Jobs

Long ago (last year) and far, far away (on Lake Muskoka) two-bedroom, two-bath luxury waterfront condos were on the market for $650,000. Not an outrageous price, considering you need a million, a mahogany runabout and a sculptured bod to fit into that neighbourhood. But no more. The Americanization of our real estate market may be about to commence.

In a month, in a room inside Toronto’s Harbour Castle hotel, forty prime resort condo-hotel units will be auctioned off, starting at a fraction of their listed value. What was $650,000 will open for sale at $155,000. Smaller one-bedroom condos on the market last year at $375,000 will go under the hammer for an initial $85,000. Commercial lots previously for sale at up to $507,900 will start at $120,000. And not only will the people packed in the auction room get to play, the process will be opened to online bids – another first for Canada, but a routine process in the States.

In fact, given the latest economic news, how long before more of the American housing experience floods north?

The average Canadian used house costs $352,581. The average US house now changes hands for $165,400. A month ago that was six thousand bucks higher. So, Canadian real estate costs more than twice as much. At least for now.

By any measure, it’s absurd. Mortgage rates in both countries are about the same. Personal incomes and rates of tax are roughly equal. But the US is ten times larger and the richest country in the world. Homeowners there can deduct mortgage interest from their taxable income. Property taxes, too. So why would a house cost half, when it should cost double?

We need but one word to explain this. Jobs. As long as Americans worry about a 9% unemployment rate; millions unable to find work even after a year or two of looking; and wages failing to keep up to inflation, they’re sure not going to walk into mortgages – however cheap houses and rates may be.

After all, there’s every incentive imaginable for southern families to rush real estate. Houses are the most affordable in over 40 years. Mortgages are at historic lows. Owning is suddenly (unlike in Canada) cheaper than renting. Recent buyers were actually given cheques by Washington just for showing up at the lawyer’s office to close the deal. And still, both sales and prices continue to fall. Almost thirty million families owe more than their houses are worth since values have plunged. And it’s universal – from New York to Boston, Chicago, San Francisco and Seattle – declines have occurred. The average US price is off 17% and in the once-hot Sun Belt, three times that number.

On Friday came news our employment market is also falling apart. The net job loss was a stunning 54,000, when economists had expected gains. The number of full-time workers plunged by 71,700 and most layoffs were in the private sector. In contrast, the US created 80,000 jobs last month.

So our unemployment rate increases to 7.3%, in the worst report since the financial crisis of 2009. But there’s a more worrisome thing to be aware of. Wage growth is falling, which simply means the average family’s income is being outstripped by inflation. Compared to a year ago, Canadians make 1.1% more, but inflation is 3.2%. Say the economists at Scotiabank: “Swings of tens of thousands in the monthly job count matter far less than the fact that the millions of employed Canadians are just not making wage gains that are keeping up with the cost of filling their grocery carts, fueling their cars and what they’re spending on other staples.”

Exactly. What people make, buys less. Food and gas suck up more disposable income. Big ticket spending eventually takes a hit. In an economy now 70% dependent on consumers, costs more jobs, and confidence.

Yesterday I argued on this pathetic blog there will be no systemic financial collapse. And I’m right. But that does not for one moment mean most people will be spared the consequences of their actions. They won’t. Interest rates can stay low ad nauseum, and the outcome won’t change. Residential real estate will take the brunt of what’s to come – slowdown in Europe, widespread government austerity, a weak and slow US recovery, slipping wages and more job loss.

Some people will be shocked when they come to sell their homes. Others will simply be unable to find a buyer. No offer. No calls. No showings. This is a daily fact of life for tens of millions of people with the same aspirations, wages, taxes, families, obligations and communities as you. They just live a few hours south, where the cold front moved through.

Many of them, like the crestfallen developers in Muskoka, have chosen death by hammer.

 

220 comments ↓

#1 Amarillo on 11.04.11 at 9:20 pm

Gotta try being foist just once.

#2 vyw on 11.04.11 at 9:22 pm

When both households and the Govt are cutting their spending, we do not have enough money in the system to drive demand and private sector jobs. Austerity under these conditions like the paradox of thrift result in contraction and if we’re not careful, deflation.

We need a federal jobs program for the bottom 30% to lift their real incomes.

#3 Helpful Advise on 11.04.11 at 9:34 pm

BONZA! FIRST!

#4 David B on 11.04.11 at 9:35 pm

“Austerity”, a word we all are going to love to hate, and two others which to be music to our ears “Disposable Income’ will seem like years ago.

Soon the Christmas sales will start and once again most will bite the bullet and say: ” We will deal with in the new year”

On the bright side in there if there 7.3% unemployment then there must be over 90% employment.

So there you go …. and late news is all is well again in Greece and the wine is flowing in Italy.

#5 T.O. Bubble Boy on 11.04.11 at 9:36 pm

Talk about asset deflation!

http://www.realtor.ca/propertyDetails.aspx?propertyId=11184802&PidKey=2009029164

$456!!!

#6 MixedBag on 11.04.11 at 9:40 pm

Even at the discounted prices, they’re too high for me. That blue building is one ugly building. When you factor in the maintenance fees and the costs you can’t control with a condominium (versus a house), it’s just not worth it.

Who in their right mind would have paid 650K?

#7 Nick on 11.04.11 at 9:42 pm

1st

#8 TurnerNation on 11.04.11 at 9:44 pm

I’ve always wondered about the prolific Toronto condo developer Peter Freed, who waded into the Muskoka quagmire with tres pricey McMansions:

http://www.muskokabayclub.com/inventory-specials.php

Condo site: http://www.freeddevelopments.com/

(Muskoka Cream Ale is really good suds, by the way :)

http://www.muskokabrewery.com/creme-ale.php )

#9 T.O. Bubble Boy on 11.04.11 at 9:45 pm

Hmmm… but yellow 1960’s kitchens appear to be fetching a premium these days:

http://www.realtor.ca/propertyDetails.aspx?propertyId=11258023&PidKey=-1675737731

(a special collectors’ edition?)

#10 Nemesis on 11.04.11 at 9:45 pm

“What the fear brigade fails to understand is widespread financial meltdown is impossible so long as the elite fends it off.” – Hon. GT

They can certainly ‘do stuff’, OldPol… but the levers ‘o power ain’t what they used to be.

PS – Yesterday’s illustration was… ABFAB

#11 Big Al New on 11.04.11 at 9:48 pm

Is it me or are 10% or more of the homes in Oshawa listed on MLS vacant. I’ve seen more homes sitting empty and unlike the US the listing doesn’t indicate it’s bank owned or otherwise.

#12 les on 11.04.11 at 9:48 pm

When you started this blog 3 years ago and picked it’s theme did you ever expect to have this much to talk about going forward?

Just wind me up. I’m endless. — Garth

#13 Young Old Fart on 11.04.11 at 9:49 pm

FROST!!! ;o)

#14 rosie on 11.04.11 at 9:50 pm

Beware! That includes Greeks, Italians and hungry realtards from the Hinterland. Who’s who anyway?

#15 Waterloo Resident on 11.04.11 at 9:50 pm

I don’t want to be the bearer of bad news but I think you should know what I see here in the Waterloo area.

This past summer homes were selling in less than 2 weeks after they were put up for sale, always for more than they were listed for.

Now, I see 7 houses that have been up for sale for about a month and NONE of them has sold YET. So something seems to have changed, homes are not selling QUICKLY the way they were. I think it has to do with jobs, the people can see that jobs are disappearing.

#16 Ravishing Rick on 11.04.11 at 10:01 pm

The financial post has an article on the misery index. Inflation + unemployment

http://business.financialpost.com/2011/11/04/canadians-misery-index-rising/

#17 amazing on 11.04.11 at 10:02 pm

DAMN IT…..NO FIRST TODAY!…I’LL TRY TOMORROW. GOOD NIGHT.

#18 cecilhenry on 11.04.11 at 10:03 pm

The self-serving hypocrisy of the real estate industry is truly contemptible at times.

While looking for a possible job (for a year, perhaps more) in Gravenhurst, the friendly interviewer asked me if I was looking for a condo or house??

Of course I would rent for such an uncertain location (and if I can’t rent, then I can’t move) , but made no comment. She continued ,

“Well, why not buy a house, you can enjoy your own space and hey, if you DO have to move in a year or so you can always sell it at a profit!!!”

Have you SEEN Gravenhurst???
Why would I EVER want to spend 30,000 of hard earned equity in closing costs etc and then RISK another 30,000 in costs should I have to move in one year. That’s alot of money for anyone. And those costs are gone no matter what. Insane, irresponsible, greedy. And then I risk selling at a loss, and under pressure if moving.

While SHE works in a dental office, what does her husband do……..

Real estate agent.

#19 Ben on 11.04.11 at 10:05 pm

I’m coming home to Canada for Xmas for a “visit”, but I couldn’t live there. It’s just gone off the chart expensive and i’m priced out. I wouldn’t find a job that paid even 1/2 of what I make in the U.S. anyway as a telecom engineer.
When I see colleages homes down here in Dallas going for $120,000… no that’s not a misprint… and i’m going to pay close to triple that in Edmonchuk? I couldn’t even drive a sports car there all year around, I’d have to have a second SUV for half the year.
Let’s see, I grossed 5,600 for a two week period and took home $4,263… at home I’d maybe take home 60% of that gross income… did I mention that’s if I could find a job that paid that?
Oh ya, my case of beer for the weekend was $10.00?

#20 Anna on 11.04.11 at 10:14 pm

These guys make the rules. They can nationalize banks, bail out countries, force taxes and austerity measures, recapitalize institutions, raise or lower interest rates, expand or contract the money supply, regulate or deregulate and in the course of it all, modify human behaviour. That means they can prevent a run on the banks, influence the bond market or make mortgages irresistibly cheap.

Almost like God. right Garth?

#21 Colin on 11.04.11 at 10:20 pm

Your link at the bottom is broken. It’s missing the colon that should be after “http”.

“the crestfallen developers”
http//www.muskokaauction.com/index.php

#22 disciple on 11.04.11 at 10:22 pm

#11 Big Al… interesting, what is your sample size?

#23 Unistar38 on 11.04.11 at 10:22 pm

Let the game begin!!!

#24 Will on 11.04.11 at 10:23 pm

When the real estate market cools further, you can expect more people to be looking for work. Perhaps the zerodownpayment guy can start advertising for 0 down lattes at Starbucks?

@vyw who pays for the government jobs? Ever check how many civil servants Greece had?

#25 Beach Girl on 11.04.11 at 10:30 pm

About the OCCUPIERS

DELETED

#26 tomohawk on 11.04.11 at 10:32 pm

From the brochure:
“…All homes and lots have an unpublished reserve price,
which means that the seller has established an
unpublished minimum selling price. The Starting Bid is
not the reserve price. In order to become the winning
bidder of a home or lot, a bidder must have the highest bid and meet or exceed the unpublished reserve price….”

Seems a bit scummy to me. Is this usual at an auction and if so what’s the point of it? To get people emotionally wrapped up in the bidding process and have people overpay?

#27 Mr. Brown on 11.04.11 at 10:35 pm

Another headline today linked the job report to the EU crisis. It does not matter much what the proximate cause is. Now the Great Sphincter is tightening. Soon the long log of endless real estate market gains will be cut off and “plop!”…

#28 Keeping the Faith on 11.04.11 at 10:36 pm

Scotiabank quotes, I love’em …

“You’re richer than you think”
has become
“You’re richer than you think?”

#29 Smoking Man on 11.04.11 at 10:44 pm

Beach girl got deleted ha ha
Go noting to say tonight other that caved. Rub and tog then casino then wine.
Black people rock whites can’t dance. Me included.
Lead belly the father of music. No one knows him
But the rolling stones. Lead zeep. All stol his shi

And many more did

I caved. Back to bozzez.

Re. Not going to crash. Sory gartho

#30 Devore on 11.04.11 at 10:55 pm

Interesting comment on Toronto Realty Blog:

I worked with a buyer a while back whose friend came in from Texas, and was astounded to hear that I though 22 days on the market was a “long time.” She said back home in Gunnsville, it usually takes 4-5 months just to get an offer!

And this is in Texas, where one might say there even was no bubble to begin with.

Rising taxes, cost of living, and shrinking disposable incomes due to sluggish wage growth and lack of employment recovery will continue to put the squeeze on owners and new buyers.

The realtors and unwitting speculators can continue to crow about averages, but as pointed out many times here, only a handful of select markets are seeing any appreciable price gains. And those, on either side, who are expecting or demanding immediate and total collapse of housing market across Canada will remain disappointed for months, maybe even years. By the time you read about it in the paper, you’re already a year behind the curve.

#31 WI BOOMER on 11.04.11 at 10:59 pm

Another day, another bailout. Oh, forgot the 8th biggert bankrupcy in US hisotry MF Global.
Yes, well Garth the economic & sentiment indicators here are pointing DOWN again. No, the whole Ritz won’t hit the fan, but those who are not economically grounded (too small a down-payment on the house), high credit card debt, high car debt yadda yadda might be pointing DOWN as well.
Just hired a new guy at work, sold his home in Missouri for essentially what he paid for it 4 years ago as prices have slipped. At least he got out without having to write a check. Good thing he had the 20% down to get out of mortgage insurance. Naturally, he’ll save the same, or more here on a replacement house when they’re ready to buy.
Had he been one of those 5% down buyers, there is NO WAY the numbers would have worked-short of a foreclosure-or if the Bank agreed a ” short sale.”
Yes, it doesn’t take much to go from 7.3% unemployment to 9%. Nobody likes not getting a raise either. My wages were frozen this year, and now next.
The good news is I HAVE wages to freeze. I don’t have a good feeling about where the economy is moving, but that is my gut, not really imperical evidence.
That won’t prevent me from buying quality dividend paying stocks, and quality Bonds. There will still be sunny days in the future, how far off, your guess Buddy!!

#32 Pr on 11.04.11 at 11:03 pm

No sign of probleme this year for CREA. Futur buyer read this joke:
The Devil tells a Real Estate Agent, “Look, I can make you richer, more famous, and more successful than any Real Estate Agent alive. In fact, I can make you the greatest agent that ever lived.”

“Well,” says the Real Estate Agent, “what do I have to do in return?”

The Devil smiles, “Well, of course you have to give me your soul,” he says, “but you also have to give me the souls of your children, the souls of your children’s children and, as a matter of fact, you have to give me the souls of all your descendants throughout eternity.”

“Wait a minute,” the Real Estate Agent says cautiously, “What’s the catch?”

#33 45north on 11.04.11 at 11:09 pm

The average Canadian used house costs $352,581. The average US house now changes hands for $165,400.

obviously the price of the Canadian house will decline to meet the price of the American house. This decline will signal a massive unprecedented loss of wealth. Canadians will feel hurt and bitter. I would say the greater the debt the more the hurt. And visa versa.

Colon: thanks for the correction to the link. Imagine a $600,000 mortgage on Muskoka Wharf Action. Pretty funny.

#34 Big Al New on 11.04.11 at 11:11 pm

#22 “disciple” it’s from my personal search experience on the MLS site, a mental approximation based on how many I’ve come across sitting empty against the number occupied. This wasn’t a dig against Oshawa as it’s my town, just the fact that if you were to search on Trulia in the States, the site would say bank owned or corporate owned, read bank owned for most all homes sitting empty.

#35 Victoria on 11.04.11 at 11:21 pm

I spoke with a woman at a Lay Z Boy Store today. She said the government would never let interest rates go up – never.

#36 Paully on 11.04.11 at 11:42 pm

Watch out for bids being taken off the wall at those unpublished reserve auctions. Savvy (scuzzy?) auctioneers can have you bidding against nobody until you do hit the reserve.

