Primordial

In May a 66-by-160 lot in a hot neighbourhood in Richmond (if such a thing exists) went to market for $1.3 million. Had it been listed two months earlier, I heard, it would have been snapped by some horny Asian for $1.5. But, too bad. The moment passed. A month later is was $1.1 million, then an even million and finally $900,000. It sold this week for $790,000.

“It goes to show,” says one of my BC insiders, “that in a buyer’s market, sellers have to get their price to where the buyers are willing to pay.  When buyers are few, and sellers are many, you can see prices fall quickly and each new low sets the bar.”

Speaking of Denial City, seems sales on the steamy west side are cooling fast, and will be 40% below year-ago levels by the end of the month. Plus, January will start with more inventory on the market than at any time in three years (nine months now in Richmond). “Buyers are disappearing,” says Deep Listing.

In the godless GTA the local real estate board is spinning a different tale. Sales in the first two weeks of December were 11% higher than in the same month a year ago, which sounds smokin’ hot. But the comparison was to December of 2010, when sales crashed from 2009 by almost 20%. So, we’re not even back to levels experienced two years ago.

Meanwhile the average selling price has hit $460,967, which the Toronto Real Estate Board trumpets as being 6% higher than last year. But the SFH average in 416, at $708,993, is $45,813 less than it was thirty days ago. Don’t expect to read that in the Toronto Star, either.

So are we advancing or retreating?

As you’d expect, there’s no national real estate market. Local economies, confidence levels and supplies of greater fools vary widely. In lots of communities realtors are renting themselves out as reindeer since sales have cratered. In others the normal pre-Christmas lull has descended. In still others, scores of sellers have canceled their listings and are waiting for February to flood back during the real estate rutting season.

So it’s worthwhile reflecting on the kind of year 2012 is likely to be. That brings us to these two charts. One (top) measures how much money we save relative to disposable income and the other (bottom) how much we owe.

As you can see, the savings rate is -5% (that’s a negative number, which means we spend on average 105% of what we bring home), while the debt rate is +153% (an historic high, which means we owe one and a half times what we earn). These are averages, of course, so some people are fine and others are screwed. But still, it’s not hard to see how this average guy is living an unsustainable life, and even his real estate has not saved him.

In fact, Capital Economics had this to say a day or two ago: “As we move into 2012, the strong likelihood of a significant drop in house prices and further losses in equity values is troubling in its implication for the household sector.”

You betcha. Had it not been for a massive run-up in real estate values over the past five years, most people would be financial basket cases. Take that away, and we’ll have a national shortage of wicker.

Worse, the implications for the wider economy suck. As these economists remind, at a time when governments take on historic heaps of debt, the country depends on private savings and liquid wealth to shore up the national balance sheet. But, you can now forget that.

“Theoretically, the household sector is meant to be a net saver (or lender), but over the past decade households have been negative savers, or net borrowers. This trend mirrors the sharp rise in household sector debt. More importantly though, this debt-financed household spending spree has been primarily consumption and housing-related, as opposed to investing in cash-flow generating assets. As such, without any offset from additional income generating sources, future household debt obligations are now much heavier than ever before.”

This means most Canadians – with70% of people owning houses and mortgage debt at $1.1 trillion – have gambled on a single asset. They have little, if any, diversification, so if real estate tanks their net worth goes along with it. They’ve also chosen to stuff their money into a thing that costs a lot to own, as opposed to collecting dividends, interest or capital gains from investments that pay. More risk.

So if real estate stumbles, “a sudden weakening in the housing sector could have sizable negative spill over effects on the broader economy.”

This is why those people who come to this blog and salivate over a 50% price drop are morons. Nice morons, of course, but still moronic. Such an event would shave at least 5% off our GDP and immediately plunge the country into a recession. Contrary to what many think, this would not topple any banks or have Bay Streeters trading in their Mercedes for those Fiat 500 tinkertoy things, but it sure would jack unemployment and cream the middle class.

More likely is exactly what I’ve forecast for a while – an eventual 15% decline, and years of sales activity that will make Saskatchewan look mountainous. Let’s all remember that it required only a 17% drop in national housing prices Stateside to send that country spiraling into a swamp so primordial the Tea Party crawled out.

God help us if that happens. Without a gun registry.

276 comments ↓

#1 disciple on 12.16.11 at 7:31 pm

第一
第一
第一

#2 NewWorldPartyDotOrg on 12.16.11 at 7:33 pm

Canada’s, Europe’s and America’s economies are fake. They are all fuelled by debt. When debt runs out, they stop growing.

Read:

Fake Economy

http://www.newworldparty.org/2009/01/fake-economy.html

Now that Canada’s Housing Bubble has surpassed the US bubble, Canada’s economy might be more fake than the US economy in 2007.

Read:

http://www.newworldparty.org/2011/11/bubbles-extreme-maker-and-breaker-of.html

#3 Nostradamus Le Mad Vlad on 12.16.11 at 7:34 pm


Thursday night, I was introduced to some of the delightful music in the SweetCrackYerNutz, a.k.a. The Nutcracker with Cossack dancing, ballet and the like.

It was an adventure well worth repeating, ‘tho I doubt if I could ever do Cossack Dancing — my physical body can hardly stand having me in it!
*
#218 Steady Eddie on 12.15.11 at 11:03 pm — “At the end of the day the 99.9% mean nothing to the TPTB.”
— and —
#220 TurnerNation on 12.16.11 at 9:42 am — “But I’m just thinking too much…it’s all a string of perfect coincidences.”

Good day, fellow offsprings of the Great White North. Don’t have to believe or think. Instead, just know and realize what is happening.

There is a vast chasm between believing and knowing. Believing is for sheeple, e.g. orthodox religions such as Christianity, who prefer to have a ‘savior’ take care of their garbage rather than take full responsibility for their own lives and choices.

Knowing leads to a much better, way more fulfilling life, and in this respect, one has to be prepared to stand alone, outside of the norm.

You are both correct, so be different — it’s a great and abundant life! Ignore the paid-for and controlled m$m. Like politicos and lobbyists, they are there for the use of TPTB.

Break away from the mold, and break on through to the other side!
*
Obama’s Depression “America’s Greatest Depression began in late 2007.”; BoA Loyal? BoA is certainly not loyal to its customers; NAFTA The economic slide began with NAFTA; Eurozone “Prelude to Technocracy: The Derivatives Crisis”; Joy of Banking Better than the Joy of Sex, because money doesn’t talk back!
*
Ron Paul sees big growth, and most of Newt Gingrich’s followers are fake; Putin – McCain “All the world saw him ((Gadaafi) being killed, all bloodied. Is that democracy? And who did it? Drones, including American ones, delivered a strike on his motorcade. Then commandos, who were not supposed to be there, brought in so-called opposition and militants. And killed him without trial,” Putin explained.”; Las Vegas Sands “Adelson is the man who just gave a pro-Newt Gingrich group $20 million.” wrh.com; BBC Admitting they always fake it; A Positive Aspect of an entire town growing its own veggies; Good PR “Frightened by the prospect of a large scale public backlash against their stupid meter program, the cowards at Pacific Grinch and Ebeneezer have cut off power to at least 3 people in California who had been sickened by ‘smart’ meter radiation and had acted reasonably to have a safe analog meter replaced on their homes. [UPDATE: As of 2pm, Dec. 14, three more persons have been cut off by PG&E.]”; Cashless Voice Recognition System.

Brainless Only Bachmann is completely clueless; TSA What is it good for? Nothing; Okiller “I know the capacity that is there to make tyranny total in America,” warned Senator Frank Church in 1975. His warning was not heard.”; Iraq War Pricey, to say the least; CC “In fact, carbon dioxide is controlled by world temperatures rather than the other way around,” he told RT. ” which explains that if Toba or Yellowstone blast off, we’re headed into a never-ending winter; 3:57 clip Egypt repression. So much for liberation; Germany Just as Solyndra went bust, now it’s spreading.

#4 thewhitenight on 12.16.11 at 7:42 pm

I found a bottle, south african, for under 10$. I win. I always win. Yeah, i drink, duh. But what im getting at is

DELETED

#5 Michael on 12.16.11 at 7:48 pm

The average Canadian home costs 70% more than the average American home. Don’t think we’ll get back in balance with only a 15% drop.

#6 Van guy blazin kush on 12.16.11 at 7:53 pm

Garth,

Is it 4686 bonavista dr?

#7 thewhitenight on 12.16.11 at 7:53 pm

DELETED

#8 Stinky the Fish on 12.16.11 at 7:58 pm

50% RE drop coming in 2012 in Canada. Called by Stinky the Fish

#9 Helpful Advise on 12.16.11 at 8:07 pm

FIRST!

#10 Prepmonkey on 12.16.11 at 8:10 pm

I watched the US housing crash, seems like this one will be the same lies, spin, denial, anger and fear. I feel sorry for those peeps here in BC that have hundreds of thousands of dollars in mortgages, but I’ve seen how no one could have convinced them otherwise. I tried and became the village idiot. Too bad it will take the economy to lows never imagined here in beautiful BC.

#11 Junius on 12.16.11 at 8:12 pm

Garth,

You said, “This is why those people who come to this blog and salivate over a 50% price drop are morons. Nice morons, of course, but still moronic.”

100% agree. There is a big difference between those of us who fear a 50% drop and those of us who wish it. It will be hard on all of us even if the number is 15%.

#12 Ben on 12.16.11 at 8:12 pm

Hongcouver is finished. The gigs up and your gambling Asian knows it!

#13 Van guy blazin kush on 12.16.11 at 8:22 pm

The thing with that Richmond home posted above, they got greedy at the wrong time. With a tag like that, they just made their listing go stale. If they listed for say, 1mil, it might of sold for close to that. So if anyone needs to sell NOW, price it right, or lose more. This seller still made a nice profit though. They paid 390k in 2003.

#14 Boombust on 12.16.11 at 8:25 pm

I think the “20/80 Pareto Principle” rule will be very much underway sooner than most people realize.

#15 Boombust on 12.16.11 at 8:27 pm

“I’ve seen how no one could have convinced them otherwise. I tried and became the village idiot.”

Same here. The LOOKS! They think/thought I was crazy. Just didn’t get it.

#16 Onemorething on 12.16.11 at 8:33 pm

15% is a fair avg decline but would predict 2003 levels over the next 5+ years. The last three markets on the radar and worth noting are China-AUS-CAN.

That’s it!

#17 Dodged-A-Bullit-In-Alberta on 12.16.11 at 8:34 pm

Greetings: Went shopping yesterday to my favorite thrift shop. Picked up a new corded phone still in original sealed bag–$ 4 bucks. Grabbed another for bedroom, vintage phone, may some day be a collectable-$ 3 bucks. I am turfing the portable phones in the house. Batteries fail and cost more than a new unit. Refuse to buy batteries, helping save the environment. My printer failed, new model from same manufacturer will not use old cartridges. Digital camera cratered, new model from same manufacturer will not use old memory chip. Wife and I will go into 2012 with no Visa balance or debt, other than utilities and taxes owing to city. If Canadians expect our economy to survive, and jobs to be created where people actually make things for day to day living, we have to bring our industry home!!! I hope to see China implode in 2012, then maybe I will be able to buy quality lumber, plumbing supplies, hardware, fixtures, etc. again.

#18 curious! on 12.16.11 at 8:35 pm

Garth, I thought you mentioned an initial 15% drop atleast then a slow melt….now its an eeventual 15%????

#19 T.O. Bubble Boy on 12.16.11 at 8:43 pm

Despicable actions and more cover-up lies from the Conservatives — this time for EI benefits:

Diane Finley and Jim Flaherty cut hundreds of Service Canada workers this year, to the point that new claims now take 2-3 months or more to process, and people are making death threats because they are so frustrated and desperate to get EI help:
http://www.theglobeandmail.com/news/politics/ottawa-notebook/festering-ei-backlog-prompts-pre-christmas-violence/article2274440/

However, when it comes to doing press releases on EI recipients, the Government spews out this misleading statement:
“Number of EI recipients drops in October”
http://www.theglobeandmail.com/report-on-business/economy/jobs/number-of-ei-recipients-drops-in-october/article2273583/

You’ll notice in the details of that press release that the number of EI Claims is up, and the ONLY reason that the number of EI Recipients is down is simply because the Government has effectively stopped processing new claims!

Diane Finley (who is in charge of *both* CMHC and Service Canada) is now right up there with Peter “Piece Of Kent” environment minister and Princess Baird for most cynical/hateful Canadian politician.

#20 Josef on 12.16.11 at 8:44 pm

First!!!!!!! OH YEAH BABY!!!!!

#21 Kurt on 12.16.11 at 8:50 pm

“This is why those people who come to this blog and salivate over a 50% price drop are morons. Nice morons, of course, but still moronic.”

Actually, I hope that prices drop back to the long-term trend line for each market. The damage done by a bubble is done on the way up – it causes resources to be mis-allocated. Nothing can change that now, the money has been spent. A reasonably prompt, smooth return to appropriate valuations will flush bad debt out of the system and speed the return to a normal, healthy economy that allocates resources efficiently.

I *don’t* hope for a crash, an overshoot or anything else that would cause further mis-allocation of resources.

Will people be hurt by a return to normalcy? No, they were hurt by the bubble, and I feel sorry for them (and me – I can’t stand apart from the fate of my friends and neighbors.) A return to normalcy only ends the denial, and is a key step in healing. It still sucks though.

#22 Mister Obvious on 12.16.11 at 8:55 pm

Forgive them Garth, for they know not what they say.

Call me a fatalist but residential real estate will play out as it is destined to regardless of what any individual wishes. You know… “As ye sow shall ye reap” and all that stuff.

But you can’t blame those who have diligently saved for hoping these oblivious, irresponsible grasshoppers might get a dose of full on religion someday.

But realistically, we would all probably regret the fallout from an extremely deep real estate crash. Some of us may relish a future foreclosure shopping spree but in will occur in an even meaner world.

#23 longtime reader on 12.16.11 at 8:57 pm

Garth you had always maintained the correction will be a 15 percent quick drop followed by a slow melt for years. Now you are saying “eventual” 15% drop??? It looks like those of us who listened to you eventually are really behind..
It’s really disappointing that you cannot really trust anyone.

Some days I wonder why I bother. — Garth

#24 househornyhousewife on 12.16.11 at 9:00 pm

Awww come on Garth,

Those little Fiat cars are kinda cute .. besides, I think those are being marketed more as chick mobiles so I doubt any big businessman is going to trade in their beemer for that thing.

HHHW

#25 Devore on 12.16.11 at 9:00 pm

But still, it’s not hard to see how this average guy is living an unsustainable life, and even his real estate has not saved him.

And of course what is unsustainable will not be sustained. Meanwhile, party on!

#26 westcanguy on 12.16.11 at 9:08 pm

If the decline is only 15%, I think we should consider us ourselves lucky. Most of the world is still kicking the can down the road. I realize that Garth doesn’t agree but sooner or later, you have to pay to play. Delaying it won’t make it better.
When rates finally go up, all these idiots who bought overvalued houses with 5% or even nothing down thanks to the friendly bank, will start to feel the pressure. Money problems can really screw up a marriage.
I’m a single Dad with a very low six figure income and..I rent. I live in Saskatchewan and people think there something wrong with me because I rent. Well, there is something wrong with me…I’ve lived in Alberta and have seen what happens to people with more money and credit than brains. I also don’t want to live in a 1978 style of thinking that this province seems to hang onto with the exception of real estate.
Having said that, I don’t hope for a 50% drop in values but I do expect more than 15% before we bottom out.

Just so Garth can roll his eyes and call me a moron, I’ll say that Ron Paul would be the best choice for the Republican ticket and for the country. Romney doesn’t have a spine and Gingrich is a crook and would be more dangerous than Bush was. Obama was and is a disappointment but given the choice, the people will stick with the devil they know before they take a chance with the strawman or the corrupt thief…

#27 Debt's Dark Embrace on 12.16.11 at 9:09 pm

15% seems like a very safe and conservative prediction.

#28 Westernman on 12.16.11 at 9:14 pm

Junius,
Yeah, it will be hard on most of us, but definetly NOT all of us.
Those that have invested in useful, tangible, durable things and have honed skills that are in demand, eschewed debt and so forth will do JUST FINE. Those that have spent their time and money on things like getting a lot of hideous tattoo’s, becoming experts on which gangster has the latest bling, who’s hockey gang is doing well, who’s on Dancing with the stars etc, will have their financial anus’s cored out which is exactly how things should be according to natural law of consequences.

#29 reggie on 12.16.11 at 9:20 pm

Reggie’s semi-educated opinion:

– a catalyst is needed for a “real” decrease in house prices in non-speculative areas; rates up, unemployment up…or fear

– any “real” buyers before 2006 who are securely employed do not care about a 15% drop
– existing Toronto condos are not crazy, but new un built ones have some unsustainable valuations ($600-$700+ sf!?)

Who “may” get hurt?

– speculators (where this investment is too much of their portfolio)

– new buyers of non prime locations with small down payments, and barely able to make the payments

– 2009-2011 buyers who are not expecting to stay put for a few++ years.

If you could of bought a decent house 5 or 6 years ago you should have bought. You will not likely see values return to that level…what is more likely is you will see the last 3 years of growth removed.

In a real “large” city like Toronto where there are jobs, growth, population to support values….well real estate will stay high. Exurbs could fall….especially if gas rises.

The resource area provinces / cities should stay up too. Though there will be some commodity softness in the near term.

Vancouver….well I don’t get it, never have. Yes its nice scenery…but job prospects, salaries are so far removed from the real estate values there is no logic there.

The Atlantic provinces, well they are small and the population is small. Growth has not been as crazy in $ terms, but has been in % terms…keeping it less insane then other markets….some areas (neighborhoods) are out of wack with reality. Those are the most likely to fall.

Territories…no idea. I don’t ever see any info about them.

2012 Prediction:
– prime area (urban core) growth 2 to5%
– non prime (exurban, less desirable suburban) growth 0 to -15%
– rural area growth 5 to10%

#30 NAGA on 12.16.11 at 9:20 pm

Garth – I am not suggesting that you may be wrong – but I am confused. The confusion stems from various media reporting of the personal debt measure for Canada.

While everyone is consistent on reporting the actual number 153% – my confusion is related to various and conflicting definition of what this represents.

You defined it as a measure of total debt to gross income (for every $1 of gross income on average Canadians owe $1.53).

Others have used disposable income instead of gross income. This makes the situation significantly worse.

I have also read that one of the contributor to this increased debt is personal vs mortgage debt. I believe that the average number is approximately $30,000 for personal debt for the average family.

Another observation is that the traditional lending measure is that to qualify for a mortgage the lenders use a gross debt service ratio which as percent of gross income should NOT be greater than 40%. In other words the monthly payment to service all debts including property taxes on a home should not be greater than 40%.

Today we have seen reports that suggest that the feds are considering more changes to lending rules: possibly 20% down payment, 25 year amortization and for condos including the cost of condo fees in the qualifying criteria.

Should the Feds also look at the gross debt service ratio and enforcing it by not allowing the banks to take it off their books through financial engineering. If they have to accept the risk of high gross debt service ratios I think they would be more prudent with who they are lending to!

Debt to disposable income ratio. Why obsess? It’s too high. — Garth

#31 Canadian Watchdog on 12.16.11 at 9:22 pm

Who is saving these days anyways? http://i39.tinypic.com/2nlw85w.jpg

#32 Phil & T on 12.16.11 at 9:25 pm

If Canada (and Australia) see a return to the long term pricing line, it’ll be more than a 15% drop for “Mr Average”. There ARE locations where the boom has been less significant, but not many, so whilst they may see a lesser decay in prices, the many Estates built solely as a speculative exercise (in inappropriate capital “investment”) will bear the brunt of any collapse.

Massive, energy and space-inefficient houses, literally “thrown together”, on tiny land allocations, but, hey, “they look good” and that’s all that matters to the “keeping up with the Joneses” mentality.

Interesting times ahead for us all, whether we like it or not.

#33 Nostradamus Le Mad Vlad on 12.16.11 at 9:25 pm


“Primordial Tea Dog Party help us if that happens. Canadians – with 70% of people owning houses and mortgage debt at $1.1 trillion – Bay Streeters trading in their Mercedes for those Fiat 500 tinkertoy things, but it sure would jack unemployment and cream the middle class.”

There is the crux of the problem — an eroding middle class receiving lower wages, or rather, food prices are going thru the roof, so people have to make do with less from their incomes to keep themselves fed.
*
#189 Junius on 12.16.11 at 7:00 pm — Links have been previously posted. Shouldn’t be too hard to find them, so you’re on your own.

