It’s over

Robin says the real estate market in his part of the country (Sunshine Coast of BC) “is totally dead. So I got lucky – I’m free. I sold my house!” In Winnipeg, Jeff says he goes past a massive new subdivision being built and wonders what the hell’s going on. “At night, driving by on my way home, it’s a ghost town, few lights on and no cars crawling the streets

“There are 38 listings. And that’s just on MLS. Who knows about all the ones still under construction and for sale by the developer that aren’t listed?. It’s a ghost division and I don’t see how anyone in this city could argue that they’ll fill all those homes. $450k is out of the range of the vast majority of families in this city, where wages aren’t nearly as high as they are in other parts of the country, and yet developers, realtors and mortgage brokers keep trying to convince Winnipeggers that subdivisions like Waverly West are the only place to be.”

On the western flank of the GTA, Wendy’s house has been for sale now for 17 months, reduced from $2.2 million to $1.35. It’s breathtaking, but another price cut is coming. “There aren’t even showings any more,” she says. “I get a little shot of adrenalin when a car pulls into the laneway after seeing the For Sale sign. Then they leave.”

In reality, the Canadian real estate bubble’s over. The air’s been deflating from that giant gasbag for the last few months, as sellers in most places find buyers have disappeared, or morphed into vultures. This fact eludes the media, as usual, since all real estate ‘news’ in this country comes from Re/Max, real estate boards, CREA, Royal LePage, that wingnut cultist Don Campbell or economists from banks that make mortgages.

This is why blogs matter. Even this pathetic digital dishrag. In such venues, actual sellers, wannabe owners and smug renters share meaningful and accurate intelligence on what markets are doing. The message has been clear – outside of the moist property hothouses of 416 and urban Vancouver, where enough idiot buyers and kamikaze speckers remain to impress reporters – the housing decline’s gone viral.

First, sales stall. Then listings stale. Buyers quit competing. Markets crumble. Prices edge lower. Buyers wait. Finally values start to tumble.

It’s a pattern familiar to people living in the US, Britain, Spain, Ireland and a host of other places where they discovered house prices cannot be sustained when families are mired in loans or struggling with monthly payments. In Canada real estate and debt have soared together. Wages and salaries have barely budged. It’s only a matter of time.

We’re now about half way through the process of bubble to bottom (but every market moves at its own pace). Big price reductions are, as I said a few days ago, some months off. Those who have been waiting to buy, and jump at the first 10% or 15% reduction, will regret it. Bear market trap.

But back to Robin. He has a question. “What should I do with the house proceeds? Which areas of the stock market do you expect to be affected when the sub-prime crisis finally hits Canada, and house owners start dealing with negative equity and walk away from their home?”

Well, Robin, first understand that the housing correction in Canada will not be a mirror of the US experience. While oodles of people who bought since 2009 will fall into negative equity, since they coughed up ridiculously small down payments, it does not mean a wave of defaults, foreclosures or powers of sale.

The first response when real estate falls is denial. Most homeowners tell themselves the situation’s temporary and will correct in a few months. They do nothing. But in time it becomes evident the home is worth even less, so panic sets in. But because (in most of Canada) you can’t just walk out on a mortgage (the bank will hunt you down and eat you), the first instinct is to sell – and ask enough money to get out with as small a loss as possible.

The result is a new wave of listings, which helps supply overwhelm demand, dragging down sales and chilling the market. Within months, prices have to be reduced, and a vicious circle ensues. It’s a classic real estate death spiral. As values decline, all homes are worth less and middle class equity evaporates. Those without much of it see their net worth gutted. They stop going to Ikea and Best Buy. That’s when the economy takes a punch.

But because all high-ratio, high-risk mortgages in Canada are insured by the taxpayers, don’t worry about any banks going pointy-side-up. Profits may be curtailed and common share values affected, but there’ll be no disaster on Bay Street. If you think the banks have not already taken measures to slide through a housing correction, you visit too many puerile doomer web sites.

So, Robin, I’d invest my stash exactly where I’ve already suggested. Your portfolio should be balanced between fixed income (about 40% is good) and growth-oriented securities. Half of the fixed side should be in corporate, government, real return and high-yield bonds, and half in a variety of bank and insurer preferreds. The growth portion should have no equity mutual funds (too costly, too ineffective) and no individual stocks (too volatile).

Instead go for a few real estate investment trusts, energy trusts, sector and index exchange-traded funds. Balance these between Canada, US and international, durable sectors (finance, energy, pharma, for example) and between large, medium and micro-cap corps. Add a dash of commodities and precious metals, and you have a portfolio which will withstand market flushes, wilting realtors, media panic, Euro diddling, downgrades and your desperate neighbours.

In the next two years the only thing that should surprise you, Robin, is that people are surprised.

It was all here.


#1 R.O.V. on 11.20.11 at 7:24 pm


#2 Debtisforever on 11.20.11 at 7:26 pm

I’m getting that feeling too. This real estate boom is over. Here comes the pain.

#3 Hashnugs Inthebong on 11.20.11 at 7:26 pm

I am not first

#4 Ron on 11.20.11 at 7:28 pm

Another great post. Bang on exactly what’s coming.

#5 MarcFromOttawa on 11.20.11 at 7:33 pm

1st in line gets the prize

#6 Cowtown on 11.20.11 at 7:44 pm

Here in south Calgary overlooking Fish Creek Park, houses usually sell fast – it’s a nice area. However, my neighbor put their house up for sale a few months ago, at a reasonable price (compared with what they paid anyway – about $50K less). I spoke with them about a month ago and just a few showings and no offers. nada. It’s a great house – all updated. Today I noticed the house has been taken off the market. I sure hope they didn’t HAVE to sell…

#7 West Side Survivor on 11.20.11 at 7:58 pm

Sold my house on Vancouver’s West Side in February this year. Cashed in on the Chinese New Year buying spree. Got 200k over asking, I still can’t quite believe it. Have been renting in the same area since then. Realtor friend said market has slowed completely in this area (Kitsilano). There are a few houses that sell, but the offers over asking are gone. Now most of the updates I get via email are “price reductions”. Another West Side realtor I know expects the area to drop 20% in 2012. Some of my friends are dismissing this as the seasonal “Christmas slowdown”. They think I’m nuts and real estate will come roaring back. I haven’t seen prices slide dramatically just yet but expect the reality check will really hit in February when the listings start popping up again.

#8 Kevin on 11.20.11 at 8:00 pm

Yeah, I agree the bubble is most likely over. There are some pockets of resistance throughout the country, but it is only a matter of time before they succumb as well.

One just has to stand back in amazement on what has happened over the last decade and a half.
The average house price in Canada has appreciated by 126% from 1996-2010, mortgage credit appreciated by 180% from 1996-2010,the average weekly wage appreciated by 39% from 1996-2010, and inflation came in under 30% from 1996-2010.

It should be noted that the average Canadian house price has driven past $360,000 while mortgage debt has topped 1 Trillion.

Amazing run, but eventually all bubbles burst and in the end fundamentals do matter.

#9 Nick on 11.20.11 at 8:06 pm

Well… 1st again!

#10 Off the river on 11.20.11 at 8:08 pm


No. Actually nicely done. Thanks again Garth.

#11 T.O. Bubble Boy on 11.20.11 at 8:08 pm

Individual REITs, or a REIT ETF?

Anyone, anyone?

#12 Daisy Mae on 11.20.11 at 8:13 pm

OMG! “It’s over” is right up there with “we have to talk”. LOL

Now I’ll get back to your blog….

#13 Peter Goesinya on 11.20.11 at 8:14 pm

oh ya

#14 Marc L on 11.20.11 at 8:15 pm

Numero Uno

#15 City Slicker on 11.20.11 at 8:24 pm

To add to Garth’s list of dropping prices, here in Calgary, this condo is been on the market for 10 months. Was listed for $419,900 in August, now $398, 800.
Will be interesting to watch and gauge at what price will this finally sell:

Garth, how does one choose an investment that will short Canadian RE?

#16 jasonturbo on 11.20.11 at 8:33 pm

I had an accident. I glued myself to myself.

#17 Eden on 11.20.11 at 8:33 pm

Please let it happen in Regina so I can finally afford a house. Prices are ridiculous here, but vacancy rates are extremely low and there’s a new mine opening south of town…

#18 OwlEyes on 11.20.11 at 8:35 pm

Not to mention the throw-away condos flooding the market in Toronto.

#19 gladiator on 11.20.11 at 8:47 pm

There’s a new syndrome around here called “firstitis”. More and more dawgs get infected. Or maybe it’s idiotitis?Not sure.

#20 Bench Warmer on 11.20.11 at 8:47 pm

Just looking at an ad from Jayman Homes, in the Saturday homes section of the Calgary Herald. They advertise the full price of the house, then beside the price they have what your monthly payment would be. The monthly payment they arrive at is based on a 35 year amortization, 20% down and 3.19% fixed for 3 years. I thought the 35 year amortization not allowed? Is this false advertising or can they still offer this?

#21 Junius on 11.20.11 at 8:48 pm

For those people with an iPhone or iPad there is a new App for Canadian ETFs called ETF Central. It also has some basic info on ETFs. Looks like it might be from Claymore or they are the main advertiser. I am still checking it out and will let you know.

#22 dd on 11.20.11 at 8:51 pm

By not being it the market.

Very hard to short real estate in Canada. Find a large public home builder, short the shares. However, if you are wrong, losses can be huge.

#23 Junius on 11.20.11 at 8:51 pm

Wife and in were rewding the listings porn in the Vancouver rags today. Looks like prices are really dropping in places around the city. I was surprised at some of the price drops in North Vancouver. However insanity remains in Vancouver proper with crack shack listings still topping a million.

#24 BPOE on 11.20.11 at 8:54 pm

North Vancouver houses being snapped up like hotcakes at 1.5 million. It ain’t over folks.

#25 jasonturbo on 11.20.11 at 8:59 pm

ive been waiting and waiting for this melt down to start……. It wont happen as all the fear mongers on this blog lead it to believe. There is so much work starting up in Alberta/BC/Sask that its “different here” and the fact that there is no chance of Canada going into recession. USA wont let us, they need our oil. Interest rates will never go to 10 % because it cant. If it does the Canadian Goverment will have to bail everyone out.

just look at the price of oil its right where it needs to be for the USA economy to take off.

lets look at facts,

-house is cheap compared to the rest of the world
-house hold savings are at an all time high
-debt to income ratio is on par with the rest of the world
-oil/gas is still affordable
-taxes are low
-cost of living is going down

Really Canada is booming. Either get in the boom or get out its that simple, there will be another real estate boom in the next year or 2.

#26 Van guy waiting on 11.20.11 at 9:06 pm

This is just the beginning. It’s going to be quite a show with a decreasing in price with rates to rise in the future. Fireworks are about to begin.

#27 Unistar38 on 11.20.11 at 9:10 pm

The real estate is dead for the next ten years. Expect many 40% to 50% hair cut stories.

#28 Mr. Lahey on 11.20.11 at 9:11 pm

It is official fellow Canadians. The shit hawks are in the air and Canadian real estate is in their targets. Barb and I aren’t worried, the trailer is paid in full. Ricky on the other hand is mortgaged to the max…

#29 chris on 11.20.11 at 9:16 pm

I come to this site to get a boost of reality so I don’t succumb to my house lust and buy. I am seriously banking on a correction in Vancouver next year. I have noticed in the last several months that house prices are slowly coming down (barely) or at least stagnating and definitely selling under asking in the burbs (I almost bought my dream house, but kept strong!). I do now notice that houses are being pulled off the market and there isn’t much selection these days. Lots of crap on the market. I’m hoping this is just seasonal and that next spring will show plenty of inventory at reduced prices. The Vancouver market seems to be resilient for the time being. Very frustrating to say the least. My BIL bought his house last year in Burnaby and tells me that it is now worth $300K more. Seriously, what is the point in actually working for a living in Vancouver?

Re the poster’s note about Kits: I rent a house in Kits and the houses to my direct left and right sold the same week in July, both OVER asking. So, I’m not sure that Kits is dead, just yet. The house to my right sold $500K over asking and the house to my left sold just over asking at $2M. They bought that house in 2006 for $700K, so not a bad profit in 5 years. They plan to rent and buy back in after the correction. The family that made $500K on their house are renting the house back from the mainland Chinese purchaser for the next year and are basically flippers and looking for their next Kits project. They bought the house in 2009, so a tidy $500K profit in less than 2 years isn’t bad either. I’m just a sucker with a really high paying job that can’t afford squat in this town.