#37 Aussie Roy on 11.04.11 at 11:59 pm

Aussie Update

By now we all should know that falling RE prices causes a recession, rather than the common misbelief that a recession will causes RE prices to fall?.

SOME of Sydney’s wealthiest suburbs, including Kirribilli, Cremorne, Manly and Darlinghurst, are suffering such high levels of unemployment growth they qualify as being in recession.

A Herald analysis shows residents in traditionally wealthy white-collar suburbs of Sydney are losing their jobs at a much faster rate than NSW generally.

http://www.smh.com.au/national/job-axe-falls-hardest-on-rich-suburbs-20111104-1n02f.html#ixzz1cne9Jm67

WOW – An Aussie politician said this – Maybe there is hope.

Soaring property prices meant the average Perth family – which earned $73,300 a year – needed 6.5 times their annual income to purchase a home in September 2010, compared to 3.9 times a decade earlier, Minister for Housing Troy Buswell told the Community Development And Justice Standing Committee.

The median house price in Perth has lost 5.7 per cent since September last year, and is now $524,055, according to the Australian Bureau of Statistics. The average unit is worth $345,297.

But Mr Buswell said 90 per cent of Perth houses remained unaffordable for 46,000 key workers, such as police, teachers and nurses.

http://news.domain.com.au/domain/real-estate-news/wa-great-aussie-dream-harder-than-ever-20111104-1mzea.html

USA

I now want to analyse the Arizona housing market – with particular emphasis on its largest city, Phoenix – to determine why prices bubbled and then burst in such a violent manner.

In the lead-up to the crash, Phoenix’s economy was booming. New jobs were being added at a fast pace and per capita incomes were growing strongly:

http://www.macrobusiness.com.au/2011/11/how-phoenix-housing-boomed-and-busted/

#38 Nostradamus Le Mad Vlad on 11.05.11 at 12:04 am


H – F’s economic action plan is quite remarkable. Lots of glossy m$m ads, containing politico spin / drivel which is baseless, yet sheeple still suck at the teat of a corrupt govt.

We are as strong as the southern fried chicken crossing the road! Canada is in a depression, but we’re getting better quick! Honest!

“But no more. The Americanization of our real estate market may be about to commence.” — As above, so below. Yep, Oz and us are gonna get creamed, as the cycles change. There is nothing to prevent that from taking place.

“. . . how long before more of the American housing experience floods north?” — Months, and that’s being generous.

“In an economy now 70% dependent on consumers, costs more jobs, and confidence.” — The barter, or underground system is probably in full swing down south, and is likely to accelerate here as well.

“I’m a dentist, you’re a mechanic. I need dental work done. I can fix your car in return.” “Done.” No taxes paid, just a conversation between two people.

“I argued on this pathetic blog there will be no systemic financial collapse.” — Probably, but it’s like someone cleaning a blackboard — they erase everything there.

At least there is some good news in BC — New Tech Firm, and the Midway mill is almost up and running again. Only employs 35, but (depending on orders from ChIndia), may reach 100 in the near future.
*
#2 vyw — “We need a federal jobs program . . .” — Just as the US did prior to WW2 — make-work projects, which kept people active. Not sure if it will work this time.
*
Cdn. Joke of this and Next Year; Notice how Cameron is shifting the blame to others for his party’s own inadequacies; Guy Fawkes Day In the UK, Nov. 5 is bonfire night, a celebration of what happened. History repeats; ECB and the end of the Euro; 7:22 clip Economics professor says Ron Paul is ignored by the m$m, so he must be right; Link in “It happened in US and Europe, because of failures of regulators in Europe and the US!” But it didn’t happen here, ‘tho it’s about to.

Links in Greece, Italy and HAARP — blood brothers? Parts of Turkey were roughed up by the ‘quake recently; Links in NWO, secret societies and banking cabals; Portual and Italy implode, just as El Hierro explodes; Troika Surveillance, It’s A Mess, yet all is unfolding as it should; Inflation is not a problem; Dead Canaries tell no tales.
*
Plutonium – Uranium Fission in Reactor 2, and Why Fukushima is worse than Chernobyl; Beginner’s Luck The only thing I catch is a cold; Heptitopters That Magnificent Man In His Flying Contraption (and it works); Viper Your Nose! Snakes alive. Not for the faint-of-heart; Giant Land Grab for the police state.

Antarctica Part of the natural evolution of change, ‘tho this ‘berg is a little bigger; 5:09 clip How to brainwash a nation. Not difficult, with the NFL and Dancing With The Stars; 0:55 clip Three ‘quakes at El Hierro; Easter Bunnies for WW3; Solyndra Why would the WH reject requests for documents?

#39 tran, Calgary on 11.05.11 at 12:05 am

Ready? Get Set. Fire!

http://poorrichards-blog.blogspot.com/2011/11/world-war-3-foregone-conclusion.html

http://www.ynetnews.com/articles/0,7340,L-4143755,00.html

#40 Dorothy on 11.05.11 at 12:18 am

The Real Estate Market has already slowed in most of Canada, and I’m sure you’re right when you say it’s only a matter of time before it begins to slow down in the few remaining bastions as well. But as a really bad real estate meltdown would decimate our already battered economy, I’m at a loss at how many of your bloggers are salivating at the prospect.

I think many of these people haven’t really taken the time to think through the consequences of a really devastating real estate meltdown of the type they are hoping for.

Because while its true that those who bought houses they couldn’t really afford, with massive mortgages, would probably wind up getting their “just desserts”, they’d also drag the rest of us and the economy down with them. And no-one should be rubbing their hands with glee at THAT prospect, not if they have any sense anyway.

A modest correction would make houses more affordable for those who have been shut out of the market in recent years. But as a crash would benefit no-one, you bloggers who appear to be hoping for such should be careful what you wish for.

#41 ed on 11.05.11 at 12:20 am

Whe’s your next book coming out? Enjoy the Money Road. Is this book going to be the same? What’s it going to be about, hopefully more about investments and less about real estate.

#42 British Leyland U-boat on 11.05.11 at 12:35 am

Now there be four of us but one of us is for work and the other three be spare parts. We being government workers one in four works – rest there for show. Well now if I can get me Lucas electrics lit I might just be able to chug out of harbour and straddle a Canadian winter. Not much hope of me patrolling (reliably) the Arctic without having to surface for lobster. Ah well there ain’ t much RE to torpedo up there anyway’s. And the Mohawk Warriors – them who could sink me with pebbles – they’re all down occupy. Thankfully, cause I’ve never fired one – I mean, I’m rusty virgin steel close to thirty not knowing what to do in that dept.

Maybe I could make me way to Musk through the St. Lawrence – hey I’m used to docks – dry ones even. Nail me some RE. When they faintly do de-commission me maybe I’s could end-up on tour-duty in that fish tank at the CN Tower?

#43 GTA Girl on 11.05.11 at 12:40 am

TorontoBubbleBoy;

I thought you were kidding. That listing is unbelievable! My grandma had a better kitchen that in…. 1972!

Holy crap, we’re going to hell.

#44 Where's The Money Guido??? on 11.05.11 at 12:46 am

#26 tomohawk on 11.04.11 at 10:32 pm

And auctions have paid shills bidding in the audience. Or the auctioneer’s helpers screaming out a fake bid when the bidding starts dying before getting their price. Just go observe some time and see the slime that run these things. It’s the biggest scam since the shills in a black jack card game at the casinos in BC who hit hard 17s or don’t hit soft 13s to 16s against a face card for the dealer (especially when they’re the anchor). I quit going to both……

#45 yogi on 11.05.11 at 12:55 am

The catchy music on the auction site made me think I was on a Martha Stewart website instead of last gasp grab for cash on a failed condo project.

#46 nonplused on 11.05.11 at 1:13 am

Spot on post tonight Garth. I hope you are right about no systemic collapse, although I think “no collapse” and “smooth sailing” are 2 different things. I still think a lot of people are going to loose a lot of money over the next few years, and a lot of money is going to loose a lot of value. But as long as the gas pump still takes my credit card, I believe we’ll stumble through.

Side note to Banksters: What’s with this $100 pre-authorization at the pump? I’ve got a $20,000 limit for jepers sake! You know how irritating it is to have to swipe twice every time I have to fill up??? Oh, and there is your inflation for you, if you were having trouble finding it.

(Specs: 2011 Dodge Cummings. About $130 to fill right now, gets me about 800km.)

#47 dd on 11.05.11 at 1:17 am

Ya, what inflation? I said that we are in a sea inflation and you said it doesnt matter because it is not here. This is not the UK you said. Well it is here.

Money printing does that. Time to wake up.

#48 SLN on 11.05.11 at 1:26 am

It astounds me how there can be predictions of ‘no recession’ while in the midst of one. Oh, sure, they release some numbers that pretend to indicate otherwise.. but can anyone verify any of these numbers?

Also astounding is the fact that anyone can understand that the only stimulus available (low interest rates) is played out AND also understand that job numbers are falling AND clearly see that wages haven’t increased in forever (nevermind the last year.. try the last 30 years adjusted for inflation, etc) BUT THEN blame people for the hell they are about to pay.

it doesn’t add up. Seriously.. pass the salt. The rich are SO under-seasoned.

#49 Cristian on 11.05.11 at 1:31 am

“But the US is ten times larger and the richest country in the world.”

It all depends on how you measure.
If you measure by total GDP, yes, the US is the richest country, but then China is second richest. Which would lift many eyebrows.
Some may object that you should measure by GDP per capita. Which makes Luxembourg the richest country in the world.

“Yesterday I argued on this pathetic blog there will be no systemic financial collapse. And I’m right.”

I wonder how do you know that you’re right long before it’s over. You must have some secret source of information that nobody else in the world has access to… Because you seem to be the only one who KNOWS.
Wow…
To me, you are simply a repeat ofender of the kind who doesn’t know, and doesn’t know that he doesn’t know. Which is pitiful.
At least I know I don’t know what’s gonna happen in a week, a month or a year, and I am not ashamed of it.
Like I said in the past, it would be better if you talked just about real estate, at least your message there is more coherent and makes sense. Leave the stock markets to anyone’s guess, stop embarrassing yourself.

#50 Druid on 11.05.11 at 1:58 am

On 168 yesterday: “The elites may also be doing what they are paid to do: look after those with no self-control and who always act in their own self-interest.” — Garth

Not too likely. Everyone looks after their own self interest, even the elites. The elites are in fact looking after “those with no self-control and who always act in their own self-interest”, but that is themselves. We’ve had enough Wall Street bankers explain how they are doing “God’s work” to know that by now.

I suppose the elites might be made to work for “those (other people sharing the same trait) with no self-control and who always act in their own self-interest”, if it was highly in their own self interest to do so. But as a group, it’s not. They look after themselves first, same as you, same as me.

I’ve studied magic, Garth, it won’t work on me.

I also know how to make a crop circle. Whatever fancy patterns and alien messages you want.

I also know that what the elite is trying right now is a combination of magic and alchemy. Magic can work under the right circumstances where perception can be altered to a desired goal, but the goal is always that of the magician. Alchemy never works and any magician worth his weight knows that.

Here is the incantation to protect you from our elite magicians’ attempts to get you to believe in alchemy:

“There is no free lunch.”

#51 Tony on 11.05.11 at 2:08 am

I would still rather live in Greece than Canada

#52 Thetruth on 11.05.11 at 2:16 am

I agree with Garth that inflation will outpace salary growth. Also, high paying jobs will become scarcer. To get them, it will matter who you know and much less what your qualifications are (see BC Hydro).

But why did Jason Kenney double senior citizen immigration numbers today for at least the next 2 years?? Only reason i think is to pack more people into Van and Toronto. Helps demand for housing. Leads to banks selling more mortgages… Keeps Garth’s dividends rolling in, etc….

#53 No Fun Vancouver on 11.05.11 at 2:17 am

Great as a Canadian I can’t bring my lonely
Mom to Canada. My Dad recently died in Iran and my Mom really wants to live with us and her grandchild but I can’t but you can buy your way into Canada and inflate the property market. All that matters with the Conservatives is the bottom line.

#54 Van guy waiting on 11.05.11 at 2:37 am

Nobody wants a home in Muskoka. And vacation properties have been not selling that well for quite some time now.

#55 Jody on 11.05.11 at 3:28 am

“there will be no systemic financial collapse.”

I certainly hope not but I don’t trust any of the dickhead politicians and greedy scum bag bankers who run this planet to try hard at preventing a collapse. I think they will all take what they can then bugger off, bloody bastards. G-Pappy the leader of Greece will get hung, literally, Greece will have a military coup, hopefully the transition will be bloodless. The Euro is going bye bye and when it does it’s going to send a shockwave across the planet.

#56 penpal on 11.05.11 at 4:11 am

@ # 9 T O BB

Never mind the yellow kitchen, look at the furnishings!

For a $949,000 listing?

The entire contents of the home as pictured looks like the proceeds of a yard sale.

I have been to open houses at such places in Toronto numerous times and often the value of my wristwatch exceeds the total value of ALL of their furnishings, yet the house is priced above $ 1 million. Even worse in ‘lofts’ and condos I have visited.

What does that tell you?

In two words, HOUSE POOR!

As Garth points out in this posting tonight, the affordability squeeze with stagnating to lower incomes and escalating costs of living and maintenance of houses has arrived to destroy discretionary spending and with it jobs.

These people can’t even furnish the damn place!

It will be fun watching reality assert itself as these “house heavy” owners are forced to sell into a declining market.

Screw every one of these social climbing a-holes that bought above their means to impress family, friends and neighbours, but most of all themselves.

They are about to find out what “rich” really is and what it is not.

#57 Jane24 on 11.05.11 at 4:59 am

The problem is that the govt is saying go out and spend consumers and save the economy at the exact same time it is saying save for your old age or live in poverty.

We can’t do both so more and more of my friends are doing the later. Eating dog food is more scary than not having the latest stuff.

#58 pablo on 11.05.11 at 5:06 am

Ahhhhh; the doom and gloom, the witty banter, the unbridled sarcasm and narsistic prose, not to mention the sexually exploitive,but demeaning, yet arousing photograph accompanying this fine literary piece. We’ll have no more pictures of canine shinanigans, no fashion obtuse street denizens, no coyingly humerous pranks displayed here, for this is the temple of lust and debauchery that is the viewing screen of this fine nation, this Canada, this british outpost of the new world.

This is what I’m talk’n ’bout my bruther, yeah Garth is back, with his ink wells full of spunk ready to discharge on the blog screen. The creative juices of advanced decreptitude roiling up from his atrophied loins. (now doesn’t that paint a pretty picture eh!)
I eagerly await his next offering, sitting here perched at my desktop, my interest, nay; my ardour peaked, my own juices barely contained at a rolling boil.

#59 Another DownUnder Canuck on 11.05.11 at 5:29 am

From yesterday post:

“These guys make the rules.
They can nationalize banks, bail out countries,
force taxes and austerity measures,
recapitalize institutions, raise or lower interest rates, expand or contract the money supply,
regulate or deregulate and in the course of it all,
modify human behaviour…
prevent a run on the banks, influence the bond market or make mortgages irresistibly cheap.”

Do you see the parallel with;

“What piece of work is a man,
how noble in reason,
how infinite in faculties, in form and moving,
how express and admirable in action,
how like an angel in apprehension,
how like a god!”

Except that the second text was purportedly spurred by a mad man.

You da man, GT.

#60 Mike Rotch on 11.05.11 at 6:57 am

@ Ben:

“Let’s see, I grossed 5,600 for a two week period and took home $4,263… at home I’d maybe take home 60% of that gross income…….”

I have no doubt taxes on 145K or so are lower in Texas than Alberta, but you’re probably looking at 30% net rate vs. 25% ish.

There are plenty of reasons not to move to Edmonton, but your estimate is off by about $14,000 of them.