#17 Dodged-A-Bullit-In-Alberta — “I hope to see China implode in 2012 . . .” — Greetings DAB. It may well happen to a number of different countries, not only China and it could happen very quickly. In any effect, things will be changing, one way or another.
*
US inflation gives Fed hope (for what?); WTO Russia joins today; US Mayors Don’t care for the rise in poverty and homelessness; Honesty is the best policy Homeless man returns cash, life changes for the better; Recession or Depression? Someone can make that call.
*
Toasty Comet Right thru the heart of the sun; Ocracking under pressure for pipeline; Ron Paul “Basically, what Strassel is saying here is that she doesn’t WANT Ron Paul to win because his ‘views on foreign policy’ are that he won’t sacrifice more American kids to serve in wars on Israel’s enemies. Ron Paul has two enemies dedicated to keeping him from the nomination, Israel and the federal Reserve and both are represented in the Wall Street Journal.” wrh.com; NDAA Bill Passed The end of America; Flame Retardant Could be one of the causes in the explosion of Type 2 Diabetes; Russia As usual, the m$m are blowing this all out of proportion. “Sodium-22, with a half life of about 6 years, is used in medical applications. It cannot fuel a reactor and certainly cannot be used in a weapon.” wrh.com; 2:30 clip Russia proposes UN draft to bring US – Syria together at the table.

#34 Romeo Jordan on 12.16.11 at 9:32 pm

Sheet is getting bad here in Hongcouver.

Sinking fast.

I suggest that we will be 15% below peak prices (spring 2011) in 6 months and that this will just be the beginning.

We could actually fall 50% or more, although my base case remains in the 40% range.

xoxox
Romeo Jordan

#35 Dirt Dog on 12.16.11 at 9:49 pm

15% is just a way for Garth to cover his backside. In Vancouver we are well above the bottom of the 2008 meltdown market even with a future 15%correction. 30 years in the business and a couple of meltdowns under my belt, I am in the 50% camp. Herr Turner does not need the grief and wrath of a ‘specific’ percent, only that he called the trend.
P.S. Deck those halls, boys and girls.

My 15% is a national number. Such a correction would be significant. 17% leveled the US. — Garth

#36 Chaddywack on 12.16.11 at 10:03 pm

1.5M to 790k……..but what about those 747s landing every day with rich Chinese…..

I thought the world wanted to move here!

Funniest comment I heard recently in the Vancouver media was that there’s still tons of HAM coming here, but the Chinese have suddenly figured out that Richmond is prone it flooding so they’re all moving to West Van…….

Chinese have been a majority in Richmond for years now and they JUST figured out it’s built on a floodplain!? Seriously.

#37 MarcFromOttawa on 12.16.11 at 10:03 pm

Garth I don’t think people understand how harsh a 17% correction would be.

http://upload.wikimedia.org/wikipedia/en/c/c1/Median_and_Average_Sales_Prices_of_New_Homes_Sold_in_United_States_1963-2008_annual.png

On a chart it doesn’t look like much but it was enough to keep the Bernanke up at night.

#38 The Place to Be on 12.16.11 at 10:07 pm

A 15% decline will do nothing to make Vancouver RE affordable. A lot of people that post to your “pathetic blog” are indeed forecasting (and hoping) for a much greater decline there. I can tell you that prices in the Okanagan are seeing declines greater than 15% and are still not selling. 2012 looks no better.

