at first and then implode later. This is what essentially not only caused the RE collapse, but inevitably was the procuring cause of the entire economic collapse. Rates have since retracted in the U.S. in order to help breath life into the economy, but with so many out of work, it is doing little.

Now, most Americans seem to have learned a lesson. Most are only buying on 30-year guaranteed money, or a traditional loan. Saving is sexy again. Prudent spending is smiled upon. And, renting is trendy. The one major difference between both of our countries, though, is that about 50% of Americans opted for these ARM programs during the height of the market in the U.S. In Canada, you have nearly 100% in these types of loan programs with little money down at artificially low rates because thats all that is offered. See? A real conundrum.

#56 disciple on 10.25.11 at 9:17 am

George Orwell never used the term “doublespeak”, but it continues to be used unabated and unrecognized everyday in our media and gov’t press releases. Here is a short primer on what to look out for:


#57 Moneta on 10.25.11 at 9:17 am

Too Repeat – Trickle down theory did not happen in America.
It sure did trickle… never flowed that’s for sure. LOL!

#58 Marc L on 10.25.11 at 9:18 am

Why is it that whenever I see Mark Carney, he is in a grand hotel ballroom…? Probably giving speeches to corporate backers and setting up for his speaking tour during retirement.

Check it out.

That is the ceiling of the Railway Committee Room, an historic space in the Centre Block of Parliament Hill when he testifies occasionally before the Finance Committee. — Garth

#59 Kevin in Winnipeg on 10.25.11 at 9:23 am

“One of the worst things you could have done in 2011 was buy a house in a bidding war in the GTA or the Lower Mainland, in Winnipeg or Saskatoon.”

Do you have a source to back this up? Why is it the worst thing? I believe the same was said in 2008 and since then, real estate in Winnipeg has gone up 30%.

Average price 2008, $196,231. Average price now, $229,719. Increase, 17%. Anyone buying today expecting a similar outcome is daft. — Garth

#60 realitybytes on 10.25.11 at 9:23 am

protest the 99%


#61 InvestorsFriend (Shawn Allen) on 10.25.11 at 9:24 am


Number 49 Sam.i.am responded to my query at 17 about where the right of Americasn to sweet deals on refinance come from whereas in Canada we would face HUGE interest differential penalties to ever contemplate refinancing a fixed 30-year mortgage, is such a thing even existed in Canada

Sam confirmed the sweet nature of the deal down South. (Thank you Sam). But Sam could not shed light on where this right to refinance comes from (embedded in Fannie Mae / Freddy Mac loans? a government rule?)

Garth? Anyone?

It’s pathetic that none of the hordes of financial commentors in Canada to my knowledge have ever even questioned this. (I have tried but can’t find the answer).

While we are at it how is it possible that along with receiving this free re-finance right, the American 30-year mortgage rate is nevertheless about equal to the truly fixed 5 year rate in Canada????

Apparently in the U.S., the term “fixed” is usually much less permanent and scary than it is in Canada (at least ehen it comes to mortgages)

#62 disciple on 10.25.11 at 9:27 am

Funniest double-speak ever. From the same charlatan who brought you aspartame. BTW, he is also a clone of Maximilion Freiherr von Weichs, Nazi General Field Marshall.


#63 johnny5z on 10.25.11 at 9:30 am

#17 – Although a person can get a 30 year fixed, many of the people who got in trouble had “innovative” mortgages. Many were fixed/floating (such as fixed for 5 years then reset every year afterwards – 5/1) or variable payment. Many innovative products had “teaser” rates for a year or two. Of course, there’s frustration after the tease. Then the Minsky Moment and everything heads downhill.

#64 TurnerNation on 10.25.11 at 9:31 am

5 year fixed rate down to 3.19%!!


#65 Devil's Advocate on 10.25.11 at 9:33 am


#66 Devil's Advocate on 10.25.11 at 9:33 am


#67 Devil's Advocate on 10.25.11 at 9:33 am

“Follow highlined road”

#68 disciple on 10.25.11 at 9:40 am

#46 Moneta… Imagine for just a moment that OWS is orchestrated by Wall Street. How does that change your discussion with your father?

The Hegelian Dialectic. Play both sides against each other. Foment emotional angst, present a ready-made solution to the manufactured problem. A modern rendition of the Pax Romana, Divide and Conquer.

#69 disciple on 10.25.11 at 9:45 am

The grow-op a few blocks away from my home that was up for sale, has had the MLS description modified. It no longer mentions that it was a former grow-op. After about a month on the market for almost 100K under current market valuations. Isn’t this illegal somehow? Definitely unethical. Would I be violating any bylaws by putting up a small notice, like on the side of the garage or something with the original MLS listing with the part about it being a grow-op highlighted in yellow? Why do I feel like I need to involve myself? What else can I do?

#70 Tony Touch on 10.25.11 at 9:55 am

Puh-lease! “Tough on my generation,” whines the Boomer. Yeah it was so tough having the stock market sky rocket throughout your whole life. It was so tough having your choice of jobs with great pay and benefits without an education. Maybe if your generation didn’t get so greedy and learned from your parents you’d all be living pretty damn sweet right now! Your generation has no idea what tough is.

#71 Deliverator on 10.25.11 at 9:59 am

That “eat your lunch” letter by some Wall Street “banker” has been around for a couple of years at least. Silly, arrogant, BS. I’d like to see that jerk work his control fraud from behind the counter at McD’s.

#72 The thing in the basement on 10.25.11 at 10:01 am

40 – a technical draftsperson is not a professional. Please
explain further.

#73 Ron on 10.25.11 at 10:02 am

Interesting article about China RE bubble.


#74 torontorocks on 10.25.11 at 10:19 am

Carney keeping rates low, no forecasted increase to 2013. House prices will continue to explode as people continue to borrow at low interest rates. I make an above average wage, touch wood. I believe I’m priced out of this market forever.

If a house goes for $829,000 in BWV in Toronto, and I can’t afford it reasonably, then I guess I really am just a chump.

#75 The American on 10.25.11 at 10:28 am

At #38: 19thBPOE, oh I get such a laugh when you post. You just cannot help yourself, can you? I guess that’s what happens when a person is retarded. Here… Let me correct you (again). Flying into/out of Canada is substantially more expensive than similar flights into/out of the U.S. This is why every friend I have in Vancouver drives 2 hours and 45 minutes, and 120 miles South to Seattle to take their flights to Hawaii and Puerto Vallarta. They typically save around $250 doing this. That $5 surcharge on flights into/out of the U.S. is to help cover costs of TSA and new standards of security (not found in Canada, mind you).

