Canadian subprime

Does Canada have a subprime mortgage problem? You know, Oakies buying McMansions? Loans for fogging a mirror? You bet your beaver we do. In fact, those profligate Yanks have nothing on us when it comes to taking a perfectly useful asset like a home and turning it into a pile of casino chips.

We‘ve systematically lowered mortgage lending standards, encouraged banks to take excessive risk, eliminated the need for money when buying real estate, and turned what used to be an accomplishment and a privilege into a right and an entitlement. Now that 70% of us have swilled the Kool-Aid, pushing house prices and debt levels to historic highs, a melt in both sales and prices seems inevitable.

If you need irrefutable proof, just read the realtor comments on this pathetic blog. Here’s one that slithered in Monday from a Re/Max guy. I love this. It’s classic.

Garth, I have to say you come across as an ignorant buffoon. Let me regurgitate what I’ve learned here, your hate for kids, your hate for women, your hate for anything financial that is not an ETF, bond or preferred. Absolutely pathetic, telling people to grow a set or they are screwed because they are not following your delusional road to so called success. Face it you’re a salesman who has 90% of this blog fooled, not surprising because most can be herded like sheep and this blog is a fine example of it. Btw, how many properties are you holding now? I know, I know, its only 30% of your net worth. Nice tactic on bragging about your financial prowess, I guess all the ‘screwed’ and ‘setless’ will have to do with breadcrumbs as you parade around in your gay mobile.

I’d say that touched all the bases, right? Hateful. Self-serving. Insulting. Manipulative. Boastful. Oh yeah, and queer. It sounds to me like we’re growing closer to HouseAgeddon daily, when idle real estate agents hang around here trying to blow me up.

But no one should feign surprise at what’s coming, or has already arrived across large swaths of the nation. Canadians have ventured down the same road Americans forged, turned home ownership into a cult, then an economic holy grail, finally societal horniness, and somehow think it’s different here. The primary differentiator academics point to is the fact ‘Canada doesn’t have subprime lending.’ Untrue. We practically invented it.

“Subprime” simply means lending to people who would not qualify under traditional guidelines. For example, buying a home once meant you needed a 25% downpayment, then the bank would cough up the other three-quarters. Prior to 1999, nobody with less than a 10% down could qualify for mortgage insurance, or get financing. But after that, the feds dropped the bar to just 5% – opening the floodgates for both credit and higher house prices. Suddenly banks were encouraged to give 95% financing, since the taxpayers were wiping away the risk through CMHC. Subprime was born.

More incredibly, in 2003 CMHC eliminated all restrictions on the amount of money people could borrow in a high-ratio, high-risk loan, and still be insured. Suddenly the way was clear for million-dollar Vancouver crack shacks to change hands with deposits small enough to fit on a few credit cards.

In fact, once the Harper Conservatives took office – just as the US housing market was imploding – Canada embraced the subprime culture as nobody has done before. Over my objections, Parliament approved 40-year-long amortizations and 0% down payments, which ignited the greatest surge in real estate values ever. (Since then, 40 has turned into 35, then to 30 and soon to 25, as the feds struggle to contain the damage.)

The result has been an orgy of personal and household debt. After all, when you don’t really need money to buy a house, why wouldn’t you? Consumer debt now equals 92% of the entire economy. This is just a hair below the level US debt achieved before America exploded, igniting the GFC.

But why stop with shrinking downpayments, fluffing risk, pushing debt and inflating prices? Not content with financing houses for people without savings or investments, our banks have gone that final, noble, subprime mile and totally eliminated the need for money. Most of them offer ‘Cash-back” mortgages, so once you agree to borrow a steaming pile of debt, they’ll give you enough cash to close the house deal. CIBC, for example, hands over 7% of the borrowed amount (95% of the house value), for 102% financing.

Not only that, but ‘self-recognition’ mortgages have allowed the self-employed, commissioned salespeople and other dangerous types to score mortgages without even verifying their incomes. So not only does Canada offer no-money-down deals, but also liar loans, interest-only mortgages, payment-skipping and 125% financing. All backed by Ottawa, which means lenders smile every time a Wal-Mart greeter with no assets buys a $500,000 condo in Yaletown.

So given all this, and emergency interest rates for the last four years, how could we not have had a real estate orgy? It’s the equivalent of a wild coke bender with a Hummer-full of needy nubile Amazons, not that I have any experience with such things.

So forget the Re/Max protestations and ad hominem hurls. It’s not different here after all. We indulged. We compromised. We took the low road. The easy, worn path. The myth of the buttoned-down, prissy, risk-averse Canadian banker is simply that. Everyone sold out.

And no one should be surprised what comes next.

239 comments ↓

#1 Darren on 02.20.12 at 9:21 pm

We’re all doomed!

#2 Randy on 02.20.12 at 9:22 pm

fIRST IS WURST !!

#3 Canadian Watchdog on 02.20.12 at 9:25 pm

Ok folks, here’s some more TREB data that I formulated showing 2011 average percent gains by zones within the central, eastern and western parts of Toronto (excludes outer GTA). The annual average was calculated from TREB’s median monthly price change (by zone). Data is for all house types.

Zone – Annual Median Percent Gain %

E01 +0.86
E02 +1.35
E03 +0.54
E04 +0.97
E05 +1.52
E06 +1.27
E07 -0.03
E08 -0.53
E09 +0.94
E10 -0.03
E11 +0.79
W01 +2.05
W02 +0.66
W03 +1.01
W04 +0.54
W05 +1.51
W06 +1.48
W07 +3.00
W08 -0.74
W09 +7.08
W10 +0.68
C01 +0.79
C02 +2.88
C03 -1.05
C04 +1.94
C06 +3.76
C07 -0.22
C08 +0.88
C09 +7.57
C10 +0.74
C11 +10.20
C12 +3.28
C13 +0.89
C14 +0.81
C15 +2.05

Total Average For Toronto C.E.W. +1.7%

TREB Zone Map (Click To Zoom In) http://www.torontorealestateboard.com/buying/district_map/index.htm

Having this data is like being a kid in a candy shop. Here’s a sample of what I can analyze with TREB’s data.

Zone C12 (Bridal Path)

Median Price http://i39.tinypic.com/1z5t3dd.png
Sales http://i44.tinypic.com/2db8fuh.png
New Listing http://i39.tinypic.com/avrgp2.png
Active Listings http://i40.tinypic.com/ajqwjl.png
DOM- Days On The Market http://i41.tinypic.com/18ygyx.png
Sale Price/ List Price Ratio http://i44.tinypic.com/27zyp0h.png

Enjoy!

#4 Retired Boomer - WI on 02.20.12 at 9:25 pm

Subprime, yeah we got them. STILL the area with the highest foreclosure, anne problem loan rates of all.

Beware, your TAX PAYERS will love picking up the BS left when the mortgage guarantees go bad!

#5 Bill Gable on 02.20.12 at 9:32 pm

The hubris.
The Best Place on Earth.
Wince making.
All of my friends talk RE 24/7 and they think they are going to sell and retire – all the Boomers are going to sell to whom?
So screwed, and watch when Gas prices crank higher – and food prices continue to escalate.
Yikes.

#6 Mr.Lee on 02.20.12 at 9:33 pm

Canada took the realestate road back on 06 as MR. Turner points out, that is roughly 4 years later than USA, GB, EU et al. 2008 is when it unraveled in Estadas Unidos, project that forward 4 years and one has 2012. This year should be interesting for real estate in Canada.

“An economy predicated mostly on debt finanancing is not sustainable.”

Peter Schiff

#7 Bridgepigeon on 02.20.12 at 9:37 pm

Let’s slam that gay mobile and put on some spinners.

#8 gypsy kid on 02.20.12 at 9:41 pm

crash is a mere formality now…not that i’M looking forward to it. why would anyone want to see their country fall apartbecause of mismanagement and dastardly leadership, and greed of individuals?

response to the above remax guy.

I must say though, Garth is entertaining and informative, but not a warm andfuzzy bear.

IF youdont like what he says, dont read him. This is his site after all.

#9 zman on 02.20.12 at 9:43 pm

hi

how do you explain that mortgage dafaults are still less than 1 percent….these people who should not have qualified are still paying their mortgage on time….i had heard that canadians will miss their utilities payments but not their mortgage…and rates rising being a problem well this is not going to happen for a very long time….
however i do think real estate is too expensive but prices will only come down when rates rise and this is not going to happen…

Patience. They will come. — Garth

#10 Realtors in a panic on 02.20.12 at 9:44 pm

Realtors are in an outright Panic and they are scared that the masses will wake up from realtor propaganda of lies since ” most can be herded like sheep” . Lol Realtors think everybody is stupid and laugh at those who are buying into this housing bubble which is bigger then the US housing bubble. Canadians housing costs TWO TIMES more then a US home. Do people even understand this FACT? You can buy TWO homes in the US for ONE Canadian home. My uncle in Chicago tells me I could buy TWO homes in Chicago in a north york like(young and sheppard) area for the same price as One home (young and sheppard). Canada is in a housing bubble thats more of a ponzi scheme then a housing bubble. Thats how bad it is in Canada. This is 100% fact and realtors know it ….they just hope you are stupid.

#11 not 1st on 02.20.12 at 9:47 pm

After I sold my house in cowtown, I thought lets just see what the bank will give me for another purchase. So they called me the other day and asked how much I needed. I said I wanted the max. They called back and asked if $850,000 would be good enough. I said sure, lets get pre-approved.

$850,000?? are they on crack. While I could handle the payments, I am not delusional enough to take that on for a house.

#12 Seven Stars and Orion on 02.20.12 at 9:50 pm

When the current unpleasantness unwinds, won’t joe average learn to despise the big banks? I mean, once all these outstanding mortgages are collected, won’t the big lenders be hated and blackballed for two or three generations? What kind of fool would do business with institutions with slimy hands practically responsible along with government for wiping out the middle class?
Than again, there’s no shortage of fools in this country – quod erat demonstrandum.

#13 Andy on 02.20.12 at 9:51 pm

This is my first comment in 2 yrs..
Went to see 4 houses(scarborough) today in 500K range with a realtor, wanted to puke..after seeing all of them. I have no idea what people have been smoking…
This will really not end well..

#14 Form Man on 02.20.12 at 9:51 pm

thank you for this post.

In 2006 a Kelowna realtor told me how she was super busy selling presale condos to self-employed contractors via ‘stated income’. In 2007 the subprime crisis in the U.S. became a news story. This caused me to worry about the Canadian exposure ( based on my realtor friend ). I was told that ‘ Canada doesn’t have to worry, no subprime mortgages here’.
It is now 2012 and Kelowna is making national headlines because of skyrocketing foreclosures. Just a coincidence I guess.

#15 Farfetched on 02.20.12 at 9:53 pm

Got to think past how this will effect housing – that is obvous. How will this change the public’s perception of financial institutions? How will the FIs react? Will they need to? Will perception even change? Are people just getting dumber and dumber on their vegan diets and consistant intake of Kim Kardashian?

#16 squidly77 on 02.20.12 at 9:55 pm

The Fullerton Grandparents

http://homeguide123.com/articles/Top_5_Most_Ridiculous_Mortgage_Borrower_Stories_of_2007.html

#17 Miko on 02.20.12 at 9:55 pm

all the Vancouver west side area listings (MacKenzie heights, Dunbar, Shaughnessy, Kitsilano) talk more about what great Elementary schools are nearby than the actual house, emphasizing the schools in CAPS….. just saying

#18 Retired Boomer - WI on 02.20.12 at 10:01 pm

Sometimes that spell checker has a mind of its own. It’s worse when one fails to use the dam thing.

2007 our subprime US style started to crack, and we still are not over that orgy are we? FANNIE & FREDDIE started buying that crap, and WE tax payers had to bail them out.
Banks were holding & selling the MBS all the world over, my apologies to anyone who bought that crap.

Still, it proves beyond anything that there is NO FREE LUNCH. If you ant a house, buy one when you have the 20-25% down payment (not borrowed monkey either) and finance it for no more than 25 years…15 preferred. IF you can’t pass that test you DO NOT deserve a house.

IF you bought with less, and lose your place, I can only hope a cheap dastard like me will scoop it up from the bank for a pittance, after your foreclosure. BEWARE I buy my cars that way, and have no interest in owning any RE other than my little home right here.

As for stocks, ETF’s and prefereds GO GARTH!!! Sure beats credit cards, car payments and mortgages as far as the eye can see. Can stocks go down? Sure, same with all the fore-mentioned, just like RE sometimes does. While that doesn’t happen all that often, when it craters it looks a lot like…FLorida, Nevada, Arizona…not so much like here where it lost maybe 15% at the peak.

Still if you were the sub-prime borrower at the market’s high with your big 3% own..you only have 12% to go before you are back to even money. THAT’S HERE. IF that was one of the big loser states you are effectively paying for your home TWICE now.

Some choices, like those who chose risk sometimes end very badly.

In a Decade or so, you may be able to laugh at this silly nonsense.

#19 squidly77 on 02.20.12 at 10:02 pm

Story # 4 – The Hahn Family

Jeffrey and Vanessa Hahn bought a $475,000 house in 2004 with an adjustable rate mortgage and then took out a significant home equity loan not too long afterwards. In September 2006, the main mortgage interest rate reset, which caused the payment on their main mortgage to jump from $2,200 per month to $3,700 per month.

In March of 2007, the couple got a cash-out refinance of $570,000 even though the required monthly payments for this loan equaled their monthly take-home pay. Needless to say, they made no payments on this loan and subsequently lost their home to foreclosure.

When the San Francisco Chronicle profiled the Hahns, Jeffrey said he was ‘shocked’ by the number of hate comments that were generated.

‘I just don’t get how these people can judge me like this…think{ing} we…took advantage of the system. The system took advantage of us,’ Hahn was quoted as saying.

#20 The cat on 02.20.12 at 10:08 pm

I know a lot of people just getting by in Alberta.when the patch slows down, wich it will.there’s going to be alot of for sale signs.

#21 T.O. Bubble Boy on 02.20.12 at 10:09 pm

Only a handful of new listings on guava.ca today, but 2 were enough to prove that we’re at the peak of stupidity:

1) 46 RANLEIGH AVE
Feb 9: $799,000 Feb 20: $899,000
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=11552327&PidKey=1489732711

2) 220 BURNETT AVE
Feb 14: $699,900 Feb 20: $760,000
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=11566259&PidKey=-275816334

Apparently the demand for 2-bdrm bungalows pretending that they’re not about to be torn down to build a McMansion went up almost 10% in 6 days!!! Gotta love the pics where the realtor intentionally shows other McMansions next door and across the street.

