Joy

Suzi and her partner are teachers making a combined $90,000 a year with fifty grand idling in a GIC. “But we’re not horny,” she insists. “If we were house horny we’d be trying to get in the market – but we’re not stupid.” Still, this didn’t stop the two of them from writing me to ask if it’s a good time to buy a house in Victoria.

“Despite what the headlines are saying I have noticed that condo prices have dropped – a year ago there were NO two bedrooms below 400K and now there is quite a few to choose from. Is it a result of increased stock? Anyways just wondering what you think a reasonable price would be for a 2 bedroom? Also our plan B is to buy a house with my mom and dad when they retire (they have house in Victoria currently valued at around 850K) – should we just skip the condo and wait for mom and dad? Are we being smart with our money?”

Hey, Suze, you’re getting lustier by the minute. Sounds like Plan A is to buy real estate, as opposed to Plan B, which is to buy real estate, and get your poor retired, jobless parents to pay for it. B’s better (for you).

But first let’s leap back into the steamy little quagmire this blog’s created. This week has been devoted to giving you a realistic, real-world expectation of what will happen to Canadian real estate values. It hasn’t worked. At least among the 1% of daily visitors who actually deign to leave me a message. I guess the others have jobs. Or lives.

Most commentors decry my estimate of a coming 15% reduction in the national average, followed by a lengthy period of real estate decline. They want bloody intestines. They want it now. Phoenix is their idea of a good market (prices off up to 80% in some hoods). They relish the thought of screaming Boomers in white golf shoes clinging to a shard of granite c-top while a front-end loader turns their McManion into landfill.

As appealing as that may be, it won’t happen here. The thing Canadians need to fear is not an uncontrollable wave of mortgage delinquencies, foreclosures, bankruptcies, rampant power of sales, evictions or municipalities dozing abandoned homes, but simply negative equity. With nine of ten mortgage originations for first-time buyers in 2011 going to finance deals where the downpayment was 5%, for example, any real estate correction is lethal. The virgin owners are immediately under water and likely to stay there for many years. Eventually most will sell, but for less than they paid, sparking a downward drift in prices.

What took years to swell will take as long to contract. Remember, the US housing market peaked in the last few months of 2005, and is still correcting more than six years later. Those who believe house-heavy and investment-poor Boomers can ride out a decline are soundly mistaken. Sure, two or three years of denial are to be expected. But then you’ll see a generation in full-fledged panic, suddenly understanding what a dumbass idea it was to pay off the mortgage instead of feeding a fat financial nest egg. You may not be able to live inside an ETF, but neither can you eat pot lights.

A glacial economy, demographics, an ocean of debt, oversupply of homes, rising rates, property tax creep, tighter mortgage regs – the list of threats to real estate’s impressive. All of them will play a role in bringing prices back to the mean after what’s been a 13-year aberration in Canada. Once sales in an area slow (as they now are from the outer GTA to the inner Okanagan), owners eventually capitulate, and values erode. But it never happens in weeks. Idiot buyers engaged in bidding wars may establish new valuations for a street in just hours, but it takes months (or years) for sanity to return. Prices are sticky. Owners get greedy. But they always learn. If a property doesn’t sell, there’s  just one reason.

Yesterday I mentioned RBC’s forecast of a slowing market. Merrill Lynch, too. That came after the Bank of Canada warned. And TD called for an end to 30-year mortgages. Now Scotia is singing the same tune, saying our boom is aberrant, long in the tooth and disturbingly virile (sounds like me).

“Canada remained a notable outperformer, though activity here too shows some signs of cooling. Weak market conditions will likely persist well into 2012.”

By the way in the last few months (says Scotia), the US real estate market fell at an annual pace of 7.5%, Britain was down 6.7%, Australia off 5.7%, Spain lost 8.9% and Ireland crashed 14.7%. Can Canada be far behind?

But back to Suzi. Should she buy a $400,000 condo with fifty down (12%)?

Of course. The local newspaper says so: “Victoria’s economy is protected because this is a retirement town, a government centre with a strong high-tech sector and an attractive place to live, says the head of the Victoria Real Estate Board.”

That must be why the city will set a new all-time low this year for the number of new houses under construction. How else to accommodate all those new retirees, streaming into a city where the average SFH costs $592,000 and so far this year has received more snow than Halifax?

The truth is, Suzi, there’s only one direction for that market, and most others across the country. It’ll take years, not months, before the extent of the decline is known. The trip down will not be explosive or noisy, and resisted at every new price point by real estate druggies. But it will be relentless, remorseless and unstoppable.

So rent, babe. And get your wrinkly parents out, too.

No joy coming.

157 comments ↓

#1 Tim on 12.20.11 at 10:17 pm

You didn’t answer her question. What do you think is a reasonable price for a 2 bdrm condo in a decent neighborhood in Victoria?

#2 Ian on 12.20.11 at 10:18 pm

FIRST!!

#3 Spiffy on 12.20.11 at 10:21 pm

FiiiiiiiiiiiiiiRRRRRRRRRRRRRRRst!

#4 First on 12.20.11 at 10:25 pm

First Try!!!

#5 Bill Gable on 12.20.11 at 10:27 pm

When I begged my sister not to buy a joint in California, she told me they couldn’t ‘lose’.
Golf, sun, alien, IRS, Border and now reality.
“The place just ours across the cul -de-sac was just listed for $78,000 less than we paid for ours a year ago” came the plaintive whine on the phone from Disaster in the Desert.
What went up on helium, will go down on a gas bag of debt, regret, and retracement.
The great unwinding scares the new head of the IMF, and if you have been paying attention to our astute, Amazon appreciative, host, you get it.
A lot of folks think I am nuts, when I give honest appraisal of what I see happening. This Party Season, I am going to listen. It should be interesting.
A lot more fun than hearing a Family member who just got clipped.
It is amazing to me, that people will make decisions in RE, with less thought than what kind if topping will be on the triple Cap, before work.
The world is wacky, and about to get even weirder.
The US needs to cough up $10 trillion in debts in 48 months.
Where do they get the money..? Don’t mention China – seen the Markets and RE lately? HAM, my foot.
Europe is busted and England is so badly off they have asked Chuck to pay for Wills and skinny.
What movie is this anyway?

#6 Bickity boom on 12.20.11 at 10:29 pm

cool

#7 Bill Gable on 12.20.11 at 10:31 pm

Next time, I will put on my glasses. Gosh, apologies for crummy hunt and peck effort earlier. Mr. Turner must wonder if that egg nog was taking effect. Not.

#8 AlbertaGuy on 12.20.11 at 10:34 pm

Garth, you mention Phoenix at 80% off – that is sounding very compelling. When are you going to turn your gaze south and give us blog dogs who have taken your advice to heart and sold some guidance when it comes to buying us property?

#9 FTP - First Time Poster on 12.20.11 at 10:36 pm

I’m guessing by the look on “Mom & Dad’s” faces that the news of who the real father is was disclosed just prior to that picture being taken.

#10 First Place on 12.20.11 at 10:41 pm

First. Like magic.

#11 Timing is Everything on 12.20.11 at 10:44 pm

…[Victoria] so far this year has received more snow than Halifax?

I must have slept in that day.

#12 Van guy blazin kush on 12.20.11 at 10:47 pm

Merrill Lynch has been forcasting correction since 2008.

#13 Mr. Lee on 12.20.11 at 10:48 pm

Too many extremes, on one hand the pumpers and cheerleaders. On the other the doomers and the oblivion croud. Let us hope and pray to God, Allah, the Creator, that our housing lust corrects in the form of a soft landing………….and that the over extended get some sort of chance and time to pay off their debts.

Let us pray

#14 Amarillo on 12.20.11 at 10:52 pm

Lethbridge is hardly ever mentioned on this blog, even when we’re First in many ways. On second thought, not that surprising I guess.

On a different note, the CBC questioned today if perhaps Ontario was becoming Canada’s Greece due to all its provincial debt.

The questionner also mused about the possibility of the ROC (rest of Canada) having to help Ontario & Quebec pay off their massive provincial debts.

As just one Albertan, I can say that idea would go over like a bloated hippo.

Say it aint so Joe.

#15 John on 12.20.11 at 10:52 pm

“suddenly understanding what a dumbass idea it was to pay off the mortgage instead of feeding a fat financial nest egg.”
I haven’t seen you comment lately about the merits of holding one’s mortgage in their RRSP. My RRSP is sitting in cash equivalent to my mortgage(which is actually a LOC)s. I was thinking of holding the mortgage in my RRSP – is that still worth considering, or do I just keeping paying the interest payments and reinvesting the RRSP?

#16 kilby on 12.20.11 at 10:57 pm

Suzi. Can’t you come up with something more original than “house horny” It is a bit overdone……a lot of those 2 bedroom condos for sale in Victoria are the 35 year old ones (with laundry in basement) There has been a lot listed, I know because we have owned one for 9 years to facilitate kids and UVic. An appraiser just commented last week that we would be smart to sell ASAP as he is expecting a glut of them in 2012. I would wait a year then see if you still want to buy. The local REB president is pretty positive that Victoria is so popular and everybody wants to be there that prices will never go down. Obviously he hasn’t had to pay for a BC Ferry trip lately…They have a lot to do with both retirees and tourists avoiding the island

#17 [email protected] on 12.20.11 at 10:58 pm

It’s interesting that there has been a large crop of headlines in the G&M lately on the RE theme. Not bullish.

http://www.theglobeandmail.com/report-on-business/the-american-dream-now-just-a-pipe-dream-for-many/article2278572/

http://www.theglobeandmail.com/news/national/toronto/condo-investors-may-head-for-exits/article2277142/

http://www.theglobeandmail.com/report-on-business/economy/housing/canadas-housing-boom-among-longest-in-western-world/article2277801/

#18 george on 12.20.11 at 10:59 pm

Statement of Claim filed in Federal Court against Bank of Canada et al.

http://sovcom.net/2011/12/20/statement-of-claim-filed-in-federal-court-against-bank-of-canada-et-al/

#19 Josef on 12.20.11 at 10:59 pm

FIRST!!!! OH YEAH BABY!!!!!!!!!!!!

