Throwing it

Boomer men’s Eye Chart

The hot news lately is BMO’s 2.99 Special. As I detailed here some days ago, we have a mortgage war on our hands. A fixed fiver at less than 3% has not happened in the 195 years Bank of Montreal has been operating, Before that, all life forms were amino acids, lichen and conservatives.

As you’d expect, idle realtors have seized on this fluke of nature to declare the spring market will bubble anew. They’re busy pumping the media with rosy forecasts and (of course) telling lusty young couples they must act now or (a) never get this kind of financing and (b) risk being priced out forever. (Of course once teaser rates rise, prices will fall. But the commission cheque will be cashed).

The second slam-dunk consequence of the bankers’ move will be a flood of new listings over the next few weeks. Sellers who gave up last autumn, or homeowners smart enough to cash in their windfall capital gains are expected to deluge MLS with vast numbers of new red dots. In fact, in certifiable places like Vancouver, it’s already started. The big question is if there’ll been enough demand from greater fools to sop up all those inflated houses.

This might tempt first-time buyers into believing that in a 2.99 world, owning’s finally become cheaper than renting. Is this so?

Actually I noticed in the last few hours some realtor posted this in the comments section of our chastened blog: “With 2.99% mortgage and affordable prices, owning has to be cheaper than renting. 2 bedroom condo for $150,000? ”

   It sounded appealing. So I took a quick look. It’s ugly, of course, unless you heave for Formica. And it’s 32 years old, which is about the time condo buildings get structural hemorrhoids and owners receive special assessments. Still, it’s a place to live. But is it a place to own?

Let’s figure it out.

This $150,000 condo is cheap. In fact, there are only 26 units in all of Calgary which cost the same or less. And you can buy it with just 5% down ($7,500), plus the cheapest five-year mortgage ever. Assuming you could live there without turning into plastic, is it a good deal?

Well, after the downpayment the mortgage amount would be $142,500. Of course added to that would be the CMHC insurance ($3,918) plus closing costs ($3,000). Now the mortgage is $149,418, or just about 100% of the purchase price.

With BMO’s 2.99 Special (available only in the 25-year model), the monthly payment would be a scant $706.35. Yippee!

But not so fast. The condo fees on this Eighties box are $465 a month, and you can add in another $150 for property tax. Now the monthly carrying cost is $1,321. To rent the same unit (I called around) would set you back $1,200. So over five years (the life span of the 2.99 mortgage), monthly occupancy costs would be $79,260. The cost of renting the same unit for 60 months would be only $72,000.

But wait, the realtors cry! Every month the owner shells out $706.35, a portion is going towards equity that the renter never sees. So owning has to be smarter and more godly.

Let’s assume this ugly little unit retains 100% of its value until 2017 (which is a stretch, given what lies ahead and what’s already happened to Calgary condo values), and sells again for $150,000. At that time the $149,418 mortgage, despite $42,381 in payments, has shrunk to only $127,684. Subtract that from the $150,000 selling price and you get a profit of $22,316. Yippee! Owning rules!

Well, not exactly. Remember that $7,500 of that was the downpayment, which you’re just getting back (and which the renter didn’t need to cough up). Now the profit is $14,816. But it also cost money to sell the condo, usually an average commission of 5%, or $7,500. So the after-fee profit is $7,316. And then there’s the matter of the equity  – what’s known as the opportunity cost. This is the money the downpayment could have made if it wasn’t sitting in the condo doing nothing. Figure that at 6% (to be tame), or $2,536. Oops.

In fact, buying this unit at the lowest fixed mortgage rate in history, then selling it at full price five years later, would result in a bump of only $4,780. Now deduct the 60-month premium that owning cost over renting, in this case $7,260, and guess what?

The tenant is $2,480 ahead of the owner.

So much for ‘throwing your money away on rent.’ Now imagine when rates rise, BMO recovers and the ugly duckling of Garry Crescent gets uglier.

Email this blog to your mother-in-law. Now.

269 comments ↓

#1 [email protected] on 01.20.12 at 10:26 pm

Teaser rate 2.99% is temporary right? BMO said it was to pump sales in a slow month (Jan/Feb). My supposition is that if RE agents get what they want in higher prices and a spike in sales for this usually slow time Flaherty will have no choice but to clamp down with either 25 years or 10% (or best case both).

#2 Fan on 01.20.12 at 10:28 pm

Fhirsssst??

#3 Van guy on 01.20.12 at 10:30 pm

Is it ever better to buy then? At what price would it make sense to buy?

#4 Mr.Lee on 01.20.12 at 10:30 pm

The issue is that you are using sound arithmetic to deduce your argument, and this is the problem. Too many people succumb to emotion when buying homes and reason seems to be as fleeting as the Calgary summer. If said basic arithmetic were employed to just a fraction of the decision making formula for home purchase that would be tremendous. Alas this is not the case, so therefore we have over inflated property values coupled with low interest rates that the Egyptian Mummies may have seen. Couple this with the fact that real income has not moved up much over the last ten years, inflation on staples keeps going up and that the Globe may face some sort of economic slow down…………..the reasoning behind basic math was abandoned a long time ago.

#5 eviee1973 on 01.20.12 at 10:31 pm

Here in SW Calgary, nothing screams a near bankrupt condo develpoer, then London at Heritage Station. Two towers built, first has a lot of empty units, second is more than 50% empty, and a big mess between both, a unfinished construction project mess. Developer has immediate possesions, and is leasing units rather than trying to sell them. There are a lot of realtor key boxes at each tower. RBC must be financing the developer, as they recently opened a branch in the vacant retail plaza on MacLeod Trail.

#6 Chubster on 01.20.12 at 10:31 pm

Structural hemorrhoids! That’s the sovereign bond market in a nutshell. Thanks, dude. Party!

#7 TheRealTruth on 01.20.12 at 10:32 pm

Very Logical Garth although I doubt the strata fee is that high.

This is what is going to happen during the spring:

There is going to be a rush to buy on the low end because of these rates… this momentum WILL push prices up in the short to medium term… at the end of the year we on this blog will be talking about a 15% correction from late 2012 levels (to bring us to late 2011 levels) and then a slow melt afterwards.

This is what my gut feeling says…rather than believe a logical analysis. What does history tell you?? Just saying Garth.

In this case, the owner of the 150,000 condo wins.

#8 Devil's Advocate on 01.20.12 at 10:32 pm

Could I be…. FIRST!!! LOL

#9 Heloguy on 01.20.12 at 10:33 pm

Don’t you just love math and logic? Unfortunately some can’t be swayed by facts. So today I am starting a new charity that will help take care of those out there that are immune to logic. We are going to call it Stolistomom; short for “stop listening to mom”.

#10 JessicaJ on 01.20.12 at 10:34 pm

Wow! From one happy renter! Thanks Garth for always telling it like it is!

#11 RE Bear on 01.20.12 at 10:36 pm

first, hah!

#12 A Fan in Van on 01.20.12 at 10:36 pm

So, if the opportunity cost is 2536.00, then the profit goes from 7316.00 to 4780.00. Minus the premium of 7260 and the renter ends up being 2480 ahead I think. I guess my math could be wrong, though.

#13 Peter Goesinya on 01.20.12 at 10:37 pm

What will happen to the Calgary housing market now that the keystone pipeline is delayed?

Can’t see them just running a pipeline through an earthquake zone and beautiful mountain wilderness to the west coast for China.

#14 Bast on 01.20.12 at 10:39 pm

I know that complex, and not to be cruel, but it was old when a friend of mine lived there 15 years ago. And it’s right on McKnight Trail, near the airport. Laaahhvely…
It seems the insanely low natural gas prices might actually be having a detrimental effect on Calgary real estate though. Remember, Calgary is a gas town (no pun intended) and an oil town second.

#15 Phoeey on 01.20.12 at 10:39 pm

1st? Couldn’t be.

#16 mid-Ontario on 01.20.12 at 10:40 pm

Sorry Garth, there’s no way the tenant wins.

First, the owner has that sense of ownership – priceless to most Canadians.
Second, in the lifetime (the period of time within a life where thoughts turn to nesting) of most would be buyers of this condo, real estate always goes up.

Outside of this blog, few know otherwise.

Time to tak the show on the road again.

#17 guy on 01.20.12 at 10:41 pm

FIRST!!!!!!!!!!!

#18 Devil's Advocate on 01.20.12 at 10:42 pm

And the moral of your story today Garth is… rents may very well be pushed up. For why would anyone enter into such a losing proposition as to buy a revenue property with such sad prospect of return?

Disclaimer: note I said “”may” very well be pushed up”. I am not forecasting just suggesting one of the many possibilities I am aware of which pale compared to those I am unaware of. Who’s to say which it will be; real estate prices or rents but one thing is for sure, given the current dynamics one or the other must give.

Actually condo rents will be declining. — Garth

#19 Chris scott on 01.20.12 at 10:42 pm

Ugh, NE Calgary; not a nice area.

#20 Steve on 01.20.12 at 10:42 pm

Impeccable logic, Garth. But you’ve made the same point numerous times already. How about sharing some of your expertise in other areas. For example, many of us would like more information about so-called “fixed income” investments. There are many articles on the web every day about investing in the stock markets, but relatively little information about the alternatives. You’ve made it clear that we should be into preferreds, but how about expanding on fixed income investments generally? For conservative investors like me, it would be a topic of great interest. I don’t give a rip about old cheap condos, and mortgages that will destroy greater fools in 5 years. If those idiots haven’t gotten the message by now, they never will. I’m looking forward to learning how to ensure that my retirement savings will last longer than I will. Please help!

I have addressed bonds and preferreds a few times. Start with the archived posts. And keep reading. — Garth

#21 Jamaican_Gal on 01.20.12 at 10:44 pm

Oh, yeah, baby!!!

Fiiirrrsssst!!!!

#22 TurnerNation on 01.20.12 at 10:50 pm

A facincating blog compendium of nutty Toronto MLS listings. With commentary.

http://www.themash.ca/

#23 Canadian Watchdog on 01.20.12 at 10:51 pm

#16 mid-Ontario

“First, the owner has that sense of ownership – priceless to most Canadians.”

You don’t own a home until you finish paying it. That’s the illusion.

#24 A Fan in Van on 01.20.12 at 10:53 pm

Hahaha — damn you, autocorrect. “Ipain mittens” should be “I submitted.” =D

#25 Devil's Advocate on 01.20.12 at 10:57 pm

“Actually condo rents will be declining.” — Garth

I’m not saying they won’t but what makes you so sure as to say so unequivocally that they will?

#26 R on 01.20.12 at 10:59 pm

If you told your mother in law that your sole plan to take care of her daughter was to invest all your savings, plus leverage yourself several times over and sink it all into one investment..a sure winner like Apple common shares, she’d forbid you to marry…

Start talking mortgages and well, now you’re a real provider.

#27 RetiredBoomer2 on 01.20.12 at 10:59 pm

when I bought in 1988 I figured the house cost was $100 more a month vs renting which I would make back over time without rental increases. Some houses would cost over $200 more a month compared to a smaller rental.
The buyer is usually at risk and looks to the long term but in this market he can look to forever before he gets paid back. I used to take 20 years to recover your initial investment in a house and now forever.

#28 A Fan in Van on 01.20.12 at 10:59 pm

Ah, I see you fixed the original point, sir Garth. Never mind. ;)

#29 A Fan in Van on 01.20.12 at 11:00 pm

Dammit! Original ‘post’. I’m never posting from an iPhone again.

#30 Renting and loving it on 01.20.12 at 11:09 pm

#7, you “doubt” the strata fees are that high?

It’s in the listing Garth linked to. Still doubtful?
Here’s the MLS listing: http://www.realtor.ca/PropertyDetails.aspx?&PropertyId=11274170&PidKey=447612132

It’s about 1000 sq ft. 465/mo is pretty low by Toronto standards. (in Toronto you’d be looking at $550+)It has what looks to be electric heat. If that isn’t part of the monthly maintenance fees, that’s gonna be pricey.

#31 45north on 01.20.12 at 11:11 pm

Van guy: Is it ever better to buy then?

how about “was it ever better to buy?”

definitely was. for the last 50 years just about everybody could expect 2% gain a year, compounded brings final price $165,610. Mr. Lee’s talked about real income. In the 1970s period , your salary would increase 10% a year. Mine did.

so Van guy, if 1974 comes again, buy

#32 Devil's Advocate on 01.20.12 at 11:12 pm

“Actually condo rents will be declining.” — Garth

By my very crude calculations influenced greatly by a few glasses of Friday night wine in order for rents to decline as you suggest Garth the price of related real estate would have to tank far, far more than both you and I have agreed. Not only then would no one have incentive to add to the rental inventory but so too would many current landlords would exasperate the situation in seeking to crystalize their capital gains by selling their revenue properties thus further reducing the supply of rental units. I think we know what would happen then right? Supply and demand… But as I said a few glasses of Friday night wine… who knows…

#33 Devore on 01.20.12 at 11:14 pm

The tenant is $2,480 ahead of the owner.

So much for ‘throwing your money away on rent.’

But Garth, when you own, not only are you building equity, like every responsible adult should, but you can also spend oodles of money to replace the nasty carpets, paint the walls purple, upgrade the formica to granite, and load up on shiny SS appliances. This is Pride of Ownership(tm), which is worth at least an extra $10000 every year, and what makes owners superior to renters.

#34 John Ratadlin on 01.20.12 at 11:16 pm

In 2001 World Financial Report said buy silver $3.80 U.S.$ per troy ounce. Now silver is 32.18 U.S.$ per troy ounce. Garth you missed a 846.84% capital gain. Garth do not buy silver yeah right!

#35 Cowboy on 01.20.12 at 11:17 pm

Garth,
I get what you are saying BUT speaking as a Calgary renter for many years, in order to get a reasonably priced/good deal rental, you have to move plenty of times. For instance, the last 2 houses I have rented have eventually sold. For the amount quoted above (that was ‘lost’ by buying) I would rather have the stability of living in a home as long as you wish rather than the expense of moving every couple of years.
Not to mention how much of a pain it is to move so often. I have been following your blog since the beginning, and while I think prices will come down a bit yet, they have already come down a lot! Currently, the house I am renting that I have to move from (damn-again?!) was listed at almost $600,000. Now, a year later, it is listed at $475,000. So basically, someone will probably buy for at 425-450,000. Great house in a great community, big house as well. So, while I respect you Garth much more than of those dirty, self-entitled, dishonest politicians, I have somewhat regretted not buying. Of COURSE, I put no blame on you as it is my life and my choice, it may be OK and not supremely stupid to buy a house years ago, or even today….

#36 Bigrider on 01.20.12 at 11:18 pm

2.99 five year rates. What’s next 1.99 variable ?
I’m afraid all RE bears including myself are going to continue to be wrong. The sick obsession with RE has reached such absurd levels nothing is going to stop the runaway juggernaut that is RE prices in T.O.
A few years from now T.O will have same multiples to prices verse income that Vancouver has.

Your prediction as mine Garth have been proven wrong.

#37 T.O. Bubble Boy on 01.20.12 at 11:18 pm

2.99%!!! Buy Now!

I hear there’s a special on tear-down 1-bdrm bungalows in Toronto… only $849k!
http://www.realtor.ca/propertyDetails.aspx?propertyId=11462817&PidKey=1510967389

(can you finance the $500k to rebuild this place at 2.99%?)

#38 I'm stupid on 01.20.12 at 11:20 pm

Hi Garth

I’d like add something you never addressed. How many vrm are there? Those have been less than the 2.99 fixed for the last 5 years. The realtors can pump all they want it won’t make a difference, all the buyers have bought and the ones who wish to buy will wait until prices come down.

#39 Jeff in Victoria on 01.20.12 at 11:24 pm

That 2.99% is definitely temporary, BMO website says limited time offer until January 25, I imagine things will be hopping in the Real Estate biz for the next few days!!!

#40 Jimbo on 01.20.12 at 11:27 pm

Garth,Don’t forget cost of a home inspection of around $300.

#41 -=jwk=- on 01.20.12 at 11:28 pm

TO van guy #3.

This is awfully close, if it was me I would buy in this situation.

I am willing to pay an ‘owners premium’ to own (my own paint colors, some leverage on the condo board, better credit score, cant be kicked out on a whim etc).

The owner premium for me is somewhere 10-20% range (per month, assuming equity gains in first few years are minimal). So for this example, with about 10k out of pocket, I would buy it.

Most examples in Toronto have a 50-150% owners premium. It’s not uncommon to pay double what it costs to rent. Sorry, no. We looked at a real nice – lakefront- rental that is bigger than our current place. It was the top half of a 2story house. Rent was asking 1500/mo. We decided with two kids under two, the stairs and no garage we said no. It was just listed in the market at 900k. Roughly a 60% owners premium.

#42 LJ on 01.20.12 at 11:31 pm

Yep, you forgot to mention that the Calgary condo gets to watch airplanes land all day long, listen to the freight trains grind along two blocks away and has to deal with the noise from the busiest road in the city about 300m away.

Never mind that the neighbourhood is a hole. But, let’s not get judgemental. People live in worse places, like Vancouver, where it rains for 10 months of the year.

#43 Devil's Advocate on 01.20.12 at 11:36 pm

#244Bobby on 01.20.12 at 10:44 pm
For #208 DA,

If, as you pontificate, a realtor’s fudiciary duty is to provide their client with the best property, then why do most only show their own firm’s listings? Or perhaps even more importantly, they conveniently seem to omit those listings that are FSBO or belong to a discount broker?