#22 };-) aka DA on 02.20.12 at 10:09 pm

#14Form Man:

No coincidence… Although a larger number of those foreclosures are the inhabited principle dwellings on which the HELOC was taken out against by those who ventured into the speculative presale / assignment of contract game.

Shift happens. They didn’t see it comming. Who’s next..?

I see a lot of real estate speculators posting on this blog – just betting against instead of for. No different a bet is a bet is a bet is a bet. It’s all speculation.

Real estate like most “investments” is a long term hold or else it is a gamble.

#23 Toon Town Boomer on 02.20.12 at 10:09 pm

Notice the realtor admits that most people can be herded like sheep. WAKE UP PEOPLE! That’s exactly what these realtors will do, them and the banks will take you to the slaughter house. They don’t care about you or the future economy of Canada.

#24 Sh on 02.20.12 at 10:14 pm

Judging by the blatant RE pumping stories on the Vancouver Rain, the beginning of the end of the peak is near. When anxiety gets this high and the RE pumpers start really pumping out the “all is well” ads, it’s like the alcoholic lying on the bar floor saying “I am not a drunk.”

#25 Bottoms_Up on 02.20.12 at 10:20 pm

Why would anyone try and insult Garth? He was a friggin’ MP for Dog sake, those people grow the thickest skin of all.

Regarding Canadian ‘subprime’, I’ve spoke on this before and I believe Canada is not as bad as the US was.

As a ‘subprime’ borrower myself, I was UNABLE to get a very conservative mortgage, TWICE. Once in 2007 and once in 2008. The biggest thing that made a difference for me getting a mortgage was having a stable job. Once I had that job, I got the money.

So, I do believe Canadian banks lend to people with jobs. Unlike what was happening at the height of the US crisis where if you had a pulse you qualified.

#26 Observer on 02.20.12 at 10:23 pm

Looking for suggestions – what to buy with $5000 and put in a TFSA. ETF’s, REIT’s, dividend producing stocks, bonds? HELP

#27 Bottoms_Up on 02.20.12 at 10:28 pm

#5 Bill Gable on 02.20.12 at 9:32 pm
——————————————–
It’s true, there are a lot of boomers with overpriced homes that plan on selling to someone. However, Gen X/Millenium is use to getting things for free, and likely won’t be paying $500,000 for a place to live.

Gen Y is their best bet, but I think Gen Y is slowly coming around and realizing they don’t want to commit a lifelong of earnings to paying off a house plus interest.

Interesting times indeed.

#28 Bert on 02.20.12 at 10:28 pm

The remax twit seems pretty familiar your blog Garth. Maybe there is hope.

#29 Canadian Watchdog on 02.20.12 at 10:30 pm

Only two facts you need to know about CMHC’s sub-prime mortgages: i) They have $12-14 billion in total equity to backstop… ii) http://i39.tinypic.com/2gsikcn.png

#30 The Thing in the Basement on 02.20.12 at 10:31 pm

“Prior to 1999, nobody with less than a 10% down could
qualify for mortgage insurance, or get financing.”

Incorrect Garth. In BC in 1991 we bought our first house with less than 7% down – and the minimum was 5%. I believe there was a provincially sponsored program.

Correct. I referenced CMHC. — Garth

#31 Form Man on 02.20.12 at 10:35 pm

#22 DA

True enough. My worry is Toronto right now seems like Kelowna 2007-2008. My guess is the next few years for Toronto will be like the last few have been for Kelowna.

Difference is the Central Okanagan has a population of some 180,000 people……….
GTA 6 million………

#32 Van guy on 02.20.12 at 10:37 pm

“And no one should be surprised what comes next.”

Are you predicting riots to break out after the crash? Or are you picking on Vancity? It sure looks like that from the pic you posted.

I think she’s hot. — Garth

#33 NewWorldPartyDotOrg on 02.20.12 at 10:38 pm

“Does Canada have a subprime mortgage problem?”

Read:

Housing, the most manipulated market in the world
http://www.newworldparty.org/2011/04/housing-most-manipulated-market-in.html

“TD Bank told me that for a couple of years, Canadian banks were giving out zero-down, 40 year mortgages to people who were one paycheque away from insolvency. These were Canada’s version of subprime mortgages.”

#34 TaxHaven on 02.20.12 at 10:44 pm

How long has government been in the ludicrous position of “guaranteeing”, via CMHC, private mortgages anyway?

There’s more. What about the ridiculously undercapitalized CDIC? Central banking’s artificial interest rates? Unemployment “insurance”? Minimum wages? Fractional reserve banking fraud? Socialized – and poor quality – medicine? Tariffs and excise taxes? Government Liquor Stores? Fiat currency? A VAST public sector? Housing subsidies? Child support & other social welfare payouts?

And many STILL say we suffer under “unrestrained capitalism”…!

Hahahahahahaha…!

#35 45north on 02.20.12 at 10:47 pm

And no one should be surprised what comes next.

Homer Simpson: “default” the two sweetest words in the English language

I love sub prime:
http://www.youtube.com/watch?v=NkEwdg1VP_c

in the US, the usual mortgage is 30 years fixed, yep you sign up for a mortgage and pay the same rate for 30 years. In the US they had “teaser mortgages” where there was a low rate for say 2 years and then the rates increased. In Canada, mortgages reset after 5 years. Or less.

not 1st: They called back and asked if $850,000 would be good enough. I said sure, lets get pre-approved.

pretty funny

Seven Stars and Orion: wiping out the middle class?

which is exactly what has happened in the US:

The amount of wealth that was lost to the median family here in Florida is really staggering

http://thehousingbubbleblog.com/?p=6942

what comes next is the Canadian middle class is wiped out

#36 northerner on 02.20.12 at 10:47 pm

another entertaining and informative post Garth, your real estate mate might have hit upon a good name for another book “delusional road”. We in Australia nearly mirror your situation in Canada, have a look @ this
http://www.refundhomeloans.com.au/index.php
and this; http://www.smartcompany.com.au/finance/20111017-refund-home-loans-falls-in-administration-but-buyers-waiting-in-the-wings.html

#37 AprilNewwest on 02.20.12 at 10:51 pm

#200 Kilby – From yesterday ” Insecurity”. The fellow you spoke to in the elevator, whose building another tower [despite many finished units unsold] didn’t happen to mention that he has to go ahead with the building. The procedure of applying for a building permit and all that goes with it takes 2/3 yrs before they can dig a hole in the ground. Anyone correct me if I’m wrong. Of course he has to sound positive when speaking to the public consequently telling you Van prices will go up. He knows many will believe him.

#38 Uh Oh Canada on 02.20.12 at 10:55 pm

What’s the latest on the CHMC budget? Were they granted a higher budget or were they capped?

#39 ivan, calgary on 02.20.12 at 10:56 pm

it’s true – hummer is as gay as a vehicle can get.

and while i have no insight in other markets when it comes to calgary please know that comes february 2013 prices will be 2-5% higher than today.

:-)

#40 cto on 02.20.12 at 10:57 pm

Today I took a walk down Yonge St at Sheppard and counted about 6 large condo projects in that area alone.

I got thinking about generations, decades and the socialogy of it all.

In the years after WWII 50 -60s much construction in building industry, factories and places of business.

The places of work made people wealthy and the banking and business sector prospered starting construction of the large office towers 1970s-80s.

Now there is hardly any office construction and they are demolishing factories and paving farmland to build condos! Condos! What is the lasting economic benefit in this insanity! Condos make no money for anyone but the few involved in its construction and sale, then that’s it! It’s a net cost after that. NO BENEFIT!

When this ponzy scheme ends, we will have nothing!

#41 this is wonderland on 02.20.12 at 11:00 pm

Jeez Garth, maybe it time to start interviewing body guards.

http://www.allvoices.com/contributed-news/7559214-female-bodyguards-are-the-choice-of-celebrities

#42 Lorne on 02.20.12 at 11:05 pm

#33 New World…..great article!

“Let’s say you’re a politician. You know that:
You’ll get re-elected if you:
grow the economy, or
make your voters feel wealthier
Economy will grow and your voters will feel wealthier, if you:
boost housing sales and prices
Housing sales and prices will go up if more people buy houses
More people, even if they can’t afford it, will buy houses if they can borrow and leverage more
People can borrow and leverage more if you:
reduce down payment
extend amortization
reduce interest rate
enable banks to lend to risky borrowers
Banks will lend more, if you remove their risk
CMHC can remove the risk from the banks
As long as you get re-elected, that’s all that matters. This built up of un-sustainable debt and fake wealth is the next politician’s problem.
What would you do?”

#43 renters rule on 02.20.12 at 11:05 pm

“zman

i had heard that canadians will miss their utilities payments but not their mortgage”

That’s because in places like Que and Ont it is ILLEGAL for the utility company to cut you off for not paying (people have frozen to death in winter, died from heat prostration in their homes in summer in the past)… they will try and collect, but they can’t cut you off for non-pay.

Nice try though…..enjoy your losses on your (over) investment property (s)

#44 Guy_in_Regina on 02.20.12 at 11:08 pm

Garth, you seem pretty sure about max amort’s going back to 25 years in this budget – I hope you’re right. RE is insane.

What about a place like Regina though? (preconceived notions aside). Lowest unemployment rate of any CMA, lowest vacancy rate of any CMA (0.6%), booming economy. I’m hoping for a correction to make things more affordable – but I’m afraid it won’t come to the Queen City.

#45 Walter Safety on 02.20.12 at 11:08 pm

My cuz left her job as a senior mortgage underwriter with a major bank about two years ago . She had an exceptional offer from what i’ll call a Tier 2 lender .
Now she is back at the bank . The Tier 2 lender was using every loose lending practice that was worth learning from USA lenders, but the don’t ask ,don’t tell policy she couldn’t live with.
Alas ,Garth this bubble has a long way to go . The US bubble ran into a credit contraction. The Canadian bubble is basking in the sunshine from the opening of the money spigots.
Questionable lending practices alone won’t pop this bubble it will take systemic failure.

#46 renters rule on 02.20.12 at 11:08 pm

Ivan, calgary

Enough with the gay bashing you deluded calgary redneck

#47 Maxamillion on 02.20.12 at 11:10 pm

NYC apartment sell for 88 million, stop your whining. Russian billionaire purchased it for a 22 year old student, now that’s the crazy part.

http://ca.news.yahoo.com/video/us-22424932/nyc-apartment-sells-for-88-million-28344077.html

#48 Form Man on 02.20.12 at 11:11 pm

#37 AprilNewwest

You raise a good point. While construction projects regularly get cancelled or postponed prior to start of construction, the closer one is to issuance of permit, the more ( usually borrowed) money has been spent, making it imperative to try and proceed. It is also true that this process with a high rise can take 2 – 3 years.
The same development process that responds slowly to demand ( causing shortages and price jumps) is just as lethargic when decelerating, causing overbuilding.

#49 Industrial Guy on 02.20.12 at 11:17 pm

Southern Ontario is in big trouble. We all prayed the worst possible scenario wouldn’t play out. Sadly, that’s exactly what’s happening right now. The manufacturing catastrophe is picking up steam. The sudden closing of Electro-motive Diesel in London has struck the region like a stake through the heart. Now everyone realizes their jobs are in jeopardy. Just wait and see what that does to housing prices in the region.

The continued closure of US Steel’s plant in Hamilton has left a lot of people wondering if that plant will ever open again. This is a really odd situation. US Steel’s other plants in North America are running at around 90% capacity …. But company Chairman John Surma says there are no plans to restart until there is a “substantial improvement in the North American market”. If 90% capacity isn’t enough .. what’s this guy waiting for .. a Government hand out? Of course he is .. These guys play our Governments like a cheap fiddle.

The recent Drummond report says Ontario has a spending problem and major cuts must be implemented. Well, with all these major employers closing .. and the Premier of Ontario’s insanely expensive green electricity fetish driving more out. Isn’t it a revenue problem first?

#50 T.O. Bubble Boy on 02.20.12 at 11:18 pm

Diane Finley, the horrible MP in charge of the CMHC debacle and the shameful EI program, is now in charge of spreading lies about old-age security:

http://www.theglobeandmail.com/news/politics/finley-to-make-the-case-for-adjusting-old-age-security/article2344215/

Note to Canadians: don’t believe a word this woman says! She may be a bigger fraud than Peter Kent or Tony Clement!

#51 Don on 02.20.12 at 11:21 pm

#5 Bill Gable on 02.20.12 at 9:32 pm
——————————————–
However, Gen X/Millenium is use to getting things for free, and likely won’t be paying $500,000 for a place to live.
******************************************

WHAT? care to back this statement up with some simple examples. I guess when you went to school they didn’t teach students to back up your assumptions with true facts. The world has gone to hell and who exactly are the present day leaders. What generation would that be.

#52 Don on 02.20.12 at 11:25 pm

Garth

Re: the email from the as# hole realtor sitting on his hands.

How does the saying go. First they ignore you, then they laugh at you, then they fight you, then you win.

I guess they are at the “Fighting you stage”

Can we get his email, I would like to call him about buying a house – Low ball. Release the blog dogs… come on Garth.

#53 Leonard on 02.20.12 at 11:28 pm

The doomer boomer strikes again, of course Canknuckleheads are not smarter than the Yanks, that should be obvious, just look at corner gas or Nickelback. If you thought we were going to get out of this clean, guess again, Canada has all it’s eggs in one lovely hand woven real estate basket, everything is in there. Well everything except our fearless boomer doomer Garth.

#54 Mr Buyer on 02.20.12 at 11:31 pm

I do not think people are as dumb as they appear to be. A great deal of people figured out that most of the risk was removed and that flipping a house was their last best chance to amass some serious coin. The worst case scenario for a great deal of people worked out be losing very little of their own money with the end of the line being bankruptcy and the upside being the sale of a house after a year or three or five with a huge price increase. The high probabilities laid healthily in the succssessful sale side of the estimation with a chance of bankruptcy being such that it only had to be considered for a moment. So the race was on but the probabilities did not remain static as they usually never do. Our adaptability as a species is a doubled edged sword in that people at large became comfortable with the chance of bankruptcy ever present. As the likelyhood increased more and more, so to did the tolerance of this risk. Now we are past the top of the bubble and people have grown so accustomed to dismissing the risk of personal financial disaster that they are for all intents and purposes hooked on taking the chance they can cash in SOME HOW. Starting over is somehow maybe romantic and there is still an ever decreasing chance of cashing in on some guy buying the place I bought in 2012. BUYER BEWARE, CAUTION. THESE ARE VERY DANGEROUS TIMES. The bubble has topped.