#30 BackBacon Crusader on 11.20.11 at 9:16 pm

Thanks for the shout out on my e-mail, wanted to let you know that not everyone in Winnipeg has had the realty kool-aid.

I did want to quickly add for reads that while 38 listings in MLS may not sound like much, Waverly West is a medium sized subdivision. Most subdivisions of equal size in Winnipeg currently have, at most, 8-15 listings (15 in one of Winnipeg’s largest, actually).

#31 NYCer on 11.20.11 at 9:16 pm

I hope it happens soon cause it took me forever today to find a parking spot today at Yorkdale. Why do people still pretend to have money?

#32 Kris D. on 11.20.11 at 9:23 pm

Deirdre admits the market will ‘soften’ but thinks there is too much at stake (politicians & banks want the status quo for votes & profits, respectively) to prevent a collapse or implosion.

Who’s your vote for – Garth or Deirdre? Garth, I gotta say, based purely on looks,Deirdre’s got one up on you.

Where did I say ‘collapse’ or ‘implosion’? — Garth

#33 CrowdedElevatorfartz on 11.20.11 at 9:27 pm

@#200 Standard Deviation (last post)
Interesting Stat ( $2,000,000 is what the average Defined Benefit pensioner recieves over their “retired” lifespan).
I have argued with several friends that are currently govt employees that their pensions are “golden” and somewhat undeserved(cue outraged govt employees response) and, more importantly, unsustainable.
While govt employees used to be poorly paid they could alway rely on a well deserved iron clad pension and medical benefits plan to take care of them in their retirement years.
Unfortunately, this is no longer true.
The average govt employee (civil, provincial,federal) is now very well paid( ie equal or superior to the private sector wage) compared to the average private sector employee.
Generously pensioned( defined benefits….Only govt union employees have THAT perk! Ask a retired GM employee how they’re sleeping these days.)
And, of course, the obligatory medical benefits to help top up the comfort level.
While I dont blame govt employees for protecting their “platinum” pension schemes. Who wouldn’t ?
After all, it was their unions that negotiated them and long ago retired elected officials that agreed to them…( knowing full well they would NEVER have to deal with the ultimate financial calamity this will create.)
One wonders what economic fantasy planet these government employees reside on. My prediction for the next 5 – 10 years
There will be Government legislated claw backs/cut backs of medical benefits. Then reduced defined benefits either directly or through higher pension taxation.
When the average taxpayer of the next 5 – 10 years is renting a place to live, buying exorbitantly priced food( how’s $7 loaves of bread sound?), and barely sticking a few pennies on the dollar into a private pension plan(if at all).
The sympathy for long retired govt employees howling in protest at the unfairness of it all will be lost by the quiet click of the tv remote as the viewer changes news channels.

#34 Stevenson on 11.20.11 at 9:27 pm

Housing bubble has bursted? Based on what? A 2 mil house that couldn’t sell for over asking price? Maybe if the season slows down enough the people who cry and whine that moved out of Gta and Vancouver can afford to come back to buy again.

Garth you claim market is beginning to head south and all media is wrong, but you’re right. That’s it? Then again most people believe if you repeat it enough. Must be like time shares sales or how people use to believe the planet is flat.

It’s not? — Garth

#35 InvestorsFriend (Shawn Allen) on 11.20.11 at 9:33 pm


This is a link to my FREE reference article that gives you

DELETED. (Buy an ad — Garth)

#36 In the Maritimes on 11.20.11 at 9:34 pm

You mention “bank and insurer preferreds”. Some of the yields are very good but most seem to be selling for a premium over their redemption value. I’d hate to get stuck with them if interest rates ever head up and the price of these preferreds go down. I’d be happy with the current yields on some of them for 5 to 10 years (or so) but then I’d want to sell them for at least what I bought them at. Because of Basel III & NVCC
requirements, will the banks and insurers have to redeem most of these preferreds by 2022? If I could count on that then I’m interested. I’ve read that there is $70 billion or so of preferreds in Canada alone that will have to be redeemed. Makes me wonder if the current ruling or interpretation of Basel III re:Non-Viability Contingent Capital might get changed and I’ll be stuck with a 4% yield forever unless I sell at a loss.

You’re worried about a steady 5% yield complete with dividend tax credit for ‘five or ten years’ because it might not last? Give your head a shake. — Garth

#37 I'm stupid on 11.20.11 at 9:37 pm

I was at a store yesterday waiting in line when I saw the dumbest think ever. A lady in front of me bought a $100 visa gift card. When the cashier scanned it it cost $113. So I was compelled to ask the lady if she knows that the value of goods when it was used would be about $90. The lady had a puzzled look on her face so I explained that $90 plus hst is about $100 and that she is paying tax twice. Realizing her stupidity get response was it is not classy to give someone cash.

I guess it’s better to look like a fool.

#38 I'm stupid on 11.20.11 at 9:37 pm

Her response

#39 Onemorething on 11.20.11 at 9:38 pm

Guys it’s so bad in the US that Financial Advisors and Firms if small enough and in a position to close shop are doing it.

These are the firms I like to deal with as they actually make you money, let you be somewhat self directed and dont hammer you for fees.

Reason for getting out?

Protect thier investors as the markets are a mess, cannot find returns like the big insider boyz.

I would expect long time RE Agents with good track records (of integrity and honesty) you know who you are to either find something else to do now or only help to facilitate those few on the exit they like as there will be no buyers and those few who exit (likely boomers with some positive equity) will need to be hand held by people they trust.

You see RE AGENTS, those of you who are not scum will get paid on the downturn but you better subsidize you income. Chances are if your a bommer agent your invested in the RE downturn as well.

Garth, have a very tough time agreeing with you on Canada not suffering greater in this next stage. I will meet you half way between what the USA has suffered and your projections.

Still gonna get ugly.

And it doesnt matter what Canada can provide in Nat Resources to China or any other new export market, the demand is not there!

#40 I'm stupid on 11.20.11 at 9:38 pm

Thing ever

#41 cool on 11.20.11 at 9:41 pm

House on above link is on market for 6 months.After 20k price reduction it finally has conditional sale on it.
Next week I will let you know how much it sold for.

The buyer had bought it last year for 500K.So he is underwater big time.

This is Alberta’s real estate market.

#42 Nostradamus Le Mad Vlad on 11.20.11 at 9:43 pm

“It’s over, all high-ratio, high-risk mortgages in Canada are insured by the taxpayers . . .” — Congrats. H – F – C.

After saying that Canada would never run a deficit (on record, check it out), turning us into a warmongering nation, you have since managed to sentence a boatload of individuals to debt slavery for the rest of their lives.

Does that give y’all a warm, fuzzy feeling inside? Do you feel good when you go home at night, have a nice supper and forget about women’s and children’s shelters full to overflowing? After all, your policies, probably taken from GS playbook, has left these people in a state of unintended consequences.

Tory times are tough times, and you have proven that without a shadow of a doubt.

“Even this pathetic digital dishrag.” — Good moniker, like this!

“They stop going to Ikea and Best Buy. That’s when the economy takes a punch.” — One of the reasons for all these wars is the west’s sluggish economy, part of which is the removal of money from the system.

In this respect, countries like Greece and (eventually) Italy, plus others to come can be led by unelected govts., people appointed by TPTB without question. Hence, a NWO. Canada is one of them.
6:30 clip Since JFK, only criminal banxter puppets running the US Fed, and I Shot JFK Two clips. “Whether you believe this man or not – one thing is certain. Murder Inc. is still alive and well – America’s number one export.”; 4:58 clip Journalist exposes false millionaires trying to get tax hikes; Federal Reserve Banks “Federal reserve banks, including the capital stock and surplus therein, and the income derived therefrom shall be exempt from Federal, State, and local taxation, except taxes upon real estate.” Taxes on RE? No wonder they’re bulldozing entire subdivisions!

7:07 clip Hypothetical. The first 12 hours after the collapse of the US$; 2:14 clip It doesn’t matter what happens to PIIGS, it’s what Germany and TPTB decide; 1:56 clip Tax on Credit Default Swaps;
Nukes May be exchanged, angry words but tensions are running higher than debts, and
China; 6:57 clip Oz, just another puppet sate of the NWO; 9:20 clip Revenge of Ron Paul on CBS. The interviewer squirms at some of the responses; 2:45 clip Egypt explodes, a.k.a. the US – NATO – UN’s plans coming unglued.

NOTW phone hacking scandal takes another turn; Monsanto in Nepal They are everywhere, except my stomach! TSA Scanners are safe, so why has Europe banned them? Fair Use “Righthaven Case Ends in Victory for Fair Use.”; Seismic New quantum wavelength theory could be real; Copenhagen</.votes to legalize marijwanna.

#43 Okanagan Renter on 11.20.11 at 9:44 pm

I figure I can afford to stay put at least another 5-7 years before succumbing to the wiles of housing lust. This should, ideally, allow me & my good lady to pick up the pieces of the real estate crash in our fair town. I still see houses selling mighty fast here, but maybe it’s still flippers on kool-aid?

I’ve talked to a number of neighbours who seem to think that buying a shack falling to pieces and then tearing it down or renovating it is a great investment in our part of town, which is among the oldest. Sometimes I wonder why I even bother getting into an argument with these gentle, bovine folks.

#44 The Original Dave on 11.20.11 at 9:51 pm

I hope it happens soon cause it took me forever today to find a parking spot today at Yorkdale. Why do people still pretend to have money?


I don’t think that’s because of the housing bubble. Whoever runs that mall, has got things together. All the stores that have come in are premium stores. It is by far the best mall in the city and it’s always super – busy!

#45 Norton72 on 11.20.11 at 10:10 pm

In Winnipeg – young people are still buying realestate (3 to four hundred plus range). It is still a sheeple mentality.
I too have stopped talking on home prices and its gutting of peoples road to financial independence.

I’ve been wondering about insurance companies. Prices are attractive and going over Manulife reports they are loaded (Seemed like a lot of hedging).
They are depressed due to low interest rates now, but when rates rise?
Does this make sense?
Attractive dividends – and a long term investor.
Is there an Insurance ETF or capture them inside a Financial sector ETFÉ

(Why is my keyboard doing this – é or É – on the backslash é question mark keyÉ)

#46 Foggy on 11.20.11 at 10:11 pm

Well it’s about time…
My handy-dandy graph of Cdn house prices, going back to 1950, showed clearly the last 3 peaks, and subsequent decline. A somewhat predictable sine curve. My forecast, a few years back, was 2006 for the next peak. Didn’t happen. The Feds messed around with interest rates so badly that it threw everything off. Instead of cooling the market, it created a whole new sub-class of “buyers” who had no business buying a house. Now that this group has been shoehorned into the market with super low mortgage rates – who’s left? At 70% ownership the housing market is saturated.
Let the pain begin….

#47 Onemorething on 11.20.11 at 10:19 pm

Bommer sp Boomer

#48 Not on the boat. on 11.20.11 at 10:21 pm

I think it would be perilous to be watching the 1 to like 1.8ish market, especially in Van for indicators of the pop. The momentum in this market is more lambs heading to the abattoir. Pumped up on the financial equivalent of Monsanto Corn Feed #625, low rates, cash back, teaser rates, cosmic length amort times.. maybe with a little parental or multi-generational cash mixed in.. and of course anabolic levels of fear.

I think you need to look just above that where no numbers wizardry will get in the door just cold, hard, cash. There you will find the odd hazy buyer but from my view here on the heart of Van West it is less party and more tumble weeds…

We are officially at the part where Wile E. Coyote, in hot pursuit along a road next to cliff is about to make a distinct realization about the Terra Firma that had been under his feet…

Don’t be a Wile. E…


#49 Kurt on 11.20.11 at 10:24 pm

@ Benchwarmer

The restriction to a 30 yr am is for CMHC insured loans. At 20% down, this loan need not be insured, and it’s entirely the bank’s problem if there’s a default.

The rationale for CMHC’s existence ended in 1955. It shouldn’t exist, and it most certainly shouldn’t be backed by the taxpayer. It needs to be wound down as soon as reasonably practical.

#50 Buy Low Sell High on 11.20.11 at 10:34 pm

Supposing that the bubble has burst as Garth purports. How long does everyone think it will take for prices to trough? Of course, we won’t know that until it’s in the rear view mirror. However, last time a bubble burst in the GTA in 1989, prices did not find a bottom until 1996. Any blog dawggies want to speculate as to the number of months or years for prices to reach their lowest? And, remember, kiddies, you always make your money on the Buy Side!