#39 Macrath on 12.16.11 at 10:09 pm

$$
$$
$
[]___
/ /\
/____/__\
|[][]| || |
~~~~~~

#40 Nick on 12.16.11 at 10:10 pm

“Meanwhile the average selling price has hit $460,967, which the Toronto Real Estate Board trumpets as being 6% higher than last year.”

Yes, average selling price of $460,967 for first two weeks of December 2011 (+6% higher than last year) with no stats about listings and new listings?!?!:
http://www.torontorealestateboard.com/market_news/release_market_updates/news2011/nr_mid_month_1211.htm

But it was an average selling price of $481,748 for first two weeks of November 2011 (+10% higher than last year), new listings +16% higher than last year:

http://www.torontorealestateboard.com/market_news/release_market_updates/news2011/nr_mid_month_1111.htm

Summary: – $20,781 (-4%) in only one month… And maybe new listings explode in the two first two weeks of December?? Why they don’t give stats about that in December??

First buyers must avoid Canadian housing market until 2015-2016.

Long decrease of Canadian RE prices is beginning…

#41 Macrath on 12.16.11 at 10:10 pm

Damn didn`t work!

#42 Maxamillion on 12.16.11 at 10:13 pm

This weekend after shopping for useless crap relax and enjoy BBC doc How the West Went Bust

Part One
http://youtu.be/2-KVieLh9Uc

Part Two
http://youtu.be/ugbthPAJb_U

#43 Harlee on 12.16.11 at 10:13 pm

From “Dogma”:
#139 AmericanFemale
Compared to most Americans,most Canadians (male or female) really don’t care about civil liberities.Most Canadians (especially in western Canada) supported Prime Minister Trudeau when he enacted the War Measures Act in Quebec back in 1970. They think he did the right thing. Not a lot has changed in 40 years. A lot of Canadians are actually indifferant to the concept of “civil liberties”.
#193 Smoking Man
That clip was very funny. And don’t you just love their….accents?
Garth,this blog: “…realtors are renting themselves out as reindeer. ” Ho ho ho…Poor Santa…:-(

#44 Lookoutbelow on 12.16.11 at 10:18 pm

In the Garden City of Richmond, Garth, we have already seen a 15% correction from the highs of March April 2011. That was the time when the Hot Asian Money was flowing freely. Alas that madness, along with some heavy duty manipulation of pricing for those famous 66 x 120 lots by a company called New Land Strategies, based in Richmond, was at its peak. They purchased tens of properties in West Richmond with large deposits and long possession dates along with “the right to assign the contract” to a greater fool. It worked, just hope the CRA is keeping track of all those Capital Gains.

That lot that sold would be fairly valued at about $550K given the long term trend in pricing. That sounds like 30% lower from here. It’s going to be an interesting movie here on the West Coast but be warned, it won’t have a happy ending.

How can readers of this blog not understand a national average number? In some places it will be 0%. In others 40%. Sheesh. Must be Friday night. — Garth

#45 Raj on 12.16.11 at 10:21 pm

And then this,

http://www.thestar.com/business/article/1103497–investors-fight-to-back-out-of-trump-tower?bn=1

#46 Stupesing in Cabbagetown on 12.16.11 at 10:22 pm

Interesting article in the New Yorker about defaulting on debt: what is smart when done by a business is dishonorable when done by an individual. See http://www.newyorker.com/talk/financial/2011/12/19/111219ta_talk_surowiecki .

#47 Habs76-79 on 12.16.11 at 10:24 pm

I don’t think most people here salivate over any possible 50% drop in RE prices. I think most want a correction before it gets even worse and sadly tough medicine tastes bad but in the longer term may be better for all of us.

Now some may salivate thinking a huge drop in RE and combined with them having good or better finances they can then buy into RE and not feel oppressed by obscene mortgage payments and stupid long terms 30+ years, nor fear interest rates going up even as little as 1%. It may sound as if they are all salivating and waiting to laugh at millions of “house horny” fools, but it’s more that many want sensibility and reality to return to not just RE but to the economy and financing in general.

In the end there will be no stopping, nothing Carney, nothing “F”, nothing CREA, etc. can do to stop the deflating of the RE bubble. The only debate we will have is that will it be a POP! or a soft deflation? Once done housing will likely remain depressed for maybe decades to come. As too will our REAL GDP numbers and not the phony, politicized ones STATS CAN gives us.

With 30 odd years now of ever more available and ever easy to get cheaper credit we’d never have seen GDP numbers in Canada or the West in general as we’ve seen till now. But it’s all phony as a $3.00 bill and the Piper is playing his tune. It may still sound a little in the distance but his tune gets louder each day now.

Those that have done best to insulate themselves in terms of financing, saving, investing and a more realistic outlook to life will likely suffer all this to come the least.

#48 City Slicker on 12.16.11 at 10:24 pm

I thought the avg price drop in the US was 30%, national avg that is.

#49 Mr. Lahey on 12.16.11 at 10:26 pm

Greetings blog dogs. Just taking a quick break before returning to the amazing FASTPGFBDCParty in this my second last post. I will give a full review on Monday morning and then take a well deserved break from all the work that has gone into the FASTPGFBDCParty! The bearded oracle, gifted luminous mystic, all seeing, all knowing, former right honourable minister of national revenue, outspoken and fearless parliamentarian, defender of all rational thought against Ron Paul groupies, gold standard lovers, tin foil hat extremists, debunker of conspiracy theories, humble, sagacious visionary, best selling author, witty raconteur, champion of the little guy, tireless campaigner for truth, unflinching opponent of the real estate industry and over all jolly good fellow, Garth Turner, is once again leading everyone in a spirited east coast jig still attired in his Scottish Highlands tartan kilt. He is literally exploding with energy while Ron Paul and Mark Carney look like two cowboys showing up a gun fight with pellet guns! They are buckets of sweat, obviously worried about their debate this weekend with the sagacious one. Bubbles, Ricky, Julian and the rest of the Sunnyvale gang are really into this FASTPGFBDCParty! Ricky keeps pestering Ron Paul with taunts like, “hey Ronnie, should we move to an aluminum standard or a gold standard?” Bubbles went up to Mark Carney and literally placed his face next to Carney’s and with those thick glasses and big eyes and a pointed finger said, “I think you screwed us over Carney!” Gotta go, the bearded one is about to address the audience. Next report Monday morning. Have a great weekend blog dogs because we sure are going to!

#50 45north on 12.16.11 at 10:28 pm

In May a 66-by-160 lot in a hot neighbourhood in Richmond went to market for $1.3 million. A month later is was $1.1 million, then an even million and finally $900,000. It sold this week for $790,000.

BPOE where are you? What about the Hot Asian Money? BPOE you came on pretty damn tough, so where are you now? BPOE all is not lost. Kirkland Lake (ON) is booming.

#51 gladiator on 12.16.11 at 10:33 pm

I mentioned this 2 days ago, but it was shortly before a new post came out, so not sure many fellow dawgs saw it: 153% of debt to income ratio uses pre-tax income, but people have to pay the debt off with after-tax money, so if you want to have a realistic view of this situation, then assuming a 30% average tax rate, the real debt to income available for spending is = 153% / 0.7 = 219%!!!
“OMG” is not enough to describe the brown stuff we’re in, and it’s not chocolate, if you wonder…

#52 brainsail on 12.16.11 at 10:34 pm

#5 Michael on 12.16.11 at 7:48 pm

“The average Canadian home costs 70% more than the average American home. Don’t think we’ll get back in balance with only a 15% drop.”

I don’t know where you got those numbers from because the actual difference is much greater.

Average US SFD house is 2400SF and sells for an average of ~$180K while the average CDN SFD house is ~1500SF and sells for an average of ~$380K. Sorry, I do not have the time right now to provide any links.

#53 Pension Funds on 12.16.11 at 10:36 pm

Additionally, many pension plans have altered investment rules to allow for real estate “exposure”.

This might be the worst aspect of an eventual valuation trimming for most, especially public sector workers.

#54 jess on 12.16.11 at 10:36 pm

Quis custodiet ipsos custodes

Hanford engineer testified to problems at Bechtel’s cleanup chemical site….

Hanford Challenge – engineers raised concerns
poor mixing in the tanks build up solid trap hydrogen gas could lead to fire or explosion, corrosion

Department of Energy is the owner and a regulator at the same time!

http://video.msnbc.msn.com/the-rachel-maddow-show/45692124#45692124

#55 TheRealTruth on 12.16.11 at 10:41 pm

15 percent correction and higher rates in the future. I’m so glad I bought in 2008. The low rate and money saved from renting more than make up 15 % decline. Nothing to see here nice morons.

Why not greater than 15%? Could it be pop growth ? Hahaha.

#56 Nostra Vlad de Mad on 12.16.11 at 10:47 pm

ONTARIO’S CREDIT RATING WITH MOODY’S ABOUT TO BE CUT!

If you have money, save it for the coming real estate collapse. You should be able to buy real estate for nice prices with cash in hand.

#57 Van guy blazin kush on 12.16.11 at 10:49 pm

How can readers of this blog not understand a national average number? In some places it will be 0%. In others 40%. Sheesh. Must be Friday night. — Garth

0%???? Oh oh,

You just disappointed many many people!

In Bathurst, NB? — Garth

#58 Usuk on 12.16.11 at 10:57 pm

49th! Oh crap, I’m not. Guess I’m just another loser – brownie points if you can find the others!

#59 TurnerNation on 12.16.11 at 11:04 pm

I saw a GM Volt today (new electic car). Noticed plate read: MAYOR 1. Looked inside, it’s Mayor Hazel of Mississauga (she’s about 90, served for decades).

Electric cars are in existance for 100 years now. Yes, back in the day they were serious contenders to gas engines. What happened? Well we had an Oil Man, then a Son of Oil Man + former Oil Co. VP run the USA recently. Sorry, no battery men found.

GM Volt (a POS) gets, what, 60-80 miles per battery charge?
Really? Do you seriously believe that after 100 years of technological advances, an electric car can only obtain these pathetic numbers? Whereas every other technology found light years of advances? Can any rational person justify this view? Technology is suppressed. The war is indeed for our minds.

GM did make a feeble attempt years ago at a decent electric car. It was successful. Too much so. It was crushed, with police beating off the protestors:

http://ev1.org/

Oil’s well that ends well.

#60 Curious! on 12.16.11 at 11:04 pm

Ok, with 15% national correction, which market is set for 0% correction, the 416? Surely not the Gta burbs (e.g Mississauga)

#61 TurnerNation on 12.16.11 at 11:11 pm

Found this, just for fun:

The ANT AND THE GRASSHOPPER
This one is a little different.
Two Different Versions.
Two Different Morals.

OLD VERSION:

The ant works hard in the withering heat all summer long, building his house, and laying up supplies for the winter.

The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away.

Come winter, the ant is warm and well fed. The grasshopper has no food or shelter,
so he dies out in the cold.

MORAL OF THE OLD STORY:

Be responsible for yourself!

MODERN VERSION:
The ant works hard in the withering heat and the rain all summer long, building his house and laying up supplies for the winter.

The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away.

Come winter, the shivering grasshopper calls a press conference and demands to know why the ant should be allowed to be warm and well fed while he is cold and starving.

CBC, CTV, Global and City TV show up to provide pictures of the shivering grasshopper next to a video of the ant in his comfortable home with a table filled with food. Canada is stunned by the sharp contrast.

How can this be, that in a country of such wealth, this poor grasshopper is allowed to suffer so?

Kermit the Frog appears on CBC News with Peter Mansbridge along with the grasshopper and everybody cries when they sing, ‘It’s Not Easy Being Green.’

People Against Poverty stages a demonstration in front of the ant’s house where the news stations film the group singing, We Shall Overcome.

Then Olivia Chow has the group kneel down to pray for the grasshopper’s sake.

Dalton McGuinty condemns the ant and blames Prime Minister Harper, former Premier Mike Harris, Bill Davis, Joe Clarke, Harold Ballard, and Conrad Black for the grasshopper’s plight.

Ed Broadbent and John Sewell explain in an interview with Wendy Mesley that the ant has gotten rich off the back of the grasshopper and both call for an immediate tax hike on the ant to make him pay his fair share.

Finally, the Provincial Liberal/NDP coalition drafts the Economic Equity and Anti-Grasshopper Act retroactive to the beginning of the summer.

The ant is fined for failing to hire a proportionate number of green bugs and having nothing left to pay his retroactive taxes his home is confiscated by the government Green Czar David Miller and given to the grasshopper.

The story ends as we see the grasshopper and his free-loading friends finishing up the last bits of the ant’s food while the government house he is in, which, as you recall, just happens to be the ant’s old house, crumbles around them because the grasshopper doesn’t maintain it.

The ant has disappeared in the snow never to be seen again.

The grasshopper is found dead in a drug related incident, and the house, now abandoned, is taken over by a gang of spiders who terrorize and ramshackle the once prosperous and peaceful neighbourhood.

The entire Nation collapses bringing the rest of the free world with it.

#62 Jamon on 12.16.11 at 11:24 pm

Oh no. I watch Dancing with the Stars, and I cheer for the Maple Leafs. Please don’t let them core my anus out…

#63 Ralph Cramdown on 12.16.11 at 11:39 pm

The combined population of the GVRD and the GTA+Hamilton is 9 million people. Our population is more concentrated in fewer cities than the US. Even the CMHC is overweight in GVRD+GTA mortgages, so I don’t know who’d care that the average (including Timmins) slumps 15%.

Toronto has way too many people in construction+reno, and Vancouver doesn’t even have a day job. A 15% drop won’t get us back to historic price/rent and price/income norms, and booms like this one don’t bust back down to the trend line, they overshoot.

If we go from devoting 19% of GDP to R.E. down to only spending 14%, it’s gonna suck. I’m not looking forward to it. But to look at the scale and scope of recent property busts worldwide, I doubt ours will only be 15%. That’d take us back to the levels of two or three years ago, when the market was already far out of balance. With 70% of households on the property ladder, most of them overleveraged, a bust means 25%+ of households underwater, unwilling and unable to become move-up buyers.

#64 Pat on 12.16.11 at 11:45 pm

Party on Garth!

#65 whiteshoes on 12.16.11 at 11:53 pm

Dear Boomers-

I’m so sorry about what a mess you’ve made of it all…wish there was something I could do about it.

I’m the Gen X guy who you thwarted as best you could my whole life because of my *hairstyle*

Sad to say, the long hair wasn’t going anywhere, it gets me laid lots even now.

I’m now middle age and no longer much of a consumer, there is zero scope for you to sell me a new car, any sort of real estate, a silly big TV, invest my non existent savings and retirement fund, or receive much in the way of taxes to pay for your whiny needs, seeing as I make about $18,000 a year and everything I own would fit in a pickup truck with room to spare. I don’t have a cell phone, I have plenty of time to visit people in person and don’t fritter my cash away on recurring payments.

My retirement plan is inheriting money, and guess what- you wont get the tax on that either. It wont be much, but I’ll be sure to keep it out of your hands. If it’s not enough, guess I’ll be living on Dr. Ballard’s.

I and many many of my generation don’t have credit at all, didn’t participate in this bubble, and think its ridiculous that people would pay close to a million dollars in rented money to fund what amounts to a warehouse to store your Hummel figurines and tacky furniture.

You guys should have thought about this before you rolled the red carpet up behind you, but now, it’s just too late- there’s my generation, and a huge number of the following ones not interested in picking up after you- people will suddenly realize a condo has the same general allure and features as a mobile home, except trailers are built to considerably better standards. As for suburbia, pffffft! Just the fuel bills for heating and basic transit/gas/transportation are close to what my rent is…

I won’t be hurt by not getting the good job in future I never had in the past- but I think theres a lot of you gonna be working forever…you should be very concerned, the well is really dry. I can’t help you.

Sorry thirty years of neo-con theory didn’t pan out, see you around the campfire!

whiteshoes

#66 April on 12.16.11 at 11:58 pm

From a reporter I heard on CKNW this morning. Many stores up for lease on Robson st. ” You could shoot a canon down Robson”, he said. That’s how quiet it is and this just before Xmas. 70% off sales all over the place.
From a lawyer visiting from New York. Van has “no growth” maybe even into “negative growth”. “People are moving out”… didn’t specify where these business are moving to.
From a man who lives in Kits. Walk down West Broadway or 4th ave … empty stores with For Lease signs. I happen to be listening to the radio one day recently and heard a woman comment on this situation saying high end businesses are moving in. Yeah sure….Anyone else notice empty stores in Van?

#67 Nick on 12.16.11 at 11:59 pm

This is why those people who come to this blog and salivate over a 50% price drop are morons.

……………………………

You just do not know.

#68 InvestorsFriend (Shawn Allen) on 12.17.11 at 12:04 am

SO LET’S MAKE SOME MONEY

Okay so a few of you, a VERY few might be in a position to sell your house and rent and buy back later for a gain. That’s great. For you few.

But most of us are not interested in selling and renting. The disrution and moving costs and the real estate fees are all too high and we don’t want or need the stress. Our houses are either paid for or we are in a position to afford higher interest rates and for a variety of reasons we are not budging. Not selling. (And anyhow it’s really hard to make a case for selling if you expect only a lousy 15% drop in price.)

So, how can we make some money from a prediction of lower house prices? How can we use the financial markets to make some money if house prices fall?

Well I don’t know really, but here are some thoughts.

Save money and pay down debts and be ready to buy a rental house or a better house if and when prices are down a good 20%.

Be ready to buy stocks or businesses related to house prices when they hit juicy lows. What stocks are those? I can actually only think of one and it’s already cheap and I am not so sure it will get cheaper. But if it does and you have cash, you can pounce.

Short the stocks of any mortgage lenders that cater to uninsured mortgages. Problem – there may be no such stock, but there may be a couple.

See, I told you I did not really have any good ideas on how to make money on cheaper houses short of selling my home which I won’t do.

Any other brilliant ideas out there?

As Buffett has said, predicting Great Floods don’t count. Building Arks is what counts.

What’s in your Ark?

#69 TurnerNation on 12.17.11 at 12:17 am

44 Raj on 12.16.11 at 10:21 pm

This listing’s been on the market for a while…asking 1 mil under value?

http://toronto-condos-homes.com/14a_read.php?ltl=968238

Reduced to Sell ..!!
$1,000,000 under current asking price
One Million Start up tax free Equity !
Trump Tower is one of the most sought condo in Toronto.

List Price:
$1,499,000

Maintenance Fee:
$1,200.00

#70 GregW, Oakville on 12.17.11 at 12:19 am

Hi Nastra, You might find this of interest regarding some fact about our global village. I’m assuming it is base on facts? The ~13 pics are nice too. Sorry about this link cutting off a couple letters on left side in some of the pics.
http://www.scribd.com/doc/24188051/If-You-Could-Fit-the-Entire-Population-of-the-World

#71 Onemorething on 12.17.11 at 12:25 am

#18 curious! on 12.16.11 at 8:35 pm

Garth, I thought you mentioned an initial 15% drop atleast then a slow melt….now its an eeventual 15%????

My 15% is a national number. Such a correction would be significant. 17% leveled the US. — Garth

How can readers of this blog not understand a national average number? In some places it will be 0%. In others 40%. Sheesh. Must be Friday night. — Garth

This goes to show you Garth that we simply cant expand our minds and stuck on every word to defend bricks and mortar. This is what our so-called leaders discuss everyday and leak subtly via the MSM. They are F#cking scared Sh#tless!

This message is not a leading indicator but a lagging one. If you havent sold you done!

0% decreases means there was never an increase or the bloody location was barely unihabitable. These places do exist and dont produce or supply any jobs. This is where you go to die or start a cult.

15% national average is saved for non bubble territory, think of rural provincial towns and eastern cities again not bubbly but unfortunately will get drawn down due to the increases in job losses.

20-25% for medium bubbled areas – you know who you are. Growth due to unaffordable housing urban sprawl.

25-35% GTA/Calgary parts of BC. Heck throw in Ottawa as Governement cuts jobs.

35-50% in Toronto/Vancouver and potentially others.

The key thing to note here is that when the USA hit 17%, it soon suffered a spiral which went down to a national avg. of 30%.

Most sources (who have been bang on) expect another 15-17% to go as more job losses, more companies go under, exports from a strong USD faulter (as that is the only thing positive right now) and an inventory of homes (which even if the buy Yanky property now commercials showing in HK and SING) work it wont stop the inventory growth which is likely 3 years (I can hear the bulldozers now).

You see, it’s never been a question of ‘if’ but ‘when’ and so I predict the USA goes back to 1998 levels and Canada 2003.

China is cooked! My buddy just saw a prime 1000sqft in Shanghai which was sold two months ago for 900K US drop to 500K!

AUS/Canada just the last of the messed up bubble!

We will look back at all of this and wonder how stupid and manipulated we have been.

#72 Onemorething on 12.17.11 at 12:28 am

oh and onemorething – 1998 for the USA is exactly the lag Canada was behind in the RE value (5 years) to support a pull back to 2003 values in Canuckville.

#73 george on 12.17.11 at 12:39 am

Garth it seems to me that since you started your greaterfool.ca blog several years ago the average home price in Canada has gone up significantly more than 15%.

#74 Romeo Jordan on 12.17.11 at 12:41 am

Garth is right, could EASILY be 40% in places.

I could see a Hongcouver Westsider that was $2,000,000 six months ago and would at most fetch $1,900,000 now, drop down to $1,200,000 in a couple of years, or sooner. That said, it could fall all the way to a million bucks (that’s 50% for your math challenged types (ie. Captian Junius (have another rum and coke mate!)) given the right circumstances.

People will realize that debt is not wealth. In a way, this is our generation’s big wake up call, and will be seminal for us going forward.

I’m taking Garth’s advice, dropping debt, increasing savings and investing in a diversified and somewhat income oriented portfolio. Although I probably have a much higher commodity and gold/silver component than he would agree with, it’s similar in many ways.

Junius, hold on to your panties girl, the ride down has begun.

xoxox
Romeo Jordan

#75 OkanaganInvestor on 12.17.11 at 12:45 am

Here also are some national average numbers, which makes Canada look good.

“Look for another debt downgrade of the USGovt in coming months, after the Q4 shows a ripe $1 trillion in added deficits.”
Graph showing US GDP at 100% is shown in article attached.
“Compare to Canada which has a mere 34.9% total debt burden versus its GDP, a much stronger financial situation. The nation in the Great White North could have been a powerhouse leader with a huge sovereign wealth fund like Norway, except they followed the Goldman Sachs path to the fields of corruption and fealty, selling almost all their gold in a grand Wall Street game that even Switzerland joined. Then Canada followed the Bush Doctrine of fascism, embracing the war footing, sending soldiers to support the narco war, and tightening the security vise. Next they will become a Chinese commercial colony, a better fate than the US to be sure.”

And we’re worried about housing!

http://www.gold-eagle.com/editorials_08/willie121511.html

#76 Alberta Boy on 12.17.11 at 12:55 am

In ALberta we are really seeing a “must buy now” low interest rates-or I can never afford it! The last of the “desperate to own our getting in on the low interest rates.
Still prices have really gone down over $20,000 in the last couple month in Calgary, and in Edmonton it looks like we could go down into 2005 price levels if the interest rates budge up just a little, as we are well contracted into 2006 price levels for SFH & condo averages.

#77 chubster on 12.17.11 at 1:13 am

let’s say in ancient egypt, pyramid building became 50% of gdp. would it fundamentally matter if that collapsed and total gdp fell 25%? what if instead the nile didn’t flood properly and agriculture, being the other 50%, got cut in half? as painful as it will be, a drastic ‘restructuring’ in the housing sector is exactly the remedy needed so that savings and capital can get redeployed to net productive activities. there is a price to pay for misadventures and it cannot be evaded.

#78 Mr Buyer on 12.17.11 at 1:17 am

A fifteen percent drop would not correct what happened in Canada over the course of this bubble this past decade. Not even close in my estimation. Buyers should hold onto every penny they c

#79 Canadian Watchdog on 12.17.11 at 1:20 am

It appears the Fed has just increased it MBS holdings and I wouldn’t be surprised if it’s Canadian banks offloading their MBS through repos as I mentioned here before. More to confirm..

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2011/12/Weekly%20Fed%20MBS%20Change.jpg