Because they do not understand nor have they embraced the concept of buyer agency or as commonly referred to on this “pathetic” blog “Buyer Representation Agreement (B.R.A.)”. That simple document illuminates and makes so clear to the agent their purpose and incentive that they can and will practically move moutains to ensure their clients wants and needs are met above all else.

#44 shanks on 01.20.12 at 11:36 pm

Forget home inspections, they are just going to tell you a bunch of stuff you would rather not know and kill your house lust.

#45 Keeping the Faith on 01.20.12 at 11:45 pm

#7 TheRealTruth…Avoider

Get real buddy. Tell us your realtor license number so we can report you for fraudulent representation!

#46 Keeping the Faith on 01.20.12 at 11:47 pm

#18 DA

>>>> DUUUHHH WRONG AGAIN.
WINNING … ?!?!?!

#47 Keeping the Faith on 01.20.12 at 11:49 pm

#25 DA ….

DUUUUHHH, YOUR MEDS ARE WEARING OFF. RE-DOSE!

#48 Bottom Feeder on 01.20.12 at 11:51 pm

Let’s write down the current Calgary Condo prices so we can determine the winner five years from today. The 30 day average price is $254,683. The 30 day median price is $245,000. These prices are less than the prices 6 years ago. The Trans Canada XL line will be built in segments and full approval will come after the U.S. election. The Kitimat LNG plant will start exporting gas in about 3 years from now, boosting the price of natural gas. Oh, and the world will allow inflation to run its course to get Europe and the U.S. out of trouble. Stay tuned. See you in 2017.

#49 nonplused on 01.20.12 at 11:52 pm

That might be the funniest pic yet! Too bad the resolution is so low.

#50 Keeping the Faith on 01.20.12 at 11:52 pm

#32 DA

HOOOOONNNKKKK …. wrong again.
Rents in Vancouver end of 2008/beginning 2009 plummeted, supply of rentals far outstripped demand, was there, lived it.

Do you get tired of making notches on your “dump comments” bed post? ohhh wait, you’re by yourself drinking wine on a friday night, what else would you be doing on your bed post? LOL

#51 Kevin on 01.20.12 at 11:53 pm

“Let’s assume this ugly little unit retains 100% of its value until 2017 (which is a stretch…)”

Has there ever in Canadian history been a 5 year period where home prices were less at the end of the period than they were at the beginning? I’m asking sincerely here.

#52 Keeping the Faith on 01.20.12 at 11:55 pm

#43 DA
Yeah, BRAs should be called PMFDNA = Pay Me for Doing Nothing Agreement.
Loser DA, you’re a simple RE Loser.

#53 Jessica6 on 01.20.12 at 11:57 pm

Toronto RE has gone just insane. I don’t know how anyone bright enough to afford these places would ever consider paying the asking price for these…

http://fmlistings.tumblr.com/

#54 disciple on 01.20.12 at 11:59 pm

Rats..When I need that infernal zoom function, it doesn’t work. .

#55 disciple on 01.21.12 at 12:04 am

#45 Jessica… It seems I’ve made a habit of opening up the real estate section of the local paper and laughing out loud at the asking prices. This evening my son looked at me with curiosity as well as pity. What have we done to ourselves?!

#56 rentin on 01.21.12 at 12:05 am

“Actually condo rents will be declining. — Garth”

According to you (and I believe the same) house prices will fall as well.

How do REIT’s turn a profit then? Falling assets and income too?

#57 pablo on 01.21.12 at 12:07 am

hey Garth; along with a strong cdn dollar, 2.99% 5yr mtg war, T.O. was awarded the highest economic level city by the esteemed cibc. wow. the prices in the gta just got a firm as a pair of silicone fun bags! and as far as this spring being a rout; 50% market correction predictor can hold their breath until their gonads fall off, it aint gonna happen, not in the gta anyhow. here in the frozen wastelands of durham region in my exclusive enclave of lower ajax by the lake there’s no blood in the water, no smell of fear, the only sound you can hear aside from the water fowl is the sound of reno contractors trailers whizzing by as they go from one executive detached suburban 905 palace to another getting things spruced up for spring market opening day. right now there’s a few listings and they are moving even at this time of year. oh yeah and as far as carney raising rates, not much chance of that with f and h freaking over our economy stumbling, while they continue their unbridled pork barrelling in ottawa with tax payer funds. oh canada, a land of indentured servitude and neo fuedalizm. pity.

#58 shanks on 01.21.12 at 12:10 am

disciple, just use your imagination…

#59 Corban on 01.21.12 at 12:22 am

When was the last time anyone saw Utopia around here? It’s been a while.

#60 Van guy on 01.21.12 at 12:25 am

For all the people that think that HAM are on a plane now heading to Van to pull their pants off, you are absolutely wrong. Chinese New Year is a time to relax and spend time with family. Its comparable to our Christmas. During our Christmas, sales for RE in Canada are slow and many are not thinking about anything but family. 

Garth,

If condo rents fall, does this affect reit’s that own residential condos? So maybe stay away from those ones? Your thoughts please. I have your drink here for you

#61 Shark on 01.21.12 at 12:26 am

“Email this blog to your mother-in-law. Now.”
But then you might help her.

#62 RN on 01.21.12 at 12:26 am

I don’t understand how the math of Toronto home prices works.

The median home price now is over $500,000. The last data I could find on median family income put it in the $75k range. Let’s say it’s $80k for the heck of it. In Ontario that leaves $61,375 in after tax income. Even at today’s historically low rates, the mortgage payment amortized over the life of a 10 year loan results in a payment around $5k a month. That means basically all your after tax income goes to house payments. Before real estate taxes. And life.

How in the world do Torontonians do it? It seems impossible.

Am I missing something here? I must be.

#63 specuskeptic on 01.21.12 at 12:26 am

Love these “breakin’ it down” posts. Very difficult to argue with the facts here. More like this! (Though, recently, there have been a lot of these math/fact based posts) Love it. I’m sure there will be no shortage of examples going forward over the next few years.

#64 Paul on 01.21.12 at 12:28 am

REITS. Might want to watch this before you buy any apartment reits.

http://www.cbc.ca/marketplace/

#65 Fifty Percent Correction Predictor on 01.21.12 at 12:34 am

#51 Kevin on 01.20.12 at 11:53 pm

You must be a young guy.

In Toronto, in 1989, the RE bubble bursted. It did not recover until in late 1990s.
My landlord went bankrupt because of flipping houses.

#66 Dad on 01.21.12 at 12:38 am

Ha, try telling a Calgarian their shining city on the hill is anything but “the real capital of Canada” and watch their heads explode.

But what do we know down here in the Southern Forgotten Realms, thar be dragons and theocracy past High River!

#67 Van guy on 01.21.12 at 12:40 am

#49 nonplused on 01.20.12 at 11:52 pm
That might be the funniest pic yet! Too bad the resolution is so low.
——————————————————————
You must be a boomer then. My 30 year old eyes see every girl clearly. Too clear actually. Pornographic to be honest

#68 Frank on 01.21.12 at 12:43 am

It is only better to rent if RE prices stagnate or drop. If RE goes up just a few percentage points every year then of course it is better to buy, you will get your money back when you sell and more. Garth owns his own home and he believes that it is better to buy so why not you?

#69 Tony on 01.21.12 at 12:50 am

Re: #7 TheRealTruth on 01.20.12 at 10:32 pm

Just the opposite, in Alberta the foreclosure rate for one bedroom units must be around ten percent or about 5 times the provincial average for all foreclosures. Prices for one bedroom units will only go sharply lower in Calgary and most will end up in foreclosure.

#70 Devore on 01.21.12 at 12:55 am

#51 Kevin

Has there ever in Canadian history been a 5 year period where home prices were less at the end of the period than they were at the beginning? I’m asking sincerely here.

If you were asking sincirely, you’d spend 10 seconds on Google:

http://canadabubble.com/charts/695-canadian-housing-price-chart.html

Yup!

How about 10 years, or even 15?

#71 Bobby on 01.21.12 at 12:59 am

For # 43 DA,

I’m certainly very conversant with BRA’s but can’t understand why one must be signed in order for the agent to meet his fiduciary duty. May I suggest that the document is there solely for the realtor to secure his/her commission. I will never sign one, nor will any of my colleagues.
Again, I see a time in the near future where realtors will be paid for their time. Those who provide a level of service commensurate with what they charge will do well. The others will be looking for another line of work.

#72 obert on 01.21.12 at 1:02 am

^And if the price of that condo falls by 30% and the owners are underwater by 50 K, how will they like their pride of ownership? Oh, they will pay it all till the end of their lives, and retire on catfood in a rotten old condo building. Not a nice perspective.

I don’t believe in continued housing boom in Canada, even if rates go to zero.

#73 Devil's Advocate on 01.21.12 at 1:07 am

Keeping the Faith

Yu very funny guy. };-)

#74 Cristian on 01.21.12 at 1:15 am

The “opportunity cost” is actually higher than that.
It’s not only the money the downpayment could have made if invested, but also what all the other monthly payments to the bank over five years could have earned if invested. Even at 5% return.
So the renter would be even more ahead.

#75 Joe on 01.21.12 at 1:15 am

Hmm, built in 1980…

Try 32 years old, Garth.

#76 Arshes on 01.21.12 at 1:27 am

#56 rentin on 01.21.12 at 12:05 am
“Actually condo rents will be declining. — Garth”

According to you (and I believe the same) house prices will fall as well.

How do REIT’s turn a profit then? Falling assets and income too?
—————————————————–

Correct me if i’m wrong, but REITs are about cash flow, not building equity. The usually have various properties, so they are usually diversified. Some may be paid for, with higher cashflows, some may have lower cash flows. Some properties may be in higher demand areas, ie higher rents which would offset areas with lower rent. And REIT’s are businesses, so they take the time and effort to take into consideration all thier costs when they purchase buildings/land for rental purposes and cashflow projections. Some REIT’s like Riocan, which rent out their land to alot of the big box stores, like Walmart or Home Depot, would probably have long term lease agreements with these companies and that rental income isn’t likely to drop because of these agreements.

#77 Daniel on 01.21.12 at 1:37 am

#51 –

Calgary – Now.

Condo’s are less in Jan 2012, then Jan 2007.

So are houses – current :
Jan 2012, average house $428k
Jan 2007 average house: $432k,
Houses are also down 5% (20k) from
Jan 2008 average house $455k ave.

Houses in Calgary are down year/year in Calgary too.

2011 Jan – $454,163.
2012 Jan – $428,054 (month to date)

As are condo’s

2011 Jan – $288,291
2012 Jan – $256,358 (month to date)

http://www.findcalgary.ca/page_content-19.html

#78 Gord In Vancouver on 01.21.12 at 1:42 am

Thanks for the informative post, Garth.

#79 george on 01.21.12 at 1:58 am

Thoughts on the Crisis of Capitalism

http://www.prudentbear.com/index.php/creditbubblebulletinview?art_id=10623

#80 villain? on 01.21.12 at 2:23 am

Thank you so much, Garth!

I have been trying to explain this situation to some friends, who are hot to buy now.
I failed, one just bought last week.

But now, equipped with this kind of info and math, maybe, just maybe…

#81 Doug in Victoria on 01.21.12 at 2:32 am

#35 Cowboy on 01.20.12 at 11:17 pm

You’ve regretted not buying !? The house you are renting has lost $150,000 in value during the period you wish you were an owner ?!

#82 Sam on 01.21.12 at 3:34 am

What happens if you consider the rent vs. buy comparison for a detached home over a much longer time period – say, >35 yrs? Assume the house value, along with taxes and maintenance fees, and rent would simply increase with inflation.

#83 P & T S on 01.21.12 at 3:51 am

Garth’s calculations do not mention the other cost of ownership – maintenance. This property is 22 years old, and there will be problems, and things that need to be replaced. even those who do provide good Home Inspections are not clairvoyant, and on top of the “structural or essential” repairs there is always the desire to “make the place feel like home” with the attendant costs, which can be significant.

Houses, Flats, Trucks, Buses, Boats etc. are ALL depreciating Consumer Durables: at least traditional houses do have the associated true (land) asset value; what does this 22 year old concrete box in the sky have??

As to the “Rents might rise” theories

1) You can’t get a mortgage to pay the rent, so those who are struggling now will certainly be unable to pay more in the future (without Government assistance – i.e. more taxation), – and –

2) All the thousands of “new” flats are not going to be “owned” by owner-occupiers! Oversupply in the rental market always depresses rental yields, (which may be another one of the reasons why they are bulldozing homes in the US, apart from the obvious one that the properties photographed have been vandalised).

Everywhere else there has been a “Housing Bubble” deflation has seen significant decreases in rental costs, despite the strident “It’s Different Here” rhetoric in the local MSM.

The Albertan Tar Sands are not going to save the Canadian Housing Bubble.

#84 Waterloo Resident on 01.21.12 at 3:54 am

Is this a blog about real estate,
or is it a blog about who is “FFhirsssst”??

( or other crazy wakos saying the same thing? )

#85 NorthYork Sash on 01.21.12 at 3:55 am

Garth, I don’t understand why you compare rental of a unit vs a purchase of a unit on the mandate that you have to sell after 5 years. That’s where “all” of your losses for the purchase of the property appears. One should be purchasing a property for the lifetime of the mortgage 21 yrs on average. “Not talking speculators or young ones”. Now I completely agree one should never buy an asset that is overvalued like it is now, and one where interest rates are destined to rise to normal levels 7%. I agree with you on all your other points, boomers, debt, etc… I don’t agree with you on the notion of comparing a rental to a house/condo that you HAVE to sell upon 5 years, where did you come up with that? If anyone is going to sell after owning for 5 years they are stupid “unless it’s for profit” “Vancouver”.

Because the 2.99 mortgage only lasts that long. Afterward the condo owner loses big time. — Garth

#86 Bilbo Bloggins on 01.21.12 at 4:44 am

Garth,
Like lotteries, real estate pumping works because people can’t do math.
At least with a lottery you can dream.
With a property declining in value… now that’s a nightmare.

#87 Freedom first on 01.21.12 at 4:47 am

Okay. I like to keep it simple. If I had 250,000$ cash right now, would I invest it in this old condo dump in it’s crummy location? No…….Or, would I want to own and live in this condo at 250,000$? No.

#88 Two-thirds on 01.21.12 at 4:55 am

Speaking of Calgary, its economic momentum is slowing, according to the recently-released CIBC Metropolitan Economic Activity Index (2011 Q3). Toronto and Edmonton came out at #1 and 2, respectively:

http://www.edmontonjournal.com/business/Edmonton+economy+roll+report+says/6024795/story.html

The above article is a “brilliant” piece; Ben Tal is at its finest, with confidence-reinforcing statements like this:

“Tal expressed a cautious attitude toward Canada’s economy as a whole. The most recent index aver-age of 10.2 ranks well below 2010s high of over 15. The index measures the 25 biggest metropolitan areas in Canada, not the whole Canadian economy. Tal said those cities ac-count for upwards of 60 per cent of the national economy.

“Cities are showing that the economy overall has slowed down a little bit since mid-2011,” said Tal. “Al-though it’s operating at a relatively OK level, it has lost some momentum in general.”

“This was not a made-in-Canada recession. In many ways we are second-hand smokers. Nevertheless, we feel the pain.””

So, a 33% YOY decrease in the index, but it is “a relatively OK level” and the economy has slowed down “a little bit”?

Although the article focuses on Edmonton, the full ranking is given. Worth a read – Tal outlines the risks to the economy, while taking great pains to not fret the reader with the full-effect of their implications:

“We have to reduce the vulnerability of the cities to the economic cycle, and especially to the oil market, by improving the diversity of economic activity,” he said. “You have the luxury of time, because prices will not crash on us any time soon. But I think that it’s time to start preparing for a situation in which, at the margin, oil will not add so much to economic activity.”

Tal pointed to Western Canada’s relationship with China as evidence, claiming that a “hard landing” across the Pacific would lower global oil prices and harm the western Canadian economy. Many economists recently expressed concern that China’s economic growth may slow this year from the double-digit rates of the 2000s to around five per cent.

If that happens, he said, Calgary and Edmonton will be powerless to do anything about it. “Regard-less of what the municipalities do, if something bad happens in China, we will feel the pain in Western Canada, there’s no question about it,” he said.”

Alas, what else could be expected of mortgage merchants?

#89 TheRealTruth on 01.21.12 at 4:59 am

#45 Keeping the Faith,

You can all me a RE Agent if that’s what it takes to turn your noodle.

Seems like you are emotional that prices aren’t coming down as much as you like. Well, I guarantee you that prices in March/April will be higher at the low end of the market than they are now. Its just 60-90 days away. Watch…still emotional? and want to call me a RE Broker now?

Now why can’t Toronto prices match Vancouver prices? Is it different in Vancouver? Again, watch what happens in the next 60-90 days!

#90 Doug in Victoria on 01.21.12 at 6:02 am

Re: Finding info in Garth’s old posts (#20 Steve)

Search google with site:greaterfool.ca in the search field, such as:

preferred site:greaterfool.ca

…or maybe…

“smoking man” slave site:greaterfool.ca

…and the ever popular…

squirrel site:greaterfool.ca

#91 Herb on 01.21.12 at 6:25 am

Darn it, my enjoyable vision does not work beyond line 2!