#20 First on 12.20.11 at 11:00 pm

Yahhoooo!!!!!!!!!

#21 Ziggy on 12.20.11 at 11:02 pm

Great post Garth. Came across this article about the situation in China. If a correction in China was to materialize, it could have implications on selected commodity prices.

http://www.latimes.com/business/la-fi-china-housing-bubble-20111213,0,6222603,full.story

#22 T.O. Bubble Boy on 12.20.11 at 11:07 pm

There are other types of guaranteed investments beyond the GIC that their cash is in now…

Just bet the $50,000 on the Maple Leafs to miss the playoffs.

#23 young & foolish on 12.20.11 at 11:10 pm

I’ve noticed that a lot of posters here are afraid of inflation (and of it’s return propagated by inevitable central bank printing) Fiat money could become less valuable, as real assets become more pricey.

In this case scenario, what happens to the price of real estate?

#24 vatoDETH on 12.20.11 at 11:10 pm

I know someone who bought a condo at the peak of Calgary’s boom. They stated that they have lost $30k already. I took a quick peak at the City’s Assessment page and estimate that the assessed value is $40-50k below what the Boom Price was.

The main point of this story is that they already stated they can not move, because they’d be losing money. Wait until the market actually sinks beyond this point. Then of course there are closing costs and penalties as Garth kindly points out.

I believe they paid $240k for a simple 2 bedroom condo. It’s actually a renovated apartment block by the looks of it. The place is a single floor with about 900 sq ft of living space. You can hear people walking on the floor above.

I wouldn’t even pay the $190k it’s assessed at now. It’s small, got no yard, apartment-style parking lot. The area is nice, but not downtown or anything.

They suggest that they’d have to rent it out, if they wanted to upgrade. Subsidize someone else’s rent and condo fees. This would be until the market recovers of course.

The echo of this housing boom will resonate for a decade. It’s been a short term gain for many. The long term pain for multiple the boomers, generation X/Y will be felt for years to come. Few profited from this, but the long term effects on our humbled nation will be felt.

#25 Bobby on 12.20.11 at 11:11 pm

Hey Suzy,

Take a drive towards Colwood. Near the VGH they are now throwing in a car if you buy a condo. My guess is that they are not selling well.
With only 480 sales last month and over 1100 realtors, the VREB can only put a positive spin on the Victoria market. Hey, their salespeople are on commission and if you don’t buy, they don’t get paid.
I’m looking for a new home in Victoria too but am in no rush to buy. Lots of listings with many of them sitting empty.
It’s going to get really ugly out there.

#26 T.O. Bubble Boy on 12.20.11 at 11:13 pm

I’m pretty sure Garth stole his 15% prediction from this Hong Kong Property Analyst (who predicts Chinese RE will fall by up to 15% in 2012 as well):

http://www.washingtonpost.com/business/lee-says-china-real-estate-prices-may-fall-15percent-in-2012/2011/12/18/gIQAoEHP3O_video.html

#27 Van guy blazin kush on 12.20.11 at 11:13 pm

#1 Tim on 12.20.11 at 10:17 pm

You didn’t answer her question. What do you think is a reasonable price for a 2 bdrm condo in a decent neighborhood in Victoria?

Garth doesn’t answer these questions. This “pathetic blog” answers questions. I’ll answer this one. For 1000 sq/ft should be $275,000

#28 GTA condo market crashing on 12.20.11 at 11:18 pm

condo investors are heading for the exit. Trump towers was in the papers pointing out the many investors who are walking away from their downpayment. This has also hit condos in northyork and other parts of the GTA. Condo sales person I know tells me its 2008 all over again when condo investors were walking.

#29 Devore on 12.20.11 at 11:26 pm

#1 Tim

What do you think is a reasonable price for a 2 bdrm condo in a decent neighborhood in Victoria?

Why would Garth know? Find yourself a good realtor who specializes in Victoria condos and will tell you things straight up, without blowing sunshine.

#30 waiting on 12.20.11 at 11:29 pm

In the past few months, three acquaintences have sold their RE, (they all live and work here in Vancouver) and two have bought across the border in Washington state and one in Hawaii. They intend to rent here and enjoy long weekends and holidays where they’ve bought. If I know three people who’ve done this, then statistically, there must be a lot more. All three were single women in their 50’s, and they bought beautiful homes for the price of a one bedroom Vancouver condo. I’m not sure what all this means, but it’s three sellers who didn’t put their money back into this market.

#31 The Original Dave on 12.20.11 at 11:29 pm

I agree with comment #18. Lately there’s been a lot of news in the newspapers of real estate going sour. Sometimes I wonder if that is one thing the wacky smoking man has right. Why all of a sudden is everyone joining up and calling for a downturn?

I do believe real estate is way too frothy. I think all our major financial institutions and prudent Real estate feel the same way, it’s just that it’s akward for all of them to feel the need to come out and declare it. What is the purpose or what is the intention? It’s been 5 or 6 stories in the past week.

Hey, maybe it’s true. Maybe the boys at the top want to talk down the market during the winter and then talk it up in the spring/summer just to keep things balanced. It will turn against them eventually as RE is already way too crazy.

#32 Jeff in Victoria on 12.20.11 at 11:29 pm

Yes, in Victoria, “it’s different here”.
Real estate market is all in your prospective, if your listing was the 1 in 10 or so that sold, I guess it is a good market, if yours was one of the other 9 that hasn’t I guess it is a lousy market. Sure good to hear from VREB that more new condos are breaking ground, we need more empty condos. It will help keep us safe from the ‘bubble’, did I mention “it is different here”.
That should reinforce to the Victoria couple writing in that there are now and will be more nice condos out there for them to happily rent while they reallocate that $50G that is wallowing in the GIC into something better and keep building up their nestegg.

#33 CoreyMc on 12.20.11 at 11:32 pm

God the posters on this blog are getting worse. How do you do it anymore? Between the House Pimps and the stupid re-asked questions, I skip at-least 2/3 of this blog now. But still enjoy reading your posts. Keep it up(If you can).

#34 NFN_NLN on 12.20.11 at 11:34 pm

#19 george on 12.20.11 at 10:59 pm

Statement of Claim filed in Federal Court against Bank of Canada et al.

Does this include CMHC, there was no mention. Letting private banks push mortgage risk onto tax payers at ever increasing levels… I don’t remember voting on that.

#35 from kits on 12.20.11 at 11:48 pm

gezzz…scotiabank has really done a 180.

in february of this year they wanted to give my wife and I a 900K mortgage with a 250k down payment

sounds like they are talking out of both sides of their mouth to me!?

wonder what the agenda’s are for these banks? All their mortgages are protected by the government so why do they care about 30 year vs. 25 year? just a thought….

#36 lord lucan on 12.20.11 at 11:49 pm

So … if the message is to rent … is it a good idea to become to be a landlord in 2-3 years time, when property values have dropped 15%?

Or, will there be an oversupply of rental properties flooding the market from speckers — and rents will be a race to the bottom?

(of course, before buying an investment property you need a diversified liquid portfolio etc etc)

#37 Ben on 12.20.11 at 11:50 pm

Tim on 12.20.11 at 10:17 pm
You didn’t answer her question. What do you think is a reasonable price for a 2 bdrm condo in a decent neighborhood in Victoria?
……………………………………………………………………..

Less then it is now

#38 Stuck on the Island on 12.20.11 at 11:54 pm

People who promote the idea that things will get better on the Island are clearly delusional.

We had our mid-Island, entry-level detached home for salee for over 3 months with maybe a half dozen showings, a few price reductions and zero offers. In fact, the last 30 days had no showings at all.

We are going to drop it again and re-list after New Years and hope to get out of here, but we already have come to realize that there is no reasonable way out. We just want out. Now.

#39 Aussie Roy on 12.20.11 at 11:55 pm

Aussie Update

The land of the underwater mega mortgage mug

New reality: owing more than you own

Rising property values have been an article of faith in the housing market for a generation of Australians who borrowed big as real estate prices marched ever upward.

Now, though, some buyers are finding that their homes are worth less than the size of mortgages taken out to acquire the proverbial roof over their heads.

While the percentage of home owners with so-called negative equity remains tiny – about one in fifty of the 3 million households with mortgages – the number may well swell in 2012 if home prices extend their declines as some analysts expect.

http://www.smh.com.au/business/new-reality-owing-more-than-you-own-20111221-1p4l2.html#ixzz1h8bvLbdK

And the RE industry still trys to convince us we have a shortage – sheez.

#40 JW on 12.20.11 at 11:55 pm

Victoria….newlywed or nearly dead. Friend of mine with a young family tells me they were looking at closing down some schools due to the lack of funds but also the lack of students. Nice place to live with great weather but a very sleepy town. Wait suzi, you’ll have lots of time to make your move. Rent is the new cool…

#41 Curious! on 12.20.11 at 11:58 pm

So if late-2011/early-2012 is the peak, then noticeable reduction in values won’t happen until 2014-2015 in inner Gta?!
Dammit Garth, I wanted a correction Yesterday!….oh well, back to renting n investing

#42 NewWorldPartyDotOrg on 12.20.11 at 11:59 pm

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

“Canada’s ratio has continued soaring to 150%, past the American peak of 124%. However, this is misleading. For young couples who have to pay bubble prices, this ratio is much higher. In the example below, it is 482%.