#51 Westernman on 11.20.11 at 10:37 pm

Wow! You took a really big gulp of “it’s different here” kool aid… ( or a really big toke of something )
Housing is cheap in Canada compared to the rest of the world? How old are you… 10?
Here’s what you should do – go out and buy the biggest suburban Mcmansion you can find ( 0 down…mortgage the whole thing ) and fill the garage up with exspensive toys – all 100% financed of course and then check back in with this pathetic blog in one years time and report how well things are going for you.
I’m sure we all will enjoy a good laugh.

#52 billy contore on 11.20.11 at 10:43 pm

you better come and check caledon and king. We have reduced our home 5 times and not one offer. I purchased for 800K in 2000. I am down to 1100K from 2mil a year and half ago. I want to know where all the buyers are. Because we have not seen any.

#53 Not 1st on 11.20.11 at 10:44 pm

Garth, what are your thoughts about using a HELOC to buy dividend bearing stocks or ETFs and let the distributions make the payment for some odd 25 years. By that time, wouldn’t you have a nice asset all paid for, then can pocket those dividends in full? Is this a sound strategy, or too risky on leverage?

#54 Ex-Cowtown on 11.20.11 at 10:45 pm

#19 gladiator on 11.20.11 at 8:47 pm

There’s a new syndrome around here called “firstitis”. More and more dawgs get infected. Or maybe it’s idiotitis?Not sure

Oh.. the horror… it’s just that you have never experienced the exhilaration, the exultation and the crowds exclamation of having ever been first.

Only in Canada you say? Pity…

#55 Frank on 11.20.11 at 10:47 pm

We are blessed to be living in this country we call Canada and yes it is very different here. There will be no housing correction of 40% to 50%, maybe we may have 10% to 15% at worst or just a stable housing market.

#56 Morleycat on 11.20.11 at 10:49 pm

So if 416 and urban Vancouver still have enough idiot buyers and kamikaze speckers, how far behind the rest of the country do you think they are? Will a correction in Toronto and Vancouver take significantly longer to begin?

#57 Westernman's mother on 11.20.11 at 10:50 pm

When you come over for dinner next week, I will wash you mouth out with soap, boy!
You called Garth a wimp? tsk tsk

#58 Stevenson on 11.20.11 at 10:55 pm

I hope it happens soon cause it took me forever today to find a parking spot today at Yorkdale. Why do people still pretend to have money?


Why do people still refuse to believe the fact that some people actually do have money? That and a lot of them made it off RE in the past few years too?

#59 Westernman's mother on 11.20.11 at 10:57 pm

Where did I say ‘collapse’ or ‘implosion’? — Garth
yeah, some of the kids here have ADHD or need a good spanking.

#60 Toxicosis on 11.20.11 at 11:03 pm

Plenty of people will either claim bankruptcy, where the banks will get virtually nothing, or consumer proposals where they’ll get a bone. This will accelerate tremendously especially as the job situation worsens and more people cannot or will not keep up with payments of their other debts. Thus the banks will have to either be bailed out again, perhaps 75 billion a few years ago of taxpayer money wasn’t enough. So Garth is right, the banks will be just fine and the rest of us will get screwed. The banks are being saved all over the world, it will be no different here. They certainly will not suffer through a depression, but us citizens definitely will.

In the event of personal bankruptcy, CMHC has the banks insured. There will be no bailouts. — Garth

#61 [email protected] on 11.20.11 at 11:06 pm

RE: #11 T.O. Bubble Boy on 11.20.11 at 8:08 pm
Individual REITs, or a REIT ETF?
Anyone, anyone?

I personally like REIT ETFs like ZRE or XRE since they are baskets with decent returns (4.8-5.7% yield). The balance is that political news can hit ETFs harder as there are more things Cdn REITs as a group are exposed to (like the healthcare changes in the US that hurt Extendicare). If you have stocks in Boardwalk, Riocan or Dundee you do get the dividends without the ETF MER but always hope you picked the right one.

hope this helps.

#62 Toxicosis on 11.20.11 at 11:08 pm

In addition credit is drying up all over the world, thus it is wishful thinking that our credit/debt/housing collapse will not be just as severe as the US’s. To believe otherwise when municipalities are in major debt and the layoffs have only just begun, is denial of the worst sort and will only end in tears. But good luck to those and Garth, who think we’ll just muddle through. Our FIRE economy is virtually almost all that is left, and it is on fire.

Credit is plentiful. You’re embarrassing yourself. — Garth

#63 mf on 11.20.11 at 11:14 pm

There is also a dump not too far from Waverly West. If the wind is in the right direction, you can smell it.

#64 Jimbo on 11.20.11 at 11:15 pm


“Interest rates will never go to 10 % because it cant.”

That’s what they recently said in Italy, etc. Now bond holders are getting slaughtered thanks to the bond vigilantes. They ultimately control yields. Not governments.

“-house is cheap compared to the rest of the world”

Right. I drove by a couple houses south of Seattle, both a stone’s throw from the ocean. Beautiful, professional areas. Both asking just over $120K. Around Vancouver, a similar house would be 10x more expensive.

“-oil/gas is still affordable”

At Friday’s closing of $97/barrel??

“-taxes are low”

Just noticed a few days ago how the dividend tax credit for 2011 and 2012 is getting smaller and smaller, resulting in a higher net dividend tax rate each year.

“-cost of living is going down”

Oh boy.

#65 East Van on 11.20.11 at 11:16 pm

Would love to see an analysis of how long condos and SFHs are on the market before they are sold in Toronto, Monteal, and Vancouver.

#66 Get Real on 11.20.11 at 11:25 pm

# 55 Frank

Jesus loves you but everybody else thinks that you are an [email protected] #$%^

#67 JohnnyBravo on 11.20.11 at 11:29 pm

Activity seems to be picking up in my Downsview neighbourhood lately. But the houses are also getting snapped up very quickly. Every single For Sale sign I see also says “Sold.” I know, this “analysis” is about as scientific as the UN’s Intergovernmental Panel on Climate Change. But at least I’m not making it up.

#68 Keeping the Faith on 11.20.11 at 11:33 pm

#34 Stevenson
This is your eviction notice.
OGF (Occupy Greater Fool) is over.

Just like all the other Occupy movements you:
– make no sense
– have no message (‘it’s different this time’ and ‘fundamentals don’t matter’, do not count)
– will one day think to yourself “I was such an IDIOT”

Please cease and desist from Occupying this blog with your pathetic self-pleasuring posts.
No one believes you.
No one here likes you
Your posts smell of Real Estate agent vomit.

Please move along.

#69 MP on 11.20.11 at 11:36 pm

@ #45 Norton72

I’m on an IBM PC, same thing happens to me and it’s infuriating.

For some reason you can switch your keyboard type. I have to hit the Ctrl + Shift key on the LEFT side of my keyboard and it switches back. I have to do this every few months after accidentally switching during normal typing. Such convenience, eh?


#70 West Coast on 11.20.11 at 11:39 pm

Here’s one for you Nostra:

#71 Elmer on 11.20.11 at 11:46 pm

Why hold index ETFs when you can be fully diversified with just a few stocks? All you need is a bank, a telecom, a pipeline, a reit, and a utility and voila you hold everything you need and don’t have to pay any management fees. I guess you can use ETFs for, the non Canadian portions of you portfolio, but you don’t need one for the Canadian part as i’ve shown.

That’s a joke, right? — Garth

#72 Junius on 11.20.11 at 11:48 pm

#25 Jasonturbo,

What are you? A comedian? Not even worth wasting time responding to.

#73 West Side Survivor on 11.20.11 at 11:50 pm

re: Chris’ neighbours selling over asking. I agree – Kit’s isn’t dead yet, but the sales you speak of were 4 months ago? The over asking offers are over (according to my realtor). As well, houses aren’t selling in one week like they use to!

#74 GTA Girl on 11.20.11 at 11:51 pm

Everything that JasonTurbo said makes no economic sense.

If the world economy slows so does demand.

Pockets of Canada have the most expensive real estate in the world. For no other reason that pure speculation driven by a pyramid like mentality. Jeez, NewYork city looks reasonable.

Canadians are the biggest savers? Jason…please. The koolaid must taste real good at the BradLamb seminars

#75 Junius on 11.20.11 at 11:53 pm

#68 Keeping the Faith,

Actually i hope Stevenson stays. The fear and desperation is entertaining to read.

BPOE’s delusion has also grown on me. Another desperate pumper who has run out of time.

#76 Junius on 11.20.11 at 11:54 pm

#71 Elmer,

You got to stop watching Jim Cramer. That dude and his thin diversity strategy will get you in trouble.

#77 yogi on 11.20.11 at 11:57 pm

Unless the XL pipeline doesn’t get built, in which case we produce our bitumen to the few markets in Canada that can use it. All the producers have to lower their price for their bitumen to compete for that little upgrading capacity that already exists in Canada. In the meantime, all those projects that haven’t sunk their capital yet get cancelled. Trust me, never, ever, count on oil prices…

“It’s different here” are the most dangerous words ever uttered.

#78 Canadian Watchdog on 11.21.11 at 12:03 am

Most are quick to assume that the market will crash quickly in a low vacancy market, but only an exogenous financial crises would unwind the markets a la US style housing collapse. However with all this Euro turmoil and the US Supercommittee in deadlock, it’s 50/50 now.

The amount of immigrants being admitted into the country has had an impact on the rental market. This is widely reported in government and CMHC reports. While the media reports that citizenship is being reduced, foreign workers and students have been growing vastly over the years. All together, Canada admitted a record number of nearly 500,000 permanent and temporary visas, in which 40% of migrate to Ontario; of those 200,000 in Ontario, 45% move to Toronto. Immigrants are mostly renters; more renters feed speculators.

It’s a pretty chaotic situation when Toronto’s vacancy rate is 1.5%. I have a few conspiracy theories of my own believing that the government orchestrated this shortage by imposing heavy taxes (2010) on construction costs, developer permits and DCCs. All regional data shows that housing starts are below pre-2008 levels; this is probably due to the 2008 crisis that discouraged and delayed builders to form new homes, but also from higher building costs.

Toronto Vacancy Rates

The key data to watch next quarter is the Senior Loan Officer Survey reported by the BoC; also 5-10 yr bond, inter-bank lending rates. I’m a fundamental believer that ‘it is’ lending markets that will slow the housing market first. As for betting on a lack of fools willing to take on more debt, one can only conclude if it’s already this bad, surely there’s more.

Mortgage Credit Allocation By Type

#79 GTA Girl on 11.21.11 at 12:04 am

Stevenson; yes people have money..some call it lines of credit. If they’ve sold RE in the last couple of years most of these new rich folk are no doubt also buying RE. At top of the market.

The US retailers are aware of the crazy mentality of buy-buy-buy going on in places like Toronto. It’s why big chain stores have opened, Burberry is in Yorkdale…and Sting, DuranDuran and every other old celeb is hitting Canadian cities to cash in.

But then look at our debt to income ratio. Or lack of standard of living dollar to inflation.

Throw in credit card companies and mortgage lenders throwing money at Starbucks Barristas to spend spend spend.

Somethings got to give. Like 70’s Disco..BiancaJagger can’t stay on the white stallion at Studio 54…the party has to end

#80 The American on 11.21.11 at 12:26 am

Jasonturbo = BPOE, FOLKS!!! Why you say? Because everything he wrote is a lie (which he refers to as “facts” in typical BPOE fashion).

-houses in Canada are not cheap compared to the rest of the world
-house hold savings in Canada are at an all time LOW, and even NEGATIVE in many Canadian markets (due to taking on too much debt to buy a house). In fact Canadians are now more indebted than Americans. Worst in the entire G20.
-debt to income ratio is NOT on par with the rest of the world, hence why the IMF is now putting Canada on the top of its radar with great concern for its ability of its consumers to repay their debt without default
-oil/gas has tripled in price since 2004
-Taxes in Canada are anything but “low”
-cost of living is is accelerating in Canada

I hope Jasonturbo is playing a prank on everyone. Either that, or he is on par with being as stupid as BPOE.