#92 GTA Girl on 01.21.12 at 6:41 am

Older Condos rarely make money. Back in the 80’s there were 2bedroom condo units, 1,000 sqft+ selling for $150k. Most were in former rental buildings that went co-op. it was boom times in GTA. A new build townhouse was selling for $200k in Mississauga.

Then the bubble burst and rates sky rocketed.

Go back to look at these same units, they’ve barely increased. Buildings are in rough shape. Rare is a Condo building that’s been well managed, repaired and without issues. Maintaining them takes cash, and no one can know when repairs are required let alone emergency fixes. Does no one remember that condo building in early 2000’s in Toronto where the whole underground parking structure was flooding and sinking? Suddenly your investment is in the minus territory.

Don’t even mention the Manulife building in Toronto where owners thought they owned their parking spaces only to learn the didn’t…years of lawyer fees.

Homework needed to buy units. There are gems, but there’s work involved. God knows what’s in store with these all-glass sloppily built condos over time.

#93 T.O. Bubble Boy on 01.21.12 at 7:47 am

Ok! Ok! Everyone stop debating!

Al Sinclair (realtor) declared on CP24’s Hot Property that “prices will DEFINITELY be higher in 5 years”, and that “The Economist Magazine (calling for 25% declines in Canadian house prices) doesn’t see the truth because they aren’t ‘on the ground’ in Toronto”.

There you have it – Toronto is definitely in the buy-now-or-be-priced-out-forever world of insanity like Vancouver.

Just give in – the TV Realtor told you to.
(as he advertised a $979k townhouse near Woodbine racetrack that will ‘definitely be a bidding war’)

#94 Onemorething on 01.21.12 at 8:47 am

#18 Devil’s Advocate on 01.20.12 at 10:42 pm

And the moral of your story today Garth is… rents may very well be pushed up. For why would anyone enter into such a losing proposition as to buy a revenue property with such sad prospect of return?

Disclaimer: note I said “”may” very well be pushed up”. I am not forecasting just suggesting one of the many possibilities I am aware of which pale compared to those I am unaware of. Who’s to say which it will be; real estate prices or rents but one thing is for sure, given the current dynamics one or the other must give.

Actually condo rents will be declining. — Garth

And that’s very true, there is a short lag where rentals are in demand for a short period while RE prices decline. This does not mean rental will go up during this demand either!

When looking for a rental, only take 1 year terms as rentals once on the decline we shave values quickly so dont get locked out of those 10% declines for the extra year per rental.

As for DA, he has every right to post here and take the contrarian view to our outright contrarian views, I just wish it wasnt as frequent!

Previously I recommended he start his own blog!

Why does this guy have so much bandwidth for us gents? I wonder?

#95 Victor on 01.21.12 at 10:19 am

Dr. Doom reveals what lies ahead and where he’s stashing his money

Jan. 20, 2012 7:17PM EST

Q: What’s your assessment of how well Canada is doing in the current global environment?

A: It’s a mixed picture. The overall fundamentals are better than many advanced economies. The fiscal situation, the balance sheet, is better. The banks have been better regulated. But now, with weakness in U.S. and Europe, growth will be below trend. Household debt is rising. There is some frothiness in the housing market. I don’t see a bust as in the U.S., but I would not rule out a 10-per-cent correction.

Q: Given that risk, the uncertainly about North Korea, the instability in Nigeria – as well as concerns about Europe, the U.S. and China – why are you so bearish on gold?

Gold is a risky and highly volatile asset, silver even more so. Should everybody have some gold and silver in their portfolio? I’d say yes. But should they be massively overweighted in it – I’m not sure. Because as gold prices rise, people sell their shares, their winners, to compensate for all their losers. Second, many gold positions are highly leveraged, so any credit crunch produces margin calls and the price plummets. Unless you are a professional, you can burn your fingers.

http://www.theglobeandmail.com/report-on-business/economy/dr-doom-reveals-what-lies-ahead-and-where-hes-stashing-his-money/article2309900/

===========

Looks like Nouriel isn’t disagreeing with the bearish view of this blog on both real estate and gold.

#96 mikef on 01.21.12 at 10:25 am

Realturds.
Here’s what we do to them

http://www.youtube.com/watch?v=sA1ePzf99vI

#97 JC on 01.21.12 at 10:41 am

#56 Rentin

Actually, REITs have several strategies @ their disposal that the newly minted homeowner/ money renter doesn’t. To boost profits they can take advantage of generationally low interest rates to refinance their existing mortgages which should result in more positive cashflow. Also, rental complexes typically operate with a margin structure that results in a lower pricepoint for rent than a speculator/flipper can charge per month to remain cashflow positive. Someone renting out their recently purchased condo would have to go deep into the red every month to match the cost a renter would incur in a well-managed rental complex. One can only do that for so long before writing off the investment (ie selling @ a loss) or bankruptcy.

#98 C on 01.21.12 at 10:54 am

From MLS.ca total listings:

Burlington, Ontario House/Detached $400,000-$550,000 2 or more bedrooms 2 or more bathrooms

January 5th, 2012 384
6th 387
7th 392
10th 402
11th 407
13th 420
16th 421
17th 425
19th 434
20th 437
21st 443

#99 bigrider on 01.21.12 at 11:06 am

#92 GTA Girl. – All good points.

#93 T.O Bubble Boy- Al Sinclair has got to be the slimiest dirtbag in the RE industry today. Makes Don Campbell look like an altar boy.

Al Sinclair will become a used car salesman once the bubble bursts.

#100 TurnerNation on 01.21.12 at 11:30 am

I really though HAM (Hot Anglo Money) would go for this house. I believe it began at 780k though I may be mistaken, but it was 728k, now reduced 724k

They don’t mention busy Front St. as being 100 paces away, and the GO/VIA Train track corridor is beside Front.

http://www.realtor.ca/propertyDetails.aspx?propertyId=11149265&PidKey=-543852440

#101 Montrealer on 01.21.12 at 11:32 am

I have created a spreadsheet to calculate all these figures, have fun. http://www.beachboy.ca/greaterfool/Garth_Calculator.xlsx

#102 Van guy on 01.21.12 at 11:33 am

Im sure Garth doesn’t rent because he probably bought a home in the 70’s. Paid off in a handful of years. The advice on this blog is for young families or young couples that are considering buying. If this was the 70’s or 80’s, I’m sure Garth’s advice would be different. Garth is trying to tell the young, don’t tie up your a bulk of your $ into RE and end up paying all that interest just for the sake of owning. Like he has said many times, let your money work for you. Have your $ pay for your rent. This adviceis clear and is for the average canadian. If you’re wealthy, there’s no need to come here. The problem that is looming will affect the middle class which is a majority of our nation. Look people, don’t worry what Garth does, worry about yourself and the people you care or. Garth is not a doomer as he never wanted this to happen in the first place. Understand this, and you will be just fine.

#103 Dave on 01.21.12 at 11:35 am

Sure, lock into a 2.99% mortgage with restrictive terms and play roulette where the board stops spinning 5 years from now.

Anyone remember what rate reset mortgages did in the US?

Oh thats right. It’s different here.

#104 Cowboy on 01.21.12 at 11:42 am

Doug in Victoria,

No of course I do not regret not buying a house a year ago that has gone down $150,000!! I enjoyed living there for a much cheaer price! I meant generally speaking buying is right for some people and especially since prices have come down so much I will low ball on a house and see what happens! I may buy in the next year or two…
I can’t believe how many houses are selling, this market is NOT dead!

#105 Cowtown Lover on 01.21.12 at 11:45 am

# 66 Dad on 01.21.12 at 12:38 am

Ha, try telling a Calgarian their shining city on the hill is anything but “the real capital of Canada” and watch their heads explode.

But what do we know down here in the Southern Forgotten Realms, thar be dragons and theocracy past High River!
+++++++++++++++++++++++++++++++++++

You are mistaken; there is nothing south of High River.

And plaintive whispers of High River being real are just so much legend as well.

#106 johnny5z on 01.21.12 at 12:09 pm

Also, price in the lack of freedom to move if your neighbor is loud, you find out there are problems with the location once you move in, or you find another job somewhere else. A qualitative cost.

#107 GTA Girl on 01.21.12 at 12:12 pm

BigRider: I say this about Toronto condos with bitterness, especially when looking at Manhatten buildings run as co-ops which increase in value and prestige, and are controlled and run like a business.

But the mind frame is different in NewYork. Living in high rises in well laid out apartments which resemble actual homes and not Japanese cheap sleep hotels.

Plus New York has the life, culture and diverse business’s , which lacks here in Toronto. There’s not enough local business’s to support the amount of condos built. Whole sections of the city w/o grocery stores, dry cleaners and amenities.

Everyone in Toronto condo industry are dillusional

#108 Stevenson on 01.21.12 at 12:18 pm

When you rent, what you are doing is subsidizing these “investor/speculator” mortgages even if not fully covering the carrying costs. Which then means they don’t pay that full amount in mortgage payments while investing on that unit. This what a lot of Canadian residents that live off shore do and bank in that primary residence gig. Yes that’s right primary residence…there is a loop hole around it.

Were we not claiming victory a few weeks ago about all the doom and gloom? What happened to all the correction talk?

I remember talking about how lower rates won’t make a difference and what is it doing now?

Interesting you cannot challenge the math. — Garth

#109 househornyhousewife on 01.21.12 at 12:18 pm

Garth,

I still say, “You can’t shine shit”. If you are going to buy something, buy something that’s worth it. Just because something is cheap it doesn’t mean you should buy it.

The own vs rent argument is not even worth bringing up. It will almost always be cheaper to rent than to own, especially in today’s expensive market. That condo is probably worth around $100,000.00 and not $150,000.00 .. for all of the reasons you outlined in your post.

The other issues worth considering when owning are:

a. some wonderful properties cannot be rented and so must be owned (this is true for many waterfronts in certain locations and other unique types of properties) .. therefore if your dream is to live in one of these, you have to buy

b. will said property be worth anything in the future .. in other words, is holding onto that property worth it ? Again, depending on the property’s location, view, cachet etc.. it may be something worth keeping because it may not fluctuate as much as other more “run of the mill” properties (like condos or McMansions as you always put it).

c. is said property where you want to be for the next 10 to 15 years ? what are your future plans ? if you are 21 and don’t have a permanent job, then buying is not for you so rent

d. how do you feel about renting ? some people, like myself, detest having a landlord and if given the choice would rather own than rent .. however, I would never in a million years put my money on a condo unless it had an amazing water view with high ceilings and lots of space (some sort of value that does not degrade with time). If I lived in a big city and I had the choice of buying a shitty condo or renting one … well the choice is obvious and I would have to rent.

Of course I am talking about living in a property and not owning it purely for speculative purposes. I think that anyone stupid enough to buy a box in this day and age purely for speculative purposes (ie. to fund the mortgage and expenses with rental income and then make a capital gain in the future) deserves what they get. Well duh ! In this case, of course it is less risky and less trouble to take that downpayment and invest it elsewhere. I don’t even know how people are even considering such a stupid thing these days.

For other types of properties to live in, however, the approach should be different and math is not the only thing that needs to be used in order to make a sound and satisfying decision. Math should, however, be a part of that process and I do agree that many are buying who cannot afford to. As with any purchase one cannot afford, these people will have to face the consequences eventually. That’s life.

HHHW

#110 GTA Girl on 01.21.12 at 12:19 pm

http://www.moneyville.ca/article/1118907–in-toronto-gta-upmarket-spells-highrise-as-single-family-homes-become-scarce?bn=1

Toronto condo builders are asking for what exactly? Saying current laws unfair to them?

But their the reason why condo units have decreased to walkin closet size!

Blowing smoke….again

They sound almost shrill

What do you make of this? Anyone?

#111 Jimmy on 01.21.12 at 12:29 pm

BMO’s 2.99% deal is losing steam quick as Mortgage brokers have the same rate available and with less restrictions. 10 year rate is also very attractive now.

Have a look…

http://www.torontomortgagesite.com/

#112 Dragonsayer on 01.21.12 at 12:31 pm

Wait a second. This property is listed at $149,900. Garth’s calculations are based on a purchase price of $150,000, rounded up. Who in their right mind would pay full asking for a sad sack property like this?

Run the numbers on $149,900. Tell us how it works out. — Garth

#113 Junius on 01.21.12 at 12:37 pm

#89 TheRealTruth,

You said, “I guarantee you that prices in March/April will be higher at the low end of the market than they are now.”

Be careful when making these sorts of predictions. Factors are too complicated to predict with this level of certainty.

I still do not understand your reasoning on the lower end of the market. Is it not the most vulnerable? Did most people who were going to buy not buy over the past few years? Won’t some speckers and flippers be forced to sell in this economy?

Who are these buyers who will push up the market?

#114 Devil's Advocate on 01.21.12 at 12:40 pm

#71Bobby on 01.21.12 at 12:59 am
For # 43 DA,

I’m certainly very conversant with BRA’s but can’t understand why one must be signed in order for the agent to meet his fiduciary duty. May I suggest that the document is there solely for the realtor to secure his/her commission. I will never sign one, nor will any of my colleagues.

Again, I see a time in the near future where realtors will be paid for their time. Those who provide a level of service commensurate with what they charge will do well. The others will be looking for another line of work.

There is some truth in what you say. But would you expect a general contractor to build you a house without your having signed a construction contract. It is not uncommon for a REALTOR to invest three months of their time helping a buyer find, negotiate, oversee and close a deal on a property.

There are other legal considerations which benefit both parties. I have never had a lawyer or judge refuse to sign a B.R.A. when I asked.

As for your time and billing proposal; it would be great as then unrealistic sellers would be reluctant to list knowing that even if their property did not sell they would still be obligated to pay for the cost of the REALTORS time and expenses which as it stands now is downloaded on the realistic successful sellers. Unfortunately it will never happen.

#244Bobby on 01.20.12 at 10:44 pm
For #208 DA,

If, as you pontificate, a realtor’s fudiciary duty is to provide their client with the best property, then why do most only show their own firm’s listings? Or perhaps even more importantly, they conveniently seem to omit those listings that are FSBO or belong to a discount broker?

Remember, the buyer’s agent is still paid by the seller, so they do have an obligation to the seller.
I have bought and sold many properties and in only one instance did the realtor really earn their pay. Rather, most were solely interested in their commission. Interestingly, when I sold a property at Whistler the realtor could best be described as pathetic. It is amazing how they respond when you threaten to file a formal complaint.
I see a time, coming very quickly, when both buyers and sellers agents will be paid for their time. It will quickly cull the realtor ranks.
Perhaps you may still be around?

Not true. However some REALTORS who have no Buyer Representation Agreement might worry how they would get paid for their time showing a discount brokerages listing or that of a FSBO. Personally not only do I show both discount brokerage listings and FSBOS, I knock on the doors of those homes which match my clients home search criteria to ask if they are considering selling in the near future.

Again not true. In British Columbia anyway we have Buyers Agency. While yes the remuneration paid the Buyer’s REALTOR comes from the proceeds of the sale, it is commonly accepted that the asking price of the house has been adjusted accordingly. But that is a good case for Buyer Representation Agreements (BRA) which facilitates a negotiation of that aspect of the transaction.

Time and Billing? Again… not going to happen. It would be nice but not going to happen unless legislated for getting REALTORS to come to a consensus on such a thing would be like herding cats.

#236Van guy on 01.20.12 at 9:26 pm
Even realtor Larry Yatkowsky is not bullish on Van. Da, any thoughts?

“At this precise moment we really don’t know if there will be a substantial change in our local Vancouver market. Going out on a limb, my take on what I’m seeing says the numbers for January are not going to be pretty. That said, I anticipate that should the expected visitors fail to materialize the adjustment will start on the west side and quickly filter east, south and up valley. By Feb/March if the market has as some suspect, crossed the line into negative territory, we’ll begin to see a picture developing. How big and what that picture will look like be may not be known until we get some hindsight by May or June.”

Larry is entitled to his opinion, as are you an so am I. But I deal in Kelowna real estate and stick to it as each market is so unique that I dare not practice in unfamiliar territory as I could not possibly provide an adequate service to a client by doing so which would put us both at risk financially.

Notice thought that Larry states; “How big and what that picture will look like be may not be known until we get some hindsight by May or June.” He is, in-as-much, echoing what I keep repeating on this pathetic blog – you can’t forecast the future with any confidence. The best you can hope to do is look at the recent trend of the past and try mitigating the risk you might otherwise incur going forward with the supposition that it the future will rhyme. Real estate is a long term hold so it should not matter what happens to it in the short run. Which is not to say you shouldn’t buy or sell when it is most to your advantage. Problem is most buyers buy in a seller’s market for fear if they do not prices will rise pricing them out and they don’t buy in a buyer’s market for fear that prices have yet further to drop. Sellers typically act in the same manner but in the inverse; They tend not to sell in a seller’s market waiting for prices to rise yet further and they do tend to try sell quickly in a buyer’s market in effort to avoid selling at the bottom of the market. But the only way to tell when the peak or trough has been achieved is after it has passed and you look at it in retrospect.

The best time to buy and sell is in the “safe zone” – somewhere in between the peak and the trough. No you may not optimize your purchase or sale but to try time the market is speculation and puts you at peril of equally large losses as those potential gains. Just like gambling, which speculation is, the bigger the risk the bigger the payback if not a big loss. So do what blows wind up your skirt but don’t come crying to anyone for the folly of your own actions. Again the “safe zone” think about it…. I think we would all agree we are well off the peak. The question is how far away, after considering that the bubble burst 3 and 4 years ago in terms of prices and volumes respectively, do you think the bottom of the trough is?