#55 Jon B on 02.20.12 at 11:39 pm

Great summary of the sub-prime Canadian reality. I see all sorts of refinancing ads for “upside down” mortgage holders here in the US. And since when is a Hummer regarded as a gay mobile? Seems pretty non-gay to me.

#56 Thomas on 02.20.12 at 11:50 pm

Real estate is not the path to financial freedom unless you buy low, and sell high. However, people will pay any price now as if it were shares of a tech company during the tech bubble.

#57 Keith in Calgary on 02.20.12 at 11:51 pm

Garth…….

An old Lancaster bomber pilot from WWII once told me that……”the flak is always the heaviest when you are directly over the target”………

Bombs away !!!!!

#58 The Thing in the Basement on 02.20.12 at 11:53 pm

“The same development process that responds slowly to
demand ( causing shortages and price jumps) is just as
lethargic when decelerating, causing overbuilding.”

Yes, Form man, absolutely! Well covered in the demographia studies. So the big question is how do we balance it all to avoid (or at least reduce) the boom-bust
cycle?

#59 Mr Buyer on 02.20.12 at 11:57 pm

I remember hearing a statistic decades ago that something like 90% of millionaires made their money from real estate. That made quite an impression upon my 20 something mind. I had no real idea how this was done for most but I summised that people worked hard and scratched together a downpayment and bought a semi-distressed property needing cosmetic enhancements and then put it back on the market at a somewhat elevated price and the key to success was doing this multiple times and finding the RIGHT property with some upside potential. There was risk for certain but it all seemed quite reasonable. Fast forward to today with the passing of the top of this bubble and there is no upside potential. Along with this there is no reasonable basis for pricing with a massive potential for loss. BUYER BEWARE. THE BUBBLE HAS TOPPED. OFTEN THUS HURT WORST IN THHE COLLAPSE OF A BUBBLE ARE THE LAST FEW BUYERS. DO NOT BE ONE OF THE LAST FEW BUYERS TO PURCHASE AT BUBBLE INFLATED PRICES. THIS IS NOT THE TIME TO BUY. The bubble has topped.

#60 Mark on 02.20.12 at 11:59 pm

Next week’s Macleans Magazine will cover the story of the Canadian Housing Bubble. It might be the cover story, or a leader story on the front page. I have seen the preliminary three cover designs for next week. It will either be Justin Trudeau as the cover story or the Canadian Housing Bubble.

#61 Wendy S on 02.21.12 at 12:14 am

Great post garth, people are DILUSIONAL! its only a matter of time till these horny’s face reality. heres a photo i found that sums up whats going on in our country. you should use this.

http://tinyurl.com/72672t7

#62 [email protected] on 02.21.12 at 12:17 am

@ #26 Observer on 02.20.12 at 10:23 pm
Looking for suggestions – what to buy with $5000 and put in a TFSA.

Depends on your stomach, I went an even split on the etf route with preferred shares (CPD) and REITs (ZRE). They both pay monthly 4%+ as Garth advised. There are lots of choices, but if you have to go with a balanced mutual fund please keep an eye on the MER – go with a bank’s monthly income fund or Mawer Diversified.

#63 Joe Q. on 02.21.12 at 12:18 am

#9 zman on 02.20.12 at 9:43 pm writes: “how do you explain that mortgage dafaults are still less than 1 percent….”

Mortgage defaults tend to be a ‘trailing indicator’ in the housing market. In the USA, the number of mortgages in arrears (a prelude to default) didn’t start increasing significantly until prices had been stagnating or declining for two years.

#64 Joe Q. on 02.21.12 at 12:26 am

#21 T.O. Bubble Boy on 02.20.12 at 10:09 pm writes: “Apparently the demand for 2-bdrm bungalows pretending that they’re not about to be torn down to build a McMansion went up almost 10% in 6 days!!!”

These situations are common in Toronto — the sellers deliberately list far under their target price in order to spark bidding wars, but if those bidding wars don’t generate the expected windfall, they refuse all offers and try again the following week. For legal reasons, they have to set their new asking price above the highest bid that was received previously (otherwise they leave themselves vulnerable to charges of false advertising).

Note that according to many realtors, this practice is usually counter-productive — too many PO’ed people and it takes the momentum out of the sale.

#65 rentin on 02.21.12 at 12:26 am

“lenders smile every time a Wal-Mart greeter with no assets buys a $500,000 condo in Yaletown.”

Bullshit, those are union zeller’s employees.

#66 PATRIOTIC DUTY CALLS: How to STOP the SUBPRIME LENDING IN CANADA on 02.21.12 at 12:26 am

1. Get rid of canadian bonds before CMHC, Municipal or Provincial Govt bankrupt (and wipes your portfolio out (if you believe it can happen). This will reduce lending capacity ten fold, only the qualified ones will get a mortgage. As it should be.

http://quote.morningstar.com/fund/f.aspx?Country=USA&Symbol=F0CAN05M27

http://quote.morningstar.ca/quicktakes/fund/f_ca.aspx?t=F0CAN0721F&region=can&culture=en-CA

http://quote.morningstar.ca/quicktakes/fund/f_ca.aspx?t=F0CAN05M4X&region=can&culture=en-CA

2. Stop working full-time slave workalcholic jobs when you can, e.g. do your own bussiness, work part-time, take a sabatical year off, retire early, take unemployment every so often. Gov. wil have less revenue to grant to money wasters and family connections, and you will have your HEALTH.

3. Place 20K each year in RRSP (or anything above 78000), 1 week left for fiscal 2011. Put the FED govt in red, so they stop lending to housing bubble, and re-assess the current HUGE SHIT CMHC is in, before they bankrupt this blessed country completelly and we are forced to join US.

4. Remember, only a fool is happy to have house prices increase and pay thounsands more in taxes every year.
A house correction to historical levels is needed to lower property tax bills to sustainable levels.

#67 Preciousss on 02.21.12 at 12:27 am

I had a very nice chat with my realtor today. A very decent person and as realistic as can be.

We decided upon an ask price that undercuts every comparable lakeside property in the area by 20%. I will offer reduced rate earthworks and “cheaperthanthebank” vendor take-back financing.

It’s time to moveit, moveit. It’s time to moveit, moveit.

#68 tigerbaby on 02.21.12 at 12:45 am

#62 truth hammer on 02.19.12 at 10:27 pm
” … Canadians have three hundred years of experiance…..and we’re still as dumb as a sack of hammers. …”

is there a truth missing in there somewhere?

#69 The Thing in the Basement on 02.21.12 at 12:49 am

169 GTA Girl from last blog re trillion $$ inheritance.

Yes I find many holes in that too. Saw no reference to the source for that figure. And what does it comprise? Real Estate? Subject to downturn and cap gains on rental/vacation property . Stocks and such? Ditto. RRSPs? Huge tax liability.

Also a higher percentage of the elders had DB pensions which will disappear with their deaths.

So how much is a trillion? For the 9M boomers its about $110k per. But that’s the average. We know that most wealth is held by the…..wealthy! So your typical boomer might get a few $10Ks. Maybe good for a couple of years
of retirement.

#70 Bilbo Bloggins on 02.21.12 at 12:50 am

How ignorant is that fella.
70% of Canadians owning homes != herd
Yet he thinks a few hundred blog dogs on this site = a herd.

#71 City Slicker on 02.21.12 at 12:59 am

#9 zman on 02.20.12 at 9:43 pm

hi

how do you explain that mortgage dafaults are still less than 1 percent….these people who should not have qualified are still paying their mortgage on time….i had heard that canadians will miss their utilities payments but not their mortgage…and rates rising being a problem well this is not going to happen for a very long time….
however i do think real estate is too expensive but prices will only come down when rates rise and this is not going to happen…

Patience. They will come. — Garth
———————————————————
When can we say that we’ve finally arrived?

#72 ms bboomer on 02.21.12 at 1:00 am

Hi Garth, that classic ReMax guy was very rude and full of himself. And so angry! Weird to send that email too, I guess house-aggedon is near, and he is just afraid. I applaud your tough skin; I have also felt your deep, caring self on your blogs. Again, thankyou for the work you do.

#73 P & T S on 02.21.12 at 1:05 am

Not just in Canada folks – ALL the Australian “Big” Banks (NAB, Commonwealth, Westpac and ANZ) were just as “generous” in offering ridiculous loans. As existing NAB (Commercial) Customers we were offered a domestic (home) loan of 15x our combined income – because of our “good Commercial loan servicing record”! We suspect that is just one of the reasons why house prices (not value) have rocketed so high “Down Under”.

Same mindset too – “everyone” will retire early / owning millions by the “easy route to untold wealth” – RE Investment. One of the local papers is even suggesting that Schoolkids should “be in on the act” – “It’s never too young to start on the Property Investment ladder!”

http://www.news.com.au/money/property/never-too-young-to-buy-property/story-e6frfmd0-1226275496776?from=public_rss

Seems things there must be getting REALLY desperate, if they are now roping ALL the family into the joys of Home Ownersship – from the Grandparents to those still at school.

Wonder who’s going to be buying all these houses when they want / NEED to sell up???

#74 betamax on 02.21.12 at 1:23 am

And aside from the spendthrift banks, there are a multitude of HELOC lenders like Alpine Credits, who will give money to losers that even the banks won’t touch:

http://www.alpinecredits.ca

” If you own property in BC or Alberta, we can get you a home equity loan no matter what your age, credit or income.”

This. will. not. end. well.

#75 Devore on 02.21.12 at 1:24 am

Bah, on death ears, Garth. I’ve been saying for two years now that every CMHC loan is by definition sub-prime, since if it were not, banks would be happy to carry the risk, instead of getting the government to co-sign the loan. Usually, profanity ensues. The real estate cool-aid drinkers are certainly amongst the most ignorant and rude people I’ve had the displeasure of meeting. Can’t blame them, they have to be. Cognitive dissonance and all that. Bad for mental stability. You tell them anyone with a pulse can get a 100-102% amortization mortgage from a Canadian bank, through the army of their arms-length mortgage brokers who will pull out every trick in the book (and even invent a few of their own) to get your business, and their heads explode from rage.

“Nooo! Canadian banks are prudent lenders, with very strict rules and oversight!”

And of course, by extension, Canadian borrowers are responsible, and only are allowed to borrow what they can repay. Perhaps so, until they can’t, but in any case, you should not do something just because you can. I was flabbergasted at how much my bank was willing to lend to me. A sum I could not even fathom to be able to repay in my income earning lifetime. Who borrows that kind of money? Everyone.

#76 John Prine on 02.21.12 at 1:34 am

Regardless of what the re/max salesman wrote, I do know two realtors that have both sold their SFH and condo in 2011 and, like myself are not planning on buying in 2012. They, of course don’t “talk down” the market but are realistic both with their own circumstances and realize that they will still be able to sell in the future but will have to adjust to the new market reality.

#77 Loan money to anyone on 02.21.12 at 1:37 am

Thank-you Garth, for your showing that subprime lending is alive and well in Canada.

Toxic mortgages were the root cause of the financial crisis in the US three and a half years ago. It’s outrageous that the Canadian government has done nothing (despite having ample time) to eliminate the practice and it’s arrogant to assume a financial crisis can’t happen here as well.

Why can’t we learn from the mistakes of other countries?

#78 Nostradamus Le Mad Vlad on 02.21.12 at 1:48 am


“. . . what used to be an accomplishment and a privilege into a right and an entitlement.” — Kids of today can hold any attitude they want, but one of life’s simple lessons is what a person puts out is precisely what they get back. No one else is responsible for their choices except them.

“. . . to so called success.” — Each has their own road to ‘success. Being debt free and content with life suits us just fine. Success is not the size of a house or an investment portfolio.

“. . . as the feds struggle to contain the damage.” — The CPC created this mess with their idiotic policies, and they will be held responsible for fixing it. Taxpayers didn’t ask for cheap money — the feds handed it out on a silver platter, without telling anyone there is no such thing as a free lunch, that it has to be repaid.

To this, add a bunch of Europeans who are looking to emigrate here. Unemployment is basically out of control, esp. with the youth. If the CPC lets them in with little money, where are they supposed to work, now that mfg. is in ChIndia?
*
Oil If only it was possible to see five years into the future, and see where oil prices are, and and SArabia; Hydro rising Prices in UK up, and Surging Energy Prices; Spanish riots; Where the stock market is going; China Money to buy companies; John Bogle supports Obomba, but Obomba Curious pix. “If we don’t vote this man out in November, this country is finished.”, and Second Term? Taxageddon Obomba 2013 (PDF) from Soros; EZone Leaders knew the Euro would crash and burn; 34 Resignations Bank execs., govt. officials etc. (links in).

Greece, Portugal, Spain and possibly Ireland may exit the EZone; Meaningless Greece deal; US$200 bln. Disability claims; Real Money from fake US Bonds; John Mauldin The cancer of debts and deficits (that’s what Canada has); Leaked Memo on Greece; 2005 Back To The Future; EZone Some under pressure; Certain About Nothing.
*
2:09 clip “Women’s Army China: 363,789,674. Population of America: 311,591,917.”; Whisky Pancake; Iran Nice for the US to admit this (as if no one knew), and Criticizing Iran; Turkey and China helping Iran (China needs the oil), and China is right on this — the west is causing all the trouble in Syria and Libya; SOPA replacement using child porn as an excuse to spy on citizens, and Section 34 gives the CPC Orwellian powers; One world religion sorta goes with the NEO, but it’s not gonna work; Chess Game The west is losing.

#79 SophieZombie on 02.21.12 at 2:06 am

Garth, what do you think of this ?
I thought that if you can afford a toy-home of 850K, you should pay your taxes or wait a year. How can you prevent illegal suite it the recreational property, which could be in an urban area ?

B.C. home builders applaud HST transition rules
He (Falcon) said starting April 1, 2012, the government will raise the HST rebate threshold for new home buyers to $850,000, up from the current $525,000, meaning more than 90 per cent of newly built homes will now be eligible for a provincial HST rebate of up to $42,500.
http://www.cbc.ca/news/canada/british-columbia/story/2012/02/18/bc-hst-reax.html

#80 Dirt Dog on 02.21.12 at 2:08 am

#33 New World

Bang on!!! How many times have I heard the phrase “our fragile economy” sprouted from the government. Harper and crew have done a magnificent job of manipulation and have now been aptly rewarded with their majority government. We will all be heading off to church in the near future I suspect.