#76 Peter (NYC) on 10.25.11 at 10:34 am

To #17 Investors Friend – to your question:

Does anyone know why the Americans are able to refinance out of 30-year fixed rates? My suspicion is that perhaps all or most Fannie Mae and Freddy Mac mortgages come with that refinance option built in. Either that or there are Federal rules that obligate the bank to allow the refinance.

I’m a Canadian living in the US for 12 years now. The 30 year fixed rate mortgage here in the US is a global anomaly. There is only one other country, Denmark, that has the same regime – don’t ask me why Denmark?? If you take 30 year money you can always feel free to refinance – there is no penalty. This is because all mortgages are written with the right to prepay the entire mortgage at any time. This is essentially what a refi is. The competing mortgage company will offer you a better rate and incorporate all of the costs of entering a new mortgage into the loan. The rate that you get for your home is the best rate possible, second home is the next best rate. After second home you can get 30 year fixed on up to 8 more investment properties. What makes this all work is that Fannie Mae is assigned the mortage after the bank lends to you. Typically the bank who wrote the mortgage will stay on and service it – but Fannie Mae packages it up and it gets sold on the open market as a structured product. The fact that this was so easy to do by private entities at the subprime level is what got us into this mess to start with. Today – as a stimulus measure the administration has increased the number of Fannie Mae mortgages that an individual can have from 4 to 10. I think this goes part way to understanding how things may work slightly differently here. The US Administration has always had a hand in managing the US Housing market from since after the Great Depression. Today Fannie Mae is under the conservatorship of the Treasury. It is completely bankrupt in my opinion and would be insolvent if not for the backing of the Treasury. If you have a job and collect a steady income it is relatively easy to secure financing even today and there are some very exceptional income opportunities in the US today because demand for rental units has jumped with the waves of foreclosures taking place today. It really is the sweetest deal imaginable for Americans (except of course those that took on too much leverage recently). To be able to know with exactness how much your mortgage payment will be 30 years from now provides one with certainty in making investment decisions that is very helpful.

#77 The American on 10.25.11 at 10:34 am

At #38: 19thBPOE, by the way that “BPOE money” you like to talk about is just that… TALK. Seattle, Los Angeles, San Francisco, Houston, Dallas, New York City, Ft. Lauderdale, Boston, Washington D.C., Chicago, San Diego, even friggin’ Portland all have substantially more amassed wealth, innovation, industry and infrastructure than Vancouver. Get real, poser. Again, you’re not impressing anyone. You just make shit up as you go along for fun, or you’re just stupid. You are great for a little chuckle, though!

#78 disciple on 10.25.11 at 10:37 am

When we attend to something we ignore everything else. Attention is narrowed perception. It is a way of looking at life bit by bit, using memory to string the bits together… as when examining a dark room with a flashlight having a very narrow beam.

Perception thus narrowed has the advantage of being sharp and bright, but it has to focus on one area of the world after another, and one feature after another. And where there are no features, only space or uniform surfaces, it somehow gets bored and searches about for more features. Attention is therefore something like a scanning mechanism in radar or television, and Norbert Wiener and his colleagues found some evidence that there is a similar process in the brain.

We also speak of attention as noticing. To notice is to select, to regard some bits of perception, or some features of the world, as more noteworthy, more significant, than others. To these we attend, and the rest we ignore… for which reason conscious attention is at the same time IGNORE-ANCE (i.e., ignorance) despite the fact that it gives us a vividly clear picture of whatever we choose to notice.

Forgive me, my friends, I am just trying to awaken you. Most of you have been asleep for so, so long. Return unto your selves and discover your destinies.

#79 The InvestorsFriend on 10.25.11 at 10:40 am

U.S. HOUSE PRICES RISE for Fifth straight Month

Case Shiller data just out shows U.S. house prices rose for the fifth straight month.


Headlines will focus on the fact that they are still down from a year ago. But the bottom was now five long months ago.

They also look at the fiction of seasonally ajusted, which is les rosy. Forget adjustments. House prices bottomed five months ago in the U.S. That is a fact.

Will they keep rising or set a new bottom? No one knows but I will guess they keep rising becasue they are so far below replacement cost in many Cities.

#80 TurnerNation on 10.25.11 at 10:43 am

We’ve all heard the song by Prince: “Party Like It’s 1999”.

Some have suggested there is a deeper meaning at play.
Let’s examine that time-period: 1999 – tech bubble, Y2K mind control fear campaign (but nothing occured).

2000-2001 Stock market control: millions lost trillions in the tech bubble.

2001: The destruction of the World Trade Centres literally marked the end of USA as a center of world trade. Get it?
Communist China took over (how’s that war on communism working out? There never was one, but this harkens back to the mind control of the Vietnam war – a precursor to 9/11 shock and awe).
But you think these are all random events where people living in 3rd World countires gained something. Okay…

2001-present: shaping of a new world order, every hold-out independent country is being invaded. Crackdown on rights at home.
WW3: target is civillians, not armies – *our bombs are dropped only onto town and cities not battlefields*.

2006-2008 – housing bubble crash, market crash, oil bubble.
2009 – Flash Crash
2010-present EU countries pushed into bankruptcy as planned. What, did you think EU (central planning a la communism) was designed to help people?

2011 – sub prime (ha) interest rates offered to savers. WW3 continues unabated.

Yes, 1999 was the end of an era. Things are speeding up. All planned by those who own the Means of Production.
Each headline we read is carefully crafted for an emotional reaction. Remember 9/11 they tell us – you can feel your breath draw in slightly at the mention. Fear. What if it happens here. Better have men with guns guard us in the street, just in case. Papers please.
You saw the snuff films on TV: helicopters were scrambled asap to record it, but no fighter jets were over NY.

Each war interview/picture shows us the same tiny band of “rebels” smiling, waving, wearing freshly pressed fatigues. Almost looks like a movie set. Or is it.
“We know he has WMD!!”

#81 Steady Eddie on 10.25.11 at 10:45 am

Who cares at this point, the system is broken. The next system panic, stock market crash, bond collapse etc… blah blah whatever… will wipe out the majority of gains for the average investor as usual. It’s a joke.

I recommend everyone invest in the razor blades, the next precious metal to skyrocket.

Next up is my exposé on Santa Claus and the Easter bunny.

#82 disciple on 10.25.11 at 10:54 am

More thoughts for a slow-traffic Tuesday morning on this blog, and I throw in a free history lesson!:

You were kicked off the edge of a precipice when you were born, and it’s no help to cling to the rocks falling with you. And then comes the hitherto unbelievable surprise: you don’t die because you were never born. You had just forgotten who you are. All this comes much more easily with the collaboration of friends.
When we are children, our other selves, our families, friends, and teachers, do everything possible to confirm us in the illusion of separateness—to help us to be genuine fakes, which is precisely what is meant by “being a real person.” For the person, from the Latin persona, was originally the megaphone-mouthed mask used by actors in the open-air theaters of ancient Greece and Rome, the mask through (per) which the sound (sonus) came.