Where do you think real estate prices will be in 5, 10, 15, 20 or 30 years? How old are you and how long do you plan on owning the roof over your head? I deal with a great number of seniors who sell their home and move into seniors rental accommodation. Of course to the bulk of them owning is not a consideration. They just don’t have that long term a plan in mind.

#94Onemorething on 01.21.12 at 8:47 am
Previously I recommended he (Devil’s Advocate) start his own blog!

Why ever would I do that when this one serves so well and clearly needs such an anonymous “Devil’s Advocate” as I.

#115 Joanie on 01.21.12 at 12:51 pm

Dear blog contributors,
Most of the readers of this web page look forward to various responses and view points, however this race for ” first ” entry is getting redundant. If your ego can tolerate it, please try to refrain this needless impulse. Let’s try something new in 2012:)

#116 Victor on 01.21.12 at 12:51 pm

Best move

“My best investment move would be purchasing my stocks when they were low and focusing on paying off the mortgage quickly.”

Worst move

“It would be investing in mutual funds in my 20s with high MERs [management expense ratios] and low returns.”

http://www.theglobeandmail.com/globe-investor/investment-ideas/features/me-and-my-money/going-straight-for-the-dividend/article2309756/

=======

Dividend stocks, DRIPs good….mutual funds, maybe not so much.

#117 Junius on 01.21.12 at 12:53 pm

Interesting article on Vancouver home assessments in the Globe and Mail. My apologies if it has been posted already. One owner realizes how screwed he is. Bought at $950,000 in 2009 and was happy when his assessment went up to $1.35 the next year. This year is nearly $1.9. He gets the fact that assessed value and sale value are not the same. Also, note the comments in the comment section. Opinions are changing. The world is catching up to Garth.

http://www.theglobeandmail.com/news/national/british-columbia/assessments-hit-vancouver-homeowners-hard/article2307362/

#118 Devil's Advocate on 01.21.12 at 1:04 pm

Bobby @ #71 and #244

Might I quite simply suggest; if you are presented a request by your REALTOR that you sign a Buyer Representation Agreement (B.R.A.) and you are uncomfortable doing so then you clearly do not have enough confidence and trust in that particular REALTOR and should decline and find another.
On the other hand a REALTOR faced with a prospective client who refuses to sign a BRA should politely decline to do business with that prospective client for they clearly are unworthy of such a commitment of time and expense as a REALTOR knows it might take with no guarantee of remuneration for those services.
Both REALTOR and client have opportunity to modify the terms and conditions of the BRA by way of addendum and should do so to the mutual satisfaction of both.

#119 kilby on 01.21.12 at 1:11 pm

Apparently there are not too many people that will qualify for the 2.99% mortgage, it’s a teaser to get potential customers in the door, large down, max 25 year with stellar credit history. Many will leave with a 3.99% deal. (This from Vancouver realtor)

#120 Bankers in a Panic of Canada's housing crash on 01.21.12 at 1:32 pm

If the market was doing so well realtors wouldn’t be here pumping RE since they would be selling it. The fact is they are selling nothing and very worried. You can see it by the increased postings of the worried realtors. Even with BMO 3% rates 25 year mortgage offer there are not enough fools left over with more product for sale then demand. Many sellers are worried and thus listing early with hopes of finding a sucker before the market falls back down to economic reality.

#121 Dan on 01.21.12 at 1:42 pm

#62RN

People in Toronto or other “home” owners/money renters borrow money they don’t have to pay their bills. The use credit cards HELOC , LOC and any other means to borrow just to survive. This explains 153% and growing debt Canadians have. With continued jobloss , strikes and wage reductions the house of credit cards will come crashing to the ground. Everyone in the RE knows housing is a bubble worse then the US.

#122 Maxingandrelaxing on 01.21.12 at 1:42 pm

Check out this doozie of a flip: I believe it was bought last year for a ripe 460 or so… Sadly somebody is going to be hurt on this one.
http://www.torontoluxuryrealty.com/117HallamTORONTOOntario/W2257055/TREB_REM134

#123 Realtors in a panic on 01.21.12 at 1:45 pm

It seems to me the US is reconfiguring its economy and fixing things, while we here in Canada for some reason seem to be in another world. What may help change things in Canada is the US being resurrected into a new economy – much lower wages per capita. Let’s face it, how much do you need to pay people when houses are $150k! Eventually manufacturing jobs will roll into the US from Canada like a tsunami(which is happening as we speak). Is this what it will take for Canada to get its house in order?

When can the average Canadian remember when the average house in Canada was 2 times more in price then an average house in the US? There is no doubt we have a serious problem here.

#124 Ogopogo (né Okanagan Renter) on 01.21.12 at 1:54 pm

#105 Devil’s Advocate

Nice self-serving try there, DA, pushing BRAs on unsuspecting victims. Garth already tore that notion to shreds on his post of a little while back, “The trouble with BRAs”. I recommend anyone (especially noobs here, there are quite a few lately) considering throwing money away at a realtor to read this:

http://www.greaterfool.ca/2011/11/13/the-trouble-with-bras/

As Garth puts it in his inimitable way:

“Do not sign it, unless you have too much money and enjoy supporting realtors.”

Sorry, DA, you fail. Again.

#125 Tom from Mississauga on 01.21.12 at 1:58 pm

# 3 Van Guy – Is it ever better to buy then? At what price would it make sense to buy?

When it takes less cash flow per month to own than it does to rent. Hence, you are being rewarded for your risk of buying an illiquid asset.

#126 Waterloo Resident on 01.21.12 at 2:00 pm

Okay everybody, what to learn something about when you can determine when the price of gold is about to skyrocket and when the economy might be heading into another recession, here is the charts you NEED to know:

The following shart shows that the yeild on the 30yr Treasury Bond actually fell below that of the yield on the 3-month T-Bill, and when that happens America USUALLY goes into recession in the next 12 months.:

http://stockcharts.com/h-sc/ui?s=$TYX:$IRX&p=D&st=2000-01-01&en=2003-01-01&id=p19130550431
here is $GOLD over the same time frame:
http://stockcharts.com/h-sc/ui?s=$GOLD&p=D&st=2000-01-01&en=2003-01-01&id=p21053036120

The same thing here once again at the end of 2006 / start of 2007:
http://stockcharts.com/h-sc/ui?s=$TYX:$IRX&p=D&st=2006-01-01&en=2008-01-01&id=p33738397086
here is $GOLD over the same time frame:
http://stockcharts.com/h-sc/ui?s=$GOLD&p=D&st=2006-01-01&en=2008-01-01&id=p17792495731

So if the ratio goes below 1, America goes into recession in the next 12 months.
Now what about Gold, what does it do?

Well, when stocks start to look like they are going to fall, people pile into Gold as a safe haven, so gold usually goes up. So the lesson is; when the ratio falls down to below 1, BUY GOLD !!!


This is what the chart of the 30-yr / 3-month ratio looks like now, it is around 75. but just a few weeks ago was around 600 ! usually anything OVER 100 represents HYPER-INFLATION.
When ever this chart has values OVER 10, GOLD ALMOST ALWAYS RISES in value.
http://stockcharts.com/h-sc/ui?s=$TYX:$IRX&p=D&yr=3&mn=0&dy=0&id=p50950922367

What happens is the ratio SPIKES up to 50 or above and then crashes, and gold falls down too, but as long as the ratio is over 10 you will rest assured that the price of gold will continue to skyrocket, no matter what.

If you want to know if gold is a safe bet right now, then take a look at this chart: When the line falls down the the blue or red bands, then its usually a bottom for gold prices and its safe to buy. Right now I would say that based on this one chart its a safe bet that Gold will continue to rise. (but wait until I show you the next 3 charts that will show you why gold is to be avoided now).
http://stockcharts.com/h-sc/ui?s=GLD:$CDW&p=D&yr=3&mn=0&dy=0&id=p81171496120

Look at these three 3-year charts. When every all 3 of them are in a falling trend like they are now, its a time when you TOTALLY AVOID GOLD at all costs.
http://stockcharts.com/h-sc/ui?s=$CDNX&p=D&yr=3&mn=0&dy=0&id=p95696037966
http://stockcharts.com/h-sc/ui?s=$SILVER&p=D&yr=3&mn=0&dy=0&id=p52599079983
http://stockcharts.com/h-sc/ui?s=$GOLD&p=D&yr=3&mn=0&dy=0&id=p10926741966

So my advice to anyone thinking of buying Gold: Wait until the $CDNX charts turns around and starts to rise, this shows that worldwide commodity prices are once again on the rise and so will Gold too. Right now commodities (and Gold) are on a falling trend, not a rising trend.

If anyone is invested in BONDS: RUN !!!! RUN NOW !
Here is the chart that shows that rates are just about at the bottom and will soon start to rise, as you can see from this chart the value of TLT is ‘peaking’, and this happens usually about the time when Bond prices are about to crash because interest rates are about to skyrocket.
http://stockcharts.com/h-sc/ui?s=TLT&p=D&yr=3&mn=0&dy=0&id=p82673992704

And we all know that when interest rates go up, so will mortgage rates, and when that happens the real estate market usually falls quite a lot, so starting some time about May, expect the housing market to stall, and then in late summer the papers will be talking about how the housing market is “Deflating”.

This is not a gold blog. Knock it off. — Garth

#127 Chris on 01.21.12 at 2:02 pm

Garth, I heard from a friend who used to be with BMO as an employee that the reason for the 2.99 percent 5 year fixed is twofold:

1) To get people who are in variable rate mortgages into a more stable 5 year fixed which has roughly the same rate (but is less risky if rates rise).

2) To get people who have home equity lines of credit and variable rate mortgages to refinance everything as one big 2.99 percent fixed rate mortgage.

(Is that even possible? Can you take your existing HELOC and refinance it as part of a larger low rate mortgage?)

My friend is speculating the banks are afraid that variable rate HELOCs are a greater risk than 5 year fixed
mortgages, and with Flaherty and CMHC no longer insuring lines of credit on homes, they want to get more existing clients out of VRMs and HELOCs and into 5 year fixed mortgages. Thoughts?

#128 Devil's Advocate on 01.21.12 at 2:07 pm

#120Bankers in a Panic of Canada’s housing crash on 01.21.12 at 1:32 pm
If the market was doing so well realtors wouldn’t be here pumping RE since they would be selling it. The fact is they are selling nothing and very worried. You can see it by the increased postings of the worried realtors. Even with BMO 3% rates 25 year mortgage offer there are not enough fools left over with more product for sale then demand. Many sellers are worried and thus listing early with hopes of finding a sucker before the market falls back down to economic reality.

A REALTOR typically has a very flexible day compared to say someone flipping burgers at BK (I am not suggesting that is what you do for a living). Also most REALTORS these days have technology which grants them access to the internet at all times, iPads, iPhones, netbooks, notebooks etc. and unlike someone flipping burgers we are at liberty to use them anytime we see fit.

Quite frankly I am surprised this “pathetic” blog is not overrun with REALTOR comments. I think it is simply a matter that they really couldn’t care less about the misconceptions of the pups and poodles. Besides which, if the market really was as bad as you think it is the surest way for a REALTOR to change that for themselves is to work harder which too would preclude them from participating on this “pathetic blog”.

Me? Why am I here? I keep asking that very question myself.

#129 Van guy on 01.21.12 at 2:12 pm

My realtor friend works mainly on van west sfh.

Dec 2011 sales 19
Dec2012 sales 128

This is how the correction of 08 started. Starts with van west and all condos, then it moves south, then east. Garth was totally right when he said “say a prayer for Van west” back in the fall.

Owning vs renting? It’s cool to own than to rent. Just like how it is cool to smoke and drink as a high school student. It’s looks and feels cool until you’re broke and have zero or negative equity.

#130 bill on 01.21.12 at 2:19 pm

”I’m not saying they won’t but what makes you so sure as to say so unequivocally that they will?”

well da , the canada wide property managing company that I work for has a 20 story apt in surrey that is only half full. [it is for sale I believe]
a smaller company under the same property managers’ wing so to speak, has recently sold two apt blocks in abbotsford for the same reason. no quality tenants.
we are now at the point where we are considering rent freezes. unthinkable a few years back…but now with the type of renter we would prefer is in underwater condos it seems more likely as we face more competition from the aformentioned underwater condo/home owners for that elusive rent paying reliable type renter……
I’ll bet they wish they were renting now instead of losing their shirts eh?

#131 Cow Man on 01.21.12 at 2:22 pm

Amigos: Please consider that a mortgage is forced savings. Those who don’t go the forced savings route, rarely save. Iall of my peer group who did not go the forced savings group are our of time. The other side of ownership.

#132 rod on 01.21.12 at 2:31 pm

Another excellent blog Garth!
Re: trash talk. Based on your last posting, I would suggest for your own mental health to stop reading the comments section. Cheers!

#133 GregW, Oakville on 01.21.12 at 2:33 pm

Hi Nasta, You may find these article of interest?
– Fukushima’s Impact on the Ocean Analyzed
No danger from water, but marine sediments are the big question
http://spectrum.ieee.org/energy/environment/fukushimas-impact-on-the-ocean-analyzed
– A Battery as Big as the Grid
2012 could mark the arrival of utility-scale battery storage
http://spectrum.ieee.org/energy/the-smarter-grid/a-battery-as-big-as-the-grid
– 2012 Called Make or Break Year for Smart Grid
http://spectrum.ieee.org/energywise/energy/the-smarter-grid/2012-called-make-or-break-year-for-smart-grid
– Data Mining Scrabble
A study of 10 million game simulations finds the true worth
http://spectrum.ieee.org/geek-life/tools-toys/data-mining-scrabble

#134 syd on 01.21.12 at 2:43 pm

http://www.moneyville.ca/article/1118907–in-toronto-gta-upmarket-spells-highrise-as-single-family-homes-become-scarce?bn=1

#135 Junius on 01.21.12 at 2:44 pm

#127 Chris,

That is a reasonable explanation. If true, it shows you that the banks have done a stress test on the consumer and are worried. They should me.

#136 Lord Humungus on 01.21.12 at 2:47 pm

To all you Garth-o-philes out there that detest D.A.’s comments.
His monicker explains his point of view. He’s(she’s?) playing “devils advocate” for the Real Estate industry.
I find DA’s point of view refreshing and informative from a non realtors perspective.

DA please keep the comments coming. I may not agree with you but I like to hear what your point of view is if only to help me prepare for the day when I have to deal with a realtor in a negotiated sale/purchase.

#137 [email protected] on 01.21.12 at 2:53 pm

Has the media fringe (in this case business writers) finally turned a corner? Great new article in Canadian Business magazine this month (Feb 2012) with predictions and reasons; link is http://www.canadianbusiness.com/article/65694–prediction-the-canadian-housing-market-will-crash . Apologies if this has already been posted.

#138 Ogopogo (né Okanagan Renter) on 01.21.12 at 3:09 pm

#129 Van guy

Owning vs renting? It’s cool to own than to rent. Just like how it is cool to smoke and drink as a high school student. It’s looks and feels cool until you’re broke and have zero or negative equity.

Well put. My European friends in France and Italian (and now bubble-popped UK) can’t seem to understand our Canadian obsession with RE. Everyone there rents, unless they’ve inherited the place from a parent or grandparent, and even then they’d either sell it or rent it out themselves. There is no stigma attached to renting whatsoever and since the Euro Zone kicked in they’re free to move around as much as they want as job opportunities shift. Homeownership is seen as something passe and sclerotic. What I find ironic in our frozen hinterland is that mortgage renters here tend to move on average every 5 years or so, so it’s not like we as a nation like to dig our roots deep either. We simply seem to love throwing money away at the banks and realtors. And then we pretend we hate them.

Learn from European renters, if not from their profligate governments.

#139 TurnerNation on 01.21.12 at 3:11 pm

Ok, even the free weekly newspapers are now advocating ETFs. I think the equity market has peaked in the short term…

http://www.thegridto.com/life/finance/your-savings-account-is-hosing-you/

Fri Jan 20, 2012
Finance

Your savings account is hosing you

If you want your money to grow over time, consider investing in an ETF—but first learn what it is.

BY: Hilary Doyle

A while back, I sat down with a business-journalist friend who warned me that keeping my money in a savings account was making it disappear. I’ve always been pretty good at making money vanish on my own, so my decision to open a savings account had been a concerted effort to do the opposite. I thought it was a safe way to make money grow over time. Albeit, a long time. My pal pointed out that while the interest rate on my high-interest savings account was 1.5 per cent a year, Canada’s rate of inflation hovers at almost double that. So despite earning 1.5 per cent in annual interest, at current inflation, every dollar in that account was losing almost as much in purchasing power each year.

#140 DUI on Money Road on 01.21.12 at 3:11 pm

I’m sure it’s already been said but the owner also takes on the possibility of a special assessment, is responsible for replacing worn-out appliances, and is less flexible to move in future etc.

#141 Daisy Mae on 01.21.12 at 3:26 pm

#118 DEVILS ADVOCATE: “Might I quite simply suggest; if you are presented a request by your REALTOR that you sign a Buyer Representation Agreement….”

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

There should be no need for a BRA. It is self-serving….and shows a lack of trust on the part of the realtor. I wouldn’t sign one.