On a final note the “gay mobile” was kinda funny…

Hugs

#81 Mainlander on 02.21.12 at 2:20 am

Just before the US meltdown I met people that when approved for a new credit card, they considered it a pay “raise”. Being Canadian I never really understood the thought process. I am seeing this same phenomenon here in Canada right now, I recognize it because I’ve seen it before. When this melts down there will be alot of people wondering what just happened. We have always been a few years behind the Americans, everything that they’ve ever had first, whether we wanted it or not, has shown up here.

#82 Trailer Park Boys on 02.21.12 at 2:33 am

Not sure why Garth is putting up with crap from likes of Gloria Steinen(CIA agent).

If she lived in OUR trailer…she may not have enough time to write Fem/Nyst BS.

Gender specific chores would have to be completed first……then maybe rants to Ann Landers,Dr Phil and Oprah..

#83 ZRH2YVR on 02.21.12 at 2:34 am

Had a great weekend in Whistler. Spent the weekend in the epicentre of the recreational property meltdown capital of BC. Sales – dead now for 4 years. Inventory – 2 years. And- to make it worse – many of the old buildings are now getting assessments- – and big ones. Have a look at the building attached to the North Shore Credit Union in Whistler – Their problems are so big they have to get permission from the city to do the repairs- Almost likea rebuild it seems.

Had an interesting conversation with a couple of locals – one who is a mortgage broker who said he has basically spent his past year foreclosing on the foreigners. Seems their ski-paradise has not turned out too well and they have issues back home. Also – many of the places in Whistler who are in a gain position (i.e., pre-2002) are actually underwater because during the peak – people levered it up to buy – – – MORE WHISTLER PROPERTIES. Rediculous.

Anyhow – the broker was convinced we have only seen the tip of the iceberg in Whistler and that Vancouver is only around the corner. Feb stats in Vancouver are not bad for Feb but seasonally they are terrible and 2nd worst in a decade (sound familiar?).

Anyhow- – Just a note for those that say . It’s Different here. They are right — unlike the rest of Canada’s market – our inventory is at almost record highs . . . .

Thanks GT for keeping this up.

#84 Ronaldo on 02.21.12 at 2:36 am

#26 Observer – I like PHN660. A monthly income fund, low MER. Can be purchased in a direct trading account on TSX through most banks. No purchase or selling fees. Slight holding period. A good balanced and managed fund for these times. There are many others. TD has an excellent selection of EFunds with low MERs as well, no purchase or selling fees. I purchased 5 in equal amounts for my TFSA at the beginning of January and they are up an average of 7% ytd. Check it out but do your own due diligence.

#85 John G. Young on 02.21.12 at 2:50 am

#55 Jon B

“…since when is a Hummer regarded as a gay mobile? Seems pretty non-gay to me.”

Absolutely. Oversized, brutish, ungainly, ugly — definitely not gay.

#86 syd on 02.21.12 at 2:55 am

http://www.moneyville.ca/article/1133853–baby-boomers-set-to-inherit-1-trillion?bn=1

#87 martin9999 on 02.21.12 at 3:29 am

Patience. They will come. — Garth

patience its a virtue

#88 Johnny on 02.21.12 at 3:51 am

Hey Garth…I thought you might have some fun with this: http://www.vancouversun.com/business/Saving+retirement+Real+estate+your+best/6174958/story.html

#89 joeworker on 02.21.12 at 4:07 am

I just don’t understand how people can blindly trust a realtor!? They have no formal education and their income is entirely dependent on YOU buying or selling your house. Show me how this is any different from a car salesman? or a travel agent? Or a ‘financial services rep’ ie. mutual fund seller. It’s strictly cash for markup on things you were already going to buy.

If a car salesman told you now was a good time to buy a car, would you do it? How is this any different than when a realtor tells you its a great time to get into the market?

Pathetic.

#90 eagle eyes on 02.21.12 at 4:22 am

Hummer as a gay-mobile? Well I’ve heard that when a man drives a large vehicle, they are making up for something else for which they are ashamed. Just saying.

#91 munch on 02.21.12 at 4:51 am

Last!

#92 Tiffa on 02.21.12 at 5:19 am

On a practical level, I’m really curious as to how the process goes when a bank calls in an insurance payment from the CMHC.

Obviously there’s some designated time-line. They have to sell the house, presumably, for whatever they can get? CMHC would then pay the difference; the monetary loss, and perhaps more, I’d be curious to know the specifics.

And beyond that, I’ve heard tales (whispers, anecdotal evidence) that CMHC can and has then turned around and sued the folks that took out the mortgage, for the amount the CMHC had to pay the bank. Is this true? I’ve never been able to find or get an answer anywhere. Are taxpayers truly and fully on the hook in these cases? Or are the (previous) homeowners legally on the hook for that money? It’s bizarre how little I can find out on this.

#93 Deb on 02.21.12 at 5:45 am

Yes, the question is why Mr. Re/Max guy is so, so defensive, like someone who is cornered with his back against the wall? The truth can sometimes be painful and difficult to accept. But when Mr. Re/Max does nothing to explain or reinforce his point of view with facts, it comes across as small and flaccid.

As you have said before, Garth, first-time buyers are the red meat of the real estate industry. We need to imagine, just for a moment, what the market would look like today if 25-year amortizations and 10% down payments had continued to be the norm over the past several years? It is clear that fear and the first signs of panic have begun to take hold now that the only thing left in the market are a few sorry chicken wieners, rather, greater fools.

#94 TEMPLE on 02.21.12 at 5:50 am

What the hell is a “gay mobile?” Is that a trailer? Garth, do you live in a trailer?! If so, nice strategy for keeping your housing to less than 30% of your net worth. Crafty, old man, very crafty…

#95 };-) aka DA on 02.21.12 at 6:01 am

#48Form Man on 02.20.12 at 11:11 pm
#37 AprilNewwest

You raise a good point. While construction projects regularly get cancelled or postponed prior to start of construction, the closer one is to issuance of permit, the more ( usually borrowed) money has been spent, making it imperative to try and proceed. It is also true that this process with a high rise can take 2 – 3 years.
The same development process that responds slowly to demand ( causing shortages and price jumps) is just as lethargic when decelerating, causing overbuilding.

Timing has a lot to do with the outcome of a good rain dance.

Ya think these guys crystal balls were maybe just a little cloudy?

Think about it… to amass the amount of financial glue required to put together such a project generally requires a catalyst who has the brain power, not to mention the deep financial pockets, to pull it off. Yet so many have miscalculated.

There is a lesson there for us all – no one has a crystal ball.

As it is on the way up so can it be on the way down.

#96 truth hammer on 02.21.12 at 7:26 am

Wow…..slamming truck ownership as ‘gay’. Thats so gay. I’m going to have to check myself before I do any business with any real estate agents. Lets see……ducktail hair…..black Ford low rider…….rat tail comb……tightey whities…..zero cologne except Old Spice…….Bryllcream….and a closet full of tutu’s. I guess you have to hate gays to fly the big ballon but my oh my…isn’t hate speech so telling.

I have been away fro Canada long enough to be shocked by such nastiness. Here in Thailand people are allowed to live out whatever preferance they have chosen as the most comfortable for them. There is no no hate….no intolerance….absolute acceptance……its not sick or weird to choose something other than what is dictated by the majority.

In Canada , people who are differant are outcast and reviled…here in Thailand they are recognized as ‘a third kind’ and have been fully integrated into society so that all acts of hatred. are non existent.

This hate speech from a real tard shows how deeply entrenched the attitudes of the past are still part of the Canadian mainstream…how embarrassing to share the same passport as this fool.

Note to real tards….the bigger your yap about what is gay or not has been proven to indicate the basic sexual insecurity of the ‘hater’. Direct your hate where it should be focused….on the pimps and whores who have dragged so many naive young buyers into the real estate morass of 2012.

#97 SaraBeth on 02.21.12 at 7:45 am

If that is the type of person that Re/Max employs, I won’t ever be looking to them to buy even a dog house.

Childish does not even cover it. *sheesh*

#98 T.O. Bubble Boy on 02.21.12 at 7:54 am

Speaking of sub-prime, it can really pay off… U.S. banks paying delinquent borrowers up to $35,000 to sell their homes:
http://money.cnn.com/2012/02/10/real_estate/short_sale_incentives/

Imagine: you went in with 0% down, your house as an ATM, and you get $35k to walk away!

#99 maxx on 02.21.12 at 8:30 am

Today, right now, even a shortened 25 year amortization period is a very long time during which to expect/hope for job stability, whether you’re in public or private employment.

#100 Mr Buyer on 02.21.12 at 8:36 am

I am hearing this melt word again. It sounds nice, like things are not going to be so bad. I am wondering if such will really be the case. BUYER BEWARE. THE BUBBLE HAS TOPPED. NOW IS NOT THE TIME TO BUY A HOUSE. DO NOT BE LEFT HOLDING THE BAG. BUYER BEWARE.

#101 Pr on 02.21.12 at 8:43 am

If you are, patriotic, proud; Canadian. All of us shoud send this great article to every one you know and others. Make them read this. Its a national emergency!

#102 fancy_pants on 02.21.12 at 8:48 am

Sounds to me like that agent has to sell more homes or buy more sex. grumpy grumpy.

#103 Guy on 02.21.12 at 8:50 am

Interesting how easy the banks still are Garth, methinks that a hungry Bangkok hooker would be a greater challenge. Last week, after seeing a Mcmini estate farm that my wife fell in love with, I decided to call the bank, expecting be turned down and put an end to the love affair. As I am using my nom de plum, I can openly say that the banks are only aware that I keep a minimal balance here and that I am employed (by a Chinese based company they are not aware that I own) with a salary (unverified) of $7,500 per month and no other verifyable assets. They caught me totally off guard by offering me an $850,000 CMHC insured mortgage on a $900,000 purchase price (plus discussed a “cash back” option). The only stipulation from this un-named bank (TD), was that I commit prior to the end of February….how very responsible of them. There is no way that I should have qualified for anywhere near that ammount and it makes me seriously question the quality of the morgages they’ve been pumping out. Anyway, hopefully my wife won’t read this, as I plan to keep renting for another 6-8 months, then purchasing the aforementioned property for about $500,000….cash. Keep up the good blogs and ignore all the comments from the single digit realtors…..the vast majority of them will be back to digging ditches in short order.

#104 Gypsy Kid on 02.21.12 at 8:54 am

Stop using “gay” as a diss.
Let’s keep this at a reasonably mature and intelligent discussion on real estate and investments.

#105 guy from toronto on 02.21.12 at 8:56 am

hey truth hammer, how long have you been in Thailand? Are you planning to come back or did you just up and move there? I am thinking about getting out of Canada for a while and do some relaxing over there….have never been….can you recommend any good sites with info re finding a place to live, how to get around etc? thx!

#106 fancy_pants on 02.21.12 at 9:03 am

If the Cons are smart they WILL lower the max amortization back to 25 yrs. That should be enough to stop the bubble from growing without popping it completely. Rate increases will crash the RE market. That is why we still have emergency rates.

#107 MikeCalgary on 02.21.12 at 9:10 am

I love this blog.

#108 expat_engineer on 02.21.12 at 9:33 am

#3 Canadian Watchdog

Thanks a lot. This data is a goldmine. Sales are one of the lowest in january sine 2005 and new listings are the highest ever. “Soft Landing” here it comes.

#109 geogar on 02.21.12 at 9:39 am

cruel irony. . the sheep herder compulsion will make no nevermind. When doomers like me lift the mattress to find nothing but mouse turds and grey pubes. the house will lose every time. call me every name in the book. just don’t call me collect. keep it up Garth good job!!

#110 isabel on 02.21.12 at 9:41 am

was fortunate to come across this blog a couple of weeks ago. it is one of a few blogs on the canadian economy that i have been able to find and read religiously. I take everything with a grain of salt, but I really enjoy different opinions, perspectives and links to original sources/charts.

I also happen to be of the opinion that the status quo can not continue. I ordered Money Road, half way through it, it’s a very good read, have learned a few important things I plan to implement.

#111 Realtors in a panic on 02.21.12 at 9:42 am

Mr remax is in an outright panic and has attacked Garth without any facts. These realtors know housing is in a bubble and they know their propaganda of lies has fooled many. They outright say people are a herd of sheep. Will you fall for realtor propaganda of lies?

#112 GTA Girl on 02.21.12 at 9:51 am

“People won’t walk away from 20% equity” said Kevin O’Leary

Equity is an illusion, not tangible till you sell your home. If you imagine your home is worth $1mil, with a mortgage of $800k. And your desperate neighbor sells his house for $700 k…..

Bush-bye equity. Negative territory.

Does no one remember the early 90’s?

#113 Ralph Cramdown on 02.21.12 at 9:51 am

Here’s an interesting quote from a mortgage broker:

Data aside, tighter lending guidelines are forcing many “A” borrowers into the arms of “B” lenders. Examples include strong self-employed borrowers with assets and significant equity who (legally) don’t report income in a traditional manner. Many of these lenders get financing with non-conforming lenders versus the big banks–despite the borrower’s low default risk.

See? They’re all “A” borrowers, they just can’t get loans from “A” lenders. Down in the USA, they coined the term Alt-A: Seen as virtually as good as “A” in good times, but defaulted almost as much as subprime come the bad times.

#114 };-) aka DA on 02.21.12 at 10:13 am

On Greater Fools: In my doctors office hangs a plaque which reads;

“Smoking reduces smokers”

As it says of smokers so too does it of any fool.

#115 Sky on 02.21.12 at 10:13 am

Good post truth hammer. The gay sterotyping was getting on my nerves. Homs come in a variety of shapes, sizes, and personalities. Just like hets.

#116 };-) aka DA on 02.21.12 at 10:18 am

#111GTA Girl on 02.21.12 at 9:51 am

Does no one remember the early 90′s?

Hell I’d venture to say most around here don’t remember the early 80’s!

Someone recently commented that they knew a few, as did I, who took their lives over that ugly turn of events. As did that, and that of the 90’s, this too shall pass. It may already have.

#117 Form Man on 02.21.12 at 10:21 am

#58 The Thing

The boom/bust cycle in real estate development will never disappear, but booms are generally associated with easy credit. Rather than attempting to control the developers ( which goes against my free market principles ), prudent lending regulations may mitigate the busts.
Having said that, human greed and stupidity apparently has no bounds.