So while Ed Clark plays ‘good guy’ in the media, he’s really offloading MBS and probably shorting all your homes. Reminds me of 2008…

#80 chubster on 12.17.11 at 1:28 am

add. as the eurozone is presently demonstrating, and someday the us too, by running ever-increasing deficits, gdp isn’t being grown organically. it is being borrowed. uncontrolled, this always ends in default and the primary creditor is typically one’s own children. a tumor is also growth.

#81 ZRH2YVR on 12.17.11 at 1:42 am

#6 – re: Is it 4686 bonavista dr

Yes it is – – do you have any insight why a big lot in a subdivision in west richmond with a tear-down house would sell for a price which is so low? There is a 3M easement on 2 sides but I can see how that would take it so far down. It’s a crazy transaction.

#82 HouseBuster on 12.17.11 at 1:42 am

50% drop is on its way. Get out while you can.

#83 Nostradamus Le Mad Vlad on 12.17.11 at 1:44 am


China easing up on US treasuries, and China – US relations This will end up being a tit-for-tat thing; Eurozone out of reach, and politicos out to lunch; UK Home Sales set to plummet; Same in NAmerica Crumbling roads, infrastructure, etc.; GS and Europain; Fights between friends, and Banxters and politicos secret meet.

IMF 1930s-style slump; Short clip of how big and fast Walmart and Sam’s Club have grown; Looking Beyond 2012 and the US; US$20K / Yr. One family can live reasonably well; Reitrement Anxiety Some people know it all too well; Five retirement plan mistakes; Renting is the craze now; Expansion during deflation? Portuguese farts; No Xmas for trucking; Hard Landing or China; Alpha by wayside; IMF seeks world bailout for Europe (our taxes will be headed higher).
*
World’s smallest lady Pic to prove it; Chemical Weapons deployed around US. Would be in accordance with the FEMA camps that don’t exist; Thugs Might be a nasty 2012, with all the unemployment; Russian space probe landing, but in the wrong place; Fukushima No one seems to know, and this; White Rainbow At least there’s one color; Assad The west wants to get rid of him, because of the friendly relations with Russia.

Democracy a threat? Govts. are the main threat; FEMA Camps on 72 hour notice.

#84 nonplused on 12.17.11 at 1:56 am

Garth, a gun registry is like having Customs ask “have you anything to declare?” All it does is keep the honest people honest. Only at a cost of a billion dollars a year, not counting the wasted time that could be put to productive use like mowing the lawn or reading Money Road spent by the law abiding citizens who have to comply with this monster.

Fact: To buy a gun or ammo legally you have to have an FAC. So the RCMP and the police already know who the gun owners are.

Fact: The gun registry only covers legal guns. Long arms in particular. You are talking about hunting riffles and shot guns.

Fact: Criminals prefer weapons that are either restricted, in which case they already have a registration system, or illegal, in which case they ain’t going to register them no how.

Fact: The gun registry was a knee-jerk reaction to a tragic event. However, it does nothing to prevent such things from occurring in the future. It is simply a bad law, the result of a government that misunderstood the problem, implemented legislation that fixed nothing but cost a lot of money, and was trying to buy votes.

The gun registry was almost as good at fixing the problem as the new divorce laws. Sure, mom doesn’t have to pay taxes on child support, but dad does so child support is less and the government gets more taxes ($500,000,000 more per year being extracted from families at the time the law was enacted.) How does that help the kids?

The fact is governments are incapable of understanding or addressing real issues in our modern age. Let’s take your beloved TFSA as an example. Sure, it’s nice for people making less than $100,000 a year, but really? Why should anybody have to pay taxes on savings in an inflationary environment? Why not make all CDIC insured savings accounts tax free up to the CDIC limit? That would be too simple. The real beneficiaries of the TFSA are once again the financial industry, because it means more fees.

We live in an age where our governments are wholly incompetent to do anything. They cannot identify the root of any problem, are blind to potential solutions, and are so “kick-back” driven that all proposed solutions are a business venture for the legislators where they don’t have to put up any capital but the rewards are huge. The system is totally corrupt, which I could live with, but it’s also completely incompetent, which is going to be a problem.

The more of this incompetent knee-jerk reaction department creating useless laws they get ride of the better.

Do you know that in Calgary you now need a permit and up to a $4000 dollar penalty to cut down your own god-damn tree? Who thought of that? An idiot. An elected idiot of course, but there are no other types of elected people.

Except Ron Paul, but it’s too late for his ideas.

#85 BPOE on 12.17.11 at 2:06 am

What did the buyer pay for that lot originally?
If 15% is the “eventual” downside risk then no big deal. No investment goes straight up but a 15% sway downward is nothing in a long term trend.
Anyone who has been to Richmond recently will see whole neighborhoods being bulldozed with monster homes being put up. Come on down, get educated as to what is going on. Bottom line BPOE is always going to cost a fortune

#86 BC Boy on 12.17.11 at 2:09 am

@ #1:
第一
第一
第一
———————-
It wasn’t me!!!

#87 BPOE on 12.17.11 at 2:09 am

40% is just not happening. It would take higher interest rates and the carrying charges would be the same as paying more today for lower interest rates. Long term trend intact
******************************************
How can readers of this blog not understand a national average number? In some places it will be 0%. In others 40%. Sheesh. Must be Friday night. — Garth

#88 BPOE on 12.17.11 at 2:11 am

Bottom line buyers bought and will continue to do so. Any come down in prices for new homes has to do with the hst debacle
*******************************************
Lookoutbelow on 12.16.11 at 10:18 pm
In the Garden City of Richmond, Garth, we have already seen a 15% correction from the highs of March April 2011. That was the time when the Hot Asian Money was flowing freely. Alas that madness, along with some heavy duty manipulation of pricing for those famous 66 x 120 lots by a company called New Land Strategies, based in Richmond, was at its peak. They purchased tens of properties in West Richmond with large deposits and long possession dates along with “the right to assign the contract” to a greater fool. It worked, just hope the CRA is keeping track of all those Capital Gains.

#89 Scott in Gibsons on 12.17.11 at 2:13 am

There is one influence on housing prices that gets little attention. The cost of replacement. This is the economic law seen in action on WalMart shelves due to their hard bargaining to drive down the “China Price”. The cost of any good can always be driven down to near the cost of replacement by competition. Do a little math and apply this to the cost of housing. Land is abundant and could be brought to market at very cheap prices. Basic but adequate housing could be built on this land for a reasonable amount of money and the housing bubble is gone. The missing piece to this solution is access to Crown land by all Canadians. 150 years ago the Government of Canada would give you 160 acres of land if you would only live on it and farm it. Now if you want a lousy 55′ by 120′ you have to give up most of your lifetime earnings. There is a huge amount of land available in Canada, if we pry it out of the grip of corrupt politicians and their banker sponsers we will free ourselves.

#90 Tim on 12.17.11 at 3:11 am

so a 15% decline would put us to where we were about a year and a half ago, which is when you were already forecasting a decline?

#91 Soylent Green is People on 12.17.11 at 3:14 am

BANNED

#92 longtime misreader on 12.17.11 at 3:52 am

Garth, I’ve always misinterpreted your words in a particular way, but now I’m misinterpreting them in a completely different way.

Regrettably, I must chide you for my inconsistent noncomprehension and demand that you somehow explain the contradictory positions I have fabricated.

Thanks, you’re a peach.

#93 GTA Girl on 12.17.11 at 5:00 am

Investors are fleeing the Trump Tower in Toronto.

http://www.thestar.com/business/article/1103497–investors-fight-to-back-out-of-trump-tower?bn=1

This does not bode well for other high end condo developments under construction. ‘hello ShangraLa & Four Seasons’

Very odd though. As though someone pulled the plug on the ponzi. It’s the herd mentality now.

People should have figured out looking at resales. New condos were hitting $700 – $1,000 per sq ft. While resales laboured at $500. – $550 per sq ft. Some could even be found at $350 per sq ft.

Now we’ll be treated to a Trump visit for certain.

#94 atomic on 12.17.11 at 5:44 am

I’m happy to join the moron club… I’ve had to endure this drivel from people I work with in Vancouver who:

1. bought a house 5 years ago in just outside Shaughnessy for $650k which is now worth… wait for it… $2 million

2. a house in East Van. which is ~90 years old and bought 4 years ago for ~270k is now worth ~$800k…

Garth, I know, I know, I’m unrealistic expecting more than a 10 % correction… these homes have intrinsic value. I had the confused state that these homes would go back to the mean… I have to accept the NEW mean.

#95 Aussie Roy on 12.17.11 at 6:50 am

Aussie Update

Good news, we need some good RE news.

At places on the Bellarine peninsular there has been a glut of property the last 6 months and vendors are having to drop their prices substantially to get a sale. Probably a 5-10% drop the past 12 months. The official stats are grossly skewed by the completion of million dollar properties with views”.

http://www.theage.com.au/business/property/seaside-towns-buck-property-doom-and-gloom-20111216-1oyok.html#ixzz1gmt1U8I0

Prof Keens predictions for next years Aussie RE market get the expected negativity from Aussie MSM.

Houses to fall 10% next year? Tell him he’s dreaming

http://www.smh.com.au/business/property/houses-to-fall-10-next-year-tell-him-hes-dreaming-20111216-1oyid.html#ixzz1gmtcZWsU

Still deleveraging

THE festive sales season has traditionally proven to be a ”magic pudding” for Australian retailers.

As with the classic children’s story about an ever-replenishing pudding, consumers would continue to deliver a record spend every year at the cash registers of big-name stores such as Harvey Norman, Myer, JB Hi-Fi and David Jones.

But not this year. For some of our biggest names, this Christmas is looking more like a turkey.

http://www.theage.com.au/business/shoppers-turn-into-scrooge-20111216-1oyp9.html#ixzz1gmuGk3AB

#96 R2D2 on 12.17.11 at 7:27 am

Combining the most important RE attributes, I’ve met (a) affordability and (b) location; my mortgage broker says he’ll back me for $400,000, which becomes $432,000 with (his) fee added. He comes to us highly recommended from Goldman Sachs. He’s pretty certain he can kick it down the road to be picked up as a CDO.

http://www.thequickten.com/wp-content/uploads/2010/10/run-down-house.jpg

http://www.palmbeachpost.com/money/real-estate/florida-leads-country-in-mortgage-fraud-cases-2030747.html

#97 R2D2 on 12.17.11 at 7:51 am

@#38Macrath & #40Macrath

Don’t give up. I remember when I was in fourth year high school (grade nine) and they took us to an art appreciation day. They had several Picasso renderings on display, variously portraying “women.” I recall thinking, “the poor bastard!” Our teacher/usher on that day was a geometry teacher, who informed us Picasso’s etchings were attracting multimillionaires who thought nothing of dropping $million$ for an original. A little further along the wall, we were treated to a rendering of Van Gogh’s right ear … it was not painted by Van Gogh because I think, by then, he had removed it. (The ear I mean) The teacher just laughed and wouldn’t tell us how much it was worth.

http://static.flickr.com/174/491840235_b1f1584882.jpg

http://www.pxleyes.com/images/contests/sea%20shells/fullsize/sea%20shells_4bfbf203920a6.jpg

#98 Habbit on 12.17.11 at 8:10 am

Hi Garth. I don’t like the look of those graphs. Been trying to get people here in Saskawasteland to tune into your blog but with little success. I’ts our turn now. Many here are talking about the boom here and how it will go on for years. The president of the mining association of Canada recently said the industry would invest 50Billion in Sask over the next 20 years and it’s all over the media. The mayor of Saskatoon said that the city is in need of 10 thousand new homes PDQ. The vacnacy rate in the Queen city is .6%. The local real estae board is calling for a modest 5% increase in value for 2012. So tis true the market is local. I for one just can’t beleive a thousand sq/ft bungalow built in 74 is worth over 300K but that’s what they are selling for. We bought our home in 88 for 64K likely get 300K now. 90% of the appreciation value has been in the last 5 years. In the previous 20 years price went fron 64K to maybe 82K. People here beleive we are just catching up! We are staying in our home and using a small HELOC to buy financial assets. Works good and keep up the good work. I,m very thankfull to you and all the blog dogs. You,ve made my familly think and understand some of the nasty stuff headed our way.

#99 live within your means on 12.17.11 at 8:49 am

#19 T.O. Bubble Boy on 12.16.11 at 8:43 pm
Despicable actions and more cover-up lies from the Conservatives — this time for EI benefits:

Diane Finley and Jim Flaherty cut hundreds of Service Canada workers this year, to the point that new claims now take 2-3 months or more to process, and people are making death threats because they are so frustrated and desperate to get EI help:
http://www.theglobeandmail.com/news/politics/ottawa-notebook/festering-ei-backlog-prompts-pre-christmas-violence/article2274440/

However, when it comes to doing press releases on EI recipients, the Government spews out this misleading statement:
“Number of EI recipients drops in October”
http://www.theglobeandmail.com/report-on-business/economy/jobs/number-of-ei-recipients-drops-in-october/article2273583/

You’ll notice in the details of that press release that the number of EI Claims is up, and the ONLY reason that the number of EI Recipients is down is simply because the Government has effectively stopped processing new claims!

Diane Finley (who is in charge of *both* CMHC and Service Canada) is now right up there with Peter “Piece Of Kent” environment minister and Princess Baird for most cynical/hateful Canadian politician.
………………….

It’s not just EI claims.

http://www.theglobeandmail.com/news/politics/overburdened-phone-system-a-recipe-for-frustration-among-pensioners/article2238788/

I’ll be applying for OAS early 2012 as I imagine things will only get worse.

Overburdened phone system a recipe for frustration among pensioners

#100 JessicaJ on 12.17.11 at 9:03 am

#30 Canadian Watchdog
“Who is saving these day anyways?”

I am! Renting in mid-town Toronto, zero debt, sitting on lots of cash! Life is fantastic!

#101 R2D2 on 12.17.11 at 9:15 am

The issue of accounting transaction “Repo 105” on Lehman books ‘which suggests that Ernst & Young, Lehman’s auditors, were not concerned about the firm’s use of Repo 105.’

Ratings agencies were flat on their keesters too.

http://www.huffingtonpost.com/2010/03/12/lehman-bankrutpcy-repo-10_n_496463.html?show_comment_id=42097666

#102 sue on 12.17.11 at 9:22 am

Habbit,
Why don’t you harvest your gains of 300K and use the income (around 1800 I think based on another post by Garth) to rent a beautiful HOME??
Your home equity isn’t real unless you sell…and it’s paying you nothing to own it.
Your local real estate board is spinning numbers and lying to you, they are not a credible source of information.

#103 FTP - First Time Poster on 12.17.11 at 9:42 am

For those of you who have missed it, for the first time in a very long time, platinum is now priced below that of gold. Typically Platinum trades 10-15% higher than gold, but recently has been hammered down below it.

#104 The American on 12.17.11 at 9:54 am

47thBPOE, You’re right… Prices won’t fall 40% in Vancouver. Instead, they’re going to fall in EXCESS of 40%. GUARANTEE IT! For example, this lot that Garth is referring to that sold for a song in Lichmond would be about 35% more here in Seattle. Damn, that is a 40% haircut off original asking price, and the real estate tumble hasn’t even heated up in Vancouver area yet. I imagine its going to be a blood bath there, like I’ve been saying. Enjoy the trip down, a-hole!

Now, I’m off to catch a driver to the airport. I’m off to Washington D.C. and then taking the Acela to Manhattan. You know, two REAL cities that have something going for them! I’ll be back on January 3rd, but I’ll try to check in between now and then. Ta ta!

#105 Incubus on 12.17.11 at 10:42 am

I do not understand why you only predict a 15% decline in home prices? Since 2000 house prices have more than doubled, while inflation is only ~25%.

In the long run, houses follow inflation, so a regression to the mean implies a decrease greater than 15%.

Houses prices should be down about 35% just to return to the historical average.

In the USA houses have already dropped by 30% and I think the bottom has not been reached yet.

Take a look at these graphics

http://www.antagoniste.net/2011/12/14/etirer-lelastique/

US house prices have declined by about 17% on a national basis, as indicated here. A 15% national decline in Canada would be seismic. — Garth

#106 Junius on 12.17.11 at 10:58 am

#84 BPOE,

He is saying 15% as a national average. I agree with The American at #103. Vancouver will be lucky to escape with a 40% decline. It could and probably will be much worse.

I am diversified enough to manage it. How about you?

#107 Junius on 12.17.11 at 11:00 am

#73 Romeo Jordan,

You said, “Junius, hold on to your panties girl, the ride down has begun.”

Thanks. I will tell my wife. She missed her lesbian experience in college.

#108 Junius on 12.17.11 at 11:04 am

#88 Scott in Gibsons,

You are correct of course. People forget about supply and when the rest of the economy is slowing and deleveraging it means prices for new homes will get cheaper as well.

This is where people (ie TheRealTruth) just don’t get it. Organic population growth, migration, immigration can are all factors in demand but supply can rise to meet demand.

Real Estate Developers still need cash flow to keep their business going. Workers in the industry will need a job. Construction costs will drop to deal with the new market conditions. They always do.

#109 DebtToDeath on 12.17.11 at 11:06 am

Crazy World!

#110 Junius on 12.17.11 at 11:16 am

#28 Westernman,

Again, you make no sense. Look at the US. Since the housing bubble popped there has been a loss in value of $7 Trillion dollars in Real Estate values. $7 Trillion.

If you don’t think that collective loss on society doesn’t impact every man, woman and child in America you are beyond reaching. Some will do better than others on a comparative basis but overall everyone gets hurt.

Unless you are living in a cave, eating cat food and watching reruns of Gilligan’s Island. Oh wait. Now I see why you have that opinion. You will be just fine.

#111 Ronaldo on 12.17.11 at 11:25 am

#102 FTP – Says something about our economy doesn’t it…in particular the auto industry. Lack of demand??? and its much rarer than gold too.

#112 GregW, Oakville on 12.17.11 at 11:28 am

Hi #58TurnerNation,
It is my understanding that the type of batteries technology years ago, that was available for the EV1 did have some real issues for use in cars that you hope would run the ‘distance’ ‘for years’ and in ‘cold places’ like Canada. New battery materials have been found, along with better design and energy management technology, this was only in the last ~10 years or so. With a few years of testing, a few more to add them to the car company’s and part supply plans for production, and the market expectation of price, which needs to go with a price for a profit margin. I recall in ~2008 or before, hearing plans to bring to market electric-hybrid cars starting in ~2012.

The Toyota Prius has a plug-in version coming soon. Maybe it’ll be programmed to go further on the lithium batteries only to compete with the Volt’s battery only rang??? And there are others coming soon too.

I actually was at my local dealer last evening to have a look at the one Volt left in their lost (was sold). I even went around the block in it once(with the sales guy). It’s a nice car! I forgot to ask how long the waiting time is to get one if I put in an order today. The first 5 the dealer had are already gone, and a guy in my night school class said he has one on order.

Perhaps Miss. Mayor just like to have the newest car on the block, and why not!
Does the Mayor get a car of her choice with the job?
See might even have heard about peak-oil too?

#113 Abitibidoug on 12.17.11 at 11:31 am

Only a 15 percent drop you say? I could see a drop of 15 percent or less in London, where I live, because prices never went crazy here in the first place. However, it’s hard to imagine prices correcting by only 15 percent in grossly overpriced Vancouver, Denial City.

#114 eaglebay - Parksville on 12.17.11 at 11:36 am

#64 whiteshoes on 12.16.11 at 11:53 pm

Thanks to us boomers, you have a life.
Not that you’re doing much with it.
Why don’t you pick yourself up and do something with it, like we had to.
Get some skills, training and courage and do your share.
Become productive, innovative and ambitious.
Get a real job maybe.
There are thousands of unfilled jobs throughout Canada.
Stop playing Angry Bird and Nintendo.
Whiner.

#115 Junius on 12.17.11 at 11:42 am

Nostra Mad Vlad,

RE: Ron Paul, Marxism and all that stuff

If Marx were alive today he would be cheering for Ron Paul. Assuming, of course, he was still interested in bringing on the end of Capitalism. If you do, Ron Paul is your man. Furthermore if you are a real Capitalist you should understand and take heed of Marx because he offers us an important warning.

Marx is widely and rightly discredited for his prescriptions on the Socialist society. His critics focus on what he said would replace Capitalism which was clearly flawed and has never worked. However Marx’s real work (99% of it) was not on the new society but on the internal contradictions of Capitalism. On those matters he was dead on.

Marx most important contribution was to economics where his work essentially proved the internal contradiction of capitalism. That contradiction is that as the system grows it always tends towards concentration of power and wealth. The economy becomes increasingly anti-competitive and value extracted for a smaller and smaller number of people. Sound like the modern day US? He predicts that eventually the people will rise up and throw off the chains and take over. Kind of like Occupy Wall Street?

The thinkers who took Marx seriously from Keynes to Schumpeter through to Minsky have all understood that he was correct on this point. Recently Roubini, Stiglitz and Keen have also mentioned his name in reference to the economic crisis.

The question is – what do you do about it when you understand that capitalism is inherently unstable and prone to concentrations of power and wealth that can lead to its demise?

The answer has been appropriate laws and regulations. Thinkers like Schumpeter recognized that the most important aspect of capitalism was its “creative destruction” as it continually reinvented itself and created new innovative products and services. However he was keenly aware that society had to manage these externalities through laws and regulation. Likewise Minsky recognized this inherent instability as well and our need to guard against it.

The 4 pillars of a sustainable Capitalist society are (1) laws regarding competition, (2) laws regulating the core banking system, (3) laws regarding consumer protection including the sale of securities (4) laws ensuring the public good is placed ahead of the private good.

The erosion of these 4 pillars over the past decades is the proximate cause of the current financial collapse. The concentration of power and rule by monied interests needs to be turned back and confidence and integrity restored to the system. Otherwise Marx will be proven right.

Real capitalists support innovators like Steve Jobs, Tony Hsieh, Richard Branson or Bill Gates to the extent that their leadership provides the engine of growth for economy. However they should also recognize that the Jamie Dimon, Lloyd Blankfein and the rest of the banksters are just value extractors who are discrediting the system.

Ron Paul wants to repeal Sarbanes-Oxley and Dodd-Frank. He wants to get rid of the Education Department and Interior (ie no rules on the environment). All of this is insanity. It will lead to more monopolistic practices by banks, more blood sucking on the middle class and Marxists everywhere cheering.

So, in a nutshell, get your facts straight.

#116 brainsail on 12.17.11 at 11:44 am

#74 OkanaganInvestor

“Compare to Canada which has a mere 34.9% total debt burden versus its GDP, a much stronger financial situation”

Sorry, but the 34.9% number is for Federal Debt only and does not represent the total Goverment Debt also known as Public Debt. There is so much confusion about Debt to GDP ratios because it can be manipulated and reported many different ways. I believe the 34.9% was cherry picked to make everyone feel warm and cozy. The more truthful numbers may be the following based on total Public Debt to GDP(2010).

Canada 84% vs. US 62.9% (or is it really 100% now?)

Mass confusion…

http://www.andrewkyle.com/blog/2011/08/07/what-is-canadas-debt-to-gdp-ratio/

http://www.gfmag.com/tools/global-database/economic-data/10403-total-debt-to-gdp.html#axzz1gnnkBzYj

https://www.cia.gov/library/publications/the-world-factbook/fields/2186.html

#117 ZRH2YVR on 12.17.11 at 12:19 pm

#84
Original purchase of the lot was $345,000 in 2003.
To see how this measures to the movement of Richmond Detached housing index, 2003 was approx “124” and in Nov 2011 it was 313. This would imply a market price sale of approx 871K. Thus, 790K is representative of at least 10% drop. Not sure the specifics on this lot as to why it does not carry the same value as the other lots this size in west richmond.

#118 Ronaldo on 12.17.11 at 12:22 pm

#120 – FTP – “Typically Platinum trades 10-15% higher than gold, but recently has been hammered down below it.”

