Ten things that will happen this year

The condo market will crumble.
While logic told us this long ago, so many ingénues continued to fall for the siren call of cheap downs and urbanity. Gluttonous builders, ravenous speckers and idiot buyers together formed the perfect storm for shelter which was meant to be a cheap alternative, but became an inflated infatuation. But the demise of the virile condo market is not just a condo story. Virgin buyers are the fuel for real estate’s continued fire, as young people discover it’s way cooler to rent the same unit for less more and more freedom, the entire food chain of housing will be affected. Consequently, this is a big story.

Vancouver will be so 2009.
There’s always been a premium to be a Left Coaster. For decades people have lived in often ugly houses amidst beautiful scenery and felt smugly distant. Over time Vancouver and its flatland burbs turned into a moist version of Mississauga, replete with Staples and Best Buy, but heavier on Starbucks. Then the insularity became its Achilles heel, as locals swallowed their own Kool-Aid and became as special as the snowflakes they fear. Now the region’s unlivable for average families, and real estate’s become the new porn. This year will mark the definitive end as the pendulum swings back. If you sold in the first four months of 2011, you were a genius.

Mark Carey will actually do it.
We all know all the reasons interest rates are supposed to stay cratered. Weak economy. Insolvent citizens. Bankrupt governments. And we’ve heard all the arguments that we’ll turn into Japan, replete with a lost decade and mortgages at 0%. But forget that. Rates will rise in 2012 as Brother Carney takes aim at the very thing which poses the greatest long-term threat: our piggy opinion of debt. The appetite for credit continues to grind higher by three times the inflation rate. Mortgage debt tops a trillion. LOCs are out of control. At some point the deleveraging becomes lethal, so Carney will step up and find the testo to move. Two quarter points in 2012. Not much, but enough to change everything.

Volatile markets will reward.
Last year the Toronto stock market gave up 11% but investors with balanced portfolios lost nothing. This year the market will be just as volatile, but end the year with a double-digit gain. Investors who ignore the ride will end find similar gains. Those rooting for the demise of America will be disappointed at what happens – rising consumer spending and business investment plus the narrowing gap between corporate profits and stock values. As more jobs and confidence return the US dollar will ease, helping trade and jumping commodity values. Rising gold and oil will grease the TSX. Diversified ETF investors will do best. Stock cowboys will need Depends.

Europe will bore. Greece will choke.
So what if the Euro zone slumps into a recession in 2012? Markets will barely notice. Ditto for the inevitable default by Greece on its semi-worthless bonds, its abandonment of the Euro and petulant, ego-centric act of leaving home. The big news is there’ll be no big bank failures, no currency collapse, no defaults by any countries that actually matter. Germany and France, along with Britain, will be on an austerity kick that last through the next cycle of elections and depresses the value of most everything. If you want a great deal on a country retreat in a stable country, go shopping in Normandy this summer.

Obama will win. US real estate hits bottom.
It might be job creation, rising stock markets, the end of the Iraq war, or maybe just the way American conservatives blew their big chance with vacuous candidates, but Barack Obama will stay president. Markets will anticipate this, and reward it with a fat year-ender. Democrats will stand for stimulus, largesse, pump-priming and economic hope. Republicans will be seen as hair-shirts bent on doing the right thing for the future even if it grinds up today. In a democracy, people vote for themselves, not their grandchildren. Won’t even be close. Within months of the re-election, the American housing market will finally hit bottom and start the long, slow advance.

House prices will fall.
Canada, of course, will go in the opposite direction. By every measure – ratio of prices to incomes, household debt levels, lax lending standards, asset inflation – we have equaled or surpassed the Americans when they hit their real estate apex. In the absence of solid economic growth or wage increases, and given a slight rise in mortgage rates and unemployment, house values will be lower in December than they were in January. The decline will be commensurate with local market conditions, but average up to 15% nationally. Some places will fall a little, some will be trounced. People who buy houses before they sell their old ones will need our loving support. Stop snickering.

In fact, all asset prices will fall.
Our times are defined by an epic battle between inflation and deflation. For a while this year, deflation wins. A glacial economy, falling real estate values, tightening credit – these factors and others will be bringing down the value of assets even as the cost of living rises. Houses, cars and iPads will get cheaper, at the same time the cost of gas, insurance and food rises. Asset deflation means what you owns loses value. Price inflation means what you make buys less. This is lousy news if the bulk of your net worth is in your house or a bank savings account. It will quickly separate the investors from the savers.

F will tighten.
Fools among us believe the government wants the real estate market to keep inflating, prices to keep rising and debt to keep growing. Well, they once thought that way – when H and F came up with the 0/40 policy which destroyed housing affordability for a generation. Since then they’ve realized current levels of debt are unrepayable and once housing values normalize vast numbers of people will owe more than they own. Hence, 0% down was dumped. Forty-year amortizations shrank to 35, then withered to 30. The next shoe may be in the March budget, knocking them back to 25 years. If the bubble continues, kiss 5% adios.

Most people won’t get it.
So the back story is one of falling asset values, rising markets, a moribund economy, higher inflation and commodity prices, declining real estate, tighter credit and few jobs. For most people this is a disaster – at least for those who spent their careers paying off mortgages (even when rates were cheap), fearing investments (they don’t understand), paying too much tax (with their TFSAs in GICs) and sticking their savings in the orange guy’s shorts. These folks end up losing money to taxes and inflation, giving up equity on their homes, and paying for more everything else. They’ll be in a funk. Be very careful. Especially around siblings and mothers-in-law. Few will understand 2012 marks the end of a cycle. Financial markets will anticipate this. Your buddies at work won’t. You know what to do. They will vex.

And there, but for the grace of God, goeth this blog.


#1 Eriks0n on 12.31.11 at 10:21 pm

Happy New Year!

#2 ripa on 12.31.11 at 10:29 pm

Happy New Bear! I mean Year, sorry!

#3 VB on 12.31.11 at 10:44 pm

Do I have to wait that long !!!
Bear sliding or going the prey up
Happy New Year !!

#4 ExtraO on 12.31.11 at 10:48 pm

Ummmm…. we’ll wonder where the rest of the text is after “Ten things that will happen this year”?

#5 Stinky the Fish on 12.31.11 at 10:49 pm

Thanks for awarding me as the number 1 commenter on this site, Garth. Much appreciated. To everyone else – better luck in 2012

#6 Arse on 12.31.11 at 10:54 pm

The global economy will slow down, including China and India, and it will have impact on Canada.

Crude oil prices could come down temporirily like in 2008 and then rise back up again.

America, Europe and China and Japan will continue to rack up debt and spend more on stimulus spending and shore up Banks that are in huge trouble.

Stock market could go through the roller coaster ride it went through 2011.

Gold could decline a couple of more hundred dollars more before resuming it’s long term uptrend.

Could see a 10% decrease in house prices across Canada this year.

Obama would be re-elected.

#7 T.O. Bubble Boy on 12.31.11 at 11:49 pm

Garth – the latest Post City Magazine showed up this week, and one of your frequent targets (Sherry Cooper from BMO) is selling her $3M home in North Toronto.

Does Ms. Cooper selling her place mean that officially EVERYONE now knows that the bubble is bursting? Or, given her history of making horrible predictions, does this mean a few more years of RE stupidity?

#8 Popeye the sailor man on 01.01.12 at 12:09 am

Happy new year!

Look forward to the new book.

New years resolution is to buy a newer minivan on our HELOC. We are below average as a Canadian as we only owe 130% of our annual income including the mortgage. We have to keep up to our share and get closer to 150% ;-)

See you every day here for another year in 2012.

#9 tkid on 01.01.12 at 12:18 am

Happy New Year!

Let us hope December is as meek and mild as the March Lamb!

#10 Shy Blawg Dawg on 01.01.12 at 12:19 am

Such a tease you are Garth. One thing for sure …. going to have to wait to see the 10 things.

Waiting for 2012.

#11 Van guy blazin kush on 01.01.12 at 12:38 am

1) Canada RE declines 15%

2) Garth takes Carneys Job

3) Obama is assassinated

4) DA quits as a realtor

5) US RE finds a bottom

6) Maple Leafs will not make playoffs

7) BPOE defaults and rents in Surrey

8) Mortgage rules tighten

9) This blog will be recognized as a winner

10) Not a happy new year!! 

#12 Anon - GTA on 01.01.12 at 12:59 am

Happy New Year Garth & all fellow bloggers…

#13 Timing is Everything on 01.01.12 at 1:01 am

Happy New Year all!


#14 City Slicker on 01.01.12 at 1:03 am

What will happen is martial law in the USA. Oh wait it already happend. Americans are gonna get a can of woop ass on them, scary stuff, the events leading up to this was exactly that of Nazi Germany:


#15 dave thirsk on 01.01.12 at 1:06 am

great blog

#16 Kate on 01.01.12 at 1:15 am


#17 Crash Callaway on 01.01.12 at 1:31 am

Here’s a tip for 2012…

You can get free pencils at IKEA

#18 Mel on 01.01.12 at 1:46 am

Please Mastro, and the winners are? Whoops, and the loosers are?

I am waiting! Don’t keep me in the dark for too long, it is getting cold out there!


#19 a prairie dawg on 01.01.12 at 1:59 am

H.N.Y. folks…

#8 Popeye the sailor man

Sadly I’m way below average at <50% of total debt, to annual salary.

Woe is me.

Maybe in 2012 I can get off my wallet and buy something large, expensive, and meaningless just to fit in…


#20 Taipan on 01.01.12 at 2:04 am

1)Gold will drop for a few more weeks.

2) Euro will fall apart from its current member setup. Either a number will get kicked out or Germany and a few other stronger states will leave.
3)Capital will flee the euro, and end up in US$. Much to the angst of the US.
4)Gold will then proceed over $2000 USD an ounce.
5)S&P 500 will finally find a bottom at around 650. And then proceed on a very slow but orderly growth over the long term, where P/E EPS and dividends per share will return to historical norms.
6)Canadian will trade at 80c to USD. Before rebounding into next year at around $1.15.
7)US will print money seeking to devalue their currency. (Euro collapse causing flight to US$ and then printing causing devaluation.)
8)Euro collapse will cause USA and Canada and Australia to go into recession. China growth will slow dramatically.
9)In recession, and because of US$ movement and US recession, unemployment will start to rise significantly across Canada.
10)Housing prices will fall significantly, greatest in Vancouver, and even though many people will want to buy, they will be worried about their job security, and the lack of finance world wide will cause the market to fall faster then expected.

I wish i could be as optimistic as you Garth!

#21 Edmontonian on 01.01.12 at 2:26 am

10 Things that will happen in Edmonton…
Country’s leading foreclosure capital becomes common knowledge.
Personal & Business Bankruptcies continue to soar.
ANother 5-10% incline on Real Estate in Edmonton that sits at fall 2006 price levels currently.
The city gets 1/2 billion dollars in debt to fund a DT Coliseum for a drugstore billionaire out of desperation to revitalize it’s depration-like downtown core.
As more retails shops, bars, restuarants close and Hosing foreclosures pass 5000 people realize we were in a unstustainable credit bubble and have techincically slipped into a depression in the edmonton Area. (retail sales still down 12% since 2007, average household income down 8% since 2007, Tourism & Hotel/restaurant revenues down 25% since 2007!

#22 truth hammer on 01.01.12 at 2:48 am

This is how the mistakes get made….when so called ‘experts ‘ get the information wrong.


In fact..according to CENTA ( a more reliable & liable source of info than the G&M) the criteria for ‘substantial residence threshold) for US tax residency is 180 days accumulated over any three year period….not…as the ‘expert’ G&M writer states is 183 days in any one calendar year.

The rest of his article is solid…but wrong on the main point. They take the number of days you spend in the year you visit…..50% of the number of days you spent in the prior year and 33% of the year prior to that…..if that adds up to 180 days in total and you have not filed a tax return…….problems at the border…..for sure.

Bottom line…..if you’re a desperate Ethiopian…Somalia…Isreali……Chechen, Mexican…Guat..etc etc or anyone else from some blight hole on the planet…..the US is the promised land and you want to get there by any means.

However……..like many Canadians….I have choices in life…thats why my citizenship means a lot to me….AND why I get pissed when the Liberal apologists want to give my citizenship away like a cracker jack prize to any thief or miscreant who flops his pork across the 49th.

I choose to blow off the Americans paranoia over the 911 experiance as their problem not mine. Lets be honest…they’ve created much of their own problems internationally by being such pompous arrogant dickwads.

The US has become a police state…failing as a democracy…..failing as an economy….writings on the wall. I choose not to live or invest there….As a Canadian I feel I can rise above their crap by not participating…….there are plenty of other opportunities…at much lower cost and much more fun. Let them point their guns elsewhere…it seems the administration there is fond of shooting themselves in the face and blaming someone else. Out of almost 200 countries on the planet…the US is only one.

#23 Freedom first on 01.01.12 at 2:50 am

Happy New Year!

Wishing you all: liquidity, debt free, cash flow, diversified assets. Look after yourself:)

#24 MapleLeafsSuck on 01.01.12 at 2:54 am


You are late on your 12am deadline!! Are you partying and passed out somewhere?

#25 Gatineau beach on 01.01.12 at 3:19 am

Can’t wait to read your perspective on what’s next!
Happy new year Garth ! For what it’s worth my wife and I love reading your work . We sold our lakefront house last year and will patiently keep renting till the cows come home.


#26 vatoDETH on 01.01.12 at 3:57 am

Hmmmm… so far only 3 things have happened to me tonight!


No zombies yet…

#27 John on 01.01.12 at 5:10 am

Garth – Your ego is out of control! Reel it back in man!

#28 GUnit on 01.01.12 at 5:26 am

Happy New Year Garth! Thanks for the great blog!

#29 truth hammer on 01.01.12 at 6:37 am

BTW Garth …put this on the ‘oh crap ‘ pile.

Gold finished up 10% on the year….for the 11th year in a row of market average beating performance. Darn! Sure glad I got in 10 years ago and held on…….I’d feel stupid with nothing but underperforming bonds and preferreds dragging my long term gains down.

IMHO…..rocks and grease are cheap as borsht……see you in 20.


#30 JR on 01.01.12 at 8:55 am

#23 truth hammer
“Ethiopian…Somalia…Isreali……Chechen, Mexican…Guat..etc etc or anyone else from some blight hole on the planet…” Are you suggesting these places are any less than Canada? For starters it is Israel not Isreal.

#31 T.O. Bubble Boy on 01.01.12 at 9:17 am

Ah – I get it now: 12 EST is actually noon, which gives Garth some recovery time from whatever partying he did last night.

#32 allister on 01.01.12 at 9:37 am

I have 10 prediction of which I am sure I will be right. Remind me to review them next Jan:

1. Stock markets will fluctuate
2. Precious metals prices will fluctuate
3. Real estate prices will fluctuate in local markets
4. Currencies will fluctuate
5. Commodities will fluctuate
6. Interest rates will fluctuate
7. American presidential polls will fluctuate
8. European economies will fluctuate
9. European political solutions will fluctuate
10. Traders will prosper

#33 T.O. Bubble Boy on 01.01.12 at 9:38 am

As the RE bulls would say: housing is all about leverage:

(not in a good way)

#34 Herb on 01.01.12 at 10:08 am

If you go out in the woods looking for the teddy bears’ picnic, make sure you don’t wind up in the wrong crowd.