#142 Canadian Watchdog on 01.21.12 at 3:38 pm

#128 Devil’s Advocate

If you want to read something worthwhile go to OSFI’s website and read the 2012-01-06 press release. The government and banks are worried about the bond market, which will effect mortgage rates in the near future.

Something much bigger is going on that isn’t being reported.

#143 Daisy Mae on 01.21.12 at 3:41 pm

#128 DEVILS ADVOCATE: “Quite frankly I am surprised this “pathetic” blog is not overrun with REALTOR comments….”

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

“pathetic” is being overused in your posts, DA.

As Garth always says: “Knock it off.”

#144 VICTORIA TEA PARTY on 01.21.12 at 3:52 pm

JUST ANOTHER TEASE A LA TBTF…SORT OF…

Indeed, membership in this brand new Two Point Double-Niner Club has intriguing possibilities…for those who “qualify!”

Such a move will make many of you broke and busted-already-folks out there “somebodies”, in your overworked pea-pod minds, because it MAY remind you of what’s been shakin’ since the spring of 2008.

It’s STILL Too Big To Fail time, boy and girls! Right? Sure!

That’s right. Step right up and extend and pretend, in YOUR neighbourhood.

If your egos are big enough, just whip on down to the local deli, pick up a Greek salad, and pretend you’re the Greek government trying to stiff your benefactors, in continuing negotiations this weekend, with low interest bond yields and a 75 per cent haircut, “or we default, and you get ZIP…Sincerely your’s, Zorba!”

Why, heck; go big time to Main Stream America! Pretend you’re the CEO of Bank of America, or Fannie, or some big auto union. Can’t repay your loan? No prob, brother, someone else’ll pick up the tab. Like, the taxpayer, er I mean, the guvmint?!

Opps, made a mistake here. If I, a little fish in a mighty big economic ocean, screws up on a 300-grand two double-niner, I AM SO SCREWED.

So, maybe IF I can talk my bankster buddy into lending me $2 TRILLION, then maybe I win the jackpot and screw you! I get the cheap loot and you get to pick up the tab!

I’m dreamin’, right? Right? Hello?

#145 Van guy on 01.21.12 at 4:01 pm

#129 Van guy on 01.21.12 at 2:12 pm

Correction on my previous post

December sales
2010 sales 128
2011 sales 19

#146 rw on 01.21.12 at 4:10 pm

#32 – Devil’s Advocate

That’s assuming that owners are able to sell, never mind for a capital gain. In fact for most of Kelowna and area capital gains is just wishful thinking.

Owners unable to unload will continue or force to rent out their units (condos) increasing availability and rents to decline.

Does this make sense?

#147 Daisy Mae on 01.21.12 at 4:11 pm

Well, well, well….OGOPOGO provided us with Garths’ blog on BRAs.

http://www.greaterfool.ca/2011/11/13/the-trouble-with-bras/

You just don’t have any ethics at all, do you, DA? Give it up. You’ve lost all credibility.

#148 Bill Gable on 01.21.12 at 4:27 pm

She phoned last night.
Used to be our neighbor in the Condo development from Hell, that we escaped three years ago.
This woman has health issues. So does the building. ` The elevator has to be replaced, and I got a note of the assessment, and there is no way I can pay it.` She can`t sell, because she also told me that there are rain issues, and another assessment is sure to follow.
I suggested a chat with [email protected] and try and get some help, or better, try and sell…mark it down the cost of the coming charges and get out.
The building is 30 years old, and we sold a bit early, but did ok.

Buying a condo? Pay close attention to Mr. Turner’s post and save yourself a world of pain.

We will never buy a condo again. There is a nut on every council and the stress of constant bickering literally drove me around the bend.

My dear friend was calmed and I told her about this site and what Mr. Turner brings to this worthy blog.

Gosh, I wonder how many people are sweating this unfolding mess.

The stress is not worth it.

No free lunch, I guess.

#149 TurnerNation on 01.21.12 at 4:45 pm

#85NorthYork Sash on 01.21.12 at 3:55 am

I believe the point it: if you cannot make money with a piddly 150k unit, how you gonna do it with a 500k unit? Condos are doomed from the beginning unless you get in at bottom of cycle.

#150 TurnerNation on 01.21.12 at 4:49 pm

Kelowna reduced:

http://kelowna.kijiji.ca/f-reduced-real-estate-condos-for-sale-W0QQCatIdZ643QQKeywordZreducedQQisSearchFormZtrue

http://kelowna.kijiji.ca/f-reduced-real-estate-apartments-condos-W0QQCatIdZ37QQKeywordZreducedQQisSearchFormZtrue

#151 TurnerNation on 01.21.12 at 4:50 pm

Kelowna Reduction part deux:

http://kelowna.kijiji.ca/f-reduced-real-estate-houses-for-sale-W0QQCatIdZ35QQKeywordZreducedQQisSearchFormZtrue

#152 Cookie Monster burnin' Kus on 01.21.12 at 5:25 pm

#133 GregW, Oakville
Hello Greg,
Speaking of grid energy storage using batteries there’s a pdf issue of batteries international available for download that has a few good pieces in it. It’s a dream come true for the electric utilities.

Go to their homepage to download.
http://www.batteriesinternational.com/

#153 FormicaLuvr69 on 01.21.12 at 5:36 pm

Sorry Garth, unlike the granite that gets most 20-somethings running their bare asses along the staircase screaming “MY HOUSE!”…

Formica is what does it for me.

I will one day make a bride of Formica and then you will all see.

Oh yes, you will ALL see.

#154 Herb on 01.21.12 at 5:59 pm

The truth that’s finally emerging –

In his six years in power, Stephen Harper has successfully positioned the Conservatives as the party of neither the left, nor of the right, but of the deeply stupid.

For the details: http://www.ottawacitizen.com/news/Policy+neuronally+challenged/6029379/story.html#ixzz1k8H8xFnS

#155 TurnerNation on 01.21.12 at 6:02 pm

Here’s the weekend’s funny animal picture:

http://tinyurl.com/6tq8own

#156 Bobby on 01.21.12 at 6:15 pm

For #118 DA,

Unfortunately, the only way a realtor will receive a commission is if the buyer actually buys something. One may spend a whole week escorting a prospective buyer around, only have the buyer decide not to make a purchase. There is no house sale and the realtor does not get paid.
Perhaps there was no sale because the realtor did a poor job showing prospective homes. I have seen innumerable examples of that. The buyer decides the realtor is wasting his time so he goes elsewhere. The BRA locks the buyer into paying for a commission for any furure sale, even if the poor realtor is not involved.
No, the BRA is only there to protect the realtor and his/ her prospective commission.

#157 kilby on 01.21.12 at 6:21 pm

Why is is that some realtors are so insecure that they have to always capitalize the word REALTOR? Isn’t “realtor” loud enough?

Along with the goat sacrifices, it’s required. — Garth

#158 PrairieMongoose on 01.21.12 at 6:40 pm

M$M’s boogyman story about rentals – I’m so scared …

http://money.ca.msn.com/video?cp-documentid=cbcc2012-1901-2149-0033-218864324800

#159 bigrider on 01.21.12 at 6:44 pm

What could possibly have been wrong with the last post ???

This: “We need your predictions to finally come to fruition Garth before you are in an old age home or no longer able to write.” You are my guest here. Act like it. — Garth

#160 Danforth on 01.21.12 at 6:53 pm

My mortgage comes up for renewal in April, so now’s a good time to get a rate locked in. (5 years remaining on payments !! :)

I’m curious if other institutions will go to 2.99% as a five-year-fixer. Any thoughts out there?
The best i’m seeing is 3.4

Its just that I’m not a fan of BMO’s 10/10 clause (can increase payments by 10% / offload 10% of principle per year beyond scheduled payments) – I may be able to do better than that to get the monkey off the back faster.

#161 jess on 01.21.12 at 7:06 pm

Jan 18, 2012 07:00 PM
$10 Million Returned to Victims of Public Corruption Scheme
U.S. Attorney William J. Hochul, Jr. announced today that more than $10 million in forfeited property has been returned to the victims of one of the largest public corruption cases ever prosecuted …

The U.S. Attorney in Rochester, New York, announced today that more than $10 million in forfeited property has been returned to the victims of one of the largest public corruption cases ever prosecuted in the Western District of New York.

Those receiving restitution include the Eastman Kodak Company, the Town of Greece, IBM, ITT Industries, Inc., RG&E, and Global Crossing. The companies and town were all victims of real property tax appraisal and assessment schemes spearheaded by John Nicolo, a property appraiser.

In 2005, John Nicolo, Mark Camarata, Charles Schwab, David Finnman, and others were arrested and later convicted of a variety of crimes including mail and wire fraud, conspiracy, and money laundering. The defendants schemed victims out of millions of dollars by artificially inflating tax assessments on properties they owned, and then causing John Nicolo to be hired by the companies in an effort to reduce the resulting tax assessments.

Assistant U.S. Attorney Richard A. Resnick, who prosecuted the case, stated that David Finnman and Mark Camarata, while working at Kodak, hired Nicolo to perform real property appraisal services for Kodak between 1997 and 2005. In return for hiring Nicolo, Finnman, and Camarata would receive money representing kickbacks from Nicolo. In addition, Charles Schwab, while the Greece Town Assessor, also received kickbacks from Nicolo in connection with various property tax assessment matters involving property located in Greece.

#162 Popeye the sailor man on 01.21.12 at 7:16 pm

#124 Ogopogo (né Okanagan Renter) on 01.21.12 at 1:54 pm

B.R.A. VO for giving the link to Garths older post it is a timely reminder.

#163 Devil's Advocate on 01.21.12 at 7:21 pm

#124Ogopogo (né Okanagan Renter) on 01.21.12 at 1:54 pm

#141Daisy Mae on 01.21.12 at 3:26 pm
#118 DEVILS ADVOCATE: “Might I quite simply suggest; if you are presented a request by your REALTOR that you sign a Buyer Representation Agreement….”

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

There should be no need for a BRA. It is self-serving….and shows a lack of trust on the part of the realtor. I wouldn’t sign one.

And you don’t have to sign one. There are loads of REALTORS® vying for your business who won’t ask for you to sign one. There are loads of REALTORS® who will discount their commissions to get the deal you want… and so they should. Please help yourself to their services…. Please. All I am telling you is I and a growing number of REALTORS® will not do business without one. Why should we? We have every much right to decline your business if you won’t sign one as you do to refuse to sign one.

Would a general contractor start building a house for you without a construction contract agreed in writing by you in place? In your job do you not have an employment contract of some description in place? Why ever would anyone invest their time and resources doing a favour by helping a practical stranger find a home without some reasonable assurance they might get paid. Do you have any idea of the potential magnitude of the legal responsibility and there-by economic liability that is placed upon the shoulders of one who acts as your agent? In my personal business I have found that a buyer costs me personally no less than $2,000 and a seller no less than $3,500 regardless if they buy or sell or not. And you expect me to commit such resources and take on such liability yet you won’t sign a BRA?!? Get real. Go find another agent. Seriously we need fewer agents in this business and the more you can convince to do it your way the sooner we will weed them out of the business for they will go broke fast.

As much as anything the presentation of a BRA to a prospective client is the first litmus test to determine if the client is worth working with. I would never hold them to the agreement just as I would never hold a seller to a listing agreement. Life is too short to work so closely and for as long as we do with someone who would rather not for whatever reason. It is way better to terminate the relationship immediately and move on to better things. You couldn’t pay me enough to work with some of the clients I have turned down. Working with just one such pain in the ass who refuses to sign a BRA takes up more time and resources than three good clients who actually end up buying require.

Beyond that, regardless what Garth has told you, a BRA is a legal document which benefits both parties. As I mentioned I have had both lawyers and judges sign a Buyer Representation Agreement with me who after perusing the agreement with a legal mind had no problem with it what-so-ever.

If the whole real estate community would embrace the use of Buyer Representation Agreements I promise them they would have no problem with the discount brokerages that has led to the scrutinizing of our industry by the Competition Bureau. A REALTOR who uses Buyer Representation Agreements is unfettered in his/her efforts to seek to achieve the very best possible deal that most closely possible addresses his/her clients every want and need. Such a REALTOR is truly doing the very best thing for his client by asking them for the right to leave no stone unturned in their pursuit of that objective be it a discount brokerages listing, a For Sale By Owner or any other property that may or may not be for sale. Which buyer does not want someone working so hard for them to find that perfect home?

No there is no rule that says you must sign a BRA and quite frankly we prefer it that way as it really does eliminate the problem clients before they cross that threshold where they become a problem. I do it this way; first consult no charge. We’ll even go view a few houses on the first meeting. Before they go home I give them the BRA and ask them to be sure to read it over that night for before we go further I will require it returned to me signed the next day. No one has refused yet. I don’t know, maybe I am doing something right that they want to retain my services? If we should ever cross paths in my professional capacity you then may decide that for yourself.

#164 Coraline on 01.21.12 at 7:23 pm

Re Cow man #131

“Please consider that a mortgage is forced savings. Those who don’t go the forced savings route, rarely save. Iall of my peer group who did not go the forced savings group are our of time. The other side of ownership.”

There’s nothing I hate more than this argument. Canadian homeowners are not saving, they are withdrawing huge amounts on their LOCs and buying vacations, clothes, cars, and renovations.

I think the Hail Mary reduction in mortgage rates will have the desired effect of dragging the bubble out for a few more months. So far, the other cheap tricks have also worked. And that really pisses me off.

Wait until more Canadian businesses start to fail because of this misallocation of resources. I’m thinking of several clothing retailers in particular, like Jacob, Femme de la Carriere, and RW & Co. They have benefited from the “feel good” impact of Canadian house prices and LOCs, but my sense is that this is wearing off and that their sales are really hurting. The few reports we get on Canadian retail sales suggest that my concerns are well-founded.

#165 Popeye the sailor man on 01.21.12 at 7:28 pm

I can’t wait to hire a Realtor by the hour in the future, I know what I want, can decide on my own if a house is well suited for me. I wish the Government regulated that transaction information be public much like the stock exchange. Then knowledgeable people with web sites and data crunchers can make charts that have more meaning than what the MLS monopoly puts out.

I am provided with more info and can find more info on buying a stock or fund and shell out as little as $500. But do you think I can find out what the last owner paid the developer in 2006 for the house I’m in. The best I can do is find out the past tax assessments that is very little info to base decisions on.

#166 T.O. Bubble Boy on 01.21.12 at 7:35 pm

So, even though midtown/north Toronto homes still sell very quickly (the $869k place I noted a few days back in Lawrence Park sold in just a few days), there are some that do not:

509 Merton St.

August 5, 2011: $699k
November 28, 2011: re-listed at $699k
December 8, 2011: dropped to $688k
January 14, 2012: dropped to $678k
January 21, 2012: dropped to $669k

So, all that re-pricing, and still not even a 5% haircut overall… but, houses start to ‘smell funny’ when you play around with the price like that.

Even for $669k, you’d think that they could spend $10 on linens to stage the 2nd bedroom a bit better:
http://cdn.realtor.ca/listing/reb82/medres/5/c22464056.jpg?PhotoId=634580238035570000

#167 Devil's Advocate on 01.21.12 at 7:39 pm

#157kilby on 01.21.12 at 6:21 pm
Why is is that some realtors are so insecure that they have to always capitalize the word REALTOR? Isn’t “realtor” loud enough?

Along with the goat sacrifices, it’s required. — Garth

You mean blog dawg sacrifices };-)

It’s a trademark thing kilby: REALTOR® – we want to disassociate ourselves from those who have not qualified to be members of our cartel yet might impersonate. We have a secret handshake too.

#168 AprilNewwest on 01.21.12 at 7:48 pm

159 Bigrider – How ignorant of you!

#169 spaceman on 01.21.12 at 7:59 pm

Jeff in Victoria
“That 2.99% is definitely temporary, BMO website says limited time offer until January 25, I imagine things will be hopping in the Real Estate biz for the next few days!!!”

You have 3 months to buy after locking in the rate, it will be affective for that long, as it costs nothing to sign the paperwork.

#170 JR on 01.21.12 at 8:08 pm

Nostradamus where are you? I like to read your posts and click on many of your links.. Please don’t go

#171 McLovin on 01.21.12 at 8:09 pm

DA #32
“By my very crude calculations influenced greatly by a few glasses of Friday night wine in order for rents to decline as you suggest Garth the price of related real estate would have to tank far, far more than both you and I have agreed.”

Hey DA,

How are those rents looking like in Kelowna? Wait, I’ll tell you: Its an absolute race to the bottom with rents down at least 15% from the peak. (If you can even rent it out) Kelowna has a 7-10% vacancy rate right now so you can be sure rents are going down.

#172 Nostradamus Le Mad Vlad on 01.21.12 at 8:15 pm


Ode To A Sewer Pipe, a.k.a. A Piper’s Lamentation

I found this anonymous article deeply moving. I hope you do, too.

As a bagpiper, I play many gigs. Recently I was asked by a funeral director to play at a graveside service for a homeless man.

He had no family or friends, so the service was to be at a Pauper’s cemetery in the back country. As I was not familiar with the backwoods, I got lost and, being a typical man, I didn’t stop for directions.

I finally arrived an hour late and saw the funeral guy had evidently gone and the hearse was nowhere in sight. There were only the diggers and crew left and they were eating lunch.

I felt badly and apologized to the men for being late. I went to the side of the grave and looked down and the vault lid was already in place. I didn’t know what else to do, so I started to play.