#81 Double Trouble on 11.21.11 at 12:38 am

It’s over! We’ve been waiting years for this bubble to pop. Garth, we’re gonna take your advice and start vultching in April. We’ve got a decent down payment and will be looking for a pre-approved mortgage. What do ya recommend? Lock in for ten years with this insanely low interest rate? How long do you think the government will support the indebted masses with low rates?

#82 Nuke on 11.21.11 at 12:43 am

Just got back from a couple of weeks in Hawaii, the Big Island. Absolute paradise. Bananas, Avacados, Coconuts, Papayas, Strawberries outside our door. Kona Estate coffee. No bugs, no humidity. Return to the cold barren Toronto, who would live here unless you could do it for free or they would pay you. So having bidding wars for concrete blocks in drafty towers seems insane. Lets hope you are are right and Canadians get their senses back and reject this debt for life mania.

#83 Stasis on 11.21.11 at 12:46 am

Its over.

#84 Ozy - If the housing markets go South, brace for Impact on 11.21.11 at 12:46 am

If the housing markets go South, brace for Impact fellas. Is gonna be a lot of rising Unemplyment and short term deflation (that with gov help) will turn into 10% high inflation (banks will still pay low on GICs, that’s the trick, mortgages will be 6%). Play the cards smart, you can make 15-30% easy a year, minimal risk. Interesting times, ask yourself if you deserve more and if so, really why? If not, prepare to loose big, the future is not for every one (sheep in the flock). Tip: Don’t rely on buy& hold strategy, better get out now!

#85 LB on 11.21.11 at 12:53 am

The 75 billion of government funds directed to CMHC to backstop high ratio mortgages WAS a bailout and is a major contributing factor to our current federal deficit.

#86 oslec on 11.21.11 at 1:00 am

Is it opposite day in JasonTurbo’s world today??

#25 jasonturbo ……..

#87 U-The Man on 11.21.11 at 1:02 am

The GTA is not Winnipeg. There are many more greater fools here. In Markham, Monarch Homes released phase 2 (36 -40 ft lots) in The Nichols manor subdivision and in one week they all sold. The base price for a 2100 sq ft cardboard with brick facade home was $675,000 up to $900,000. It seems that cheap money is still motivating greater fools to buy.

#88 Timing is Everything on 11.21.11 at 1:03 am

Where did I say ‘collapse’ or ‘implosion’? — Garth

Garth, I vividly remember a slow melt mentioned. Holy cow, some renters are restless (stir crazy?)…. and some also have short (selective?) memories. ;)

#89 Nostradamus Le Mad Vlad on 11.21.11 at 1:14 am

#70 West Coast — Thanks for the link. Reminds me of Paranoid, by Black Sabbath!
The post’s heading seems to be connecting with some of the links here . . .
EU is a flop Bernard Connolly got it right in 1995, three years before the creation of the EU; How Long? Before the dictators walk over London? When Germany is ready, and Germany As mentioned earlier; Destroying the Pound Germany’s ongoing task; Strike Three As we’re going down anyway, let’s have a general strike; Telephone book I’m certainly not in the first 100 names of the phone book! Wall St. announces the world is ending, and the EU is taking a flying leap.

H.R. 3432 And now they come for the cows (to shorten to food supply — Agenda 21); More UK – German stuff; RE Joke of the Week; Maastricht Treaty; China; Not quite the origins of the mudshark.
Highest Yet Like the economy, Fukushima’s getting worse, and 5.2 ‘quake on north-eastern Japan; El Hierro Increasing whoopsie load; 0:29 clip Brand new overpass, cost $41 mln. to build and took two years to complete. Opened three weeks ago, this happened Sunday; Spain’s election. Not that it matters now; Patriotic In the UK, Muslims are the most dedicated; Exposing Faux Stories (News), consp. theories and other stuff.

Bioterrorism Scientists create lethal bird flu; Gingrich and Obomba What a revolting thought; Fairytales Iran and nukes, or The Boy Who Cried Wolf, but the US is the biggest sponsor of terrorism; Interesting question Only time will answer this; Time Bomb under the northern seas. GoM Part 2? Facebook tracking If the plug is pulled out so there is no power to a computer, no program can track anyone; Obomba’s Autopen The more physical laws a country writes, the less spiritual it becomes. Decay sets in.

#90 45north on 11.21.11 at 1:15 am

Westernman: JasonTurbo,

Housing is cheap in Canada compared to the rest of the world? How old are you… 10?

JasonTurbo: I had an accident. I glued myself to myself.

#91 NFN_NLN on 11.21.11 at 1:22 am

Garth, I can understand how the banks are protected by CMHC. So they may not take a huge hit. But don’t they at least generate some revenue from creating those mortgages?

Even if banks won’t collapse won’t they at least experience lost revenue, and won’t that be reflected in stock price or dividends?

#92 Timmy on 11.21.11 at 1:26 am

Two stocks in each of the five sectors of the economy and a bit in fixed income and commodities and your portfolio will outperform many of those recommended by most financial advisors,whom,many don’t even have acommerce degree

#93 604serf on 11.21.11 at 1:44 am

Check out the lame National Post article. The person interviews actually works in Condo Marketing, but of course the article does not disclose that.

I clicked on a link to her @mahlisah twitter account…and yep, she works for Magnum Projects…

#94 new-era on 11.21.11 at 2:00 am

Garth you forgot one thing

First, sales stall. Then listings stale. Buyers quit competing. Markets crumble. Prices edge lower. Buyers wait. Finally values start to tumble.


The Banks will make credit harder to obtain. Eg , the couple making 120 g’s will no long be able to get a million dollar mortgage. But a 400,000 one instead and more down payment required.

#95 Monte in van on 11.21.11 at 2:00 am

Houses in our Van west side hood are also selling less quickly now. Normaly there are multiple offers and things sell well above asking. But now two recent sales: asking 1.798 and sold for 1.725. The other was 1.598 and sold for 1.575. Both houses were on market about 3 weeks. (yes, still crazy but this is a big change folks.) The RE agents say its just the usual slow down but hmmm….we’ll just have to see.

#96 bluethunder on 11.21.11 at 2:27 am

The number of condos for rent in the 604 for more than $3K/mo is amazing. Who would rent an 875sq’ condo for $3795/month? The listings grow longer and longer everyday. All the same shoebox crap for outrageous
amounts that nobody here can afford anytime soon. Tip
of the iceberg.

#97 Cristian on 11.21.11 at 2:36 am

I am surprised to see emphasis on bonds, which at the current yields would bring nothing but a loss after tax and inflation, and there is no mention whatsoever of dividend-paying stocks (or ETFs). Dividend stocks are not as volatile and, if well chosen, who cares if they go down 20-30% for a while as long as the dividends keep coming in. Now that’s real income, not to mention of the tax advantages of dividends.

#98 Andrew from Saskatoon on 11.21.11 at 2:40 am

Garth, I’ve said it before and I’ll say it again. You’re not nearly bearish enough on real estate. Half-way through the decline? If that were true, it would invalidate every call you’ve made up to 2010 regarding a real estate bubble.

People have NO comprehension of how cheap real estate will be 10-20 years from now. If I really told people where I think prices will be for good homes, most would burst into laughter.

#99 stage1dave on 11.21.11 at 2:51 am

Digital dishrag, huh? That’s pretty cool…

We’ve signed another 6 mt lease on our rental condo to see us thru the winter, in the spring we’ll upgrade to a rental house. The GF & I have decided that the Edmonton market (down almost 25% in the last 5 yrs) still has room to slide, & our meager savings would be better spent exploiting our own emerging business opportunities. Nuthin’ ventured…

We’ve discussed moving back to Camrose (where the RE slide has been more pronounced, to put it mildly) but neither of us feels like commuting.

I’m almost wondering if my graded vintage hockey cards aren’t a better investment; the way the banks are acting. A pair of our 20-something relatives walked into their financial institution a couple weeks back thinking about upgrading from their condo, (which btw is 50K UNDERWATER in current market from purchase 2.5 yrs ago!) both newly saddled with a pair of 2011 brand-new car payments to boot; wondering what they could buy on combined 110K income…they PQ’d for 750K!!!!! WTF?

THIS is prudent financial behaviour in a declining market??? I’m just hoping their house/acreage lust gets overtaken by “Christmas Jollies”. I guess now that the banks have had their arses bailed out/covered by the taxpayer they’ve decided to throw the cash around like drunken sailors on shore leave…

On another note, lately my mailbox is getting stuffed with a continual flow of RE pumps, specials, offers, etc. (I really wish they’d print on a lighter, softer material so I could use it for toilet paper, or at least blow my nose in it…we’re always running out of Kleenex)

“$269,900! Only $432 bi-weekly!” Reading the fine print (which would drive an eagle to a microscope) reveals the following outrageous statement: “payments based on 5% down, and an INTRODUCTORY 2.75% (V) mortgage rate; subject to qualifying income”

The GF & I make an OK living, & could “afford” this with ease; but we both avoid debt like the plague because doing so allows us a great deal of freedom. Tying (what will probably be) a ball & chain around our necks is not high on our list of priorities.

And btw, I can’t make a deposit or withdrawal without TNLATB asking me about borrowing for housing, vacations, (what are they?) toys, etc. (and some of TNL’sATHB are REALLY HOT, least at my branch) Getting over that distraction, my mind will inevitably wander into that dark cesspool where I wonder what I would qualify for…hmmm…how much can I borrow?

That’s when I realize my eyes are starting to gleam, like they did when some guy told me he had a PSA 8 Orr RC I could “probably have for a grand”; or his grandpa had some old purple car in the garage he bought new with “…some really weird engine in it, spark plug wires run into the middle of the valve covers; & it’s got a scoop that pokes thru the hood…doesn’t want much for it” or “my dad’s got this guitar that’s shaped like a ‘V’, & he bought it in the 50’s; & he’ll trade it to you for that new lawnmower you bought ’cause he don’t play anymore”…uh-huh…

At that point I jerk myself back to reality. I might steal a quick glance at some modestly-displayed cleavage (hey, this is, after all, a bank) but I really don’t want to know…it’s just human nature to be tempted.

About what I would qualify mortgage-wise, I mean.

#100 Kits on 11.21.11 at 3:18 am

BPOE – not sure what you are smoking … the following north van listing started at $1.9M … it is now listed at $1.4M

#101 Bogdan on 11.21.11 at 3:33 am

[i]But because (in most of Canada) you can’t just walk out on a mortgage (the bank will hunt you down and eat you)[/i]
I don’t understand, why would the banks bother to hunt anyone? Isn’t the government the one going to hunt the mortgage owners that walk away, because of the CMHC insurance?

#102 Property Manager on 11.21.11 at 3:35 am

As a Strata Agent, part of my duties are to sign forms, some of which are directly related to sales, particularly the form F, statement of outstanding fees, as the fees run with the strata lot, not the owner. Only two forms are required to transfer a strata lot, the form F and the form A freehold transfer. During the heyday, I was signing up to 6 form F’s per day. I signed one last week. None the week before. I am involved in buildings in North Vancouver and Burnaby. There was a little flurry of Form F’s last month, but very quiet now. I wil track it and post.

#103 Devore on 11.21.11 at 3:50 am

#20 Bench Warmer

The monthly payment they arrive at is based on a 35 year amortization, 20% down and 3.19% fixed for 3 years. I thought the 35 year amortization not allowed? Is this false advertising or can they still offer this?

With 20% down, they can offer anything they like.

#104 AB Bust on 11.21.11 at 3:51 am

Question, real estate agents love to report on days on markets. house have been on x many days, the lower the number thr better impression it gives to the overall market. but if they let the listing expire and put it back on as a new listing doesn’t that reset their fancy ratio? is there any regulation for this? I’d really love to know the avg number of days it takes to sell real estate.

#105 Beach Girl on 11.21.11 at 5:43 am

Ya, ya, where is my information on interest rates.

Had a great weekend. Art galleries, good food and fun, drunken debauchery.

Then one friend chirped to another.

Jesus loves you but everybody else thinks that you are an [email protected] #$%^.

Party kinda ended. But love the phrase.

#106 neo on 11.21.11 at 8:23 am

Credit is plentiful. You’re embarrassing yourself. — Garth

The credit markets “globally” are telling you and everyone else the exact opposite, especially in Europe. Monetization of debt is a not a viable solution any more than only being able to pay your mortgage by constantly tapping into your line of credit. You’re embarrassing yourself.