#35 ENLIGHTEND ONE on 01.01.12 at 10:19 am

To all the self appointed prophets


#36 Buy in the US, rent in Canada on 01.01.12 at 10:20 am

1.Buy Reits in U.S. multi-family housing: Home ownership rates are declining while tight vacancy rates are providing good support for rents.

2. Buy Emerging Markets – Asian consumers: Emerging markets are growing wealthier and investing in companies that serve their burgeoning middle classes will provide many wealth-building opportunities.

3. Buy stock in Dollar/discount stores: In North America consumers are becoming more frugal. Deep discount retailers are reaping the benefits.

4. Buy Energy infrastructure: Pipelines and similar firms deliver strong free cash flow yields and benefit from high barriers to potential competition.

5. Buy Gold mining stocks: They’re undervalued and are raising their dividends. Use XIC.TO for this.

6. Buy international water delivery services: The World Bank estimates that global agriculture will require up to 45 per cent more water over the next two decades.

7. Buy Tobacco/beverages/movies: These sectors are where people spent their time and money in the 1930s. If times turn tougher, we could be ready for a repeat.

8. Buy Utilities: Their yield and pricing power make for a potent combination.

9. Buy food commodities and food products: You still have to eat.

10. Buy Home improvement/gardening: Aging boomers are spending more time at home and dollars are going to flow to sectors that service this cocooning trend.

Oh yeah and buy a house in the US in an excellent location its the cheapest its been in 40 years. Hold it 10 years and make some money.

Basically I think we’re going to bump along so you have to be defensive and the above gives you some defense.

Buy in US, rent in Canada – for now

#37 Ret on 01.01.12 at 10:33 am

#18 Ikea- free pencil tip.

You forgot to mention the free measuring tapes too!

There, 2012 won’t be as bad as you thought after all. Two freebies already and you are barely started on a fresh brand new year.


#38 Arse on 01.01.12 at 10:51 am

Currently, Gold is bearish on the daily and weekly charts.

I see technical divergence in the 4-hour and 8-hour charts on Gold charts to the bullish side forming.

It will take a couple months more to determine the longer term outlook.

#39 Devil's Advocate on 01.01.12 at 10:58 am

Well Garth it certainly appears we agree on this one. No, nothing is going to happen in 2012. If the whole period since 2008 is any indication, we are in a flat-line and will experience neither an up nor down over the course of the year ahead. This is the new norm. This is a return to norm, not a departure from it. And this is good because it is stable and predictable and consumers can be reasonably confident going forward that the ground will not shift so much one way or the other going forward. and there isn’t anything wrong with that is there?

Happy New Year to you, the pups and the poodles.


#40 Randy on 01.01.12 at 11:08 am

Bubbles will burst only to be replaced by other bubbles…

#41 Off the river on 01.01.12 at 11:09 am

All I know is that poor bugger standing in the tree has TEN toes that are about to get chewed off.

#42 Scott in Vancouver on 01.01.12 at 11:09 am

Happy New Year everyone.
What joy will the New Year bring?

#43 -jwk- on 01.01.12 at 11:10 am

So, this is what ‘breathless anticipation’ feels like!

Happy new year

#44 Daystar on 01.01.12 at 11:10 am

Happy New Year fellow blog dogs!

Hmmm….. bear… as in bear market…. or bear market rally! Or… both. A couple of each in the markets I would think and look for an ugly June (Europe is hurting and Asia will follow). Thats all the time I have and best of luck, health and happiness to you all!

#45 South of 49 on 01.01.12 at 11:24 am

Are #4 ExtraO and me the only ones who cannot see your blog entry today? I can see the bear picture and the statement “Ten things that will happen this year”, but no blog entry.

In 90 minutes. Relax. Wait for the big ball to descend. — Garth

#46 Min in Mission on 01.01.12 at 11:30 am

Just up the street from me, there was a house purchased a few years ago. Can’t remember the price, but, it has just been pulled from the market. The couple is splitting and “needs” to get their >380 K to clear. No offers. Right next door, a definite “fixer upper” sold about 4 months ago, probably less than the asking price of 269 K. The “fixer upper” is now back on the market for 359 K. Minimal and superficial work was done. Unbelievable. Both of the prices are a bit “off the wall”

#47 Devil's Advocate on 01.01.12 at 11:31 am

To quote Einstein “Nothing happens until something moves”.

The overall general “Bear Market” is a consequence of human nature at times like this. This truly is a “Buyer’s Market”. Yet are buyers buying? No! Buyers tend not to buy in a Buyer’s Market because they are afraid – afraid prices are going to continue to drop and why buy now when they can get a better deal by waiting? But is it so? How long must they wait? When will the market bottom out? How can they be sure it has not yet?

On the other hand, it is generally in a “Seller’s Market” when buyers are so impatient to buy that they end up bidding against one another to secure the deal as they fear if they do not they will be priced out of the market. Yet it is their own folly that is the very reason prices are so on the rise then as they compete against one another for what ‘appears’ to be a constrained supply and ever escalating prices.

Classic fear and greed. Both the bear and the bull are figments of our imagination.

So this year going forward it is unlikely anything in particular is going to happen as the lingering shadow of that ‘bear’ keeps buyers fearful of climbing down from that tree and participating in what truly is a “Buyer’s Market”.

#48 maxx on 01.01.12 at 11:35 am

Happy New Year Garth and fellow blog dawgs!

#49 Frank on 01.01.12 at 11:38 am

One thing for sure is that change will happen, whether it be good or bad is another story.

#50 Daystar on 01.01.12 at 11:49 am

#7T.O. Bubble Boy on 12.31.11 at 11:49 pm

Perhaps Sherry has finally read one of Garths books :)

#51 Habbit on 01.01.12 at 11:49 am

Happy New Year to all. Please don’t drink & drive.

#52 Sheila on 01.01.12 at 12:04 pm

Garth doesn’t publish on Sundays, until after 9pm; it’s his day of rest.

2012 .. in like a bear……out like ….a bull….??

Happy new Year to All!

#53 Boomer on 01.01.12 at 12:04 pm

#4 and # 46 It is a good thing that Garth is so patient with people who do not read or comprehend English. The post on the 30th said he would post his predictions on New Years Day. On the 31st he posted what he would predict and when, ie: 01:01:12 @ 12 EST. For the challenged out there that would noon on News Year Day and no I am sure you were not the only “dogs” to wonder what was happening. I don’t know how you do it Garth but keep on keeping on! Happy New to you and your family.

#54 Fred on 01.01.12 at 12:14 pm

Wow, 54 comments on a a non-existent blog entry. You really are popular Garth!

#55 TurnerNation on 01.01.12 at 12:28 pm

2012 will be Real Estate JUDGEMENT YEAR in the GTA (Garth Turner Area), for the following reasons:

– Glib newbie realtors took listings off the market, promising to “re-list in the hot spring market”. There will be no hot spring market.

– Consumers waking up today with Chistmas and vacation binge-spending hangover.

– Massive out of control price inflation slowly sinking in: 3% govt figure is propaganda lies.
Staples such as hydro, gas, coffee, food, insurance, rose 10-20% last year with no end in sight; while TSX index dropped 20% (dividends excluded, natch).

– F and the boys (those “free market proponent CONS”) will deliver a death blow to R/E via rate hikes and/or tighter mortgage rules in Q1 2012

– Jobs and rasies…where art thou?

– Kelowna will remain as Western Canada’s Ground Zero.

#56 Herb on 01.01.12 at 12:31 pm

Just done broke the code: 2012 is going to be a bear trap!

Look out, Smoking Man!

#57 T.O. Bubble Boy on 01.01.12 at 12:48 pm

Nothing on China???

Their Real Estate bubble bursting could trump whatever other factors Garth thinks will keep oil and other commodities high… Keep an eye on their local government debts and RE prices.

#58 Waterloo Resident on 01.01.12 at 1:03 pm

Bears climb trees, I hope that guy in the photo knows that? But they don’t crawl out onto a limb / branch, so if the bear does climb up into the tree, then just go out onto a nice thick branch and wait it out there.

As for Garth’s predictions: HA HA, they are a GOOD JOKE ! They gave me a good laugh.

1) The condo market in Toronto / GTA will continue to rise at double the inflation rate, for the foreseeable future. That is all due to the fact that we have MASSIVE IMMIGRATION and most immigrants want to buy and live downtown, or at least somewhere in the GTA.

2) Vancouver: ??? I have no idea, that place is too far away from where I live, but I think that with the Chinese economy softening then so will prices in Vancouver.

3) Mark Carney doesn’t raise rates just because he wants to, if that was true then he would have done it a long time ago. The government raises rates based on what the short-term bond market is telling them it should be, and right now with the rates on bonds actually falling instead of rising, there is a 95% chance that in 2012 Mark will actually be LOWERING rates, not raising them.

4) STOCKS: (I hope the go up, that’s where I have my investments in.)
As for oil: I think it will go up as the U.S. economy improves.
As for gold: I think that bubble has popped, so not much massive rises there, just ups and downs.

5) I sure hope RON PAUL wins, but I know that everything is fake in America and Obama will win because that is what the ‘big guys’ want. If Ron Paul wins the votes of the people, then for some reason he will be ‘disqualified’ and Obama wins by default.

6) As both the American and Canadian economy improves, house prices on both sides of the border will rise as well. Like I’ve been saying for some time now; that $800,000 house will soon be $2 Million, and that $300,000 house will soon be $800,000 !
Whatever you do; don’t sell hoping for prices to fall because THEY WON’T.

#59 Lostinthewilderness on 01.01.12 at 1:14 pm

Happy New Year.
This story from the Bay area tells of the effect of 33% drop in housing prices since 2007. Of couse this can’t happen in Vancouver or even Toronto where we have much more going on than San Francisco and silicon valley.
Good luck with that !


#60 Andrew Smith on 01.01.12 at 1:15 pm

Happy new year to you Garth and everyone else!

#61 Westernman on 01.01.12 at 1:21 pm

Good post Garth,
First off, let’s pray you are wrong about Obama-not four more, the first four were bad enough.
And second, not all asset prices will fall, just the ones that can’t be used to generate income…like I-pads and other assorted garbage like that.
Things like a skid steer loader and a good tandem axle trailer to take it where you can make 250.00 an hour with it will continue to be valuable assets that will cost more to aquire in 2012 than they did in 2011… for example.

#62 Ralph Cramdown on 01.01.12 at 1:22 pm

I agree with most of the predictions, but Carney won’t be jacking rates. With *core* inflation right around the target 2% and unemployment far above NAIRU, the Bank of Canada’s mandate and policy is to stand pat.

Yes, I think Carney wants to do something about the housing bubble, but it isn’t his job, and he only has one knob to adjust.

#63 Not 1st on 01.01.12 at 1:23 pm

Garth’s picture is very accurate. There will be a massive bear attack but if you are careful, you are in a good position to kick it right in the teeth and make a sweet escape to live to fight another day, just like the guy in the picture.

#64 TurnerNation on 01.01.12 at 1:24 pm

#8Popeye the sailor man on 01.01.12 at 12:09 am

Buying a brand new minivan? You know it’s gonna depreciate by 15-20% in the first two years (may be less for an Import model) right?

Minivans are a dime a dozen. Why not but a two-year old model (low km, warranty remains) and bank the $5000 of saving into kid’s RESP. It’s not like you are buying a period correct Ferarri for your collection. It’s a box on wheels of which millions are on the road.

You’re gonna need it: “education” costs will continue their 5-10% yearly rise as unions continue to milk this captive system for all it’s worth. Their DB pensions are not going to pay for themsevles.

#65 Condo buyers looking for a way out on 01.01.12 at 1:25 pm

The GTA and even across Canada will see a condo crash in 2012. Anyone with an internet knows the condo market is going to crash hard 20-25% and maybe even more as the 70% plus flippers who bought have no one to flip or rent to in this falling market. Blood will be on the streets. Condos even at 50% discount make no financial sense as you own an apartment and no land. The condo crash will pull housing values down with it 10-15% in 2012. Dont believe out of work uneducated one month trained realtors. The US crash coming to Canada….enjoy.

#66 Devore on 01.01.12 at 1:25 pm

#48 Devil’s Advocate

“Always a good time to buy OR sell” is quite the departure from the realtor(tm) staple “always a good time to buy AND sell”. We may get you deprogrammed eventually yet.

As for fearful buyers, well, not many share your optimism for catching a falling knife by the handle.

#67 smartalox on 01.01.12 at 1:29 pm

So what happens to homeowners scraping by on a 35-yr am, they got in 2007, when their 5-yr term is re-negotiated later in 2012, presumably after F limits amortizations to 25 years or less? Plus a rate hike? That’ll be like nuclear kryptonite for some people!

#68 Snowboid on 01.01.12 at 1:45 pm

#23 truth hammer on 01.01.12 at 2:48 am…

“and you have not filed a tax return…….problems at the border…..for sure”

Right on the criteria, wrong on the above statement. Complete and mail in an IRS Form f8840 to indicate your ‘substantial presence’ is still in Canada.

#69 Devil's Advocate on 01.01.12 at 1:48 pm

#56 TurnerNation on 01.01.12 at 12:28 pm

FAIL… miserably.

Some people are such energy sucking vampires that when they walk by living plants die in their wake. Can you imagine being in such a foreboding state of mind. Perception is projection. How you feel on the inside radiates to the people on the outside. In other words it’s self-perpetuating as they you interact with are in no way encouraged to be around you and thus you are left alone to wallow in your own petulance, deeper and darker and deeper as you sink away from reality no-one there to pull you back.

Let me do my first good deed of the year TurnerNation by warning you to look where you are headed before it is too late to change your course.

#70 TurnerNation on 01.01.12 at 1:50 pm

Some bearish reading (tee-hee even his surname is ‘Short’):


The “Real” Mega-Bears

By Doug Short
December 17, 2011 (weekend update)
It’s time again for the weekend update of our “Real” Mega-Bears, an inflation-adjusted overlay of three secular bear markets. It aligns the current S&P 500 from the top of the Tech Bubble in March 2000, the Dow in of 1929, and the Nikkei 225 from its 1989 bubble high.

The chart below is consistent with my preference for real (inflation-adjusted) analysis of long-term market behavior.

#71 shane on 01.01.12 at 2:16 pm

Garth, The next shoe may be in the March budget, knocking them back to 25 years. If the bubble continues, kiss 5% adios. Again i belive if the big F changes it to 25 years, it will fuel the markets again because people will want to jump in before it changes? and also people will want to buy before he gets rid of the 5% down.