Example of 29 and 30 year old Canadian teachers

Gross Household Income: $136,000 (average Canadian household makes approx. $80,000)

Net (disposable) Household Income: $98,520 ($8,210 x 12)

Assets:
House: $426,000 (Bought in 2010. House prices are higher now.)
Cash: $1,300
TFSA: $300
RRSP: $1,800
Total: $429,400

Debts:
Mortgage: $410,380
Line of Credit: $64,130
Total: $474,510

Negative Net-worth: -$45,110

Household Debt to Disposable Income Ratio: 482%

Mortgage amortization is 35 years. If they have a $410,360 mortgage, that means that their down payment was 3.7 percent. This is Canada’s version of the American subprime mortgage. This couple has 96.3% leverage. Many companies, with positive net worth and significant profits, try but cannot get leveraged anywhere near this. If house prices come down, this couple will be crushed into financial ruin.”

#43 comfortably numb on 12.21.11 at 12:04 am

This is to add to the conversation Snowboid and Dorothy had on this blog yesterday. The quote below comes straight from a leading Vernon realtor’s own blog/monthly update. I think it speaks volumes of where we are now and where we are headed.

“All areas in the Okanagan under perform as 2011 heads for a close, although the North Okanagan leads the pack in decreases. North Okanagan sales were down another 12.2% for November while the Shuswap sales were flat and the Central Okanagan sales were down a mere 1.35%.
The North Okanagan currently sits with 23.04 months of inventory – still slightly less than 2 years to sell everything that is currently on the market, at the rate we are currently selling. We are now at 2,189 total listings, down ever so slightly from the 2,211 total listings on the market same time last year. For yet another month we are at about the same level as we were in 2010 – and with the same results – too much on the market and not enough selling. To put this into perspective, as a ratio, 4.3% of the inventory sold again in November, which means 95.7% of what is on the market did NOT sell. This ratio is about the same as last month. I imagine I sound like a broken record, however the market is speaking very clearly. It is up to you whether you wish to listen to what it is saying. As I said above, too many homes are currently on the market for sale and not enough of them are selling. This of course puts pressure on pricing. The market is still falling, although it appears not at the rate that it was (we hope).”

#44 NEWSTALK1010 on 12.21.11 at 12:24 am

radio host this morning said:

“bubble? how can there be a real estate bubble in canada? a bubble is something you don’t see coming.”

self-explanatory idiocy.

#45 trump condos in trouble? on 12.21.11 at 12:25 am

Hey Garth did you see this star article about buyers bailing on the trump condos? Banks wont mortgage them!!

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

#46 Jay Currie on 12.21.11 at 12:51 am

Victoria – three days a year, snow capital of Canada and don’t you forget it.

One of the people who works with me sold a 2bedroom basement condo about six months ago for – as I recall – just over 300K. Our entire company was cheering her on, Close, baby, close!”

The prices are dropping as fast as the two feet of snow melts in the 15C weather which follows it here in Victoria.

My next door neighbour just dropped his 2400 square foot cottage from 1.89m to 1.69m. (It has a view, what can I say.) He changed the wrong number. He needs to lop off the 1 in front of the decimal place. Everything over a million just sits until the 25-40% haircut is taken. Then it moves but not terribly quickly.

The Victoria Melt is just beginning. Very little HAM money for a government and retirement town.

A lot of the million plus houses around us are rented or empty.

I rent. I love it.

#47 RM in Oakville on 12.21.11 at 12:52 am

First, Josef, et al.

Not first. Grow up. Get a real hobby.

#48 Terra No-more on 12.21.11 at 1:08 am

Alberta go join the States trillions & property boom – Ontario.

#49 HouseBuster on 12.21.11 at 1:36 am

Does this mean I should put the plans to build a Mega Mansion by the bunker on hold?

#50 Nostradamus Le Mad Vlad on 12.21.11 at 1:42 am


“. . . disturbingly virile (sounds like me). No joy coming.” — Hmmm. The less said the better!

All the banks are saying RE will slow, you’ve published figures from other western countries so sheeple will have to be given a heavy knock back into reality. Fantasyland doesn’t work anymore.
*
Curious that #4 bob’s my uncle and #6 Bill Gable, while having different POVs should be so close together.

bob’s my uncle sounds like a realtor who needs clients but doesn’t deal in the reality of life, whereas Bill tells it like it is. Two separate countries, but with more than enough similarities to see that we have started a downward trend, picking up speed along the way.
*
UK Pensions Unions withdraw; 2:03 clip Truth behind Greek crisis; Cdn. Banking Much ado about nothing, methinx; Joe Biden is insane; Nonsensically simple Print more moolah; Spain 16 bln. Euro spending cuts; The world’s richest beggar UK, IMF and Bilderberg Charade.

Hold the jolly Nice charts; Petro States Buy some Eurozone debt; Inside the mind of a gold bug; Japan and China Great food, lousy economics; Dysfunctional Politicos; Housing Bust end, and 25 cities; DSK Not quite dead and forgotten just yet; Crusade against Credit Cards; Newspapers Going the way of 8-track equipment; Thinking Like A Bull; Some Investors lose faith; Two Decades plus since the USSR fell.
*
4:17 clip The US military has killed more than 10 mln. since 1945, and Hypocrisy; Smart Meters interfering with other electronics, but PG&E offers to let users return to analog meters; Russia vs. NATO Try explaining civilian deaths in Libya (collateral damage); Biotech Catastrophe A little knowledge is a dangerous thing, Puppetmasters Ron Paul has ’em shitting brix; RIAA pirates; Giant tsunami-shaped clouds in Alabama.

#51 chubster on 12.21.11 at 1:43 am

debt/income primary the driver of defaults – this is fact, well-observed. it is NOT negative equity. in this respect, the canadian RE market may be more extreme than the us one was. other RE markets that popped taking about 8 yrs to bottom. however, one should not discount the ofuk factor – this being one of the last RE markets to go over the top, many may jump ship very quickly knowing what lies ahead. i’m thinking places like vancouver would be lucky to only see 2 consecutive years of -20%. it wouldn’t be such a bad thing for canada if worldwide confetti printing somehow triggered a bit of a flight to commodities and resources.

#52 The Thing in the Basement on 12.21.11 at 1:44 am

39 Stuck – I take it you are leaving VI. May I ask why? Have you checked about renting our your house?

#53 Chico on 12.21.11 at 1:46 am

Lethbridge.

#54 Chico on 12.21.11 at 1:46 am

It’s a great place…Lethbridge.

#55 Van guy blazin kush on 12.21.11 at 1:50 am

I really do think condos are in big trouble. In 2008, investors walked away from their deposits. Someone burned down one project “Quattro” in Surrey. And Downtown “The Beasley”, instantly gave owners of pre-sold units a discount so that they wouldn’t walk. Up to 30% for some units. Many other condos went into receivership. God knows why people weren’t scared from what happened. This could likely happen again.

#56 Jas Girn on 12.21.11 at 1:50 am

Garth is a funny man. Lol. He always entertains and educates me. God bless this man!

#57 Peter Goesinya on 12.21.11 at 2:16 am

first

#58 Peter Goesinya on 12.21.11 at 2:29 am

Garth, you say that a lot of condos are being bought by speculators and investors. But at the same time you say this correction will not correct fast. If there are lots of speculators and investors that have been buying don’t you think they will all want to get the hell out as fast as they can? Just like investors in the stock market driving the prices down just to get cash?

Probably some cities will be like that and others not. Don’t you think?

#59 Me on 12.21.11 at 2:36 am

That picture makes my heart hurt.

#60 Jane on 12.21.11 at 2:50 am

Hey Suzie, go rent there and see if u like it before you commit to buying and staying, regardless of the market.

Plus, we have friends there who can’t sell their place without losing thousands, and work has moved them to Van. You don’t want that. Living with your folks? Really? Maybe try that for a year, too, before committing to it. I’ve watched family get really bitter in that situation.

#61 martin on 12.21.11 at 3:12 am

your lines are killersss —

They relish the thought of screaming Boomers in white golf shoes clinging to a shard of granite c-top while a front-end loader turns their McManion into landfill.

#62 martin on 12.21.11 at 3:17 am

you make my night !!!

You may not be able to live inside an ETF, but neither can you eat pot lights

#63 Waterloo Resident on 12.21.11 at 5:17 am

Canada is different this time, she should jump and buy that place for $410,000 before a bidding war jumps the price to over $800,000 !

#64 Waterloo Resident on 12.21.11 at 5:23 am

FIRST!!!! OH YEAH BABY!!!!!!!!!!!!

( just kidding, I know I’m not even anywhere close to first, just being a moron like those others ! (smile.) )

#65 Aaron on 12.21.11 at 5:34 am

I live in Vic. Wife and I make 130k combined. 100k saved. Mid-thirties. One munchkin. We were poised to buy for 2 years and finally said screw it. The numbers just didnt add up. We took your advice Garth, and just moved into a bigger better rental house for half of what owning would cost. We’ll buy at some point and when we do it’ll be under better market conditions with a fat down payment. We can wait the boomers out.

#66 Kip on 12.21.11 at 6:46 am

You mentioned rising rates again.