#61 Tim on 11.05.11 at 7:05 am

Yesterday I argued on this pathetic blog there will be no systemic financial collapse. And I’m right…

Nice, arrogant AND psychic.

#62 wtf????? on 11.05.11 at 7:10 am

Sounds to me like the condo auctioneers ( real estate developers) are trying to goose the turn out by setting price points far below current ask to induce an ‘auction fever’ when the rubes show….classic con job in the real estate ‘multiple bidding wars’ page of the RE Pimp handbook. Don’t be surprised if the snow job catches a good share of TO’s dribble jar ‘investor crowd.

I stopped going to auto auctions and estate auctions for exactly the same reason…the rubes come out and get stupid…..don’t forget the shills and the stand ins….This ‘auction’ smells like real estate skunk pee to me…….I can smell it from here.

#63 a prairie dawg on 11.05.11 at 7:26 am

#26 tomohawk

“Seems a bit scummy to me.”

– – –

The RE industry summed up in only 6 words…

If you listen carefully, you can almost hear those guys from the Wiserhood clapping.

#64 Regan on 11.05.11 at 7:43 am

I tried to pay off my mortgage yesterday using my prepayment option, but will have to go back in the New Year since apparently I’ve prepaid enough this year and would have to pay an interest penalty to discharge my mortgage now. In other news, we asked a neighbour who’s an agent about potentially selling our house and have since backed away since several other factors are in flux for our family. However – she emailed asking us if we’d consider a single buyer looking at the house and making an offer – no MLS listing and presumably no effort in staging etc. Is it just me, or is that a really bad idea? I know sales can sometimes seem like matchmaking, but how is it even legal for an RE agent to represent both the seller and buyer?
Also, I encourage all of you to put your money where your community is. November 5th is Bank Transfer Day – move your money to a local, non-profit and democratically-run credit union. Try Alterna, Caisse Populaire or Desjardins for long-running organizations with better rates, reasonable fees AND a vote in what happens.

#65 Bottoms_Up on 11.05.11 at 8:23 am

http://www.realtor.ca/propertyDetails.aspx?propertyId=11184802&PidKey=2009029164

$456!!!
——————————————————–
lol, it appears he meant “4 or 5 or 6 million”

#66 Bottoms_Up on 11.05.11 at 8:26 am

#11 Big Al New on 11.04.11 at 9:48 pm
———————————————
I think that’s common elsewhere too….indicates a lot of investors are getting worried and dumping their rental properties…

#67 Bottoms_Up on 11.05.11 at 8:35 am

#19 Ben on 11.04.11 at 10:05 pm
——————————————
The standard of living difference is unreal b/w the two countries. However, aren’t there much higher municipal taxes? Also, what would you do if the ‘Oil made it to the Cup?

#68 Stinky the Fish on 11.05.11 at 8:47 am

The tipping point is in 2011 when the oldest of the baby boomer generation reaches 65. From now on, Canada’s population profile will slowly age. Fewer people will be working to support those who aren’t. The consequences will be twofold: Government revenue growth will fall, and government spending obligations will rise. There’ll be unavoidable pressure for higher taxes or spending cuts, or both. Pick your poison.

This poison will have affects on household & disposable income with wealth effects suddenly evaporating in thin air. Real estate will tank and your persistence Garth will pay off.

In the end, granite countertops will be a thing of the past. I hate granite countertops.

#69 bigrider on 11.05.11 at 8:49 am

Still lineups to buy condos in T.O Garth.

Condo investor friend just sold 597sq ft one bedroom at yonge and sheppard for 353k bought last year for 290k.

Just try to get in line for the four seasons project at Avenue and cumberland. 1000 bucks a sq ft to start.
Ridiculous I proclaim but to deaf ears.

Anyway Garth, you must be getting polyps on your vocal cords by now proclaiming the end of RE in Canada , I know I have.

All you dividend stock humping ‘experts’ should look to buy the least riskiest sectors which are the high alpha plays (oil and gas, gold stocks) hold for 3 to 5 years. Why you may say? Sectors have declined the most and are most unloved.

Safety in an empty room, risk in a crowded one.

#70 Cow Man on 11.05.11 at 8:54 am

Garth:

Did you not miss one important reasong for the watefall about to cascade. Low investment returns to retirees. My mother–law retired with the 11% interest return on Bonds in her future. This did not include the year after year capital gains her portfolio produced from dropping rates, in the bond market.

This generation of retirees are experiencing sub 3% interest rate returns, and possibly soon capital loses as bonds slowly start to errode in value with the increase of rates.

No spending power from retirees and more home on the market because of it.

Retirees dumb enough to rely on interest – less than inflation and 100% taxed – deserve the outcome. There are many safe choices with dramatically higher yields and lower taxation. — Garth

#71 bigrider on 11.05.11 at 8:56 am

Immigrant Canadians are house humping, brick licking , lawn rumping, condo cupping, crazed zombies.

Many varied cultures and religions in Canada but the universally agreed upon one is the love of real estate.

” sacrifice vacations, clothes ,cars, meals even hot showers if you must but buy a house as soon as you can ” ! is the mantra.

Not going to change anytime soon.

#72 bigrider on 11.05.11 at 8:59 am

Every single day, an article promoting RE in our T.O newspapers.

http://www.moneyville.ca/article/1080573–7-tips-for-successfully-investing-in-real-estate

Here is another.

The end is near. The end is near. My arse

#73 Bottoms_Up on 11.05.11 at 9:03 am

#33 45north on 11.04.11 at 11:09 pm
—————————————————–
why would it be ‘obviously the price of Can RE will fall to match US RE’.

Why can’t it be ‘the price of US RE will rise to match Can RE’ or, ‘the price of RE in both markets will change and likely intersect at some point’?

#74 bigrider on 11.05.11 at 9:05 am

Here you go all. Why T.O condo boom will continue.

http://www.moneyville.ca/article/1081102–good-news-for-baby-boomers-the-kids-are-finally-leaving-home

Papers are clearly on the side of the bulls.

They are clearly on the side of real estate advertising revenue. — Garth

#75 Moneta on 11.05.11 at 9:06 am

Anna on 11.04.11 at 10:14 pm
——–
If Garth did not believe on the impact of politicians, he would probably not be clinging to politics.

A while back I read a book that set out to debunk the myth that change comes from the top. I have to find that book. It’s in one of my boxes in the basement and since I’m on a zen mission…

No clinging to politics here. But unlike most on this blog, I have personal knowledge of the passion and principles which drive people to seek public office. We are fortunate so many valuable citizens accept what is a largely despised, unappreciated task. — Garth

#76 Aussie Roy on 11.05.11 at 9:12 am

Aussie Update

It makes no difference whether interest rates go up or down.

The clearance rate this weekend is 52 per cent compared to 50 per cent last weekend and 59 per cent for this weekend last year.

Who would like to bet these numbers will be revised to below 50% during the week?.

http://www.reiv.com.au/~/link.aspx?_id=F86BFA7729DF4E22B9FB036CD6EFD36F&_z=z1

Biggest Aussie housing bull update, wow now here is a surprise.

Australian housing market update for November ( looking at September data ) came out late this week. I recommend watching the entire video, but if you are pressed for time or are only interested in one market then Sydney is @4:10, Melbourne is @ 5:32, Brisbane is @6:50, Adelaide is @8:50 ,Perth is @ 9:58, Darwin is @ 11:18, Canberra is @12:12, Hobart is @13:20.

http://www.macrobusiness.com.au/2011/11/rpdata-market-update/

#77 aldo681001 on 11.05.11 at 9:19 am

Forget about jobs, interest rates, demographics, and Europe. Greed caused the problem (bubble) and greed is going to fix it. Sooner or later people will want to see all that moola they supposedly have in their homes. “Hey, I’ve got this house worth 740,000; I paid 285,000 so that means I’ve got about half a mill to my name. Hmmm…should I wait for that to go up another 100K or should I cash in my poker chips? Let me see the money!” Eventually, the “let me see the money” tune will catch on like fire. And speaking of fire have you seen what happens when there’s an actual fire in a boom boom night club? Everyone rushes for the exit at the same time and the doorway gets clogged. It’s a gruesome scene that I had the misfortune to witness on the news long ago, and I can’t get the picture out of my head. Thank you CNN.

Prices simply cannot hold when the rush is on.

#78 eaglebay - Parksville on 11.05.11 at 9:29 am

#51 Tony on 11.05.11 at 2:08 am

Why did you move to Canada then?
We want the immigrants to be 100% Canadian.
Or, go home.

#79 eaglebay - Parksville on 11.05.11 at 9:36 am

#56 penpal on 11.05.11 at 4:11 am

Are you buying the house or the furniture?
Too many people buy houses based on the staging of the property. Or the view.

#80 eaglebay - Parksville on 11.05.11 at 9:40 am

#57 Jane24 on 11.05.11 at 4:59 am

People must have a mind of their own. Never mind what the government says.

Many people would not know the difference between Chef Boyardee and doggy food. Which one taste better?

#81 Vortex on 11.05.11 at 9:40 am

I just do not understand how people really believe someone who was saying for the last 3years that the real estate is going to crash, then not crash but is going to be correction of 20-25% and more recently just a 15% when the proces went to stratosphere. There were some books to be sold along the way that’s understandable but to really take his words seriously c’mon you must have brains right?
Now, another bold statement that there will not financial crysis. Do you really think that this financial model is going to last? Printing more money and esclaving more people. Wake up.
Well, nobody can predict the future. Even there are some, it should not be taken as carved in stone as it can be changed especially when you know about that. Open your eyes to what is going on. The best is to invest in yourself, your health, your family.
Good luck to and your families.

Try harder. I’ve been consistent in saying real estate will correct, not crash. Average prices will decline 15% or so, while some markets will tumble by two-fifths. Overall, housing will experience years of stagnation – horrible news for the over-indebted. BTW, it’s ‘crisis’ and ‘enslaving.’ Ask your mom how Spell Check works. — Garth

#82 JohnnyBravo on 11.05.11 at 9:47 am

#40 Dorothy on 11.05.11 at 12:18 am

Good comment. Totally agree. Some commenters seem to be waiting for an RE meltdown like it’s the Rapture. It’s pathetic really. On the other hand, for those who don’t need to be concerned with actual employment, and have lots of cash, it’s tantalizing, even if it means a severe recession. However, I prefer a robust economy, and balanced RE prices.

#64 Regan on 11.05.11 at 7:43 am

An agent can represent both seller and buyer. As the prospective buyer, you only have to sign the agreement (I forget what it’s called). But in my opinion, it should be either illegal or there should be some kind of regulatory oversight and enforcement to prevent agents from taking advantage of the double commission to the possible (and likely) detriment of both buyer and seller. I mean, come on, talk about conflict of interest!

#83 Ron on 11.05.11 at 10:08 am

Yesterday you argued that there will be no financial collapse, but you also said its time to “come out of the bathroom”, ie, markets hit the bottom and there´s more upside than down.

Only reason to leave the bathroom is if you ran out of toilet paper.

#84 Incubus on 11.05.11 at 10:12 am

WOW incredible they cut the prices by 2/3 !

http://bidkw.com/files/uploaded/auction_132_291.pdf

They are probably selling at cost!

#85 MarcFromOttawa on 11.05.11 at 10:24 am

#64 Regan

Why would I switch from a brick&mortar bank with no fee chequing account to a Credit Union with fees.

#86 Ben on 11.05.11 at 10:28 am

#60 Mike

I don’t have a list of 20 different deductions coming off my cheque either down here because I’m a contractor.

The bottom line is I make a lot more down here, there’s a lot more job opportunities down here and it’s a hell of a lot cheaper to live down here.

At the end of the day, I have a ton more money left in my pocket.

#87 AM on 11.05.11 at 10:37 am

So, Harper blames the job losses on the Greek crisis. I wonder what the spin the will be when Canadians have collectively hit their debt limit and can no longer afford to prop up the economy using borrowed money.

I think it will be evident when declining RE values become a MSM event, and the CREA can no longer spin their numbers either.

#88 Renters Revenge on 11.05.11 at 10:41 am

Garth, you are wrong about taxes being roughly equvalent US vs Canada. Having lived in both countries I can tell you the taxes paid are significantly higher in Canada. This is especially true for families like mine where my wife and I were able to file married/jointly and be taxed as a household in the US but are taxed separately in Canada. For our family the difference in income taxes actually paid between Canada and the US was about 10% of our household income.
Also of note, for families looking to buy a home, is the fact that almost everything costs less in the US; from automobiles and plane tickets to clothes and school supplies. About the only thing that cost more was fresh produce.
All said, you are 100% correct that a simple comparison between US and Canadian avg. home prices tells us that we are in for a whopper of a correction.

#89 Ben on 11.05.11 at 10:44 am

Just one example of many ad’s here in Texas… 1 acre, 1,460 sqft log home, $89,000

http://www.landatpklaketx.com/specials.html

#90 Hammer1 on 11.05.11 at 10:57 am

#18 Ben
sure hope you have health insurance and that disease that you might get is covered under your plan.hahahahahahah!!!!!!!!!

#91 Hammer1 on 11.05.11 at 11:00 am

#25 Beach Girl
About the OCCUPIERS

DELETED
=================
is that beach girl or [email protected] girl???
just shows what she’s really made of…ignorance..

#92 Regan on 11.05.11 at 11:03 am

#77 MarcFromOttawa – my credit union IS a bricks and mortar institution, and I’ve found it consistently cheaper overall, offering better interest rates on my savings and cheaper services. Compare your banking costs as a whole. For example, my low-ratio mortgage got me free assessment, discounted legal fees, the lowest interest rate at the time, as well as free banking and debit card use for the last 5 years. By all means, take advantage of special rates but beware the bait and switch. In the long run the credit union will be more responsive to your community’s needs than a bank.

#93 Shoggy on 11.05.11 at 11:14 am

#9 TO Bubble Boy: What gets me about listings like the one you posted are the skimpy description, it’s so arrogant that the agent lists it at close to a million yet obviously wrote the specs in the car on their Blackberry. No description about the area, the lovely entryway, the potential for this that or the other thing, just basic like why bother. The only thing that would’ve put icing on the cake is if they wrote “priced to sell.”

#94 Ben on 11.05.11 at 11:22 am

#90 Hammer1

LOL… I knew it was just a matter of time before the old medicare post came back. That’s all we have as a comeback in Canada and were paying for it in our taxes. It’s kinda hidden in there but your paying. Trust me!

#95 MarcFromOttawa on 11.05.11 at 11:25 am

Regan,

I have my mortgage with ING (P-.65% for another 4 years) and a Questrade account for investing. I am not committed to any financial institution and I am wary of anybody who pushes any services or products.

That being said it’s hard to beat free.

#96 Mr.Lee on 11.05.11 at 11:31 am

Good points

I agree that interest rates may remian stagnant for an extended period of time. This in my opinion,too, does not matter as people’s erroding purchasing power and headline inflation will tamper any urge to further one’s debt obligations.

As you have mentioned in the past Mr. Turner, if you live with in your means and diversify your investiments chances are that you will be okay……………a lesson that has yet to be learnt by far too many.

Cheers

#97 DonDWest on 11.05.11 at 11:32 am

#40 Dorothy:

Because while its true that those who bought houses they couldn’t really afford, with massive mortgages, would probably wind up getting their “just desserts”, they’d also drag the rest of us and the economy down with them. . .”

Do you happen to be one of those people who bought a massive house with a massive mortgage? You literally give it away when you threaten dark prophecies will befall us all if you’re not permitted to continue your gluttony.

The baby boomers priced my generation out of housing with their greed and I’ve waited long enough. And then you have the audacity to argue that it’s our fault because we’re spending money on useless gadgets; when the truth is there’s someone such as me who has been saving up to 50% of his income for the past 10 years! And there are many likewise “young” people who had to do the same because they have no choice.