#83 stage1dave on 10.25.11 at 11:29 am

Gee whiz, open season on teachers?

My brother-in-law just packed it in after 20 yrs & probably won’t be returning to the trade. Teaching grades 7-8-9 for two decades wasn’t the utopia he thought it would be when he got that BE back in ’88.

For the record, a tenured teacher in AB (11 years, I believe) with two decades of service does a LOT BETTER than 2.5K a month! Double that & add a bit…

There’s a lot of emotional & intellectual investment in that business, btw, that although intangible; still is a factor. Plus dealing with a Dept of Ed that appears to work at cross-purposes to it’s intended mission…anyway, I don’t see people bitching about a cops’ wage in Edmonton (85K after 5yrs) or, Gawd help us; doctors, dentists, lawyers? Why is that? How about billionaires that figure the taxpayer should pay for a sports arena?

Homework, indeed…

Moving on to why mortgages aren’t as easily refinanced in Canada, could it be due to the simple fact that there isn’t any damned competition within the banking industry up here?! Don’t like the rules where you are? Close your accts & walk across the street to a competitor & you’ll discover the rules are exactly the same over there. In short, there’s no motivation for any of the big 5 to change anything, so why should they?

From what I’ve witnessed over the last 30 years, people in general in Canada “use” debt on a daily basis to get thru the day & subconciously hope things will zero out before retirement, so the population has pretty much handed this absolute economic power to these institutions. Walter Stewart made a wise observation in ’82 & it’s still true today: Canadian Banks are oozing with stability (just like F says, right?) but what the system REQUIRES is some flexibility!

Speaking of ’82, I’m still not sure whether it was Smilin’ Jack or Peter Brefoegle that illuminated the achilles heel in Canadian banking (i.e. borrowing the banks’ entire capital base & pouring it in to a company that had never paid any taxes or a dividend to it’s shareholders) but I think we’re still feeling the enervating effects of those actions today.

The American experience has shown that these institutions are totally “risk averse” & when the SHTF, the taxpayer gets the final bill.

This sure could get complicated…maybe we should go back to picking on welfare cheats & overpaid civil servants!

#84 HSC on 10.25.11 at 11:42 am

My personal thoughts on buying versus renting:

In 2007, I bought my first home… a newly-built condo in Toronto. After living there for a few months, it became clear the builder had cut a lot of corners. My unit had water damage and the builder made an even bigger mess every time his clumsy crew tried to fix it. And there was no noise insulation between the party room and the surrounding units. The noise in my unit on a Saturday night was so loud, it was embarrassing to have guests over.

The boiler system, which should have lasted at least a decade had to be replaced after the first year, at great cost to unit holders. Oh, but as owners of a new home, we were protected by the Tarion Warrantee, right? Guess again. As anyone who has dealt with Tarion knows, it was created by builders and is biased in favour of their interests. So the condo board took the builder to court, again at great cost. I could go on and on listing the costs that the builder stuck the unit owners with, but you get the idea.

Then the city decided it would be a great idea to build a shelter for “street youth” right in front of our condo. Suddenly this formerly safe, upscale neighbourhood where we paid a premium to live, was filled with drug addicts, dealers and increased street crime. The park next to the condo, where children had played safely for years, was soon filled with crack pipes and used condoms. The “youth” dragged an old mattress into the bushes where they could exchange services for cigarette money. One of them, who was dealing drugs in the area, was chased by police onto the grounds of our condo and arrested at gunpoint after a violent struggle.

I no longer felt safe having my kids and wife walking to and from school/work/subway. It seemed they had to walk a gauntlet of criminals and punks. We wanted out. But there was a problem. With all the costs associated with remedying the builder’s slipshod work, and fighting them in court, our condo fees had DOUBLED in just a 3-year period. We had fewer amenities but higher fees than other condos. Buyers were scared off.

When I factored in closing costs on the purchase, and transaction costs for the planned sale (especially agent’s commission, even at a reduced rate), I realized I would have to sell for at least $25,000 more than I bought, just to break even. We felt trapped.

My point here is not to whine and complain. My point is to say how nice it would have been to be a renter at that moment. Maintenance fees double? Not my problem. The neighbourhood takes a nose-dive? I’ll give a month’s notice and start a new life wherever I please. Ahhh… the freedom of not having your life’s savings being chained to a single property. Freedom and mobility are underrated assets.

In the end, we sold after 3 years for what we could get. We had bought in 2007 for $315,000, with a respectable down payment of $105,000, and sold in 2010 for $321,500. It wasn’t enough to cover all the transaction costs. But the losses were mitigated by the fact that the record low rates during this period meant that we had paid down a reasonable amount of the principal. So we walked away with a bit more than we had put as a down payment years earlier. And of course, we had a place to live for three years. When I add up all the costs (mortgage, closing costs, taxes, maintenance fees, etc), it probably cost about $2000 a month to live there. We could have rented a comparable place for $1600-1800. So it was a costly lesson, but certainly could have been a lot worse. However, the stress was brutal, and probably worse than the financial loss.

My conclusion: When everything is going your way, it’s nice to own a home. But when things go bad, the freedom and mobility of being a renter are wonderful things. And in the transition (when good times suddenly turn bad), owners can rarely react quickly enough to get out unscathed, as our friends to the south discovered.

#85 live within your means on 10.25.11 at 12:01 pm

#45 Sky on 10.25.11 at 8:10 am

I’ve seen too many friends and family go through what passes for cancer treatment: surgery,chemo, and radiation. In other words- cut, poison, and burn.

If it were not for an 8 hour surgery followed by 2 rounds of chemo I’d be dead 8+ years ago. Still have 2 cancerous nodes, but they’ve been stable for the last 2 years. During those years I’ve experienced so many wonderful moments – being with family & friends, travelling, meeting new people, etc. I’m thankful & hopeful that I’ll be around a bit longer. However I do agree with Sky’s comment below.


Euthanasia laws suck in this country.The state owns your body to the painful,tormented, and bitter end


Totally agree. Our laws need to change. We should have the right to end our own life before the pain, etc. becomes unbearable. Saw a program, likely on PBS, of a couple who went to Switzerland so the terminal hubby could end his life. In Switzerland, IIRC, it’ll put you back at least $33K+ excluding other costs. Most people cannot afford the costs.