Interest rates will not rise in Canada in 2012 unless rates increase in the US and that is very unlikely as Mr. Obama enters the political fight of his life. Even if he loses the election it would be 2013 before a new administration takes over.

Rates here appear to be as high as our government will allow as they are fearfull that a larger spread between Canadian and US rates would strengthen the Canadian dollar and hurt Canadian manufacturing.

What a strange world we live in eh?

#67 Keeping the Faith on 12.21.11 at 7:47 am

Thank you Garth.
One of your all time best posts.

A wonderful gift leading up to the holidays.

Thank you.

#68 Onemorething on 12.21.11 at 8:02 am

Victoria…ha! Land of the slow death sped up by spiraling RE! Retired and Boomers need income to run houses and when that income costs too much, RE’s gotta go!

But wait the 5% down son or daughter come the Boomer Bank to save their underwater mortgage. Boomer goes to bank to see the value of their home to take another ATM withdrawl. The withdrawl is denied. Insufficient funds!

Boomer goes to potentially living retired mom and dad and does the same thing.

Final blow, Retired sells, kids get tossed and they all live happily ever after in the Boomer McMansion, bitter and non communicative at dinner!

What a Lesson to be Learned!

#69 Keeping the Faith on 12.21.11 at 8:04 am

#1 Tim
Please delete http://www.greaterfool.ca from your computer.
You’re an Idiot!

#70 Onemorething on 12.21.11 at 8:04 am

You see it’s Garth’s 15% national avg. that is the pivotal point and where the knock on occurs. It doesnt have to be jobs losses (which there will be), taxes (in which will only go one way) but the trend to what the USA faces most of all – OVERSUPPLY OF RE!

#71 Sean on 12.21.11 at 8:20 am

#1 Tim on 12.20.11 at 10:17 pm
You didn’t answer her question. What do you think is a reasonable price for a 2 bdrm condo in a decent neighborhood in Victoria?

======

Work it up from the income side… i.e. average income of that average neighborhood. Now come up with appropriate rent, based on that income. Now multiply by 100. For example, depending on the neighborhood, you might be talking $1000 per month, or maybe $1600 per month. Prices therefore would be $100,000 for the former, to $160,000 for the latter. Sound ridiculously low? Only when compared to ridiculously high. That 100 multiple works out to 12% gross yield. Subtract out property taxes, condo fees and maintenance… and the net yield is not high, particularly compared to historical norms. Moral of the story… the bottom in terms of pricing is much lower than most can imagine.

#72 Darryl on 12.21.11 at 8:23 am

#15 Amarillo

On a different note, the CBC questioned today if perhaps Ontario was becoming Canada’s Greece due to all its provincial debt.

—————————————————–
Only because we have paid for the bulk of the Canadian lunch for the last 40 years.

Don’t get me going on Quebec.

#73 Stinky the Fish on 12.21.11 at 8:23 am

Maybe reiterate your thoughts on what percentage drop of RE prices for the cities of Vancouver and Toronto to get your blog dogs salivating again

Vancouver will drop more than 15% and that’s an easy call

#74 Darryl on 12.21.11 at 8:41 am

36 from kits

wonder what the agenda’s are for these banks? All their mortgages are protected by the government so why do they care about 30 year vs. 25 year? just a thought….
————————————————————————
Seems like the order to get this message out comes from above EH?

BOC wants this to happen I guess.

Probably a good thing. 25 years was the norm a decade ago.

#75 T.O. Bubble Boy on 12.21.11 at 8:56 am

Financing Debt at 5%-7% with GDP growth of -1.5% (in the case of Italy) will eventually make every country in Europe look like Greece:

http://globaleconomicanalysis.blogspot.com/2011/12/30-billion-fund-manager-makes-case-for.html

It’s pretty tough to disagree with the math… unless these countries magically turn deficits into surpluses during a recession — and good luck with that!

#76 R on 12.21.11 at 8:59 am

The picture on the this post is worth a thousand words.The banks need to stop lending money based on 2 incomes. Alot can go sideways with 2 incomes. Babies,Unemployment, Disability,Divorce or Seperation.They should be basing loans on the highest wage earner of any couple. NOT combined income.As for Vic. condos 35 +……Don’t buy them!…There are garbage.Plumbing and electrial issues….Balconies are falling off most of them .Window and door issues.Frame and roof issues. Elevator issues. Your strata fees don’t cover most of these so be prepaired to shell out more money to cover these costs.I see a ferry crashed into the dock at Duke Point yesterday. Damage to the ferry and the dock. Just in time to screw up holiday travel plans. I now understand why people call Vancouver Island …Fantasy Island.

#77 R2D2 on 12.21.11 at 9:06 am

Renter Paradise in Vancouver …

‘I wanted a small space’ …. 226 sq. ft. @$850 / mo

Former subsidized homeless shelter gone upscale.

http://www.cbc.ca/news/canada/british-columbia/story/2011/12/19/bc-tiny-apartments.html

#78 R2D2 on 12.21.11 at 9:12 am

#66Aaron on 12.21.11 at 5:34 am

We can wait the boomers out.

Shouldn’t be a problem … They’ll be waiting for health care in hospital hallway storage racks. Der Leader has proclaimed such.

http://thechronicleherald.ca/sites/default/files/imagecache/ch_article_main_image/bm_cartoon/Brucex21_0.jpg

#79 Jamaican_gal on 12.21.11 at 9:17 am

That picture is indeed heart rending. I hope it was staged; or the camera caught him at a bad moment, angle or something. Like housing, it doesn’t augur well for the future.

#80 Kip on 12.21.11 at 9:25 am

I think your man should buy the condo and wait for the parents to croak and get the house anyway. Let that kid pay the last of the mortgage.

From the looks of that picture, the house or the condo are going to be the least of his problems!

#81 Onemorething on 12.21.11 at 9:27 am

Michael Platt – If you can get the opportunity to invest with him do it. Whether you agree with him or not, which I do and always have just listen to his view on illiquidy.

Garth talks about the value of being liquid – Mike says be Super Liquid!

http://www.youtube.com/watch?feature=player_embedded&v=lvuZ7CQIkJo

#82 TurnerNation on 12.21.11 at 9:27 am

In Kelowna if you see a guy in a 3-series Bimmer yelling Oi Oi, TNT, it’s likely DA practicing his game. Who says this weblog dosn’t help realtors?

#83 Diana on 12.21.11 at 9:46 am

As always Garth, an interesting read! Thank you for the dose of realism this week, no matter how much those posters frothing at all orifices whine, moan and call curses down on your head.

I enjoy reading the letters people write in and your advice to them, even if it feels many of them are simply looking for validation on a course of action they’ve already chosen. I do have to admit, I can understand, as in a lot of cases I’m in the same boat.

I’ve been reading your blog for the last couple years, and while it’s helped me avoid a few serious mistakes with my finances (and provided endless amusement with the well turned phrases and catty commenters) I’m still buying a house next year. My first in fact. At 35 years of age. The downpayment will run between 12-15% and the ammortization no more than 25 years.

The biggest difference is, before I found your blog, I probably would have bought last year, with every scrap of money I could wring out of my investments, beg, borrow or steal from family and aimed for the ubiquitous granite countertops and stainless steel appliances with a maximum down payment of 5%… and ammortized over as long as they were willing to let me do it. So while you haven’t talked me into renting, you have talked me into keeping my real estate balanced with my other investments, not to buy more than I need because the Nice Lady at the Bank says I can afford it, and to take all my Real Estate Agent says with a grain of salt.

Merry Christmas!

#84 Alistair McLaughlin on 12.21.11 at 9:54 am

They want bloody intestines.

I do. Doubt if I’ll get them, but I want them. I’m getting sick of listening to people at work who earn the same or less than I do, yapping about their HELOC-financed vacations, and telling me, “Why don’t you buy a house? Why are you still renting? You’re not building any equity – just throwing your money away. Maybe it’s time you made an investment in yourself. Blah blah blah.” I swear the next person that lectures me about this is going to get punched in the face. I pray the bubble pops before that happens. A very rude, necessary correction to this madness can’t come soon enough.

I don’t ever recall telling anyone to buy/not buy. Even now that I am convinced beyond all doubt that we’re in a massive RE bubble, I never advise other people to hold off, or rent, or whatever. I don’t advise them anything. It’s their money. They can do their own research and make their own decisions and live with their own mistakes. Yet for some reason, homeowners don’t feel obligated to offer me the same kind of respect. I’m just a ‘toopid renter after all.

Bloody intestines. Bring it.

#85 Incubus on 12.21.11 at 10:01 am

“So rent, babe. And get your wrinkly parents out, too.”

She wont listen, next time she will email you it will be to say she bought a condo.

This shows that there is an unlimited supply of fools.

#86 househornyhousewife on 12.21.11 at 10:22 am

Hey Suzy,

Take a good look at what you are thinking of buying. These condos are not simply selling for less, they are not selling AT ALL. Is this the kind of investment you want ? It is pretty obvious that this type of residence is no longer the popular urban panacea that it once was. Used to be that people who could not afford to buy a house bought a condo instead. Now condos are not that much cheaper than “real” real estate.

If you want to know what a good price is for that condo, take a look at what condos like that sold for about 15 years ago (and compare this to the price of houses at that time) because that’s where they are headed. Garth is right, prices take a long time to descend. I would even say that they go up much quicker than they descend so it will take even longer for these prices to come down.