#72 Harlee on 01.01.12 at 2:17 pm

Hmm…I don’t know,I was rather disappointed in this end of the year blog. Some good predictions & advice,but not depraved enough. The entry for Dec. 30 2010 had a picture of a big dog doing a tiger and a mention of Lady Gaga’s exploding nipples. A year later…a picture of an angry Yogi Bear and an appeal to God. Does this mean that 2011 was a boring year ? Or that,despite all his bragging of “Amazons” ,Garth is giving up on his wicked ways. Anyway,all the best to all in 2012.Invest wisely and stay healthy. Don’t stuff all your $$$ in a mattress,spend some and have fun !

#73 Dazed & Confused on 01.01.12 at 2:17 pm

Does anyone speculate what silver will do in the short & long-term for 2012, folks??

#74 Alan on 01.01.12 at 2:27 pm

Condo markets will not tumble (in most desirable places)

#1. Recovery of the US economy will underpin real estate prices. Canada will take it’s cue from the US. Canada declined to participate in the first downdraft of US real estate and there is no reason to buy into your idea that Canadian real estate should get wacked due to a miniscule interest rate hike.

#2. Rentals are now at a premium. Watch Toronto and Vancouver rentals become the rental market of Toronto 20 years ago when you had to pay “key” fees. Vacancy rates are going lower and this will push more buyers that are able to step into their own condos to buy and not rent.

#3. If China caves, it will still grow at a projected GDP of 5-6%. That’s enough to keep wolves at bay. Also, you underestimate the resolve of the Chinese to own real estate even if it does decline in value. They are not sell at a loss, just keep it for their children. You miss this point entirely.

#4. Your contention that falling asset prices and rising markets is entirely contradictory. Inflation is everywhere. Batttle lines will be drawn on currency wars whereby a country can gain advantage over another if their currency is undervalued vis a vis China. Carney will have a problem if he hikes interest rates as this would pressure the CAD to go higher.

#5. Canada’s resilience will come from resource sector and this will be best seen in the Western part of Canada. Eddy, Calgary, Vancouver benefit directly along with smaller northern towns with pipeline activity and natural gas/forestry.

#6. Europe will disconnect from the Americas. Their problem will be their own not ours to solve. If the US gets moving in the right direction, we are all in good shape.

#7. The right amount of Vodka in the koolaid makes for a nice New Years day drink.


#75 mousey on 01.01.12 at 2:35 pm

My predictions for 2012:
1. Vancouver west condo market continues to go south with more listings and lower prices
2. Vancouver west SFH market will show minimal signs of life and there will be little price change and listings will continue to be meagre
3. Stock market will settle and good stocks will finally start performing like good stocks
4. Interest rates up a total of .5 percent
5. 30 year mortgage term zapped
6. Food prices continue to escalate
7. Greece and other euro pigs slide into irrelevance with minimal impact to Canadian economy
8. Christy Clark continues to slip in the polls
9. Iran and US come kissing close to bullet exchange
10. Small shops along 4th Ave, 10th Ave and Kerrisdale will continue close and be replaced with Nail parlours

#76 Mike Rotch on 01.01.12 at 2:54 pm

#68 smartalox

Truthfully, I just assumed that the 35’ers were going to be grandparented.

If they have to adapt to a new ammortization schedule, this could get interesting.

How would 35’ers adapt to new 30s, let alone a 25?

I guess they could take the outstanding principal from 5 years into a 35, and re-fi it into a new 30.

Fees aside (no idea what they’d be other than legals for a new mortgage), I think their monthly payment would only be a few points higher than current.

If they have to change over all the way to a 25, there might be blood in the streets….I think that might boost payments by like 15%. That’ll hurt if you’re already spending more than you make!

#77 TurnerNation on 01.01.12 at 2:59 pm

I do declare 2012 to be the “Year of the Renter”.

Mascot will of course be the Cockroach (once you got em you cannot get ride of em).

Renters will flex their muscle in the face of desperate landlords:

– Demand long leases with below-market rental rates.
– Clog the rental tribunals with complaints if landlord does wrong.
– Dazzle dazed landlords with detailed charts showing how much money their vacant property will lose, if left unrented.
– Invoke [email protected], tell landlord hey at least it beats a GIC right. Queue nervous laughter as they are forced into agreeement. After all, their realtor(grrr) told them the same mantra.

#78 Devil's Advocate on 01.01.12 at 3:00 pm

#67Devore on 01.01.12 at 1:25 pm
#48 Devil’s Advocate

“Always a good time to buy OR sell” is quite the departure from the realtor(tm) staple “always a good time to buy AND sell”. We may get you deprogrammed eventually yet.

As for fearful buyers, well, not many share your optimism for catching a falling knife by the handle.

Don’t put words in my mouth. My mantra has and will always be “the very best time to buy is when you don’t have to and the very best time to sell is when you don’t have to”. What we have today is many sellers trying to sell who don’t have to sell. Last night in Kelowna there were some 450 properties of which the MLS listing expired. Upon a quick perusal of them one quickly comes to the conclusion the bulk expired without a successful sale because they did not need to sell and were consequently not motivated to do what it takes to sell. On the other hand I think we would both agree that right now there are many who don’t perceive the need to buy either.

That being said, if you are already in the market, generally any move is a more lateral move in-as-much as the market is what it is. To try to sell high and wait for the low to buy is nothing short of gambling. In the worst of cases, if you bought high and need to move when the market is low you will need to sell low but so too will you then be able to buy low. You cannot time the market. Either you are in the market or you are not.

Therefore, there is no risk in trying to catch a falling knife by the handle Devore because if you look at your real estate investment as a long term strategy you already have a handle on it.

#79 Beach Girl on 01.01.12 at 3:09 pm

Happy New Years Day to all my fellow followers of the Great One.

Did not overly partake of the grape, nor any Christmas shopping. I gave up on that a long time ago. VISA doesn’t look for me for profits.

New flame mentioned I didn’t have a flat screen TV. I said the front is flat. (Kinda obvious)

Looks promising. Hope everyone has a nice day.

Might pretend I know how to cook.

#80 Jeff on 01.01.12 at 3:14 pm

Realtor Alan #75

Who are you kidding? Condos in Toronto sit EMPTY by the thousands. The other problem is that thousands of condos will continue to hit the GTA market each month and with over 70% of pre-con condos sold to flippers the crash will just get worse. Flippers CAN NOT rent condos for cash flow positive and this with 25% downpayment and we all know the majority put down under 7%. Flippers all over are trying to get out of their condo deals as seen in the newspapers. It’s going to be one huge drop in prices.

#81 Bill Gable on 01.01.12 at 3:20 pm

Most informative and welcome Post.
I think that people here in Dumbcouver are showing signs of the adjustment, even with the Christmas shopping and New Year’s Eve stuff – all the folks I know cut back.

Smaller parties. Most of my friends exchanged small gifts and the guys I know that are always heading to Hawaii about now, have not made travel plans at all.

Two of my friends have had their cottages listed in the Okanagan for MONTHS and neither have had a sniff. (*They are both incredibly lovely spots – near Princeton).

Check Craigslist and the listings for Yachts and everything that floats. Incredible

So it should be, as our erudite host has pointed out, one heck of a year.

Happy New Year to Mr. Turner, and his Family as well as the team at his firm.


#82 young & foolish on 01.01.12 at 3:23 pm

Happy New Year everyone ….

but will Garth continue to blog in 2012 ?

#83 Nostradamus Le Mad Vlad on 01.01.12 at 3:31 pm

Ooohhhhh, my brain hurts, Mr. Gumby. Buenos Nachos! Happy New Year! There is a chance the bear needs some dental hygiene work done — coupla squirts of skunk juice should do it.

“Most people won’t get it. They will vex.” — That is the problem. Most are too focused on the Laughs winning the Grey Cup vs. the Montreal Canucks, and is why most predictions are like wet farts and pissing in the wind.

Smell a bit funny, but they are warm and cozy all over!
#36 ENLIGHTEND ONE — “………………………EXPECT THE UNEXPECTED…………….” is a lot more accurate.

#33 allister — Bang on! See #36 Enlightened One’s words.
Homeless 3.5 mln. homeless and 18.5 mln. empty homes in US, and The First Occupy 75 years ago, Dec. 30, 1936. “The workers couldn’t take the abuse from the corporation any longer. Their working conditions, the slave wages, no vacation, no health care, no overtime — it was do as you’re told or get tossed onto the curb.”; Dictators “A blistering editorial – Goldman Sachs is ripped.”; 1932 – 2012 Parallels; Shrink Wrapped China’s being downsized; Merging The US Fed and ECB; 3:11 clip Architects of their own demise; BoA “Bank of America KNEW it was illegal but they did it anyway!”

TARP How the m$m perpetuated the lies; Ten Resolutions for non-violent activism; Unraveling while we’re ravishing at the same time! Free Markets They were once free; ECRI If youu thought this was bad, you ain’t seen nuthin’ yet, and ECRI chart — 5:17 clip; High Gas Prices caused by untold flatulence;
Obummer “On the eve of 2012, President Obama has, with the stroke of a pen, ended America as we know it.”; Top Choice “Michael Scheuer is the former head of the Bin Laden unit for the CIA. He was with the CIA for 22 years. He quit in disgust after the 9-11 commission report was released”.;
Handy Guide on whom to vote for (if we were American citizens); Chemically Induced Drugs Walnuts. Stop me, I’m laughing so hard it hurts; 3:19 clip Kucinich – Wars cost US$30 mln. / hr. (is it any wonder the US is in the shape it;s in?); Nukes Who just blinked? This may have something to do with it.

#84 Realtors in a PANIC. Toronto the next Miami on 01.01.12 at 3:38 pm

The condo market is set to crash so hard in Toronto it’s not even funny. You have countless condos that sit empty as no one is willing to buy or rent from the flippers who find themselves in trouble. With thousands of condos set to hit the Toronto/GTA market every month the desperate flippers are in major trouble. Miami had the past record in NA with the most condo developments and they crash 50%. Realtors in Miami said everyone wanted to retire there and other realtor lies. Now Toronto/GTA is in an even worse over built situation and has taken the record away from Miami. A 50% crash in condos in Toronto/GTA will not surprise many. Many experts without a vested interest have warned of a housing crash in Canada. Realtors have a vested interest and will lie. Spread the word.


#85 GregW, Oakville on 01.01.12 at 4:06 pm

Hi Garth, Some may be interested.
Article: IEEE Spectrum’s prediction of the tech that will make news this year.
At Work: January 2012
Top Tech 2012

It includes, Plug-in Vehicles Proliferate.
Full battery-electric and hybrid-electric plug-in vehicles will start hitting the streets in significant numbers later this year.
“Commercial versions of that vehicle will be produced later this year alongside conventional RAV4s at Toyota’s assembly plant in Woodstock, Ont., Canada.”

#86 Not 1st on 01.01.12 at 4:46 pm

To all those GTA shills, new immigrants don’t have $600k to put into a sky box. They often have to pool resources to get through their first 5 or 10 yrs in Canada and that means a condo is not on their list.

More likely, they will buy a 4 bedroom house for more money, add in some renos and additional bedrooms, bring the parents over for baby sitting, put up a brother or a cousin for a while and plan to keep the kids at home until they are marriage ready which is around 30 yrs. A 2 BR condo doesn’t fit that plan so stop thinking immigration is going to keep those highrises coming.

#87 Phil on 01.01.12 at 4:53 pm

Romney gets the GOP nomination. People realize he’s a moderate and easily wins the presidency.

Obama suspended Habeus Corpus. The liberals are MAD! Read Huffpost! He has shown himself either morally weak, or not a true liberal. The base will not be excited to get out the vote. Wont even be close.

#88 InvestorsFriend (Shawn Allen) on 01.01.12 at 5:12 pm

BONDS, STOCKS or BOTH for 2012

We all know Bond yields are near record lows and have been for a while. Depite that, bonds have turned out to be good investments.

What would Warren Buffett say about investing in bonds at low yields?

Well here is what he said in his 1984 letter:

Buffett said:

“Our approach to bond investment – treating it as an unusual sort of “business” with special advantages and disadvantages – may strike you as a bit quirky. However, we believe that many staggering errors by investors could have been avoided if they had viewed bond investment with a businessman’s perspective. For example, in 1946, 20-year AAA tax-exempt bonds traded at slightly below a 1% yield. In effect, the buyer of those bonds at that time bought a “business” that earned about 1% on “book value” (and that, moreover, could never earn a dime more than 1% on book), and paid 100 cents on the dollar for that abominable business.”

“If an investor had been business-minded enough to think in those terms – and that was the precise reality of the bargain struck – he would have laughed at the proposition and walked away. For, at the same time, businesses with excellent future prospects could have been bought at, or close to, book value while earning 10%, 12%, or 15% after tax on book. Probably no business in America changed hands in 1946 at book value that the buyer believed lacked the ability to earn more than 1% on book. But investors with bond-buying habits eagerly made economic commitments throughout the year on just that basis. Similar, although less extreme, conditions prevailed for the next two decades as bond investors happily signed up for twenty or thirty years on terms outrageously inadequate by business standards.


Okay, back to me. This is not 1946, but government bond yields are again near record lows.

Today it’s not as easy to buy stocks at book value. Instead, the S&P 500 trades around 2.0 times book. It has an ROE of 14%. The return on marklet value of the S&P 500 is just over 7% based on trailing earnings. Considering that two thirds of the earnings are retained and reinvested, it is not unrealistic to expect a 10% return from the S&P 500. But even an expected 7% WALLOPS expected government bond returns (based on bond yields)

What do you think Buffett would say about investing in long-term bonds today at near record low yields?

Beats me. But I’d say you still don’t understand bonds. — Garth

#89 Pr on 01.01.12 at 5:37 pm

…If the bubble continues, kiss 5% adios.- This is the number one of tree reasons we have a housing bubble, people with so lite money can buy real estate. And no risk for the bank (schl). The risk to the taxes payers. Second reason interest rate so low for so long with warning from the leader that is going up soon, it never happen. This is a bad scenario for the Canadian people who need to buy a house in this * casino *

#90 InvestorsFriend (Shawn Allen) on 01.01.12 at 5:40 pm


I asked at post 89

What do you think Buffett would say about investing in long-term bonds today at near record low yields?

Garth responded:

Beats me. But I’d say you still don’t understand bonds. — Garth

Actually I meant to ask the readership in general.

I think it’s pretty clear from his words what Buffett would say about investing in long term government bonds today. (And probably about corporate bonds as well for the most part)

For another hint of what Buffett thinks of long term government bonds, we can take a look at Berkshire’s latest fiancials.

You will see at page 17: Investments in U.S treasury fixed maturity investments (including U.S. agencies) $2 billion

Corporate bonds $13 billion

Equities $68 billion

(And this does not count all the companies owned outright. The total assets of Berkshire are $385 billion.)

So… I think it’s not too hard to say what Buffett thinks about investing in bonds today.

But then he is not a day-trader. And really, what does he know anyhow?