#86 Makaya on 10.25.11 at 12:07 pm

What’s the equivalent of Cleveland in Canada?



#87 Monte on 10.25.11 at 12:08 pm

Garth, you are making me feel better all the time about my rental on Vancouver’s west side. thanks. love the blog.

#88 The InvestorsFriend on 10.25.11 at 12:11 pm


Peter at 74 shed some light on my question at 17 of:

Does anyone know why the Americans are able to refinance out of 30-year fixed rates? My suspicion is that perhaps all or most Fannie Mae and Freddy Mac mortgages come with that refinance option built in. Either that or there are Federal rules that obligate the bank to allow the refinance.

Peter stated:

“This is because all mortgages are written with the right to prepay the entire mortgage at any time.”

And the question is WHY? There must be some law or the policies at Fannie Freddy that require this.

No sane bank would offer a 30 year “fixed” mortgage and yet allow repayment any time.

AND any bank that does this (because it is presumably the law to offer this) MUST sell that mortgage to an investor. Bank deposits are typically very short term to five years at maximum. A bank cannot afford the risk of offering a fixed 30-year rate and funding it with short-term debt.

(Well they used to and the result was the savings and loan debacle of the late 80’s).

This option to pre-pay ir refinance is WHY banks HAD to sell those mortgages and why they became dis-interested in the credit quality of their customers (it became the problem of whoever bought the mortgage).

But who instituted this INSANE law that banks HAD to offer 30-year mortgages with the ability to pay off / refinance at any time??? That persons(s) ultimately caused the sub-prime debacle. It’s called the law of unintended consequences.

#89 The Place to Be on 10.25.11 at 12:13 pm

# 54 The American

At #13: Boombust, Vancouver’s correction will be epic. Unlike what has been witnessed before.


Ya, right. Care to give a date when this epic event will happen??

I’ll mark it down and when the time comes, remind you how ridiculously off you were! Like most of your comments.

Even Garth seems to be changing his view on Vancouver’s RE collapse.

No charge at all. Van’s bust will be twice the national average – but that’s still not a 50% decline. — Garth

#90 live within your means on 10.25.11 at 12:21 pm

#56 Moneta on 10.25.11 at 9:17 am
Too Repeat – Trickle down theory did not happen in America.
It sure did trickle… never flowed that’s for sure. LOL!

Agree. So much for Reagan economics.

#91 Westernman on 10.25.11 at 12:23 pm

Harry In Saskatoon,
Man, your post made me laugh…. try and get out in the real world more and cut back on the hallucinagenic chemicals. You live in a frozen hole in the ground filled with the by-products of a very shallow gene pool.
The population of Sask. as a whole has BARELY increased in the last 50 years and Saskatoon is merely the best thing Sask. has going for it…. which is like saying my case of smallpox is less severe than your case of smallpox… in short – WAKE UP.

#92 Samson on 10.25.11 at 12:27 pm

Further to the comments from nonplused re: goverment, here is Ibn Khaldun’s definition of government:

“an institution which prevents injustice other than such as it commits itself”

#93 Westernman on 10.25.11 at 12:30 pm

Poor Proffessional,
Why wait till you are old for that long walk in the snow? Do us all a favour and take that walk this coming winter.

#94 TurnerNation on 10.25.11 at 12:41 pm

#82 HSC on 10.25.11 at 11:42 am

Something else about the condo scam: for the infrastructure pieces (big, heavy, expensive bits like water pumps, HVAC, generators, elevator motors, and so on) the builder sign sweetheart deals with leasing companies with teaser low lease rates. Of course the builder likely earns a kickback or bonus, or at least a free vacation.

After a few years the teaser lease rates rise, and the building is stuck in its contract. Ergo: higher condo fees forever.

#95 Westernman on 10.25.11 at 12:41 pm

Do you sit on a home made temple of well worn river rocks in the Lotus position while burning incense in the background while writing your posts? Shouldn’t you be on a ledge somewhere?

#96 Harlee on 10.25.11 at 12:43 pm

Harry in Saskatoon @# 23
Haven’t you figured it out already Harry ? On this blog anything pertaining to anything west of Kenora is considered crap. Doesn’t matter if you have all the facts and figures and latest reports from whatever organizations that Western Canada’s economy is healthy,you’ll be shot down anyway. It might be ignorance or envy ,or most likely a combination of both,but this is the state of what it’s all about on this “pathetic blog”. If you want to keep reading it (or commenting on it),get used to the mud-slinging,as there will be more of it against Western Canada (especially Saskatchewan) in the future. Kind of sad,but none-the-less true. Keep the faith,my friend and remember “Saskatoon Shines!” (Today is REALLY sunny -time for a bike ride along the river & coffee on Broadway).

#97 spaceman on 10.25.11 at 12:53 pm

“One of the best things would have been loading up on bank stocks or an exchange-traded fund pacing the TSX or the S&P seven weeks ago.”

I do agree, and so does Warren Buffet, that stocks are cheap now compared to a few months ago, they are again on a short term rise, and yes may be a good time to buy. We will know in a couple of months. My personal strategy is to look for stability in a 3 month period before rebalanceing back to dividend paying stocks. I like ERF, it has produced a solid dividend and is a good value. Look it up… cheers…

#98 Fabrega on 10.25.11 at 1:08 pm

#9 Mr. Lee

We are already in stagflation mode:
Higher inflation and stagnant wages.

#99 Westernman on 10.25.11 at 1:22 pm

I sumise from your posts that you are convinced beyond any shadow of a doubt that the sun does not shine anywhere but Saskatoon… I have it on good eyewitness account that the sun does actually shine on other parts of the Earth… check it out sometime.

#100 palebird on 10.25.11 at 1:25 pm

#23 Harry look in the mirror

#101 disciple on 10.25.11 at 1:44 pm

Westernman… there is no such thing as west.

In the West, even poor people have lots of money compared with the wretched and skinny millions of India, Africa, and China, while our middle and upper classes (or should we say “income groups”) are as prosperous as princes. Yet, by and large, they have but slight taste for pleasure. Money alone cannot buy pleasure, though it can help. For enjoyment is an art and a skill for which we have little talent or energy.