#118 45north on 02.21.12 at 10:36 am

Guy: They caught me totally off guard by offering me an $850,000 CMHC insured mortgage on a $900,000 purchase price (plus discussed a “cash back” option).

pretty funny

#119 I just want to dance with somebody. on 02.21.12 at 10:45 am

Garth, why are you throwing cold water on the party? Everyone is making money! We love our house! The kids have nice backyard, my Mrs goes to the mall to go shopping and I can chill out Bar-B-qing, and have a beer with my neighbour. Sure my kids are bored to tears and are still medicated. My wife is going on a conference to Jamaica, and I have drive 5 hours a day so I can babysit a call center of retards. Life is about sacrifices. That’s what we do, how we take care of each. That’s what my neighbour’s says. He’s an airline pilot.

http://www.youtube.com/watch?v=TJdfWdIBfE8

#120 45north on 02.21.12 at 10:50 am

Tiffa: I’m really curious as to how the process goes when a bank calls in an insurance payment from the CMHC.

me too

I don’t really know but I wonder to what extent CMHC has been captured by the banks? You know, trade conventions, hockey tickets, e-mails back and forth?

#121 Canadian Watchdog on 02.21.12 at 10:53 am

#112 Ralph Cramdown

Banks are putting brokers on the chopping block as demand for prime borrowers is shrinking. BMO and CIBC have already been expanding their mortgage retail business:

BMO Mortgage Jobs http://www.workopolis.com/EN/job-search/jobs?ak=mortgages&e=233&lg=en&r=false

CIBC Mortgage Jobs – http://www.workopolis.com/EN/job-search/jobs?ak=mortgages&e=4157&lg=en&r=false

Best part is when the sub-primes implode, banks will blame brokers.

#122 sam.i.am on 02.21.12 at 11:04 am

Bloomberg seems to have a lot of macro stories about Canada lately. Here’s the latest:

Dollar parity hurting manufacturing:

http://www.bloomberg.com/news/2012-02-21/canadian-economy-suffering-dollar-parity-s-one-eyed-king-in-land-of-blind.html

This can’t be a +ve for housing in the industrial heart.

#123 };-) aka DA on 02.21.12 at 11:05 am

#116Form Man on 02.21.12 at 10:21 am
#58 The Thing

The boom/bust cycle in real estate development will never disappear, but booms are generally associated with easy credit. Rather than attempting to control the developers ( which goes against my free market principles ), prudent lending regulations may mitigate the busts.
Having said that, human greed and stupidity apparently has no bounds.

Not sure I understand. If you are saying that uncontrolled credit is the cause I tend to disagree. Uncontrolled credit IS a “free market”. Real interest rates are a reflection of the risk environment in a “free market” as is “easy credit”, or at least the perceived risk.

As I mentioned previously, the analogy “smoking reduces smokers” which equally applies to Greater Fools so too does it apply to that subset as lax lending and borrowing reduces lenders and borrowers. So too does it apply to foolish developers and foolish real estate agents. This IS the true “free market”.

I say it ride.

#124 guy from toronto on 02.21.12 at 11:06 am

DA you can’t be serious.

This party is just getting started. You may wish that it has already passed….but you know it hasn’t.

“As did that, and that of the 90′s, this too shall pass. It may already have.”

p.s. you should retire that goofy emoticon.

#125 };-) aka DA on 02.21.12 at 11:06 am

“Let it ride”.

#126 };-) aka DA on 02.21.12 at 11:12 am

Don’t bail out fools. Don’t save fools from their most valuable lesson. Let them learn. Yes some will fail miserably. That needs to happen.

Survival of the fittest is a reality we need to embrace. It strengthens the herd.

The herd will not slow down for the weak. The herd moves to avoid catastrophe only when catastrophe sees the whites of their eyes.

We are not so sophisticated a species as we so arrogantly tend to believe.

#127 Ralph Cramdown on 02.21.12 at 11:25 am

#120 Canadian Watchdog

Hey, that’s funny! BMO and CIBC are both looking for hard working 100% commission mortgage salespeople in Fort McMurray.

BMO says you need “high school, or equivalent work experience,” CIBC’s looking for someone “possessing retail branch experience, mortgage experience, or having worked in a commissioned sales environment” and you have to push the creditor insurance.

Who says you need a degree to get a good job?

#128 Kris on 02.21.12 at 11:29 am

PBS had a great documentary yesterday on pre-WWII Germany. It was interesting that the spillover effect from the US Great Depression caused massive economic and social upheaval in Europe in the 1930s (this allowed Nazis to gain power, of course).

That was 70 years ago.. The world is far more inter-dependent now. Cannot see how people can simply dismiss the economic headwinds blowing the world over.. be it the US recession; or European defaults; or Chinese slowdown. Surely our jobs and GDP (and therefore, our housing) should mirror these trends?

#129 };-) aka DA on 02.21.12 at 11:31 am

I believe the premise the “everyone ought to be given a gold star” is the biggest failing of modern society.

Home ownership is not a right. It is something you earn.

Failure is a lesson many need to learn that society might move forward instead of being held back while we wait for them to learn over and over and over again that they “might” catch up. But never learning the lesson they never will catch up.

We are currently being held back while we help those who have not learned the lesson overcome their failings.

#130 Ret on 02.21.12 at 11:31 am

#49 Industrial guy

US Steel’s blast furnace is cold and would need millions to get rebuilt. Not likely to happen. Some steel rolling and coke oven production is still going on. Who would US Steel make steel for? The steel customers have left for other countries. Arcelor Mittal (Dofasco), next door, is not at capacity now and has had some job sharing and short term layoffs from what employees have told me.

Why do steelworkers keep thinking that the government will come and save their industry? They never saved any of the other industries in Hamilton. One by one they have all left.

Hamilton supported the Liberals in every election while they dis-mantled the city’s industrial base in the 1980’s and 1990’s. Thanks tequila Shiela!

The good news? At least US Steel is still paying pension checks from an underfunded pension plan to thousands of retirees even though the plant hasn’t made a ton of steel in the last few years. A special thanks to NDP Premier Bob Rae for the pension underfunding legislation under his watch in Ontario.

#131 };-) aka DA on 02.21.12 at 11:35 am

Oh and one more thing…

Can we please bring back lawn darts.

#132 The Thing in the Basement on 02.21.12 at 11:36 am

103 Guy – why spend your liquid assets when they are willing to lend you the $$ silly cheap? Keep the line
open and keep getting re-approved for super low rate.

116 Form Man – strange thing is we’ve seen it go both ways in the past – high rates didnt stop the late 70s early 80s boom (though they did eventually) and lowering rates didnt stop the late 90s drop.

#133 Golden Stu on 02.21.12 at 12:04 pm

Ottawa: The biggest sub-prime lender in the world

story written in Nov 2009….

#134 Snowboid on 02.21.12 at 12:11 pm

#114 Sky on 02.21.12 at 10:13 am…

The ultimate irony from the land of sun, sand and scorpions. Pinal County sheriff, Paul Babeu – who is running for Congress in the fall, admitted last week he was gay. The story only broke because he had threatened to deport his Mexican ex-lover if anything was said.

The story broke from the Phoenix equivalent to the Georgia Strait:

http://tinyurl.com/6wr83wg

Predictably, many people were in shock to find out the sheriff was gay – but most people agreed with the focus of the story, which wasn’t Mr Babeus’ sexual orientation, but the intimidation that was used to ‘silence’ his ex-lover!

#135 highway61 on 02.21.12 at 12:22 pm

“gay” not as a diss but as an aesthetic category so yes hummer is gay

#136 grantmi on 02.21.12 at 12:23 pm

Mortgage fraud hits ‘eye-opening’ level in Canada, report says

Consumercredit company Equifax uncovered roughly $400 million worth of mortgage fraud in Canada last year, an “eye-opening” number industry experts estimate represents only a fraction of the cheating taking place in the country’s real-estate market.

Read more: http://bit.ly/ztXDwX

Nahhh! It’s different here in canada.. we don’t have US style mortgage fraud!!! nope! not here!!

#137 Junius on 02.21.12 at 12:23 pm

#119 45North,

The Banks didn’t have to capture the CMHC because they already captured the politicians. The CMHC will pay the banks with no fuss or delay. Otherwise our “strong banking sector” will suffer. Banks win, tax-payers lose just like in the US. Except in Canada it will be simpler, cleaner and without public fanfare.

#138 Lostinthewilderness on 02.21.12 at 12:24 pm

Not only that, but ‘self-recognition’ mortgages have allowed the self-employed, commissioned salespeople and other dangerous types……………

Hey Garth, commissioned salespeople and other “dangerous types”? The best and highest income salepeople are usually paid by commission.Spent most of my life as a high tech , high income commissioned sales person.
Oh and Hummers, mostly girls drive them out here in the wild west.Guys are embarrassed to be seen in them. Just sayin !

#139 Abitibi Doug on 02.21.12 at 1:12 pm

That realturd from Remax, with his colourful comments, probably has no kind words to say about David Chilton either. In his new book the Wealthy Barber Returns he has said a lot of the same things Garth has said over and over and over on this sad, pathetic blog. Just thought that was worth mentioning.

#140 Abitibi Doug on 02.21.12 at 1:19 pm

@GTA Girl, post #111, and also post #115:
I guess I’m not the only one to remember the early 1990’s after all, although we do seem to be in a minority.

#141 Kilby on 02.21.12 at 1:21 pm

#85. Preciousss.

We sold 20% less than everybody else, it hurt a little as it was $100,000 under a professional appraisal….BUT, ours sold and most of the 14 other Okanagan lake view homes in the same price range are still for sale 11 months later.

Garth: Maybe add a Fiat 500 and a Honda Ruckus to your fleet…Keep everybody happy.

#142 SwampLily on 02.21.12 at 1:23 pm

The telemarketers have really stepped up their calls; we now receive 3-4 calls a week from recordings that want to help us with our “debt.” We’ve had the same phone number for 11 years (Victoria) and, although we’ve had telemarketers call, it’s been nothing like this – so many calls and specific to debt.

#143 disciple on 02.21.12 at 1:26 pm

#118… By any chance, is your neighbour’s name John V.? Don’t ask me how I know… but please let me know where he has escaped to… He and I have some unfinished business…

#144 Canadian Watchdog on 02.21.12 at 1:31 pm

TREB GTA Sales By Price Range (under 400k) http://i44.tinypic.com/1zqttec.png

No affordability problem? Because the TDS calculator said so…

#145 Patiently Waiting on 02.21.12 at 1:38 pm

#83 ZRH2YVR

Thanks for your great info on Whistler ZRH2YVR
! I suspected all was not well in Whistler but nice to hear some confirmation of this. I wish there were more posters giving us this type of “inside information” from conversations with the real estate industry contacts. This information is not always easy to come by, as I find many industry professionals are reluctant to tell consumers what is really going on behind the scenes for fear that the truth might get around and make things even worse.

#146 This is wonderland on 02.21.12 at 1:39 pm

#3 Canadian Watchdog

Thanks for the info and please keep it coming.

#147 Ralph Cramdown on 02.21.12 at 1:49 pm

Cannot see how people can simply dismiss the economic headwinds blowing the world over.. be it the US recession; or European defaults; or Chinese slowdown. Surely our jobs and GDP (and therefore, our housing) should mirror these trends?

Nobody dismissed the US housing crisis, SARS, AIDS, Ebola, Fukushima’s quake/tsunami/meltdown, Chernobyl, PIIGs, 9/11, a dozen wars in the Middle East, the Asian Tigers, Mexico’s near default, Russia’s default, LTCM, Lehman, 400 year floods, Katrina, Andrew, Latin American debt crises, bankruptcy in Detroit, Nortel/Enron/Worldcom accounting scandals, Bre-X, Madoff, the debt crisis, the global savings glut, too-high currencies, too-low currencies, artificially low interest rates, usuriously high interest rates, or the Dippers moving into Stornaway.

We priced them in and moved on.

#148 Waterloo Resident on 02.21.12 at 2:05 pm

Everyone assumes that interest rates will be heading up, but really, take a look at the economy, look at how much of a mess unemployment is and of how our jobs are heading to America / Mexico / Asia, do YOU really think that our interest rates will be rising anytime within the next 5 year? Frankly, I don’t think so.

My opinion is that the next move on interest rates will be a half point CUT IN RATES, probably some time this spring and that will stimulate our housing even more, unfortunately.

#149 Leo on 02.21.12 at 2:23 pm

Canada debt is near a trillion when you use real numbers not harper numbers. When you add Provincial debt which you must to gauge the overall issue of debt in Canada we have a worse situation than the US. Closer to that of France. Folks will point out that we have better revenue streams that allow for higher debt loads. I disagree. While Canada’s revenues on paper look better they are commodity driven, we have basically no manufacturing anymore. If prices fall in commodities there goes that lovely revenue stream. My point is the notion that Canada is somehow immune is ironic because from my math Canada is dangerously toxic, one province could drag the entire ship down. Now Harpo has aligned himself the the monarchy of China and told the Yanks to get stuffed we have burned the only bridge that could save us. The Yanks will not forget what harper did.

#150 Rental monkey on 02.21.12 at 2:23 pm

From a few days ago, people were commenting on Dubya’s deregulation of policies.
Back a few years ( like almost 10), I read a very interesting book called ‘Bushwacked’, by Molly Ivins. I was so aghast by what was in that book, i spent the better part of the next few months reading what the library had on the little twit.

I was shocked at what I learned, but what was even more stunning, was that he was ‘elected’ for a second term. I often have wondered if he would have been as popular that first term, if people of the US had realky been aware of what he destroyed.
His lack of conscience on environmental policies ( think blue/green rabbits) was what I still remember the most.

Now, of course, companies like Monsanto and Big Pharma can just do as they please: with no regard for the lives they affect. Human or otherwise.
Im not sure if you can download her book, but it was published in 2003.
Might have to try and find a copy to re-read and see what foreshadowing was in there.

#151 Brad on 02.21.12 at 2:39 pm

I do not understand what the problem is here.

If a recent grad from Pharmacy goes out and earns $225,000 per year in her job, then why should she worry if her $500,000 house falls in value, heck, she will have her house paid off fully in only 5 years — right ?

#152 disciple on 02.21.12 at 2:45 pm

#145 Ralph Cramdown…. now, take all of those you mentioned (great list, btw) and multiply by a billion monetized for inflation, convert into $1 Federal Reserve Notes and stack up to the moon. That is the global debt burden to the International Investment Bankers. Did you price that in?