Actually, if you go back to 2008 before the prices of metals collapsed and going back as far as 2005 you will find that Platinum traded around 85% higher than gold. By end of Dec 08, platinum was only around 4% higher than gold. By end of 09, it was back to around 35% higher than gold and stayed around the same for 2010. At beginning of 2011, it was around 27% higher than gold and now its about 12% lower. So, what are we to make of that? Are you sugggesting that platinum is now a good buy? Just wondering.

#119 Canadian Watchdog on 12.17.11 at 12:28 pm

CMHC Toronto & Vancouver vacancy rate charts updated:

Toronto http://i41.tinypic.com/wmji13.png

Vancouver http://i42.tinypic.com/5v927l.png

I don’t hear much discussion about immigration on this blog while it’s been a huge factor in the urban housing market.

#120 Snowboid on 12.17.11 at 12:31 pm

#64 whiteshoes on 12.16.11 at 11:53 pm…

Oh my God, my guilt is overwhelming, how could I have possibly forgot how poorly I treated you.

Oh wait, middle age and you are making $ 18K? Where did I go wrong?

Retirement plan… inheritance? Sorry, already changed the wills – the chihuahueños are getting it all.

#121 Van guy blazin kush on 12.17.11 at 12:38 pm

#66 Nick on 12.16.11 at 11:59 pm
This is why those people who come to this blog and salivate over a 50% price drop are morons.

……………………………

You just do not know.

50% National decline will be more devastating than the US. Unemployment will be 14% and create a new bubble in teepees and igloos.

#122 Canadian Watchdog on 12.17.11 at 12:44 pm

#99 JessicaJ

I wouldn’t be too cheerful about holding cash when its losing value everyday. Housing market will take many years (maybe even a decade) to restore equilibrium. Just think of investors that purchased US homes in the past few years—whose investments are about to take a second plunge while another couple of million foreclosed homes enter the marketplace—and let’s not forget there is still 2-3 years of unlisted inventory held by the Fed. Yep, it’s a disaster.

My advice to anyone is to invest your time researching and learning where to put your cash as opposed to waiting for a market correction.

There are plenty of high-return opportunities in third world countries if your willing.

#123 a prairie dawg on 12.17.11 at 12:44 pm

Hopefully the financially challenged consumption lemmings will learn their lesson from this, for the next time it happens. This easy credit cycle will happen again within 20 years or so, but there will be a lot of economic pain before then…

Next time they should remember that when money gets cheap to borrow, you should only use it buy assets that pay a return and allow you to write off the interest. Or, you pay down existing debt as fast as you can, to capitalize on the low rates. Then you screw the bank out of excess interest charges they’d make over a longer term at higher comparative rates.

I learned from “watching” the 1980-era credit bubble, and applied that logic this time around. While almost everyone in Canada has been spending like drunken sailors for 10 years, I’ve ramped up debt payments significantly. (and knocked almost 10 years off my 25yr mortgage by doing it)

That’s how you stick it to the banks. Remember that in 2025 or 2030, when it happens again…

– – –

As Winston Churchill wisely once said, “Those who fail to learn from History are doomed to repeat it.”

#124 Macrath on 12.17.11 at 12:44 pm

#100 R2D2

500 million in compensation for this Dick Flud crook and he is free as a bird, along with all of the roach motel of finance. Sure ! Its all tinfoil futures until your account is emptied by the likes of an Honorable J. Corzine or your so called liquidity evaporates before you can hit the sell button.

Danielle Park offers good advice “stay off the railroad tracks”

http://www.mcescher.com/Shopmain/ShopEU/facsprints-uk/prints.html

#125 Ret on 12.17.11 at 1:03 pm

Didn’t housing in the GTA fall by much more than 20% from 1989-1996? Condos were especially hard hit.

So what is different this time? If anything, HF&C have distorted RE markets even more than they were in 1989 for a much longer period of time.

#126 DonDWest on 12.17.11 at 1:07 pm

#88Scott in Gibsons

True enough, that’s what I proposed a while back but I was called a “communist” for suggesting it. The fact of the matter is my generation needs a way to opt out of the oppressive baby boomer real estate casino game that’s set up for us to fail. Houses right now are priced ten to twelve times their wholesale value; that’s simply unacceptable.

Let the market decide, I’m more than willing to work my butt off to create a village with small houses priced just fewer than 100K, but the government forces me in playing the real estate game in order to fund the baby boomers retirement. Guess what? I don’t want to fund someone else’s retirement off my hard earned labour, whether it’s by rent or mortgage.

Not only could I hypothetically and very easily create a village where every house is priced fewer than 100K, I may go out of my way to ban baby boomers from habiting in it. They can have their fun playing their real estate game amongst each other; I on the other hand see housing as nothing more than a place to live. After all, you live by the sword you die by the sword. . .

Now if the government, as I suspect, refuses to allow my generation the basic right to self-perseverance. If the government continues policies creating a generation of indentured servants in the name of buying baby boomer votes. There will come a day I may set up that village with or without their authorization. If I encounter resistance, well, that’s what guns are for. . . If the Canadian military wants to take out a village of young working families who just want to desperately flee the ridiculous house prices; let’s just say the entire world would be watching. . .

You see, Garth makes a common mistake when he writes of the dire straits of real estate and the economy. He also makes a common mistake in reassuring us the economy will survive. He assumes people have a genuine desire and virtue to defend the system, let alone the country, down the path it’s currently undertaking. And believe me this goes well above and beyond real-estate, which is the mere tip of the iceberg.

The fact of the matter is there’s a larger population than people realize who are not only unwilling to defend the system, but they have prepared for a good decade for its demise, and they’re more than ready to fill in the power vacuum. After all, we can’t change the forest until the old forest is burned down in a fire.

#127 stuart on 12.17.11 at 1:13 pm

these charts tell it all, thanks again for keeping this alive..

http://trendlines.ca/free/economics/RealtyBubbleMonitor/RealtyBubbleMonitor.htm

#128 BPOE on 12.17.11 at 1:19 pm

As usual American your not dealing with the facts. Still jealous being poor cousin next door to BPOE . You need to know what the original purchase price is. Did the owner buy at 1.1 and list for 1.3 30 days later? One example without details is not the clear picture. It’s like yesterdays post about the end of gold when the FACT is gold has returned to date this year 16.77% which beats the pants off a diversified portfolio. American you remind me of chicken little or a really bad day trader. Learn the facts and go with the trends. Go with the insiders.
*******************************************
#103 The American on 12.17.11 at 9:54 am
47thBPOE, You’re right… Prices won’t fall 40% in Vancouver. Instead, they’re going to fall in EXCESS of 40%. GUARANTEE IT! For example, this lot that Garth is referring to that sold for a song in Lichmond would be about 35% more here in Seattle. Damn, that is a 40% haircut off original asking price, and the real estate tumble hasn’t even heated up in Vancouver area yet. I imagine its going to be a blood bath there, like I’ve been saying. Enjoy the trip down, a-hole!

Now, I’m off to catch a driver to the airport. I’m off to Washington D.C. and then taking the Acela to Manhattan. You know, two REAL cities that have something going for them! I’ll be back on January 3rd, but I’ll try to check in between now and then. Ta ta!
.

#129 BPOE on 12.17.11 at 1:23 pm

According to the American and Junius doubling your money tax free is a bad investment. Also as noted no specifics why sold for so much less than average. Could be a follower of Garth wanting to get out quick before the ‘crash’
****************************************
ZRH2YVR on 12.17.11 at 12:19 pm
#84
Original purchase of the lot was $345,000 in 2003.
To see how this measures to the movement of Richmond Detached housing index, 2003 was approx “124″ and in Nov 2011 it was 313. This would imply a market price sale of approx 871K. Thus, 790K is representative of at least 10% drop. Not sure the specifics on this lot as to why it does not carry the same value as the other lots this size in west richmond

#130 Westernman on 12.17.11 at 1:27 pm

Whiteshoes,
Good for you, congratulations on your ongoing condition of poverty and sub-standard lifestyle.
Enjoy your third-world status…it is obviously quite a source of pride for you to have nothing, know nothing and achieve nothing.
Read it and weep fellow canadians – this whiteshoes creature is the future of the country…

#131 Ronaldo on 12.17.11 at 1:31 pm

Housing problem far from over in the U.S.

http://www.cnbc.com/id/45682960

#132 The Thing in the Basement on 12.17.11 at 1:34 pm

88 Scott

“Land is abundant and could be brought to market at
very cheap prices”

Two major hurdles with this Scott. First, in BC, much crown land is or will be subject to Native land claims.
Second, even if the cost for “raw” land is minimal, it
requires proper access and servicing at a level suitable to
the intended parcel size. So despite looking out your window and seeing thousand of acres of raw land, as I do, very little of it is realistically developable.

This isnt to say that local governments couldnt relax some of their requirements for development, though this
result is often a suburban sprawl.

The new demographia study which covers this should
come out in the new year.

123 P-Dawg – I did exactly that by paying off my 4.35%
mortgage in 5 years, total 170k paid off in 7 years. I guess we’re both still waiting for higher rates. I’ll call Carney at the FASTPGFBDCP. Curious though – you are
old enough to have watched the rates in the 80s but still have a mortgage now?

#133 Westernman on 12.17.11 at 1:36 pm

Junius,
Wrong again, young Jedi… look at the great depression. 95% lived in squalor but the other 5% lived better than they ever had before… I’m that 5%
I’ll be eating very well, thank you.

#134 jess on 12.17.11 at 1:37 pm

http://www.charlierose.com/view/interview/473
david graeber
what is anarchy?

#135 Incubus on 12.17.11 at 1:48 pm

ref #105 Incubus on 12.17.11 at 10:42 am

http://www.standardandpoors.com/indices/sp-case-shiller-home-price-indices/en/us/?indexId=spusa-cashpidff–p-us—-

If you take the numbers from this table “Home Price Index Levels September 2011 Not-Seasonally Adjusted”

And your take Composite-20 SPCS20R column W you find the maximum was 206,52 on July 2006. Now the indice is 141.97 (september 2011).

A simple calcul shows (206.52-141.97)/206.52 = 0,3125 or a drop of 31,25%

#136 Harlee on 12.17.11 at 2:12 pm

#97 Habbit
Two things I learnt way back in grade school that have really stayed with me :When judging content,consider the source” and “Never believe everything you read” .This was back when teachers were allowed to exercise some common sense (which isn’t so common now).
I don’t believe 90% of what comes out of the mayor’s mouth and I’ll believe in the “president of the mining corporation” when I actually see the results. Healthy Scepticism.
Saskatchewan is better off in some regards than other provinces but I don’t believe it’s going to be all that rosy either.I can’t believe how many condo buildings are being built in Saskatoon these days ! There will be a market for some condos,but not all. Ridiculous!
Take charge of your finances,plan well and good luck to you (we’re all going to have to do that for a happy new year…!).

#137 Steady Eddie on 12.17.11 at 2:18 pm

You don’t need a gun registry.
http://en.wikipedia.org/wiki/Gun_politics_in_Switzerland

Christine Lagarde proudly wears her tin foil hat:
http://www.huffingtonpost.com/2011/12/16/imf-lagarde-great-depression-1930s_n_1153248.html

I wonder how much that 1.1 trillion in debt has been leveraged and what it has been gambled upon. I guess we’ll find out soon enough.

#138 Westernman on 12.17.11 at 2:31 pm

DonDWest,
Man, you are one mixed up sad sack…
You could always go live in a cave somewhere…probably suit you.

#139 terces on 12.17.11 at 2:49 pm

#87, BPOE -“hope the government is keeping track of all those capital gains”

This income would not be treated as capital gains, it is income and taxed at a much higher rate.

In fact all real estate in Canada is brutally taxed compared to the US.

In the US your home mortgage payment is tax deductible, in Canada you pay your mortgage with after tax dollars.

In Canada your first and every dollar of taxable income from renting is taxed at your highest marginal tax rate.
This would change if you have a minimum of five full time employees into a business tax scenario, but for all of you wannabe Donalds, your rental income is considered passive and is taxed at the highest possible rate.

In the US you can sell a commercial property, hold the income until you find a new or better property and then reinvest it without paying tax. Not so in Canada. As soon as you sell a property you are taxed, regardless.

There are many other risk assets besides real estate to invest in. IMHO, real estate should be held through a publicly traded REIT that can be held in your TFSA or RRSP where you can avoid the tax. Or alternatively you need to have an active business with more than five employees.

Otherwise your risk assets have no business being in real estate in Canada.

This posting is from a person who has spent a lifetime investing in commercial real estate, and has seen the light.

#140 Beach Girl on 12.17.11 at 3:06 pm

Talked to my favourite chinese man last night. He owns a restaurant. I get SPECIAL deal, as friend, he tells me.

His wife and child live in Vancouver. He likes his freedom. I told him prices were going down in Van, he should sell.

He said, I no care, safety for family, benefits cheap. Hong Kong Govt can take my money and throw me in jail. Pay for safety and benefits. Flight close to Asia. No care if house goes to zero. No jobs, only Chinese money making houses go up. We no this. Not stupid people, we stay forever.

Now no one has mentioned this mind frame. I totally get it.

I am not being disrespectful, but that is word for word how he assessed this situation.

I am having a wonderful weekend. One idiot is here, one First Nation Warrior (we got buzzed and called him a First Haitan), someone who looks like a White Cracker (just slow) and an Italian English mongrel. Having fun at the house for unwed fathers.

Things can’t get better. We were supposed to volunteer, no one got up.

#141 Suede on 12.17.11 at 3:12 pm

Looks like Bernanke likes paying interest like most Canadian homeowners:

http://business.financialpost.com/2011/12/16/bernankes-30-year-mortgage-a-sign-of-the-times/

#142 Van guy blazin kush on 12.17.11 at 3:38 pm

I think most of the posters here will only be happy with a US style decline. In Van, for prices to become affordable, we need to shave at least 35%. Van is down 1% since peaking in June 2011. Theres a long way to go until this “pathetic blog” will become happy. But for now, the so called “greater fools” are still winning the game 

#143 Steven Rowlandson on 12.17.11 at 4:47 pm

So if real estate stumbles, “a sudden weakening in the housing sector could have sizable negative spill over effects on the broader economy.”

This is why those people who come to this blog and salivate over a 50% price drop are morons. Nice morons, of course, but still moronic. Such an event would shave at least 5% off our GDP and immediately plunge the country into a recession. Contrary to what many think, this would not topple any banks or have Bay Streeters trading in their Mercedes for those Fiat 500 tinkertoy things, but it sure would jack unemployment and cream the middle class.

More likely is exactly what I’ve forecast for a while – an eventual 15% decline, and years of sales activity that will make Saskatchewan look mountainous. Let’s all remember that it required only a 17% drop in national housing prices Stateside to send that country spiraling into a swamp so primordial the Tea Party crawled out.

God help us if that happens. Without a gun registry.
——————————————————–
Considering the magnitude of the crime against working humanity that existing house prices represents why should any mercy be extended to the system?
So what if a 90% drop in house prices implodes the canadian economy! From my point of view that would be an improvement. It would raise the buying power of my already imploded and limited income. As for house horny foriegners bidding up house prices I think that can be remedied by making property ownership in canada a possibility only for canadian citizens and by curtailing immigration. If canada can’t or won’t function on its own productivity it deserves to perish.

#144 Andrew from Saskatoon on 12.17.11 at 5:08 pm

The morons are the ones who think that it’s possible for Canada real estate to escape a 50% drop (in terms of price/income ratio).

#145 The Thing in the Basement on 12.17.11 at 5:08 pm

139 Terces – why is it taxed as income? Also, I dont believe US mortgage is tax deductible. Interest yes, principal no?

#146 R2D2 on 12.17.11 at 5:09 pm

Sachs: “I think they are channelling a general anger in American society with the impunity of the richest and most powerful people in the country, and Wall Street is not only an important part of that, it’s also a representation of it. We have the biggest inequality of income and wealth in modern American history, but on top of that we have a political system which has fallen into the hands of the corporate lobbies and we have a business elite which violates the law with alarming frequency and a Wall Street financial centre which not only broke the law but helped to create one of the most painful financial disasters in economic history that we’re still living through. That’s why people are upset. They want a restoration of democracy. They want money out of the political system and they want a fairer economy.”

http://www.thestar.com/news/article/1086149

“Our leaderships, in thrall to big business, are failing in so many places all at the same time. But we can’t give up on them” …

http://www.guardian.co.uk/commentisfree/2011/dec/16/western-politicians-government-leaderships-failing

#147 InvestorsFriend (Shawn Allen) on 12.17.11 at 5:11 pm

ALL MEN ARE NOT CREATED EQUAL

The thing about averages, is they hardly ever apply to us as individuals. No one is average.

DEPRESSIONS are absolutely horrific on average. But they are far worse than horrific for the up to 30% of people who lose their jobs. If you lose a good high paying job during a depression it can be impossible to find another one paying even 25% of what you made before. You can lose your home, your savings, your family, your hope. Suicide will look like a reasonable option.

BUT if you keep your high-paying job during a drepession. And most did and most would. Why then a depression is not so bad at all. You can pick up investments on the cheap. Move to a mansion.

There is nothing average about life. There are winners and losers folks.

If house prices drop by 30%, many Canadains will suffer badly. Some horribly. But there will not even be a depression and many, perhps most Canadians will not be harmed by it. Some will benefit greatly.

For those well prepared, a 30% average house price decline will be entertainment and an opportunity as much as anything.

Life is not fair, get used to it.

#148 GTA Girl on 12.17.11 at 5:18 pm

God forgive me…

I read BeachGirls entire entry with a faux Chinese accent in mind.

I’m going to politically-correct jail.

#149 Canadian Watchdog on 12.17.11 at 5:19 pm

#140 Beach Girl

Ask him that question in about a year or two when home prices are falling, taxes go up, healthcare deteriorates, infrastructure breaks down and people don’t go eat out to eat just to save a buck—while at the same time, China starts to reverse course to a prosperous economy.

I doubt you’ll get the same answer.

#150 Habbit on 12.17.11 at 5:34 pm

101 Sue Thank you for commenting on my post. My wife and I have looked at what you suggest. We are fast approaching our house value being 30% of our net worth. We have been fortunate but carefull. We bought our house when our combined gross familly income was about 45K so house cost was 1.5 times gross familly income likely 2 times after taxes. Those were good times here in Sask. We paid our mortgage weekly and made extra payments when $ was available all the while raising our 3 children. Paid her off in 1/2 the time. Since that time we have saved those payments. We are now saving 30K yearly. We choose to stay in our house because it is our home and has everything we need. Were we to sell and make say 6% on the 300K that would give us about 18K of income before taxes. Even with the dividend tax credit we might net 13K and that is not enough to rent what we have. Don’t forget there are costs associated with selling. Also the 300K would get chewed up by inflation over time. When prices go down it may be across the board so when we downsize or move to cottage country we would get less but pay less. For sure we don’t ever want a payment again. We are debt free and love it. Everyones situation is different. We are in early fifties and consider ourselves very fortunate to live in such a great place. The trick is to not over spend and pay off debt. Best wishes to you and yours.

#151 R2D2 on 12.17.11 at 5:34 pm

A.cute S.econd S.tage H.allucinatory O.pinion L.inked E.lite S.eriously

“Leadership” based upon false piety … moral vacuum

Jerry Falwell has moved on to warmer climes …

http://exchristian.net/2/uploaded_images/falwellinhell-747676.jpg

Chuck McVety has Harper’s ear … Is McVety a Viet Nam vet?

http://3.bp.blogspot.com/_aWNUoaQmjqo/TQK2_mdctkI/AAAAAAAAJB4/q8bpXK6hi10/s400/mcvety+copy.jpg

Pat Robertson—who was present when a ‘deal with the devil’ was made.

http://www.msnbc.msn.com/id/21134540/vp/34872839#34872839

Priestly pedophile fondlers, led by Vatican Ambassador Archbishop Giuseppe Leanza

http://i.dailymail.co.uk/i/pix/2011/07/25/article-2018551-0D02D10800000578-231_224x423.jpg

http://articles.nydailynews.com/2011-07-14/news/29792324_1_church-canon-law-irish-victims-bishops

http://clericalwhispers.blogspot.com/2011/07/papal-nuncio-prague-move.html

Did You Believe In The Rapture 2011?

Yes, my body is floating away as I vote on this poll.

Hell no! ( See earlier … Jerry Falwell )

http://robotceleb.com/news/224600-05212011-vote-now-harold-camping-rapture-poll-may-21-2011.html

http://www2.macleans.ca/wp-content/uploads/2010/02/100128_edit.jpg

#152 poco on 12.17.11 at 5:42 pm

#142Van guy blazin kush on 12.17.11 at 3:38 pm

I think most of the posters here will only be happy with a US style decline. In Van, for prices to become affordable, we need to shave at least 35%. Van is down 1% since peaking in June 2011. Theres a long way to go until this “pathetic blog” will become happy. But for now, the so called “greater fools” are still winning the game 
______________________________________________

i think you have to stop following CREA numbers—do a little more research into the real numbers of what’s selling and what price the sellers are getting for their properties—go back and look at post #176 0nDec 15—CREA maintains the price index for the tri cities is up up up—-maybe overall it is, because of a few million $ plus properties that sell—but their are many, many sales and listings where the owners are in the red !!!! — a couple more to go along with that post

911781–1542 Shaughnessy–listed Sept 2011-519k –sold–445k
907684–1341 Cimarron Dr –listed Aug 2011–748k–sold for 675k
don’t know if any of these are in the red, but it’s a substantial price drop from original list price– wouldn’t you agree?
if you’re looking to buy –you have to look “through the forest and find the trees”–there’s lots of them

#153 45north on 12.17.11 at 5:56 pm

Ralph Cramdown: But to look at the scale and scope of recent property busts worldwide, I doubt ours will only be 15%.

I doubt it too

Whiteshoes: Sad to say, the long hair wasn’t going anywhere, it gets me laid lots even now.

get a haircut and get a real job

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

I’m pretty sure I saw you in Killaloe (ON)

InvestorsFriend: predicting Great Floods don’t count. Building Arks is what counts.

pretty funny

OneMoreThing:
0%
15%
20-25%
25-35%
35-50%

I think that there will be the kind of breakdown that your talking about. Some real-estate will increase in value, I’m thinking parts of Toronto and Montreal close to the subway/metro.

Sue: Habbit

Why don’t you harvest your gains of 300K and use the income to rent?

Your home equity isn’t real unless you sell

Your local real estate board is spinning numbers , they are not a credible source of information.

Sue you rock!

Oasis: ctv news story about real estate collapsing…

thanks Oasis, I followed your link. Raza Kizilbash, I’m impressed.

#154 Van guy blazin kush on 12.17.11 at 6:05 pm

BPOE,

Where are you? 10491 Caithcart rd. Sold in June for 1.368mil. Relisted Oct 17,2011 for 1.598mil. Still sitting with crickets slowly occupying the stale listing. I holp these flippers get caught. It will be fun watching Richmond flippers cry. Hahhahaha

#155 Habbit on 12.17.11 at 6:08 pm

#136 Harlee Thank for you kind words. I agree that a bird in the hand is better than two in the bush. I do however beleive that middle Canada’s time may have come. There is much potential here. And there is still agriculture big time. My wife and I have been very fortunate to call this great province Saskawasteland home. We came here from the east in 76 and have zero regrets. Taking our first winter holiday south this year. Paying cash of course. The last comment on your post we have done and continue to do. We have a good life and we hope to pass our modest wealth to our children as our parents would have wanted. The very best to you and your familly.

#156 TurnerNation on 12.17.11 at 6:12 pm

#119Canadian Watchdog on 12.17.11 at 12:28 pm

Your earlier chart indicated Immigrant jobs on a big upswing. But we know that overseas credentials are not widely accepted (e.g. PhDs driving taxi cabs – yes I met one, once), so how do we know this immigrant job wave is not one of low-paid service jobs?

#157 Bill Gable on 12.17.11 at 6:19 pm

Noted by an earlier post from a fellow blog dawg regarding the desperate retail mess here in Vancouver – and I will sadly have to agree that things are D E A D.