Ever visit the harbor closest to you? It’s likely packed with sailing-boats and luxurious cruisers which are seldom used, because seamanship is a difficult though rewarding art which their owners have no time to practice. They bought the boats either as status symbols or as toys, but on discovering that they were not toys (as advertised) they lost interest. The same is
true of the entire and astounding abundance of pleasure-goods that we buy. Foodstuffs are prolific, but few know how to cook. Building materials abound in both quantity and variety, yet most homes look as if they had been made by someone who had heard of a house but never seen one. Silks, linens, wools, and cottons are available in colours and patterns galore, and yet most men dress like divinity students or undertakers, while women are slaves to the fashion game with its basic rule, “I have conformed sooner than you.” The market for artists and sculptors has thrived as never before in history, but the paintings look as if they had been made with excrement or scraps from billboards, and the sculptures like mangled typewriters or charred lumber from a burned-down outhouse. We have untold stacks of recorded music from every age and culture, and the most superb means of playing it. But who actually listens?

#102 disciple on 10.25.11 at 1:55 pm

Six figures on a computer screen or on a piece of paper will never help you to understand yugen. Go on, google it. There is no equivalent word, term or concept in English.

#103 Form Man on 10.25.11 at 1:59 pm

#99 disciple

that’s better. something suddenly appears to have cleared your synapses……..

#104 Van guy waiting on 10.25.11 at 2:05 pm

No charge at all. Van’s bust will be twice the national average – but that’s still not a 50% decline. — Garth

I’ll correct you Garth. “no change at all”. Garry predicted %40 correction guys for Van

#105 Just a question? on 10.25.11 at 2:06 pm

Can first time buyers still use RRSPs for their down payment?

I wonder if there are any statistics on that in Canada…

Garth or others that are of sound mind ……any answer on the above would be greatly appreciated. Thanks,

#106 Devore on 10.25.11 at 2:12 pm

#67 disciple

The Hegelian Dialectic. Play both sides against each other.

Like your “doublespeak” link? Prime example: “agenda”.

Yawn. Is this what you think about all day?

#107 sam.i.am on 10.25.11 at 2:13 pm

#60 Shawn

Just got back from lawyer closing my 30 year sweet deal :) I did ask where the right to prepay comes from and was informed it is not enshrined in law. It is written into the contract and is a feature of the particular loan program that is in play. Sounds like it is a by product of lender competition. I was informed sub-prime lenders used to write in prepayment penalty clauses, before the melt. What does the last data point tell us about the Canadian lending market? That it operates much the same as US sub-prime used to?

#108 Westernman on 10.25.11 at 2:25 pm

Do you chant Oooooooooohhhhhhhmmmmmmm and lisen to sitar music while achieving self – actualization?

#109 disciple on 10.25.11 at 2:32 pm

I hope I have shattered the myth of the Fully Automatic
Universe where human consciousness and intelligence are a fluke in the midst of boundless stupidity. For if the behavior of an organism is intelligible only in relation to its environment, intelligent behavior implies an intelligent environment… the consciousness field.
And intelligent action arises not from guilt or sense of duty, but out of understanding.

#110 disciple on 10.25.11 at 2:36 pm

Douglas E. Harding has pointed out, we tend to think of this planet as a life-infested rock, which is as absurd as
thinking of the human body as a cell-infested skeleton. Surely all forms of life, including man, must be understood as “symptoms” of the earth, the solar system, and the galaxy—in which case we cannot escape the conclusion that the galaxy is intelligent.

#111 Van guy waiting on 10.25.11 at 2:43 pm

Stupid iPhone!! I meant Garth, not Garry

#112 poco on 10.25.11 at 2:48 pm

check out the link below if you’re interested in how much you pay in various airport taxes and fees when travelling within Canada or to the US from a Canadian airport–the fees kill you –that’s why Bellingham does such a great business on flights to Vegas and Cal.


#113 Devore on 10.25.11 at 2:55 pm

#82 HSC

I had a similar experience with a condo bought in Vancouver in 2007, sold in 2010, but without the construction quality and neighbour nightmares (it was a 10 year old building in an established area). It was a nice enough place actually. Way more expensive than renting it (about 2200 vs 1450), although somewhat more comparable to what my rent was previous, but for a much much nicer and bigger place. In the end, I ended up about $20k in the hole vs had I been renting in the same period, including an $9k special assessment for new roof. An expensive lesson, although like you, I got my downpayment out (and then the realtors had their turn at it). I could have certainly used that $20k in my dividends account.

#114 Debtfree on 10.25.11 at 3:18 pm

Come on Helpful Advise #7 . Be the the gutsiest guy on wall street and say” let the 99.999% eat cake”, ala marie . This time the problem is in the hands of only 400 pigs. You PM bugs will love this or not . Laws are written on paper not stone . And corps. are weak . We can destroy any of them we want by not giving them our money . Just wait till there comes a consensus as to which one to target . Like garth says never bet against america . I would say never bet against the americans or people in general . You are helping to wake a sleeping giant Helpful advise . Just like Marie did in 1779 .

#115 Kevin on 10.25.11 at 3:20 pm

Harry in Saskatoon,
Go back in time to 2006 and look at some Saskatoon Economic housing measures

* Average house price to average household income ~ 2.7 ( alarm bells ringing after a ratio of 3)
* Average house price to average household income after tax ~ 3.3 ( alarm bells ringing after a ratio of 4)
* Medium Multiple ~ 2.6 ( alarm bells ringing after a ratio of 3)
* Monthly affordability for average bungalow with taxes + utilities ~ 30% (alarm bells ringing after 32%)
* House Price to Earnings ~ 18 ( alarm bells ringing after a ratio of 20)
* 48% of rental households in Saskatoon paid over 30% of their income towards monthly rent. (CMHC in 2005, anything over 30% is unaffordable)

Compare that with today’s measures

* Average house price to average household income ~ 4.2 ( alarm bells ringing after a ratio of 3)
* Average house price to average household income after tax ~ 5.4 ( alarm bells ringing after a ratio of 4)
* Medium Multiple ~ 4.3 ( alarm bells ringing after a ratio of 3)
* Monthly affordability for average bungalow with taxes + utilities ~ 40% (alarm bells ringing after 32%)
* House Price to Earnings ~ 25 ( alarm bells ringing after a ratio of 20)
* Over 50% of rental households in Saskatoon pay over 50% of their income towards monthly costs (anything over 30% is unaffordable)

It looks like housing is very unaffordable for renters and first time buyers now compared to just a few years ago. Never mind the fact that first time buyers have to worry about boat loads of debt as well.

From 2006 to 2010, the average house price in Saskatoon increased 84.5% (160k to 296k)

From 2006 to 2010, the average 2 bedroom apartment monthly rent increased 53.6% ($608 to $934)

From 2006 to 2010, the average weekly wage in Saskatchewan increased by 19% ( $710 to $846)

Until there is a wage boom in Saskatchewan and Saskatoon, just know that the increase in house prices is based on debt.

Even with our booming economy, the total value of mortgage debt has doubled as a % of our Provincial GDP since 2006.