When the time comes, I’ll show no shame kicking you out to the curb and seeing senior citizens chowing down on dog food. Indeed, it’s what they deserve, no sympathy from me. I’ll do whatever I can to politically fight any social security entitlements you oldies feel I “owe” you as well; that you can count on.

Revenge is a dish best served cold, because it’s sweet, sweet, sweet ice cream.

#98 eaglebay - Parksville on 11.05.11 at 11:32 am

Some common sense from the Globe and Mail.
Amazing

http://www.theglobeandmail.com/globe-investor/investment-ideas/features/the-buy-side/panicking-is-for-losers-turn-off-the-tv-hold-on-to-your-stocks/article2226036/

#99 Timing is Everything on 11.05.11 at 11:41 am

#29 Smoking Man

Maybe you’ll climb back on the wagon when you are mentally stronger. Maybe not. I do know a couple ‘functioning’ alcoholics, amongst other drugs. The line is fine and faint. After 48 years old or so, you will decline more quickly. It’s the binging that will ultimately get ya. Good luck SM. Keep on postin’.

It’s never too late to make a better decision.

#100 eaglebay - Parksville on 11.05.11 at 11:47 am

#86 Ben on 11.05.11 at 10:28 am

What’s left in your pocket goes to your health insurance and additional expenses for your safety.
Pros and cons in everything.

#101 Ronaldo on 11.05.11 at 12:03 pm

“No clinging to politics here. But unlike most on this blog, I have personal knowledge of the passion and principles which drive people to seek public office. We are fortunate so many valuable citizens accept what is a largely despised, unappreciated task. — Garth”

Absolutely Garth, know exactly what you’re saying. This does not only apply to politics but many other areas as well in our society even to people who volunteer in organizations.

There are many individuals who take on positions thinking they can make a difference and help their fellow citizen but often they find that there are forces out there that prevent them from doing it.

At times they find its like banging their heads against the wall. After awhile they get a headache and they either quit or get forced out. In the end, it matters not what great things they may have done. There will always be critics who will look for reasons to bash them. Easy to criticize unless you’ve been there yourself. I salute you.

#102 Timing is Everything on 11.05.11 at 12:12 pm

#26 tomohawk

Good point…Reverse bid price…Not a ‘real’ unreserved auction.

#103 Calgarygirl on 11.05.11 at 12:23 pm

#88 I have also lived on both sides. It depends on where you live on both sides. Coming from NYC to Alberta, I paid more in tax in NYC, with CITY, STATE, and FEDERAL. You also need to factor in that the average American worker pays healthcare costs – I had a co-worker paying $1000 a month for his family of four.

#104 AACI-Okanagan on 11.05.11 at 12:30 pm

#87 AM on 11.05.11 at 10:37 am

I think it will be evident when declining RE values become a MSM event, and the CREA can no longer spin their numbers either.

The CREA will always be able to spin the numbers to their favor whether, it is a good time to sell or buy.. 99% of the people smoking today are still alive

#105 TurnerNation on 11.05.11 at 12:31 pm

#69 bigrider on 11.05.11 at 8:49 am

There’s a beaten down oil play symbol PBN.
Dividend is .08/month (!). Perhaps a bit unsutainable. Stock price is around $9. Yield…

However, last week at-the-money November 9 calls (expiring on Nov 18th) still had at least .80 premium. Needless to say I sold them as covered calls. Will roll up a strike into Dec 10s as time melts away.

Income + income, not caring if the stock prices goes sideways.

#106 Timing is Everything on 11.05.11 at 12:41 pm

#26 tomohawk
#44 Where’s The Money Guido???

Hey, there’s a ‘short notice auction’ coming up for ‘real’ Persian rugs. They’ll look awesome in that new Muskoka Condo.

#107 Van guy waiting on 11.05.11 at 12:53 pm

#81 Vortex

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

#108 Kris D. on 11.05.11 at 12:55 pm

CMHC admitting the housing mkt has flattened. Are normal people to interpret it as ‘fasten your seat belt’?

http://money.ca.msn.com/savings-debt/yourmoney/cmhc-home-sales-to-stay-flat-in-2012

#109 Westernman on 11.05.11 at 12:56 pm

Congratulations Garth,
Finally apost that accurately sums up the economic picture… although, strangely, yesterdays post had everything coming up roses.
What a difference 12 hours make,huh?

Did you take a speed reading course? — Garth

#110 Regan on 11.05.11 at 1:00 pm

MarcFromOttawa – I’m using qtrade for investing, different from questrade? I bring up the credit union option because it’s democratic. Rather than complain about banks, I go to the CU member meetings and say “hey, how about we don’t throw our money to RE spekkers and instead focus our incentives on real people with real downpayments.” It may be a drop in the bucket, but it’s a waste of time to complain about the financial system without making any effort to change it.

#111 Maxamillion on 11.05.11 at 1:13 pm

“According to a new survey of 17- to 20-year-olds, many expect to own a home and be raking in more than $90,000 a year within 10 years.”

http://www.financialpost.com/news/High+school+grads+have+rosy+outlook+financial+future+survey/5633594/story.html

#112 Moneta on 11.05.11 at 1:18 pm

No clinging to politics here. But unlike most on this blog, I have personal knowledge of the passion and principles which drive people to seek public office. We are fortunate so many valuable citizens accept what is a largely despised, unappreciated task. — Garth
——-
Garth,

By society’s standards of success, you have accomplished a lot in your life; you obviously work hard and have many qualities.

However, in my eyes, you seem to value people with money and influence much more than those without… which is typical of the GTO crowd. You seem to want to distance yourself from it and since I walk among the rich, I know how hard it is to distance oneself from the magnetism of it all.

I believe money is central to our lives but I don’t think someone is more important because he/she is richer. My son was born with a disability and he has impacted my life in more ways than I’ll ever know. I might be the one with the clout but he is the one who shapes my value system. We all impact eachother in ways we can’t even imagine.

My father’s friend went into politics and got the same treatment you got. He went in with good intentions and came out bitter.

There are good hardworking people in every neighborhood in Canada, getting a raw deal in all sectors of the economy, not just in politics. Yes, I’m thankful for the hard working politicians but I’m even more thankful for all the hard working Canadians in every walk of life who give us the life we have today.

BTW, I never did find the book. I just wen through well over 20 boxes in my basement this morning and decluttered just because I argued with you. You helped me get a monkey off my back. Did you ever think you could help someone in that way? Probably not. It just goes to show that we can’t even begin to imagine how we impact others every minute of every day.

Have a nice weekend!

My comments were not about those of wealth, but those who run for office. Try it. Then you’ll have earned the right to be judgmental. — Garth

#113 sales have stopped on 11.05.11 at 1:21 pm

Is it any wonder why realtors continue to post on this blog with their propaganda? Realtor bigrider seems to be in panic like the CREA as the angry red dots have exploded from the GTA to Vancouver. Driving around the GTA all you see is a sea of for sale signs. Spin away realtors spin away. Why else world realtors be here?

#114 brainsail on 11.05.11 at 1:29 pm

“The average Canadian used house costs $352,581. The average US house now changes hands for $165,400. A month ago that was six thousand bucks higher. So, Canadian real estate costs more than twice as much. At least for now.”

The disparity between US and CDN prices becomes much larger if you factor in the average SFD square footage.

IIRC, the CDN average size is 1600SF and the US is 2400SF. $221/SF vs. $68/SF is a difference of 325%.

#115 Devil's Advocate on 11.05.11 at 1:47 pm

#73Bottoms_Up on 11.05.11 at 9:03 am
#33 45north on 11.04.11 at 11:09 pm
—————————————————–
why would it be ‘obviously the price of Can RE will fall to match US RE’.

Why can’t it be ‘the price of US RE will rise to match Can RE’ or, ‘the price of RE in both markets will change and likely intersect at some point’?

That is precisely what will happen. Understand though that the two markets are not really that far apart. As Garth pointed out in the US prices are down 17% on average across that country, in Canada we are down maybe as much as 15% – a figure Garth has always suggested and I have always agreed with. But Garth continues, as late as today in his response to Vortex @ post #81, to predict a 15% drop in prices. I am sure he does not mean another 15% for a total 30% but for places like Vancouver. Garth; you were right, it happened. Now lets get on with the long slow bumping along bottom recovery – but recovery it will be.

Of course there are more pockets in the US which have exhibited more dramatic price capitulation than there have been in Canada. Canada has more which have exhibited price appreciation. It is the pockets of each of these opposing groups South and North of the boarder which each will see the most dramatic shifts; those in the South (US) gaining in price and those in the North (Can.) dropping; bringing the average of each closer together.

So when and as it does you can expect the media to play up the epicenters of each – dramatizing the price capitulation in places like Vancouver and extolling the remarkable gains in places like Phoenix making the difference in each of the two countries appear more dramatic than it is. SPIN.

#116 TaxHaven on 11.05.11 at 2:00 pm

“The U.S. is…the richest country in the world.”

That’s demonstrably false if you take debt into account. And that’s the real reason house prices are falling there. Coming here too, I would agree!

Richest? More likely Hong Kong, Singapore, or Taiwan…

Biggest GDP = richest. You need to get out more. — Garth

#117 Ex-Cowtown on 11.05.11 at 2:21 pm

Read a disturbing article on

http://www.zerohedge.com/news/cme-goes-margin-defcon-1-makes-maintenance-margin-equal-initial-everythingzerohedge.com

concerning the Chicago Mercantile Exchanges increase for margin calls set to take place for Monday. If this is legit, it looks likely that this will trigger a fairly serious drop on Monday as people rush to cover their margin accounts.

I admit to not having a great background in this stuff but when it talks about lack of liquidity and interbank lending in Europe, and many, many billions in margin calls it makes me think something will happen and it ain’t gonna be purty.

Time to dust off the computer keys and get ready to buy when the blood runs in the street next week.

#118 Davey Boy on 11.05.11 at 2:27 pm

Can’t believe how obnoxious some commenters are to the host of this blog. He is generous enough to share his views along with his reasoning for coming to various conclusions on real estate and other investments.
Do you come here to perhaps learn something or just attack others for some personal ego fulfillment? If the later is the case then do everybody else here a favour that’s trying to understand finances better and find a new way to pass your time.

#119 patiently waiting on 11.05.11 at 2:31 pm

Those in Vancouver that think the Chinese will continue to save the day and keep real estate prices sky high may be in for a surprise. Seems that much of the recent speculative buying in Vancouver may have been fueled by China’s vanishing factory bosses (or laoban as they are called).

“An estimated $580-billion in private loans were handed out in the first 10 months of this year, a number almost 10 per cent the size of the Chinese economy. In Wenzhou (China’s 4th largest city), at least, only a fraction of that money went where it was supposed to . . . Much more went into speculative real estate investments.”

“The reckoning began in June, when three factory bosses, confronted with debts they couldn’t pay, disappeared without a trace . . . More than more 100 other laoban, fled or went into hiding. Some say the number on the run is twice that, and at least two Wenzhou laoban have jumped off tall buildings to their deaths.”

“I believe the first three laoban [who disappeared] are somewhere outside China. Some of the others, who had even greater debts, didn’t run. They’re just lying on their beds, staring at the ceiling, surrounded by their creditors,” said Huang Fajing, the director of a local company that manufactures cigarette lighters and barbecue starters for export to Europe, Japan and North America.”

Something tells me that some of these Loaban found their way to Vancouver . . . just a wild guess . . . Vancouver real estate is going to get very interesting pretty soon . . .

Read more: http://www.ctv.ca/generic/generated/static/business/article2226218.html#ixzz1cr6uJ8qn

#120 GregW, Oakville on 11.05.11 at 2:46 pm

Hi Nostra, Thanks for that health article you posted link to yesterday in comment #202 .
As for all the wars (the killing of other human beings to get there stuff for the most part, IMO) I keep looking for the ‘why’ it keeps happening. I’m still looking…
Why can’t we just all get along, on the only home we have, planet earth?

I saw this today, it’s 4x ~15min. parts. You might find this ladies families story interesting and thought provoking in regards to TPTB. She has concerns about education, which lead her to other issues, the mass media and she has a big clock set 5min fast.
She reads some parts from a membership book list in part 4 and make a few connection, as she sees it. It’s just some more info to think about, if you have free about an hour this weekend to watch?

“Charlotte Iserbyt breaks down the history of this secret order and reveals just how big this elite club at Yale really is and how much political power they have wielded over the past 180 years.”
http://www.infowars.com/charlotte-iserbyt-skull-bones-the-order-at-yale-revealed/#comments

#121 Ronaldo on 11.05.11 at 2:46 pm

http://www.borowitzreport.com/2011/10/26/greece-offers-to-repay-bailout-with-giant-horse/

And this is how Greece plans to repay their debt.

#122 Moneta on 11.05.11 at 2:55 pm

My comments were not about those of wealth, but those who run for office. Try it. Then you’ll have earned the right to be judgmental. — Garth
——-

I forgot… Those who run for office and get elected are disabled and have a negative net worth.

You’ve flipped. Take the rest of the day off. — Garth

#123 bigrider on 11.05.11 at 3:14 pm

#113 sales have stopped.

You are obviously new to the blog and clearly not to bright.

Why don’t you look up some of my previous posts, starting very far back and then decide if I am a realtor or not.

Idiot.

#124 Kris D. on 11.05.11 at 3:31 pm

#115 Devil’s Advocate
You’re saying housing is -already- down 15% in Canada? Am I the only one who missed this correction?

#125 Don on 11.05.11 at 3:35 pm

#97 DonDWest

Couldn’t agree with you more.

Dorothy, the bloggers have little say in what actually takes place. The wheels have already been set in motion and the blame is on the greedy and the Jones’. You cannot and I repeat cannot have exponential growth forever, what fairy tale are you currently reading?

#126 Pat on 11.05.11 at 4:12 pm

“You’ve flipped. Take the rest of the day off. — Garth”

Uh-ho, the great G did not recognize sarcasm.
’twas a good one

#127 Ronaldo on 11.05.11 at 4:17 pm

http://www.the-american-interest.com/article.cfm?piece=1157

THE DEATH OF MONEY by Peter Hartcher A long but very interesting essay

#128 Van guy waiting on 11.05.11 at 4:26 pm

Current avg Canada home prices now is $365,000.
After Garth’s 15% correction prediction, avg will be 311,000. That’s peanuts especially in the major markets.

Not if you bought with 5% down and owe $350,000. You have no idea what the consequences of a 15% correction will be. A 17% drop in the US destroyed the lives of tens of millions. — Garth

#129 maxx on 11.05.11 at 4:46 pm

“These guys make the rules. They can nationalize banks, bail out countries, force taxes and austerity measures, recapitalize institutions, raise or lower interest rates, expand or contract the money supply, regulate or deregulate and in the course of it all, modify human behaviour. That means they can prevent a run on the banks, influence the bond market or make mortgages irresistibly cheap.”

Is that why they all look so happy?

If the average person weren’t so ticked off, they’d be herniating at the laughing stock that global government has become. It short-sightedly assisted Big Finance in screwing people and by extension the economy. Now the toolbox is empty, save a few remaining jackhammers that simply accelerate further damage.
Day by day it waits and hopes with fingers crossed for the economic engine to sputter back to life and the green shoots to spring. The “consumer” is not entirely doing “it’s” job! Solution: keep squashing interest rates to entice more short-sighted idiots to borrow.
Masters of the universe? I think not.