70% off – and this is BEFORE Christmas?
There are a ton of for lease and for SALE signs on retail spots.
Friend has been running a HUGELY successful Restaurant and he just folded.
The only busy retailer I see is the Apple store.
Lots of people in Pacific Center – but not many with shopping bags.
I actually got a call from my Car dealer asking if I needed service. HUH?

The great deleveraging that Mr. Turner has been talking about has started.

Don’t buy the garbage that China will pull us out of this – their Property crisis has just begun and a new Government takes over in 2012.

The Shanghai Market has DIED and performed worse than the DOW did during 1929-33.

Get the picture?

Things have changed.

There are now 7 for sale signs on just 2 blocks, near me in Vancouver’s West End.

Even one of the busy Drug Stores on Davie street was quiet yesterday. The shelves are full. People seemed to be just buying the basics.

Fascinating.

#158 Kip on 12.17.11 at 6:36 pm

I guess my last post was too harsh as you deleted it so I’ll sugar coat this one.

Your doomsday scenario will not happen in GTA, at least not in 2012.

What doomsday scenario? I said national prices will decline 15% (could be more – we’ll see), and then real estate will flatline. You must have a mama of a mortgage. — Garth

#159 S on 12.17.11 at 6:39 pm

“…swamp so primordial the Tea Party crawled out…”

I would like to hire the Elves you have working in your dungeon 24/7 coming up with these lines.

Read this blog long enough and you, too, can lose consciousness. — Garth

#160 Van guy blazin kush on 12.17.11 at 6:47 pm

#117 ZRH2YVR on 12.17.11 at 12:19 pm
#84
Original purchase of the lot was $345,000 in 2003.
To see how this measures to the movement of Richmond Detached housing index, 2003 was approx “124″ and in Nov 2011 it was 313. This would imply a market price sale of approx 871K. Thus, 790K is representative of at least 10% drop. Not sure the specifics on this lot as to why it does not carry the same value as the other lots this size in west richmond.

Your numbers are wrong!
Mls V369792
9983 sq/ft lot
Listed nov-15-03
Sold dec-13-03
List price 399,000
Sold price 385,000

#161 Herb on 12.17.11 at 6:52 pm

“God help us if that happens. Without a gun registry.”

There is no God to help us, and soon there’ll be no gun registry. Now what?

#162 Kip on 12.17.11 at 7:00 pm

No Garth, no “Mama Of A Mortgage”, sorry. But I do work in the high rise forming industry in GTA and, with a banner year for 2011 closing, all indications are for a very good 2012.

The industry is running flat out with my company having trouble finding enough people to crew up for projects that have started and will be completed based on pre-sold units. There is enough activity to carry right through 2012 and anyone that looks beyond that really is a fool.

Take a drive around the GTA Garth, we’ve grown and there is more coming.

#163 Habbit on 12.17.11 at 7:15 pm

#153 45 North. See post 150. Enough said.

#164 BPOE on 12.17.11 at 7:25 pm

Expecting that high a return in 2 months is somewhat unrealistic. A house in only worth what someone is willing to pay.
*****************************************
Van guy blazin kush on 12.17.11 at 6:05 pm
BPOE,

Where are you? 10491 Caithcart rd. Sold in June for 1.368mil. Relisted Oct 17,2011 for 1.598mil. Still sitting with crickets slowly occupying the stale listing. I holp these flippers get caught. It will be fun watching Richmond flippers cry. Hahhahaha
.

#165 scared on 12.17.11 at 7:34 pm

#140 Beach Girl – “word for word”??? I think you are lying. The Hong Kong govt has the most generous taxation policies. It is a capitalist society. Perhaps in China it may ring true. If you asked him to sell his house, why would he think that you meant that he should move back to China? You don’t make sense.

#166 Habbit on 12.17.11 at 8:07 pm

#126 DonDWest There is no conspiracy to have high house prices. Get a grip. As has been explained there are many reasons including low rates, loose lending standards, the belief that prices always rise, speculators of ALL ages, flippers, demographics,house horniness ect. The fact that a lot of boomers are sitting on real property is no surprise. What is alarming is that the boomers have most of their net worth in their real estate and as you should know prices have only one way to go and it ain’t up. Does not look good for a lot of them but I guess they had it coming eh? The entitlement coming from you is expected. Got news for ya. You can buy a decent place to live in small town Sask for a lot less than 100K. I have a 30 year old son who is educated and a musician. He decided he wanted to focus his life on music. Lives and hour and a half from the big city of Regina. He found an older place on main street in need of work with back taxes owing and picked it up for four thousand dollars(1500 sq/ft). Gives music lessons to local kids now and tours with his band and by himself. He ain’t getting rich but he’s happy and comfortable. It isn’t that hard in this great country so please grow a set and cut out the whining. Perhaps you and whiteshoes could form a duet.

#167 The Patient on 12.17.11 at 8:17 pm

#115 Junius writes:

“Ron Paul wants to repeal Sarbanes-Oxley and Dodd-Frank. He wants to get rid of the Education Department and Interior (ie no rules on the environment). All of this is insanity. It will lead to more monopolistic practices by banks, more blood sucking on the middle class and Marxists everywhere cheering.”
__________________________________

Please be gentle with me, Junius, but a question if I may: Why insane? Isn’t Ron Paul saying get the feds out of these areas and let each state decide? What’s so nutty about that?

P.S. Garth, if not Ron Paul, who? Bill Maher, Jesse Ventura, Jon Stewart, Noam Chomsky, Ann Coulter — quite a diverse lot and all in favour for Ron Paul as the least terrible next prez of ‘Merica. This claim that Paul would capsize the U.S. economy needs to be explained, not merely stated.

#168 jess on 12.17.11 at 8:20 pm

Tri-Party Repo Infrastructure Reform
A White Paper Prepared by
The Federal Reserve Bank of New York
May 17, 2010

http://libertystreeteconomics.newyorkfed.org/2011/11/remaining-ricks-in-the-tri-party-repo-market.html

http://www.golemxiv.co.uk/2011/12/rumours-disasters-and-re-hypothecation/

#169 Devore on 12.17.11 at 8:25 pm

#118 Ronaldo

At beginning of 2011, it was around 27% higher than gold and now its about 12% lower. So, what are we to make of that? Are you sugggesting that platinum is now a good buy? Just wondering.

Platinum is primarily an industrial metal, much more so than silver. There is no reason for platinum to rise today. I think the suggestion is that gold is overvalued. However, you are to make nothing of this fact if you believe gold is money and platinum is just shiny metal.

#170 Westernman on 12.17.11 at 8:41 pm

The Patient,
Let me help you out on why Junius thinks Ron Paul being elected would be such a terrible catatrophe.
You see, Junius is a socialist. In Junius’s alleged mind the government belongs in EVERYTHING. There is NOTHING that the government shouldn’t be involved in as far as Junius is concerned. This is what socialism is.
And ALL paid for by your taxes… I hope I cleared up that little mystery about Junius for you.

#171 Beach Girl on 12.17.11 at 8:43 pm

#165 scared on 12.17.11 at 7:34 pm

#140 Beach Girl – “word for word”??? I think you are lying. The Hong Kong govt has the most generous taxation policies. It is a capitalist society. Perhaps in China it may ring true. If you asked him to sell his house, why would he think that you meant that he should move back to China? You don’t make sense.

Honest, I have no reason to lie. This is what this gentleman told me. He came to my house for 1/2 an hour. Business is slow. I never said move back to China.

I would come up with something witty, but am busy. Truly this is what he told me. If you want me to confirm, I will ask Wilson to elaborate. I do not like being called a liar.

Also Garth, you know I miss my ex, why do you portray his masculine physique when I have no chance of obtaining that again. Cruelty on your part.

#172 Westernman on 12.17.11 at 8:44 pm

DonDWest,
Yeah, you should take Habbit’s advice and buy a run down shack in a frozen Regina getto…
You deserve it – and I REALLY mean that…

#173 CrowdedElevatorfartz on 12.17.11 at 8:47 pm

This song is for you BPOE….

OOOOOOOOO THAT SMELLLLL, That smell that Surrounds YOUUUUUUUUU ……

Your diaper is full again, stinky pants means you’re full of sh*t !!!!!!!!

#174 DonDWest on 12.17.11 at 8:50 pm

166 Habbit

Wrong, the baby boomers are the most entitled people I know. Pot/kettle, give it a rest, all policies revolve around you. My generation has to work a HELL of a lot harder than yours. Most of us have to work two jobs, for a total of four jobs between spouses, just to make due. Back in your day, you needed just one job to pay a mortgage. And you have the audacity to call us lazy and entitled? Personally, I’m sick of it, and my patience has run thin!

So have your research skills. — Garth

#175 Nostradamus Le Mad Vlad on 12.17.11 at 8:52 pm


#69 GregW, Oakville — G’day Greg. Great link! There are a lot of positives to be gained from living here (but without the present fed. govt.). Appreciate it!

#60 TurnerNation — “The entire Nation collapses bringing the rest of the free world with it.”
— and —
#70 Onemorething — “They are F#cking scared Sh#tless!” — Whoa mercy! Both of you are right on the money. Damned right they’re scared shitless, because out of all the chaos and wars they create, one thing no one will ever be able to do anything about is the cycle change, from west to east.

#115 Junius — Less than 10% of your response is good, the remainder a great cure for insomnia so — Yawn. I posted links. Feel free to disagree with them, and then move on.

#157 Bill Gable — “Don’t buy the garbage that China will pull us out of this – their Property crisis has just begun and a new Government takes over in 2012.” — See how everything is perfectly co-ordinated? Sheeple who don’t follow follow Garth’s blog, with poster’s comments, wouldn’t have the slightest idea of what is happening, why it is happening and the reason for it.

It is to their disadvantage that they cannot be bothered to take the blinkers off.

#159 S — “Read this blog long enough and you, too, can lose consciousness. — Garth” — Ron Paul to become the new Queen of Lapland?
*
Fraud About time the head honchos (fall guys) were held accountable; 50:22 clip A multidude of things; Chevron vs. Brazil US$10.6 bln. lawsuit; TARP More than double the taxpayers money well wasted; Wall St. Layoffs continue.
*
2:14 clip Tahrir Square. Military brutality. Guess this is the world we live in now; 4:29 clip “But analysts say it’s nothing but a cover-up, with Iran as a convenient fall guy.”; Fukushima Japanese govt. declares cold shutdown; 5:56 clip Ron Paul vs. Michelle Bachmann; Pentagon and Libya How nice that the US – NATO – UN combined, managed to kill so many civilians to achieve a new agreement, and Central Bank; Constitution suspended? “Section 1031 of the National Defense Authorization Act otherwise known as the NDAA, provides broad authority for the federal government to use the military in domestic operations in order to detain Americans indefinitely and without trial.”, and Kissinger and Depop.

3:23 clip Chuck Woolery. TV game show hosts, with fantastic research teams to support them, replacing politicos? Yesssiiirrree, I’d go for it! DHS, a.k.a. Murder Ltd. in Jamaica; The End of Canada Canada, US and the security Perimeter; Vaccinations California passed a weird law; Odear Obomba Reading the headline is sufficient; The Tonight Show and Ron Paul seem to like each other; Russia – US Congress is the flea on the back; Singapore Next destination.

#176 Jas Girn on 12.17.11 at 8:55 pm

Garth, I am a 30-year old guy with no debts and some savings. I do not own a car, as I am waiting for the prices to go down too.

You will not believe how many people around my age are gambling their lives away on stupid houses and material things. It is very sickening.

#177 Devore on 12.17.11 at 9:33 pm

#145 The Thing in the Basement

Also, I dont believe US mortgage is tax deductible. Interest yes, principal no?

That’s usually what people mean by “tax deductible”.

#178 sam.i.am on 12.17.11 at 10:05 pm

#177 Mortgage interest is tax deductible, as are property taxes. Some car registration taxes too.

#179 Devore on 12.17.11 at 10:11 pm

#174 DonDWest

It would be hard to argue that past generations had it any easier, as individuals, than young people today, in fact today’s generation may have it easier with the prevalence of technology and the multiplication of opportunities it provides.

However, as a generation, as a society, they almost certainly had it easier. The post-war population boom was just coming into their peak productivity and consumption years, and economies around the world had a decade of catching up to do, shifting from war-oriented production to consumer goods. The newly empowered fiat currencies provided nations near-limitless credit-money creation to fund anything and everything the voters desired, backed by little more than fantastical promises of future economic growth and productivity, and much hand-waiving.

It is safe to say those days are gone. Today, consumer spending accounts for the majority of economic activity. Population growth is slowing (put that in your pipe and smoke it, Malthus) and even reversing in some places. Fiat-money systems and credit markets around the world are straining and reaching their practical limits. And no one is realistically forecasting economic growth of any significance in the next decade, and no, China and India will not come riding to the rescue.

These are all complex issues you cannot summarize in a short and neat catch phrase.

#180 Van guy blazin kush on 12.17.11 at 10:31 pm

#152 poco on 12.17.11 at 5:42 pm

In talking about Vancity. I totally agree with your comments regarding the tri-cities. But I believe Richmond is just in as much trouble. Vancouver has less sfh listings and dropping. Eventually as the burbs start to show bigger decline, Van will follow.

#181 whiteshoes on 12.17.11 at 10:37 pm

#114 eaglebay – Parksville

Thanks for the comment, I appreciate it- I think you’ve missed the point though…

I’m not the one who has been hobbled by the Boomers, you guys did it to yourselves. Taking a long view on the whole situation as a teen, it became clear to me the deck was stacked against me if I played along, so I opted out.

The house my parents bought in 1968 cost what three Chevrolet Impalas did at the time, now its valued at about what eight would cost. That’s a lousy deal on a tract house that wasn’t that great even in the sixties. On the other hand, the supernice apartment I live in costs about half as much a month as it rented for in 1968. this is a no-brainer.

Low as my income is, everything’s paid for, really nice stuff, and I have a much higher disposable income than a lot of people with pretty good jobs but mortgages on similar spaces do even now. I will not be facing bankruptcy anytime soon, eat like a king and work around 16 hours a week. I’ll have time to look after my aging parents while my foolish siblings struggle to keep the heating bills paid. The parents are doing just fine, they’re pre-boomers and saved, invested wisely and inherited a small fortune themselves and won’t be a burden on their kids.

What I wonder about is where the boomers think the taxes will be coming from when a large proportion of the people coming behind them has a suppressed income (even good jobs don’t pay the way they used to- and well paid lousy jobs are nonexistent, think manufacturing), no ability to pay much in taxes, little to no savings and large numbers in great distress from inevitable housing crash, after thirty years of burning the candle at both ends for public services, infrastructure and investments, just at the point huge numbers of boomers intend to retire and get sick.

Typical of boomers to think everyone envies them- I doubt that’s the case. I realize you all expect to spend your dotage in Malibu after receiving the payout from your priceless collectables ater an appearance on Antiques Roadshow but I suspect you’re in for a rough ride from your short sightedness, and frankly there’s not going to be a lot of sympathy for you from the generations bracketing yours.

whiteshoes

PS a tip of the hat to Bill Gable, I always especially enjoy your posts!

#182 TurnerNation on 12.17.11 at 10:58 pm

Investor move to trade rent for longer leases
Tuesday, 13 December 2011 19:58
Written by Vernon Clement Jones

http://urbantoronto.ca/forum/showthread.php/18282-Investor-move-to-trade-rent-for-longer-leases

GTA property investors are facing and, indeed, ceding to increased pressure to cut rents in exchange for longer leases — that ahead of a glut of units expected to hit the market, said one local expert.

“Recently, clients – and I, as a property investor have also had to do it – are cutting rates as long as they can get a tenant to sign a three-year lease,” Steve Arruda, a Toronto real estate investment specialist with Century 21. “Those clients are worried about vacancies because of flood of properties, mostly condos, expected to come into the market. They’ve decided to take a bit of a rent drop in order to ensure occupancy and maintain cash flow.”
The analysis comes on the heels of last week’s warning from the Central Bank, suggesting condo markets across the country are most vulnerable to a correction.

#183 Unistar38 on 12.17.11 at 11:06 pm

#140 Beach Girl,

You were not lying. You are just too stupid to your “favorite Chinese man”. You have been screwed and you do not even realize it.

What’s your ethnic origin, BTW?

#184 Habbit on 12.17.11 at 11:15 pm

#174 DonDWest You assume a lot. The one person working was the generation that preceded mine. My wife worked at part time jobs while our children were young. In her late 30’s she went back to school while still working part time and looking after our familly. She built herself a career thru hard work. I myself spent most of my working years as a tradesman often working 60 hour weeks. We considered ourselves fortunate for those opportunities to earn more. That’s what this great country is. But we must seize the opportunities. Did you know the average house size in the 50’s was 800 sq/ft? In the 70’s went up to 1000 sq/ft and now the average is 1800 sq/ft. Houses bigger familly size smaller. Guess what. They cost more too! When we decided that my wife go back to school those years were hard. I don’t know your situation Don but if you and your wife are working 2 jobs each perhaps one of you could go back to school no? Or get a trade or whatever. It’ still out there. Blaming others for ones situation is not a good strategy. Read in the globe today that Newfoundland has a skilled worker shortage. They have 13% unemployment there but can’t fill the jobs locally. See the problem there? It’s bloody sad. Change things for you and your familly Don. As Mr Eric Clapton’s tune goes Before you accuse me ………

#185 Screwed in BC on 12.17.11 at 11:23 pm

15% drop???? for the mother of all bubles? Are you kidding?

#186 Snowboid on 12.17.11 at 11:30 pm

#133 Westernman on 12.17.11 at 1:36 pm …

Wow, if I knew you were part of the 5% that lived better in the great depression I would have shown more respect.

That makes you what, 85? 90?

No wonder you are always so angry!

#187 Screwed in BC on 12.17.11 at 11:41 pm

Even as an average 15% does not make any sense. How much house prices have outpaced income on the last 10 years?
We need creative destruction to correct a flawed and rotten system.

#188 DonDWest on 12.17.11 at 11:45 pm

“So have your research skills. — Garth”

So the average person today has to work fewer hours to pay off a mortgage than the 1970’s? Today, we’re stuck in a two income trap (now 2+ income trap) based pricing. In the 1970’s, were house prices not mostly reflective off a single income?

Don’t even rebuttal how interest rates were higher back then; low cost/high interest rates simply means saving up to buy a house WITH CASH. A much healthier environment than a high cost/low interest rate environment we have today. Not to mention interest rates could always raise.

So, where have my research skills thinned?

Actually the cost of money has a great deal to do with things. A mortgage in 1975 (when I bought my first house) was 14%. It was 12% in 1990. In fact the 20-year average until three years ago was 8.2%. This exorbitant cost of money played a large role in dampening home ownership ratios and also in keeping real estate values reasonably stable (since large swaths of people could not afford any). As emergency interest rates clicked in during 2008 and mortgage rules deteriorated (40-year amortizations, 0% down), everyone could borrow for, and bid on, houses. The price and debt escalation since then has been unprecedented. Now with an economy under stress and structural unemployment, people like you have been given the expectation of owning a home (as a right) and yet clearly are living in a world full of risk. Perhaps the problem is with your own sense of entitlement, not your parents. — Garth

#189 TurnerNation on 12.17.11 at 11:51 pm

From Investors.com :

Canada holdings lose appeal

Posted 12/16/2011 06:32 PM ET

Foreign buying of Canadian securities totaled $1.97 bil in Oct., sinking 72% from the prior month, as money market funds and other investors lost their appetite for federal bonds. Foreign investment in corporate stock fell to a 6-month low. Canadian residents more than doubled purchases of foreign securities, mostly short-term U.S. debt.

#190 OkanaganInvestor on 12.18.11 at 12:27 am

#116 brainsail on 12.17.11 at 11:44 am

You’re right that federal debt to GDP is confusing. Here are some 2010/11 sources I found:

“The U.S. Debt Level:
The debt level is the debt as a percent of the total country’s production, or GDP, which was $14.7 trillion in 2010. The debt nearly 100% of GDP…”
http://useconomy.about.com/od/fiscalpolicy/p/US_Debt.htm

“The Organization for Economic Co-operation and Development excludes employee pension plan future liabilities, but includes current public sector pension plan assets in its calculations, making Canada’s combined federal and provincial debt closer to 30%.”
http://news.nationalpost.com/2011/03/21/graphic-50-years-of-canadian-debt/

“Our federal debt is about 35% of GDP while the U.S. passed 100% on Tuesday…”
http://www.torontosun.com/2011/08/05/canadas-debt-fix-the-roof-while-the-sun-is-out

Hope this helps.

#191 chubster on 12.18.11 at 12:32 am

@junius #115. foundation of capitalism is simpler yet. right to defend person, liberty and property – this is the only role of govt and the law. this is where the socialists disagree. however, legislation of equality necessarily violates the principles above since it must take from one to give to another. the two are incompatible.

capitalism not to be confused for cronyism – which is what we’ve got. on libertarian candidates, end the fed is at the top of the list. this addresses concerns about the banking cartel. without the central bank, issuance of credit from thin air, ergo ponzi credit schemes, cannot be propagated system-wide.

#192 many are trying to back out of T.O condos on 12.18.11 at 12:37 am

GTA girl #92

Know a condo sales person in north York who told me some are now trying to back out of their condo deals. It also seem this is happening all over Toronto and GTA. Was surprised to hear about trump towers and the many who are also trying to back out of deal. Looks like the condo house if cards is falling hard. Many new condos sit empty as flippers are waking up to the housing bubble. If you bought a condo you are in trouble.

#193 chubster on 12.18.11 at 1:05 am

what would appear to be my fundamental disagreement with the socialist democratic agenda.

1. don’t disagree with the objective of egalitarianism – share it but do not believe it can be legislated. that is coercion. seeding trouble to the extent advancement is not merit-based and people are forced to do what they do not want to.
2. failure is a fundamental component of any economic endeavour. ability to recognize, admit failure, perform post-mortem, liquidate, reallocate and move forward is crucial. here, a democratic process is impossibly inadequate.
ergo, economic allocation by active public policy is at best plodding and uncompetitive, more likely a guaranteed long-term disaster.

#194 Nostradamus Le Mad Vlad on 12.18.11 at 1:30 am


Back Door Deal to restore the Euro; Hungary could remove central bank; Gold and stuff; Harvard makes good investments; Bonds “JP Morgan Securities and two of its former directors have been fined for trying to bribe to Jefferson County employees and politicians in a bid to win business financing for the sewer project.” Corruption is what helps the world go around! Link in Second and third paras. are interesting.

PMs Another view; Fido to Go; Solid Case; Spain drops its drawers; Isolationists; NATO not only destroys countries, it disrupts their banking systems; Alan Greenspan failed miserably; Crazy To Believe; Business In, Army out.
*
5:03 clip For Chevy lovers (Dad’s car); Syria places missiles in position for defence; Medvedev to Obomba: Don’t push us; and Pentagon’s new ties with Libya and Turkey. Where is HAARP these days? Iran ‘blinds’ CIA satellite. Not sure about this one. Look at the sources — all western, all with an agenda against Islam and oil-producing countries; US floods Iran with agents getting info.; Artistic Images Collection of b/w pix from 1950s Chicago; Vitamin B can help memory loss and Alzheimer’s; The Treasury’s Exchange secret is finally out.

Harper reinventing Kannaduh; God Rods Advanced space weapons; The Reset Button in case all else fails; Energy Storm in the next few years; 3:55 clip Taken from the cockpit of an F18; Tensions Russia’s plans to disrupt US – EU harmony. Only fair, as they have been doing it to others for a few months now; OPEC No more oil.

#195 terces on 12.18.11 at 1:34 am

#145 thing in the basement – if you are in the business of buying and selling real estate for profit, the tax man views it the same as if you are in the business of buying and selling harleys, and profit from selling is taxed as income.

To be eligible for capital gains you have to buy a property “with the intention” of holding it for a long time.

If you are a realtor or any kind of a professional in the real estate business, the tax man can treat the buying and selling of property as “business activity” and assess your profit as Income. In fact there are many reasons they can treat your dealings as income.