He knows it’s not 1984. — Garth

#91 Devil's Advocate on 01.01.12 at 5:41 pm

Nice balanced portfolio of ten predictions Garth. No doubt you will win some and loose some, although I doubt there will be such a departure from boring, one way or the other, over the course of the year that you run too much risk of being proved too far wrong with such a balanced portfolio of predictions neither foretelling of the social catastrophe the pups and poodles await in baited breath or any significant good fortune for that matter.

But you are certainly correct on one point Garth and that is that “There’s always been a premium to be a Left Coaster”. Always has been and always will be. And that my friend is one thing I am most confident in taking to the Bank.

Call us ‘smug’ as most certainly we are and think we have good reason to be. You see we live here because we can and not because we have to while the rest of the country aspires to do the same. And that my friend is ‘demand’ which in the face of limited supply results in higher prices. The ONLY way we are going to crater is if your side of the country does first. We will watch for that signal, as so often is case, the East will send long before the ripple arrives here.

Oh and “ugly houses amid beautiful scenery”? Aren’t we exhibiting just a wee bit of lust for house porn there Garth? Brick bunkers are so Big Smoke. I’d take this scenery and lifestyle over that any day even if I had to live in a cardboard box on the corner of Granville and Main.

#92 Uh Oh Canada on 01.01.12 at 5:48 pm

2012 can be called the year of the renter and the year of the vulture!

#93 InvestorsFriend (Shawn Allen) on 01.01.12 at 5:55 pm


He knows it’s not 1984. — Garth

Of course it’s not. It’s 1946, silly. (Bonds at record low yields, Buffett wrote about 1946 in 1984)

#94 pjwlk on 01.01.12 at 6:06 pm

Happy New Year everyone!

I spoke with friends from the Bowmanville area last night. They’re telling me that homes in their area in the 600k range are still regularly selling within one week.

Did they tell you everyone also gets a pony? — Garth

#95 Post Haste on 01.01.12 at 6:11 pm

IMHO, I believe Garth is being way to conservative in his 2012 prediction. With record debt levels that has put a financial squeeze on average families – there will be no recovery until the debt clock is turned back by 20 years. When people actual save 10-15% of their wages, buy things with cash and stop going through life with blinders…then we may just be in a recovery mode worth investing into.

There is only one way Obama will win, and to be accused of being racist I will leave that thought alone…but I am sure most know where I am going with that. Sadly we vote on “who”they are, and not “what”they can do…4 more years of tepid growth.

Canadians for the most part buy homes as a long term investment, those who speak of boomers selling in droves are just chirping – in my old hood in north Etobicoke, the vast majority of 70-80 year olds still have their homes since the 50’s…there was never any mass selling when they hit 65.

Europe is not a contained environment, and China will be the one to rock the world to a depth never imagined. When China implodes on it’s own success, it will be the needed push to destablize the Canadian housing market and those that are resource rich (aka Australia, Brazil…).

I appreciate all what Garth has done this past year, but at this moment, the world has issues it needs to deal with first. And why do some believe that what happen yesterday should repeat tomorrow – we live in a ever revolving system and no where in history have we faced such dire developments that have so far just been swept under the rug.

#96 Alan on 01.01.12 at 6:13 pm

Here’s the latest:


#97 TurnerNation on 01.01.12 at 6:17 pm

I think we could make a bet with DA: if Kelwona does not rebound by end of this year he will make a video of himself singing AC/DC’s TNT in his car (if he’s not already done so) :-p

#98 Herb on 01.01.12 at 6:24 pm

#80 Beach Girl,

easy there, Woman! If you’re going to get all domestimacated, this blog will lose a good part of its spice. Next thing, Smoking Man will swear off booze and Westernmann will develop social tendencies. Then we would be worshipping mammon without any redeeming merit.

#99 Mister Obvious on 01.01.12 at 6:27 pm

#92 Devil’s Advocate

“I’d take this scenery and lifestyle over that any day even if I had to live in a cardboard box on the corner of Granville and Main.”

Now I know you are from the twilight zone. In the Vancouver I live in, Granville and Main do not intersect.

#100 Stinky the Fish on 01.01.12 at 7:01 pm

Your “Ten Things that will happen in 2012” looks a lot like my “wishlist”

#101 shane on 01.01.12 at 7:12 pm

Garth, Again i belive if the big F changes it to 25 years, it will fuel the markets again because people will want to jump in before it changes? and also people will want to buy before he gets rid of the 5% down.


#102 Blacksheep on 01.01.12 at 7:22 pm


Good job, on the 2012 predictions.

Happy new year all!

“Obama will win.”

An Obama or Romney or anyone else’s victory is, unfortunately, completely irrelevant.

We saw a sample of this in 2008, when the Dem’s
swept the White House, House and Senate, giving
Biden the power to end the filibuster.

He/they did not.

Instead, all we heard was how the evil Republican
obstructionists, blocked the positive change, Obama
had promised.

So…the resource wars continue to escalate, as the masses struggle to support the extended Bush tax breaks.

Like Roger said:

“Meet the new boss, Same as the old boss”

If the above sounds like crap, stop reading now.
If you want more insight on this issue, see below.


take care,

#103 Mister Obvious on 01.01.12 at 7:28 pm

It was going so well for a while.

Vancouver had a bubble that the denizens of Toronto could only dream about. The scope of concrete box construction was biblical. We could boast a price to income ratio well into the double digits. And don’t forget the ponderous debacle of the Olympic Village (and the great non-event upon which it was predicated). Those were undisputable facts we could lord over the smug GTA.

And what is the consensus at the birth of 2012? Just that the Toronto condo market will imminently cave in with a giant sucking sound that will be audible in Victoria. Toronto indeed! Vancouverites don’t like to be beaten at their own game. Easterners should expect swift retaliation.

#104 Freedom 85 on 01.01.12 at 7:34 pm

2012 predictions…..

Precious metals – up into February, then down into August then up into year end.. best buying opportunities = now and in May/June as gold tests 1325 – make sure you back up the truck as it will be your last chance on the road to $4000 gold.

Real Estate – slow drip down as inflation risks begin to take hold after a first half year deflation scare, then a liquidity driven last half year to get Obama reelected. Any interest rate hike (doubtful) less than 1% is essentially meaningless other than perception management, so basically this year, it will remain irrelevant…but house prices will drip, drip drip down as demand continues flat……

Stocks – begin to price in a recovery which will amount to a gain at the same rate of inflation. The liquidity driven (QE3, etc. the name will be changed to allow the QE to be ongoing with no fixed amount this time)recovery goes to late 2015/2016. this will be the boomers last chance to cash out before the sh*t hits the fan and real inflation enters the global system.

Geopolitical – sabres rattle very loudly and threateningly sometime this year but the US/Israeli – Iran war will be averted on a grand scale. NO WW III for all you doomers just yet, but that will come in time.

Buy farmland….for a rainy day/time and hold for the next decade.

Learn about and find ways to preserve the purchasing power of your savings as it will be debased over the next few years to destroy the debtloads of sovereign governments.

I always pay off debt as fast as I can, it’s always the best thing to do, though as debasement of currencies worldwide lead to higher inflation rates, it may not be the best thing to do as long as you maintain solid employment or income sources.

Good Luck in 2012!

#105 Prem on 01.01.12 at 8:04 pm

Brampton will have biggest housing crash in GTA. Nothing is selling as houses sit on the market for months with no buyers. Many are maxed out and some have walked away and went back home. With many who are maxed out some are hoping to sell . The funny thing is they do not plan to go back home but sell and move to the warmer part of US where a home can be bought for 1/5 the price and no cold. The hardest part is get visa to work. Maybe new plan leave Canada?

#106 Westernman on 01.01.12 at 8:13 pm

Actually Westernman is quite a social easy-going fellow…the claws come out when dealing with delusional, liberal , do-gooder social engineers who want to go on fantasmagorical crusades with other peoples money.
Not that I mind that even so much – it’s when they want to pi$$ MY money down a rat hole while linking arms and hugging trees.
THAT’s when ol’ westernman’s fur get up… dig it?

#107 Devore on 01.01.12 at 8:33 pm



#108 Nostradamus Le Mad Vlad on 01.01.12 at 8:38 pm

#104 Blacksheep — Great and accurate post. Link is good too!
Adios to Year of the Rabbit, welcome (soon) to the Year of the Water Dragon (12 animals, each has five elements); US Stocks have flat year; Lotsa links, bit the most important charts of 2011 are #1; TPTB Scared? “The elites are scared because their entire world, their wealth, and power, relies on the perceived need to centralize all control with the elites, and OWES proved that this is no longer necessary while history proves such centralization carries a high price which the general population is no longer willing to pay.” wrh.com.
3:18 clip NDAA and SOPA; 14:12 clip An opposing POV vs. Garth’s; Rick Santorum Oh dear. Another neocon who has fried turds for a brain, and Iran “Dear Moron. Iran already allows inspectors in at their nuclear power plant and all its supporting facilities in full accord with the terms of the Nuclear Non-Proliferation Treaty.

“It is Israel that refuses all inspections and refuses to sign the nuclear non-proliferation treaty.” wrh.com; 2:32 clip Ron Paul receives standing O for saying he will bring the troops home. Obomba said the same thing, but is controlled by Soros, and Pic of flip-flopping Romney; Myth of al-Ky-eeda which the m$m keeps selling; Edible Mushrooms Cancer fighter? Obomba crowned King of USA, and Syria “Obama is already preparing for a military intervention in Syria.” wrh.com plus War in Persian Gulf; 2:32 clip Crackdown coming; CC Se the headline.

Gun Sales Up With a corrupt govt. like theirs (and ours), it is not surprising; Biofuels are destroying more than food crops; 6:35 clip “Start at 2 minutes 39 seconds. According to this report, the “charred evidence” from the crash of Flight 93 is stored and GUARDED inside this facility. Why is that necessary, unless the official story is yet another lie.” wrh.com. Flight 93.

#109 Herb on 01.01.12 at 8:42 pm

#108 Westernmann,

you keep on demonstrating something about you I just love, your fecund imagination. It takes real creativity to breathe life into the “delusional, liberal , do-gooder social engineers … on fantasmagorical crusades with other peoples money” that exist only as talking points in neandercon circles.

You almost had me believing, until I remembered that I had never met one – or even heard of one – until I got exposed to the fact-free wingnut blogosphere.

#110 Mike Rotch on 01.01.12 at 8:43 pm

95 pjwlk, re: Bowmanville.

Something didn’t add up about fast sales for big ticket real estate in Bowmanville.

I ran MLS with $500 to 700K as parameters – three hits.

Possible conclusion – there ain’t really enough $600K houses for it to matter much whether they’re selling quickly or not.

Maybe someone with better resources can figure out how quickly the ~$350s are selling.

#111 Devil's Advocate on 01.01.12 at 8:48 pm

#98TurnerNation on 01.01.12 at 6:17 pm
I think we could make a bet with DA: if Kelwona does not rebound by end of this year he will make a video of himself singing AC/DC’s TNT in his car (if he’s not already done so) :-p

Why ever would it rebound when it never really cratered to begin with. Again, read my words real slow; this – is – a – return – to – norm, not – a – departure – from – it. Unfortunately we do still have some reparatory work to do in consequence to those lofty heady times.

#100Mister Obvious on 01.01.12 at 6:27 pm
#92 Devil’s Advocate

“I’d take this scenery and lifestyle over that any day even if I had to live in a cardboard box on the corner of Granville and Main.”

Now I know you are from the twilight zone. In the Vancouver I live in, Granville and Main do not intersect.

You are correct. I meant to say East Hastings. I kinda expected someone to pursue such a trivial line of objection as that you took. So tell me, how exactly does that minor error diminish my contention?

#112 Devil's Advocate on 01.01.12 at 8:53 pm

Too many good times at Carlos and Bud’s damn near under the Granville Street Bridge. };-)

#113 Boomer on 01.01.12 at 9:15 pm

Anyone have a read on the Kitchener/Waterloo area? Fast, slow or stagnant? Thanks

#114 The Dividend Yield Investor on 01.01.12 at 9:16 pm

Want to know how far down Canadian real estate will fall? Just watch this video from Germany, that starts from the top of the mountain. What a ride!!!

The Dividend Yield Investor
Atlanta Georgia USA

The U.S. is 1/2 to 3/4 the way to the bottom!!


#115 Standard Deviation on 01.01.12 at 9:16 pm

Given that the majority of issues facing Canada are macro-economic, over which we and our political superhero’s have no impact, plus, Canadians have an untenable level of debt and the nations balance sheets are far from healthy; we are defenceless to whatever market shocks will occur in the short term.

I predict Que sera sera and as a result “don’t worry, be happy”. Knowledge is power and parochialism will hurt you going forward.

#116 Tony on 01.01.12 at 9:26 pm

Gold will drop to 1,200 dollars U.S. silver to 18 dollars U.S. January the 4th will mark the peak for both the TSX and DJIA for 2012. DJIA will fall between 33 and 40 percent for the year. The TSX will fall between 48 and 55 percent for the year 2012. The Canadian dollar will finish the year at 87 cents to the U.S. dollar for the year. Commodities will implode with palladium and copper registering the largest losses. U.S. real estate will fall 2 percent in 2012 and finally bottom in the fall of 2013 briefly spike then flatline for the rest of 2013. Brampton Ontario will have the largest price decrease of any city in Canada in 2012.

#117 Westernman on 01.01.12 at 9:33 pm

Herbie, Herbie, Herbie,
I don’t know if you have noticed but this country is just CHOCK Full of the freedom and prosperity destroying liberal-marxist vermin I regularly eviscerate in my posts…please remove the rose colored glasses, chump, and have a look around.

#118 Tony on 01.01.12 at 9:49 pm

Gold will drop to 1,200 dollars U.S. silver to 18 dollars U.S. January the 4th will mark the peak for both the TSX and DJIA for 2012. DJIA will fall between 33 and 40 percent for the year. The TSX will fall between 48 and 55 percent for the year 2012. Canadian bank stocks will fall 65 percent. The Canadian dollar will finish the year at 87 cents to the U.S. dollar for the year. Commodities will implode with palladium and copper registering the largest losses. U.S. real estate will fall 2 percent in 2012 and finally bottom in the fall of 2013 briefly spike then flatline for the rest of 2013. Brampton Ontario will have the largest price decrease of any city in Canada in 2012. Earthquake in California around the end of August 2012.

#119 Tony on 01.01.12 at 9:51 pm

Re: #74 Dazed & Confused on 01.01.12 at 2:17 pm

Silver 18 dollars U.S. at the end of 2012. Go short either palladium or copper for 2012. Platinum should be third worst.

#120 Alan on 01.01.12 at 9:58 pm

Devore #109 -thanks for that link. States Vancouver condo prices were up last month!

#121 Devore on 01.01.12 at 10:09 pm

#122 Alan

thanks for that link. States Vancouver condo prices were up last month!

After being basically flat for the last 4 years, any news is good news, eh?