Given this current scenario you have a choice: either wait out the market until prices do come down (say another 5-8 years) OR, if you cannot wait, you can do a careful search and find something of value rather than a run of the mill condo (keep in mind that this may also take a while). If you do end up buying something, be sure that you are prepared to stay put for at least the next 10 years or so. Do your math and be sure you can remain in this residence for at least the next decade because if you are forced to sell, you will loose your shirt.

Not as easy a decision as you thought when seen like this, is it ? Slapping down borrowed money now for a soul-less condo that looks like so many others is easy but believe me, it is definitely the wrong thing to do at the moment. If you are willing to live in a condo, just rent one for heaven’s sake.

HHHW

#87 Sky on 12.21.11 at 10:41 am

@ R2D2-

“We can wait the boomers out.

Shouldn’t be a problem … They’ll be waiting for health care in hospital hallway storage racks. ”
****************************************

True story. But there are as many GenXers as there are boomers.

The health care system is staggering NOW. Boomers will collapse it. Where does that leave GenX ? Or is the GenX plan perfect health and immortality?

#88 kilby on 12.21.11 at 10:49 am

#30. Devore.

Find a realtor that will tell you straight up without blowing sunshine……They all blow sunshine, where did that come from?

#89 Junius on 12.21.11 at 10:59 am

Love this piece from the Reformed Banker on crony capitalism and why we hate Jamie Dimon:

http://www.thereformedbroker.com/2011/12/20/dear-jamie-dimon/

#90 Beach Girl on 12.21.11 at 11:00 am

Morning DonDWest

Congratulations on a new member of your tribe. (re picture)

Myself

I don’t wanta work, just want to bang on my drums all day.

No sorry

I don’t have to work, just want to bang on my drums all day.

Your attitude is not your fault, but life will correct that. Guaranteed.

Someone told you, you were special. Now they are traveling all over the world (5 times a year) to alleviate their collective guilt.

Not having to pass and exam, getting trophies for your parents actually showing up at an arena or baseball diamond in which you neither scored nor hit the ball.

Not learning the harsh realities of life, is negligence to me.

I have always told my 2 idiots they are basically just eating machines, and no one will be impressed by that.

And Dorothy, you are absolutely right. In my 20’s I didn’t aspire to much but survival. We were happy watching TV and having a 24 for the whole week. When we were bored we did what came natural. And I don’t mean weed. Ate at home and thought ourselves blessed.

You cheer me up.

Totally get off on DonDWest angst. Great Xmas pressie.

#91 Daisy Mae on 12.21.11 at 11:03 am

Tim on 12.20.11 at 10:17 pm
“You didn’t answer her question. What do you think is a reasonable price for a 2 bdrm condo in a decent neighborhood in Victoria?”

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

How can Garth know that without lengthy study, and why would he want to stick his neck out? It’s up to Suzi to do her own homework.

#92 poco on 12.21.11 at 11:11 am

#84 Diana on 12.21.11 at 9:46 am

“and to take all my Real Estate Agent says with a grain of salt.”
_____________________
if you can’t trust your agent, i suggest you find one who you can trust—there are many that actually do put your interests first —unlike some of the pumpers around here

ie: bob’s my uncle—alan—oh well—and a few others—-and if they’re not RE agents, they are dumber than a bag of hammers

#93 Meteor Man on 12.21.11 at 11:17 am

#43 NewWorldPartyDotOrg on 12.20.11 at 11:59 pm http://www.newworldparty.org/2011/11/bubbles-extreme-maker-and-breaker-of.html

“Canada’s ratio has continued soaring to 150%, past the American peak of 124%. However, this is misleading. For young couples who have to pay bubble prices, this ratio is much higher. In the example below, it is 482%.

Example of 29 and 30 year old Canadian teachers

Gross Household Income: $136,000 (average Canadian household makes approx. $80,000)

Net (disposable) Household Income: $98,520 ($8,210 x 12)

Assets:
House: $426,000 (Bought in 2010. House prices are higher now.)
Cash: $1,300
TFSA: $300
RRSP: $1,800
Total: $429,400

Debts:
Mortgage: $410,380
Line of Credit: $64,130
Total: $474,510

Negative Net-worth: -$45,110

Household Debt to Disposable Income Ratio: 482%

Mortgage amortization is 35 years. If they have a $410,360 mortgage, that means that their down payment was 3.7 percent. This is Canada’s version of the American subprime mortgage. This couple has 96.3% leverage. Many companies, with positive net worth and significant profits, try but cannot get leveraged anywhere near this. If house prices come down, this couple will be crushed into financial ruin.”
++++++++++++++++++++++++++++++++++++

They are already in financial ruin. I would be puking my guts out even THINKING about doing what they did much less actually DOING it.

#94 LS in Arbutus on 12.21.11 at 11:19 am

Suzi – I wouldn’t be touching Victoria real estate (or any real estate in BC) at all for another 5 years. You’ll be sorry.

Rent yourself a nice place, Victoria is FULL of rentals.

#95 Ret on 12.21.11 at 11:20 am

Canada, to my limited intellect, is just like the Eurozone with respect to sovereign debt. Each province, municipality, university, school board and hospital issues all the debt/ pension obligations that it wants. Ditto for US individual States.

In the Sovereign Province of Ontario, every school board, hospital, municipality and university piles more current and future debt onto the pile every year. Most of that is not reflected in the the provincial numbers.

In addition, Ontario’s $16B deficit this year will be added to the existing $200B debt pile. Ontario has only balanced the provincial budget three times in the last thirty years. Dwight Duncan was like a deer in the headlights on the TV the day that Moodies put us on a credit watch.

Ontarians are in love with their social programs like all day JK/SK, and are okay with $90,000 salaries for civil servants, teachers, nurses, cops and firemen. The industrial underpinnings of the Ontarian economy have long since left for China but why should that matter?

Party on Ontarians! Ottawa will save us if it all blows apart down the road. Ontario is too big to fail. Hey, that sounds like me in the eighth grade.

#96 Ex-Cowtown on 12.21.11 at 11:31 am

#73 Darryl on 12.21.11 at 8:23 am #15 Amarillo

On a different note, the CBC questioned today if perhaps Ontario was becoming Canada’s Greece due to all its provincial debt.

—————————————————–
Only because we have paid for the bulk of the Canadian lunch for the last 40 years.

Don’t get me going on Quebec.
+++++++++++++++++++++++++++++

Yeah, you’re right…. who gives a crap about all those billions and billions and billions of stinky oil $$ that Alberta has sent east for the past umpteen years. Or the inflated prices that the western farmers had to pay to Ontarion manufacturers… or on and on… yeah …they don’t count.

It’s all about TO.

No oil $$$ bailout for you…. we gave at the door.

#97 Alistair McLaughlin on 12.21.11 at 11:33 am

Meteor man, someone may correct me on this, but I believe US personal debt peaked at 148% of income, not 124%.

#98 Joeseph Q on 12.21.11 at 11:51 am

Garth, I would bet anything that the same scam uncovered today in the US is happening in Canada right now…

“US Housing Market Was Artificially Inflated By 14% In 2007-2010 NAR Reports”

http://www.zerohedge.com/news/us-housing-market-was-artificially-inflated-14-2007-2010-nar-reports

For those who can’t believe the current state of Canada’s “too good to be true” RE market, I hope they understand that it may not be true at all.

#99 rw on 12.21.11 at 11:59 am

How unemployment is tearing America apart

http://www2.macleans.ca/2011/11/30/tearing-apart-america

#100 HarleyStud on 12.21.11 at 12:02 pm

Hi Garth,

Could you please clarify your recent prediction of 15% correction followed by stagnation / slow decrease ? Are you predicting that prices would revert to the mean on a price-to-income basis and how many years would it take ? According to the recent Economist article RE in Canada is about 30% overvalued considering that metric. I would also assume that a 15% RE correction would affect incomes negatively.

The Economist said 25%. — Garth

#101 Jaymel on 12.21.11 at 12:02 pm

Garth
I was just reading an article posted on the globe
http://www.theglobeandmail.com/report-on-business/economy/housing/canadas-housing-boom-among-longest-in-western-world/article2277801/

one of the bullets towards the end states: •In the United States, average inflation-adjusted home prices fell 7.5 per cent y/y in Q3, bringing the cumulative decline since the 2005 peak to over 30 per cent.

You mentioned several days ago that the US had seen a 15 % decrease and that if Canada was to see a 50% that everyone seems to be salvating for it would crush us. Is this bullet right? That so far we have seen a 30% correction south of the line? Or have we seen something more to what you quoted of 15%

I referenced a 17% drop in the US, which the amalgamtion of new and resale home prices. The media report you cite is resale only and not exactly dead accurate. — Garth

#102 truth hammer on 12.21.11 at 12:05 pm

Teachers all pension millionaires says new report.

http://opinion.financialpost.com/2011/12/21/millionaire-teacher/

And the slack jawed Liberal lackeys want you to pay MORE taxes?

Add to this list all civil servants pulling down fat succulent DB pensions…..while a majority of Canadians shiver in the dark…….now thats rich !

#103 Diana on 12.21.11 at 12:05 pm

@93 Poco

I was more referring to a healthy dose of skeptisism than outright disbelief of anything my agent might say. If I can’t believe a word coming out of their mouth, I would absolutely get a new agent. If they recommend option A vs option B, I want to know their reasoning behind it if a clear choice is not obvious. I may not agree with their reasoning, but then again, I might.

Of course, I’m not planning to shop for a real estate agent until sometime in the new year, so right now the whole thing is moot. :)

#104 Stuck on the Island on 12.21.11 at 12:19 pm

#53 – We are leaving the Island because the economy is weak and money is scarce. We made the mistake of believing that we would enjoy milder weather and the beauty of the West Coast over what we had in Calgary.