Unless you have owned a property for a number of years and don’t go out and buy another one with the profit, you are at risk of being assessed or re-assessed as income. You have to be very careful and consult a high end tax lawyer if you are in a grey area at all.

If anyone is attempting to do a condo inversion, there are numerous tax bulletins about this.

#196 harden on 12.18.11 at 1:44 am

“a hot neighbourhood in Richmond (IF SUCH A THING EXISTS)”

.. pure GOLD!!

#197 rp1 on 12.18.11 at 3:18 am

“US house prices have declined by about 17% on a national basis, as indicated here. A 15% national decline in Canada would be seismic. — Garth”

Garth, your link shows a 30% decline. Left axis is the index, right axis is the rate of change. Looks like 190 in 2006. Fell to 130 by 2009, approximately where it sits today.

http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldocumentfile&blobtable=SPComSecureDocument&blobheadervalue2=inline%3B+filename%3Ddownload.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1245324826867&blobheadervalue3=abinary%3B+charset%3DUTF-8&blobnocache=true

#198 Barry in Pickering on 12.18.11 at 3:37 am

>>> [Garth] More likely is exactly what I’ve forecast for a while – an eventual 15% decline

================
Garth,
Please clarify. The average Canadian house price is up 20% since you started your call for housing prices to fall (2008, the “Great Fool- The Troubled Future of Real Estate”).

So now that housing prices are up 20% since your book, you are calling for an “eventual” 15% drop? What happened?

You obviously have no idea how serious the consequences of such a decline would be. — Garth

#199 Bailing in BC on 12.18.11 at 4:51 am

Garth – I’m not sure why Soylent Green is People was banned. Something to do with a bad link? They have been a long time poster and I have always appreciated their input. Do you think they might have learnt their lesson?

I am hoping so. It was an irresponsible action. — Garth

#200 wtf????? on 12.18.11 at 4:57 am

Canada defies the third world money grab and Greenpeace naivite’ on Kyoto.

“Kent claimed that Canada would have to pay billions to meet its Kyoto target in 2012: “To meet the targets would be the equivalent of … the transfer of CAN$14bn [£8.7bn] from Canadian taxpayers to other countries – the equivalent of $1,600 from every Canadian family – with no impact on emissions or the environment.” He was referring to the cost of buying carbon emission permits (AAUs) from other countries.”

The media has done a pee poor job of explaining exactly what Kyoto is…..and what it is not. It is not a climate accord in any wat shape or form…it is all about sucking money from taxpayers in the west to ‘sustainable development’ in the developing countries. Do you really wonder why the majority of micro countries support this kind of initiative?

Do you really think that Canada has billions to pour into the coffers of third world dictators? Are you watching the rapid growth of poverty in Canada? Do you not know that daily traffic in Beijing creates more pollution thatn entire years of work done at the oild sands? Are you aware of the tens of trillion dollars of revenue that will be saved by not shifting our home grown wealth off shore?

If you want your taxes to go up past 100%…go ahead….vote for the dictators at the UN who thought they had found a way to sucker you out of your money by making you feel guilty for being born here.

#201 Canuck Abroad on 12.18.11 at 5:13 am

A 15% increase followed by a 15% decline does not bring you back to even.

Illustration (with bigger %ages to emphasise):
2003 – Buy house for 500k
2010 – Price increase 50% your house is now “worth” 750k
2013 – Price then decreases 50% and your house falls in value to only 375k and you have a 125k loss (before any transaction fees)

This is what Garth is saying won’t happen. Many people won’t sell regardless of where prices are because they bought for the long term and won’t need to move for a long time, so the price decline is moot.

Those at risk are the ones who hope to maybe move up but can’t because the little bit of equity they put into their house has been wiped out, or worse they have to bring cash to the closing to pay off their mortgage.

#202 new-era on 12.18.11 at 5:35 am

Humm what will happen if we get a 15% decline?

Ok the people who bought in 2003 / 2005 are probably saying we’re still ahead.

But what you should consider is the people who bought recently, many with 5% down.

Time 1: Ok lets play this out. You buy a 1,000,000 condo, putting in 50,000. You now have el-zippo in the bank. No reserves.

Time 2: You get hit with 15% decline. -150,000
(now you down 100,000 dollars) and your now underwater , in the red.

– what do you do if you sell you still owe the banks 100,000 + realitor fees + bank fee and laywers.

Time 3: Now the banks must be looking at you as a high risk , because your balance sheet are hooped.

Time 4: Lets say a percentage of the people decide to get out and the market starts to flood. The people who went nuts with their bidding war will take a 15% + the value they overpaid.

Time 5: possible panic and lost of confindence in the real-estate in Canada. We will probably be compared to the USA, Australia and mabey even greece.

Something to ponder. Mabey you should spend like heck this winter, because it may be your last spending spree you take for quite some time!!!

#203 T.O. Bubble Boy on 12.18.11 at 8:19 am

Completely off topic… but I’ve noticed several Canadian stock picks among various U.S.-based “Top Stocks for 2012” lists:

Enbridge Energy Partners and RBC (from Goldman Sachs):
http://business.financialpost.com/2011/12/08/apple-only-returnee-in-fortunes-top-10-stock-picks-for-2012/

Potash, Suncor, and TD (Barclay’s):
http://www.thestarphoenix.com/business/PotashCorp+among+Canadian+stocks+Barclays+2012+picks/5857295/story.html

Potash again (Wall St. Journal / SmartMoney):
http://wallstcheatsheet.com/stocks/smartmoneys-top-10-stocks-for-2012.html

Suncor again (Edward Jones):
http://www.usatoday.com/money/perfi/stocks/story/2011-12-15/investment-roundtable-strategists-stock-picks/51992394/1?loc=interstitialskip

And… The Brick!
http://www.kiplinger.com/columns/promisedland/archives/feinberg-stock-picks-for-2012.html

#204 Cow Man on 12.18.11 at 9:16 am

Amigos:

While this blog grieves over 7% increase in home mortgage debt just compare it to Ontario Farm Debt. According to an article in this weeks Ontario Farmer, Stats Canada reported Ontario debt up 9.5 % in 2010. Interest payments are tax deductible for farmers. Canadian Farm debt total was $66.4 Billion up 6.1%. Nice future!

#205 T.O. Bubble Boy on 12.18.11 at 9:59 am

“HCM”: Hot Canadian Money
http://www.mydesert.com/article/20111218/BUSINESS04/112180331/Fair-wind-from-north?odyssey=mod%7Cnewswell%7Ctext%7CFrontpage%7Cp

#206 Ret on 12.18.11 at 10:41 am

#201

Time 3: Now the banks must be looking at you as a high risk , because your balance sheet are hooped…

and then the bank does three “you are not credit worthies” and raises your mortgage renewal rate to the moon.

You have to sell and eat the loss. TNLATB will explain it all to you.

#207 Herb on 12.18.11 at 10:44 am

#193 Chubster,

an honest statement that deserves an honest response from the socialist or communist or even Christian side.

1. You decry legislated egalitarianism (whatever that means) as “coercion”. On the other hand, what kind of freedom is the freedom to exploit? That is what capitalism amounts to in my twisted mind. It should mean giving honest value for an honest buck, but in practice means getting the most bucks for the least- value output. And our legal, political and economic cards are stacked to facilitate this. Where is a “Truth in Advertising” law, or a “Competition Bureau” with working teeth?

2. Where was the “ability to recognize, admit failure, perform post-mortem, liquidate, reallocate and move forward” in the recent and most instructive financial crisis? Capitalism quietly implemented its second maxim: socialize losses. There wasn’t much of a democratic process involved here either.

The worst part is that Capitalists and socialists can hurl claims and accusations at each other without ever hitting the mark: that there neither is nor ever was pure socialism or pure capitalism. We need a new name for a new system that pursues the common good without favouring either an upper or a lower class. Suggestions, anyone?

#208 Randy on 12.18.11 at 10:51 am

A 50% drop is not unrealistic..

http://whatisthatwhistlingsound.blogspot.com/

But the author of that drivel is. — Garth

#209 GTA Girl on 12.18.11 at 11:10 am

Yes I’ve heard this too about some condo projects. Sad fact is you can walk away from your down payment but the builder, if desperate, can legally come after you for breaking a contract. Unless you can prove delays etc.

The banks are quietly saying no to mortgage financing these condo/hotel projects. Saying its commercial venture.

Kip? You may be in the forming construction world, but too close to the mess to see the forest from the trees. Many trades have expressed concern and just what the developers are doing. Many question who is buying, what kind of financing schemes are going on. People remember the 90’s, and see this correction coming as far worse. Developers were/are pulling sq ft prices out of thin air, then selling units to odd groups of friends, partners and consortiums. Units never even languish or are affected by the marketplace. This is the danger.

Anyone looking at the resale condo market can see the glaring contrast of new price and resale.

Projects may be scheduled…but if panic hits, as it already is starting to…banks will walk away, people will balk.

#210 Canadians living on HELOC on 12.18.11 at 11:18 am

People have maxed out their credit cards and use their HELOC as a back stop to pay their debts. These people play the borrow here to pay debt there. Canadians are in more debt then the Americans ever were and now enjoy a housing bubble thats now even bigger. Mark Carney and his fellow cons have dug a debt hole so big that even with rock bottom interest rates Canadians are unable and unwilling to pay their debts off. Mark carney needs to cut off the debt now. Yes the debt ponzi will crumble like a house of cards but either crash it now with mortgage debts at 1.1 trillion or later when debts will be well above 1.1 trillion.

#211 Randy on 12.18.11 at 11:22 am

We in Ontario and Quebec are relieved that even though our Provincial Debts are almost equal to the National Debt of Canada….if we default, the rest of Canada is responsible for our massive Provincial Debts which are approaching one-half a $ Trillion….Liberalism will destroy everything !!!

#212 Sky on 12.18.11 at 11:23 am

@ TurnerNation & GregW, Oakville

Why aren’t we all driving on sunlight?

http://www.youtube.com/watch?v=4_lSxhTatUU

Political/corporate considerations aside – you won’t like the answer. SAG ( stratospheric aerosol geoengineering) has had a very negative impact on solar availability. The PTB euphemistically refer to this deliberate destruction as ‘ global dimming”.

#213 Sue on 12.18.11 at 11:33 am

Wow, Garth, the “sense of entitlement” you speak of hits the nail on the head. I see it everywhere and that is the root of the problem. A big reality check is coming and that will be particularly painful for many.

#214 Macrath on 12.18.11 at 11:44 am

Great Washington Post article on the top down systemic corruption in the US of A.

“Canada’s regulations do not allow client-segregated monies to be borrowed for speculative purposes. Further, voting and lobbying laws there do not tolerate the sort of corrupt legislative lobbying that is rampant in the United States. ”

http://www.washingtonpost.com/the-systemic-risk-revealed-by-mf-globals-collapse/2011/12/14/gIQAtrTI1O_story_1.html

This is why an MF Global cannot occur here, at least as far as individual investors are concerned. This point has been lost on too many posters to this site. — Garth

#215 Van Isle Renter on 12.18.11 at 11:53 am

At some point in time, a house will revert to being a place to live. Just as tulips reverted to being flowers after the Dutch tulip mania of the 17th Century.

The question is: What is the utility value of a house, as shelter etc.? The Americans are finding that out as we speak.

The larger issue is: Now that municipalities have switched to market based assessments and reaped unearned tax benefits for years will they recognize the drop in values and cut your taxes or will they raise them to back-fill the holes in their budgets? My bet is on raising tax rates.

At this stage, my wife and I could buy virtually any house that we want for cash. But other than the continuously falling prices out here, the thing that stops us cold is property taxes. They are high enough to make us puke.

Yeah, I miss puttering around my house and doing light renos. My wife misses painting and would love to take out a wall or two. But we don’t miss it enough to spend $5K a year on taxes.

I guess we’ll just have to keep buying preferreds with our tax savings.

#216 R2D2 on 12.18.11 at 12:19 pm

“He used to be known as “The Maestro,” for presiding over such a long period of economic growth. But this fall the former Federal Reserve chairman was being blamed for the laissez faire economic policies that contributed to the current financial crisis. In Congressional testimony in October, Alan Greenspan acknowledged that he was “partially” wrong in opposing financial regulation. “Yes, I found a flaw,” he said, when grilled about his free-market ideology. “That is precisely the reason I was shocked, because I’d been going for 40 years or more with very considerable evidence that it was working exceptionally well.” Also shocked is anyone who plans on retiring before the end of the next geologic era.”

http://www.time.com/time/specials/packages/article/0,28804,1855948_1864014_1864016,00.html #ixzz1gu5YkapE

#217 Snowboid on 12.18.11 at 12:20 pm

#181 whiteshoes on 12.17.11 at 10:37 pm…

History lesson from Calgary 1968

1968 Impala – average Calgary price $ 3500
Home value from your calculation = $ 10,500

Conclusion: your parents lived in a very small house.

2011 Impala – average Calgary price $ 30,000
Home value from same calculation = $ 240,000

Conclusion: your parents live in the same house

Rental Apartment (2 bedroom Calgary 1968) – $ 200 (hot water/heat incl)
Current rent based on your statement = $ 100

Based on your previous post your hourly salary is close to $ 22 an hour – pretty good for 16 hrs a week.

So you live in a nice $ 100 a month apartment, with a bunch of nice stuff that would fit in a pickup truck.

Based on your statement you are either full of it, or living in your parents’ basement and are already their caregiver.

#218 Van guy blazin kush on 12.18.11 at 12:58 pm

You obviously have no idea how serious the consequences of such a decline would be. — Garth

And readers of this blog don’t care. The only thing that this blog wants, is to pay a lesser price for a home. Just like me, I sold in 2009 in Burnaby and I’m still waiting. Well obviously the timing was a little off, and I’m still renting!

A renter who wishes for a market crash, with an accompanying recession, is a fool. — Garth

#219 eaglebay - Parksville on 12.18.11 at 1:05 pm

#181 whiteshoes on 12.17.11 at 10:37 pm

Whining and complaining will not do.
Every generations have their own problems.
I wish that we had all the technology that is available today. You have it and you don’t know what to do with it. What is it? Lack of real education, lack of real thinking and lack of innovation?
Instead of “bitching”, tell us what should be done. What are you going to do about the future. Vegetating won’t do.
Again, what’s your generation going to do?

#220 The Thing in the Basement on 12.18.11 at 1:06 pm

195 Terces – thank you. I actually had learned about that from a builder friend, but somewhere in the trail of posts
I completely missed that it was a real estate company
that bought the properties.

#221 Westernman on 12.18.11 at 1:21 pm

[email protected]#209,
You state ” liberalism will destroy everything”
I state ” It already has ”
The minds of at LEAST two generations of Canadians have been brainwashed since birth by the liberal, entitement, nanny state that Canada has become. 95% of Canadians can barely tie their shoelaces without help from a government agency or bureau. It’s over for this country… if you are a individual that values freedom, liberty and the right to dissent from the wishes and dogma of the thundering herd and value individualism and self-reliance then Canada is probably not for you.

#222 eaglebay - Parksville on 12.18.11 at 1:23 pm

#166 Habbit on 12.17.11 at 8:07 pm

Excellent post.
Northern BC, Saskatchewan and Alberta are also short of skilled workers.

DonDWest
By the way, don’t worry about your wife.
The odds are 50/50 that she’ll be leaving you sooner or later, when you least expect it.
With your attitude and your way of thinking, if she’s half good looking, she will not live in your little village.
Now stop your whining and get to work on your future.
Don’t worry about mine.

#223 DonDWest on 12.18.11 at 1:32 pm

“I wish that we had all the technology that is available today. You have it and you don’t know what to do with it. What is it? Lack of real education, lack of real thinking and lack of innovation?”

It’s called globalization. Look, making big money off the Internet is now a thing of the past. I actually made more money off the Internet AS A TEENAGER than I ever can hope to today. Why is that? Did I suddenly get dumber with age? No. What happened was in the 1990’s I had to compete with mostly other Canadians and Americans. Now, the Internet has been discovered by India and China, and has become globalized down the same path as manufacturing. I can’t make a living off the Internet anymore because Indians and the Chinese can do the same work for much cheaper due to the exchange rates.

Young people are screwed in part because of that technology you so cherish. The Indians and Chinese have an unfair competitive advantage because they can charge lower rates for their services strictly due to exchange rates. It has nothing to do with skills or ability. I’ve been web programming since I was fifteen years old, while Indians never even touched a computer, but obviously there’s nothing I can do when there’s Indians who offered specialized IT services at a rate lower than a McDonald’s worker. It’s all about price; not innovation.

You baby boomers had it better because you were protected. If you had to compete in this environment like us; you would fall flat on your faces. You have no right to pass judgement because in your youth you never had to compete against billions of Indians and Chinese who can do the same work for pennies a dollar!
Now maybe, just MAYBE, if you baby boomers priced your houses around the same as they’re priced in India or China, I could afford to offer services around the same prices of the Chinese and Indians, but you feel entitled to making money off your house rather than working.

Besides, many of us young people actually hate the technology. What good is it? Most of it is useless trinkets anyways. I would rather have nice affordable housing than widgets like an I-Pad. I would trade places with the boomers any time; any day. The technology is overrated.

#224 DonDWest on 12.18.11 at 1:35 pm

“A renter who wishes for a market crash, with an accompanying recession, is a fool. — Garth”

Not if he has little to lose in the first place; it’s all a matter of perspective.

You mean it’s all about you? I’m shocked. — Garth

#225 Junius on 12.18.11 at 1:50 pm

#175 Nostra Mad Vlad,

Right back at you. I haven’t read your posts for nearly 2 years. Now I remember why. I will return to my previous behaviour.

#226 Westernman on 12.18.11 at 1:52 pm

DonDWest,
Do you know how ridiculous you sound?
Sitting here, in my luxuriously appointed, stylish, lower east-side abode, just blue-skying it, I can think of at least a half-dozen ways to make good money by running my own business right out of my home with very little invested. Under 20,000.00 in each case.
The catch is that these endeavors require the owner/operator to get off his or her ass, spend some cash and stir their stumps.
I do it, and I’m a lot older than you. Are you up to it?

#227 Daisy Mae on 12.18.11 at 1:53 pm

VAN ISLE RENTER: “….will they recognize the drop in values and cut your taxes or will they raise them to back-fill the holes in their budgets? My bet is on raising tax rates.”

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

Municipalities simply increase the mill rate.

#228 Emotions,hormones & duct tape on 12.18.11 at 1:55 pm

DondDwest, Westernman, Habbit…and many others that seem to have a chasm between your ideas..

TPTB are listening to this and laughing their heads off. they love it because they hate peace…and they’re getting richer.

#229 Longterm on 12.18.11 at 1:57 pm

Just before leaving Oxford for Heathrow to flay to Calgary for Christmas I checked my email and saw a contract note alert in the TD Waterhouse account in London. It seems gold had dropped while I was busying packing and sent my gold etf through my sell stop and liquidated my holding. Gold is now up a bit but the trend is down for now and I’m out of gold in my portfolio. I did pocket 2300 pounds profit on the forced sale plus my initial investment and so not that put out to have a hefty pile of safe cash ahead of the holidays to buy high quality equities with over the coming months.

#230 DonDWest on 12.18.11 at 1:58 pm

“You mean it’s all about you? I’m shocked. — Garth”

Hey, I’ve learned from the “best”. . .

You might want to explain how my providing a free blog for you to bleed all over is about me. — Garth

#231 Junius on 12.18.11 at 2:01 pm

#167 The Patient,

You asked, “Please be gentle with me, Junius, but a question if I may: Why insane? Isn’t Ron Paul saying get the feds out of these areas and let each state decide? What’s so nutty about that?”

What is nutty about it is that is is a ruse. A lie. And Ron Paul and the other so-called freedom thinkers know it.

The states are much easier to control and co-op. Look at the current mortgage fraud state prosecution situation and you see where this goes. The White House and Feds are putting enormous pressure on states not to prosecute. Fortunately a few key prosecutors in NY and California are not going along but the pressure is enormous.

In the future all they have to do is change the law so corporations can domicile in few key states and remove ability of each state to police a critical aspect of the law.

Environmental laws set in Texas, Pharma in Nebreska, etc.

#232 Canadian Watchdog on 12.18.11 at 2:04 pm

#156 TurnerNation

Based on data I’ve researched, most high-paying jobs are in the public sector (healthcare), while the majority of low-wage jobs are in private sector. Point is, immigrants reduce wages in all sectors because they are willing to work for less then Canadian born citizens.

In general, immigration is playing a fairly big role in the housing sector while the government is pushing towards increasing the allowable amount of incoming immigrants (more so foreign workers and students). Although lower-wage jobs benefit costs for businesses, the blowback is less consumption due to inflation outpacing wage growth.

In case you’re wondering how many immigrants are migrating to Canadian cities, here is the breakdown:

1. Permanent Residents http://i39.tinypic.com/1xz1o2.png

2. Temporary Workers http://i39.tinypic.com/ej7cz9.png

3. Foreign Students http://i40.tinypic.com/2cys7md.png

As an example for Toronto: Perm. Res (92,185) + Temp. Workers (30,367) + Foreign Students (25,304) = 147,856. Divide that by 12 months and you have an average of 12,321 immigrants per month. Keep in mind this number only reflects new immigrants and doesn’t account for domestic demand.

Even when accounting for emigrating outflows there is still a net gain every year. The result of this activity over the years has been a higher rotating population (greater amount of inflow/outflow traffic), which is creating a chaotic rental market.

#233 Okanagan Renter on 12.18.11 at 2:09 pm

The thing is, after my epiphany about the RE delusion (thanks in large part to this blog) I don’t know that I’d want to buy even if there was a market crash. I’ve run the numbers on every single rent vs. buy calculator on the web, and renting ALWAYS ends up being more profitable, especially when opportunity costs, property taxes, maintenance, etc. are factored in.

Which is to say that only a catastrophic market crash would make it remotely interesting for me to give up my debt-free, worry-free lifestyle to become a debt slave. As Garth and others have pointed out, such a market crash would have such a devastating effect on the economy that it would likely wipe out any potential benefits I might realize from an inferno of RE firesales.

In one of my first posts here I wrote about how my wife & I could well be the perfect poster children for the benefits of renting a condo, and I’ll repeat it if only to save a potential would-be condo buyer from making the same mistakes as my neighbours: we live in the nicest unit in the entire building (vaulted ceilings, mountain views, etc.) while spending a fraction of the cost of owning one of the lesser units.

I’ll add one new bit of advice: try to rent in a building filled mostly with greater fools who own the units, as it is in my case. My condo only allows 10% of the units to be rented out. This means that my kind neighbours subsidize the amenities I enjoy with their strata fees and property taxes. Because they’re heavily invested in the building everything is kept up to make their “investment” look attractive. Still, a unit just down the hall has been on the market for several months and even after at least 3 price reductions no one is biting.

Caveat emptor, renter regit!

#234 Emotions,hormones & duct tape on 12.18.11 at 2:11 pm

Westernman
95% of Canadians can barely tie their shoelaces without help from a government agency or bureau.

Exaggeration doesn’t prove a point very well. It’s like lying…are you a liar?

#235 Junius on 12.18.11 at 2:13 pm

#205 Herb,

Good post.

The first thing we have to do is get rid of all these “isms”. People through around all of these terms like “liberalism”, “socialism”, “conservatism” and even “marxism” like everyone agrees on what each of them means.

The next thing we have to do is stop thinking there are simple solutions to complex problems. This approach is most common on the extreme left and the extreme right. The common theme between both of them is that if we sweep away the current system we will have something that is more just or fair or something.

In reality the thing that the Randroids/Ron Paul followers have in common with the Marxists is that their solutions will lead to a dictatorship of the few. This is history. Whether is is corporate control run by the few that we identify as fascism or state control run by the few that we identify as socialism it ends up in the same place. A few thrive while everyone else suffers.