#122 coastal on 01.01.12 at 10:29 pm

Good summation Garth. Dennis Gartman is about to go bullish gold he says. I noticed Garth likes gold to go up too. I’m not a gold nut but gold will go up, just not ballistic. Makes for a positive metals equities investment environment, just have to be very picky, juniors could be the place to be this year.

Once Italy gets their debt half ways contained then the markets will move but could take a couple of months. Merkel says she will not let the Euro tank so the printing presses will fire up soon, and with it gold and silver will follow upward.

#123 From kits on 01.01.12 at 10:40 pm

looking forward to 2012 new years eve and revisiting this post.

would be surprised to see tsx go higher by years end…go luck to everyone on their bets for the year

#124 From kits on 01.01.12 at 10:43 pm

@tony – I know someone willing to bet you 1 million gold won’t go to 1200 US…

Check out Peter grandich on the net :-)

#125 pjwlk on 01.01.12 at 10:44 pm

#112 Mike Rotch: “Possible conclusion – there ain’t really enough $600K houses for it to matter much whether they’re selling quickly or not.”

My buddy’s comment was strictly on what he observed with new “For Sale” signs popping up and subsequent sold stickers roughly a week later. The prices he mentioned I’m sure were a just guesstimate.

I thought that his comment suggested that buyers in that area haven’t tuned into any potential downside of the market as of yet. Otherwise I would think that the days on the market would be higher in all instances.

#126 truth hammer on 01.01.12 at 10:56 pm

#31…..yes………tell me how many people living in the crapholes of the world aren’t planning/hoping/wishing to escape? Have you even been to Somalia? You want to raise your kids under the El Shabab regime? Are U nutz or are you just another Liberal politically correct dinosaur that hasn’t cayght up with the reality of life on Earth?

#69 …..one in a ten thousand have done so and find themselves in deep doo doo at the border now that the files have been updated to the INS database. More info on this should help a lot of Canadians from falling into the Yankee trap in the future.

#127 TurnerNation on 01.01.12 at 11:19 pm

Alert: US 20 year+ Bond ETF is stuck at 2008 crash highs. Flight to quality persists:


#128 Onemorething on 01.01.12 at 11:31 pm

#18 Crash Callaway on 01.01.12 at 1:31 am

Here’s a tip for 2012…

You can get free pencils at IKEA

Yes and if you get enough can second as firewood!

#129 not asian on 01.01.12 at 11:48 pm

As of January 31, 2011 there were 28 listings that expired in Richmond, BC
As of February 28, 2011 there were 20 listings that expired in Richmond, BC.
As of March 31, 2011 there were 3 listings that expired in Richmond, BC.
As of December 31, 2011 there were 345 listings that expired in Richmond, BC alone.
That could mean something. just saying…

#130 Canada`s housing bubble and lower US wages on 01.01.12 at 11:52 pm

What uneducated realtors and other vested interests do not understand is Canada needs to correct 50% to compete with the US and that is what will happen. Why will this happen? Canadian workers CAN NOT compete with the wages of US workers and companies are threatening to move out of Canada to lower paying US. Since US housing is 50% cheaper US workers can earn less and still afford to live in a home while Canadians CAN NOT afford to lower their wages. Look at what is hapening and what will continue to happen to workers wages in Canada.

Caterpillar sets new pay terms for London workers


Chrysler CEO sounds warning on Canadian labour costs


If you think only union workers are going to take a hit think again as EVERYONE down the chain will suffer. Canada`s housing bubble is headed for a monster crash.

#131 nonplused on 01.01.12 at 11:53 pm

So basically 2011 only more so? Not sure about the Obama call but the rest seems plausible.

Nothing on Fukashima or Iran? I guess you only promised us 10 predictions, which is a lot already, but I bet these 2 are news worthy at some point in the year. So I’ll take the liberty of adding the following predictions:

After all of the information leaks out and several Russian and Japanese scientists make public statements regarding the severity of the incident, the international atomic agency declares Fukashima to have been the world’s worst ever industrial accident, even larger than Chernobyl. Three of the reactor cores are acknowledged to have partially or completely escaped the containment, and three of the spend fuel cooling pools are admitted to be failed and very difficult to work on. An international response is finally agreed upon. A public discussion about spent fuel disposal finally begins.

Meanwhile, one third of the way around the world…

Continued sanctions against Iran cause the Iranians to attempt a temporary closure of the Straights. This brings the US Navy into a military confrontation with Iran, briefly sending oil prices to $150/bbl. The Iranian Navy is quickly dispatched to the bottom of the sea, but not before inflicting serious damage on several US warships. The calls to bomb Iran back to the stone age rage loud in the US, but all out war is averted when China threatens to stop buying US treasuries if the conflict continues. However, the US uses the conflict as a good excuse to drop a couple well placed bunker busters on the Iranian nuclear project, killing several Russian scientists. A diplomatic crisis results. Iran also retaliates by launching a barrage of missiles at Israel’s nuclear plant. These fail to do any real damage, but they get close enough that a new war/terrorism strategy becomes common place: Attack civilian nuclear plants with conventional warheads and you don’t need nuclear warheads.

The worst case scenario (but unlikely) is that a lucky shot gets though the Patriot batteries and severs the control room from the plant while the plant is operating. A full scale meltdown ensues. Israel responds with a lethal nuclear response. Oil prices go to $200 as Saudi oil is largely inaccessible for at least a year. A world watches in aghast horror as the results of both the Israeli melt down and the Israeli nuclear strike on Iran are broadcast 24-7 on RT TV and Aljazeera. Even FOX is forced to do some sort of coverage as the world increasingly turns to the internet for news. In 2013 FOX declares bankruptcy.

#132 Arse on 01.02.12 at 12:03 am

Posssible price support for Gold is $1420. It depends how it retests that area.

#133 librarykaren on 01.02.12 at 12:05 am

Love the blog and look forward to another year on the inside of your head. Respectfully, I have just a few thoughts on your predictions.

-hopefully rates will rise, but as that should have happened last year, or before, I have some doubt…will it happen, and will it be enough to stop the debtocide?
-faith in America? Well, it’s an election year and there is a whole roster of loonies lined up for the GOP nomination. Keep the Imodium handy.
-ditto Europe, since the U.S. of A. is still holding the reins on the world economy…so, yeah, could be good for buying real estate there.
-markets anticipate, and create, and reflect, the emotions of the herd. And in this case (see GOP comments above), I think it’s going to be uncertainty, big time. No, I do not wear a tin hat.
-I look forward to the price of iPads falling…we spend too much time fighting over the one that we have.
-F will tighten RE regs when the guys at Re/Max say it’s okay.

Cheers, and, keep up the good work!

#134 Arse on 01.02.12 at 12:11 am

I am neutral on Silver at the moment.

#135 martin9999 on 01.02.12 at 12:14 am

its amazing how many peopl0 on this blogg claim to be pros in investing and speculating what the market is going to be. thus the majority of this blogg probably dont make more then 20 bucks per hour

#136 FTP - First Time Poster on 01.02.12 at 12:18 am

I have only two predictions for 2012:

1) Garth comes out with yet another book – it sells out the first run in 5 days;

2) Garth, despite having good intentions, finally realizes that this blog is much like public service – no matter what, people will always find fault with what you do and that based on the comments on this site from the past 4 years – that truly 90% of the general population are idiots. He then shuts down the blog and moves to Amazon with his bevvy of babes in tow.

#137 george on 01.02.12 at 12:35 am

Times are tough all over and many are losing their jobs or being asked to work for less. The economy is taking a hit from this alone. This new years many seemed to have stayed home as no one has money to go out. The malls were empty during christmas compared to other years. Was able to find parking and shop with easy at yorkdale and this was two days before christmas. While i do not carry any debt it seems Canadians are in deep debt as the numbers being reported in the newspapers seem to show. With inflation running wild for cost of living ( food and energy) you know the stuff the government feels we don’t need to live on thus not consider core inflation. Anyone buying in this market needs to have their head examined with all these increasing costs and threat of job loss or reduced pay with interest only to going up spell big storm clouds for canadian housing.

#138 Snowboid on 01.02.12 at 12:36 am

#128 truth hammer on 01.01.12 at 10:56 pm…

If there is really 9,999 people out of 10,000 that don’t know about the ‘substantial presence’ test and still spend 180 days a year in the US, then they deserve to be turned back at the border.

In our experience, 100% of the Canadians down here know and have completed the f8840 form. They also know about the capital gains holdback on sales, the implications on estates (if you have over $ 5 million in worldwide assets), the risks around doing anything considered work here, etc. etc. etc.

I can only surmise that Canadians that buy down here without knowing the applicable laws and rules are probably as clueless about buying real estate in Canada.

#139 OZY - 7/10 true on 01.02.12 at 1:28 am

Count on these to happen:
1.FALSE: The condo market will crumble.
-Will only moderate, not crash
2.FALSE:Vancouver will be so 2009.
-Will only moderate, not crash
3.TRUE: Mark Carey will actually do it.
4.TRUE: Volatile markets will reward.
5.TRUE: Europe will bore. Greece will choke.
6.TRUE: Obama will win. US real estate hits bottom.
7.FALSE: House prices will fall.
-Will only moderate, not crash
8.TRUE: In fact, all asset prices will fall.
9.FALSE: F will tighten.
-Neither CHMC rules or gov. spending, he will relax them actually
10.TRUE: Most people won’t get it.

#140 Jane on 01.02.12 at 1:31 am

@79 DA:
“To try to sell high and wait for the low to buy is nothing short of gambling.” It’s not gambling….I get to keep all my money, invested and making money.

“In the worst of cases, if you bought high and need to move when the market is low you will need to sell low but so too will you then be able to buy low. ” buy with what money? If you sell low and have to pay off a previous mortgage, there won’t be any left to buy with. Got friends in this situation. Best of luck to you.

#141 smartalox on 01.02.12 at 1:40 am

#77 Mike Rotch:

I ran some calculations, and it looks like the increase is closer to 20% – assuming a 1% increase in the mortgage rate, and change in AM from 35 years to 25 years.

Of course, the bank is free to have the value of the property re-assessed when negotiating the renewal of the mortgage. If house prices were to fall substantially (i.e. more than 20%) the bank may require an injection of equity (or other collateral) in order to guarantee the loan.

#142 Nostradamus Le Mad Vlad on 01.02.12 at 1:41 am

Massive Lawsuit Bond theft; Corporate Canada gets 2.86 bln. tax cut; China Someone has managed to equalize growth and inflation; UK’s debts (large); BPOE, Alan and Mikey the Realtor Six reasons why buying RE is throwing away money, but Robert Schiller has a cure; Outrageous Four predictions, right, wrong and half right-wrong; Fifteen frontier markets; John Mauldin “The world is running out of runway.”; Spain Depressed; Japan has a trade deficit and ‘quakes; Debt Collectors deserve the one-fingered salute.
Out of chaos, order (not gonna happen). Interesting that a number of Democrats are headed toward Ron Paul, Three Reasons why Obomba will win, 1:35 clip America is under martial law, ‘tho it’s never spoken of in the m$m, and 2:10 clip Mudslinging of R. Paul starts; Iran closed the Straits of Hormuz for five hours; David Cameron Harper clone? Underestimated The number of injured US soldiers in Iraq and Af’stan is underestimated; Sewage When the grid goes down after a major storm, sewage piles up esp. in the HoC; Nigeria Just in time to keep TPTB busy, Nigeria declares a state of emergency (calling NATO – US – UN); Tyranny Seems the roles have been reversed between the US and USSR, and Tyrants Beware.

Great Grandad’s Prophecies revisited for 2012; Iran bluffs out US Navy and m$m; The CFR’s new updated constitution and Police State; Bird Flu Resurgence or joke? Obloodyhell See the headline and know what type of a leader Americans have chosen; Pentagon created Arab Spring over a decade ago.

#143 The American on 01.02.12 at 1:45 am

At #23: Truth Hammer (As everyone should know, “Truth Hammer” is also BPOE, hence why you have not seen him posting in the past several days), you’re a paranoid little boy. Please take your ball and go home. All of which you wrote couldn’t be further from the truth… as usual. Goes to prove you should not speak about that of which you are completely and utterly clueless and ignorant. By the way, just how many flags can Canada hang off their Embassy in Washington DC? That’s right, more than any other embassy in all of DC, totaling no less than 42 Canadian flags, mind you. Kinda sad actually as it is the laughing joke of the entire city. Trying so hard to differentiate itself as showing the world what it ISN’T as opposed to what it IS. Most all other embassies hang no more than 3 flags representing their country. Very telling indeed. Also, how many Canadian maple leafs are shown across Canada on god damned McDonald’s signs? That’s right, every f*cking one of them. Please spare us all the speech about national pride and symbolism. You’ll get that rock thrown right back at you, not that wasting my stone would be worth it on such idiocy.

#144 The American on 01.02.12 at 1:56 am

At #128: Truth Hammer, AKA 39th BPOE, nobody is falling into a “Yankee trap” at the boarder as you put it. Only Canadians who are breaking the law by not being honest with the circumstances of their residency and/or income are being held accountable. You have a problem with this? That’s pretty unbelievable coming from someone who, as a Canadian, is perfectly happy paying 40%+ tax margins. That’s the difference how someone as ignorant as yourself would see it as opposed to law-abiding citizens of either country. You’re delusional.

#145 HouseBuster on 01.02.12 at 2:11 am

“Rising gold…”


#146 syd on 01.02.12 at 2:39 am


#147 syd on 01.02.12 at 3:01 am


For your next blog post. lots of juice – lol


#148 Alex Smith on 01.02.12 at 3:01 am

People have been predicting a Vancouver real estate crash every year. Sometime in the next decade prices may go down 10% and all those prophets will claim they were right!

Problem is, everyone who said the same thing last year, and the years before that, never announces their wrongitute.

Our of 64 condo units here, all owner-occupied, not one for sale in the last six months. You literally can’t buy in here. Instead real estate agents calling up saying they have buyers ready. Prices aren’t going down much on good units in good locations.

People all over the world want to live here. Most Canadians would come if they could afford it and find work.

Sorry, not gonna happen.

#149 R.I.P. Bill of Rights 1789-2011 on 01.02.12 at 3:25 am

Obama just signed the National Defense Authorization Act (NDAA), a law that grants the U.S. military the “legal” right to conduct secret kidnappings of U.S. citizens, followed by indefinite detention, interrogation, torture and even murder.


Don’t bet against America?

#150 futureexpatriate on 01.02.12 at 4:05 am

Of course Obama will be re-elected.

Thanks to Ron Paul.

Ah, sweet revenge for Ralph Nader giving the world eight years of Bush.

#151 Boomer on 01.02.12 at 4:44 am

11 things that will happen this year:
11. WWIII (USA starts the war with IRAN)

#152 Mel on 01.02.12 at 4:54 am

Okay, my turn to make predictions.

1. House prices will be lower by 12-15% by year end. Much lower in 2013.

2. Interest rates will be lowered by .50 by year end.

3. Oil will be around $ 85 , and lower again in 2013

4. Stock market will loose 25-30% of it’s value, and more in 2013.

5. There will be world recession that has started last fall in 2011.

#153 Daystar on 01.02.12 at 6:31 am

1) The Condo market will crumble:

Yeah, but to what degree. I can’t see it declining into double digits and I see housing overall declining a mere 2 to 4% this year. High single digits and that would define a crumbly condo market I would think.