I thought we were talking about credit in Canada. Do we really care if Greek bus drivers can’t get plastic? — Garth

#107 T.O. Bubble Boy on 11.21.11 at 8:32 am

In the event of personal bankruptcy, CMHC has the banks insured. There will be no bailouts. — Garth

… except the bailout of CMHC!

#108 Taipan on 11.21.11 at 8:43 am

Good post Garth.


1)Provided anecdotes of real situations.
2)Mainstream media are being paid to try and convince everybody that the opposite is true. – Thats where you come in, Telling the truth.
3)The courage and understanding that canada has a bubble.

For those dawgs who think it will plunge quickly, be aware, that across the border other vendors dropped prices and started taking losses, kicking and screaming.

Want to speed that up? Get youselves a GFC2.

Garth i know, you cant see it. I think 3 months will settle the issue, starting tonight where futures are already down another 1.5%.

Is the world going to end. Hell no. Are we going to get anarchy in Canada. Hell no. Are a whole bunch of people going to lose their breakfast lunch and tea. Absolutely.

But the world wont end and in a few years, “the meek might just inherit the earth as they say!”

#109 In the Maritimes on 11.21.11 at 8:44 am

Re: Bank Prefs, Basel III, NVCC

I guess I wasn’t clear. Can you let me know one Fixed-Reset Bank Pref that has a Yield-to-Worst of the 5% you mentioned.

I just can’t find that yield on Fixed-Resets. Take Fixed-Reset RY.PR.Y trading at $27.45 with a 2014 maturity price of $25.00. Yield is only 2.68% factoring in the call date.

#110 SinOrSwim on 11.21.11 at 9:19 am

The market has stalled in Vancouver area. One RE office with over 100 agents reports that the phone did not ring for 4 hours one day last week, agent stated that the market has changed almost over night!

Listed @ 1.2 six weeks ago, three showings no offers.

#111 Mr. Lahey on 11.21.11 at 9:32 am

Folks, it’s not just Randy and me who think the shithawks are swooping in for the final kill. Here is a blurb from Jim Kunstler’s Monday morning blog, calling what the shithawks in Europe are doing for what it really is:

“Just to be plain here: nothing is working. The global system of accounting control fraud has completely unraveled. Nobody will lend money to anybody anymore because everybody suspects everybody else is lying about their ability to meet any obligation.”

Randy pass me some more scotch. We live in interesting times…

#112 Fiat Freddy on 11.21.11 at 9:50 am

#67 Johny Bravo

What price range are we talking Mr. Bravo?

#113 Tony on 11.21.11 at 10:10 am

I couldn’t think of a much worst place to put money long than Canadian REITs. The question is how many of them will go to zero?

None. Your commentary is as useful as always. — Garth

#114 bigrider on 11.21.11 at 10:11 am

If we take out recent Oct 4th lows in financial markets(highly likely) this blogs host may want to turn his attention 100% strictly to RE ,which seems to show at least some signs of cooling and then only maybe.

I say this simply to save him the anguish of trying to convince anyone the merit of investing in financial assets. Won’t happen. Complete futility.

#115 Fiat Freddy on 11.21.11 at 10:29 am

#52 Billy Contore

Thanks for the info from the front lines. $800k in 2000 and you are down to $1.1 million with no offers in site. This speaks volumes…

#116 Daisy Mae on 11.21.11 at 10:29 am

JUNIUS: “For those people with an iPhone or iPad there is a new App for Canadian ETFs called ETF Central.”


Thanks! It’s a free app thru iTunes.

#117 Hoser on 11.21.11 at 10:33 am

Norton and MP:
Assuming you are using Windows 7, this will fix your keyboard problems:

Control Panel
Clock Language and Region
Change keyboard or other input methods
Keyboards and Languages
Change Keyboards
Then remove any additional installed languages.

Additional languages are installed by default. Once you remove them so you only have one language you can no longer accidentally switch them.

#118 Credit Implosion on 11.21.11 at 10:35 am

Here is what should be done in Europe and yet won’t be done and the consequences of not doing are also spelled out at the end of the quote. From Friedberg’s 3rd Quarter Report.

“The full and prospective losses on all sovereign debt, and not just that of Greece, must be taken now.
National jurisdictions, and not the artificial European Financial Stability Facility, must underwrite the rights
offering of all the banks operating in their own jurisdictions and the recapitalization must be sufficiently large to absorb losses on all sovereign debts, realistically assessed. Simultaneously, an exit plan must be devised for countries that have not been able to adjust their cost structures and that exit plan must contain a return to some local currency (or perhaps a euro II?), a sharp devaluation, and an optional return mechanism to the euro if the European project is still deemed to be a desirable objective.
Because European leaders lack the vision and the courage to jump ahead of market fears, the real risk is that the above will happen, for happen it must, by accident if not by design, in a chaotic and panicky
atmosphere, causing a run on banks, followed by their closing and a full-fledged credit implosion.”

If you want to read the full report:

#119 eaglebay - Parksville on 11.21.11 at 10:41 am

#89 Nostradamus Le Mad Vlad on 11.21.11 at 1:14 am

More of your doomer BS and conspiracy everywhere.
You must spend all day (retired maybe) chasing all the weird websites. Many freaks out there?
You’re going to give yourself a (another?) heart attack.
Life is too short to worry about all that BS.
How’s Fukushima?

#120 Daisy Mae on 11.21.11 at 10:53 am

NORTON 72: “(Why is my keyboard doing this – é or É – on the backslash é question mark keyÉ)”


I find logging off and logging back on corrects the problem.

#121 Ret on 11.21.11 at 10:56 am

#33 Government pensions.

There are simple solutions to the government pension Ponzi payouts.

Limit payments out to 3-4 times what has been put in by the contributor. That would equal about a 15 year payout and is still very generous. How about a $1.5 M maximum payout? Nix the gold plated medical/drug plans and live like other Canadians. There are lots of solutions.

There are simple solutions to seemingly complex problems but you have to have the will to implement those solutions. You can only kick the can down the road for so long.

Harper and Dolton’s solutions to date, are to add pension plan payouts to the taxpayer’s annual deficit. Those annual deficit numbers either do not, or under report those future pension obligations. Down the road, services will be cut by governments to pay pension obligations to their union supporters or governments can float more paper in the bond markets and face potential bankruptcy.

Municipalities, colleges and universities are also hugely under funding their obligations and not accurately reporting annual deficits which should include pension liabilities accumulated in each year by their employees. They are hoping for never ending growth to keep afloat and provincial bailouts when it hits the fan?

Accurately reported deficits would reflect annual future pension credits earned by employees and have those future obligations funded and added to the current operating deficits for that year.

Lots of articles written by Meredith Whitney on how US state and local governments gave away the farm in unrealistic union agreements and will not be able to meet their future contractual pension obligations to government employees.

In Canada, Bill Tufts, founder of, “Fair Pensions for All,” has raised similar concerns about overly generous and unsustainable public sector pensions in Canada.

#122 Marc on 11.21.11 at 11:02 am

Dear Garth,

While I agree with your advice that individual stocks can be “too volatile”, I do not agree with your advice to have people lump the equity part of their portfolio into ETFs/index funds.

My own personal opinion is that ETFs/index funds lump the good in with the bad where there are plenty of Canadian/US/International companies with large and growing free cash flow and dividend streams.

Maybe going the individual route requires more finesse however, if you can read financial statements, it can be done….


Do you have a secret hate of Quebec, specifically Montreal? I don’t think you’ve ever done an exposee on our market at all, leaving all the honors to Calgary, Toronto and Vancouver. Spread the wealth!

#123 Daisy Mae on 11.21.11 at 11:04 am

“In the event of personal bankruptcy, CMHC has the banks insured. There will be no bailouts. — Garth”


Defaults come out of the taxpayers pocket — it’s either the right or the left.

#124 Linda Pearson on 11.21.11 at 11:05 am

#116Hoser on 11.21.11 at 10:33 am

Or for as infrequently as this happens, you could simply restart. It always works for me.

#125 Grantmi on 11.21.11 at 11:11 am

This is what we’re competing with Vancouver folk for a house. The decks are stacked against normal Canadian born folks. How do you compete for a house when your competition has twice the purse you have!!!!

“move along.. Nothing to see here!!”

#126 bigrider on 11.21.11 at 11:12 am

Gerald Celente

Here is some of what’s really going on in financial markets

Not exactly. That’s what happens when you put your faith in a US hedge fund. — Garth

#127 bill on 11.21.11 at 11:47 am

” #71 Elmer,

You got to stop watching Jim Cramer. That dude and his thin diversity strategy will get you in trouble.”

and doesnt kramer promptly dump what he is touting?

#128 Roial1 on 11.21.11 at 11:53 am

#42 Nostradamus Le Mad Vlad on 11.20.11 at 9:43 pm

It’s over, all high-ratio, high-risk mortgages in Canada are insured by the taxpayers . . .” —
Congrats. H – F – C.

Hey, do you remember when H.F.C. was a high interest finance co.?????

Things just don’t change, Do they???

#129 Kilby on 11.21.11 at 11:58 am

North Vancouver.

The two “Atrium” towers on the waterfront, each with 86 units have been for sale for 1 and 2 years respectively. According to the mailman (most reliable source here) the 2 year building is 40% occupied and the 1 year, 20%. The real estate company has has continuous open houses, there are 3 1 bedrooms advertised, $499K and $509K 565 square feet and only 100 metres from the shipyard that just won a 8 billion dollar contract. The noise and sandblasting dust are always here…..The quality is not. Don’t see how any of this can go on.

Last 7 days, 727 residential listings and 7 completed sales, most expensive $485K, rest under $405K. Penticton is known for being the city with most debt in BC……They just re-elected the mayor responsible for another 3 years….One wonders………

#130 From Man on 11.21.11 at 12:02 pm

#132 Mclovin 11.18.11

If I were buying in the Kelowna market, I would wait until the MOI ( months of inventory ) on the market comes down to below 9 months. Skye is part of the Waterscapes development. There is an entire completed condo building in that development that is empty and mothballed……..Keep an eye on population growth for Kelowna ( govt of BC website ) and MOI. Prices have a ways to fall yet in my estimation.

#131 SQUIDLY IS GONE on 11.21.11 at 12:07 pm

“First, sales stall. Then listings stale. Buyers quit competing. Markets crumble. Prices edge lower. Buyers wait. Finally values start to tumble.”

Garth, you’ve said the exact same thing in early 2009. Never happened to date.
Stop scaring impressionable souls.

Guess you don’t live in Victoria, Kelowna, London or Halifax. — Garth

#132 Coraline on 11.21.11 at 12:08 pm

No one has commented about the new housing “strategy” coming out of the UK this morning. The coalition announced that it will back 95% mortgages to purchasers of new homes. Incredible, what a freaking scam.

Link to Guardian:

#133 From Man on 11.21.11 at 12:17 pm

#130 westernman 11.18.11

I realize you are a knuckle-dragger, but did you just crawl out from under the rocks ? Even DA ( who is still furiously punching away at his calculator keys, trying to figure out the demand/supply equation) is able to follow the news. Our esteemed leader himself, Mr. Harper, is telling us how great Canada is relative to the rest of the world.
So are you saying the Conservative policies are ruining us ?
If so, who would be better ? The Liberals I guess, since it is they who last balanced the books…..
( or you could start spouting nonsense about how superior Alberta is. except they won a geological lottery. without oil and gas Alberta would be nothing)
start answering questions like a man rather than a spoiled little infant………

#134 Westernman's mother on 11.21.11 at 12:20 pm

#119 eaglebay – Parksville
yep, we know you get all of your “news” from the MSM.
Somebody needs a good spanking

#135 meslippery on 11.21.11 at 12:22 pm

Note the year 2006 USA

#136 bill on 11.21.11 at 12:24 pm

jason turBPOE you say?
I thought there was a “d” in there somewhere.

#137 neo on 11.21.11 at 12:31 pm

I thought we were talking about credit in Canada. Do we really care if Greek bus drivers can’t get plastic? — Garth

Garth. It is called Globalization and the inter-banking relationships that exist. Who cares about Greece. I don’t. You are the one focusing on it. Please for once look at the bond market in ALL the Euro zone countries and tell me you can’t see the stress that is taking place. Even France and German yields are close to inverting. You either have no understanding of how credit markets work and how they are a better economic indicator than equity markets or you are being coy about it. Until the credit markets are properly addressed, equities will never hold any meaningfull upswings regardless of the hopium rallies that have taken place. Again, I will be proven correct and you will be proven incorrect. Tempus Fugit…

Euro bond yields are so yesterday. — Garth

#138 JohnnyBravo on 11.21.11 at 12:38 pm

#112 Fiat Freddy on 11.21.11 at 9:50 am

Most of them would be in the $400 to $600 range. But there is the odd home for sale that would currently fetch over $800. My neighbourhood is an old one with lots and lots of new builds and major rennos.