We need to return to the core values that we established our society on. Government “for the people and by the people” does not mean for the benefit of corporations and the few people that control them. Nor does it mean that each person does not have to pull their weight as best they can.

#236 Ben on 12.18.11 at 2:23 pm

Home for Xmas from Dallas and talking to my sister. They have a clear title house here in Sherwood Park, not rich but doing okay. I asked her what does it cost you a month now to own this house clear title. You know, the property taxes, house insurance, utilities, cable tv, internet, etc… What do you spend a month on that? She had it all on her excel spreadsheet of monthly expenses and it was $900 a month they pay over and above a person with a mortgage. Unreal!
Man, my hotel a month in the U.S. is cheaper then that and their vacuming my room and and cleaning my toilet bowl, shower everyday, changing my towels and bed sheets, emptying my garbage. I got more TV channels then I can count and wireless internet, breakfast every morning, coffee all day.
I mean why? Why even bother?

P.S. Their half a $ mil house in Sherwood Park goes for $100 G in Dallas. LOL

#237 Junius on 12.18.11 at 2:47 pm

#219 Westerman,

Are you suggesting that liberalism caused the Financial collapse?

Can you explain? Perhaps with facts.

#238 Westernman on 12.18.11 at 2:47 pm

Emotions,hormones & duct tape,
Yeah, you’re right – I am exaggerating…but only slightly.

#239 shanks on 12.18.11 at 2:49 pm

Garth,
i know this is a RE blog, and that you dont like metal heads hanging around junking up the space, but i have a question about gold and silver. I have heard a lot of people saying that G&S will soar in the next year, and that the current correction in the price of metals was caused by investors selling their metals to cover their currency positions.

If this is true, does it not seem like the price will continue to fall until there is an actual stabilization of global currency markets? To me, it does not seem like much has been done to alleviate the conditions that have led to the eurozone crisis and overall global debt crisis.

much obliged,

PMs are totally speculative. Hence the folly of a portfolio with more than a 5% weighting. — Garth

#240 Herb on 12.18.11 at 2:53 pm

#219 Westernman,

that piece of propaganda sludge does not deserve an answer.

#241 Fermin Morella on 12.18.11 at 2:54 pm

Worrying works! 90% of the things I worry about never happen.

#242 InvestorsFriend (Shawn Allen) on 12.18.11 at 3:03 pm

213 Van Isle Renter

PROPERTY TAX REVENUE DOES NOT RISE WITH HOUSE VALUES

Van Isle Renter wrongly states:

Now that municipalities have switched to market based assessments and reaped unearned tax benefits for years will they recognize the drop in values and cut your taxes or will they raise them to back-fill the holes in their budgets? My bet is on raising tax rates.

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

Perhaps it takes a home owner to know this but the statement is wrong. Municipalities collect property taxes bases on what they NEED. The market value assessment just determines the amount each home owner pays.

Say the municipality needs 5% more revenue but house prices are up 10%. They then CUT the tax rate per $100 of assessment by 5%.

But they are honest enough to describe this for what it is: A 5% tax increase, not a decrease .

This is how it works. Municipal property tax rates seem to be an honest and transparent system.

So, no, property taxes will not fall when house prices decline. Neither did they rise due to house inflation. They rose because the municipalities needed more money.

Now of course if your house value went up 100% while the average rise was 50% then your property taxes go up more than average. That hurt you but did not help the municipality. It helped the guy whose house price rose LESS than average.

#243 Westernman on 12.18.11 at 3:04 pm

Junius,
I am not just suggesting it…I’m damn sure of it. In fact the mental disease known as liberalism has pretty well cored the heart out of what once was a vibrant, formidable, innovative engine of ever-increasing standard of living entity known as western civilization.
And no, I am not going to waste my valuable time providing research footnotes to convince the likes of you about this or anything else – you can find out on your own in time that I’m right.
My time is valuable – I don’t do public service work.

#244 Emotions,hormones & duct tape on 12.18.11 at 3:06 pm

Westernman, you stated,
“It’s over for this country… if you are a individual that values freedom,…..”

Why be defeated when you know that this great nation has faced so many turbulent times from its conception, adapted and carried on. I don’t think our forefathers ever envisioned that this little backwater collection of old country tribes would become a G7 powerhouse.
The beauty of this country and its free thinking people is that we as a tribe value what we have. All tribes protect their own or they perish. We are all Canadians.

#245 45north on 12.18.11 at 3:09 pm

Beach Girl: talking about the guy in the back of the pickup truck: I miss my ex, why do you portray his masculine physique?

he may look clumsy on land but you should see him in the water!

you know Beach Girl, for a while I thought that you and Daisy Mae were roommates but no you have a dog named Daisy. Nothing to do with Daisy Mae.

Westernman: You see, Junius is a socialist. In Junius’s mind the government belongs in EVERYTHING.

yeah, he is

Habitat: I own my own house and like you I’m not selling.

#246 Westernman on 12.18.11 at 3:11 pm

Emotions,hormones&duct tape,
” and they are getting richer ”
Me too,baby, me too.

#247 Emotions,hormones & duct tape on 12.18.11 at 3:14 pm

#209 Randy
All of the nations of the free western world are “Liberal democracies”, even the US. (on the macro political scale of the entire world we all sit left of centre because of our free thinking societies.
We have also been the most powerful, ethical, rich, influential to world change, charitable, etc..do you think there’s any connection or is it just a fluke?
Despite all of that, yes we have problems, but we can solve them because of all of the above. Let’s not lose that freedom.

#248 Kilby on 12.18.11 at 3:15 pm

#174 DonDWest

Tweet yourself a coffee. Take responsibility for your own future instead of blaming others. lots of 25 to 35’s I know are doing pretty well, too busy to complain about life. You sound like a bitter 50 year old that never got it together when you had a chance. Go work up North…….

#249 Dale Blayone on 12.18.11 at 3:20 pm

Can anyone please tell me where I go on net to find average monthly prices in TO?

#250 Westernman on 12.18.11 at 3:23 pm

Emotions,hormones&duct tape,
G7 powerhouse? Holy crap! I almost soiled myself laughing at that…of ALL the verbage I can think of to describe our sad little country “powerhouse” is the VERY last one on the list. HILARIOUS!
You must be female…NO man, however deluded, would utter absurdities like you do.( Well, maybe Form Man)
I can’t wait for your next comedic salvo…fire away!

#251 Tom on 12.18.11 at 3:27 pm

Live in a smal town in Alberta POP 1.300 where there
are 37 Houses for sale most are priced at well over $200.000 dollars and to add stupidity to the mix not one seller is wiling to bargin even though only one
property has sold in the last four months and well below the asking price. Beside the out to lunch debt load far to many are carrying for obverpriced housing that people ran like sheep to the slaughter to grab .The sheep foolishly desided to borrow even more of this same cheap easy money to buy toys like boats trailers new cars trucks and on and on even before thinking about the realitys of the must be paids taxes utilitys grocerys ect insurance ect.We truly do carry the seeds of our own destruction and it’s as simple as to just keep on overloading ourselves with huge personal debt loads and praying not to get sick fired or have the bottom drop out of the housing market which now looms larger daily and has had the allarm bells ringing loud and clear. So wake up and pay attenion to
what Garth is saying in his Blog or become a casualty with the silly sheep who sadly will not wake up until they are at the slaughter house door that being when the bank arives at the door with the forclosure notice

#252 DonDWest on 12.18.11 at 3:31 pm

“You might want to explain how my providing a free blog for you to bleed all over is about me. — Garth”

I meant figuratively speaking; I’ve learned mostly from society (and your generation) that selfishness and cold heartedness wins the day and is the only way to profit.

There was a time I used to care. I gave to charity, opened the doors for old people, was well mannered and polite, genuinely tried to help people, etc. all that resulted was absolutely poverty for me. The same people who I was trying to help looked down upon me because I’m poor. I behaved this way because I naively believed that unlike my parents; it was possible to be a “nice guy” and get ahead. It wasn’t working.

Since then I have come to realize through experience that only assholes get ahead in capitalism. My own parents were good examples. The problem is you’re right – I’m not very good at it. I can’t even bring myself to take advantage of 3rd world countries and outsource labour even though I have the knowledge, funds, and ability to do so. My concience is preventing me from getting rich – I’m trying hard to flush it out, it’s not easy though.

If humans are naturally selfish and evil; I don’t see it. I was taught to be selfish and evil; and I can’t bring myself to do it.

#253 Junius on 12.18.11 at 3:33 pm

#240 Westernman,

No facts. Only mindless rhetoric. Again, you have nothing to offer here but a glaring example of so much that is wrong.

#254 Longterm on 12.18.11 at 3:33 pm

Garth

Bonds or bond etfs? And why one over the other?

Cheers

Bonds, of course, if you have an experienced advisor and seven figures to invest. Otherwise, ETFs. — Garth

#255 Junius on 12.18.11 at 3:34 pm

#205 Herb,

BTW – the best name for the current situation is Neofeudalism. Essentially the control of the population through excessive debt. I haven’t seen a good name for the way out of this mess.

#256 Emotions,hormones & duct tape on 12.18.11 at 3:43 pm

Westernman,
I respect that you are a unique individual and are very self-reliant. kudos. I aspire to that too..
Canada is the very place that you want to remain in, free thinking, clean, well kept, organized, where people respect your privacy and a country that so many around the world only dream about living in.
It’s certainly not perfect by any stretch, but what are the alternatives?

#257 Timing is Everything on 12.18.11 at 3:45 pm

#219 Westernman, Do you live in Canada? If so, why? It sounds terrible.

#258 Tom on 12.18.11 at 3:47 pm

Sadly it’s allready far to late for the maney who have
been sucked into the quicksand of the housing market
that is so obviously circling the bowel. Banks handing out cheap money is a lure that was and is just too hard to resist.Now if the housing market implodes as all signs most certainly are indicacting. Persons who bought houses with this cheap money then borrowed even more to buy useless toys will wind up loosing big time.

#259 Emotions,hormones & duct tape on 12.18.11 at 3:50 pm

Westernman
According to the IMF, we are #10 out of 183 countries in GDP., not bad for such a sad country, boohoo for us.

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)

#260 Westernman on 12.18.11 at 4:05 pm

Emotions,hormones & duct tape,
Wikipedia,huh? Consider the source, I say.
There are several U.S states that have a higher GDP than Canada in addition to most of Europe etc.
Wikipedia is the online equivilant of toilet paper.
Timing is Everything… yeah, I live here about half the time. I tolerate it.
Junius… I say again, you are going to have to do some of your own thinking on this…I’m not your mother or your parole officer.
And finally, last and certainly least is you-DonDWest- to get ahead in a capitalist systym you don’t have to be an asshole ( it helps, but it isn’t mandatory ) you just have to identify a need or service that people are willing to pay for and provide that product or service. Simple, no?

#261 DonDWest on 12.18.11 at 4:07 pm

#256 EHDT

Being in 10th place when you’re arguably first place in natural resources isn’t much to write home about. I’m not saying this in support of Westernman’s arguments, just throwing this in for a little perspective. As a country we have the capacity to do much better.

There are a few notable factors that are holding us back: Bad governance, mostly foreign owned corporate management (rather than Canadian owned), and lax banking regulations. Not to mention a passive Canadian populace who generally just does as they’re told and who are afraid of rocking the boat. In Canada, unless you’re from Quebec, we’re taught that revolutionary ideas are for the Americans, Germans, French, British, etc. but not us.

#262 boomorbust on 12.18.11 at 4:19 pm

#205 Herb on 12.18.11 at 10:44 am

Suggestions, anyone?

A benevolent dictatorship. I’m pretty busy these days but I could put aside some time to rule the world.

#263 The Thing in the Basement on 12.18.11 at 4:20 pm

234 Ben – I would agree with your sisters numbers. But in my short experience renting a house, I still paid those utilities and insurance. I also recall paying hydro bill in rented apt., though cable was included.

The hotel sounds like a great deal. Only problem is its in Dallas (I cant say anything wrong with Dallas, just not on my shortlist). Any thoughts on buying there?

#264 The Thing in the Basement on 12.18.11 at 4:31 pm

249 DonDW – I’m not following. First you say you’re poor. Then you say you have the funds to take advantage of oursourcing. Do you own a manufacturing facility? I recall you said you’re 29 with $100K investments. Just what is it?

#265 DonDWest on 12.18.11 at 4:31 pm

#257 Westernman

“And finally, last and certainly least is you-DonDWest- to get ahead in a capitalist systym you don’t have to be an asshole ( it helps, but it isn’t mandatory ) you just have to identify a need or service that people are willing to pay for and provide that product or service. Simple, no?”

I’ve met a lot of people around my generation who have created brilliant products or services and they have failed because it’s not that simple. Good marketing and salesmanship is where it’s at; and sadly that involves being an (sorry for the lack of better words) asshole, or at the very least a douchebag.

And as I have already pointed out; price is a big issue. People have become accustomed to “Wal-Mart culture” and they’re only willing to pay cheap prices. That works fine if you live in China or India. The Canadian dollar right now is the most overvalued currency on the planet.

#266 The Thing in the Basement on 12.18.11 at 4:34 pm

Bonds, of course, if you have an experienced advisor and seven figures to invest. Otherwise, ETFs. — Garth

Sorry Garth, I thought you didnt like bond funds because
you couldnt tailor them to fit the individual.

A bond ETF is not a managed bond fund. — Garth

#267 The Thing in the Basement on 12.18.11 at 4:37 pm

257 Westernman – everybody knows the trick to wiki is to review the cited sources. Some good, others not so good.

#268 Westernman on 12.18.11 at 4:41 pm

DonDWest,
Please try and focus, son – I’m only trying to help you.
Get over this “the rich are evil ” shit. It’s just not true. And stop thinking in terms of electronic shit ( I can read your mind,boy, all the way from here ) and think in terms of real work. Hard, dirty and sometimes dangerous. The world is full of twits thinkng they are going to get rich inventing yet another useless video game.
And marketing and salesmanship is ESSENTIAL to success, I can’t stress this enough. Being successful is all about developing relationships.
Remember – the world will beat a path to your door if you invent a better mousetrap…but ONLY if they know about it! THATS what marketing will do for you.
You are in bad shape psychologically kid, you will have to re-program your entire way of thinking…it won’t be easy but you can do it if you try.

#269 Snowboid on 12.18.11 at 4:44 pm

#221 DonDWest on 12.18.11 at 1:32 pm…

Funny, I was making good money with a computing business (VAR – small business systems for accounting) in the mid-1980s. I was one of many small businesses that provided IT solutions to small business. There were no big box stores as competition and although I worked hard, my business was undone by an unlikely competitor – a drug store chain opened up a computer department.

With their purchasing power I couldn’t match pricing. They didn’t offer any after-sale support, which was part of my VAR model. Needless to say I gradually lost my big customers, then my small ones. Customers didn’t get that the extra they paid for my systems came back as equivalent support after the sale. Funny, some still called me for help on their drug store equipment, I offered my services at $ 25 an hour (some wanted it free).

Still couldn’t make ends meet, so I stopped selling and concentrated on programming where money was still good.

So while I agree that globalization has resulted in what may be unfair competition, I don’t believe protection was any better in the 1980s. Same thing then, it was all about price, not innovation.

#270 Cato on 12.18.11 at 4:47 pm

Housing is a symptom of global trade imbalances that slowly arose over last 50 years. It was never sustainable and we get to live through the profound consequences as the world seeks a return to economic balance. The trouble is entire generations have grown up under this economic model and consider the aberration normal. Just need to think objectively for a moment to realize we aren’t entering a recession but an economic re balancing to the way the world should have always been but wasn’t. The idea that one side of the world can produce while the other consumes with nothing but debt taken as trade is not a sustainable, it works for a generation but than falls apart. Its been the model we’ve been living under and its going to be a shock as it unwinds. Everything is not going to magically go back to what we view as “normal” because “normal” was the result of a failed economic model.

Europe will survive, not because of the Euro zone but because war instilled a resiliency into the structure of European society. One can live just fine without a car in a city like Paris or London, same can’t be said living Calgary. Europeans have the social infrastructure to live a full, rich life without the western hyper consumption we’ve all grown accustomed to. This makes Europeans more resilient. Same can’t be said for Canadians. A recession in Europe is an entirely different social experience than a recession here in Canada.

The US will survive as the bastion of capitalism. For all its ills capitalism is the only economic system that moved the human race forward out of the dark ages. The US will continue to attract the best and brightest driving new ideas for personal gain. It seems ruthless but its human nature, capitalism is in our DNA. The ideas that come out of striving for personal gain benefit the entire human race. We’ve shunned capitalism in Canada because we fear its ugly side, but in doing so we’ve lost its strengths.

I’ve come to realize Canada is truly in danger, moreso than Europe or the US. We share the same social ideals of the Europeans but we lack their social infrastructure & population densities. We favor the hyper consumption exhibited by our US neighbours but we abhor free market capitalism. We’ve been living an economic fantasy world that could very well turn into a nightmare.

Government leadership is an oxymoron. Government doesn’t lead, it simply reacts lead by emotion of the mob. Crisis is inevitable and unavoidable. We will continue to see continued crisis as the world rebalances. Don’t trade the crisis – trade the predictable response of governments to a crisis. This re balancing is going to last 20-30 years and create plenty of trading opportunities. If you miss one just be patient and wait for the next one to arrive.

Europe will enter new phase of its crisis next year. The US will have to step in and backstop EU banks, if this happens before the US elections the Obama administration will be slaughtered at the polls. The republican field isn’t exactly confidence inspiring, lack of confidence will just add more fuel to fire smoldering in the bond markets.

A few years after European crisis subsides it will be Japans turn. Japan is truly without hope, destroyed by its own xenophobia. Its a mathematical certainty, the country can’t be saved but that doesn’t mean the western world won’t try.

A few years after Japan we’ll be revisiting round two of the EU crisis, along with a made in America bond crisis as both regions start buckling under weight of past bailouts & spending. This is where populations start to split dramatically between the haves and the have nots. Life becomes extremely miserable for the have nots as social spending is truly curtailed.

Canada will not weather the coming storm without serious changes which we don’t seem willing to make. As its looking now we are going to end up resembling Russia in many ways. I highly doubt many of the social programs Canadians view as a fundamental right will exist in same manner in 20 years time. Anyone under 40 needs to start preparing now for a world where access to medical care is ruled by the size of your bank account. Its doubtful socialized medicine will survive in Canada for the younger generation.

All bets are off if war erupts. The probability of war is extreme. This won’t be an Operation Iraqi Freedom, Operation Enduring Freedom or Gulf Storm type of war. This will be real war, with evenly matched combatants and real death & destruction. We already know the likely flashpoints are Iran & Israel, China & Taiwan but new hotspots are emerging daily thanks to stress brought on by financial crisis. Financial crisis is the true underlying cause of most wars throughout history, including WW1 & WW2. Its the legacy one generation hands to another after economic policy fails and war preparation becomes the last best driver of economic growth.

#271 DonDWest on 12.18.11 at 4:48 pm

#261 The Thing in the Basement

I remember writing “was” poor; poor being past tense.

I still feel poor though because 100K in Canada buys practically nothing of any significant value that’s a life changing event. I don’t care for cars or vacations at globalized fishbowl resorts. From ages 18 to 24 I played nice guy; from ages 25 to 30 (30 now) I became more of an “asshole.” From ages 25 to 30 is where most of the 100K came from. . .

As for outsourcing manufacturing; that too is in the past. Outsourcing white collar work is where it’s at; it costs practically nothing.

#272 Snowboid on 12.18.11 at 4:52 pm

#231 Okanagan Renter on 12.18.11 at 2:09 pm…

I agree 100%, although we aren’t in the best unit, we are in a 10% building as well. As long as rents in the Okanagan remain so low, we will stay there.

A couple of units are for sale (but won’t sell at what they are asking) and we have the cash, but it doesn’t make any sense when the rents are so much lower than the cost of ownership.

#273 DonDWest on 12.18.11 at 5:02 pm

#266 Snowboid

I’m in complete agreement, but it’s got regressively worse since. In the 90’s, you had at the very least the rivalry between high end shoppers and price shoppers. Although even I could sense that in the end the price shoppers would “win” and I was living off borrowed time.

However I was a kid then, sure beat whatever I was taught in school, so I didn’t care too much.

I noticed the “Wal-Martization” of the economy was slowly but surely prevailing as the baby boomers became more and more powerful up the economic ladder. The silent generation and Gen-X seemed to care more about quality products; while the boomers merely cared about price. As more Gen-X’ers lost higher paying jobs due to the Wal-Martization, eventually they had no choice but to join the train wreck because they could no longer afford higher quality products. It was a deadly cycle of cheapness. . .

#274 DonDWest on 12.18.11 at 5:32 pm

#265 Westernman

“and think in terms of real work. Hard, dirty and sometimes dangerous. . .”

My experience with the trades is that employers artificially broadcast labour shortages in order to make use of government temporary worker programs. That way employers can hire temporary foreign workers for the cheap. There isn’t much opportunity here; it’s greatly exaggerated. Most don’t even advertise the work opportunities; and once investigated more thoroughly, I can see why.

Maybe there are opportunities to start businesses here as there is genuine demand; the problem is these are businesses with large upfront costs. 100K won’t start a shipyard building company, an oil company, a water treatment plant company, etc. Banks (obviously) won’t loan to someone without experience in the industry in order to start a business; and I can’t get experience because employers view me as an (excuse the politically incorrect term here) preppy white boy. They just don’t hire young white people, believe me I’ve spammed the resumes and have had the interviews.

The biggest myth going in Canada is the “trades labour shortage.”

‘Get over this “the rich are evil ” shit. It’s just not true.’

If the only way to get rich is outsourcing to 3rd world countries; then I’m afraid the “rich are evil” theory holds some merit. . .

#275 Patiently Waiting on 12.18.11 at 5:45 pm

DonDWest, whiteshoes etc,

My disaffected GenX brothers and sisters, we may live humby but we are not debt-slaves. We have the self-control to avoid expensive traps like condos, SUVs and children. As the debt-fuel economy implodes before our eyes, the spoils will be ours at deep discounts:

http://www.cbc.ca/news/canada/british-columbia/story/2011/12/18/bc-video-holiday-shopping.html

Happy holidays because we are among the few who can look forward to the New Year.

#276 The Thing in the Basement on 12.18.11 at 6:55 pm

268 Don DW – thanks for replying. I bet your $100K still
puts you well ahead of average for your age. And dont worry about being an a-hole – you are probably not as bad as you think. Many people confuse that with simply saying ‘no’ to people/customers/clients/employees, or
just being direct and honest with people. And don’t give away your ‘stuff’ for free. As a consultant, I get that constantly. We screen our calls, and I probably toss over 50% of the requests immediately because there is simply nothing in it for my company.