2) Vancouver will be so 2009.


3) Mark will actually do it!

A half a point? I agree, thats not doing much but it sets a tone.

4) Volatile markets will reward.

I agree again with what you’ve said here and would like to add that there could be a serious selloff by June. I’m looking for the markets to run up from the middle of the month on until March and then sell off with a severe selloff some time in June. The oversold market recovers in through the rest of the year. I agree that oil stays strong this year (while natural gas stays below 4 bucks) but I think news coming out of Europe causes the U.S. dollar to strengthen and gold to wobble around the $1200 to 1500 mark for the year and exit around $1300. Sorry, not bullish at all on gold. Why? Euro woes, U.S. economy shows true signs of life especially towards the end of the year.

5) Europe will bore, Greece will choke.

Hmm… not so boring from what I can tell. Spain just revised their public debt to GDP deficit for this year to 8%. With unemployment hovering around 21.5% still, it sets the undertones of southern Europe for this year and next. The U.S. economy comes around this year, has an off year in 2013 and comes around in 2014 and it may well be enough to lift Europe (including southern Europe) out of its malaise but for the next couple years, Spain is an ugly reminder of just how bad busted real estate bubbles can get.

Italy is a problem that won’t go away. Is it too big to fail? I think so. I’m not so sure that the Euro can be saved beyond 2013. Some drama will come in May and June as fresh public debt to GDP numbers come out and the Euro’s fate is sealed in 2013 as Europe comes to realize that Italy can’t be saved. Look for Italy to dominate the press this year. Spain and Portugal, not so much due to their lower public debt to GDP ratios but Italy will dominate the press. France will be nervous and they should be. They could be next (within 5 years).

6) Obama will win. U.S. real estate hits bottom.

Obama wins…. it will be closer than people think, but I don’t think Obama wins Garth. I think he’s lost the support of Democrats who expected more. Someone comes from the Republican camp that turns it around for the U.S. and its evident by 2014. Who it is, I don’t know. Its not coming to me but I can’t see Obama winning the next election and his replacement is a true winner. Can’t disagree in the slightest with housing hitting bottom this year. I thought it would be last year, until I became educated on ARM’s (and some of us on this blog clearly don’t understand historical ARM impacts to housing or they would know that this year, housing hits bottom and begins its rebound unofficially in…. Q4.

07) House prices will fall.

Absolutely. Only question is, by how much. What I see is a federal government doing what it can to cool a housing bubble in orderly fashion. The best they can hope for is a 2 to 5% decline in housing. I think the feds get what they are looking for. I doubt that they want any more than this for a decline as the feds seriously take their dictation from Baystreet from what I can tell (which, in my humblest opinion is not a great thing for Canada. Banks are out for what is best for themselves, so much so, they don’t stop and think about their own long term future, blinded by their own greed for short term gain. The feds need to be looking out for what is best for Canada and they haven’t been. The Harper government has put themselves first this whole time and its quite evident when one looks at how they’ve handled housing among other things). Its why I see no drama this year with interest rates (but a half point increase like you say, is not out of the question and seriously, does Mark need to raise rates to attract buyers of our public debt? Not as long as treasuries stay artificially low in the U.S., he doesn’t regardless of how badly the feds and provinces like to borrow and spend) and no drama with CMHC reg changes.

8) In fact, all asset prices fall.

Agreed. Imports cost more (currency related) and Assets fall. Assets are overvalued and at the mercy of a stagnant economy, while I think the loonie will fall even with higher oil prices due to a stronger U.S. dollar.

9) F will tighten.

Can’t see CMHC regs being changed at all. The market is in decline and as you say, the condo market and BC’s real estate market will lead the declines and its partly engineered by tightened regs as well as changes to immigration with already high valuations doing the rest. I tend to think that there will be no more changes going forward and that the bubble is over at least in terms of national averages so tightened regs would actually increase the decline of housing valuations too much.

I can’t see F doing anything with CMHC this year other than get nervous about what rising interest rates will do to housing in 2013 or 2014, 2014 in particular. Oh, he should do something in terms of increasing down payments now, but he won’t. He does whats best for Harper/Bay street in that order. Canada last. Voters in this nation have much to learn and it comes at a price.

10) Most people won’t get it.

I agree with your conclusions here except for how Europe effects things. And the markets… have you seen what BNN is running for top stories?


Its media like this that leads to 10% retreats in a week and it will likely happen in the first week of trade this year but investors will eye new valuations, consider the market oversold and buy in…. from mid January on through March and the market becomes overbought and the debt scare comes back… from Europe, where else? And on that note, will the markets stay down from what I think will be a June funk? Nope, oversold conditions combine with surprise, surprise, good news coming out of the U.S.A. for once and the markets ride the tide through the rest of the year but is it built on a weaker dollar? Ironically no… so what does that say about commodities? Commodities will fall in the second quarter (as the dollar strengthens) but strengthen again in Q3 and Q4 due more than anything, to demand. I do see some weakness in the U.S. dollar by the end of the year but its short lived and why? Italy goes broke in 2013 but heck, I’m just a guy with an opinion and thats next year :).

Enjoy your blog as always Garth (however oversexed, hormonal, raunchy, crazed, gold buggery, ego clashed and estate surreal as it can be but its entertaining!). Have a good one in 2012 and I wish you and fellow blog dogs the best of successes this year ;)

#154 Daystar on 01.02.12 at 6:48 am

#133nonplused on 01.01.12 at 11:53 pm

An entertaining read. I do expect some kind of dust up this year concerning Iran and North Korea could get interesting as well. Food riots could continue to destablize poorer nations. It could be an interesting year in terms of international “incidents” with the U.S. and China being the big players.

#155 JR on 01.02.12 at 7:58 am

“#31…..yes………tell me how many people living in the crapholes of the world aren’t planning/hoping/wishing to escape? Have you even been to Somalia? You want to raise your kids under the El Shabab regime? Are U nutz or are you just another Liberal politically correct dinosaur that hasn’t cayght up with the reality of life on Earth?”

#128 No doubt there are places i wouldn’t want to live in this world.. Not to make it personal but i’ve been to some of the places you originally listed and they are in some ways just as good as Canada. I get your point though

#156 [email protected] on 01.02.12 at 9:09 am

Act quickly … Act decisively … Put your money in a sock


#157 R2D2 on 01.02.12 at 9:26 am

“Not gonna happen … BUT IT MIGHT!”


#158 House on 01.02.12 at 9:38 am

Nice superficial disquisition.

#159 The American on 01.02.12 at 10:10 am

At #132: Canada’s Housing Bubble and Lower US Wages… So, what you’re saying is that U.S.-based/headquartered and founded companies will return many operations back to, eh hem, the U.S. Wow, what a novel concept. You are absolutely correct in your assessment of the situation. I’m no sure how much the Canadian correction would need to be overall to guarantee that some of these companies stay, but there are several forces happening on THIS side of the boarder, regardless of Canada, that is propelling the “return to home” behavior. Politics, higher taxation for “bad behavior” of operating/manufacturing outside of the U.S., lower costs of living, oh yes, and POLITICS.

#160 miketheengineer on 01.02.12 at 10:16 am

Inflation UP, especially in Food.

Employment DOWN, especially the hard hit manufacturing.

RE trend…PRICES DOWN…see point #1 and #2.

RE has become unaffordable to most…especially SF homes of the detached type. Any interest rate hike is going to kill a lot of people.

It will come to Location, Location, Location. Best locations will suffer the least.

Condos are a big question. I personally know guys who got “killed” in the last “Condo Boom”. A lot will depend on the LOCATION of the condo, and who is buying them and why. I see the condo thing slowing this year and prices generally down.

15% correction for 2012, across the board does not seem unreasonable.

#161 GTA Girl on 01.02.12 at 10:39 am

Base economic principles are thrown out the window in some of the commenters postings.

“Massive Immigration!” – which is untrue. And even if it were jobs would be needed. The term “massive” would be on par with Dawson city gold rush, or today’s oil sands jobs. Immigration totals haven’t changed much.

“Condos will gain more / bubble won’t burst/ there’s no bubble”

A condo shouldn’t be the same price or more than a house in the same area. A new build condo shouldn’t be 3x’s more than a re-sale unit, in the same area. Hotel room sized condos do not make any sense in a city the size of Toronto, with it’s population. And especially not being sold for the exact amount as a single family home in a neighboring municipality. Clearly, the new condo market has not been exposed to the open consumer market, and is being used as pure ponzi-esque investing.

Resources will save Canada? You’d think we were the only ones with resources according to many on this blog. They may falter if economic growth stalls world wide.

It all comes down to jobs. And things do not look good.

Your Condo will not save you.

#162 pbrasseur on 01.02.12 at 10:39 am

As indicated by the stock markets whose job it is to anticipate thing the Canadian and US economies are going in different directions at this point, their’s is going up, ours is heading for trouble, maybe a lot of troubles.

This is the bid 2012 story.

We have a severe productivity problem in this country, for years it has been hidden by easy money, a commododity boom and government spending. A new cycle will soon begin, one where reality will be more apparent.

Hang on to your hats fellow Canadians….

#163 GFgroupie on 01.02.12 at 10:50 am

Stagflation – Most people don’t get it.

#164 Condo Sucker on 01.02.12 at 11:13 am

A couple of commentors here predicting a 30-50% stock market crash for 2012…get real people!

The stockpocalypse of 2011 drove the TSX down 11% which is a significant number but a far, far cry from 30+%.

Then again can’t say I’m surprised with such gross exagerations given the number of gold nuts on this blog.

#165 down and out on 01.02.12 at 11:22 am

What if interst rates do not rise in a slow controlled order but jump up quickly like in the eighties because people rush to buy trying to avoid the next increase setting off inflation . Just a nightmare I keep seeing after being caught with a morgage earlier in life. Kind of like a child of the depression always warning of the next one because governments are really powerless to control the masses.

#166 City Slicker on 01.02.12 at 11:35 am

“Rising gold and oil will grease the TSX.”

Good for you Garth, nice to see you’ll be a gold bug in 2012. You’ve joined the right side, and will be rewarded like the rest of us.
All that’s left to see is if the FEMA camps will have anything to do with Obama’s enforcement Marshall Law.

I’m not a gold bug, and this statement merely reflects the change in commodity prices that US economic growth will engender. A balanced portfolio should not exceed a 5% metals position. As for FEMA camps I am amused you are so naive. — Garth

#167 Beach Girl on 01.02.12 at 11:38 am

#99 Herb on 01.01.12 at 6:24 pm

#80 Beach Girl,

easy there, Woman! If you’re going to get all domestimacated, this blog will lose a good part of its spice. Next thing, Smoking Man will swear off booze and Westernmann will develop social tendencies. Then we would be worshipping mammon without any redeeming merit.


Ah, you might be right. The swain mentioned I needed a man. In regards to shoveling and lawn maintenance. I told him I have a bicycle. I was not put on this earth to entertain a man. Vice versa. If you need me, I don’t want you.

But, this would probably not work.

I had a New Years Day dinner party. Invited a huge proud First Nations man, an East Indian Gas Bar Owner, two beautiful 30 year single moms, and a huge steroid White Supremist. Also Miss Daisy was in attendance with 2 young children.

The conversation was intense. We all had fun. The Indian guy thought the First Nation man said he was a First Haitian. LOL. The Indian man says people call him a Sand Nigger and he doesn’t like that. LOL. The White Crazy Man is quite intelligent, the tattoos are quite alarming as he had a wife beater shirt on.

My new intended showed up with an expensive bottle of wine. Major error in judgement, they grabbed that and it was gone in the blink of an eye. I keep inexpensive crap on hand.

He reviewed the crowd with shock, revulsion and a bit of horror.

He asked me, why do you entertain these people. I said, aren’t you having fun.

Don’t think I’m getting that TV. Don’t care.

Life is much to short to worry about TV programming.

But we are going out for chicken wings on Wednesday, so far.

#137 martin9999 on 01.02.12 at 12:14 am

its amazing how many peopl0 on this blogg claim to be pros in investing and speculating what the market is going to be. thus the majority of this blogg probably dont make more then 20 bucks per hour


That is funny.

#168 Pete in Barrie on 01.02.12 at 11:38 am

#132 – I was also intriued by the news story out of London, ON about the lockdown of the Caterpillar plant. The company is demanding that the employees take a 50% pay cut; obviously the unions are balking. Is this a sign of things to come – reduced wages? How does this influence the housing market in Canada?

It is a 50% cut in benefits, as I understand it, not pay. — Garth

#169 Mike Rotch on 01.02.12 at 11:48 am

143 Smartalox:

I did not allow for a 1% increase in mortgage rate…..I signed a 5y closed/fixed back ca. 2007 and the best rate I could get was a fair bit higher than I figure I could get today.

Variables are still lower too, no?

Anyway, that’s all academic, at a given rate, it’s still probably a pretty large jump in monthly payment. Especially if you’re already house poor and not actually managing to pay down total debt.

#170 jess on 01.02.12 at 11:50 am

.#34 T.O. Bubble Boy on

why servicers foreclosure rather than modify…
Diane e thompson national consumer law center.

…servicers often deny homeowners principal and interest rate reductions because as servicers they find it profitable to offer repayment plans or forbearance agreements that do little to reduce homeowners’ debt burdens….

The NCLC report also found that the lack of third-party oversight allows servicers to pursue foreclosure instead of effective loan modifications that would benefit homeowners as well as investors. While credit rating agencies and bond insurers do monitor servicers, their oversight too often encourages servicers to foreclose.
The NCLC report includes a detailed examination of loans in foreclosure from 1995-2009 and how components of servicer compensation affected the likelihood and speed of foreclosure. It also looks at the rise of the servicer industry as a by-product of securitization; and the limited, but only effective oversight of servicers by credit rating agencies and bond insurers.”

Diane E. Thompson*

#171 johnnny on 01.02.12 at 12:20 pm

To those who think it is wonderful to have a desperate landlord with his/her financial back to the wall,be careful what you wish for.
Who do you think your “new”neighbours are going to be?
Do you think, just maybe , the criteria to rent from a “motivated” landlord will not be as demanding as when the landlord could properly check the renters background,credit rating,etc…?
Will you be entertained with night time hallway drama,or the coming and goings of people from “that” apartment down the hall that always seems to have a funky smell coming from it.
Will you be serenaded with throbbing “tunes”to lull you to sleep?
Will there be no need for a building fob or entry pass because all the polite, responsible people are “outside” the building.

How is that any different than owning a condo when you have no control over who buys above or beside you? What a foolish comment. — Garth

#172 John Prine on 01.02.12 at 12:36 pm

#132 Canada’s Housing Bubble and lower US Wages.