Turns out we were far happier in Alberta, so we are going back. I like money more than I like scenery.

Lesson learned. We should have just rented. We sold out of Calgary and bought here… now we’re stuck in a declining market with little hope of selling. Most likely scenario will be to rent it out as we want to be gone by March 1st.

#105 coates on 12.21.11 at 12:24 pm

i bought a condo in a small ontario city in 1977 right at the top of the market after a big construction boom…it’s value dropped immediately and interest rates began to rise(19 % at the top)…50 % of the owners left the keys in the doors and left…being a responsable young man i stayed and paid what turned out to be a very high rent for ten years,,,during that time chmc rented out the empty units to anyone they could…at the bottom of the market chmc painted the empty units and threw in new appliances and sold them at a large discount further depressing the prices….in 1986 i finally got out at a loss after fees…hope it doesn’t happen again but it doesn’t look good…have a happy holiday and keep up the good work

#106 Junius on 12.21.11 at 12:26 pm

Good summary of recent events from Credit Writedowns. Note the comments on both the Chinese and Australian housing bubbles popping.

Canada is the last to go.

Here it is:

http://www.creditwritedowns.com/2011/12/thoughts-on-europe-and-the-global-synchronised-slowdown.html

#107 rw on 12.21.11 at 12:26 pm

GOP Moves to Require Pee Tests and GEDs for Unemployed

A new bill threatens to make being jobless even harder than it already is.

http://motherjones.com/politics/2011/12/unemployed-insurance-ged-drug-tests

#108 jess on 12.21.11 at 12:40 pm

Maybe some of those 1%ers that Kevin O’leary claps for should see if any of them fit into one of these catagories. I especially liked #2 banksters cheating banksters (knowingly)

Bill Black’s call to journalists was inspired by Dante’s circles of hell as described in his Divine Comedy.

http://neweconomicperspectives.blogspot.com/2011/12/dantes-divine-comedy-banksters-edition.html#disqus_thread

#109 jess on 12.21.11 at 12:49 pm

How many condos in T.O or elsewhere have owner occupancy rules?

#110 Devore on 12.21.11 at 12:50 pm

#89 kilby

Find a realtor that will tell you straight up without blowing sunshine……They all blow sunshine, where did that come from?

You’ve seen one, you’ve seen em all, right? You must be a ton of fun at parties.

#111 City Slicker on 12.21.11 at 12:55 pm

#85 Alistair McLaughlin on 12.21.11 at 9:54 am They want bloody intestines.

I do. Doubt if I’ll get them, but I want them. I’m getting sick of listening to people at work who earn the same or less than I do, yapping about their HELOC-financed vacations, and telling me, “Why don’t you buy a house? Why are you still renting? You’re not building any equity – just throwing your money away. Maybe it’s time you made an investment in yourself. Blah blah blah.” I swear the next person that lectures me about this is going to get punched in the face. I pray the bubble pops before that happens. A very rude, necessary correction to this madness can’t come soon enough.

I don’t ever recall telling anyone to buy/not buy. Even now that I am convinced beyond all doubt that we’re in a massive RE bubble, I never advise other people to hold off, or rent, or whatever. I don’t advise them anything. It’s their money. They can do their own research and make their own decisions and live with their own mistakes. Yet for some reason, homeowners don’t feel obligated to offer me the same kind of respect. I’m just a ‘toopid renter after all.

Bloody intestines. Bring it.
———————————————————-
This happens because someone elses self worth is always relative to those around them. They make their sorry lives feel better by saying I’m up on you cause I’m a homeowner, BMW driver etc. This is what fuels over debt in society (typical rat race). Until the tide turns of course, then the real men from the mice are sorted.

#112 VICTORIA TEA PARTY on 12.21.11 at 1:04 pm

THE PROBLEM WITH VICTORIA…OF COURSE…

…is THIS nonsense: “Victoria’s economy is protected because this is a retirement town, a government centre with a strong high-tech sector and an attractive place to live, says the head of the Victoria Real Estate Board.”

Victoria is all those things, but think carefully about the words that are used. What do most retired people in this town do with their money right now? They HOARD it!

As far as the “government town” angle goes, let me advise you of the upcoming budget and a no-brainer forecast of at least SOME austerity, which means the surviving civil servants will be hoarding here, too!

Ever since the late great WACCY Bennett started moving “govmint” from Victoria to Vancouver, beginning in 1967, the move has continued inexorably, like some glacier on speed.

Every successive government, including a gaggle of NDP administrations, has followed suit simply because Vancouver is still the best place to do most business on the West Coast.

To bolster this point, a close relative received Premier Clark’s Christmas card the other day; it was mailed from the government’s Vancouver cabinet office, instead of from her BC legislature Victoria office. So there, Victoria Chamber of Commerce!

AO FOR VICTORIA BUSINESS…

That community simply doesn’t have the capacity, even with its invisible hi-tech cohort, to compete in any way with a super-sized metropolis like the Big Smoke, where government often plays a direct role with a growing business elite to effect real economic change. That has never happened here on any grand scale, except during the ship-building years of WW2.

AS FOR #1 TIM

“You didn’t answer her question. What do you think is a reasonable price for a 2 bdrm condo in a decent neighborhood in Victoria?”

The answer, Tim is ZIP. The price hasn’t PLUNGED enough. And contrary to the 15 per cent Real Estate Rule of Garth, it will. Just wait for it. After all, this is Victoria!

MORE GREASE FOR VICTORIA’S REAL ESTATE SKIDS…

While you’re at it, check out the markets today; economic news out of Europe; downwardly-revised US real estate stats going back to 2007; horrific.

It ain’t nearly over, and the Fat Lady is still poundin’ on the pounds before she FINALLY starts to sing!

#113 Victoria on 12.21.11 at 1:08 pm

I think the President of the VREA is pretty scared.

#114 Tony on 12.21.11 at 1:36 pm

Sad as it is to say with limited room in long term bonds to the upside a GIC is probably one of the smartest places to park money in 2012. For someone who doesn’t know what they’re doing and doesn’t have the knowledge to short stocks or Canadian real estate stocks preserving capital is probably the best idea.

#115 Lorne on 12.21.11 at 1:41 pm

#102 Stuck on the Island
So, where is your home….might be interested in a nice rental.

#116 Gordon on 12.21.11 at 1:48 pm

It scares me that these two are supposedy teachers!

#117 Paul on 12.21.11 at 1:55 pm

#105 Stuck on the Island on 12.21.11 at 12:19 pm

Were looking to move up island from Vic in Mar and rent a place or buy if the price is right. Maybe you could pass your email on to Garth and id he can forward on to us that would be appreciated.

Thanks

#118 EdmontonJim on 12.21.11 at 2:01 pm

I have been right in my prediction for Edmonton for the last two years (no change). And I think I will continue to be right, no matter what happens to interest rates: RE prices will remain flat to at least 2013, and then begin to climb slowly.

So all things considered, it is ‘safe’ to buy a house here provided:
1. You can actually afford one
2. You aren’t counting on it to appreciate in value.
3. You plan on holding on to it for a long time, and are prepared to take care of it.

In other words, if you are a responsible adult who is buying a house as a lifestyle choice (not an investment), you may as well buy now rather than waiting for a massive correction that isn’t coming.

#119 EdmontonJim on 12.21.11 at 2:06 pm

Oh, and if you can’t afford a house, save until you can. Those prices aren’t going anywhere any time soon.

#120 kilby on 12.21.11 at 2:06 pm

#111 Devore.

We NEVER talk about real estate at parties in Victoria, more fun that way.

#121 GregW, Oakville on 12.21.11 at 2:08 pm

Hi Garth, Someone may be interested in this ‘opinion’ and updated US housing number. From BNN
(G,re: careful#211 ‘option’, I meant to say ‘opinion’. Sorry my bad spelling.)

“I believe that Canadian real estate is over-priced by about 25 to 35 percent,” he tells BNN.
Housing market overvalued: Jarislowsky
http://www.bnn.ca/News/2011/12/20/Housing-market-overvalued-Jarislowsky.aspx

“The Realtors group revised down data from 2007 to 2010 to show average annual sales down 14.3 percent at 4.42 million units instead of the previously estimated 5.16 million units.”
U.S. existing home sales jump in November
http://www.bnn.ca/News/2011/12/21/US-existing-home-sales-jump-in-November.aspx

#122 R2D2 on 12.21.11 at 2:17 pm

@#88Sky

”Or is the GenX plan perfect health and immortality?”

Most really excellent advisors who give good advice freely suggest plan A AND plan B.

Plan A = perfect health

Plan B = immortality … Hale Bop will be around again

#123 R2D2 on 12.21.11 at 2:18 pm

@#94Meteor Man

I think you might be a little too optimistic.

Forget about ANY government services.

The Feds are going to eliminate the GST and wipe all corporate taxes to ZERO.

#124 R2D2 on 12.21.11 at 2:19 pm

@ #97Ex-Cowtown

You’re forgetting we were in the N. Edmonton homeless shelter when Ralfie Kleiner
Beiner, his chauffeur in tow, paid us a visit to throw down $70 and tell us to “get a job.”

#125 Darlene on 12.21.11 at 2:24 pm

Sky on 12.21.11 at 10:41 am

The health care system is staggering NOW. Boomers will collapse it. Where does that leave GenX ? Or is the GenX plan perfect health and immortality?

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

I can only speak for myself, but I’m doing almost everything I can to ensure that I don’t live forever. I smoke, work around dangerous chemicals, and live off coffee. Personally I’m really hoping for a progressive government that allows for euthanasia. So when my time comes around, I can put myself out of my misery and not be a burden to those I love.