I didn’t think so. The fact of the matter is that debt has to be repaid, whether it is now or in thirty years, it doesn’t matter, default is a sideshow and is temporary, the collectors always come in some form or another.

#153 Silver on 02.21.12 at 2:46 pm

My friend is a agent does mostly commercial for last 30+ years….
check out the sales numbers in vancouver …. he’s actually worried…. shit moving in real terms.
lots for sale buildings again though.
Mostly the upgraded one looking to flip…

check out the granite countertops in the commercial properties for sale in vacouver.
Commercial properties…. granite countertops….???
Silver

#154 Kilby on 02.21.12 at 2:46 pm

Whistler, not including Pemberton. 672 listings.

12 completed sales in last two weeks.
Average days on market, 124.

2 most expensive.

Ask $2,095,000, sold after 353 days for $1,600,000
Ask $1,495,000, sold after 508 days for $1,150,550

#155 Kristy Kream on 02.21.12 at 2:50 pm

#61 Wendy S on 02.21.12 at 12:14 am

I about peed myself in laughter when I saw the photo you posted.

wait for it.. wait for it.. “POP!! = “Boom.”

#156 };-) aka DA on 02.21.12 at 2:54 pm

#123guy from Toronto

There you go making predictions again. How do you know for sure? Notice I said “may… have”. I’m not predicting the future as I only deal in the realities of the present. That being said our numbers are up so far this year. It really doesn’t matter what you or I think. What matters is what “they” think. Believe me when I tell you the posters on this pathetic blog represent on a vocal minority and are not nearly so representative of the thoughts “they” have on the matter. It is “they” who set the course of the market not you and not me.

#157 Jason on 02.21.12 at 2:54 pm

A few doors left to our place recently sold for $789K (asking was $719K, which I thought was a bit over priced, but of course I was way off…). Apparently, there were biding wars going on when groups of buyers filghting over that place. This is in Richmond Hill (hwy 7 and Yonge).

Yesterday the selling agent knocked our door and asking if we were thinking of selling. When we told him that we’re actually renting, he looked shocked. Well, I guess I can agree with him in a way that the interest rate is super low now, how can anyone not taking the advantage and still be renting?! Lol…

We actually sold our place early last year, and we’re thinking of buying perhaps in 2-4 years and hoping it’d be a good entry point…

#158 SRV on 02.21.12 at 3:03 pm

Agent Rant,

Poor baby… reminds me of a maintenance guy I knew back in the 80s. He and his wife caught the RE boom and made a bundle (as agents… never forget them complaining about how hard it was to drive the For Sale Signs into frozen turf)… next time I saw him he was driving a new Caddy and wearing a full length fur coat (I kid you not). Well, what goes up… next time I saw him he was single and unemployed. But, at least he got the Hummer story right…lol!

I for one, will not miss the 50′ billboards of smug, wannabe big shots on every corner :-)

Garth… some OAS stories floating around today… any inside scoop on Fs plans for it in the budget?

Thanks

#159 disciple on 02.21.12 at 3:06 pm

I didn’t have a choice whether to participate in this fake democracy or in this quasi-capitalist corporate fascist state we find ourselves in. This simple ignored fact, by itself, defeats the entire purpose of a democracy or capitalism. Some might say it is the “natural” way of things. I would challenge that, of course. If you don’t know you’re in a prison, then you’re not thinking, and that’s exactly the way they want it. Patriotism?

You, and I, participate, unwillingly, in a system of money creation, that is immoral, ultimately destructive, and without any redeeming quality. Yet, we have the power to change it in an instant:

STOP. CONSUMING. THE BULL. I am slowly getting off the grid and out of the matrix. You can, too. Don’t be afraid. Capital resides with the banking class. They could bail out the world ten times over and there would never again be a “financial crisis” or “liquidity squeeze” or “credit contraction”. So, why don’t they?

Here is the real motive behind Internet Censorship. It’s not what you think, I guarantee you that:

http://realcurrencies.wordpress.com/2012/01/03/mutual-credit-the-astonishingly-simple-truth-about-money-creation/

#160 Willa on 02.21.12 at 3:12 pm

Stupidity is universal. Canadians aren’t smarter than Americans. We’re just as dumb. So are Australians.

Unless there are firm rules in place, people and businesses will inevitably behave recklessly. Like driving on a highway with no speed limits, no cops, and no lines on the road. Like the US economy with no regulation.

Government has a job to do — to make the rules clear and to enforce them. When it fails, then there’s going to be a big run on stupidity.

No matter where you are.

#161 Ralph Cramdown on 02.21.12 at 3:13 pm

That is the global debt burden to the International Investment Bankers. Did you price that in?

If by IIB you mean CPP, The Caisse, Teachers’, OMERS, CALPERS, PIMCO, countless other public and private pension plans, bond fund investors, and innumerable coupon clippers watching CSI reruns right now (“Hi Dad!”), then yeah, I’ve priced that in.

#162 Kris on 02.21.12 at 3:26 pm

#146 Ralph Cramdown

Nobody dismissed the US housing crisis, SARS, AIDS, Ebola, Fukushima’s quake/tsunami/meltdown, Chernobyl, PIIGs, 9/11, a dozen wars in the Middle East, the Asian Tigers, Mexico’s near default, Russia’s default, LTCM, Lehman, 400 year floods, Katrina, Andrew, Latin American debt crises, bankruptcy in Detroit, Nortel/Enron/Worldcom accounting scandals, Bre-X, Madoff, the debt crisis, the global savings glut, too-high currencies, too-low currencies, artificially low interest rates, usuriously high interest rates, or the Dippers moving into Stornaway.

We priced them in and moved on.
—-

That’s cute, but..
Cdn RE has not priced-in global econ malaise, that’s my simple point.

#163 Canned Goods and Buckshot on 02.21.12 at 3:35 pm

Brad

Recent pharmacy grad makes $225K? Where? This is highly unlikely or your comment is embellished a great deal.

#164 Daisy Mae on 02.21.12 at 3:42 pm

#77 Loan Money to Anyone: “Why can’t we learn from the mistakes of other countries?”

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

Because this government is self-serving and simply doesn’t give a damn.

#165 Mixed Bag on 02.21.12 at 4:16 pm

“Suddenly banks were encouraged to give 95% financing, since the taxpayers were wiping away the risk through CMHC.”

This is infuriating. CMHC should be completely funded through the insurance payments made by those requiring it, not the taxpayer. Instead, the tax payer backs the loss. Not much different from the $700B bailout Wall Street got. Where in my younger years I thought of my taxes as contributing to our collective good and infrastructure (as least partially, being realistic even then), because of examples like these, I am now much more cynical about the proper management of my tax dollars, and am particularly motivated to employ legal tax avoidance strategies. I should hope that if the banks ever turn to CMHC, they would need to prove their fiduciary responsibility in each and every case before getting a dime.

#166 Ralph Cramdown on 02.21.12 at 4:16 pm

They’re really, really sorry:

Douglas Kelly
Publisher, National Post

Reading Saturday’s “Street Smarts: Where to live in Toronto’s Yorkville, heart of the city,” I was struck by the description of condo buyer Vickie Zemelman as a “North York mother of three school-aged children.” If she’s also a real estate agent, shouldn’t that be disclosed in the context of this article?

Similarly, in “Street Smarts: Footloose and fancy in Toronto’s Yorkville,” real estate agent Bob Saunderson is described as a “British-born Yorkville resident” and an “empty nester” but nowhere is his day job mentioned. I would also note that John Caliendo is a real estate financier.

If these articles are essentially industry written advertorial, shouldn’t they be labelled as such? I realize that the bar for objectivity is lower in the real estate section than in hard news, but is there any separation between church and state here at all?

Dear [Ralph],

I’m the editor of the Post Homes section, and I was forwarded your note re the Yorkville story from our publisher.

Thank you so much for bringing this situation to our attention. We weren’t given much of this information, but that’s no excuse. We will certainly scrutinize the subjects of our stories more carefully in future.

Please let me know if you have any further concerns.

Shari

Shari Kulha
Editor, Post Homes
National Post

Thanks to the dogs here for pointing this out. I’ve also sicced the Competition Tribunal on TREB for their misleading year-over-year stats comparisons.

#167 Raging Ranter on 02.21.12 at 4:18 pm

Great list Ralph, but I’d argue we’re not very good at pricing those things in. In fact, we typically resist pricing them in until we’re forced to. I’d argue many of those events were not priced in until the 2008 financial crisis hit. And we just might be due for another major “pricing event”.

#168 Daisy Mae on 02.21.12 at 4:24 pm

#141SwampLily on 02.21.12 at 1:23 pm
“The telemarketers have really stepped up their calls; we now receive 3-4 calls a week from recordings that want to help us with our ‘debt’.”

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

I’m finding the same thing.

“Press 1 if you want more information….Press 2 if you do not”.

LOL What a joke!

#169 Maxamillion on 02.21.12 at 4:26 pm

Detected Mortgage Fraud in Canada reached over 400 million last year. You really don’t need any money in Canada to buy real estate.

http://watch.bnn.ca/headline/february-2012/headline-february-21-2012/#clip623185

#170 Form Man on 02.21.12 at 4:31 pm

#122 DA

I thought my comment was pretty straight forward, but apparently I stumped you.

In a true free mortgage market there would be no CMHC providing taxpayer-backed insurance. I submit that this ‘market intervention’ is helping to cause over-building.

#171 TRT on 02.21.12 at 4:39 pm

Since everyone loves stats so much…

Why have Canadian retail sales grown steadily (and still growing) since the 2008? Its a straight line month over month. $32 Billion in 2008…now $39 Billion.

People have more and more money. It may not be you or the company you keep BUT stats point to people having more money!! Most people on this blog don’t have money.

Now cue the HELoc crowd. Anything to suit your beliefs.

#172 titosantana on 02.21.12 at 4:40 pm

#105 Toronto Guy

I used to travel quite frequently to SE Asia for work and yes Thailand is a great place to retire. Your money will go very far there. I dive in my spare time and have seen much of Thailand. A good place to start is the city of Pattaya. Lots of retired foreigners live there and it still not too costly. You can get a nice place on the beach and enjoy life as the quality of life is good and weather even better. The larger islands are beautiful (phuket/ ko samui) but a bit more costly ., however, still a better retirement value than canada.

#173 BPOE on 02.21.12 at 4:56 pm

The times have changed. It’s actually very difficult to get a loan today. Luckily BPOE hipsters buy in CASH so no issue

#174 TRT on 02.21.12 at 4:59 pm

Pension Attack on younger Canadians for the benefit of the boomers…

http://www.thestar.com/news/canada/politics/article/1134568–old-age-security-feds-aim-pension-message-at-young-canadians

And Boomers…enough of the ‘we paid into it’ bs. Your generation increased the debt (fed/prov/mun) by $1,000,000,000,000….that’s a trillion by the way.

Cannibalize the Young!! Proud to be a Canadian Boomer?

If your gonna raise the age of retirement, make it effective immediately!!

How do boomers feel of the following idea? : Lets immediately institute a fee based private healthcare system for 25 years… and then go to a public one in 2037. It will then be sustainable as the boomer bulge will have passed. Yeah?

#175 Roial1 on 02.21.12 at 5:00 pm

http://ca.reuters.com/article/businessNews/idCATRE81K1K920120221

Canada may cool housing market; prices won’t crash: Poll

Garth, is this an example of “Delusional thinking” or what?

They must have poled all the realestate company economists in Canada. LOL.

#176 Junius on 02.21.12 at 5:01 pm

#152 Silver,

One interesting area of Vancouver to watch regarding commercial properties is the area between Cambie and Main north of Broadway to 2nd Avenue.

It has a lot of the media, film and light industries renting space in converted commercial buildings. It is an odd and eclectic collection of buildings and spaces. Many spaces are relatively short term and “as is” rentals. Most of the buildings are owned by individual investors or small companies as they are smaller and light commercial.

What is interesting is that it is highly sensitive as a neighbourhood to economic changes. In boom times space fills up quickly and in bust times empties out fast. It is very much a touchstone area.

If you drive these streets right now you will see an unbelievable number of for sale and for rent spaces. I have worked with businesses in this area for more than 2 decades and never seen so many openings. It is quite shocking.

#177 bcpaul on 02.21.12 at 5:11 pm

#169 TRT on 02.21.12 at 4:39 pm

Since everyone loves stats so much…

Why have Canadian retail sales grown steadily (and still growing) since the 2008? Its a straight line month over month. $32 Billion in 2008…now $39 Billion.

People have more and more money. It may not be you or the company you keep BUT stats point to people having more money!! Most people on this blog don’t have money.

OK, since you’re thick:

CHEAP MONEY. Funny how consumer debt follows retail spending.

#178 Preciousss on 02.21.12 at 5:21 pm

#150 Brad on 02.21.12 at 2:39 pm
I do not understand what the problem is here.

If a recent grad from Pharmacy goes out and earns $225,000 per year in her job, then why should she worry if her $500,000 house falls in value, heck, she will have her house paid off fully in only 5 years — right ?

No recent grad from a pharmacy program earns this for re-bottling and labelling dugs. Not even close.

#179 Bill Gable on 02.21.12 at 5:26 pm

“Canada’s government will make it tougher for many homebuyers to get mortgages this year as it grapples with an overheated property market, according to analysts in a Reuters poll, who also ruled out the prospect that prices could suddenly crash.

Ten of 14 economists and strategists surveyed last week in Reuters’ first poll on the Canadian housing sector answered “yes” when asked if they thought Ottawa would tighten mortgage rules within the next 12 months.

They expect home prices to climb just 0.1% in the year to December 2012, and the same in 2013. That is down from a 0.9% year-on-year increase in December 2011.

If Finance Minister Jim Flaherty tightens requirements for government-backed insured mortgages it would be his fourth intervention in the real estate market since 2008.

Flaherty could raise the minimum down payment to buy a home from the current 5% or reduce the maximum amortization period from 30 years.

Any move would likely come before the prime spring real estate season, analysts said. “Sometime between now and the next budget,” said Benoit Durocher, senior economist at Desjardins in Montreal, on the timing of such a move.”

*Don’t you love it when vested interests tell tapped out and scared Canadians, don’t worry, and pay no attention to the guy behind the curtain?

Incredible.
http://tinyurl.com/88x8hxj

#180 Westerman on 02.21.12 at 5:28 pm

Regarding the Realtor’s comments about Garth, you can always tell when you are getting real close to the truth – the squealing gets high pitched and downright snarly… so Garth must be starting to put a hurt on some of these know-nothing Realtors …
Looks good on them I say…

#181 Ralph Cramdown on 02.21.12 at 5:30 pm

Cdn RE has not priced-in global econ malaise, that’s my simple point.