The workers put down their lunches and began to gather around. I played out my heart and soul for this man with no family and friends. I played like I’ve never played before for this homeless man.

And as I played ‘Amazing Grace,’ the workers began to weep. They wept, I wept, we all wept together. When I finished I packed up my bagpipes and started for my car. Though my head hung low, my heart was full.

As I opened the door to my car, I heard one of the workers say,

“I NEVER SEEN NOTHIN’ LIKE THAT BEFORE AND I’VE BEEN PUTTING IN SEPTIC TANKS FOR TWENTY YEARS.”

Apparently I’m still lost . . . it’s a man thing. Don’t worry. I’ll be alright next week.
*
#133 GregW, Oakville — Ahh, g’day Greg. Better half and I have been celebrating Chinese New Year’s, so I haven’t been around for a few days. Anything exciting happen?

Thanks for the links. Actually, the one re: batteries had me contemplate on filling up my TFSA on a lithium penny stock, wait a few years then cash it in and put it in a non-registered plan. Your link only adds to that, so thanks!

#173 garth's foil on 01.21.12 at 8:19 pm

hello garth

i think i just heard your evil nemesis on the radio, simon giannini (?) on newstalk1010..on his real estate show.

whatever you say, he says the exact opposite.

couldn’t believe it!

he must hate you!

#174 Al on 01.21.12 at 8:22 pm

A different view on RE; http://www.youtube.com/watch?v=TMqiMG_wpww&feature=youtu.be

#175 MarcFromOttawa on 01.21.12 at 8:29 pm

#70 Devore

Your chart is inflation adjusted. He was cleary talking about nominal prices.

#176 Daisy Mae on 01.21.12 at 8:52 pm

Snow in Vancouver!

Chilled Vancouver commuters faced their second day of winter hell today, as an additional ¼ centimeter of the peculiar white stuff fell, bringing the lower mainland to its knees and causing millions of dollars worth of damage to the marijuana crops. Scientists suspect that the substance is some form of frozen water particles and experts from Saskatchewan are being flown in. With temperatures dipping to the almost but not quite near the zero mark, Vancouverites were warned to double insulate their lattes before venturing out.

Vancouver police recommended that people stay inside except for emergencies, such as running out of espresso or biscotti to see them through Vancouver’s most terrible storm to date. The local Canadian Tire reported that they had completely sold out of fur-lined sandals.

Drivers were cautioned to put their convertible tops up, and several have been shocked to learn that their SUV’s actually have four wheel drive, although most have no idea how to use it.

Weary commuters faced soggy sushi, and the threat of frozen breast implants. Although Dr. John Blatherwick, of the Coastal Health Authority reassured everyone that most breast implants were perfectly safe to 25 below, down-filled bras are flying off the shelves at Mountain Equipment Co-op.

“The government has to do something,” snarled an angry Local. “I didn’t pay $850,000 for my one bedroom condo so I could sit around and be treated like someone from Toronto.”

#177 Jaksun on 01.21.12 at 8:59 pm

http://www.nytimes.com/2005/08/19/realestate/19real.html

From the time machine. Why would Canada be any different than NYC

#178 Jaksun on 01.21.12 at 9:02 pm

http://finance.yahoo.com/news/pf_article_102603.html

Another prescient article from the us before the crash.

#179 P & T S on 01.21.12 at 9:07 pm

#91Herb on 01.21.12 at 6:25 am
Darn it, my enjoyable vision does not work beyond line 2!

Don’t blame your vision – might be your PC Video Card. If your using the “came with the Motherboard” system, resolution will be so-so at best. There’s a VERY good reason why good Video Processors cost good money.

#180 kilby on 01.21.12 at 9:22 pm

#167 devil’s advocate

THANKS, ALONG WITH THE HANDSHAKE, DO YOU HAVE TO LEASE A 323i AS WELL? OR IS THAT JUST IN VANCOUVER AND VICTORIA?

#181 Bigrider on 01.21.12 at 9:42 pm

# 159 Garth to Bigrider- ok maybe the comment i made was a bit off colour now that I re read it but I meant no offense by it at all. No offense to any elderly people either.

#182 Nostradamus Le Mad Vlad on 01.21.12 at 10:08 pm


#170 JR — No worries JR! I’m usually out to lunch, but sometimes I show up here as well!
*
ChIndia have told the west where to shove its oil embargo on Iran; Economic Annihilation “You’re just JEALOUS!” — Mitt ‘Cayman’ Romney (wrh.com); 3:55 clip US alone wastes US$1 bln. worth of food yearly; Sarkozy – Iran “Russia and China will not sign off on such a deal, because they need the oil to keep their economies moving forward.” wrh.com; Obomba “Obama was NEVER a “man of the people”; he is, and has always been, a man of the elite and monied.” wrh.com; Prosecute Hmmm.

Davos wants men (not women) to fix their mistakes. That could be a major mistake; See? I told you. Women are way ahead of men; 16 New Strategies; Vanity Fair and the DJIA; Scientology and RE Like the RC Church, it has lots; Homeless Surge Rising rents and low wages.
*
2012 Violent civil unrest; 3:18 clip USSA – A Totalitarian State; 12:10 clip Chris Hedges sues Obama over NDAA, but he is the wrong person. Soros is running the show; War (with Iran) What is it good for? Democracy “It is not at all reassuring, as an American who cares deeply about the future of this country, to realize that the last and current Presidents of this country are unindicted war criminals.” wrh.com; Stress, not Gardasil caused these reactions, and Vaccines Scientists say to buy Nortel and Bre-X; Monsanto Abusing illegal workers, but they are busted; Sahara Desert Snow. Or CC. Call it what you will, and CC First para. is interesting; Two Carriers “It appears that the US is attempting to provoke Iran into some kind of provocation to be used as the “excuse” for escalating into a military confrontation.” wrh.com.

Arizone Strikes Back Investigating feds. for gun-running, etc.; Romney Guilty but “I am not a crook”; MegaUpload’s Demise and Cloud Storage; Temporary Victory SOPA stopped for the time being; The ‘Net Who is connected and who isn’t; Swedish Schools Doing away with some.

#183 City Slicker on 01.21.12 at 10:59 pm

The $400+ condo fees on the piece of junk unit are stupid. That tells you it’s costly to keep this building going.
I know a couple that tried selling their trailer park unit, same thing $400 monthly fee. They bought it 5 years ago for $65K, tried to sell last year for $110K, then finally sold a couple months ago for $70K. Big loss on that one. And it wasn’t very old. Buyer beware of monthly fees, they make selling it back to a cold market hard.

#184 Devil's Advocate on 01.21.12 at 11:40 pm

#180kilby on 01.21.12 at 9:22 pm
#167 devil’s advocate

THANKS, ALONG WITH THE HANDSHAKE, DO YOU HAVE TO LEASE A 323i AS WELL? OR IS THAT JUST IN VANCOUVER AND VICTORIA?

323i? hell no… in Kelowna, minimum 328xi Executive Edition if not a 5 series. X5s used to be the code but now they are considered soccer mom taxis.

#185 M on 01.21.12 at 11:51 pm

Garth – you devil- can we get a magnified version of the lowest three lines of your teaser nurse poster ?
Reminds me of a girlfriend from long ago :)

PS I was boozing with a good friend this week, he’s pretty low due to a divorce. I tried to cheer him up explaining that just like with a sold house, a good girlfriend is an x-girlfriend and a good wife is an x-wife.
..and don’t expect richness due to those :) Quite the contrary.

#186 45north on 01.21.12 at 11:55 pm

Jaksun: from link to the NY Times Aug 19, 2005:

As the value of real estate has skyrocketed, owners have become enamored of the wealth their homes are creating, with many concluding that real estate is now a safer and better investment than stocks.

I remember I was at a wedding in NY City the summer of 2004, yeah everyone was getting rich on real estate. The decline in NY City has been less than in the rest of the US in part because of the tight standards of the co-ops. GTA Girl made the same point.

she (GTA Girl) asks: What do you make of this?

Those, and other hard facts about one of the hottest housing markets in the world, has builders calling on government, to review land-use restrictions, red tape and development fees

basically the builders project the housing bubble into the future – demand will keep going up – therefore zoning restrictions need to be relaxed, municipalities need to take on the cost of extending road and water services out to the very distant suburbs

point number one “demand will keep going up”, well no it won’t because the demand is based on lower borrowing standards, the gig is up, the banks know it and that it is why they have come up with the 2.99% 10 year mortgage

point two “zoning restrictions need to be relaxed”, let’s be very careful here, Garth figures, I figure that a great many condo projects that have started construction are going to be in trouble. Deep trouble. There may be specific properties where the zoning should be relaxed – the developer needs to prove that his property will be the best built, the best managed and the most in demand property in the City.

point three: “municipalities need to take on the cost of extending road and water services out to the very distant suburbs”. Are you kidding? The municipalities are going to be hard pressed to maintain existing services. The very distant suburbs extend out to Barrie, Peterborough and Guelph. They are dependent on the price of gasoline. Very dependent. US cities that extended services to far outlying areas wish they hadn’t.

C. Burlington: the numbers seem to be going one way – up. With the Go Train I still think that Burlington should be one of the most attractive cities.

Bill Gable: She phoned last night. yeah I think she needed to hear a kind voice. God bless.

#187 Jane24 on 01.21.12 at 11:59 pm

The really weird thing is that Canada, either the biggest or second biggest country in the world, has some of the the highest RE prices in the world. I mean honestly, there is no shortage of land!!

#188 TurnerNation on 01.22.12 at 12:07 am

**ALL: I’ve submitted [email protected] to Urbandictionary.com – will see if they approve of it or not.

U.D. is kind of a modern/adult word lookup. I learned the meaning of Kush there….

So, if you Oldsters (another new word) are feeling square because you cannot understand what today’s cats are jiving about then check out UD.

http://www.urbandictionary.com/define.php?term=oldster

I submitted:

Review your submission

You sent this to Urban Dictionary, but it is not yet published.
This is your last opportunity to check it out before it gets reviewed by editors.

—————————–
[email protected]

The Nice Lady At the Bank (Canadian).

Locks you into 2% 5-year GICs and 3% MER index mutual funds. Believes housing always goes up.

[email protected] recommend I lock in my GIC at 2%, while extending me a mortgage at 3.5%.’

by 1BlogDog on Jan 21, 2012

tags: turnerite, harperite, orange guy’s shorts, beemo, blog dog carney

#189 Trailer Park Boys on 01.22.12 at 1:03 am

We’re sure glad this blog provides free Viagra for those EAST of Winnipeg under the Health Act.

Just enough soft porn to qualify in both (?) official (?)languages(?).

#190 Nostradamus Le Mad Vlad on 01.22.12 at 1:16 am


4:41 clip The new economic paradigm shows how individuals cope with constant changes in their financial lives; New EU Taxes Coming to a country near you! Tony Hayward For BP boss (GoM mess) on a new shindig, and cleaning up nicely; UN, IMF, WTO and World Bank pull for more power. NWO is a better catchphrase; China and their currency swap deal with UAE; 3:32 clip The race is on. Russia vs. Canada for the oil-rich Arctic seabed.

Sarkozy dumps (not what you think); Nigeria and Oil; Hedge Funds push Greece over a cliff; Spain announces a soccer fiasco; Baltic Dry Index Gettin’ jiggy with it; Comparative Risk See the headline; US Housing Market Another chart; Southern Europe and HI; Gold and Stocks The cocktail from hell; Reality Check.
*
Further info. on the Year of the Black Water Dragon; CFR The case for regime change in Iran (oil), and Iran’s Defense Options Call Russia and China, give them all the oil they want and they will handle the rest; USAF Monitoring the ‘net world-wide; FairySparkleDust Pix from Deep Space Nine; Obomba Spreading the troops around (and thin).

#191 syd on 01.22.12 at 2:06 am

http://www.torontosun.com/2012/01/21/toronto-real-estate-safe-as-houses

#192 Bobby on 01.22.12 at 2:13 am

For #118 DA,

Thanks for your explanation of the BRA. You can polish it however you wish, but it is there solely to protect the realtors interests.
Looking at an example from the Toronto Real Estate, you have to chuckle when the form lays out how a brokerage can represent both the interests of the buyer and seller. So much for the buyers best interest. Moreover, if the realtor is a dud, and the buyer finds a property on their own, they are still obligated to paying a commission to the realtor.
I would have chosen a better example of people who have willingly signed, judges and lawyers. Not a beacon of competency.
If anything, I admire your conviction to a lost cause. You haven’t abandoned ship, unlike our infamous Italian captain.

#193 Pat on 01.22.12 at 2:51 am

181 Bigrider:
“… I meant no offense by it at all. No offense to any elderly people either.”

Uh-oh, you just called Garth 84 or older. I know that with all the wisdom pouring from him daily it can be confusing, but look at him – does this black beard look like it belongs to a 84-year old man?

#194 villain? on 01.22.12 at 3:10 am

I’d rather learn a fourth language than this “urban” crap. So useless,
Kush meinen allerwertesten.

#195 Ozy - for Devil's Advocate on 01.22.12 at 3:26 am

#184 Devil’s Advocate – Post with your name, anything to HIDE? Cruela Devil?

#196 CHANGES on 01.22.12 at 3:47 am

I am voting NDP
someone needs to help the people getting priced out.

#197 Devore on 01.22.12 at 4:40 am

#163 Devil’s Advocate

Before they go home I give them the BRA and ask them to be sure to read it over that night for before we go further I will require it returned to me signed the next day. No one has refused yet. I don’t know, maybe I am doing something right that they want to retain my services?

Get over yourself. People will sign anything put in front of them.

#198 Devore on 01.22.12 at 4:44 am

#175 MarcFromOttawa

Your chart is inflation adjusted. He was cleary talking about nominal prices.

Look again.

#199 First to last on 01.22.12 at 7:23 am

http://youtu.be/7ezeYJUz-84

A fan remake of the original start wars movie. Watch the opening credits too funny

#200 Pr on 01.22.12 at 8:42 am

You want to know, why , what you read and learn her are so different from the main stream media, across the nation? Watch this! http://www.youtube.com/watch?feature=player_embedded&v=evkpcBPZ1R4

#201 R2D2 on 01.22.12 at 8:44 am

Leading by example? [cynical but worthy]

… Jim Flaherty that is — is reported to be preparing to raise the age for which seniors are eligible for their Old Age Security pension from 65 to 67. …

seniors’ 2-beer-a-day might become ‘last call’ ***

http://www.thewesternstar.com/Opinion/Editorial/2012-01-21/article-2869977/Leading-by-example/1

Compliments of ‘Any port in a storm—O’Flairity’

#202 R2D2 on 01.22.12 at 8:48 am

#188TurnerNation on 01.22.12 at 12:07 am

How’s ’bout some other characterizations like the trusty Kerouac? … ‘for cats who can’t sand after every scoff’

#203 Mike Rotch on 01.22.12 at 10:03 am

62 RN, RE Mortgage payments:

New math?

$500K borrowed at today’s rates for a traditional 25 year period is somewhere South of $3K per month.

Still way too rich for the median income earner, maybe about half would be appropriate. But a damned sight less than the $5K per month you estimated!

#204 Mike Rotch on 01.22.12 at 10:04 am

Also, while I’m here, can one of the e-Savvy blog dogs give me a tutorial on how to format text in my posts with bold, italic, etc.

HTML or other markup tags??

#205 Herb on 01.22.12 at 10:10 am

#179 P&TS,

the problem is not lack of clarity but lack of size. If your video card enlarges those pics, let me know what you’ve got and I’ll get one.

#206 Junius on 01.22.12 at 10:15 am

#200 PR,

This is a terrible video of Christian right wing propaganda. It distorts the facts and delivers a ridiculous message that it is all about some bizarre and unprovable conspiracy theory.

Our media is terrible for a number of reasons. Here are a few:

The first of which is the corporate consolidation that has meant for fewer and fewer media outlets as the same companies strive for market domination. They create an illusion of choice as the same articles and information are shared across a broad number of outlets. Accuracy and integrity becomes replaced by efficiency as quarterly sales reports shape the behaviour of the organization.

Secondly, the need for constant growth puts a growing pressure to attract an audience through any means possible including printing and creating more sensationalist news. All you have to do is read the Rupert Murdoch scandal in the UK to see this approach in full bloom.

Finally, the digitalization of media combined with the current economic conditions have put considerable pressure for advertising dollars. Not wanting to “bite the hand” that feeds them our media cower to the industries that provide them with the day to day advertising and cash flow necessary to survive. Again, accuracy and integrity and less important that serving the opinions of the advertisers.

#207 truth hammer on 01.22.12 at 10:29 am

Ok…..the government turds are saying that assesment appeals have gone down…….the hilarious wordsmithing and us first agenda advertising in this well spun piece forgets to tell you that Richmond ( for ex) has had a population inversion from 1-2% Mainland Chinese who speak no English and have no idea how to appeal thier prop tax bill to 60% of the entire population who are now Mainland Chinese and speak no English as wellas having no have no idea how to appeal thier prop tax bill. How do I know they are unable to understand the current system??????? because I am part of the community….slightly more able to deal with the CDN bureaucracy……and can tell you most of these Nw cans have never had any experiance talking back to the government. For the City/Province etc to say that appeals are going down….is to infer that people are satified with the assesments is bunk. …..based on sloppy reporting and sleazy use of statistics….all using the immigrants ignorance of the system…..I directed a strata group through appeal and they were successful…..however 99% of the new cans have no such idea…..and I don’t rent my time for such things to make it right for everybody.

http://www.vancouversun.com/business/property+assessments+skyrocket+appeals+drop/6029413/story.html

PS…now that shitty hall is awash in an unargued tsunami of cash….which special interest group is going to be first in line for a strike and a raise? Wanna check out what the ‘administrators are making versus the average citizen? BTW….the raises…excuse me …negotiated settlements these turds get makes the dough permanent……higher taxes forever despte any downward movement in prop prices.