OWS ers have been lobbed the disingenuous challenge of “defining their message”. This attempt at invalidation has been orchestrated by both those who don’t have a clue and those who do but are guilty as sin and are buttressed by the power elite. The occupiers are a nuisance, are they? Personally, I find that greedy, dishonest incursions into my fiscal well-being are much more of a nuisance. “Austerity” is more of a nuisance. Future cuts to basic, essential programs are a nuisance. The Misery Index is a nuisance. The message, succinctly, for those who don’t or won’t get it, is that government should get out of banks and investment firms beds, shake its head clear of the corruptive ether and return to a more holistic view of society.

Capitalism, IMVHO, should benefit far more people than just the criminal wieners who were and continue to be bailed out. “Too big to fail” really means collectively all of those (power elites)who had cash in the wrong game and didn’t see the train wreck coming. Whose assets are really being protected?

It matters little how much one thinks one knows about markets, the economy, the players, market cycles, fundamentals,……….. I’ve spoken to enough “professionals” who have taken serious haircuts after having “done the work” and thought they’d taken out as much risk as possible prior to plunking down coin. Equity, bond and financial markets have collectively become the world’s largest casino.

#130 Devore on 11.05.11 at 4:48 pm

#92 Regan

In the long run the credit union will be more responsive to your community’s needs than a bank.

My community’s needs? What does that even mean? Example please.

#131 April on 11.05.11 at 4:48 pm

Davie Boy #118
I totally agree with you. I bet some of these rude and ungrateful bloggers wouldn’t have the guts to say face to face to our host what they post here.

#132 Westernman on 11.05.11 at 5:01 pm

Just an observation…
First let me say I have never been and in all liklihood will never be a Real Estate Agent but this business of crying ” Mommy! ” every time an agent misrepresents facts is about as adolesent as it gets.
This is the real world – people lie all the time for financial gain, sex , status etc.
Do your damm homework on your potential purchase, use what little critical,objective,logical cognitive ability you posess and decide if it is worth the price or not. Then live with it and stop expecting someone else to look out for your best interests.

#133 Timing is Everything on 11.05.11 at 5:07 pm

Some people will be shocked when they come to sell their homes. – Garth

Agreed, like the ones in Vancouver getting $1.5 mil for a tear down on a postage stamp. ;)

Timing is everything when it comes to this sort of thing. Will I shocked in 2030 when I sell?

#134 45north on 11.05.11 at 5:22 pm

Bottoms_Up: why would it be ‘obviously the price of Can RE will fall to match US RE’.

obviously because that is the simplest way to reconcile the differences

the American market is much bigger and its decline reflects the larger trends: more unemployment, lower paying employment. I compare the Canadian market to states in the United States like Washington State and New York State. In 2007, while major states such as California and Florida were falling, Washington State and New York State were rising. So I think of Canada to be like an American state but with separate institutions: CMHC instead of Fanny Mae and Freddy Mac. Canadian banks instead of American banks. Oh a separate currency and separated from the United States by an international border.

Why can’t it be ‘the price of US RE will rise to match Can RE’ or, ‘the price of RE in both markets will change and likely intersect at some point’?

I suppose that in the abstract the price of US real estate could rise. I study the US real estate blogs closely. There is a depth of knowledge, experience and reflection unprecedented in history. Unprecedented. US real estate is not going to rise.

If you don’t think so, spend some time on the internet, do some reading. You will see that we are not talking in the abstract.

#135 amazing on 11.05.11 at 5:23 pm

Ok, two years ago I was looking for a house. Cost: 589,000 new. I did not buy because possible correction. This summer similar house sold for 740,000. So if correction arrives, lets say house goes to 620,000 (hardly) then the only greater fool are those who bought in june-july. I am missing something or are we salivating for a correction difficult to arrive?

Salivate all you want. The economics of Canadian housing are unsustainable. — Garth

#136 harden on 11.05.11 at 5:28 pm

Re. #5 $456!!!!

My guess is he forgot to add the obligatory three “8’s” after the 456

#137 Van guy waiting on 11.05.11 at 5:56 pm

Not if you bought with 5% down and owe $350,000. You have no idea what the consequences of a 15% correction will be. A 17% drop in the US destroyed the lives of tens of millions. — Garth

So it will destroy a few hundred thousand people because we have a lesser population?
Do you still see a slow erosion after the -15%?

Still don’t get it, do you? There are almost 30,000,000 people in the US who are underwater, not because they borrowed with little or nothing down, but because they had equity of less than 17% in their properties. This fact alone has helped create a vicious cycle in which buyers shy away, afraid of more declines, so houses lose less value. The average downpayment in Canada these days is 7%, so you can run the numbers yourself. Of course, this is in addition to all those in the States who were swept away in the foreclosure binge because they had virtually no equity – like the majority of first-time buyers here. These factors, combined with unemployment (Canada at 7.3% now, the US at 9%), are lethal to housing. — Garth

#138 brainsail on 11.05.11 at 6:26 pm

I thought this is an interesting read about turning US RE bargains into income.

“These real estate investors are buying up properties as fast as they can, taking advantage of rock-bottom prices (and mortgage rates) with the knowledge that the markets have to recover at some point. While they wait, they’re making a pretty nice return on their investments as landlords.”

http://money.cnn.com/galleries/2011/real_estate/1111/gallery.investors/?iid=Lead

#139 Daisy Mae on 11.05.11 at 6:34 pm

les on 11.04.11 at 9:48 pm
When you started this blog 3 years ago and picked it’s theme did you ever expect to have this much to talk about going forward?

Just wind me up. I’m endless. — Garth

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

Yes, you really ARE a glutton for punishment…. LOL

#140 Devil's Advocate on 11.05.11 at 6:34 pm

#124Kris D. on 11.05.11 at 3:31 pm

#115 Devil’s Advocate

You’re saying housing is -already- down 15% in Canada? Am I the only one who missed this correction?

That is what I am saying. And yes you apparently missed that correction. But of course I expect to garner a significant amount of backlash from readers.

Homes that were selling for $450,000 at the peak of the market are now selling for less than $400,000. Homes that were selling for $700,000 at the peak of the market are lucky to see a “6” in front an offer today. Places that were selling for $300,000- they are still selling pretty close to what they were. $2mil properties are selling for $1.5. Of course these are generalizations but not far off what we are seeing in all but the most desirable of locations.

There are places which have kept escalating like Vancouver but they are not the norm – just as Phoenix is not the norm south of the Boarder.

Real Estate prices in the US will begin to rise led by those places which were particularly hard hit like Phoenix and real estate in Canada will fall dragged down by places like Vancouver. But don’t expect too much of it although the MSN will exaggerate each focusing on those isolated pockets as example without letting on they do not represent the “norm”.

My point is the market has corrected about as much as it is likely to. Demand fell by a third in 2008 back to the pre-boom core levels. Those core buyers, those who deem themselves having a less discretionary reason to buy, are still out there buying. It is the flippers and fools who have left the market. Builders are not adding to supply so much as they wait for the excess inventories to be eroded – which they are. Prices did capitulate roughly 15% in consequence to these new supply/demand dynamics and have held for three years since. Unless something else impacts that supply/demand equation I just do not see prices falling that much further. Really what else can happen short of some Black Swan event that could at any point in history?

“Interest rates” I hear you say. By the time they arrive it will be as much to quell the all firing rocket launchers of the economy. They will be needed and many will welcome them. A few, greater fools, will not, as they stare down both barrels of their death sentence; rising interest rates and negative equity. You will hear much of them by the “If it bleeds it leads MSN” but in reality they will not be so great in numbers as many of them find new more secure employment in the by then clearly improving economy.

It’s over. I really do believe this one is over. But to paraphrase Garth; this one (“comparatively” I add) will be a long, rocky, hard climb out of. But… I sincerely believe we are through the worst of it. Time will tell…

#141 rana on 11.05.11 at 6:35 pm

Davey Boy #118

I agree with you (although i am not sure how generous Garth is being- we all need to make an income :)

Its true that these are only opinions, judgements and advice- and as they say advice is like an a**hole, it usually stinks- so your choice to smell it or not.
In this case I do agree that the advice stinks but unfortunately its probably right.
Look at whats happening in the US and Europe- I would say its quite arrogant to say that nothing will happen to Canada’s housing market. To “invest” in this market at this time would be a bad decision.

#142 brainsail on 11.05.11 at 7:08 pm

I am very surprised that there hasn’t been much discussion about the 72K loss of full time jobs. If you interpolate that number in the US with 10X the population. That would equate to 720K loss of full time jobs. I could be very wrong, but I don’t remember a loss that high for one month ever reported in the US.

Oh, wait a minute, Mr. Harper has the answer.

“On Friday, Mr. Harper blamed the jobs numbers on global worry over the ripple effects of Europe’s lingering debt woes. The data are “a reflection of the lack of confidence that has been spreading in world markets as a consequence of the euro-zone debt crisis,” he said in Cannes, after a meeting of leaders from the Group of 20 industrialized and developing economies.”

http://online.wsj.com/article/SB10001424052970203716204577017832228375516.html?mod=googlenews_wsj

So, why didn’t the US unemployment numbers react the same way?

#143 Unistar38 on 11.05.11 at 7:10 pm

Just remember: Nothing cures a high price like a high price. The end of RE greed is here…

#144 Nostradamus Le Mad Vlad on 11.05.11 at 7:11 pm


#120 GregW, Oakville — “Why can’t we just all get along, on the only home we have, planet earth?”

G’day Greg. Unfortunately, this home of ours was designed to be a violent, warring planet and always will be, which is why it is a very good classroom for each of us to have as many experiences as possible.

Although this is the first heaven, it is like the very basement of a 10,000 storey skyscraper. When each of us finishes our life cycles here, all we do is step out of our clay temples, and get on a large elevator which takes back into the next worlds again.

Thanks for the links!
*
Greek Referendum What’s it all about, Georgie? 3:39 clip Homeless and jobless vets interviewed; 5:58 clip Don’t Occupy banks, OWS instead! It’s Move Your Money Day today; Greek citizens take matters into own hands.

10:17 clip How the banxters took control, all the way from the 1800s; A Plague is what the central banxters are; Chaos Not you Chaos — this is more small businesses pulling their accounts from BB (Big Banks), and switching elsewhere; Unemployment Benefits run out. “The ranks of the poor would also rise.”.
*
WW3 “The world is at a dangerous crossroads.” and Of interest, the UK has teamed up with the US and Israel to take out Iran’s not-so-nuke WMD; 3:37 clip “Where a UK citizen could get a 6 months MAXIMUM sentence, in the US he’d get 60 years (for the same offence). The differences are so immense that this treaty should be torn up.”; House Porn Not RE, what the American warhawks enjoy watching; Textile Factory is Syria’s nuke WMD plant, roughly the same as Iraq. dubya had a lot of fun there, because the finger pointers are batting zero.

NATO “Iranian President Mahmoud Ahmadinejad says NATO has become a tool that former colonialists are using to once again dominate the world.” Of course they will fail, because the cycle change must run its course; Peru “Peru’s government got this one absolutely right.” wrh.com; Sex, Drugs and Geritol Wotta way to go, or “Cops and clergy; a lethal combination!” wrh.com; 5:34 clip WW3 a foregone conclusion?

#145 T.J. BONES on 11.05.11 at 7:26 pm

Sir Garth : Yesterday’s picture of the ladies. Are they the Amazon bike detailers?

No. Advisors. — Garth

#146 T.J. BONES on 11.05.11 at 7:30 pm

Sir Garth: On break surely

#147 bcpaul on 11.05.11 at 7:39 pm

No one knows if there will be a crash, but a correction is happening as we speak. I watched house prices around here go from ~$160,000 in 2003 to ~$500,000 for the same houses in 2008-2011. No new jobs, no increase in salary, just a service sector economy. What fueled this massive ponzi-scheme is greed combined with cheap money, 40-year w/ 0 down mortgages.

Sorry, but I don’t feel sorry for anyone involved in a ponzi-scheme that takes a loss. All I am hoping for is a correction in prices to bring them back down to the mean. And coming down they are. Worry if you bought the big 40′ RV on your mortgage.

#148 Daisy Mae on 11.05.11 at 8:11 pm

Davey Boy on 11.05.11 at 2:27 pm
“Can’t believe how obnoxious some commenters are to the host of this blog.”
***********************
You’ve got that right….

#149 Yoshima on 11.05.11 at 8:28 pm

A website for all you precious metals owners:

http://www.catsforgold.com/

#150 Daisy Mae on 11.05.11 at 8:30 pm

April on 11.05.11 at 4:48 pm
Davie Boy #118
“I totally agree with you. I bet some of these rude and ungrateful bloggers wouldn’t have the guts to say face to face to our host what they post here.”
******************

The rudeness is unbelievable….enuf already! Get off his back. Garth is doing us a SERVICE. Appreciate what he has to say.

#151 A New Brunswicker on 11.05.11 at 8:50 pm

My husband and I live in a small town in New Brunswick and we’re planning on moving to Moncton within the next year. We’ve been watching the Moncton market for the past 2 years or so. Very affordable houses but we believe that it has been overbuilt there. Prices are coming down, houses are sitting and sellers seem to be getting desparate even there! Check out this link!

http://moncton.kijiji.ca/c-real-estate-houses-for-sale-4-Bedroom-Semi-with-FREE-CRUISE-for-2-W0QQAdIdZ327615567

#152 jess on 11.05.11 at 8:59 pm

Mr. Rubin:
“all part of a cycle of periodic excess leading to periodic disruption.”
========

what “bankers call “quick-flip model:”
10 percent down payment no shovels
10 percent shovels in ,
10 percent at the topping out ceremony and the rest when the project is complete. All of this is money borrowed from banks, and the loans are secured by other real estate built with similar funding.”

From 08
http://www.spiegel.de/international/world/0,1518,584801,00.html

#153 jess on 11.05.11 at 9:08 pm

The Federal Home Loan Banks (FHLBanks, or FHLBank System) are 12 U.S. government-sponsored banks that provide stable, on-demand, low-cost funding to American financial institutions (not individuals) for home mortgage loans, small business, rural, agricultural, and economic development lending. With their members, the FHLBanks represents the largest collective source of home mortgage and community credit in the United States. (wiki)
———————-
RefCorp
DefinitionResolution Funding Corporation. The organization created by Congress in 1989 to bail out the savings and loan industry by offering debt to some companies and liquidating others
————————–

Termination of Federal Home Loan Bank Resolution Funding Corporation Obligation
A Notice by the Federal Housing Finance Agency on 08/10/2011

Close SummaryThe Federal Housing Finance Agency (FHFA) has determined that, as of July 15, 2011, the Federal Home Loan Banks (Banks) have satisfied their statutory obligation to contribute a percentage of their annual net earnings toward the interest payments due on bonds issued by the Resolution Funding Corporation (RefCorp)
http://www.federalregister.gov/articles/2011/08/10/2011-20311/termination-of-federal-home-loan-bank-resolution-funding-corporation-obligation#p-6

Summary
The Federal Home Loan Banks (FHLBanks) are 12 regional cooperative banks that U.S.lending institutions use to finance housing and economic development in their communities.Created by Congress, the FHLBanks have been the largest source of funding for community lending for eight decades…”
http://www.fhlbanks.com/assets/pdfs/sidebar/FHLBanksWhitePaper.pdf
http://www.fhlbanks.com/overview_faqs.htm#q5

#154 Bubble1 on 11.05.11 at 9:11 pm

Although the action starts from a very low price, it doesn’t necessarily those condos will be sold at dirt-cheap prices. It may be close to the original price. It’s not convincing that your article uses this kind of data.