#126 R2D2 on 12.21.11 at 2:24 pm

And they all say, there’s nothing of value at my house.

It’s all in the eye of the beholder.

http://wac.450f.edgecastcdn.net/80450F/wgrd.com/files/2011/10/Hoarders.jpg

#127 spaceman on 12.21.11 at 2:39 pm

I am in Victoria, renting, but family is growing, Suzie, wait until end of January before making any decisions. You have nothing to lose, and possibly more to gain. Its a crap shoot, but indications are that inventory will boom, my PCS shows dozens of homes taken off the market, this tells me they are coming back.

There is absolutlely no pressure on prices increasing, but all signs point to increased inventory, and less sales, therefore, price corrections.

I believe this spring will tell us the fate of the market…

we will see…

#128 Alex B on 12.21.11 at 2:42 pm

Hey Garth I appreciate that you are revising your estimates and telling what you think is the truth. Whats going to happen is all these overleveraged 20 somethings who bought 96% leveraged houses are going to have the same payments if interest creeps up even .5% (I’m reading that they’re going to be low a long time now) even a 10% correction over 5yrs is less then the equity you can put down in 5yrs at a low interest rate. So they’ll all be fine, I guess that’s ok? this is the way thing are going these days, how the economy is held together. How long do we wait to try and get into a house, 400k now is 400k in 2yrs, maybe a lot of houses in a stagnent market means we can get that 400k for 320? is that our best bet now? Or just wait it our with Rentals being our freedom. I guess I can’t stand the feeling of all those people leaping into houses are going to work out, happy as I get to keep my job, but all the thinking, reading, analyzing and trying to be smart, really accounts for nothing, and they’ll laugh at my renting with their increasing equity over time. Even if it fluctuates, still a lot more then the 0% I have in rental. Sigh, no real correction, real estate agents laughing at us, 20 somethings in super nice houses think I’m a joke for renting, and I guess they’re right. At least I have freedom! Also you poor people in Victoria, sounds like me, moved from Calgary for a year, didn’t take long to realize the lifestyle (not really that good) sure isn’t worth having no job, or a pathetic barley paying job, tech sector my ass!

Actually I did not revise my forecast. — Garth

#129 GregW, Oakville on 12.21.11 at 3:22 pm

Hi Nastra, This might be interesting to hear the arguments of, if it really goes anywhere beyond just a filing?
Bank of Canada Challenged in Legal Action: “Restore the Use of the Bank of Canada for Canadians”
http://globalresearch.ca/index.php?context=va&aid=28292

#130 45north on 12.21.11 at 3:27 pm

NewWorldPartyDotOrg:
Assets:
House: $426,000 (Bought in 2010. House prices are higher now.)
Cash: $1,300
TFSA: $300
RRSP: $1,800
Total: $429,400

great post NewWorld, if the young couple sold right now for say $450,000 they would have to bring $20,000 to the table.

Lets check back on the young couple next year, December 2012.

#131 45north on 12.21.11 at 3:35 pm

US Housing Market Was Artificially Inflated By 14% In 2007-2010 NAR

http://mcaf.ee/ceyi6

this is pretty significant

#132 poco on 12.21.11 at 3:53 pm

#104 Diana on 12.21.11 at 12:05 pm
Of course, I’m not planning to shop for a real estate agent until sometime in the new year, so right now the whole thing is moot. :)
_______________________________
the new year is only 10 short days away!!!

you’ll do what you feel is best for you, but i might suggest– do a lot of the research yourself—find a reliable agent (there’s 100k of them in Canada—everyone must have a friend or relative in the business)
start by getting your agent to send you all the new listings–price changes– and sales of what you are looking for –after doing this for a few months you’ll see where the market you want to buy in is going (i’ll guess that it will be going down)

after selling two properties, i had my timeline of when i would start looking seriously to buy again, but that time has come and gone–from the price declines i’ve found in the tri cities since the spring of 2010, along with Burnaby and New West, and yes, even hot Vancouver , i’ll bide my time til at least next fall or around this time next year and see where we’re at –no reason to rush in–prices have been falling and will continue to fall (many properties in the tri citis have already had a 10% to 15% haircut already)
here’s a couple of recent owners who probably would love someone to take their property off their hands
v921228-bought May08-297.5k—listed at 288.8k
v921407-bought Mar08-315.9k–listed Mar 11at 316k
not much of a loss compared to many others, but where are those big year over year increases we hear so much about
or those many owners who thought they were getting a property at discount prices last year only to disover the market wasn’t going up like they believed (msm–realtor-bs)
v917585-bought Jun10–215k–listed at 214.9k
v918591-bought Oct10–303k–list Nov11–315k–now at 296.6k
be very careful Diana

#133 Kip on 12.21.11 at 4:15 pm

I hate to be the bearer of good news but did anyone hear about the GTA Union to Pearson Train link? It’s a go and we need 1200 tradesmen for 3 years work. Good jobs with pensions and benefits and there are also rumors that thes guys might even buy real estate.

I know some people currently working on the big site at Union Station and there is more work coming for 2012, count on it!

#134 NorthOf49 on 12.21.11 at 4:51 pm

Though this was expected in the US after the 2010 voluntary foreclosure freeze was lifted, it still makes for a scary headline. Doh!!

From marketwatch.com

Newly initiated foreclosures in the U.S. jumped in the third quarter of the year and are expected to remain at a high level for the “foreseeable future,” a U.S. bank regulator said Wednesday.

The number of new foreclosures increased by 21.1% during the third quarter, the Office of the Comptroller of the Currency said in a report.

http://www.marketwatch.com/story/new-foreclosures-jump-in-q3-2011-12-21

#135 AKatz on 12.21.11 at 5:10 pm

Unbelievable – 300 sq feet apartments in Vancouver: http://realestate.yourmoney.ca/2011/12/vancouvers-new-micro-lofts-upsetting-to-some.html

#136 Jan Etter on 12.21.11 at 5:14 pm

#103 truth hammer on 12.21.11 at 12:05 pm
“Teachers all pension millionaires says new report.

http://opinion.financialpost.com/2011/12/21/millionaire-teacher/

And the slack jawed Liberal lackeys want you to pay MORE taxes?

Add to this list all civil servants pulling down fat succulent DB pensions…..while a majority of Canadians shiver in the dark…….now thats rich !”

***

Actually, if you read the article, this teacher did not have a DB pension so your vitriol is misplaced. As suggested by the Financial Post writer, if you have $1M in assets spinning off $50k in income annually that does not eat into the principal, your estate is way better off than if you have a defined benefit pension paying $50k/a, because in case#1 your estate gets $1M less probate and taxes, and in case#2 your estate gets bupkus. So it is fallacious to say that a teacher with a $50k/a pension is a millionaire:

“From where I sit, any career teacher who makes it to age 65 is already a millionaire, since the rest of us would need $1 million of capital in order to spin out an annual $50,000 from it.

So my initial impression was that the very phrase “Millionaire Teacher” was redundant. However, after I got into contact with Andrew Hallam, author of Millionaire Teacher, I discovered a different set of circumstances.

While he is Canadian, Hallam teaches in Singapore, where he does NOT enjoy a DB pension. So his tale of amassing $1 million before age 40 is a little more interesting than the average Canadian teacher arriving at Freedom 55 millionaire status solely by a DB pension.

My own father was an Ontario teacher and, like anyone else in a good DB pension, would have had little RRSP room. While he may have been a pension millionaire, the pension died when he did and I can verify that what was left was much less than a million dollars!”

#137 poco on 12.21.11 at 5:31 pm

I see DAs’ mentor is making the usual type statements about the US housing market phoney numbers

A statement by Lawrence Yun, chief economist for the National Association of Realtors as listed in a report on existing home sales caught my eye today.

“From a consumer’s perspective, only the local market information matters and there are no changes to local multiple listing service data or local supply-and-demand balance, or to local home prices” said Yun.

On the surface, the statement seems incredulous. How can the national data be completely screwed up, in need of major revisions, if the local data is accurate.

http://globaleconomicanalysis.blogspot.com/

#138 Bobby on 12.21.11 at 5:39 pm

Suzi,
I just had a brief look at the MLS for Victoria. Many of the homes that I looked at have now been either taken off the market or the listing has expired. Many were empty and had a number of price reductions.
I would certainly be in no hurry to purchase or I would go in with an offer significantly below asking. I would suggest 10-15% less as that is what all indicators are pointing to. If your realtor refuses to make such an offer, get another realtor. You will find they will quickly come around.
A good place start your search is BC Assessment, as it will give you the assessed value of the property for taxes. These assessments will be lower next year to reflect the reality in the market. A realtor will say that these have no value, especially if the asking price is above assessed value. However, many listings will highlight the list price if it is significantly below assessed value.
Do your homework and you will do well.
Merry Christmas!

#139 NAGA on 12.21.11 at 5:50 pm

Garth: this quote from ScotiaBank report on housing jts published and in reference to US market “Household credit market liabilities as a share of disposable income have fallen from a peak
of 164% in 2007 to 146% in the third quarter of 2011.” Back to my confusion of a few days ago this is different from your reference to Canadian debt levels?

Deal with it. — Garth

#140 Ret on 12.21.11 at 5:51 pm

Today, Dolton hands out $36M in bonuses to the Ontario civil service. Nothing like buying off the civil service managers too. We can’t have them upset. The patch is already on with the public sector unions.

http://www.torontosun.com/2011/12/20/province-to-shell-out-36m-in-bonuses

You can put another $36M on the tab Dolton. Party on Ontario!