I am allergic to kool-aid, so I research this stuff my self. I have yet to find any stats, numbers or any fundamental reasons why average house prices in Saskatoon should be where they are.

#116 TurnerNation on 10.25.11 at 3:21 pm

I expect the conference call system will crash when a few hundred, even thousand, blog dogs log in and slobber all over it.

#117 Form Man on 10.25.11 at 3:21 pm

#108 disciple

nope, now you have wandered off into unintelligible mumblings again.

#118 MoneyMyHoney on 10.25.11 at 3:33 pm

Garth, I don’t see you talking about interest rate going up anymore. Good that you took it off completely. Interest rates are going to hold steady if not, it is only going to dip. No raise. It seems Carney couldn’t get it ‘up’ anymore.
If you are stuck in the 90s go back in time to the 90s and stay there. Past is not the present nor is it an indication of the future. Just because the sun rises in the East and sets in the West everyday, you don’t expect decades to repeat itself.

#119 MoneyMyHoney on 10.25.11 at 3:39 pm

Indebted households can’t absorb more debt charges, unless incomes start shooting higher. And guess what the odds are of that? – Garth

Answer: Lots of variables involved. Don’t take anything for granted nor be focused on one. There are trillions in debts worldwide. If the Govt. or Bank of Canada decide to print money, well, it will reflect in peoples salaries too. So, given that Bank of Canada and Govt. of Canada wants to see a soft landing for the mess they created (or forced to create), they may opt. for the route of printing money (uh.. the new ones, polymer money).

Not a chance. — Garth

#120 househunter on 10.25.11 at 3:57 pm

Forget about a correction anytime soon in Vancouver. Rates are staying low for another year or so. A halt of HAM is the only thing that will stop this but everyone knows …. if China is in trouble, the money will be rushed out of that country by economic criminals and brought everywhere they can move the money. Vancouver Cambie is already dropping a bit but a big correction? I’d love to see it just out of self interest. I’ve been waiting for years for that correction to come.

#121 kw on 10.25.11 at 4:19 pm

Does anyone know if if Garth’s conference call number is a tollfree number?

#122 Devil's Advocate on 10.25.11 at 4:29 pm

I don’t have time to elaborate or debate it but thought you might all be interested in some interesting Okanagan Real Estate Statistics:

First Time Buyer activity has fallen off in the past 12 months by a wopping 36.95%.

Upgrade Buyer activity has increased by a 25.29%.
The shift from SFD to Strata continues as more move from Single Family Residences to Strata (28.43%) and fewer from Strata to Single Family (-44.12%).

Traditional families two parents and children (23.43% more) and Empty Nesters (22.41% more) continue buy homes as those bought by single males (16.15% fewer), single females ( 6.58% fewer), couples without children (27.57% fewer), and single parents with children (15.38% fewer) appear to be in retreat.

Financing is losing ground to all cash as buyers tell us that there are 4.05% fewer high ratio and 20.59% fewer conventional mortgaged borrowers today than there were a year ago. Those who bought with Cash though increased in numbers by 42.79% over last year.

Despite what you might believe there has been an increase in the number of Albertans buying Okanagan real estate as 24.34% more Albertans bought Okanagan dirt this year than last. This makes up for the 24% fewer Okanagan properties that were sold to British Columbians. The sale of Okanagan properties to people from all other Provinces increased as well.

Interesting stuff… no?

#123 maxx on 10.25.11 at 4:36 pm

#7 Helpful Advise on 10.24.11 at 10:17 pm


Why don’t you all have a nice big “street” party and eat yourselves.

#124 Reasonfirst on 10.25.11 at 4:43 pm

#114 Devil’s Advocate

Genuinely interesting stats but:

“Upgrade Buyer activity has increased by a 25.29%.
The shift from SFD to Strata continues as more move from Single Family Residences to Strata (28.43%) and fewer from Strata to Single Family (-44.12%).”

I think the term “upgrade buyer” needs to be re-evaluated. Isn’t it more of a “downsize buyer”…

#125 Kevin in Winnipeg on 10.25.11 at 4:49 pm

“One of the worst things you could have done in 2011 was buy a house in a bidding war in the GTA or the Lower Mainland, in Winnipeg or Saskatoon.”

Do you have a source to back this up? Why is it the worst thing? I believe the same was said in 2008 and since then, real estate in Winnipeg has gone up 30%.

Average price 2008, $196,231. Average price now, $229,719. Increase, 17%. Anyone buying today expecting a similar outcome is daft. — Garth


That is your opinion. What fundamental reasons, other than no one wants to live there because of the snow and polar bears, support your opinion of the Winnipeg market?

#126 zeeman1 on 10.25.11 at 4:51 pm

#61 Disciple.

Rumsfeld a clone of a German general? Interesting. Proof?

#127 dave_in_TO on 10.25.11 at 4:55 pm

#117 MoneyMyHoney

Yeah we can see huge increases in US salaries due to the US money printing machines.

The printing press money will never reach the American people as increased salaries and it won’t in Canada either.

#128 JRoss on 10.25.11 at 5:10 pm

DA #120,

Without the absolute numbers, the percentages are at best incomplete and at worst misleading.

Unintentional I’m sure.

#129 Tony on 10.25.11 at 5:12 pm

It doesn’t take rising interest rates to tank a housing market. It appears Canada is going down the drain and interest rates are headed lower. It looks like the smart money was dumping stocks today and the stupid money was buying commodities. Commodities should get absolutely hammered to the downside tomorrow as will stocks even if the market only opens slightly lower they’ll get trounced later in the day.

#130 La Di Da on 10.25.11 at 5:20 pm

Me thinks The American struck a nerve. Usually when someone strike a nerve it is because they are right. I agree Vancouver will have a massive correction. I do not see where anyone claims a 50% decline though. Even The American. What do you think the decline will be in Vancouver?

#131 The InvestorsFriend on 10.25.11 at 5:24 pm

Sam.i.am at number 105. said:

#60 Shawn

Just got back from lawyer closing my 30 year sweet deal :) I did ask where the right to prepay comes from and was informed it is not enshrined in law. It is written into the contract and is a feature of the particular loan program that is in play. Sounds like it is a by product of lender competition. I was informed sub-prime lenders used to write in prepayment penalty clauses, before the melt. What does the last data point tell us about the Canadian lending market? That it operates much the same as US sub-prime used to?

Sam, thank you kindly. But I still have a suspicion that it is a right that Fannie / Freddie require, if a bank wants to offer a Fannie Freddir mortgage I bet that clause HAS to be there. I should give them a call.

I am a bit skeptical that it is JUST competition, not when the refinance option is SO common in the U.S.