A quick scan of the MLS shows more and more homes in Toronto, being priced at (just) below $300,000. A few months ago you’d be hard pressed to find ANY SFDH at those levels.Mind you, these were the same homes that 15 years ago were selling for $150 – $200.

In any event, right now I’m more worried about prices on the stock markets. The US Super Committee a failure (I’m shocked!). AND MF Global announcing the losses are not in the hundreds of mils, but in the billions.

Trust and confidence are quickly being eroded. I hope we are not on the edge of another 2008 run on the financial system as some think is possible. But the news today just keeps getting worse.

#139 TaxHaven on 11.21.11 at 12:42 pm

“Finally values start to tumble.”

Not “values”…PRICES. How can something unsold, without offers, have a defined “value”?

And ALL governments think alike. All of them are utterly clueless, totally Keynesian and universally reactive: Britain too is now mulling offering 95% mortgages…

#140 disciple on 11.21.11 at 1:26 pm

Good Day, ladies and gents. Much thanks to my ghost-writer for a valiant attempt, but I need to clarify that the Earth is not 6000 years old, and that although the black pope and the Jesuits hold esoteric power, the concept of the Illuminati is more marketing trick than genuine sick.

No, the real sicko’s are in the entertainment industry. A significant number of literary works and film productions are used for and/or created for use as programming script. The Wizard of Oz, Alice in Wonderland, Shakespeare, Mickey Mouse, Johnnie Darko, Labyrinth, Britney Spears etc…

Message to “Jeff”: Alex Jones is a CIA agent. The mixing of truth and outright lies is a very potent form of mind control. We must be ever vigilant.

#141 Fabrega on 11.21.11 at 1:27 pm

#25 jasonturbo

What are you smoking dude????

#142 Harlee on 11.21.11 at 1:28 pm

#82 Nuke
Oh gawd,here we go again…Someone complaining about how “cold” it is and why it’s so miserable to live where they are. The worst are from B.C. of course. Now Nuke claims to live in Toronto. I checked the weather for that city and today it’s -2 to +2. That’s NOT cold,that’s Spring !
You know what we real men in Saskatchewan call “cold”? When it goes down to -30 I put on my parka when I go out. When it dips down to -40 I put on a sweater with my parka and might mention to someone:’Kind of feeling cold out there…” I must admit the breeze is a bit “brisk” at -30. REAL Canadian men know how to make love in a canoe,in -30 weather,with a wind chill of -35 on the frozen Saskatchewan River. The only difficulty is when you do that,you can’t wear long underwear -it gets in the way of everything….
I know,this isn’t a “weather blog” but geez I’m getting tired of posters here using the “cold” weather as an excuse not to live in B.C. or T.O. when it’s all B.S.
As a REAL Canadian man who knows what REAL cold weather is,it’s all rather embarrassing to me,especially as this blog site reaches an international readership. Man up now and stop it.

#143 Form Man on 11.21.11 at 1:36 pm

#130 and #133

that should read ‘Form Man’ I think I got hacked by Devil’s Advocate……

#144 Lostinthewilderness on 11.21.11 at 1:48 pm

MSM report on Canadian Home Prices.More peole getting the message.

Canada Income Inequality: How A Growing Earnings Gap Is Raising Home Prices For All Of Us

#145 Van guy waiting on 11.21.11 at 1:49 pm

Active listings in the rebgv have dropped 15% since Sept. Sales on pace to be better than Oct.

#146 disciple on 11.21.11 at 1:52 pm

I believe the real economy has been diluted and polluted with dirty money (sex, drugs, and music) to such an extent that we should pay more careful attention to what Big Media is feeding us to get a glimpse into what will happen to the markets.

P. Diddy (aka Sean Combs) is a linchpin (central cohesive element) in the music industry. His father worked with Frank Lucas, was murdered, and I believe, Diddy’s success is a pay-back for the guilt felt by Frank Lucas. Diddy’s single “I’m coming home” hints at his guilt for Biggie’s murder and is contained in the album, “Dirty Money”.


#147 kc on 11.21.11 at 1:58 pm

99 stage1dave on 11.21.11 at 2:51 am

“some really weird engine in it, spark plug wires run into the middle of the valve covers; & it’s got a scoop that pokes thru the hood”

hey. if you run into tooo many of these deals let me know and I will give you my number and I can help you out here…. LOL

cheers (nice post)

#148 bigrider on 11.21.11 at 1:59 pm

#126 Garth to Bigrider- “Not exactly. That is what happens when you put your faith in a U.S hedge fund”

Garth you yourself have said that alternative strategies like hedge funds have a place in a persons portfolio. Pension funds have been allocating more to hedge funds over past several years and they have due diligence processes way and above those of average individual investors.

Does it not boil down to trust, fiduciary duty, ethics and culpability or is it just a dog eat dog, evil world out there?

If you invest the bulk of your assets in a foreign hedge fund run by a guy you’ll never meet that’s making bets against high-risk sovereign debt of nearly-insolvent states, you deserve what you get. — Garth

#149 Nostradamus Le Mad Vlad on 11.21.11 at 2:08 pm

#119 eaglebay – Parksville — “Your commentary is as useless as always. — Garth”

How are the berating and insulting lessons going, eaglebay? Really turns you on, eh?

To each their own.

That was my comment to Tony, who had nothing of value to add to this blog. — Garth

#150 Seller on 11.21.11 at 2:08 pm

Someone asked how they can sell short Canadian residential real estate. Here are the best ways:

1. There is a company called Genworth Mortgage Insurance Canada (MIC.TO). It competes against CMHC for the insurance of Canadian mortgages and typically ends up insuring the highest loan-to-value properties. It has approx $260 Billion of mortgage insurance in force and only $2.5 Billion of equity. There are options listed on the Canadian exchange as well, so you can either sell the stock short or buy the put options.

2. Another company with lots of exposure to dodgy residential mortgage credit is Home Capital Group (HCG.TO). This is Canada’s largest sub-prime mortgage lender. As the big banks have drawn back their exposure to the riskiest markets, HCG has been growing share. It is dependent on retail GIC’s for its funding and the business could easily go poof if confidence evaporates.

3. Canadian Western Bank (CWB.TO) is the weakest of the Canadian banks from the point of view of exposure to Western Canadian property developers (somebody has to be lending to ski chalet developers in Big White and Revelstoke, my guess is that CWB has a disproportionate share).

4. For a flier, it is interesting that the Horizon’s HFD (double inverse exposure to Canadian Financial sector) is option eligible. So for really risky and leveraged exposure to a Canadian banking crisis resulting from a property crash (which will probably be a logical consequence, despite what Garth says), try some out of the money call options on HFD.TO

#151 jasonturbo on 11.21.11 at 2:53 pm

86 oslec on 11.21.11 at 1:00 am Is it opposite day in JasonTurbo’s world today??

#25 jasonturbo ……..

today is a day traders dream.
remember fear mongering…. media, this blog, recession, bail outs, gold gold gold is going to the moon 5000 oz. its all different types of fear.

if you didnt follow the news, gold blogs, or this blog what would change in your local area. in my area nothing, its still booming help wanted every where….

its a perfect day

#152 Alex B on 11.21.11 at 2:58 pm

As one of the people who are hoping to possibly buy in the next few years, I do have worries. What if the Canadian Gov. keeps interest rates rock bottem like Japan for the next 10yrs +? If we apply standard inflation to houses here in Calgary, even with a 30% correction, with how much principle you can put down in 10yrs with 3.5% interest, isn’t that still well within inflation? What if people just sit on the houses, can’t sell, but keep making the payments, will it still death spiral? I realize its mega high, but can the gov backed mortgauges and low interest rates keep prices still bubble high for many years to come?

I suppose it comes down to risk and return, TFSA investments are great, but you’re pumping rent anyways, with long term low % rates and 3% inflation per year, we’re still gambling on major correction. Also if down payments go up to 20% and interest rates spike, say with even a 30% correction, does this improve affordibility that much? I’m not sure.

If rates stay low for 10 years housing prices will be the least of your worries. — Garth

#153 Fiat Freddy on 11.21.11 at 3:02 pm

#138 Johny Bravo

The price range you indicate is what I thought as I know the GTA. You said in your response, “trust and confidence are quickly being eroded. I hope we are not on the edge of another 2008 run on the financial system as some think is possible. But the news today just keeps getting worse”.

I wish it weren’t so but we are on the edge of something far worse than 2008. Read Al Friedberg’s Friedberg Mercantile’s 3rd quarter report, Garth’s dismissive comments of him notwithstanding. I will give you his final line:

“Odds for another worldwide Great Depression of a length and magnitude similar to the one begun
almost 80 years ago have risen considerably. I do not believe that markets have properly discounted this
horrifying prospect.”

#154 Bill Gable on 11.21.11 at 3:04 pm

Watching the head of the ECB on Sixty Minutes last night and although a consumate Pol, she also came off as more than a wee bit unsure about Italy, Spain, Greece, and the USA.

“Worse than 2008 in many ways”.


Addenda: JasonTurbo – where have you been living, Pluto?

#155 Vigilante on 11.21.11 at 3:25 pm

Not sure about the rest of the country, but Garth’s prognosis is not true in Edmonton.
Two things need to happen for the market to go down substantially in Edmonton.
Interest rates need to rise and if un-employment increases. Both are not happening anytime sooner in Edmonton.
But at the same time Edmonton property prices will not go up either. It stays the same with seasonal adjustments or a slow melt for an extended period of time. Anyway it not a good time to buy, but the relief is not near either.

Sales here are pathetic, but yet the sellers won’t budge with the price because the interest rate costs are almost free. Some price reductions are tricks by the realtors in which they list initially with the seller forced 2007 prices.

I wrote: “First, sales stall. Then listings stale. Buyers quit competing. Markets crumble. Prices edge lower. Buyers wait. Finally values start to tumble.” Sounds like Edmonton is in the process of doing exactly what I said. — Garth

#156 Roial1 on 11.21.11 at 3:27 pm

Is’nt this what you call a “Freudian slip”?

That was my comment to Tony, who had nothing of value to “ass” to this blog. — Garth

I am enjoying a hearty laugh. Thanks Garth.

#157 bigrider on 11.21.11 at 3:32 pm

Good post today Garth by the way and responses to my comments about MF Global fair enough.

You did say a way back that you would be commenting on the current operations of CMHC and whether or not it is a company that should continue to operate.

You make much mention of it, but never an opinion on it’s culpability and viability going forward.

#158 disciple on 11.21.11 at 3:45 pm

‘For God doth know that in the day ye eat thereof, then your eyes shall be opened, and ye shall be as gods, knowing good and evil.’ – Genesis 3/5

Modern Western civilization was built on sugar, tobacco, alcohol, opium, tea, chocolate, coffee, and on a religion discovered through the use of psychedelic chemicals found in mushrooms. Those brightly-coloured eggs we are looking for on Easter are amanita muscari. Red and white among the green = Xmas.

Food is drugs, drugs is food, let’s not be persuaded otherwise. Those “foods” that will help us are restricted, while those that numb the acuity of our senses are advertised incessantly. Why are the streets of our cities empty on Saturday mornings? Because we have spent Friday night, finding meaning through “food”, and ultimately failing over and over again, because we do not do what we need to do, which is find the TRUE SELF with real food.

#159 Van guy waiting on 11.21.11 at 3:46 pm


Buy your chalet in Whistler. Garth says prices are at 2002 levels.

Actually it was a local realtor who made that comment. — Garth

#160 Darjean on 11.21.11 at 4:02 pm

I’ve been following this blog for quite some time and have learnt so much from you, Garth, as well as some of the other posters on this site. Thanks! I’ve taken the leap and established an account with a discount brokerage; made a couple buys, Royal Bank Canadian Dividend fund and CIBC bond fund.

I would like some clarification now before investing further. Garth, you advise not buying individual stocks or equity mutual funds, but have previously recommended preferred shares. RBC sends me new offerings and one of them has been Enbridge preferred shares series “D”; 6.3 year rate reset preferred. Would these be considered “individual stocks” and would they be “too volatile” for a newly retired 59 year old who would like some income to supplement my rather meagre pension? Although I’ve learned a lot from this blog, (always invested in Government of Canada savings bonds and GIC’s), I still have a lot to learn. Thanks again for your always wise advice.