#141 Cato on 12.21.11 at 6:16 pm

Parent & child going in on a home together seems like a recipe for disaster. Real estate agents like promoting it but sounds like a situation that could get ugly really fast if financial circumstances changed for either party.

I’ve never understood the logic behind retirees being drivers of economic growth. If that assertion held any water we wouldn’t see US cities with older demographics struggling so badly.

Small, well designed condo communities might be the one bright spot going forward. The recent pop in US multi-family housing could be a sign of this. Kids can’t afford much but would rather live in a shoe box than go back to the basement. Parents need to downsize and are short on their retirement goals so can’t afford much and want to keep what they have liquid.

Shipping containers might end up being the ideal housing of the future. Cozy and affordable. Given a choice I think most Gen X & Y’ers would choose a steel box over sharing a McMansion with their parents. More than likely my compatriot X & Y’s will be pushing for their parents to get into the box and while they get the house. Mark my words, the beginning of the end of boomer retirement dreams will start with “Hey Mom & Dad, we’ve got a great idea …”

#142 Rick on 12.21.11 at 7:17 pm

“suddenly understanding what a dumbass idea it was to pay off the mortgage instead of feeding a fat financial nest egg”

Realestate is one of the best investments you can make if done correctly. End of story. If you purchase a house in a market (time and location very important) that is over valued you will lose. If you do your homework and purchase a house in a location that is on the up AND will cash flow (put down enough money) you will win.

I have four rentals. Cash after all bills is $1800 a month. The mortgage gets paid down by the tenants rent as the value rises. If the value drops by 50% I don’t care because I do not plan to sell for another 15 years and maybe not then either. Rates can go up to 12% then I start breaking even and that is ok also.

At least this way I have a solid asset. Not a stock pile of this BS paper money we throw around every day.

Rick

How much cash do you have invested to generate this return? How exposed are you to rising rates? Are you under rent controls? What is the age and condition of your rental stock? Every investment has risk. The key is to secure a return which justifies the amount you are exposed to. Bravado doesn’t count. — Garth

#143 Rob Chipman on 12.21.11 at 7:20 pm

Garth:

I wish you had a search box on this blog. I read this statement in the post above:

“Most commentors decry my estimate of a coming 15% reduction in the national average, followed by a lengthy period of real estate decline. ”

and wonder two things.

First: why?
Second: when?

I’m in the Vancouver market. I know a bit about the Phoenix market. We haven’t seen any substantial correction in Greater Vancouver since sometime during the Clinton administration.

We’ve weathered some pretty sizeable negative external events. I can’t understand what it will take to change the direction of this market. (To stay on topic, Victoria is not Vancouver, and I would not buy a personal residence now unless I could reconcile residential security with the value of the cash. Suzi will pay dearly for a condo in Victoria, and more than any cashflow valuation would justify).

#144 robert james on 12.21.11 at 8:14 pm

LOL It is a well known fact that there is a special kind of stupid in BC when it comes to real estate,,especially in the Okanagan… !!http://www.century21.ca/derryanne.hubbard

#145 The Thing in the Basement on 12.21.11 at 8:26 pm

105 Stuck – Sorry VI didnt work out for you. But if its mainly the money thing but otherwise you enjoy it, it may be worth keeping the house and renting back in C-town. Maybe [email protected] or [email protected] can be your tenant. Good luck.

137 Akatz – I posted the cbc link yesterday. Interesting comments. Why do you feel it is unbelievable? The young lady interviewed said it was just what she needed as a low/mid earner.

138 Jan – doesnt that drive you nuts when people dont read their own links?

#146 JohnSaccy on 12.21.11 at 8:33 pm

After the breaking news you posted yesterday about US housing starts at 9.3%, care to comment on this one, Garth?

http://bottomline.msnbc.msn.com/_news/2011/12/21/9608643-its-official-housing-market-was-sicker-than-we-thought

I am sure no one goes to prison in US for fraud committed by banksters/relators to “protect” the normal law abiding tax paying citizens.

Resale numbers have nothing to do with housing starts. — Garth

#147 Humpty Dumpty on 12.21.11 at 8:33 pm

Come on G, spread some of that joy around at this time of year… After all, It aint going to last that much longer…

Here’s a true Canadian survivors guide for the next year

http://www.youtube.com/watch?v=c3aCw-RurOk&feature=player_embedded#!

Good day, Eh!

#148 Dorothy on 12.21.11 at 8:54 pm

#146 – Robert James

Actually she’s right Robert when she points out that people who already own a home, and want to move to another home, won’t lose a dime in a falling market providing the home they buy has fallen by the same amount as the home they sell. And she’s also right when she says that if the home they buy has fallen by a greater amount than the home they sell, that they could actually come out of the deal better off than if they’d sold at peak. That’s not news. It’s always been that way during a RE downturn. The only one’s who get hurt in a downturn are those who have to sell into a downmarket and move to a market where prices haven’t fallen, particularly if they’re in a position of negative equity due to having bought with little or no downpayment.

#149 45north on 12.21.11 at 9:34 pm

“anyone holding illiquid assets is going to be crushed”

Michael Platt
BlueCrest Capital

http://mcaf.ee/3zvo1

real estate is illiquid

this is the best statement on the European crisis that I have seen

Have you ever considered that hedge fund managers use the media to move the market and create positions? You should. — Garth

#150 robert james on 12.21.11 at 9:39 pm

#150 Dorothy I quess you did not see the foreclosure she is trying to sell for God knows how long.. Sorry,, with 21 months inventory or whatever it is ,,it is not a sellers market as she claims.. I live 15 miles south if Kelowna and things are ugly now but will get much worse .. “Special niche market you know” ,, as any realtor will tell you!! If there is anyone dumb enough to believe that they deserve to get their arse handed to them.. If anyone knows or remembers what happened in 1981 they would change their tune very quickly.. Cheers!!

#151 bob's my uncle on 12.21.11 at 9:55 pm

The market is getting ready to spring forward, I can see the signs as more and more people are starting to inquire about purchasing. The bitterness on this site makes the great depression feel like a night at the rippers with free bottle service and lap dances.

Not sure why though? so you missed out on the low prices, big deal, right now you have the opportunity to get in somewhere in the middle. We still have quite a ways to move up from here and anyone that buys now will still see appreciation. Get out and buy your favourite property!!!

#152 45north on 12.21.11 at 10:51 pm

Michael Platt
BlueCrest Capital

Michael Platt has not moved the heads of Europe to engage in round after round of meetings, to issue statement after statement. The European Central Bank is the dog and Michael Platt is the tail.

Still he is an intelligent observer with a stake in the game. I think he has revealed his true thoughts.

#153 The Dividend Yield Investor on 12.21.11 at 11:36 pm

For those of you who are into interactive sites for real estate look no further.

The New York Times is just fantastic and will give you an interactive graph to determine whether renting or buying is the better deal. Shove that under the “Nose of a [HHFC] House Horny Fellow Canadian.” Be careful of friends, relatives,and strangers they can be very testy. It was the same way here in good old U.S.A. before the “BIG BUST.” [-sarcasm on-Everybody knows real estate only goes up -sarcasm off].

Below is the title to the site. Have fun with it and promise not to be too cruel to those HHFC’s. Don’t use the terrible example that I used, before the real estate crash, and tell my HHFA’s “Are you out of your mind.”

Here’s the title and link is below.

Is It Better to Buy or Rent?
Whether renting is better than buying depends on many factors, particularly how fast prices and rents rise and how long you stay in your home. Compare the costs of buying and renting a home in the calculator below. Click the ADVANCED SETTINGS button to change inputs such as your rate of return on investments, condo/common fees and your tax bracket.hether renting is better than buying depends on many factors, particularly how fast prices and rents rise and how long you stay in your home. Compare the costs of buying and renting a home in the calculator below. Click the ADVANCED SETTINGS button to change inputs such as your rate of return on investments, condo/common fees and your tax bracket.

http://www.nytimes.com/interactive/business/buy-rent-calculator.html

To my new northern friends,
Happy Holidays and to a profitable new year.

The Dividend Yield Investor

#154 Rob Chipman on 12.22.11 at 12:45 am

Robert James:

“.. If anyone knows or remembers what happened in 1981 they would change their tune very quickly.. .”

If you’re talking Vancouver, then the market doubled in ’81 and almost halved in ’82. Interest rates were double digits…as in over 20% at one point.

It was a completely different story then. The city was much smaller and the globe much bigger.

With inflation running at 3% and govt’s deeply in debt I can’t see anyone raising rates so much. Can you? Rates may double over the next 5 years as Garth predicts, but will that be enough to force sales and really cause pain?

#155 Future Expatriate on 12.22.11 at 8:35 am

First!

(Couldn’t resist!)

#156 voinz on 12.22.11 at 10:16 am

Your numbers don’t appear to add up correctly, unless I am missing something: 550k sale minus the 393,212 and the 31k from the selling costs does not yield 129,900…also, please explain how you reache the 393212 figure… If the original mortgage was for 440,000, and they made 144k in payments over 60 months at 2400 bucks/mth this translates to (58,124 to principle and 85,876 in interest), then shouldn’t they theoretically owe 381,876?

#157 kilby on 12.22.11 at 1:27 pm

Teacher’s Pay.

Masters with 16 years service in Washington State pays $64,174.

Top Step in Coquitlam (Vancouver BC area) Pay grade 11 pays $69,857.

US retirement benefits are better. Not much difference at all.