Even if there is a law it makes sense it would be written in the contract.

But maybe you are right it is just competition…

Hopefully you won’t send me a legal bill for this.

#132 MarcFromOttawa on 10.25.11 at 5:33 pm

Thanks for letting us “sit-in” in the teleconference.

#133 Westernman on 10.25.11 at 5:39 pm

Kevin in Winnipeg,
Don’t defend some hellhole just because you live there… Winnipeg may not be hell on Earth but you sure as hell can see it from there.
Remember Kevin : defending the indefensable only makes you look foolish….

#134 sam.i.am on 10.25.11 at 5:57 pm

Shawn, you are probably on the right track. The actual clause on the note is “Borrower’s Right to Prepay.”

#135 sam.i.am on 10.25.11 at 6:11 pm

I dialed in, and liked the concall. It shows Garth and co are real people working hard for their clients. Thanks Garth. BTW is there a way to mute all?

#136 Smoking Man on 10.25.11 at 6:20 pm

Anyone catch Bat Man today around noon?

#137 NoName on 10.25.11 at 6:21 pm

#7 “email”
it lookks like it came out of the book

Masters of the Universe and the Cult of Risk

#138 MarcFromOttawa on 10.25.11 at 6:27 pm

#119kw on 10.25.11 at 4:19 pm
Does anyone know if if Garth’s conference call number is a tollfree number?

Google is your friend (even if the answer is on Yahoo)

#139 Nostradamus Le Mad Vlad on 10.25.11 at 6:46 pm

#67 disciple — “The Hegelian Dialectic.” — Correct. TPTB need a strong diversionary tactic while NATO preps for WW3 (links in last night’s post).

A FF will also help things go smoother for them, by distracting us further.

#78 TurnerNation — “Communist China took over (how’s that war on communism working out?” — Great post.

Apparently, the Communists won the war — Obomba and Soros run the show now, and they are both lefties.

But everything is fine, in its rightful place as the cycle changes and the Wheel of the 84 continues turning, rolling along.

#79 Steady Eddie — “Next up is my exposé on Santa Claus and the Easter bunny.” — Did they ever marry and produce offspring? Now THAT would make a real good conspiracy theory!

#80 disciple — “You had just forgotten who you are.” — True, and until these clay temples or physical bodies run their course, most will remain completely devoid of what is happening at that moment.

This is why death is such a delightful experience. We finish everything up here, step into an elevator and go back up to where we were before, thus proving to ourselves the reality of the continuation of life.

#107 disciple — “. . . in the midst of boundless stupidity.” — Got that right — the worthless, irrelevant and mindless endless drivel which happens down here each day is all orchestrated by idiots of the highest order.

#124 zeeman1 — “Rumsfeld a clone of a German general? Interesting. Proof?”

Rebirth (reincarnation). We take all the experiences of this present life with us, and add them to the next.

Check out the almost identical lives of Tchaikovsky and Elton John.

#140 MarcFromOttawa on 10.25.11 at 6:50 pm

#127 Tony

Thanks for dumping your stocks today.



#141 Poor Non-Professional on 10.25.11 at 6:58 pm

Hey that guy was right, I’m not a professional!! Close. Not a big deal.

Westernman! I go for regular walks these days, I’m wasting time here now ahead of the next one. Right now I’m far too healthy, vigorous, and attractive to go down that way. You and I have to wait.

#142 Abitibi Doug on 10.25.11 at 6:59 pm

Part of the problem, in both Canada and the U.S., is house size. Most newer houses built are much bigger than ones built in the 1970’s or earlier so inevitably a buyer has to spend more and have a larger amount of their net worth in housing. Why, in this day in age, can’t we build smaller and more affordable houses?

#143 Dave on 10.25.11 at 7:01 pm


Thanks for the conference call.

I have a hard time reconciling the soft-spoken professional phone voice with the tough-talking, Harley-loving, acerbic blogger…

You should see me knit. — Garth

#144 Bottoms_Up on 10.25.11 at 7:22 pm

Ok I gotta comment on Americans–I love ’em!

Never afraid to speak their minds, and they do and love their jobs like they were born into them. I have always had great experiences going down to the States…it’s just too bad that now it’s gunna cost $5.50 more to do so. lol.

#145 BPOE on 10.25.11 at 7:23 pm

The American truly clueless in Seattle. Epic!! LOL Don’t you read the papers? Going much much higher. Get a grip on reality. Seattle sucks and will never ever hold the housing and lifestyle values of BPOE
At #13: Boombust, Vancouver’s correction will be epic. Unlike what has been witnessed before

#146 Bottoms_Up on 10.25.11 at 7:26 pm

#103 Just a question? on 10.25.11 at 2:06 pm

#147 maximum mortgage on 10.25.11 at 7:36 pm

The Department of Housing and Urban Development is considering a rule that will require borrowers to have a 20 percent down payment before qualifying for a home loan, realtors said.

Now that would put a crimp in the Vancouver market!

#148 JRH on 10.25.11 at 7:46 pm

#91….Haha good one !

#149 pablo on 10.25.11 at 8:04 pm

“But what problem does it solve?” None.- really Garth, none, is that what you really believe?
Well my bespectacled diminutive friend, I’ll tell you what problem it solves; as if you didn’t already know. This mortgage write-down and refinance (which is what it really amounts to) is just an additional bailout being given to the lenders holding those mortgages. What they’re (the international bankster cabal) doing is draining the remaining income and cash reserves from those that have managed to hang on, and not yet walked away from their indentured servitude(mortgages/consumer debt). It dangles another carrot in front of the indigent prolitariate masses that feed the international banking conspiracy and props up the illusionary house of cards. It tells them; look, we’ll cut you some slack, don’t give up the ship just yet, hang on, just a little while longer, things’ll pick up soon. It delays any further errosion of the u.s. financial system and the possible collapse of the lending institutions that fronted the garbage mortgages in the first place, it delays the eventual uproar and release of pent up anger, and frustration being held by Mr. and Mrs Average American; that bought into the whole bogus “american dream” of happiness coming from owning a sfd home in the burbs of any city, holding down slave jobs and consuming more and more useless consumer goods being marketed to the masses as some how life changing or enhancing existance by owning the latest iteration of any electronic do-dad that preoccupies the populace and luls them back into their stupor.
One of the best things would have been loading up on bank stocks or an exchange-traded fund pacing the TSX or the S&P seven weeks ago. -garth.
Well, I’m not buying that one either, stocks, etfs and such are precious little better than real estate; just another rigged game, controlled by the financial elite using high speed trading and insider knowledge to benefit themselves and their cronnies. Overall; the average working stiff is lucky if he gets out with his skin intact.
I do however concur (aren’t you fortunate!) with your previous posting, that if you’re buying real estate, look for an already depressed market, look for value, and look for a desperate vendor who has lost all hope and sanity; buy what you know/believe will retain value or loose it slower, after careful investigation and due diligence. Only if you can afford it, and for christsake keep the freezer full of squirrel souffle, stock up on gas for the generator buried in the backyard, keep the guns n ammo hidden and ready; cause the shitbirds are fly’n and there’s a shit storm a come’n.