It doesn’t have to price that in. Wildly high price:income and price:rent ratios in the two/three largest markets are enough to guarantee a slump (though I know neither the hour nor the minute thereof). The US may suck for its unemployed and underemployed, but it is growing, as are lots of other places. Just because Cdn RE is a bad bet right now doesn’t mean it’s time to go to the mattresses with gold bars and canned goods.

#182 jess on 02.21.12 at 5:38 pm

libor
…”Richard Werner, a finance professor at the University of Southampton, England. “There is no independent verification of the interest rates reported by the banks, which is a big problem. This affects the whole economy: mortgages, derivatives contracts across the world.”

Libor is derived from a survey of banks conducted daily for the British Bankers’ Association in London. The lenders are asked how much it would cost them to borrow from one another for 15 different periods, from overnight to one year, in currencies including dollars, euros, yen and Swiss francs. After a predetermined number of quotes are excluded, those left are averaged and published for each currency by the BBA before noon.

Canada Regulators
Based on UBS’s disclosures, regulators in Canada have alleged that banks communicated with each other and through brokers to manipulate the Yen Libor rate.

http://www.bloomberg.com/news/2012-02-21/ubs-turning-whistleblower-in-libor-probe-pressures-rivals.html

Lenders aren’t supposed to know each other’s submissions until the rates are released, the Canadian Competition Bureau said in court filings last year. By doing so, the traders affected all interest-rate derivatives that use yen Libor as the basis for their price. In an interest-rate swap, banks make or lose money depending on the floating interest rate, usually tied to Libor, the bureau said.

“Libor has always been a lie, because it represents what banks would pay for funds rather than what they are actually paying,” said Peter Hahn, a finance professor at London’s Cass Business School and a former managing director at Citigroup. “People who have an incentive to make money from mispriced markets are able to misprice those markets, and that is a serious control problem.” …

#183 TRT on 02.21.12 at 5:39 pm

Blackberry in trouble…

New OS on their tablet today and stock sinks while broader market rises. It’s unfortunately over for RIMM.

BBX will be DOA.

Android vs iOS future.

#184 Van guy on 02.21.12 at 5:43 pm

#170 titosantana on 02.21.12 at 4:40 pm

I totally agree with you. Many parts of Asia are great for retirement. Canada is a rip off for basically everything.

#185 Junius on 02.21.12 at 5:45 pm

#169 TRT,

You said, “People have more and more money.”

This we know is not true. There are lots of things to look at in retail sales that impact the statistics. One is Auto sales which tend to have a huge influence on the overall statistics. Auto sales slowed in 2008 and 2009 but jumped the past 2 years. Another fact is that certain parts of the country such as Alberta and Saskatchewan are way up while Quebec and Ontario are flat for down.

You may also want to consider the amount of new home buying by younger Canadians which usually comes with new furniture, etc. all on credit.

One thing is for sure. With debt numbers continuing to rise throughout the past few years most of these purchases were made on credit.

#186 Junius on 02.21.12 at 5:55 pm

#147 Waterloo Resident,

You said, “Everyone assumes that interest rates will be heading up, but really, take a look at the economy, look at how much of a mess unemployment is and of how our jobs are heading to America / Mexico / Asia, do YOU really think that our interest rates will be rising anytime within the next 5 year? ”

Yes, they will. Within 5 years is guaranteed. There are plenty of economies in the world in worse financial positions than Canada and they have higher interest rates. The higher risk of their bonds ensures that.

So long as Canada runs deficits it will need to borrow money in the international market. Right now we are considered a good risk compared to other nations but that may not be the case for long. The global contraction of credit will eventually push rates up despite what the Bank of Canada wants to see. It is not that simple.

#187 jess on 02.21.12 at 5:59 pm

TRT on 02.21.12 at 5:39 pm
re:blackberry

what about the carriers losing money subsidizing the
iphone e.g.

IPhone May Cost Verizon $5 Billion in Subsidies in First Year …

Apple’s subsidy makes iPhone a nightmare for carriers – Feb. 8, 2012
etc etc…

#188 jess on 02.21.12 at 6:06 pm

Tuesday, February 21, 2012
Affirming what anecdotal evidence has suggested about the mortgage crisis, an audit out of San Francisco has found that more than 80% of foreclosures broke some kind of law.

City officials requested the audit that examined 382 randomly chosen foreclosures that occurred from January 2009 through October 2011. The findings revealed that 84% of the files involved “what appear to be one or more clear violations of law.” The violations included not giving homeowners warning that they were in default on their loans (6%), not giving homeowners adequate legal warning their property was being sold (10%), backdating of documents (59%) and transfers of loans by entities that had no business doing so (45%).

Another disturbing discovery related to the Mortgage Electronic Registry System (MERS). In 1995 the bigger banks created MERS as a privately owned electronic system for registering mortgage sales that was supposed to replace local county recording. In the words of the New York Attorney General’s Office, they did so “to allow financial institutions to evade local county recording fees, avoid the hassle and paperwork of publicly recording mortgage transfers, and facilitate the rapid sale and securitization of mortgages.” The San Francisco audit found that in 58% of cases, the loan beneficiary listed on the deed of sale was different from the one listed in the MERS database.

from January 2009 to November 2011. About 84 percent of the files contained what appear to be clear violations of law, it said, and fully two-thirds had at least four violations or irregularities. …

#189 Patiently Waiting on 02.21.12 at 6:10 pm

http://ca.reuters.com/article/businessNews/idCATRE81K1K920120221

When they tell you that there is nothing to worry about there is no crash coming in real estate . . . that’s when you should start to worry . . . whistling past the graveyard I’d say . . .

#190 };-) aka DA on 02.21.12 at 6:12 pm

#122 DA

I thought my comment was pretty straight forward, but apparently I stumped you.

In a true free mortgage market there would be no CMHC providing taxpayer-backed insurance. I submit that this ‘market intervention’ is helping to cause over-building.

I agree.

Without CMHC the banks would take a closer look at the risk and some, many, would find their mortgage application declined. Of course the primary reason for high ratio mortgages in the first place to allow entry of First Time Buyers who otherwise would find themselves excluded opportunity. But is that so wrong. I am sure without it (CMHC Insurance) the banks would still lend to some FTBs but the qualification requirements would be tighter.

But then I am a hard-nosed right wing free market kinda guy who detests the “everyone gets a gold star” mediocre homogenization of our society. There is no incentive, there is no risk, there is little reward as taxes erode any such opportunity, there is way too much government intervention in every aspect of our lives.

It all started with the banning of lawn darts I tell ya!

#191 };-) aka DA on 02.21.12 at 6:15 pm

#168Form Man on 02.21.12 at 4:31 pm
#122 DA

I thought my comment was pretty straight forward, but apparently I stumped you.

In a true free mortgage market there would be no CMHC providing taxpayer-backed insurance. I submit that this ‘market intervention’ is helping to cause over-building.

I agree.

Without CMHC the banks would take a closer look at the risk and some, many, would find their mortgage application declined. Of course the primary reason for high ratio mortgages in the first place to allow entry of First Time Buyers who otherwise would find themselves excluded opportunity. But is that so wrong? I am sure without it (CMHC Insurance) the banks would still lend to some FTBs but the qualification requirements would be tighter.

But then I am a hard-nosed right wing free market kinda guy who detests the “everyone gets a gold star” mediocre homogenization of our society. There is no incentive, there is no risk, there is little reward as taxes erode any such opportunity, there is too much government intervention in every aspect of our lives. It all started with the banning of lawn darts I tell ya!

#192 jess on 02.21.12 at 6:16 pm

understating

cdo
Magnetar.Delphinus CDO 2007-1 for the Japanese bank Mizuho,Tigris [5]
http://www.propublica.org/article/sec-warns-top-banker-of-charges-over-magnetar-deal

=

Cioffi and Tannin

March 2007, the amount of the funds invested in subprime mortgages was stated clearly as 6 percent. What exactly was the exposure?” The answer: “60 percent.”
http://www.bloomberg.com/news/2012-02-20/sec-surrender-goes-on-with-bear-fund-deal-commentary-by-william-d-cohan.html

#193 Junius on 02.21.12 at 6:28 pm

#185 Jess,

The iPhone is a nightmare for carriers but they have no choice. Rogers initial exclusive deal on the iPhone created an avalanche of switching that Bell and Telus are still smarting from.

The real nightmare for the carriers is yet to come. They continue to chip away the fringes with Apple’s new IM taking away texting but just wait for their iTV offering along with Google TV. These are just the beginning.

#194 Junius on 02.21.12 at 6:32 pm

#189 aka DA,

You said, “Of course the primary reason for high ratio mortgages in the first place to allow entry of First Time Buyers who otherwise would find themselves excluded opportunity. But is that so wrong?”

The primary reason for high ratio mortgages was to stoke the economy. The effect was to pull forward many first time buyers but that was not the reason for the policy decision. Of course, is these FTBs who will be hurt the most when renewal time comes and they are in negative equity.

#195 Form Man on 02.21.12 at 6:36 pm

#189 DA

perhaps we could start with allowing lawn darts only for realtors, mortgage brokers, and conservatives. Once their ranks have been thinned out, we can consider other categories of players.

#196 Ret on 02.21.12 at 6:36 pm

Just (5 pm EST) watched a 10 min clip on BNN with David Madani that says it all about the overheated markets and impending RE implosion.

The clip isn’t on the BNN site yet so no link. A must see. Dovetails Garth’s views 100+%.

#197 maxx on 02.21.12 at 6:41 pm

Typical conversation (I’m being generous) with a realtard:

Prospect: “I’ve noticed that homes in the area have been sitting for quite a while.”
Realtard: “Canned remarks, Canned remarks, Canned remarks, Canned remarks, Canned remarks, Canned remarks, Canned remarks, Canned remarks, Canned remarks, Canned remarks……………………………………..”

#198 Ralph Cramdown on 02.21.12 at 6:43 pm

Canada may cool housing market; prices won’t crash: Poll

It’s part of the continuum:
– Prices are set to keep rising on increased demand
– Prices will continue to rise, but at a more moderate pace
– We’re seeing a much needed moderation in price increases
– With more inventory available and prices holding firm, there’s more choice than we’ve seen in a long time for first-time or move-up buyers
– Prices may cool somewhat this year before resuming their increases again next year, experts say
Okanagan a bargain, but it won’t last long (from May 20, 2011)
– We’re starting to see an uptick in interest at open houses, prices are expected to rise in the Spring
…after that, pretty much radio silence

#199 Devore on 02.21.12 at 6:43 pm

#122 };-) aka DA

Uncontrolled credit IS a “free market”. Real interest rates are a reflection of the risk environment in a “free market” as is “easy credit”, or at least the perceived risk.

You can’t have a “free market” when you are manipulating the risk, aka moral hazard, which lowers risk and thus lowers the risk premium (ie real interest rate). You want “free market” and “easy credit”? Look at the credit card industry. How do you like them 20% interest rates?

As I mentioned previously, the analogy “smoking reduces smokers” which equally applies to Greater Fools so too does it apply to that subset as lax lending and borrowing reduces lenders and borrowers. So too does it apply to foolish developers and foolish real estate agents. This IS the true “free market”.

Yes, when after a period where lax lending is encouraged and rewarded, the risk profile is modified, there is an artificial and sudden shock to the credit market, which no one could have foreseen or hedged against, because, wait for it, it was artificial and arbitrary. Only the ones with political connections will be forewarned and bailed out. I still don’t see this “free market” you keep talking about. There is nothing “free”, in every sense of the word, about central planning and moral hazard.

This new DA is like a mind melt between the old DA and Investor’s Friend: voodoo economics made up on the fly and BS rolled into one.

#200 reasonfirst on 02.21.12 at 6:44 pm

#169 TRT on 02.21.12 at 4:39 pm
“Why have Canadian retail sales grown steadily (and still growing) since the 2008? Its a straight line month over month. $32 Billion in 2008…now $39 Billion.”

Nice try!

Retail Sales Jan 2008 $35.8B
http://publications.gc.ca/collections/collection_2011/statcan/63-005-X/63-005-x2011001-eng.pdf

Retail sales Jan. 2011 $37.1B
http://publications.gc.ca/collections/collection_2011/statcan/63-005-X/63-005-x2011001-eng.pdf

Not to mention the HELOCs!

#201 I'm stupid on 02.21.12 at 6:44 pm

Junius

I have appletv. I got it hacked to avoid iTunes and to be able to stream from other sources. It’s the best thing ever. The only drawback is that you need a wifi plan that allows you to down load a lot. My plan is $75 per month now. The providers no longer carry unlimited Internet. I can bet when cable-sat tv numbers decline enough that Internet service will increase.

#202 I'm stupid on 02.21.12 at 6:47 pm

Also Viber will kill long distance. I used it in the Caribbean recently, I called telus for a plan and they said it was $3 per minute. Viber is free with wifi connection, again the only negative is that the other person must have the viber app.

#203 };-) aka DA on 02.21.12 at 6:51 pm

#192Junius

The effect was to pull forward many first time buyers but that was not the reason for the policy decision. Of course, is these FTBs who will be hurt the most when renewal time comes and they are in negative equity.

Do you really believe they are the ones so who will be hurt so much or those who took out massive HELOCs with which to finance their speculative real estate endeavors? My information suggests it is that later group which far outweighs the former. Of those facing or in foreclosure I have seen very few who were first time buyers who bought at the peak. I personally represent a number who got caught up in the real estate speculation game.

Oh and one more thing, just as you can speculate on real estate by betting it will go up and so can you speculate on real estate by betting it will go down. Buyers are reluctant to buy in a buyer’s market as they speculate that prices have yet further to fall. Buyers are anxious to buy in a seller’s market as they speculate prices are going to rise in perpetuity.

#204 Devore on 02.21.12 at 6:55 pm

#131 The Thing in the Basement

116 Form Man – strange thing is we’ve seen it go both ways in the past – high rates didnt stop the late 70s early 80s boom (though they did eventually) and lowering rates didnt stop the late 90s drop.

1970s were the result of massive (for its time) monetary inflation which came about after the USD gold convertibility standard was ended.

#205 };-) aka DA on 02.21.12 at 7:02 pm

#192Junius

“Home” owners are a different breed than they who are attracted to dabbling in real estate speculation. The former generally has budgeted for a long term hold. The later anticipated getting out before things changed and were less inclined to have made contingency allowances.