#208 Randy on 01.22.12 at 10:33 am

You actually don’t even own your home once you finish paying off the mortgage…try not paying your property taxes for a few years….

#209 TurnerNation on 01.22.12 at 11:05 am

half a mill (including 2 land tfsr taxes, closing costs) for a Leslieville tar paper shack!

http://www.realtor.ca/propertyDetails.aspx?propertyId=11268878&PidKey=1055764152

#210 Sky on 01.22.12 at 11:13 am

# 203 Randy – “You actually don’t even own your home once you finish paying off the mortgage…try not paying your property taxes for a few years….”

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

More of a partnership, really.

YOU own the mossy roof, broken furnace, leaky windows, the landscaping screaming for expensive water.

THEY own the positive cash flow ( taxes).

Don’t you love our silent partners? The risk, the repairs, the paperwork – those are yours, all yours.

And you can eat your losses too. They turn their noses up at that slop. They only turn up for the feast. And then they gorge.

.

#211 TurnerNation on 01.22.12 at 11:14 am

bigrider – are you an Anti-Boomerite? ;)

We’ve all heard the tired canards and refains: boomers control the media; boomers control the banks, boomers are selfish; boomers seek to unload their decaying McMansions onto us.

#212 TurnerNation on 01.22.12 at 11:16 am

I have news for DA: two of my co-workers – early 30s, account manager types, each own/lease new a BMW 335i – that’s the twin turbo version, natch.

(Sure they have more HP than brains, but they are drunk on cheap credit).

So a boomer realtor driving a plain vanilla 328ix is hardly the pinnicale of success, is it hmm?

#213 First to last on 01.22.12 at 11:32 am

Doctor Housing Bubble in SoCal just did a post on the ridiculous Canadian Housing Bubble:

http://www.doctorhousingbubble.com/canada-housing-bubble-ripe-for-popping-vancouver-housing-bubble-2012-pop-real-estate-canada/

#214 Randy on 01.22.12 at 11:38 am

I live in rural Ontario and we have a well on the property …..The undying rumour is that the Ontario Government will soon start to meter and charge us for our own water…Next it will be a charge for the CO2 produced by the trees on my property….

#215 Daisy Mae on 01.22.12 at 11:50 am

181Bigrider on 01.21.12 at 9:42 pm
# 159 Garth to Bigrider- “ok maybe the comment i made was a bit off colour now that I re read it but I meant no offense by it at all. No offense to any elderly people either.”

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

We’ll ALL be elderly one day if we live long enuf.

#216 Devil's Advocate on 01.22.12 at 11:51 am

#211TurnerNation on 01.22.12 at 11:16 am
I have news for DA: two of my co-workers – early 30s, account manager types, each own/lease new a BMW 335i – that’s the twin turbo version, natch.

(Sure they have more HP than brains, but they are drunk on cheap credit).

So a boomer realtor driving a plain vanilla 328ix is hardly the pinnicale of success, is it hmm?

It was an inane conversation to begin with and my response was fraught with sarcasm. That you didn’t pick up on is interesting though.

I think the only thing that is more foolish than “house lust” for all the wrong reasons is to be a tire bitter. Nothing depreciates as surely and quickly as an automobile. Not to mention a 335 might be an iconic show of one’s manliness where you come from here in Kelowna we like the all wheel drive for getting up the ski hill and back.

But more to the point… the more successful REALTORS drive a not more than 3 or 4 year old plain vanilla North American four door sedan like a Chev Impala or Ford Taurus. Seriously – they know clients can be put off by such a show of flash as an expensive import. They also know this business is about the bottom line and their business vehicle should be a budgeted item that makes economic sense – clean, reliable, respectable and cost efficient.

#217 Dragonslayer on 01.22.12 at 11:55 am

Wait a second. This property is listed at $149,900. Garth’s calculations are based on a purchase price of $150,000, rounded up. Who in their right mind would pay full asking for a sad sack property like this?

Run the numbers on $149,900. Tell us how it works out. — Garth
—————————————————————-
I think I was not clear enough in my post. What I meant to convey was that a fair comparison should reflect the fair market value of the property, given that your scenario was trying to reflect the fair rental value. And again, no one would pay full asking for this property. It is downtrodden looking place.
One would bargain hard when buying it and so let’s try the numbers again at say, $135,000 purchase price. That tips the advantage toward owning rather than renting.
One more observation:
-we are using the first 5 years of the principal repayment period for the example. We all know that one pays very little off your principal over the first 5 years. I bet if we extended the scenario to 10 years, the advantage would tip even more toward owning vs. renting.

Empty argument. The numbers disprove you. And as for the 5-year horizon, the 2.99 mortgage has a 60-month shelf life. After that the rate will probably double. Surely you can see that? — Garth

#218 Daisy Mae on 01.22.12 at 12:16 pm

213Randy on 01.22.12 at 11:38 am
“I live in rural Ontario and we have a well on the property …..The undying rumour is that the Ontario Government will soon start to meter and charge us for our own water…Next it will be a charge for the CO2 produced by the trees on my property….”

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

Here is the Okanagan we have to curtail our usage, or we’ll pay the price. This area is semi-arid. I personally won’t be using my increasingly expensive domestic water to keep my lawn green.

There are no lawns in Sedona, Arizona, for instance — but the city is very green. And it’s all because of their native plants.

#219 Devil's Advocate on 01.22.12 at 12:23 pm

#192Bobby on 01.22.12 at 2:13 am
For #118 DA,

Thanks for your explanation of the BRA. You can polish it however you wish, but it is there solely to protect the realtors interests.
Looking at an example from the Toronto Real Estate, you have to chuckle when the form lays out how a brokerage can represent both the interests of the buyer and seller. So much for the buyers best interest. Moreover, if the realtor is a dud, and the buyer finds a property on their own, they are still obligated to paying a commission to the realtor.
I would have chosen a better example of people who have willingly signed, judges and lawyers. Not a beacon of competency.
If anything, I admire your conviction to a lost cause. You haven’t abandoned ship, unlike our infamous Italian captain.

Ummmm uhhhhh…. Thanks…. I think?

I will not deny that a BRA does protect the REALTOR to a large degree. But that sword cuts both ways as without a BRA you are most likely to get just marginally more loyalty from your REALTOR than you have given them by not signing. As I mentioned I use a BRA as much as a first litmus test to whether or not a prospect client is worth taking on. Furthermore, as I said, life is too short to hold someone to such an agreement if they want out or prove to be not worth the effort – yes it happens. In that case I am better to cut them loose and move on to better things.

All a REALTORS business is based on contingency. If we are unsuccessful we don’t get paid. As I mentioned it has been proven to me time and time again in my year end accounting that a buyer costs me no less than $2,000 and a seller no less than $3,500 whether they buy or sell something or not. And I should take on that liability without some show of conviction by them?!? Get real.

Who better to know the law than a lawyer or a judge? Actually the greatest skill each demonstrates is that of seeking the right answer before stating what they think. There-by through their long vocation in doing so in that specialized area (contract law and law of agency) they must have more knowledge of it than you and I. That they are willing to agree to a BRA tells me they understand and agree to the benefit to BOTH parties in doing so. That is good enough affirmation for me despite the disagreement of Garth and his Dawgs.

It’s not a lost cause Bobby, it is a worthy cause I will not abandon because it works for both parties to the agreement.

#195Ozy – for Devil’s Advocate on 01.22.12 at 3:26 am
#184 Devil’s Advocate – Post with your name, anything to HIDE? Cruela Devil?

My posts are anonymous for several reasons. Without anonymity I would, because of my work, need to hold back some of the truths I share with you here that others might prefer I not divulge.

#220 Van guy on 01.22.12 at 12:24 pm

Empty argument. The numbers disprove you. And as for the 5-year horizon, the 2.99 mortgage has a 60-month shelf life. After that the rate will probably double. Surely you can see that? — Garth
————————————————————
In 1998 my folks got a 5 year fixed at 4.89%. With a struggling economy, how could the Feds raise rates to 6% for a 5 year fixed? A double in interest in the next 5 years is a really scary thought.

The feds have nothing to do with it. — Garth

#221 The Thing in the Basement on 01.22.12 at 12:41 pm

It’s here! 2012 housing affordability from demographia.com! I wont spoil the surprise!

187 Jane24 – if the report is anything like the previous
ones, you would be advised to read it to better
understand the “shortage of land” theory.

215 DA – good vehicle advice for any professional or business person. Also works for office digs. Anything too fancy only says to the client/customer that they are paying too much. Better to have new equipment.

#222 Timing is Everything on 01.22.12 at 12:56 pm

#213 Randy – rumours

Ontario – Clean water Act

Myth: The Province of Ontario will require meters on private wells.

Fact: The Clean Water Act does not require meters on private wells…The Ontario Water Resources Act requires anyone taking more than a total of 50,000 litres of water in a day to obtain a permit.

http://tinyurl.com/7ras6t9

#223 Ogopogo (né Okanagan Renter) on 01.22.12 at 1:02 pm

#176 Daisy Mae

Hilarious! Thanks for that.

“With temperatures dipping to the almost but not quite near the zero mark, Vancouverites were warned to double insulate their lattes before venturing out.”

Zinger.

#224 Daisy Mae on 01.22.12 at 1:45 pm

#218 DEVILS ADVOCATE: “If we are unsuccessful we don’t get paid….”

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

And so, you shouldn’t.

#225 GregW, Oakville on 01.22.12 at 1:45 pm

Hi #152 Cookie M…, Thanks for the link.
Hi # 172 Nastra, Be careful not to buy using money you can’t afford to lose. Penny stocks are long shots, in the high risk category. But you probably already know that.
I think http://www.altairnano.com/ does have an interesting product. But my choice and timing on buying and selling their stock didn’t work out for me. I’d defiantly buy a plug-in car if there batteries were being utilized in it! I’d guess some large corporation has their eye on them to buy the technology.
It still has potential, but what do I know.
Can I assume you have read G’s book? It’s a good read.
I hope you have better luck with your stock picks, and don’t use money you can’t afford to lose/gamble with.
(FYI, My wife was so happy with the new finical advisor I recently found to switch to; she cried with joy right there in the office a little bit after our first meeting concluded! I’m confident it will work out much better than [email protected] she was using.)

Here are some other interesting developments with potential, maybe.
The gold bug may be amused with the first one?
This link should take you to the latest edition of AMP magazine by ASM International.
See page 14, Energy Trends. Article titled; http://amp.digitaledition.asminternational.org/issue/51396
Fool’s gold leads to new options for cheap solar energy.
Foam-based grapheme holds promise for electric vehicles.

Time will tell if this technology can be scaled up and compete with present and future stuff??

#226 Daisy Mae on 01.22.12 at 1:49 pm

#218 DEVILS ADVOCATE: “But that sword cuts both ways as without a BRA you are most likely to get just marginally more loyalty from your REALTOR than you have given them by not signing…”

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

So if we want you to do a half-assed job, we have to ‘sweeten the pot’?

#227 Daisy Mae on 01.22.12 at 1:55 pm

#218 DEVILS ADVOCATE: “My posts are anonymous for several reasons. Without anonymity I would, because of my work, need to hold back some of the truths I share with you here that others might prefer I not divulge.”

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

Being honest and truthful is never detrimental. You’re not naming names, so what’s the problem?

#228 Daisy Mae on 01.22.12 at 2:21 pm

#218 DEVILS ADVOCATE:“The buyer agrees to pay directly to the Brokerage any deficiency between this amount and the amount, if any, to be paid to the Brokerage by a listing brokerage or by the seller. The buyer understands that if the Brokerage is not to be paid any commission by a listing brokerage or by the seller, the Buyer will pay the Brokerage the full amount of commission indicated.”

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

So the listing brokerage and seller can simply renege….and immediately the prospective buyer then becomes responsible for the commission on the sale?

Has the RE business gone completely mad? Talk about desperation. LOL

#229 Cato on 01.22.12 at 2:43 pm

Part of the reason so many first-time buyers make the leap prematurely is tenancy legislation. Contrary to popular belief provincial law is not tenant friendly and in many cases regulatory bodies are inept. Sure, there will always be sensational stories that make it into the media about drug dealing tenant destroying the property of poor aunt Millie but for the most part the majority of maleficence is occurring on the landlord side of the fence.

I know plenty of young tenants who jumped into home ownership prematurely after being psychologically scarred by rental experiences. When they realize regulatory agencies are impotent they often make the leap into ownership under belief that its their only option for safety and stability (especially if young children are involved). This group doesn’t necessarily lust over home ownership or speculative gain but is simply seeking perceived safety and security they feel is unattainable in the rental market.

This cuts both ways. From standpoint as a potential investor majority of us would factor maintenance costs that other competitors for same investment properties clearly do not. I’m sure majority of us on this blog as a matter of ethics would never leave serious health or safety deficiencies unremedied in any property we owned even if the remedies carried significant cost. Others are clearly not so inclined and as as a result can maintain a significant financial advantage when it comes to competing for investment opportunities.

This is where the state is required to level the playing field. Unethical individuals should face penalty for non-compliance and should never be rewarded for bad behavior. By turning a blind eye Canada is poisoning the housing market. From what I’ve seen ethical investors simply cannot compete with the unethical, over time the one will simply dominate the other in the market. Clearly this is of little benefit to society. I’ve done alot of traveling and as a result have rented properties in many countries. If put in the shoes of a twenty something with young kids I’d probably make the leap to buy in Canada rather than rent. I’ve never seen a country so tolerant of slumlords. Behavior we tolerate out in the open actually lands people in jail elsewhere in the world.

#230 Canadian Watchdog on 01.22.12 at 2:48 pm

#174 Al

Inflation is the hidden tax that consumers do not see and if they understood how to measure purchasing power (the real measure of wealth and investment performance), they’d realize everything else has increased at the same or greater rate of home appreciation. Even Big Macs kept pace with home prices http://i42.tinypic.com/zyc56p.png

Inflation is much higher then 2.9%, everyone knows that.

#231 a prairie dawg on 01.22.12 at 2:49 pm

#218 Devil’s Advocate

I will not deny that a BRA does protect the REALTOR to a large degree…

– — –

And the “timing” of such a document to appear is really handy (for realtors) if someone suspects future falling sales, many stale listings, and few buyers.

Honestly, who would bring in this agreement if things were still going very well in real estate? ie: Bidding wars, cheap easy credit, horny RE virgins lining up, etc.

It seems completely geared toward protecting a paid commission affected by lagging sales and buyer capitulation.

So much for the contingency model.

It’s starting to resemble a contractual MER.

#232 vreaa on 01.22.12 at 3:17 pm

Vancouver RE Thought Experiment:
“Would You Buy This House For Half Price?”

http://wp.me/pcq1o-3zT

#233 Kevin on 01.22.12 at 4:06 pm

For those interested:

Demographia is out with their affordability report for 2012 with data from the third quarter of 2011.
http://www.demographia.com/dhi.pdf

Canada: Housing in Canada is moderately unaffordable with a Median Multiple of 4.6 in major metropolitan markets and 3.4 overall. Housing was generally affordable in Canada as late as 2000. In the early years of the Demographia International Housing Affordability Survey, Canada was generally the most affordable nation. However, this year, Canada ranks third, behind the United States and Ireland.

Among major markets, four were moderately unaffordable and two were severely unaffordable. Among all markets, 9 were affordable, 17 were moderately unaffordable, 3 were seriously unaffordable and 6 were severely unaffordable. The four most unaffordable metropolitan markets were in British Columbia.

For metropolitan areas to rate as ‘affordable’ and ensure that housing bubbles are not triggered, housing prices should not exceed three times gross annual household income. To allow this to occur, new starter housing of an acceptable quality to the purchasers with associated commercial and industrial development, must be allowed to be provided on the urban fringes at 2.5 times the gross annual household income of that urban market.

Some may want to verify demographia’s numbers as I looked at Saskatoon and they showed a median house price of $274,600. According to SRAR in the third quarter of 2011, the median house price was near $300,000. This would push Saskatoon from a median multiple of 4.0 ( moderately unaffordable) to 4.4 (seriously unaffordable)

But either way, it is another report that backs my claim of a housing bubble.