What? Did Chez Redneck close early tonight? — Garth

#150 Devore on 10.25.11 at 8:05 pm

#132 sam.i.am

Quick and dirty google points to prepayment rights under the interest act. So that would be specific legislation to bring this benefit to the mortgage consumer, and for lenders to hedge against or otherwise account for.

#151 Devore on 10.25.11 at 8:07 pm

#132 sam.i.am

… So that would be specific legislation to bring this benefit to the mortgage consumer, and for lenders to hedge against or otherwise account for this risk. All things being equal then, US mortgage rates should be higher than Canadian mortgage rates (for new loans and renewals).

#152 Devore on 10.25.11 at 8:10 pm

#133 sam.i.am

I dialed in, and liked the concall. It shows Garth and co are real people working hard for their clients. Thanks Garth. BTW is there a way to mute all?

I was on as well, it was a good call.

Since no questions are taken, the moderator can just get the operator (*0) to globally mute all non-moderators. There are always mouth-breathing yahoos who believe they are being super stealthy and no one can hear them because they are special and don’t need to mute themselves, or people hitting the hold button to take another call (and having us all listen to their elevator music).

Sorry, I’ve been on too many conference calls recently.

#153 Westernman on 10.25.11 at 8:12 pm

Poor Professional or Non- Professional,
No, you don’t have to wait – don’t wait! About Jan. 12th just leave your domicile and walk North by Northwest… just wear a t-shirt and sneakers,light cotton dockers. Just keep walking until you feel veeeeery sleepy… then just find a nice snow drift to cuddle up with. I’ll wait, you should act as soon as possible.

#154 Nostradamus Le Mad Vlad on 10.25.11 at 8:26 pm

Greenspan Doublespeak? TPTB want NAmerica to fail, to have their power base in Brussels; Frozen in Wisconsin Not the weather, workers’ pay; Food Prices You know, and with workers’ wages being frozen it will place an extra burden on us; 5:07 clip “A five minute video.. about doing nothing.”; Citi They are right on this, The EU could (temporarily) collapse TROTW, thereby stepping above NAmerica; 1:51 clip Central banking solutions. The ‘centre’ is in Europe; BoA begging? “At that point I would have been on my feet shouting, “What do you mean you’ve run out of money?!?” That would get the attention of the other customers.” wrh.com; Steuben Crystal Another one bites the dust.

7:54 clip Greek myths blown out of the sky; Gold vs. Money The debate continues; US$25 billion That’s a helluva secret! And US$4 Trillion That’s the collective states’ debt and don’t forget the Trillion Dollar bills for all those illegal wars! PMI dives into the cesspool; Focus, People Some are getting desperate; The Toilet in Libya “But we got rid of that Gold Dinar crap and that made it all worthwhile!” — Official White Horse Souse. wrh.com. Libya had a central bank and an economy backed by gold, so no IMF; Italy “And if Berlusconi is able to meet EU demands, the EU will just come back with more demands.” wrh.com. So let the PIIGS fall. A thorough cleaning is required anyway.

Syria As expected, Syria and possibly Algeria are next. Obomba is a good title for him; Cdn. Military The real face of the CPC; Obomba the Oliar Isn’t this the way Rome eventually fell? Nuke dismantled “So, the service manual says to cut the red wire first, but all I see in here is a yellow and a green wire!” wrh.com; 20 Million Tons From Fukushima to Hawaii; NAU – SPP “Hidden in that worthless jobs bill was the Border Perimeter and Security Act between the US and Canada.”

China Cheap talk at the moment; Gadaafi’s gone, so why does the new govt. allow this? Never happened under Gadaafi; Bolivian ‘cano Thar she (almost) blows; Ebola Virus “Marburg is also a filovirus and emerged in Europe in 1967.” wrh.com.

#155 Poor Non-Professional on 10.25.11 at 8:38 pm

I’ve got stuff left to do Westernman. Gotta hang on. Sorry brother. Dockers hehehehe

And so ends my bizarre experiment commenting on Garth’s blog… yikes. Good luck everybody, keep up the good work watching this space and keeping the zookeepers amused.

#156 mel in victoria on 10.25.11 at 9:13 pm

Hey Garth…….looks like my last message got ‘deleted’ ,censored?? …went off into cyber space??

You asked me a question better suited to offline conversation. My email is [email protected]. — Garth

#157 just a question on 10.25.11 at 9:30 pm

I guess there isn’t any knowledge on this site just throwing jabs at each other and opinions. Answers to a basic question…….don’t exist.

#158 TurnerNation on 10.25.11 at 10:09 pm

The conference call was great. But some blog dogs did not mute their phones – so you could hear grunting, panting or something else in the background.

#159 V Castellano on 10.25.11 at 10:59 pm

Hi Garth,
Yes it’s true that the collapse of the Housing Market in the US has caused the the Great Recession,and a slow Recovery.However I believe the collapse of Manufacturing in the US and Canada has had a great effect on both economies also.
Best regards,
Vern Castellano

#160 Beach Girl on 10.26.11 at 8:15 am

#153 Poor Non-Professional on 10.25.11 at 8:38 pm

I’ve got stuff left to do Westernman. Gotta hang on. Sorry brother. Dockers hehehehe

And so ends my bizarre experiment commenting on Garth’s blog… yikes. Good luck everybody, keep up the good work watching this space and keeping the zookeepers amused.


It is the weather, SAD symptoms, that are making you feel down. Don’t end it. Buy a dog, even a fish. I would normally say something snarky, but, I feel for people being down. At least you have a job.

#161 TurnerNation on 10.26.11 at 8:23 am

If you have kids…look for Dolton McG in Ont. to also push this witches brew onto boys now. New drug testing is outsourced to shady operators in 2nd and even 3rd world countries – hey if a few of them die or become sick we do not care..

Merck’s Gardasil Vaccine Wins U.S. Panel Backing for Routine Use in Boys
Merck & Co.’s Gardasil vaccine, used to protect girls from a virus that causes cervical cancer, should also be given to 11- or 12-year-old boys to reduce transmission of the infection, a U.S. advisory panel said.