Thank you for pointing out that when union wages take a hit so does EVERYBODY else. A lot of contributors here want all unions to take big pay hits, especially government ones. They don’t realize that when union workers make $18.00 an hour that the same job, non-union makes $15.00 . It’s all tied together.

BC medical is up 6% today, CPP EI is up $320 per year, BC Hydro is up 3.9? and ICBC is up $69 per year. If the middle class is going to exist we need to keep our wages up or being a third world country will come quicker than we think.

#173 BPOE on 01.02.12 at 12:43 pm

The predictions are are just an opinion nothing more. They are wishful thinking and compiled by a mind conditioned by external forces.

Do the exact opposite of what The American posts and you will be rewarded. Just like his Country wrong on every front. Look over his posts the last 12 months, dead wrong on every post. Vancouver owners made money on their homes and that’s a FACT
Never fear The American can rant but will not stop gold will not stop Vancouver and continues to blow billions on his drug war influencing his Canadian Conservative buddies but will ultimately lose and in fact already has. Check out this article from Macleans you will NEVER see American post such bullish sentiments on their Country

#174 kim on 01.02.12 at 12:45 pm

great post #132

Workers wages and benefits are being attacked all over Ontario. We can not compete with US workers since cost of living for almost every thing is higher in Canada . Plus the big one is RE in Canada which is double the historical average. I alway thought the US had slightly higher RE average. With US workers able to work for much less and still be able to afford to live while Canadians can not afford to work for less. RE in Canada would have to correct 50%. Canadians are even 153% in debt. Can any realtors explain these facts away?

Realtors did not inflate Canadian house prices. Canadians did that. They will learn the consequences. — Garth

#175 Where's The Money Guido??? on 01.02.12 at 1:17 pm

Re: #174 John Prine on 01.02.12 at 12:36 pm

BC Hydro is up 3.9? That is not correct, the rate per gigajoule may be up that much, but the Lieberals have sneakily lowered the first tier amount, so that you start paying the second tier rate MUCH sooner, which in my calculation, is over 10% (my second tier rate kicks in at 1287 Kilowatt Hours, when it used to kick in at 1420 KwH). Along with an increase of the Carbon Tax on our Terasen Gas bills of 25%, yes 25%!!!! Creeping taxes at way over their inflation rate on gov’t controlled monopolies to forever thieve money from you to pay for their humongous pensions and pay perks, and of course the Owelympics.
For people on fixed incomes, it’s a one way street to the poor house and homelessness. Merry Xmas from your BC Lieberals, as they gorge themselves on your nickel !!!

#176 JRoss on 01.02.12 at 1:26 pm

Alex Smith,

“Sometime in the next decade prices may go down 10% ….. sorry not gonna happen”

You picked a bad day to be so smug.

SFH average in Vancouver dropped 6% for the month of December. It is now 13% off the May peak and approaching neg YOY.

Attached fell almost 10 percent in the month and are back a full two years.


But don’t worry, it is probably just noise.

#177 Herb on 01.02.12 at 1:28 pm

Realtors did not inflate Canadian house prices. Canadians did that. They will learn the consequences. — Garth

Do you think that Canadians would have inflated house prices if realtors had told the truth? The victims certainly will learn the consequences, while the perpetrators in the RE and associated industries will sit on the profits.

#178 Beach Girl on 01.02.12 at 1:34 pm

#95 pjwlk on 01.01.12 at 6:06 pm

Happy New Year everyone!

I spoke with friends from the Bowmanville area last night. They’re telling me that homes in their area in the 600k range are still regularly selling within one week.

Did they tell you everyone also gets a pony? — Garth


I doubt anyone in Bomanville is worth $600,000. That make the SHAW (Oshawa) (Oshwegians) look like a raging metropolis. LOL. The only thing there is the Bomanville Creek and a shopping plaza. So funny.

#179 Form Man on 01.02.12 at 1:41 pm

#40 Devil’s Advocate

You seem very confused my friend. On one hand you tout the attractiveness of the Okanagan ( home buyers are lined up to move into Kelowna ), but then you go on to say that once they move here, they find it is a brutish, nasty place, causing realtors to be just as busy moving them back out…..explaining the moribund local real estate market I suppose…… Apparently Kelowna is the last refuge of the alpha male ( not where one would anticipate finding little old ladies on scooters ).

You express surprise that I am still here. I enjoy living here, and tying my sailboat up in front of my lakeshore home, but that doesn’t mean I cannot see the economic problems that the Okanagan is saddled with ( and trust me, Kelowna is not the last holdout of street-mean business people who happily forgo profits just to survive ; more like the last holdout of evangelical con men and over-stressed realtors ). As I wrote here previously, the real profits are to be made elsewhere these days.
Prices will continue to slide in the Okanagan for the entire year of 2012 ( just like they have been sliding since 2008 ). You will continue spouting deluded nonsense, until the overwhelming weight of facts renders you silent. Your silly attempts at justifying yourself ( tell us, do folks want to move here, or move away ? ) will continue to provide immense amusement to the readers of this blog

#180 Victor on 01.02.12 at 1:46 pm

#170 Pete in Barrie on 01.02.12 at 11:38 am

#132 – I was also intriued by the news story out of London, ON about the lockdown of the Caterpillar plant. The company is demanding that the employees take a 50% pay cut; obviously the unions are balking. Is this a sign of things to come – reduced wages? How does this influence the housing market in Canada?

It is a 50% cut in benefits, as I understand it, not pay. — Garth


LONDON, ONT. — Locomotive maker Electro-Motive began the new year by locking out CAW members at its plant in London, Ont.

Contract talks collapsed last week after the company issued a final offer that would cut the wages of union members in half, eliminate pensions and gut other benefits.

The previous contract for the more than 420 CAW members expired at the start of 2012, and the union set up picket lines at the plant Sunday evening.


#181 Daystar on 01.02.12 at 1:47 pm

#169Beach Girl on 01.02.12 at 11:38 am


#182 Alan on 01.02.12 at 1:48 pm

Flaherty will not screw with the real estate market in Canada. He made a statement in the Fall that the market was balanced and he may soon find out in some areas that it is a buyers market. So, with this in mind, there is no reason for F to tip the cart. Doing so could do more harm than good. In fact, a healthy real estate environment is exactly what the country needs in 2012.

There is nothing healthy about houses people cannot afford. — Garth

#183 Form Man on 01.02.12 at 1:50 pm

#119 westernman

Well it seems the Christmas spirit has once again eluded you. Your pathetic rantings are beginning to sound like a broken record. No facts to back up any of your vitriol, no examples provided of jurisdictions where your philosophy has been anything but an abject failure. You continue to show us your tiny, bigotted mind. You seem very frightened of the world westernman. I predict you will be even less relevant during 2012

#184 TurnerNation on 01.02.12 at 1:55 pm

On MLS.CA search for Kelowna BC from price range 275000 to 475000 – returns 400 listings!!

Just who will move to this highway whistle-stop/strip mall of a town, and what jobs will they find?

This Ground Zero update was brought to you by: TNT – It’s dynamite. TNT

#185 TurnerNation on 01.02.12 at 1:59 pm

#132Canada`s housing bubble and lower US wages on 01.01.12 at 11:52 pm

Rio tino mining locked out 800 workers in QC. Let’s bet these jobs will be moved to a 2nd World “Free trade” country.


MONTREAL, Jan. 2 (UPI) — International mining conglomerate Rio Tinto Alcan said it locked out 800 employees at a Quebec aluminum smelter after three months of contract talks failed.

In a release from Montreal, the company said it was beginning an “orderly shutdown” of about one-third of its production at its 438,000 ton Alma smelter in Saguenay-Lac-Saint-Jean, Quebec.

#186 TurnerNation on 01.02.12 at 2:03 pm

Pensions, like the Geneva Convention, are soo0 1900s. We are in a new neo con era now, taking us back to the dark ages. Dogma, religion and might rule. You are with us or against us.

Child labour is alive and well overseas.

#187 tkid on 01.02.12 at 2:14 pm

#174, the issue is not was not of wages but of pensions, specifically of pension promises made when the pension funds cannot pay out what has been promised. But now, significant wage reductions are being demanded and are being given of unions in the US: http://www.nytimes.com/2011/12/30/business/us-manufacturing-gains-jobs-as-wages-retreat.html?_r=1&pagewanted=all.

How long will it take before the Ontarioan unions face the same cut-the-wages demands: http://business.financialpost.com/2012/01/02/electro-motive-locks-out-workers-in-london/:

Electro-Motive, owned by Caterpillar Inc., said earlier on Sunday that it was unilaterally imposing changes in wage and benefit terms for its workers after talks broke down, and that workers were encouraged to show up for work.

#188 Basil Fawlty on 01.02.12 at 2:46 pm

Happy New Year!
My prediction is for massive money printing in 2012. Without it the world banking system will collapse. Of course, I was wrong one other time.
In regards to gold and the money bunnies, maintain the position of head buried in the sand.

I applaud your consistency. You are still wrong. — Garth

#189 Blobby on 01.02.12 at 2:51 pm

Just heard an advert for a new set of condos on the radio (in langley, bc). They’re offering first time buyers their first year mortgage for free, and other buyers a free car.

At this point, realising the desperation of the sales team, i realised just how doomed the condo market is…

#190 Abitibi Doug on 01.02.12 at 3:11 pm

Garth said: Financial markets will anticipate this. Your buddies at work won’t.
That’s consistent with my observations. One guy I worked with thought I was nuts investing in equities, saying they would tank in the year to come (understand it’s the perception of such an idea and the resultant fear that helps to hold markets down), and another guy thought gold was the way to go.
Meanwhile, my hope is that the volatility will continue, to create opportunities to get stocks or funds that pay good dividends, at fire sale prices, on the market dips. That would be a good way to start the new year off!

#191 BC Seller on 01.02.12 at 3:31 pm

Is BPOE an idiot, or does he really believe what he is saying? Can someone please clarify for me? I am agreeing with THe American on this one. Truth Hammer is the same poster and poser as BPOE. Good catch The American!!!

#192 foolsrushin on 01.02.12 at 4:00 pm

1. US dollar continues to rise in the short term and markets fall
2. When the pain gets bad enough QE3 is announced and the US Dollar tops out.
3. US dollar begins its decline
4. Markets, commodities, PM move up assets like real estate decline.
5. Money should continue to gravitate to income bearing stocks which will cause them to become overvalued.

Wild Cards
1. Europe will have no bearing? We will see how bad it gets, the choices they make and the repercussions their decisions have.
2. China continues to slow which should mute commodity gains despite a declining dollar. Gains will still be made.
3. Loss of confidence should increase throughout the world adding to PM gains.
4. Housing in the US to turn and move up? Hardly! They haven’t stabilized and are unlikely to for some time to come.
5. Canadian Real Estate is headed for long term declines. Like a rolling stone it will pick up momentum as it gets further down the hill. We have a lot of catching up to do.
6. Companies EVERYWHERE will battle for market share to retain customers. You are already seeing RBC, Shaw etc offering $$$ to switch your business to them. That won’t help earnings.
7. We will see if world governments can control declining consumer confidence and a world of savers while trying to create a controlled level of inflation. It always overshoots.
8. BRIC countries WILL continue to move away from the US Dollar in an effort to curb inflation in their countries. Canada will continue to stay the course and Canadians will pay the inflationary price. This will eventually be the end of the US Dollar as the worlds reserve currency and will surely lead to WW III.

What did I do to deserve this blog? — Garth

#193 Westernman on 01.02.12 at 4:15 pm

Poor, poor,nieve little Herbie,
The people that bought overpriced houses that were well beyond their means to afford them are not ” victims ”
They were grown men and women whom I presume could do math ( if it is still taught in schools anymore ) and signed the papers of their own free will. I think the word victim is a bit misleading – I think the word ” idiots ” would be more appropriate.
I see your victimhood mentality is still going strong Herbie…bless your little childlike heart.

I see my socialist pal Form man has returned from a long Christmas bender… I think you are somewhat in error about me in 2012 – I feel it’s going to be a very good year for me – very good indeed.

#194 View on 01.02.12 at 4:17 pm

“Canadian workers CAN NOT compete with the wages of US workers and companies are threatening to move out of Canada to lower paying US.”

Logical sense as I see it with average home prices in the US 50% less than in Canada. How can we compete?

#195 Garth Turner | Canadian Performer's Money on 01.02.12 at 4:19 pm

[…] again! Deleveraging. The article is a must read for anyone wanting to know what to expect in 2012. Click here to read it. Share this:EmailPrintLike this:LikeBe the first to like this post. This entry was […]

#196 Westernman on 01.02.12 at 4:29 pm

[email protected]
The reason Canada cannot compete with the U.S. is because Americans are more driven, more resourceful, more inventive, more aggressive and more productive than Canadians – it has sweet f-all to do with cheaper houses. It’s darwinian in nature…

#197 Canada`s housing bubble and lower US wages on 01.02.12 at 4:33 pm

The American # 161

Oh yes, POLITICS is a big factor of manufacturing leaving Canada and going back home to the US. Aside from that Americans workers earn muchless and Canadians who are maxed out on debt paying double for RE and more overall for goods can not compete with US workers. Can Any uneducated realtors explain how it’s possible for the RE bubble to not pop when workers wages/benefits are under attack and thus pull back their spending which has and will continue to slow the Canadian economy down? Canadians are now in MORE DEBT 153% of income then Americans were at the tip top peak of the US housing bubble. Realtors CAN NOT explain the numbers away which is why the realtors on this blog (Realtors very worried about current housing crash taking a strong hold on the way down) continue to avoid explaining the numbersand economics of the RE bubble in Canada.

#198 Waterloo Resident on 01.02.12 at 4:34 pm

Hey, imagine going across the border to do some shopping, and a cop stops you for no reason. He tells you to get out of your car, you are under arrest. You ask “WHY?”, he does not answer, he just puts you into handcuffs and takes you away. You are held in prison for 3 years, not given any excuse as to why you are being held, all that you are told is that the arresting officer thought you were ‘suspicious’. Now you find that you are being sentenced to death in 2 weeks, again for absolutely NO REASON. You are not allowed for your case to be heard in court, they keep saying that under the new law PEOPLE HAVE NO RIGHTS, and can be arrested simply for the act of having more than 7 days of food at home, or missing part of one finger.

Well, guess what: Obama just signed such a law into effect on Christmas Eve !
Its called National Defense Authorization Act (NDAA), a law that grants the U.S. military the “legal” right to conduct secret kidnappings of U.S. citizens, followed by indefinite detention, interrogation, torture and even murder. This is all conducted completely outside the protection of law, with no jury, no trial, no legal representation and not even any requirement that the government produce evidence against the accused. It is a system of outright government tyranny against the American people, and it effectively nullifies the Bill of Rights.

Read about it here: http://www.naturalnews.com/034537_NDAA_Bill_of_Rights_Obama.html

And go to Youtube and find out about it before they make a law that removes people’s freedom of speech and makes it a capital offense !