Best advice: get some help. And I hope the dividend fund is not inside an RSP. — Garth

#161 The InvestorsFriend on 11.21.11 at 4:23 pm

Seller at 150…

Believe it or not Genworth Mortgage Insurance, a private company, is also largely guaranteed by taxpayers. (ala Fannie, Freddy) At least that is my recollection.

I had expected Home Capital to crater in 2008 with the recession but it never happened. They are smart operators. But a real slide in house pries could be brutal for them. I just would not bet on it though.

Canadian Western Bank is quite conservative. May take some losses but don’t bet against them.

Shorting is a good way to get wiped out. Leave it to the experts. If you want to take risks, borrow and invest in something you think is cheap.

#162 Westernman on 11.21.11 at 4:30 pm

Form Man,
1. Everything i say on this blog is 100% true.
2. I am under no obligation whatsoever to answer any questions from the likes of you.

#163 Form Man on 11.21.11 at 4:56 pm

#162 westernman

great to hear from you buddy ! glad to see you are attempting to carry the torch that DA has passed. It is a bit of a dim flicker, now that I have thoroughly shredded all of his pathetic arguments. I don’t really tolerate the ideological trumpets who run and hide at the first sign of facts. If what you are whimpering about is true, back it up. Wipe your tears, stop sobbing, and give us some facts instead of childish outbursts.
I rather doubt you can. Your type are only content ranting at the uninformed. Education and information destroys you………

#164 Seller on 11.21.11 at 4:57 pm

Investor “friend”, you will find that the only people subject to the Genworth MIC “guarantee” are its customers. That is to say, in the event Genworth MIC is wiped out, the banks who bought mortgage insurance get 90% of their insurance value paid by the government. However, this only happens after MIC goes bankrupt.

If you are afraid to short buy a put. Puts on these companies (MIC and CWB) are very cheap in relation to their very high level of risk.

#165 Vigilante on 11.21.11 at 5:28 pm

I wrote: “First, sales stall. Then listings stale. Buyers quit competing. Markets crumble. Prices edge lower. Buyers wait. Finally values start to tumble.” Sounds like Edmonton is in the process of doing exactly what I said. — Garth

First, sales stall. – CHECK
Then listings stale – CHECK
Buyers quit competing – CHECK from 2008
Markets crumble. – CHECK from 2008
Prices edge lower. – CHECK from 2008
Buyers wait. – CHECK
Finally values start to tumble- Not until interest rates rise or un-employment increase, because homes have to become unaffordable for prices to tumble. I see many people just paying interest and waiting. Sure its a loss, but not unaffordable. People do insane things which we have no control over.

#166 Westernman on 11.21.11 at 5:35 pm

Form man,
Nice rant, but can you be more specific. Hard to respond to something as incoherent and aimless as your last post.

#167 Peter (NYC) on 11.21.11 at 5:38 pm


First – thanks for your url references – the clip you posted last week re: BBC Hardtalk was awesome. Keep them coming.

Geral Celente reference – not sure you or Garth got the nuance there. Celente (the MF Global reference) was not investing in MF Global’s hedge fund. He had a commodity futures trading account. Orginally with Lind Waldock then taken over by MF Global. He bought gold futures and would take delivery which was his way of purchasing bullion.

MF Global is in hot water right now because the firm took clients assets (illegally) and made proprietary investments with them.

Imagine you have a TD Waterhouse account and you get told that your funds were withdrawn b/c some TD Investment Banker used them to place a losing bet.

This is the equivalent. It really sounds scary.


#168 Stevenson on 11.21.11 at 5:46 pm

Where is the slow down? The hottest most inflated areas are still selling away. For so long we have said beware the Canadian RE. Think about it this way for those who didn’t buy when times were tough, those are the fools. The greater of the greater fool who didn’t follow. They can sell for more, but some of you will fitting of a way to make yourself feel beeter.

Some of you see people shopping at yorksale or driving a BMW expensive and accuse them affording it off a line of credit? There are very wealthy people here in Canada, but some of you don’t seem understand that because all you see is The Canadian market. Asian students drive those cars to high school now days. If someone sold a a 400 sq ft apartment in a tear down building in hong kong or parts of china they could buy multiple properties in the core. Canadian RE is not anywhere near expensive.

#169 kim on 11.21.11 at 5:46 pm

yorkdale is full of window shoppers and those who have nothing to do.In fact all malls i have been to seem to be like that. Its hard to find parking and walking around the mall. once you are in the empty stores its all good as you pick what you want and pay without waiting. the only real biz done in malls is the food court or any other food stores in the mall always have line ups. people can still afford a coffee , ice cream or whatever. My question is why do all these window shoppers and families goto the mall if they have no money? i would bet 90% of mall goes go there to hang out.

#170 Stevenson on 11.21.11 at 5:47 pm

*core of van or Toronto

#171 happy housing crash everyone on 11.21.11 at 5:52 pm

live in downsview and noticed nothing is selling. the only sold signs i see are the ones that sold almost three months ago. it seems like when the housing market is frozen like it is now realtors will leave the sold signs up for as long as possible. The last time i noticed sold signs being left for so long was 2008. the way the markets has been crashing and all the layoffs going around it is looking more and more like 2008. happy housing crash everyone.

#172 Luke on 11.21.11 at 5:56 pm

I have never responded to this blog or comments in it but I am now compelled to respond by this comment:

” ive been waiting and waiting for this melt down to start……. It wont happen as all the fear mongers on this blog lead it to believe. There is so much work starting up in Alberta/BC/Sask that its “different here” and the fact that there is no chance of Canada going into recession. USA wont let us, they need our oil. ”

Wrong. Just because they need it doesn’t mean they won’t let politics get in the way. They’ve already delayed the keystone pipeline to 2013 over politics. Not to mention recent U.S. protectionist measures, oil alone is not going to keep our economy going. They can’t keep their own economy going, that’s why they’re borrowing 33 cents for every dollar they spend. That’s barely sustaining the status quo. What makes you think this will go on forever?

“Interest rates will never go to 10 % because it cant.”

Wrong. When governments around the world start defaulting on their bonds, or they default through money printing, that is hyperinflationary. If interest rates in Canada are held down in that environment while they rise around the world then capital will be sucked out of this country faster than you can say election and we’ll be in the deepest recession in our history. I wonder what house prices would be like with 25% unemployment? Much higher than today I’m sure you think.

“If it does the Canadian Goverment will have to bail everyone out.”

Yes. Maybe. Look how great that’s working out in the states. At the expense of the future taxpayer. That tax payer by the way is already headed for a crisis by 2020 now that the baby-boomer generation is all retiring. There goes your cost of living argument.

“just look at the price of oil its right where it needs to be for the USA economy to take off.”

Wrong. Oil at $100 US a barrel marked the beginning of the U.S. housing crisis.

lets look at facts,

” -house is cheap compared to the rest of the world”
Wrong. Unless you are comparing all of Canada to major markets like London, Paris, New York and L.A.

” -house hold savings are at an all time high”
Wrong. Savings are evaporating already. There are lots of recent reports in the media that show savings are being squeezed out of working individuals, forget retirees.

” -debt to income ratio is on par with the rest of the world”

Wrong. Unless you’re comparing Canada to the U.S. and PIIGS Countries. Then you’re right. Guess where those economies are heading?

” -oil/gas is still affordable”

Wrong. Are you for real? It costs $4,000 in fuel to send a transport trunk carrying goods from Toronto to Edmonton. Have you looked at your grocery bill lately?

” -taxes are low”

You are adding ALL taxes right and not just income? 35% Income Tax (average). Sales taxes (in ontario, 13%). Property taxes. Gas taxes. Alcohol taxes. The average Canadian family pays 42.6% of it’s income out in tax in one form or another. What percentage do YOU think would be too high?

” -cost of living is going down”

Another hilarious statement. Try that statement on someone who lives in Ontario.

“Really Canada is booming. Either get in the boom or get out its that simple, there will be another real estate boom in the next year or 2.”

Wrong. Unless your definition of a ‘boom’ is a government that has been stimulating the economy with artificially low interest rates and capital injections. You better buy all the real estate you can.

#173 Westernman on 11.21.11 at 5:59 pm

A note to all those who have commented that the malls are full so everything must be O.K. ( I paraphrase ) I would like to point out that a bunch of soccer moms with over-extended credit cards buying cheap Christmas ornaments made in China in no way indicates a healthy economy.

#174 Form Man on 11.21.11 at 6:09 pm

#166 westernman

you seem to have the same reading comprehension frailties as DA. or is it memory ? we are all still waiting with breathless anticipation for your answer to my question :

which country in the world do you recommend Canada should be run like ?…….?

same question, many times, many days, ( check my posts ). can you answer it ? ……..?

#175 Devore on 11.21.11 at 6:09 pm

#93 604serf

That’s an amazing article.

“We call it mingles,” says Mr. Simpson, noting he often sees single women teaming up to get that first home.

“Single women are not waiting for Mr. Right to come along and sweep them off their feet. If they can’t afford it on their own, they mingle and pool their resources.”

He says the relationship is not much different than that of roommates, two people getting together to rent an apartment. What’s different is that they are buying.

Not much different, huh? Yeah, buying together is just like rooming together, except for the massive mortgage and that inconvenient contract. What happens when one wants to or needs to sell? Easy to ignore these minor details, when it always goes up 20% a year, except that it doesn’t, and it’s been mostly flat for years.

#176 Vince on 11.21.11 at 6:09 pm

@69. Change the language on your laptop to English-Ireland or UK. It’s the little “EN” symbol in the Taskbar tray at the bottom right. The E accent-egu comes up when you have it on English Canada, and it changes over to French. If you toggle the “EN” language setting, it flips back immediately.

In other news, condos are now selling at near $600/sq.ft. in my building in Toronto. 9th Floor, no view, midtown Toronto. It’s gotten to the point where it actually makes financial sense for me to sell the property and lease it back from an investor. There are still apparently fools left out there that are willing to ‘invest’ in this manner as well. I wouldn’t even have to move, my cash flow month-to-month would drop about $500/mth, but I could sustain that for about 140 months on the proceeds, with no downside/leverage risk of ownership. Hell, I can probably buy it back from the investor after-the-fact.

Anybody else considering doing this sell-and-lease arrangement?

#177 TaxHaven on 11.21.11 at 6:19 pm

@#15 City Slicker…

Hahaha…! $400,000 for THAT??? It’s joined to another house!

#178 in_calgary on 11.21.11 at 6:19 pm

it’s still easy enough to sell a house/condo here (providing the location is right). with 2.99% rates readily available (four years, fixed), i am surrounded by people (co-workers, friends) who recently bought or are planing to buy. been buying and selling re in this city for 20 years and my prognosis for calgary is: a mild price increase (3-5% per year) for another two years at least. those waiting for price drop missed their chance three years ago (winter 08/09 ).

#179 Bigrider on 11.21.11 at 6:26 pm

Fiatfreddy at # 153.

You can’t argue with friedberg.

Unbelievable performance.

They definitely rail against our hosts opinion of a ” muddle through” economy that’s for sure .

#180 Herb on 11.21.11 at 6:29 pm

#121 Ret,

“simple solutions to seemingly complex problems” simply suffer from too much simplicity.

#181 888realtor on 11.21.11 at 6:37 pm

The current monetarist model which been exercised since early eighties: print money –> distribute them through credits –> create middle class virtual wealth –> enjoy immense profits and conformist society.
Until financial elite has practical capability to exercise that model nothing will change. In Canada, here is still a room to feed more credits to people, maneuvering and manipulating monetary system – so we won’t see any noticeable home price drop soon.
Who, on earth, will refuse getting huge profits for nothing after all, there must be some serious prerequisite for that. Do we currently have any ?

#182 Westernman on 11.21.11 at 6:45 pm

Form Man,
You seem particularly venal and petulant today… did your wife refuse to let you out of your cage this weekend?

#183 I'm with Westernman on this one on 11.21.11 at 6:50 pm

buying baubles on credit does not indicate a healthy economy.

Actually the opposite.

#173 Westernman on 11.21.11 at 5:59 pm
A note to all those who have commented that the malls are full so everything must be O.K. ( I paraphrase ) I would like to point out that a bunch of soccer moms with over-extended credit cards buying cheap Christmas ornaments made in China in no way indicates a healthy economy.