My article stated the opening bids. What they sell for depends on the participants. Are you drinking? — Garth

#155 pathcontrolmonk on 11.05.11 at 9:30 pm

so much for all that HAM money

http://www.theglobeandmail.com/report-on-business/international-news/asian-pacific/chinas-vanishing-factory-bosses/article2226218/

#156 Moneta on 11.05.11 at 9:33 pm

#131April on 11.05.11 at 4:48 pm
Davie Boy #118
I totally agree with you. I bet some of these rude and ungrateful bloggers wouldn’t have the guts to say face to face to our host what they post here.
————

In case you did not notice, he’s a public figure. He is still involved in politics, a contributor to social and fiscal policy. We as Canadians must voice our opinions if we don’t agree. I agree with many of his ideas but some of them are contrary to what I want to see in Canada.

If you agree with everything, well good for you. If not and prefer to be the polite Canadians we are known to be, that’s your choice. I’ve made mine.

I am not a politician, do not hold elected office, do not belong to a political party and have no influence over public policy making. Like you, I’m a private citizen. Just a better informed one. — Garth

#157 Moneta on 11.05.11 at 9:41 pm

I am not a politician, do not hold elected office, do not belong to a political party and have no influence over public policy making. Like you, I’m a private citizen. Just a better informed one. — Garth
——-
It is not evident that all “ties” have been broken.

Drop the bias. You will see more clearly. — Garth

#158 Junius on 11.05.11 at 9:50 pm

#140. DA,

You said, “My point is the market has corrected about as much as it is likely to.”

Dream on. It hasn’t even begun to adjust.

#159 City Slicker on 11.05.11 at 9:53 pm

Garth, here is a new non-profit organization in Calgary, Attainable Homes Calgary.
If you’re make less than 80K household income, they help you out with a down payment. I find this strange since avg household income in Calgary is only 90Kish.

http://attainablehomescalgary.ca/our-home

Anyway when the City has to have programs like this you know there is a problem with housing regulation in terms of affordability.

#160 45north on 11.05.11 at 10:03 pm

I have personal knowledge of the passion and principles which drive people to seek public office. — Garth

In1979, Nancy Smith gave up her job in the Federal Civil Service to work full time on the south-east transitway in Ottawa East. The work was entirely unpaid in fact she was out-of-pocket. After the transitway plan was finalized we asked her to run as municipal councillor. She won the election and worked tremendously hard in municipal politics. In 1991 she ran for Mayor and was defeated.

By her dedication and unbowed determination, she has made a unique contribution to the City of Ottawa.

http://en.wikipedia.org/wiki/Nancy_Smith

#161 April on 11.05.11 at 10:08 pm

Moneta #156
Didn’t you know there’s a difference between disagreement and being offensive. You need to reread my post. I was agreeing with blogger #118.
Most of us appreciate what Garth is doing and if some of us sometimes disagree that does not mean we should be offensive towards him. What you “want” to see in Canada may or may not be what you get.

#162 Devil's Advocate on 11.05.11 at 10:11 pm

The average down payment in Canada these days is 7%… – Garth

Last year just 22.2%* of the properties purchased in the Okanagan region of British Columbia were financed with high ratio financing (less than 20% down) This year that dropped marginally to 21.3%*.

Conventional financing (20% or more down payment) last year constituted 57.8%* of property purchases. This year conventional financing has fallen to just 45.9%*.

Buyers paying all cash (no financing) grew from 22.2%* of the market last year to 31.7%* this year.

*OMREB Buyers Survey Sept 2010/ Sept 2011

#163 Devil's Advocate on 11.05.11 at 10:24 pm

#154Bubble1 on 11.05.11 at 9:11 pm
Although the action starts from a very low price, it doesn’t necessarily those condos will be sold at dirt-cheap prices. It may be close to the original price. It’s not convincing that your article uses this kind of data.

My article stated the opening bids. What they sell for depends on the participants. Are you drinking? — Garth

Want to see how auctions work? Just attend a court foreclosure proceeding as the judge asks each bidder to retract their bids and resubmit “putting their best foot forward”. Similarly, auctions tend to result in a feeding frenzy in which bidders lose control and end up paying more than they anticipated.

Put a $500,000 property up for sale with an asking price of just $250,000,what do you think it will end up selling for? I guarantee you that with any degree of exposure it will sell for well over the $250,000 as multiple ready willing and able buyers bid against one another to secure the deal. As often happens, the $500,000value might well be exceeded. If only I could convince a few sellers to try this strategy.

Property sells for market value. There are no “steals”. None. But there are Greater Fools.

#164 April on 11.05.11 at 10:29 pm

Junius #158 to D.A.
Good for you Junius. You beat me to it.
Dream on DA

#165 Moneta on 11.05.11 at 10:30 pm

What you “want” to see in Canada may or may not be what you get.
——
It’s a certainty if no one voices their wants.

#166 Moneta on 11.05.11 at 10:31 pm

April on 11.05.11 at 10:08 pm
——-
I know 2 wrongs don’t make a right but our host is not always the most gentle.

#167 Derek R on 11.05.11 at 10:47 pm

#142 brainsail on 11.05.11 at 7:08 pm wrote:
I am very surprised that there hasn’t been much discussion about the 72K loss of full time jobs. If you interpolate that number in the US with 10X the population. That would equate to 720K loss of full time jobs. I could be very wrong, but I don’t remember a loss that high for one month ever reported in the US.

So, why didn’t the US unemployment numbers react the same way?

A more likely reason than Harper’s is the reduction in the amount of new debt being introduced into the Canadian economy. There seems to be a very close connection between the change in debt level and the employment level in an economy as described by Steve Keen on his blog in this and other articles.

So if Keen is right, the recent Canadian unemployment increase is most likely caused by the recent slowing in the increase of Canadian debt whereas the American unemployment decrease is most likely caused by the recent slowing in the decrease of American debt.

#168 City Slicker on 11.05.11 at 10:55 pm

Put a $500,000 property up for sale with an asking price of just $250,000,what do you think it will end up selling for? I guarantee you that with any degree of exposure it will sell for well over the $250,000 as multiple ready willing and able buyers bid against one another to secure the deal. As often happens, the $500,000value might well be exceeded. If only I could convince a few sellers to try this strategy.

Property sells for market value. There are no “steals”. None. But there are Greater Fools.
———————————————————-
Well I’d be interested to see the final results of the auction. Could also be a good indicator of the demand of housing in general. See who has any kingo left.

#169 McLovin on 11.05.11 at 11:00 pm

Last year just 22.2%* of the properties purchased in the Okanagan region of British Columbia were financed with high ratio financing (less than 20% down) This year that dropped marginally to 21.3%*.

Conventional financing (20% or more down payment) last year constituted 57.8%* of property purchases. This year conventional financing has fallen to just 45.9%*.

Buyers paying all cash (no financing) grew from 22.2%* of the market last year to 31.7%* this year.

*OMREB Buyers Survey Sept 2010/ Sept 2011

Look at the source. These figures are simply wrong. I have talked to multiple bankers and mortgage brokers in the Kelowna area and high ratio is consistantly 90% or more of their business.

#170 BC Bring Cash on 11.05.11 at 11:09 pm

Talk about disappearing jobs. That is also happening in China. Also Bosses are disappearing. Shrinking credit, missing Managers. Can BC Premiers Cristie Clarks up coming junket of Corporate Elites to China really revive the BC economy. Not likely when Chinas chances are declining.
http://www.theglobeandmail.com/report-on-business/international-news/asian-pacific/chinas-vanishing-factory-bosses/article2226218/

#171 Ozy - Is not going to happen, here's why on 11.05.11 at 11:33 pm

Is not going to happen, here’s why: Canadian markets like GTA is heavily cornered – from all angles – benficiaries: developers, builder industry, mortgage industry (brokers, banks, credit unions, etc), project financing industry (banks, private money, ec), real estate agents, etc. This applies to both residential and commercial. GUYS, you are toast. I applaud above groups of interest for making a killing on the profit, nothing immoral or illegal here, kudos brothers!
You have to pay the price and you have the freedom to swear if you must!

Now, this cornering to total un-afordability, would not have been possible without active participation from CMHC, which you folks subsidies anytime you buy a canadian bond mutual fund…

The truth is, CMHC had let down the average citizen badly, and here is what I do not applaud, because CMHC is not a profit-oriented entity. Federal prosecutors should auto-engage and investigate any potential fraud and malintention there.

Occupy should target CMHC and forget about Bay St.

Again, I applaud builders and banks for making $$$$$ for the shareholders, but I am dismayed at CMHC destroying its single mandate: to make housing affordable for average Canadian.

Dudes, leave your cozy office in ottawa and walk the country to see the destruction of affordability you brought in last 5 years, it appears you either are unqualified or you pretent to be.

#172 Nostradamus Le Mad Vlad on 11.06.11 at 12:03 am


Uh Oh Better get MF Global; 4:37 clip Here, for once and all, are Yale’s Secret Societies; Derivatives Margin calls Monday, asteroid Tuesday; Bilateral Bedwetting Think I’ll check out tomorrow!

5:37 clip Can you feel it In The Air Tonight? (with lyrics. Probably goes with derivatives and asteroid); Banana Republic Yes! We’ve arrived! Kannaduh is trooly a rotten banana republic! Please Fondle My Bonds, 52% of unemployed no longer receive benefits; US needs to generate 262,500 jobs every month by election to return to pre-depression levels; Extreme Poverty Obummer and Harpo – birds of a feather.
*
Susan Boyle prefers a council house to a McMansion; Of Mice And Asteroids Tuesday we can play “Oopsie – missed me” with a large globular hemmorhoid; Dehumanization Hugging not allowed? These P.C. dingleballs have gone over the top; Islam rising.

Link in Recently a link described how The Fourth Reich was moving ahead. Further, this; HAARP Rings over Montana. Isn’t Yellowstone somewhere in the vicinity? Syria blasts US for blatant interference.

#173 Onemorething on 11.06.11 at 12:29 am

Yesterday I argued on this pathetic blog there will be no systemic financial collapse. And I’m right. But that does not for one moment mean most people will be spared the consequences of their actions.

Agreed Garth, systemic while global leaders believe is possible up down or neutral has not worked as they thought. Cracks everywhere to fill, protectionism not far away.

Systematic Manipulation is starting to fail and the last of the easy money for the elite is close to ending too!

China, AUS and CAN RE last to correct FINALLY! Global Reset still in play. Sovereign Debt to be handled individually. Good Luck everyone!

#174 LB on 11.06.11 at 12:44 am

# 64 Why would I switch from a bank to a credit union?

Because:

1. Current capital ratio requirements for credit unions, as per BC’s Financial Institutions Commission, is a minimum of 8% base capital to risk weighted assets and many voluntarily maintain 13-14%. Canadian banks current capital ratios vary from only 3.5% to 7%.

2. Deposit insurance for ALL credit unions in BC are 100% guaranteed by the provincial government’s CUIDC, for all deposits,of unlimited amounts (excluding member share accounts, which can be the minimum of $5). By contrast, banks deposits are insured by the federal government, under CDIC, to a maximum amount of $100,000.

3. The Board of Directors of Credit Unions are elected every three years from WITHIN the membership.

4. The credit union I switched to has a no fees,no minimum balance chequing/debit account, free online access and a free monthly statement mailed to you if you want.

#175 Kilby on 11.06.11 at 1:11 am

#85 Mark
Our credit union paid out $650,000 in profit sharing to it’s members in 2010. we pay $15 per month for unlimited chequing/internet and get back $300 to $400 every year depending on what we have deposited. just a small credit union (Summerland) but I understand that there are others that do this. as well, we elect our own board members, would never go back to banks…

#176 betamax on 11.06.11 at 1:44 am

#29 Smoking Drunk

Booze makes you weak.

#177 Sky on 11.06.11 at 1:55 am

@ Moneta

For you, Moneta:

http://www.youtube.com/watch?v=EZ4N4ua0xUM&feature=channel_video_title

#178 Jane24 on 11.06.11 at 3:55 am

I have lived in several countries in fact over the last few years in the UK, Italy and the UAE but Canada has the highest prices on everything that I have experienced. I was visiting family in TO in April and I realised that I was paying more than London for everything I touched. Then you have the sales taxes on the top.

Don’t know how Canadians manage with their high taxes as well. No wonder so many friends in Canada have literally nothing in their houses and only go out for a meal for their Silver Wedding.

You do have to live your life, it only comes around the once.

#179 Victoria Gal on 11.06.11 at 5:52 am

Victoria & BC is lagging in job creation, so we’re going to fix it by building condo & townhouse projects because prices will go up in 2012…………………

http://www.timescolonist.com/business/Condo+construction+lead+Greater+Victoria/5658572/story.html

#180 Are we like the USA on 11.06.11 at 8:04 am

Hello Garth
It looks like you needed your bullet proof vest today.
So while this seems like a cheap shot, it is not meant that way.
I agree with some of your analysis but sometimes I just wonder how similar or different we are to an American housing meltdown?

You list is America that and America this just wait it will happen here because it happened there?

Yes when American sneezes we catch a cold and sometimes it takes months and sometimes years after a downturn in USA to turn up here.

But In three years Canada is far better than the rest of the world? Is it an illusion?
Why do we have a better economy, as in the G&M yesterday manufacturing jobs are at the lowest level in 35 years.

The first wave of boomers turn 65 this year, is that having an impact on jobs as they retire?

Why has housing not dropped here? surely we are not different that the Americans but why is it taking so long?

Do you remember the last recession in the 90s everything stopped? And yet I talked to an engineer at one of Canada’s largest Engineering firm yesterday and he has five large scale projects (Not housing). Why?
Are we like Nortel not seeing the future?
Is that our fate, too much Debt and then not seeing the shift in the Economy?

Yes we have too much debt, yes we have a US economy in the Toilet, yes we have over a million unemployed, but why have we not hit a brick wall like the rest of the world?
Something is not right and I do not understand what is keeping Canada different from the rest of the world.
Some kind of illusion I guess.
Respectfully

#181 Pr on 11.06.11 at 8:26 am

Don’t Occupy Banks! ‘Move your money Day’ kicks off in US. This. If it gets viral, will be THE BIG Pandora box.

#182 Steven Rowlandson on 11.06.11 at 9:33 am

What do canadian real estate and telephone companies have in common?
Answer: They priced themselves out of the market!

#183 penpal on 11.06.11 at 9:54 am

@ # 79 Eagle Bay

You missed the point entirely.

The homeloaners are too tapped out to afford decent furniture commensurate with the price of their house.

Think about it – you spend most of your ‘at home time’ INSIDE your house, ergo the furnishings have a degree of importance to most. They spent too much on the house to adequately furnish it.

What I saw in those pictures would qualify as “anti- staging” to most Realturds – it detracts from the appearance.

But then again, some people have no taste…..

#184 Linda Pearson on 11.06.11 at 10:02 am

Hi Garth

Further to the back and forth between you and ‘Moneta” above, are you not still a member of the Queen’s Privy Council? And, if so, would that not qualify as a political position?

I readily admit to not knowing much about the QPC, only that it exists and that you belong to it and will for the rest of your natural life.

The designation ‘PC’ plus $2.50 will get you a Grande Bold at Starbucks. It is honourary, brings no compensation, role or influence. Kinda like a PhD. — Garth

#185 Devil's Advocate on 11.06.11 at 10:15 am

#169McLovin on 11.05.11 at 11:00 pm

But of course. What better to believe than your random personal pole of a few bankers over that of a third party commissioned by a real estate board endeavouring to learn about their buyers so they can be of better serviced to them or as the paranoid might think better take advantage of them. Either way I think the real estate board has a far greater vested interest in the accuracy of theirs wouldn’t you agree?

By the way I talk to a good many bankers and brokers through my work week as well and their comments reflect the results of that survey.

Here’s another stat: First Time Buyers have diminished in their participation from 29.5% last year to 18.6% this year. First Time Buyers, as you can well imagine, are the predominant group behind high ratio borrowing.

The reason sales volume has fallen is largely due to the absence of those willing to gross up on their financing of a home. Certainly there are a good many of such boasting of such action on this “pathetic blog”.