#199 Timbo on 01.02.12 at 4:38 pm


“But if Stern’s figures are anywhere near accurate it makes me optimistic that 2012 will be a turning point. Why? Quoting John Maynard Keynes, the only economist who seems to know how to pull a country out of an economic depression, “If you owe your bank manager a thousand pounds, you are at his mercy,” Keynes said. “If you owe him a million pounds, he is at your mercy.”
If he’s even partially correct then congratulations, Wall Street; we’ve reached a place where the foreclosures would cause Housing Armageddon. Where the middle-class itself has become Too Big To Fail.”

Florida is sinking people. Good luck with the illusion of prosperity.

#200 poco on 01.02.12 at 4:41 pm

#79 Devil’s Advocate on 01.01.12 at 3:00 pm

Don’t put words in my mouth. My mantra has and will always be “the very best time to buy is when you don’t have to and the very best time to sell is when you don’t have to”. What we have today is many sellers trying to sell who don’t have to sell. Last night in Kelowna there were some 450 properties of which the MLS listing expired. Upon a quick perusal of them one quickly comes to the conclusion the bulk expired without a successful sale because they did not need to sell and were consequently not motivated to do what it takes to sell. On the other hand I think we would both agree that right now there are many who don’t perceive the need to buy either.

450 properties that the MLS listing expired—you think that’s a big deal—you as a “supposed” realtor knows this happens at this time of year no matter what type of market there is–so called buyers or sellers market

look at Vancouver –a hell of alot more than 450 removed from MLS—oh yes– all these sellers didn’t really need to sell–did they?

funny thing is, all those that delisted will be re-listing in the not too distant future–(and many at a reduced price) along with a ton of others, their owners just now waking up to the fact the housing market is going to take a substantial hit in the coming years –this re-listing happens every year as you should know

as more and more perceive that there is no need to buy –prices will continue to drop just as they have been doing for the last 2 years

#201 Canada`s housing bubble and lower US wages on 01.02.12 at 4:45 pm

View on 01.02.12 at 4:17 pm
“Canadian workers CAN NOT compete with the wages of US workers and companies are threatening to move out of Canada to lower paying US.”

Logical sense as I see it with average home prices in the US 50% less than in Canada. How can we compete?

It’s impossible mathematically for Canadians to compete with Americans unless Canadian housing corrects 50% . How can maxed out Canadians unable to pay their bills with current wages pay with reduced wages? In fact without CHMC giving out subprime loans which allowed Canadians to have 153% debt to income the housing market would fall 50% over night. All the vested interests are hoping for a soft impossible landing but ponzi schemes always crash. Condo flippers all over the GTA are trying to get out of their deals as the housing house of cards is starting it’s fall. The vested interests are even having a hard time spining the numbers which makes no mathematical or economic sense.

#202 brainsail on 01.02.12 at 5:13 pm

#201 Waterloo Resident

You said…

“Well, guess what: Obama just signed such a law into effect on Christmas Eve !
Its called National Defense Authorization Act (NDAA), a law that grants the U.S. military the “legal” right to conduct secret kidnappings of U.S. citizens, followed by indefinite detention, interrogation, torture and even murder.”

…and Obama said…

“I want to clarify that my administration will not authorize the indefinite military detention without trial of American citizens,” Obama said in a statement Saturday. “Indeed, I believe that doing so would break with our most important traditions and values as a nation.”


#203 poco on 01.02.12 at 5:18 pm

#174John Prine on 01.02.12 at 12:36 pm
#177Where’s The Money Guido??? on 01.02.12 at 1:17 pm
here’s one tax for BC residents that everyone forgets—passed in 2008 –set to expire in 2012—-if you believe that—take a look at what it includes–it’s not just gas


#204 Coho on 01.02.12 at 5:40 pm

#201 Waterloo Resident,

Good post.

And we often hear the term “Don’t bet against America”. What America? There is no more USA as we’ve known it. They’ll have to change the words to their national anthem as it is no longer the land of the free. And home of the brave? It doesn’t sound like it. They’ve officially lost their republic and Bill of Rights.

It’ll be our turn next. But it seems most don’t value or maybe even grasp the concept of freedom. Or perhaps we all take it for granted despite history showing that governments tend to grab more and more power over time and eventually become despotic. The American Founding Fathers knew this. That’s why the Bill of Rights was added to the Constitution. Its purpose was to protect the people stated it is their right and morever “their duty”, to throw out a government that has become despotic. Well, they’re there.

Oh well, at least we have the distraction of granite and stainless, buck$ and Bieber, beer and baseball to rose colour our glasses.

#205 brainsail on 01.02.12 at 6:08 pm

After I read the following article, I realized where the Alberta dirty oil may be headed.


So, why doesn’t Canada call it a day, build some refineries, stop importing foreign oil, become self sufficient and sell the excess gasoline to other countries?

The Keystone Pipeline has become a political/environmental football down here (we live in Central Texas) and the US could easily wash its hands to consuming “dirty oil” by just refining it and selling it to other countries for huge profits and jobs creation. Why can’t Canada do the same? Am I missing something?

#206 P & T S on 01.02.12 at 6:11 pm

As well as the “manmade” issues, there is always the significant probability of climatic or environmental problems arising – seemingly at just the right moment to cause maximal distress. Both 2010 and 2011 have seen major cyclones / tornadoes, flooding, and unseasonally cold weather (I’m thinking of the very early and very heavy snowfall in the US of A last year).

Another interesting situation is the coming London Olympics – a prize “terrorist” target if there ever was one, especially in view of the UK’s much – touted “Special Relationship” with the US. Ideal as a “false flag” attack too – the US wouldn’t be faced with cleanup / reparation costs, but would be very well placed to profit from the reconstruction.

#207 Westernman on 01.02.12 at 6:24 pm

Yeah, you are missing something. Canadains are not able to do any kind of indusrial/manufacturing activity on their own. They would much rather sit back in their recliners, swill beer and wait for the ” government ” ( the source of all prosperity according to most Canadians ) to shower them with happiness and prosperity.
Canadians cannot bust a move unless a ” government agency ” of some type is established and the venture is studied for ten or 15 years. If an additional tax can be imposed in the course of these feasability studies well then all the better!
See brainsail, this is how Canadians are… now you know why Canada can’t do the same as the U.S.

#208 Herb on 01.02.12 at 6:27 pm

#208 Brainsail,

of course you’re missing something: we have become a branch plant economy. In true colonial fashion we export natural resources and buy back finished goods, including refined oil products. National or global are irrelevant terms in business as long as the profits wind up in the same pockets.

#209 Trailer Park Boys on 01.02.12 at 6:51 pm

Yeah, we know where to shove our future.

We think we’ll start our own Federal Reserve thingy.

People always want money…right ….supply and demand.

We got/stole a printer/copier….inkjet…..When ink runs out, go down to our Asian re-filler dude. He owns 10 condos .

Anyway, we will send out coupons….50% off our first batch of bank notes…..and sorry no rain checks.

#210 bridgepigeon on 01.02.12 at 7:00 pm

205 Brainsail, And you believe what Owebombya says? The bill has been passed. No Habeas Corpus any longer, no Bill of Rights, all gone. No one can casually shrug off the implications of this. There was a time when the citizens would riot in the streets if the government tried a stunt like this. Who’s on Dancing With the Stars tonight?

#211 TurnerNation on 01.02.12 at 7:01 pm

#182Victor on 01.02.12 at 1:46 pm

As I’ve always said, with this Orwellian-named “North American Prosperity” plan, merging the economies of CAD/US/Mexico did anyone really think Mexico wages will rise to our standard, or ours would fall?
The answer is clear. Harper/Obomba have sold us out.

#212 Timbo on 01.02.12 at 7:04 pm


The Eurozone New Orders component came in at 43.5 so expect a plunge across the board in future PMI readings as manufacturing output contracts further to keep up with orders.

New austerity measures in Italy, Spain, Portugal, France, and Greece have yet to bite, and they will. Economists think the European recession will be over mid-year. I think they are in fantasy-land. More likely, the US follows Europe into recession.


“Over the pre-crisis decade, developments in the UK economy were driven by unsustainable levels of private sector debt and rising public sector debt. Indeed, it has been estimated that the UK became the most indebted country in the world.”

kicking the can down the road has helped cushion the blow but it is only going to get worse. Enjoy the holiday’s while you can.

#213 Nostradamus Le Mad Vlad on 01.02.12 at 7:11 pm

Costco in 2012 . . .

One day, in line at the company cafeteria, Joe says to Mike behind him, “My elbow hurts like hell. I guess I’d better see a doctor.”

“Listen, you don’t have to spend that kind of money,” Mike replies “There’s a diagnostic computer down at Costco. Just give it a urine sample and the computer will tell you what’s wrong and what to do about it. It takes ten seconds and costs ten dollars – A lot cheaper than a doctor.”

So, Joe deposits a urine sample in a small jar and takes it to Costco.

He deposits ten dollars and the computer lights up and asks for the urine sample. He pours the sample into the slot and waits.

Ten seconds later, the computer ejects a printout:

“You have tennis elbow. Soak your arm in warm water and avoid heavy activity. It will improve in two weeks. Thank you for shopping at Costco.”

That evening, while thinking how amazing this new technology was, Joe began wondering if the computer could be fooled.

He mixed some tap water, a stool sample from his dog, urine samples from his wife and daughter, and a sperm sample from himself for good measure.

Joe hurries back to Costco, eager to check the results. He deposits ten dollars, pours in his concoction, and awaits the results.

The computer prints the following:

1. Your tap water is too hard. Get a water softener (Aisle 9).

2. Your dog has ringworm.. Bathe him with anti-fungal shampoo (Aisle 7).

3. Your daughter has a cocaine habit. Get her into rehab.

4. Your wife is pregnant. Twins. They aren’t yours. Get a lawyer.

5. If you don’t stop playing with yourself, your elbow will never get better!

Thank you for shopping at Costco!
#182 Victor, #187 TurnerNation, #189 tkid and #197 View — “Canadian workers CAN NOT compete with the wages of US workers and companies are threatening to move out of Canada to lower paying US.”

Ontario and Quebec have two of the largest debts / deficits in the country, which are crushing them. As boomers retire / die, young couples are choosing not to have families (way too expensive, never mind becoming debt slaves to a bunch of bricks and mortar). It’s much cheaper for companies to lock out unions, shut down plants here and move overseas. It’s happening more and more. Good posts.

#188 TurnerNation — “We are in a new neo con era now, taking us back to the dark ages. Dogma, religion and might rule. You are with us or against us.” — Sums it up very well!

#207 Coho — “It’ll be our turn next.” — Already happening, albeit quietly.

TPTB have used the Arab Spring to lull us lazy westerners into a false sense of security, while continuing to strip us of basic civil liberties and freedoms. See responses to above posters.

#214 jess on 01.02.12 at 7:18 pm

” Canadians borrowing did that. ”

…although some of those over-lenders made off better! For example, 4 wamu executives earned more than $95 million from January 2005 through September 2008. (FDIC) The bank failed in fall 2008.
The FDIC for $64 million, almost all of which will be paid by their insurers; their out-of-pockets costs are estimated at just $400,000.
These financial executives were compensated for “return on equity” unadjusted for risk. The executives get the upside when things go well; when the downside risks materialize, they lose nothing (or close to it).”

Foreclosures rise as more fail to pay

…the Australian Bankers’ Association has launched a website, to help encourage customers to contact their bank before foreclosure is the only option.


Undisclosed unreported arrears ? Deficit higher

Spain slashing expenses and raising taxes
the budget deficit for this year was revised up to 8 percent of national income from the previous government’s forecast of 6 percent

#215 Westernman on 01.02.12 at 7:44 pm

” The executives get the upside when things go well, when the downside risks materialize, they lose nothing or close to it”
Stop wishing, praying or hoping life will be fair… it isn’t now, it never has been and it never will be.
Repeat after me young Jedi – do not ever expect anyone else to do anything in your best interest – only you can do that – it’s not anyone else’s obligation to adjust for the stupidity of the general public.

#216 jess on 01.02.12 at 8:27 pm

182 Victor
From bloomberg

Daniel J. Schlicksup claims that this company sold and shipped spare parts globally from an Illinois warehouse while improperly attributing at least $5.6 billion of profits from those sales to a unit in Geneva, according to the suit filed by Daniel J. Schlicksup. He was a global tax strategy manager for Caterpillar from 2005 to 2008.

Caterpillar Accused of Demoting Executive Discovering $2 Billion Tax Dodge
QBy Peter S. Green – Jul 8, 2011 3:23 PM ET

caterpillar uses the southern strategy” involved opening new, small plants, termed “focus facilities”, in right-to-work states.

#217 Not so smug any more but a lot richer on 01.02.12 at 10:03 pm

@ Alex Smith: “People have been predicting a Vancouver real estate crash every year. Sometime in the next decade prices may go down 10% and all those prophets will claim they were right!”

Check the historical charts, Alex. Those who have been predicting price drops in Vancouver have already been proven right. Prices tumbled in Vancouver in 2008/2009. The only thing that reversed that decline was a drop in interest rates to an all time low.

It is plain wrong to state that prices here have never fallen in the last few years.

Check the charts again for December 2011 and you’ll see that prices dropped over 10% in the last quarter of 2011.

Vancouver property owners have an incredibly selective memory. I was like that too until I sold last year and started checking the facts before leaping into buying again.

#218 Herb on 01.02.12 at 10:11 pm


your #210 comment proves that you truly are a moron. I’m going to change your handle accordingly.

#219 TurnerNation on 01.02.12 at 11:16 pm

I bet all the locked out Caterpillar union workers voted for Harper. Now look where it got them. 50% pay cut.

#220 Westernman on 01.03.12 at 1:46 pm

Herbie @ 221,
I hit the nail right on the head, didn’t I Herbie?
It probably stung quite a bit because it was probably a pretty damn accurate disciption of you – leaving out the slow motion avalanche that is your gut as it cascades over your belt…

#221 Kevin on 01.04.12 at 2:18 pm


“So what happens to homeowners scraping by on a 35-yr am, they got in 2007, when their 5-yr term is re-negotiated later in 2012, presumably after F limits amortizations to 25 years or less?”

Uhm… they’ll renew with their current lender at the same amortization (35 years) and current rates, and enjoy their lower payments?

“Rate hike?” What rate hike? Even if there is one this summer (there won’t be), perhaps you should refresh your memory regarding what the 5-year fixed rates were in 2007. Hint: They were A LOT higher than they are today.

And if you renew with the same lender, you don’t have to get CMHC again. Which means the 35-year amortization is still available to those borrowers. Nothing changes for them, except their interest rate goes down and their payments shrink a little.

#222 Les on 01.04.12 at 5:42 pm

I noticed your angst before Christmas about the idiots who post here. Not sure why you don’t just turn off comments since you’d have just as many readers and less grief. As far as I can tell, no sensible person posts here (including myself, now), and personally I only ever browse the comments to check if you’ve said anything interesting in response to one of the many crazies who think your comments forum is their own personal bully pulpit. I can’t see what you gain from providing it. Just a suggestion. Happy New Year.