#184 Michelle on 11.21.11 at 6:58 pm

@#142 Harlee-

Try living in northern Labrador with a wind chill of -55C.
But it’s a “dry kind of cold” so not so bad as long as your skin isn’t exposed for more than a minute :)
(and I was a girl)

#185 Devore on 11.21.11 at 7:04 pm

#107 T.O. Bubble Boy

… except the bailout of CMHC!

Only if mortgage losses exceed their capital provisions. TBD.

#186 Devore on 11.21.11 at 7:27 pm

#109 In the Maritimes

I just can’t find that yield on Fixed-Resets. Take Fixed-Reset RY.PR.Y trading at $27.45 with a 2014 maturity price of $25.00. Yield is only 2.68% factoring in the call date.

That’s basically yield to maturity (YTM). It’s why interest rates can double, but bond prices don’t fall by 50%. Easy to do for bonds, which have a fixed maturity date. Harder for preferreds, which vary in terms much more than bonds. Sometimes prices of different series vary between different types of terms, sometimes they are very tight. There are just more moving pieces for investors to consider.

#187 Devore on 11.21.11 at 7:43 pm

Not exactly. That’s what happens when you put your faith in a US hedge fund. — Garth

MF Global is not (was not) a hedge fund. They’re a futures broker. They allow investors to trade futures. Celente bought futures, and after MF Global illegally took the cash to complete his contract out of his account to fund their own obligations, he got a margin call. I don’t see what any of this has to do with hedge funds. This is about the market regulator (CME) failing to regulate.

#188 Harlee on 11.21.11 at 7:48 pm

#184 Michelle
I ALMOST made it over to Labrador when I toured Newfoundland in early September 2010.But that was just when Hurricane Earl came through and our tour guide thought it wouldn’t be wise to be on the open water,so he decided to cancel the boat ride. That night the wind was fierce but it had been fairly warm that day so we didn’t feel a chill.
For the record (IMHO)here is how the winter temperature rates in Canada: -1 to -19: Invigorating! ,20 to -25: Rather Chilly, -26 to -31:Kind of Cool,-32 to -37:Feeling Cold, Below -37:Effing Freezin’
Minus 55 as you mention is…unthinkable.
One day I do hope to get to Labrador,but I do think it will be in the Summer….

#189 Kilby on 11.21.11 at 7:59 pm

#184 Michelle.

“I was a girl” ???

#190 Form Man on 11.21.11 at 8:04 pm

#182 westernman

wifey stayed in the cage with me……..
you keep dodging and running. you cannot answer a simple question apparently. amazing

#191 jim on 11.21.11 at 8:05 pm

Alot of worried out of work realtors on this blog spending alot of time posting over and over again.If RE was doing so well you realtors wouldnt be here defending it 24/7. RE must be in more trouble then we all could imagine. Judging from the few sales in my area North York it would seem RE is entering a cold winter that will last for years.

#192 BPOE on 11.21.11 at 8:07 pm

The notion that people are carrying huge debts is a total myth. Canada is crawling with millionaires/billionaires and millionaires/billionaires from overseas are coming over in a tidal wave. All this talk about BPOE being affected by people in debt is a bunch of bull and the people propogating this garbage KNOW IT
Some of you see people shopping at yorksale or driving a BMW expensive and accuse them affording it off a line of credit? There are very wealthy people here in Canada, but some of you don’t seem understand that because all you see is The Canadian market. Asian students drive those cars to high school now days. If someone sold a a 400 sq ft apartment in a tear down building in hong kong or parts of china they could buy multiple properties in the core. Canadian RE is not anywhere near expensive.

#193 Nostradamus Le Mad Vlad on 11.21.11 at 8:08 pm

#134 Westernman’s mother — “Somebody needs a good spanking” — Ooooh, eaglebay / he / she / nuthead may enjoy receiving a good dose of what it puts out!

#158 disciple — Nice to see you back. Trust you had a good break from the blog. Your replacement was well chosen!
2:20 clip Oblunder preparing 20K troops inside US for ‘event’; EU woes could mess up this continent; Predictions frim Credit Suisse; US$52.5 bln. in bank debts due next month; Images of America in the 1970s.

On The Edge 100 mln. close to poverty in US; MF Global Billions frozen, not many served; Memo Found Anti OWS tactics; Rand Paul Automatic cuts in the budget; Taxpayers carry the risk for private mortgages inn the UK; Soaring City bosses’ pay vs. grunts; Super Committee fails in its task;
3:03 clip US, UK and Canada impose sanctions on Iran, so they’re all guilty of supporting a rogue nation; Tahrir Square Ongoing protests. The US – UN – NATO sure did a fine job of getting rid of all the trouble, so the Egyptian cabinet resigns; HAM (Amateur) Radio Learning another skill; 6:43 clip At least some of the judges haven’t been bought off; Farmland As farmers retire and see, Monsanto moves in; The Kennedy Murders and the following cover-ups.

Texas Secede now, or live under tyrants; Freeway collapses Infrastructure problems; Aspartame Now sold under a new name; Mayor Bloomberg ties terror plot to Lex Luthor. Santa and the elves are involved as well; Road Rage NASCAR fans jeer Michelle Obama.

#194 The InvestorsFriend on 11.21.11 at 8:09 pm

Seller at 164…

good point that Genworth shareholders would be wiped out before the government gurantee steped in the protect the banks.

However, your use of Investor “friend” was uncalled for.

And if you want to insult me, why be subtle about it?

You may address me as The InvestorsFriend, or as Mr. Allen.

#195 Junius on 11.21.11 at 8:26 pm

#172 Luke,

Good work going through this. Glad you posted.

One point. Houses in LA are now considerably cheaper than parts of Canada – in particular Vancouver. I had a friend up from LA a few weeks ago and he was laughing at our prices.

#196 maxx on 11.21.11 at 8:32 pm

#55 Frank on 11.20.11 at 10:47 pm

Oh yeah, I forgot, Canada’s got way better fiscal rockets than the coyote………

#197 Keeping the Faith on 11.21.11 at 8:40 pm

#168 #170, Stevenson
Please leave, you make no sense.

Posting with you is like playing checkers with a mentally challenged kid.

If you’re mentally challenged, that’s ok and I’m sorry for your disability.
There are other websites you can visit, just google them.

#198 Westernman on 11.21.11 at 8:59 pm

Form Man,
I’ve been thinking about your question and have come to the conclusion you should have an answer… and all you have to do is get up on your hind legs and beg…squeel like a pig, boy.

#199 jess on 11.21.11 at 9:10 pm

…and some have rented their homes out as B&B’s only to find out that some of the neighbourhood was thinkin’ the same.
Leveraged moveouts


Baum bombed
foreclosure mill shuts

#200 jess on 11.21.11 at 9:11 pm

Derivatives Risk in Commercial Banking
March 26, 2003

…”Most of the significant losses to date from derivatives activities have arisen from operational failures. A review of the largest derivatives losses bears this out. The collapse of Barings Bank in 1995, Daiwa Bank Ltd.’s loss of its charter also in 1995, and more recent troubles at Allfirst Bank in 2002 are just a few examples. In each of these cases, derivatives traders circumvented risk-management controls and the institutions suffered significant, sometimes fatal, losses from derivatives positions. ”

History of Japan Daiwa Bank
GOA report on AIG

Greenberg Sues (on behalf of Starr International and a large AIG shareholder ) U.S. Over A.I.G. Takeover

#201 Junius on 11.21.11 at 9:17 pm

#192 BPOE,

How do explain the rising household debt levels if everyone is swimming in cash?

You are so full of it. And not cash.

#202 Junius on 11.21.11 at 9:21 pm

#168 Stevenson,

You said, “Canadian RE is not anywhere near expensive.”

Excuse me? It is way, way more expensive than most of the US and large parts of Europe. This includes many places where you get paid LOTS more than Canada and get to keep more of it as well. You are once again without a clue. However you are entertaining as a reminder of just how desperate people like you have become.

You and BPOE should go on a date.

#203 Habbit on 11.21.11 at 9:37 pm

#190 Form man, Ignore westurdman

#204 Marty on 11.21.11 at 9:38 pm

Gold plated health/drug plan for civil servants ? last time I checked, employer’s part comes to 2.60$ per pay. Employee boots the rest, 70 $ or so.
As for PP, I agree retiring before 60 is non sense spp with defined benefits. PP are coordinated with CPP/RRQ.

#205 The thing in the basement on 11.21.11 at 9:58 pm

85 LB – the bailout does not show up in the deficit because It was basically an asset swap to supposedly
create liquidity in the system.

What happened was the BOC took highly liquid securities and traded them for CMHC mortgages from the banks. This was done by a reverse auction where the banks paid some kind of premium to unload them. That’s why the total stopped around $75B and not the $125B available.

Remember they said it did not create any risk to the the
taxpayer? It didn’t because the mortgages were already insured by the taxpayer.

#206 Westernman on 11.21.11 at 10:15 pm

Hey Habbit,
Ignore yourself.

#207 albertagirl on 11.21.11 at 11:16 pm

Winnipeg? Seriously?
I saw a comedian a few weeks ago that said he moved from Edmonton to Winnipeg because he wanted the same crap city but wanted to get paid less! HA!
Don’t get me wrong, I am a Fort Mac girl, raised in Edmonton, spent a decade and a half in Calgary, only to move to the ‘Peg for a year and then back to E-town….. My husband thinks the move to Winnipeg was a secret ploy to get him to think Edmonton was a great city (He’s a Calgarian). When we moved to The ‘Peg in ’08 (selling out 2001 Calgary purchase for more than double) we thought ‘Peggers were CRAZY. They thought they lived in Calgary (or Vancouver, or TO, depending on where you’re from) and were building bigger, better houses that the masses were coming to. It took us about a year to move away. No offense, Manitoba DOES have the ABSOLUTELY NICEST people in this country!!!! You are warm and helpful (probably due to this being Canada’s “Bible Belt”, I have never seen so many churches!) but your winter SUCKS and I’m from Fort McMurray!!! Then, the BUGS!!! I thought they said Mosquitos, no, there’s pill bugs, and dew worms, and wasps, and wood spiders, and ants and every two weeks there is a new infestation. Then the humidity and then the smell! Most of SW Manitoba is thousands and thousands of pig barns. Drive between Lorette, MB to Steinbach and count the hundreds of bards, with the hundreds of pigs. It STINKS! So, for me to think someone would spend $400K on ANYTHING in that provence (to quote Russell Peters) is MIND BLASTING! The only house worth that price are north of the city, along the Red River, and, well, they get flooded every spring (except 08, when I lived there, I guess I got lucky!)…. and I wont even go into the TAXES!!! YIKES!

#208 BackBacon Crusader on 11.22.11 at 12:08 am

Alberta Girl,

Waverly West is the newest subdivision in Winnipeg. There’s not a house there priced less than $450k, and most are in the $550-$650k range. It’s madness. I have an amazing job here (I moved back from Calgary in 2010), and I am paid the same here as I was in Calgary for the same job, so it’s really bumped up my standard of living, but to see people here actually plunking down those sums on homes is insanity. NOTHING justifies those prices in this city (the median FAMILY income is just north of 70k).

#209 Sky on 11.22.11 at 7:11 am

@ Peter ( NYC) # 167

Exactly ! The funds Celente had were seg funds.

When MF Global blew up, Celente’s market positions were transferred over to another brokerage. Shortly thereafter, the new brokerage issued a margin call re: Celente’s gold future’s contracts.

That’s when Celente found out he had nothing left in his seg funds account and couldn’t cover the margin call. The six figures he HAD in his account were ” disappeared”.

The corruption goes well beyond the supposed $600 million missing. No surprise there.

“The shortfall of commodity customer funds at MF Global Holdings Ltd (MFGLQ.PK) may be around $1.2 billion, about double initial estimates from regulators, the trustee liquidating the company said on Monday.”

#210 Shane on 11.22.11 at 3:11 pm

Garth, We need to hear the price of housing to decline in the GTA.


#211 PeterM on 11.22.11 at 3:57 pm

“…since all real estate ‘news’ in this country comes from Re/Max, real estate boards, CREA, Royal LePage, that wingnut cultist Don Campbell or economists from banks that make mortgages”

Garth, are the Teranet/National Bank home price indices similarly biased?

A useless index. — Garth