Believe it or not McLovin there are a lot of buyers out there who own the home they are in right now free and clear. A good many of them are changing homes for lifestyle reasons porting the equity from one to the other that easily covers the purchase. Hence the increase in “All Cash” purchases from 22.2% to 31.7%.

There is more than one reason interest rates are so low. Think supply and demand. There is less demand for it today so they put it on sale to entice that demand up. Simplistic but in part true.

#186 Timing is Everything on 11.06.11 at 10:40 am

#172 Vlad – Hugging not allowed? Dehumanization.

‘No public displays of affection – Zero tolerance.’ policy.

Well, let’s try ‘Rehumanization’….

http://www.youtube.com/watch?v=zH0S5tJCkQM
http://tinyurl.com/753ck3e

http://tinyurl.com/3bfeep5

#187 T.O. Bubble Boy on 11.06.11 at 10:51 am

Future shortage of HAM?

In Beijing, 53 of this year’s 90 new residential projects have already started to offer discounts.

Is that why even the RE board is saying that Vancouver is now in its first Buyer’s Market in 2.5 years?

#188 City Slicker on 11.06.11 at 11:05 am

Are we like the US
Yes we have too much debt, yes we have a US economy in the Toilet, yes we have over a million unemployed, but why have we not hit a brick wall like the rest of the world?
Something is not right and I do not understand what is keeping Canada different from the rest of the world.
Some kind of illusion I guess.
Respectfully
———————————————————-
A turn can happen on a dime. I was talking to a RE agent in a new development few weeks back. Younger guy, here in Calgary. Really didn’t seem to know all too much. After talking to him for a half hour, and telling him about what I know, and this pathetic blog, he came out with it and said “yeah my dad is a RE agent too, and he says he use to have tons of people coming by to see listings, and now he’s lucky if he gets one or two through the door”
I think that is anecdotal evidence. I use to get discouraged when I saw more new developments coming up, as it seemed like a sign of demand. But the same thing was happening in places like Vegas, bubble will keep on inflating until the big bust.

#189 jess on 11.06.11 at 11:10 am

Mad Vlad

google map 340 Asti Rd Cloverdale Ca. united states
hit the street view and pan to the trees. what is that?

#190 Can't afford a home on 11.06.11 at 11:20 am

Garth can you post the emails for CHMC and every other email where it would be best for Canadians and blog dogs to sent complaints? It’s one thing to inform the public is another to inform the leaders and let them know their actions are leading people to financial ruin. Looking at prices in the GTA would put anyone in ruin and interest rates are 2% if they jump to 4% for whatever reason many tens of thousands would be bankrupt. My husband and I have $100k saved for a DP but if interest rates goto 4-5% we know we would be ruined. We have friends who bought 3 years ago and today they could never afford their home. This is madness garth and the government needs to get out of the housing market and allow free markets to price interest rates. Please put up emails address so all blog dogs and sent emils to best place to conplain.

#191 Daisy Mae on 11.06.11 at 11:44 am

166Moneta on 11.05.11 at 10:31 pm
April on 11.05.11 at 10:08 pm
——-
“I know 2 wrongs don’t make a right but our host is not always the most gentle.”

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

Garth has every right to defend himself against rude, ill-informed bloggers…and he does that just fine. He is always polite. He does not need to be ‘gentle’.

#192 ENJC on 11.06.11 at 11:48 am

Interest rates aren’t going to go up any time soon. That doesn’t mean that it’s a good time to buy a house, but that this will go on longer then everyone thinks. It’s just a general grind lower until something major gives housing the push it needs to make a substantial correction. We can all see things aren’t going well the world over, and we’re not immune from it. It’s going to be a rough ride for a good while but we’ll all still be here in a decade. Stop being so afraid everyone.

#193 Devil's Advocate on 11.06.11 at 12:13 pm

#190 Can’t afford a home on 11.06.11 at 11:20 am
Garth can you post the emails for CHMC and every other email where it would be best for Canadians and blog dogs to sent complaints? It’s one thing to inform the public is another to inform the leaders and let them know their actions are leading people to financial ruin. Looking at prices in the GTA would put anyone in ruin and interest rates are 2% if they jump to 4% for whatever reason many tens of thousands would be bankrupt. My husband and I have $100k saved for a DP but if interest rates goto 4-5% we know we would be ruined. We have friends who bought 3 years ago and today they could never afford their home. This is madness garth and the government needs to get out of the housing market and allow free markets to price interest rates. Please put up emails address so all blog dogs and sent emils to best place to conplain.

Such a poignant example of all I have been trying to say. There are buyers out there. This couple is not trying to avoid buying a home. They don’t even understand the real purpose and intended message of this “pathetic blog”. They’ve come here to vent their frustration and plead that Garth help them in their pursuit of home ownership as they seek to lobby the powers-that-be to work toward an economy that will allow them to fulfill their dream (home ownership) or get out of the way of the “free market” which they believe will do it for them. They have not come here to learn about “balance” and “financial security”. They came here to join the ranks of the discontent – discontent over the seemingly ever elusive goal of homeownership.

This is clearly frustrating for Garth and no doubt why he often calls this blog of his own “pathetic”. It is not what you say but what they hear and people tend to hear what they WANT to hear not necessarily what you are saying.

This lady is demonstrative of two things I constantly badger the readers of this “pathetic blog” about. Ultimately more want to buy a home than not – thus there is no shortage of demand – pent up as it may be and the free market is more adept at giving people what they want than any government which tends more often to stand in the way of than facilitate those wants.

Biggest mistake is to give your children too much too easily resulting in their becoming spoilt and incapable of fending for themselves. So too is it of government and its people. Making home ownership as easily attained as it recently was spoils that segment of the market to which you “gift” it at the expense of all others. But more disturbing; when things turn sour they we helped we did so without teaching them valuable lessons others learn along the way. They lack the knowhow to be able to fending for themselves when things turn sour and there is no free lunch.

Don’t blame the banks. It wasn’t the banks it was our government making home ownership affordable to those who ought not have been afforded it. Our governments facilitated this unwarranted home ownership through our banks by creating incentive for the banks to act other than they would have in the absence of such incentive. The banks are a part of the free market. The banks are profit driven. Of course they will, and should be expected to, act in their own best interest. And so too ultimately does everybody else. For example, my only interest in considering the wants and needs of my clients over my own is the future prospects for my business. If I mistreat a client I should as surely as I will eventually lose their business. It is ultimately in my own best interest to treat my clients well – the better I treat my customers the better it is for me as become so happy with my service they refer me to their friends and family. This is the free market. It’s real simple. As it is of the self-employed so too is it of an employee and employer. Anyone missing this deserves their fate

#194 Junius on 11.06.11 at 12:23 pm

$267 Derek R,

Thanks for pointing out Steve Keens. An Australian national treasure and one of the few economists who really understands it.

Lately I have thought of him like Socrates in Plato’s Apology – to paraphrase – “I realized I was the smartest person in Greece because I was the only one who knew I didn’t know everything. Everyone else thinks they have all the answers and clearly they don’t.”

Keen has become this for the economics profession pointing out time and again how they don’t have a clue what they are doing. He seems to be one of the few who is honest enough to admit it.

#195 Junius on 11.06.11 at 12:29 pm

#193 DA,

You said, “The banks are a part of the free market. The banks are profit driven.”

While I agree with you that – in this country at least – we have the government to blame more than the banks we can’t look at our banking system as entirely part of the free market. We have a highly regulated banking system (thankfully!) and we insure large parts of the banks holdings. Furthermore as we have found out when they do get into trouble they are hardly going to go into bankruptcy but will be the first to come running for a bailout.

#196 The American on 11.06.11 at 12:39 pm

At #134: 45North, I first want to say I thoroughly enjoy reading your posts as you really seem like one of the few who truly understands both the U.S. market and the Canadian market. Your perspectives are valuable.

I do feel, however, that U.S. real estate has grossly over corrected as replacement costs for these homes is much higher than for what they can be purchased. The unemployment rate in the U.S. is the ultimate cause/culprit for this. Consumers are afraid as long as jobless numbers are hight. Now, we’re hovering around 9%, which is definitely an improvement from where we were just a year ago. And, my all indicating factors, the jobless numbers will continue to improve in the long-term over the next year. What happens is the housing stats (which are typically negative) will always lag the good news in the job reports. We’re not talking a month lag.. no, we’re talking at least a year with every jobs report that is released. Consumer confidence takes a lot of time to re-instill after all we’ve been through. The point? Well, I have a theory that home prices have indeed stabilized in the U.S., for the most part, and we’re bouncing along the bottom right now at ridiculously low 30-year fixed rates. NOW is the time to buy if there ever was as replacement costs are higher than purchase prices and rates are at historic lows. Hell, even JP Morgan Chase is now preaching this song, which is saying something:

http://www.scribd.com/fullscreen/69771369?access_key=key-1qcycek0b6rgjd4coeft

As the jobless numbers improve over time, the home values will improve over time to what is a truly sustainable market (right now, its grossly undervalued). I do not, however, predict a “bounce back” to anything like what was witnessed preceding 2006. The average American home today is indeed $165,400. However, in normalized conditions, that value should be around $240,000. I believe it is this number, $240,000, where the Canadian and American markets will intersect to find normality.

However, I do not believe the Canadian market will have this “soft landing” that many continue to preach. The market is just beginning to show signs of cracking to the masses. Yes, its been stressed over the past year there, but now it is cracking, and reports are becoming more opaque to consumers. These reports have a LONG way to go before they’re truly transparent, though. This will happen in time, and as it happens, the real estate decline will accelerate. My point I believe that the market in Canada will overcorrect as well. The bigger the bubble, the louder the pop. Canada’s bubble is of unprecedented proportions, which will propel the accelerated decline. Low rates do not salvage “values” in a home, contrary to what I so often read in this blog by some of its posters/posers. Instead, they fuel bubbles, draining consumers of all expendable income and causing for on-boarding of gross indebtedness to the banks. Then, the rates rise ever so slightly (the tiniest pin in the huge bubble), and it’s all over. Then, the only thing left to do is to lower rates again in hopes of incentivizing consumers to pick off excessive inventory that is now 50% of its original value (think Bend, Oregon for example). But, consumer confidence is low, and it quickly turns into a race to the bottom.

I use Bend, Oregon (which is one of my favorite place ANYWHERE in the world) as they have prices that had surged to about $300-$400/square foot. Bend is a relatively small town at about 170,000 people, but its setting is stunning, the food is outstanding, the music is a blast, its 64 parks are stunning (yes, that is 64 parks in a small town), the art never stops, the recreation is year-round, the homes are adorable, and it really feels like a throw back to the 1950s America. At the same time, it is a surprisingly very sophisticated (and quite liberal) little town in Central Oregon that has attracted Hollywood stars to purchase there, whom will remain nameless for now. Basically, you can down hill ski, cross country ski, golf at 5-star courses, play on the lakes, hike, bike, fish, camp, kayak, raft, rapids, rock climb, eat/drink, shop, and play to your heart’s content in what is a high desert paradise with over 300 days of sunshine a year. Oh yeah, and it has tremendous health care facilities and solid infrastructure abounds. How could it get any better? Values there today are HALF what they were even 3 years ago. Today, you can easily buy most anything from as little as $90/square foot, up to $200/square foot. Yes, it has taken a 50% hair cut. Would I buy there now? You BET! I could care less if values go down another 50% (which they won’t) because the replacement values are higher than prices are already. The INTRINSIC VALUE is already baked in. Its the market that must correct for the TRUE MARKET VALUE to be realized, and this will happen. Shave off another 2% unemployment in the U.S. and we’ll start to see better things a year later with respect to real estate values. Confidence is key. Oh, and now that I’ve talked Bend up so much, here’s some links and vids for those who’d think they’d enjoy visiting there.

http://www.ci.bend.or.us/
http://www.youtube.com/watch?v=u6zSKJqalug
http://www.youtube.com/watch?v=siv2_defWKg&feature=mfu_in_order&list=UL
http://www.youtube.com/watch?v=Yk9UW1DQtGk&feature=mfu_in_order&list=UL
http://www.visitbend.com/
http://en.wikipedia.org/wiki/Bend,_Or

#197 Devil's Advocate on 11.06.11 at 12:46 pm

#195Junius on 11.06.11 at 12:29 pm

Think man, think. You are not that short sighted.

Those insurances, be they assurance or regulatory, provided to the banks are a part of government incentive for the banks to act in a manner they otherwise would not.

#198 Observer on 11.06.11 at 12:58 pm

@ Can’t afford a home…..

Jim Flaherty Minister of Finance

http://www.jimflahertymp.ca/contact_us.html

Constituency Community Office – Whitby
701 Rossland Road East- Unit 204
Whitby, Ontario L1N 8Y9

Telephone: (905) 665-8182
Fax: (905) 665-8124
E-mail: [email protected]

Parliament Hill Office – Ottawa
House of Commons Centre Block Building – Room 435-S
Ottawa, Ontario K1A 0A6

Telephone: (613) 992-6344
Fax: (613) 992-8320
E-mail: [email protected]

Regional Office – Toronto
150 King Street West- Suite 2404
Toronto, Ontario M5H 1J9

———————————————

Mark Carney Bank of Canada Governor

Mark Carney
Governor
Bank of Canada
234 Wellington Street
Ottawa, ON K1A 0G9

Telephone: (416) 973-5613
Fax: (416) 973-6501
E-mail: [email protected]

#199 Observer on 11.06.11 at 1:05 pm

RE: my last post….
The last three lines belong under Flaherty’s name.

#200 wetcoaster on 11.06.11 at 1:23 pm

DA,

Nice stats dude, but you miss the boat that the 22% high ratio is more then enough to crash a market. They will set the selling prices as they dump to satisfy the bankrtuptcy judges.

I know several young couples scraping by and I don’t know many young couples to begin with so odds are this is the tip of the iceberg once the divorces kick in and kids are involved then neither qualify to rebuy when the pot is emtpy. It’s called real life which most real estate ho’s and Trump wannabe’s don’t get. Tough times brings increased relationship break ups.

Guess the market sucks so bad up there you have lots of time to post here again, another great indicator of the coming tank job.

#201 penpal on 11.06.11 at 1:29 pm

@ # 190 Can’t afford a home

Seriously, why would you bother contacting the CMHC?

Do you not think that CMHC management are aware of this?

They are unable to stop it, and if they try to they will lose their jobs and pensions faster than you can say boo.

And they know it.

Even if in a fit of good conscience they tried to reign in this madness, their board of directors (who are interest conflicted by belonging to the very industries who benefit from this madness continuing), would veto any such action.

Don’t you think that the Liberal party and NDP finance critics know what Harper has done?

Of course they do, but they did not want to point out this fact, even to win the past election, as the fallout on their parties for “ending the housing boom and impoverishing Canadians” would haunt their chances for an eventual election for a generation or more.

They are cowards and treasonous to this nation’s long term welfare!

Do you think yourselves, Garth, myself and a few other posters here are the only ones who can think critically in this whole freaking country?

The only ones who can do math?

The only ones who can see that CMHC violated their charter and mandate time and time again from the continuous weakening of lending criteria including the removal of lending amount caps?

Do you think insuring mortgages on $1 milion plus dollar houses that consume over 50% of gross pay is helping to provide “affordable” housing for Canadians? Or that BMHC believes this to be so?

F*#K NO!

No, the ONLY HOPE we have of this nightmare of criminally irresponsible lending activity stopping is;

1) for the whole market to collapse from an absence of buyers, or

2)an exogenous event that impairs the ability of idiot Canadian mortgage borrowers to service their insanely high debt loads, or

3)the sentiment towards home “ownership” changing.