#234 villain? on 01.22.12 at 4:09 pm

My dear Realtors!
This whole BRA Agreement thing is absolute hogwash!
This is no different than a store owner asking for admission fees before you enter their store.
After all, the store owner is ordering and displaying the inventory of the shop, (and all else that goes with it), right?
So if you go into his store and don’t find or buy the merchandise that you as a customer are looking for, you better make sure that the customer will leave some dough for you, regardless?
You know what? I would never set foot into this store, same as I would never sign up with a realtor who uses this kind of system.
If you don’t like showing properties to your potential clients and feel you are wasting your time and money if they are not signing, then I have a solution for that.
1. Arrange for the property to be open or leave a key with someone, so the buyer can go there on his/her own to view this property. (I know it is not doable, so-any better idea?) After all, YOU want to sell, right?
2. Do not hold me (or the seller) hostage to the option of their property being sold, as in: either you sign a BRA, or else!
3. When you post the listings, disclose the problems, I will find out anyway.
4. When the size of the floor space is listed at 1200 sq. ft., then I don’t want to see a building that is maybe 800 sq. ft. at the most. It makes you look dishonest.
5. Those wide angle pics of the properties are more than annoying, if the rooms are too small to have a picture taken of, then admit to that.
6. Stop using your silly realtor slang to disguise shortcomings and be honest from the start.
You are only wasting my time and money, as well as my patience. And you feel that I should pay you???
Maybe YOU should be paying ME for wasting my time and money!
Before I would sign a BRA, I will walk!

#235 I'm stupid on 01.22.12 at 4:31 pm

Why is everyone here trashing DA? He’s a realtor his job is to sell property. He did not create this bubble nor is he responsible for the stupid decisions some make. Sure he has benefited from the bull run of the last 10 years but so what. The level of hate for his profession here is incredible. It is good that everyone posts, all aspects of a conversation is the only way to form a qualified opinion.

#236 TurnerNation on 01.22.12 at 4:38 pm

Well if I had to buy a car these days I would buy this model: the shark

http://toronto.kijiji.ca/c-cars-vehicles-classic-cars-1986-BMW-6-Series-635csi-Coupe-Must-Sell-W0QQAdIdZ323308690

http://www.bigcoupe.com is the fan site.

Been working on cars since I was kid, so prepared to do all the work and maint. required.

#237 First to last on 01.22.12 at 4:39 pm

#213 Randy umm trees produce oxygen… fail science much?

#238 TurnerNation on 01.22.12 at 4:42 pm

By kid I mean teenager. Whoops I forgot this is a motorbike blog.

Bikes, babes, and balanced portfolios. :)

#239 First to last on 01.22.12 at 4:59 pm

#207 Randy sure we should go back to the dark ages and not have any municipal paved streets, lights, etc… If you don’t want to pay property taxes don’t live in a municipality go live in the woods with your CO2 producing trees…

#240 Devil's Advocate on 01.22.12 at 5:05 pm

#235TurnerNation on 01.22.12 at 4:38 pm
Well if I had to buy a car these days I would buy this model: the shark

http://toronto.kijiji.ca/c-cars-vehicles-classic-cars-1986-BMW-6-Series-635csi-Coupe-Must-Sell-W0QQAdIdZ323308690

http://www.bigcoupe.com is the fan site.

Been working on cars since I was kid, so prepared to do all the work and maint. required.

Well if nothing else you do have good taste. And the 3.5 liter BMW engine is a strong, bullet proof, hard pulling, turbine smooth machine. But the colour should be arrest me red. };-)

#241 shanks on 01.22.12 at 5:35 pm

#233 villain? on 01.22.12 at 4:09 pm

you got this right on… most realters that I have dealt with have turned out to be pretty much the scum of the earth in my humble opinion. demanding BRAs is just another example of the bottom of the barrel.

if you are a realtor and are going to (potentially) make tens of thousands of dollars from my transaction, have some class and earn it. demanding a legal document that locks me into using your services even if they turn out to be garbage is a free pass to do your job poorly. No Thank You!

#242 45north on 01.22.12 at 5:48 pm

Kevin: Demographia, affordability report for 2012 with data from the third quarter of 2011.

wow, just like BPOE says Vancouver is world class. In other words, after Hong Kong, Vancouver is the least affordable city in the world. In fact in Canada the least affordable cities – Vancouver, Abbotsford, Victoria and Kelowna – are in BC. There are no other cities in BC listed at all – Smithers and Fort St. John don’t matter. Another way of putting is that there is no bottom. I mean if prices crash in Vancouver then where in BC can you look for houses to retain their value? Answer is “no where”. In BC, we are looking at the elimination of middle class. Read what happens in the US when the middle class is underwater – people stop paying their mortgages, family stress and breakup.

Okay imagine government programs to “keep people in their homes” Good luck with that. Here’s Mark Hanson:

I don’t follow the logic of “Foreclosure prevention” as a positive for housing, particularly mortgage mods or bulk REO-to-rent schemes. Both are just another form of can-kicking that will hurt the housing and mortgage markets.

http://mhanson.com/archives/606

My plan is to pay families who are foreclosed $1000 a month for a year and to make payment of CMHC insurance (to the banks) conditional on foreclosure.

#243 jess on 01.22.12 at 5:57 pm

5. (1)
Subject to section 3(2), whoever-
(a) being in possession of confidential information however obtained-
(i) divulges it; or (ii) attempts, offers or threatens to divulge it; or
(b) wilfully obtains or attempts to obtain confidential information,

is guilty of an offence and liable on summary conviction to a fine of five thousand dollars and to imprisonment for two years. In other words, you can go to prison in Cayman not only for revealing information – but merely for asking for it too! (We’ve had complaints in person about this very aspect of the law from Cayman private practitioners.)
http://www.cayman.gov.ky/pls/portal30/docs/FOLDER/SITE83/GAZETTES/GS2009/GS332009.PDF

•Switzerland isn’t a tax haven, apparently.
•Panama definitely isn’t a tax haven, either.
•Bermuda (another Romney favourite) is not a tax haven. Even the British government says so!
•Monaco a tax haven? Moi? Non!
•Jersey isn’t a tax haven. Perish the thought!
•Barbados, of course, isn’t a tax haven either!
•Gibraltar isn’t a mucky little tax haven conduit for dirty Russian money. Definitely not!
•And on and on.
http://treasureislands.org/romneys-spox-says-cayman-isnt-a-tax-haven-if-he-believes-it-i-have-a-bridge-to-sell-him/
http://abcnews.go.com/Blotter/romney-parks-millions-offshore-tax-haven/story?id=15378566
tax loopholes for the super rich
http://abcnews.go.com/Blotter/romney-parks-millions-offshore-tax-haven/story?id=1537856

#244 Devil's Advocate on 01.22.12 at 6:02 pm

#223Daisy Mae on 01.22.12 at 1:45 pm
#218 DEVILS ADVOCATE: “If we are unsuccessful we don’t get paid….”

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

And so, you shouldn’t.

Daisy Mae:

Again, besides the legal aspects of a BRA which benefit the client as much as the REALTOR, I use a BRA as a first litmus test to determine if I want to continue on with that prospective client or not. As a prudent business practice I try to ensure I only deal with high quality clients deserving of my high quality services. I owe it to my other clients not to waste the time with such an uncommitted prospect client, time that I could otherwise be devoting to them. I am not one who “throws a bunch of shit against the wall hoping some of it sticks”. My time is more valuable to me than that and far better spent with those rarer but worthy clients who do pass the test who are happy to pay me for the good work I do for them and happy to sign a Buyer Representation Agreement to ensure they retain my unrelenting devotion to them.

#245 TurnerNation on 01.22.12 at 6:48 pm

And here is how a B.R.A will hurt the consumer. Lazy realtors:

http://forums.redflagdeals.com/question-realtors-1134378/

#246 jess on 01.22.12 at 6:54 pm

Cato -“I’ve seen ethical investors simply cannot compete with the unethical, over time the one will simply dominate the other in the market.”

a free market should come from free people
http://productsofslavery.org/

#247 Daisy Mae on 01.22.12 at 7:08 pm

#243 DEVILS ADVOCATE: “….worthy clients who do pass the test who are happy to pay me for the good work I do for them and happy to sign a Buyer Representation Agreement to ensure they retain my unrelenting devotion to them.”

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

Wow….now I’m gagging! LOL

#248 Steven Rowlandson on 01.22.12 at 7:25 pm

The big assumption made by alot of real estate market participants on the sell side is that the working man is made of money, is rich and or is going to get raises and cost of living allowances. This assumption does not apply to all working men and it sets a minimum price standard that is absolutely unreasonable and unpayable.

#249 The Thing in the Basement on 01.22.12 at 7:28 pm

241 – 45 North – not a world survey – anglophone & HK only.

#250 Richmond sinking on 01.22.12 at 7:28 pm

After discovering this blog last year, I decided to sell my home. I listed my Richmond home in Sept for $780,000. The first week I had 2 viewings. After that, there were no showings until Dec. Well that showing turned into an offer. $680,000. I was shocked. I threw back at them $730,000. They countered at 700k. I declined. January rolled in, and still nobody came. I was nervous at this point. Called them back and said lowest id go is 705k. Sold after 4 months. In my area, this was the first sale in 5 months. Here it is V910648. Advice to Richmond sellers, don’t be too patient, lower your asking if you really want to sell. I feel something bad is going to happen. Good luck to you all!

#251 Pete in Barrie on 01.22.12 at 7:41 pm

I wonder if anyone (Ontario readers) noticed that the Toronto Sun dedicated 4 of its first 10 page in today’s paper to GTA real estate. Seems everything is fine in the GTA. No imminent drop in prices and everyone wants a condo downtown. But how could 4 pages of a major newspaper cover such a benign subject – at least the way they covered it.

#252 KT604 on 01.22.12 at 7:44 pm

DA,

Given the clear level of frustration on this blog with a BRA (even you don’t seem to be all that thrilled with them), why not simply offer a flat hourly rate for your services? If you’re as good as you say you are, then you should have not qualms with such an arrangement, as, like you say, the “quality” buyers will be more than happy to work with you. Wouldn’t that weed out the bad apples far more effectively? I’m not a huge fan of commission-based services to begin with, and I’m sure you’d agree that most REALTORS(r) had no issues with being paid on commission when times were good. But now that sales are fewer and farther between, all of a sudden REALTORS(r) are entitled to a paycheque? Live by the sword…die by the sword. I would have no problem paying my agent a flat hourly rate for a set of services that we agree on at the outset of the business relationship. What makes you different than lawyers, accountants or any other pay-per-hour professionals? I’m not trying to be a jerk. I’m actually curious.

#253 JRoss on 01.22.12 at 8:06 pm

DA,

‘I am not one who “throws a bunch of shit against the wall hoping some of it sticks”. ‘

With all due respect, that is exactly what you do on this blog.

#254 Devil's Advocate on 01.22.12 at 8:09 pm

#246Daisy Mae on 01.22.12 at 7:08 pm
#243 DEVILS ADVOCATE: “….worthy clients who do pass the test who are happy to pay me for the good work I do for them and happy to sign a Buyer Representation Agreement to ensure they retain my unrelenting devotion to them.”

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

Wow….now I’m gagging! LOL

I will admit I thought it sounded somewhat stagy as I wrote it but really, how else would you have me say it?

It’s a two way street Daisy Mae. Often I spend more than six months becoming very involved in these people’s lives. Buying and selling a home is a very emotional time – one of the most emotional. I do take it very seriously and consequently cannot and will not take on more than I can manage and especially will not take on someone who is not committed to the process. Why ever would I? To do so would be unhealthy for me, for them, for the other agent who might become involved representing the other side of the transaction and their client and especially so for all my other clients who depend on my attention to their real estate needs.

If you are of such character that you cannot respect my time I have no interest in dealing with you. It’s just as simple as that – mutual respect. I respect that you will not want to sign a BRA and would have it no other way please respect that I am in no way compelled to work with someone who will not. Really I’m ok with it that way and so apparently are my clients. Why aren’t you?

#255 Pr on 01.22.12 at 8:13 pm

#205 Junius
You work for the government!

#256 cam on 01.22.12 at 8:29 pm

Renting vs. Buying: What to Choose? http://calgaryrealestate.ca/news/2012/01/renting-vs-buying-what-to-choose/

#257 Daisy Mae on 01.22.12 at 8:31 pm

#233 VILLAIN “This is no different than a store owner asking for admission fees before you enter their store.”

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

Believe it or not, there are Christmas bazaars that DO charge an admission fee. I guess the crafters believe the public should foot their bill for space/table rental. I don’t believe we should…so I don’t go. ;-)

#258 Daisy Mae on 01.22.12 at 8:47 pm

#253 DEVILS ADVOCATE: “If you are of such character that you cannot respect my time I have no interest in dealing with you.”

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

Do not — repeat, do not — attack MY character.

#259 Daisy Mae on 01.22.12 at 9:07 pm

#251 KT604: “why not simply offer a flat hourly rate for your services?”

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

This is coming. The present RE fees of 7% on the first $100,000 and 3% on the remainder is, and always has been, outrageous. It might have been reasonable years ago when houses sold for $50,000. There are agencies already advertising flat rates. The seller has always been responsible for the commission. When and why did this change? What a racket…

#260 Daisy Mae on 01.22.12 at 9:25 pm

#253 DEVILS ADVOCATE: “Buying and selling a home is a very emotional time – one of the most emotional.”

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Give me a break. I can think of other professions where emotions play a very large part. Lawyers and doctors, dealing with clients/patients comes to mind. RE agents are at the bottom of the list!

#261 Daisy Mae on 01.22.12 at 9:31 pm

#253 DEVILS ADVOCATE: I appreciate your tenacity but you’re not going to win this one. I said it before and I’ll say it again — give it up.

We’re not discussing this further….

#262 Devil's Advocate on 01.22.12 at 9:40 pm

#257Daisy Mae on 01.22.12 at 8:47 pm
#253 DEVILS ADVOCATE: “If you are of such character that you cannot respect my time I have no interest in dealing with you.”

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Do not — repeat, do not — attack MY character.

My use of the term “you” was meant in the broad sense at any given person not specifically pointed toward you although I think we would both agree it is highly unlikely you would pass my litmus test.

#263 Devil's Advocate on 01.22.12 at 9:42 pm

#260Daisy Mae on 01.22.12 at 9:31 pm
#253 DEVILS ADVOCATE: I appreciate your tenacity but you’re not going to win this one. I said it before and I’ll say it again — give it up.

We’re not discussing this further….

Clearly understood and mutually agreed. Let’s move on, shall we? };-)

#264 Snowboid on 01.22.12 at 11:02 pm

#259 Daisy Mae on 01.22.12 at 9:07 pm…

I’m with you on that, the days of the full commission agency are numbered!

#265 Alex B on 01.23.12 at 12:19 am

Thanks Garth! this is the kind of breaking it down that I enjoy reading here, applicable to people in my market segment. You do a lot of writing, like a lot! and appeal to many demographics, today, 2.99, condo, solid! keep up the good work!

#266 Matty on 01.23.12 at 12:44 am

I am new to this blog. Thanks for you effort Garth Turner. Adds some perspective and makes me feel good about renting. I am still in real estate as a venture capitalist. PS my house doubled in value in the 2000s but accounting for the upkeep and improvements, new roof, mortgage and taxes, I broke even on the sale in 2010.

#267 An Cat Dubh on 01.23.12 at 4:44 pm

Don’t drug pushers offer drugs for cheap until the person is totally dependant on them for the supply, then jack the price up. My niece is house horny. I keep mentioning this blog to her. She so far has resisted, but I know once she reads a few postings, she will come around to the truth.

#268 D-Dawg on 01.24.12 at 3:37 am

Garth…. sad face :( Your points so often underscored with an analysis of an example that exists on the margin of stupidity. Rarely (ever?) do I see your analytics tackle the situation that is the norm for many homeowners in the GVRD.

Let’s figure *that* out.

The mortgage on my 3400 sq. ft. home in Clayton is 439k$. The variable rate I have is currently is at 2.1%. I have guy who gives me 1050$ every month to live in the suite that is in the basement of the home (for avoidance of doubt, the rental suite is the norm for many GVRD homeowners). I pay, pardon me, my renter pays, the interest on my mortgage, which amounts to $768 monthly and I’m left to cover the balance of the monthly carrying cost of approximately $1420. Yippee!

It would cost $2600 per month to rent a home similar to mine (I talked to my neighbor, he is renting). To be fair, I only occupy in 2200 square feet of my home, whereas my neighbor has the entire rental for his use, some 3500 square feet. A sensible comparison would be to look at what it would cost to rent a 2200 square foot home in the Clayton Heights area (I called around). $1900 per month, and ugly little units to boot.

I throw this spreadsheet up against a renter spreadsheet any day. Owning does rule.

Anyway Garth, you are not wrong, you just aren’t as right as you could be. Keep up the good work, I look forward to your views of more normal situations in the year that will be 2012.

#269 NorthYork Sash on 01.24.12 at 10:01 pm

Garth, I don’t understand why you compare rental of a unit vs a purchase of a unit on the mandate that you have to sell after 5 years. That’s where “all” of your losses for the purchase of the property appears. One should be purchasing a property for the lifetime of the mortgage 21 yrs on average. “Not talking speculators or young ones”. Now I completely agree one should never buy an asset that is overvalued like it is now, and one where interest rates are destined to rise to normal levels 7%. I agree with you on all your other points, boomers, debt, etc… I don’t agree with you on the notion of comparing a rental to a house/condo that you HAVE to sell upon 5 years, where did you come up with that? If anyone is going to sell after owning for 5 years they are stupid “unless it’s for profit” “Vancouver”.

Because the 2.99 mortgage only lasts that long. Afterward the condo owner loses big time. — Garth

I understand that it only lasts 5 years, but you still don’t have to sell your home just because your renewal comes up. If that’s the issue then a 4% banger for 10 years will calm things down. I have done the calculations, rent and owning condo is about the same, except condo has the risk of loosing value. House is a fail from the beginning. This is based on a 180k condo with 438$/month condo fees.

Try again. — Garth