Thinking that you can convince the pimp to see the errors of his ways and discharge his whores is a pretty poor strategy for making those girls becoming ‘good girls’ again.

For me, this naive posting was the last straw.

I have followed this blog since its inception and after years of logical and factual arguments being posted as to how and why “this will not end well”, I give up.

This madness ends only when Canadians are broke and dispirited from waking up to their and the world’s true financial condition and not a moment before.

And that really is too bad, because we as a nation will be much, much poorer for the experience and it will be truly too late for those affected by this insanity.

Good luck all.

Give up if you want, but the world keeps evolving. Change is incremental. The end never comes. — Garth

#202 JRoss on 11.06.11 at 1:47 pm

Devil’s Advocate

McLovin is right. The numbers a meaningless, it is a survey, meaning is it biased first by those who were asked and then by those who chose to respond. And perhaps most importantly, it is based on the responses of those who have an incentive to respond in a certain manner and who are fully aware of what their responses are meant to imply. It is bunk.

And futher, you keep spewing percentages without posting the absolutes. Without the actual number, the percentage has no context. The actual number of Albertans, or first time buyer or whatever may not have changed at all, but just just represent a change in the overal mix. Unless you post absolute and relative proportions there is no way to determine what the numbers really mean.

#203 McLovin on 11.06.11 at 1:50 pm

DA : “Either way I think the real estate board has a far greater vested interest in the accuracy of theirs wouldn’t you agree?”

I DO NOT AGREE!

I think their vested interest is the same as yours. Making people feel good about the market. Making people feel that it is well supported by non speculators and that prices will be firm to strong forever. I don’t see it in their best interest publishing that the average down payment is 7%. That type of news makes people think of the US. That type of information would expouse the “house of cards” the massive run up in prices has been built on and they and you don’t want that.

You are obviously intelligent (if misguided and somewhat religiously delusional) Please don’t tell me that you believe what you actually wrote. Also please stop writing as if we are penniless children who need guidance about the real world. I think there are several people on here who would gladly compare tax returns with you. Thinking real estate (especially where you live) is a bad deal does not mean we have the assets to buy it. (Or in many cases own it)

PS – I do know that many people own their houses free and clear. In fact, anyone who bought a place pre 1985 who doesn’t has obviously not been a good steward of their financial assets.

#204 jjpetes on 11.06.11 at 1:52 pm

Garth you have the gaul to say on Howestreet that Papandreau was wrong about talking referendum

uh, NO

Hey bud what happened to oh lets see a thing called DEMOCRACY?

Here allow me to define it for you

Where the PEOPLE determine the the FATE of its nation

Ever heard of it? Oh I forgot you were in government so its only about your next four years

Papa is an experienced politician, saying and doing anything to retain power. The referendum was about him, not democracy. Surprised you could not see that. — Garth

#205 Paul on 11.06.11 at 2:59 pm

#140 DA,
I’m one of the “fools” that sold in kelowna partially on your advice in 09. Were still renting in Victoria and watching the market up island. There’s much more to choose from now in our price range then a couple of years ago. One thing though…quite a few of the properties that we have actually gone and looked at are now in the rental pool, taken of the market because of no buyers. I don’t think the worst is over but just beginning. Our lease ends in Mar/12 and we’ll see then if we buy or rent again for a couple more years. My gut feeling is rent. People are getting desperate.

#206 penpal on 11.06.11 at 3:29 pm

RE # 201 penpal

to Garth Turner

This country will “evolve” only when forced to by reality, and after much denial and when it is too late for the most vulnerable borrowers.

The political landscape of this country is such that when that happens ALL POLITICIANS will have been complicit in the dimming of our country’s future potential at a time when it will hurt us most.

By not speaking up as they were too afraid of the political consequences of pointing out that they have (through the misuse of CMHC policy for the political gain of garnering or keeping votes) transformed or allowed to be transformed (through their silence) the Canadian dream of home ownership into a nightmare of debt penury for many.

I applaud your abstention from the political process in this country as it speaks well of your integrity.

The fact that you have attempted to showcase the RE issues in Canada augments your reputation in my eyes, though I still find you entirely too forgiving when it comes to politicians (and their true agendas) in this country.

Despite my personal disagreement with your opinions and optimism at times, I have appreciated very much your persistent attempts to alert Canadians as to the error of their RE ways and I salute you for your efforts.

I do hope that there is an Order of Canada award in your future.

It has been a privilege to be allowed to post here and I thank you for this forum.

Sincerely,

penpal

#207 Van guy waiting on 11.06.11 at 3:42 pm

#189 jess,

That’s paranormal activity

#208 Devil's Advocate on 11.06.11 at 3:51 pm

#200 wetcoaster on 11.06.11 at 1:23 pm

DA,

Nice stats dude, but you miss the boat that the 22% high ratio is more then enough to crash a market. They will set the selling prices as they dump to satisfy the bankrtuptcy judges.

That’s 22% of newly issued mortgages wetcoaster, not all existing. There are many, many who did finance via high ratio mortgages who will be just fine. They will not ALL fail even if the value of their home were to crash as much as you seem to believe.

Yes there will be casualties. As I said “Anyone missing this (be it taking out more credit than they should or any other imprudent act) deserves their fate.”

As for me having “lots of time to post here again” being, “another great indicator of the coming tank job”; don’t be so quick to come to that conclusion. The markets, here in Kelowna anyway, are what they are and where they should be – not as exuberant as they were at the peak of the bubble but well within historical norms. I never really got into the business of the bubble anyway as I was too busy warning that it would not last and could end badly. In retrospect I should have been working harder taking advantage of the market conditions then. Many of those I warned simply found another eager to sell them the house I was reluctant to. Had I done so I would have more time today to post comments on this “pathetic blog”.

So no wetcoaster you are wrong. Unfortunately the softer the market is the harder I have to work and there is ALWAYS work in my business… just sometimes harder to find than others.

#209 Devil's Advocate on 11.06.11 at 3:56 pm

Oh and Wetcoaster;

I am always working… always. Between the time of my post to which you commented on and that last of mine in response to yours, I was out working – just as I am right now on this Sunday. That is not to say I don’t get time off – I do, when ever I choose to take it.

#210 nothing selling on 11.06.11 at 4:14 pm

The problem with the housing market in Canada is the fact you have people without money competing with people who have money. The people without money who have no understanding of money are more willing to out bid those who have money. Now it seems the number of people without money are unable to qualify for homes that are now priced 8X their income. The UnConservative government have done a disservice to Canada and the Canadian people. In world of justice and democracy Harper would be arrested for financial crimes against Canada. Its to bad we live in fascist world.

#211 Mean Gene on 11.06.11 at 4:32 pm

20 Ways to Lose Your Nest Egg

http://www.forbes.com/pictures/mjf45ejgk/dont-sit-tight#content

#212 Marc L on 11.06.11 at 4:34 pm

Garth,
Could you limit the comments field to about 150 words?
This way you want not have entries that are like a Reader’s Digest. It may also allow people to get their point across in a brief manner and then they can go out of the house and meet people.

• Please avoid pasting the text of excessively long articles or news stories within your comment — provide a link to the item instead.

Got it. — Garth

#213 Devil's Advocate on 11.06.11 at 4:57 pm

#202 JRoss on 11.06.11 at 1:47 pm

and

#203 McLovin on 11.06.11 at 1:50 pm

Believe what you want to believe. It is still a free country and you are entirely at liberty to do so.
What I will tell you though is I have no hidden agenda. None what-so-ever. I sincerely believe what I write and try to do nothing more than help others open their mind to other possibilities. Really, it is not so important to me that I should try fabricating untruths to convince you. I merely offer the readers of this “pathetic blog” insight and information from that “dark side” they hold prejudice against – “pre – judge” for what ever reason.

As you well know, I take regularly quite a bit here for my convictions but continue to offer them for your consideration. Do you honestly believe I am doing so as some sort of paid mercenary of CREA? What I post here could not possibly influence enough of you to turn the market around and quite frankly the market does not need turning around. The market is just fine the way it is. It is what it is because it is “the market” that is what it is. Mess with Mother Nature and you will soon be forced to endure her wrath. So too is it of the economy.

Again, you can take or leave my advice. The choice is yours. I really don’t care. As I said “Anyone missing this (what ever prudent advice it may be) deserves their fate” including me should I ignore yours and it prove true. But, for the time being until some overwhelming evidence to the contrary, which I have yet to see, I am content adhering to my own convictions. You should do whatever you are most comfortable with.

#214 Devil's Advocate on 11.06.11 at 5:01 pm

#202 JRoss on 11.06.11 at 1:47 pm

and

#203 McLovin on 11.06.11 at 1:50 pm

Believe what you want to believe. It is still a free country and you are entirely at liberty to do so.
What I will tell you though is I have no hidden agenda. None what-so-ever. I sincerely believe what I write and try to do nothing more than help others open their mind to other possibilities. Really, it is not so important to me that I should try fabricating untruths to convince you. I merely offer the readers of this “pathetic blog” insight and information from that “dark side” they hold prejudice against – “pre – judge” for what ever reason.

As you well know, I take regularly quite a bit of heat from the Blog Dawgs for my convictions but continue to offer them for your consideration. Do you honestly believe I am doing so as some sort of paid mercenary of CREA?

What I post here could not possibly influence enough of you to turn the market around and quite frankly the market does not need turning around. The market is just fine the way it is. It is what it is because it is “the market” that is what it is. Mess with Mother Nature and you will soon be forced to endure her wrath. So too is it of the economy.

Again, you can take or leave my advice. The choice is yours. I really don’t care. As I said “Anyone missing this (what ever prudent advice it may be) deserves their fate” including me should I ignore yours and it prove true. But, for the time being until some overwhelming evidence to the contrary, which I have yet to see, I am content adhering to my own convictions. You should do whatever you are most comfortable doing or believing.

#215 T.O. Bubble Boy on 11.06.11 at 5:04 pm

What happens when no one falls for your attempt to trigger a bidding war? You raise the price of your house $75k or course!

C2225917 46 RANLEIGH AVE, Toronto, Ontario
Oct 25th: $839,000
Nov 6th: $915,000

http://www.realtor.ca/PropertyDetails.aspx?PropertyID=11253529&PidKey=-1765215327

#216 TurnerNation on 11.06.11 at 5:40 pm

Our blog dog leader is on the internet radio again:

http://talkdigitalnetwork.com/2011/11/this-week-in-money-4/

Podcast: Download (Duration: 46:18 — 31.8MB)

Garth Turner – Greece, housing & jobs.
John Kaiser – Rare Earths.
David Skarica – Markets…sick of Greece.

#217 jess on 11.06.11 at 5:47 pm

178 Jane24
cheaper prices in the uk = liquidiation sales = glut of empty space

=
This could be a billion!
http://www.justice.gov/usao/nys/pressreleases/November11/alliedhomemortgagepr.pdf

The corporation maintained only a handful of quality control employees to review its thousands of mortgages, most of whom were located in St. Croix, in the U.S. Virgin Islands, and employed by a company that HODGE set up to obtain tax benefits. According to the Complaint, when the quality control manager visited her staff in St. Croix, she discovered that they did not know what HUD was or even what a mortgage was.
HODGE’s offshore entity earned millions of dollars in management fees from ALLIED, but conducted little substantive loan review. When HUD auditors asked for up-to-date quality control reports and ALLIED could not provide them, it provided fraudulent reports at HODGE’s direction. Finally, in the annual certifications ALLIED submitted to HUD to maintain its HUD-approved status, ALLIED falsely certified that none of its employees had been convicted of a crime and that it had a clean record in the states in which it operated. In fact, ALLIED faced serious sanctions from numerous states and employed numerous convicted felons, having hired more than a dozen in a single year.

Alledged that Hodge persistently monitored and intimidated senior managers and other employees. For instance, Hodge provided his assistant with full access (including the ability to delete emails) to the email accounts of several key employees, including Allied’s general counsel, senior compliance officers, quality control managers, and others. Hodge also instructed his chief information officer to capture the password of Stell’s personal email account and installed an electronic listening device under the desk in the CIO’s office.
“Hodge also required employees to sign extremely broad confidential agreements and has sued numerous former employees for the slightest perceived breach, including a former tax manager for speaking to the IRS. In one recent such action, when Stell was asked what a former employee could say that was not confidential, she responded: ‘just what a good company it is.'” (Emphasis and parentheses in complaint.)
Prosecutors say Allied ran hundreds of “shadow,” unapproved branch offices that originated FHA loans, and deceived HUD by using the ID number of a HUD-approved branch on the applications.
“Allied’s undisclosed shadow branches could not be audited by HUD and their default rates were disguised by the default rates of branches whose IDs they were using – IDs that were based on false certifications. While some senior managers questioned this practice, it was continued under the direction of Hodge,” the U.S. Attorney’s Office said in its statement.

#218 UK Love Calling on 11.06.11 at 6:35 pm

Gotta admit that those damn Yanks are geniuses in times of toughness. Seems like in times of adversity their creativity sings to the world. In this instance I look to Maroon 5 and Christina Aguilera which are American artists with awesome talent. Americans know how to pull themselves from the muck when times get tough and they do it with music and entertainment. Look at the Great Depression. The world always follows suit. Katie Perry, Kesha, Lady Gaga, they’re all keeping it moving along with hope. Never bet against America people. Move Like Jagger – Best damn song of the year I guarantee it!!! What people aren’t seeing is how these videos epitomize the meaning of being American as the details are in the subtlety of the humor. Depressions yield humor and stellar entertainment. Nobody gets it better than the Americans.

http://www.youtube.com/watch?
v=ZQsK9WzDiuM&feature=mfu_in_order&list=UL

http://www.youtube.com/watch?v=tyL9H5n_sxQ

http://www.youtube.com/watch?v=EVBsypHzF3U

http://www.youtube.com/watch?v=QeWBS0JBNzQ

http://www.youtube.com/watch?v=wV1FrqwZyKw

http://www.youtube.com/watch?v=KlyXNRrsk4A

http://www.youtube.com/watch?v=LiD72NS3UHQ

http://www.youtube.com/watch?v=pzh5VaHyKoY

#219 Bubble1 on 11.06.11 at 8:08 pm

http://www.realtor.ca/map.aspx?vs=VECondo&veZoomLevel=12&veCenter=44.961397020156994,%20-79.39561843872072&currentView=0#acr:false;ac:false;baths:0-0;beds:0-0;fp:false;gar:false;pmin:0;pmax:0;rmin:0;rmax:0;openh:false;pool:false;stories:0-0;buildingstyle:;buildingtypeid:;viewtypeid:;waterfront:false;forsale:true;forrent:false;orderBy:A;sortBy:1;LisStartDate:;mapZ:18;page:1;mapC:44.92074510205319,%20-79.38966125249864;curView:0;curStyle:r;chkSchl:false;chkTran:false;chkPol:false;chkMed:false;chkWrk:false;chkFire:false;chkAll:false

Some units are already on market for sale. The price for 1 bed is around $150k, much less than the original price.

#220 jess on 11.06.11 at 8:21 pm

Bend
Summit Accommodators

The professional “facilitators”

Summit principals secretly used their customers’ money to fund more than a hundred real estate deals .It worked until land values plunged.

founded Summit in 1991 shut it’s doors 2008

The company was a so-called “facilitator” of 1031 tax-deferred exchanges, a popular tax avoidance strategy. The IRS allows property owners to defer capital gains taxes on profits from those transactions if they buy another qualifying property within certain time limits. As a facilitator, Summit’s role was simple: it was to hold customers’ money while they concluded these 1031 transactions.

The company prospered as Central Oregon boomed and local residents flocked to participate in 1031 transactions. Summit’s average monthly assets doubled from 2004 to 2006 reaching $109 million.

http://www.fbi.gov/portland/press-releases/2011/pd040811.htm