Yes some F.T.B.s who otherwise would not have been afforded home ownership in the first place, or bought beyond their means, will face hardship ahead. But many will get through it and they who do not meet a just fate as they ought to have known better and be held accountable for their autonomous actions.

#206 reasonfirst on 02.21.12 at 7:04 pm

#169 TRT on 02.21.12 at 4:39 pm
“Why have Canadian retail sales grown steadily (and still growing) since the 2008? Its a straight line month over month. $32 Billion in 2008…now $39 Billion.”

Duh – mind is still in 2011.

Better Comparison:
Dec 2011 Retail Sales just reported $38.6B
Dec 2007 Retail Sales $35.1B

That’s 2.4% year…not 5% in your example.

#207 lookoutbelow on 02.21.12 at 7:19 pm

BC Minister of Finance pushing more air into the Housing Bubble in BC, through a new “$10,000 refundable credit”. One of the highlights in his 2012 Budget:

“Budget 2012 introduces new relief for first-time buyers of newly built homes — giving consumers a break while supporting the new-home construction sector.

Effective February 21, 2012, to March 31, 2013, the $10,000 B.C. First-Time New
Home Buyers’ Bonus will give a temporary, refundable income tax credit for
first-time buyers purchasing newly-built homes.”

Who says housing is not a right. Sad part is the BC taxpayers are funding this credit to the marginal home first time new home buyer.

The Income Tax credit PLUS cash back mortgages are starting to sound like, you guessed it, “SUB-PRIME”.

But no problem since Flaherty will probably follow BC’s example of stimulating more construction and increase the $600 Billion CMHC limit.

#208 X on 02.21.12 at 7:23 pm

Any chances of the minimum downpayment being altered? This really would have more of a debt sobering impact than reducing the amortization period form 30 to 25 years. Which also needs to be done, but it isn’t enough to stop the debt orgy.

#209 darrell on 02.21.12 at 7:28 pm

So we all know the housing market in Canada will crash, how do we make money from it? Look into shorting MIC on the TSX exchange. Genworth MI Canada Inc, the leading private sector supplier of mortgage default insurance in Canada (ie right behind CMHC). Even better, look into purchasing some PUT options! Cheers, you can thank me later!

#210 edmonton mortgage broker on 02.21.12 at 7:43 pm

#167 Maxamillion on 02.21.12 at 4:26 pm

“Detected Mortgage Fraud in Canada reached over 400 million last year”

That’s barely a drop in the bucket. i’d add a couple zeros to that figure to get an idea of the amount of mortgage fraud per year in Canada.

#211 Day of reckoning delayed again? on 02.21.12 at 7:57 pm

Please write about the latest BC budget. You know, the part about the provincial government offering a $10000 cash back to first-time buyers of new homes.

#212 gtrz4peace on 02.21.12 at 8:06 pm

TRT – Whatever you are smoking, we would like some. A “Fee-based private healthcare system” means YOU do NOT get healthcare if you are

1) Self employed with any kind of health issue, from acne or asthma to serious illness – if they do insure you it will be extraordinarily expensive.

2) Someone who has ever been sick or had surgery

3) Someone with a sick child (insurance pirates hate sick kids so many policies don’t cover them)

Wake up dudes, your healthcare system is the only thing saving millions and millions of you from “medical bankruptcy” or worse, no access to healthcare at all.

That is why every sane nation has a national healthcare policy. Go to the US and try it for awhile if you don’t believe us.

We know what “for profit” insurance is.

#213 Stupesing in Cabbagetown on 02.21.12 at 8:12 pm

Mortgage fraud on the rise: http://business.financialpost.com/2012/02/21/mortgage-fraud-on-the-rise/ however, a Reuters poll assures us that housing prices won’t crash: http://business.financialpost.com/2012/02/21/canada-housing-prices-wont-crash-poll/ . Whew!

#214 Silver on 02.21.12 at 8:21 pm

You mean to tell me peolpe in BC need a $40,000 plus tax break on a $850,000 purchase….in BC

that’s stupid in the extreme…

steel from one pocket..legitimate tax payers to give a discount to speculators the other pocket.

but no one in Canada will invest without a tax break anyway…

Silver

#215 comfortably numb on 02.21.12 at 8:29 pm

DA
“It all started with the banning of lawn darts I tell ya!”

I actually own two sets of them and can be found on many nights kicking back with the wife tossing them around in the back yard. The problems begin after the third or so beer………

#216 mark on 02.21.12 at 8:41 pm

Garth you’ll be pleased to know a pair of Australian mortgage broking sharks are holding up the CMHC system as a beacon of what Australia should aspire to

http://www.macrobusiness.com.au/2012/02/wallis-not-joyris/

I’d love to see you cut these weasels down.

#217 Paul on 02.21.12 at 8:47 pm

Today in BC budget…..The B.C. First-Time New Home Buyers’ Bonus of up to $10,000.

Everything is fine in the RE market here in BC. :)

#218 maxx on 02.21.12 at 8:47 pm

#151 disciple on 02.21.12 at 2:45 pm

Bingo!…..and you can’t price in fundamentals in a relentless downward spiral either.

#219 Timing is Everything on 02.21.12 at 9:02 pm

That reminds me…The Canucks are playing the Predators. Just starting now. Thanks Garth. You always come thru.

#220 Kilby on 02.21.12 at 9:18 pm

#210 GRTZ 4 Peace

Well said, one sickness can wipe you out forever. I have many friends here that grew up in the states and have lots of horror stories. People can talk down our system until their family is in need….The game changer. How many Canadians who travel schedule all their medical needs when they are back here?

#221 salonist on 02.21.12 at 9:43 pm

something is still stirring
i was at walmart in oakville today. there was a fellow in line behind me chatting away on his cell.he was rhyming off 9 developments opening up in the neighborhood this weekend and next.figured his best bet would be to buy some spec properties at nayagua and 6th line here in town.figured they would sell through the 90 offerings in one day.

#222 OneMoreThing on 02.21.12 at 9:44 pm

In my quest to determine what are top products in the underground economy, the 1970’s Lawn Darts were in my top 10!

#223 Nostradamus Le Mad Vlad on 02.21.12 at 9:45 pm


Dark and wet day – night combo here, but a great series of posts today.
*
Greece vs. Germany Maybe Germany doesn’t want to pay billions back for WW2 reparations; China buys more oil from Iran. No way will the western butchers (UN – US – NATO) get past China, Russia and Pakistan; 4:17 clip Financial fascism; Spain’s barter economy gets fans; Economic Warfare “When the Peloponnesian War began, in 431 BC, Athens was the strongest city-state in Greece. By the time the war was over, just 27 years later, it was reduced to a state of complete devastation.”; Boomers Work until you drop; Unemployment “Which means the real unemployment just hit 30%.” wrh.com; Iran Higher oil / gas prices for EZone, if they still sell to them; Fascinating Greece taking down Wall St.?
*
Pakistan – US relations Worse than dead; 9:33 clip Why are the Bits. constantly rioting? They have learned from Iceland, Ireland, Greece etc.; Iran is Iraq II. Same lies and deceptions; Harper “Great: maybe Harper can pay those billions of dollars the US government has been giving to Israel for years, and make it the Canadian Taxpayers’ problem!! Stephen Harper, you have no idea what a load that would take off the US Federal Governments’ shoulders, and – hey, I am thanking you in advance!” wrh.com; 34:56 clip “Agenda 21 has been broken up and repackaged as three new organizations.”; Cameron and Sarkozy Two war-loving leaders with broke countries; Deathcult WW3 began on 9-11; FF Update Statue of Liberty targeted.

#224 Timing is Everything on 02.21.12 at 9:49 pm

#137 Lostinthewilderness – Oh and Hummers, mostly girls drive them out here in the wild west.Guys are embarrassed to be seen in them.

It’s true Garth…Hopefully you at least have a H1. I’m guessing the Amazons use it for beer runs.

http://tinyurl.com/7ag8784

#225 The Thing in the Basement on 02.21.12 at 9:50 pm

202 Devore – yes, the vietnam war and Charles Degaulle
demanding gold, I remember it well, though I didnt have
a clue what they were talking about at the time….

#226 Daisy Mae on 02.21.12 at 9:52 pm

#191 JUNIUS: “The iPhone is a nightmare for carriers but they have no choice. Rogers initial exclusive deal on the iPhone created an avalanche of switching that Bell and Telus are still smarting from.”

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

Does anyone know what the iMessage is all about? I THOUGHT I was texting but it went thru as an iMessage. Something new?

#227 a prairie dawg on 02.21.12 at 10:09 pm

It didn’t start with lawn darts. And it didn’t even start with the first idiot who burned himself with a pack of matches. (ie: close cover before striking)

It started with the first judge in Canada to decide we must all be protected from ourselves. (actually the Yanks started it, we just followed along)

The Darwinism model was working pretty well up until then though…

#228 truth hammer on 02.21.12 at 10:16 pm

#105 TO Guy. Compared to my neighbours who have been retired here in Bangkok for the past 14 years I am a relative newbie. If you were to come to Thailand to live I would suggest you come and have a look for yourself and see what ‘fits’ for you. Don’t hunker down right away, take a short term residence in Bangkok and travel around the country. After you stay in a serviced apartment and have taken a good look then you’ll have a better idea of where you want to live. BKK is a huge city and there are many differant area’s….take your time. BTW……if you ride the BTS ( skytrain) down Sukhumvit Road ( main street on steroids) you will spot hundreds of ‘for rent’ signs along the way. Get off and inquire after you scope out the area for the things you want to have around you. BKK is not like TO or Vancouver…it is a real city……TO would fit into one small corner of the city and disappear.

I choose to live in the city because it is convieniant…all the mod cons….easy for me to do my buisiness and get around….lots of things to do and see. I am not one for the close quarters of the ex pat communities such as titosanto suggested in post 170. The community of Pattaya is primarily a sex tourist area where you would be surrounded by the low life all the time and thats no good. You may as well hang out in the worst areas of your own city if you want drunks and whores as your everyday comapnions….not my scene. But….go there aand check it out…..it is on the beach….and it is cheap to rent an apartment there……try Jomtien….a bit farther down the beach but close enough to access the facilities. BTW….you can have cable, adsl, telephone..etc etc etc …it is all available.

You can get a single serviced room starting at 5000 baht anywhere in the country inc BKK….approx $160 per month…….I have a larger place but thats my choice. Good luck…..as 107 said it is a quantum improvement in retirement lifestyle over Canada. Weathers fine.

#229 };-) aka DA on 02.21.12 at 10:19 pm

#197Devore on 02.21.12 at 6:43 pm

This new DA is like a mind melt between the old DA and Investor’s Friend: voodoo economics made up on the fly and BS rolled into one.

No, I think you underestimate the depths of my meaning. I’m talkin’ REAL free market. Nothing made up on the fly about that one. Hell if the economy goes the way most here seem to think it is we’ll get there soon enough as we are reduced to a true survival of the fittest.

I’m up for it. Bring it on! An apocalyptic transmutation some might think regression but surely as pure and real as it gets. Now THAT’S a free market. No BS, fight to survive or die. Are you ready for something like that?! I thought not.

Hey, it’s got as much chance of happening as anything else forecast here. Squirrel soup anyone?

When I say “free market” I mean free efin market not some lame assed combination that “gold star for everyone” mentality preached by parents who drive their kids a block to school because their too lazy to get off their porky little butts and a manipulative government which pays lip service to free enterprise but regulates the shit out of it.

#230 Habbit on 02.21.12 at 10:19 pm

#172 TRT Machevellian tactics are being used. Too many are falling for it. Carefull what you wish for as your turn will come.

#231 NFN_NLN on 02.21.12 at 10:37 pm

New pharmacy grad = $40/hr + overtime (Alberta)

#232 };-) aka DA on 02.21.12 at 11:28 pm

#225 a prairie dawg

You get it.

#233 Hoover in Phuket on 02.22.12 at 12:33 am

As a former North Vancouver real estate owner that now resides oversea’s (retired at 43!) I take pleasure at reading about all of the doom and gloom happening back in my former homeland regarding real estate. Ok to some degree it has have merit, but for the most part it is all El Toro Poo Poo. Yes I would agree that some areas of Canada RE pricing is overpriced. It is called supply and demand. If you have to live in a particularly expensive area then you pay the price. Simple. Like women and purses. A Prada is the same thing as a Wal Mart purse except the price. They serve the same purpose and are probably made in the same Chinese factory! I would find it hard to believe that a bank, credit union, or private lender would be stupid enough to lend on a property beyond a persons means. Come on lets get real here! Cdn banks are some of the soundest in the world. If they are stupid enough to do that then they deserve a good kick in crotch!! Well, last I checked I didn’t see any Bloor Street bankers hunched over! The only thing to be gained by lending over a persons means would to be gain the upper hand by underhandedly getting the persons down payment so the lender would gain control of the property at a low price. Where I live now that is the case, but in Canada the banks and credit unions are not in the real estate business they are bankers. However if you borrowed money from lefty the loan shark well then the case holds merit. I have read comments that you can own 2 houses in the USA for 1 in Canada, actually you could probably own more than 2 if you shopped in Arizona or Vegas, but keep in mind that the population of USA is 10 times that of Canada. Hmmm there’s that supply and demand thing again. Then I read about housing in Kelowna. I happen to know people right now trying to sell a water front property with no luck at all. The property has been listed for over 1.5 years. But look at Kelowna, what the heck would you do there. It is home to the newly wed’s and more so the nearly dead’s!! Recreation property!! When times get tough the first thing to go is the toys! In this case real estate. Now look at Whistler, BC. Have you seen the cost of real estate!!! Makes my eyes roll back. You seriously have to get your head examined to buy into that market. And there is nothing in Whistler except ski’s and mountain bikes. Don’t see people taking about doom and gloom there over their $8 Starbucks coffee!

Lets get to Vancouver as I lived there for quite some time. This city is one of the most beautiful cities in the world. Who the hell would want to live in Toronto, cold, damp, relatively flat, its the concrete jungle. Boring!!!! But if your work, family, etc need you to be there then so be it. Make your bed and sleep in it. With Vancouver sure the cost is high, it always has been, because people want to live there. Not because they have to, they want to! Hmmm, here comes that supply and demand thing again! Second, unlike all other cities in Canada, Vancouver only has so much land. Remember it has the ocean on one side, mountains on the other and a little border with the USA on the rest of it. Well what happens when you start to run out of land. Don’t make me say it! S & D! So even if real estate prices plummeted by 20% that downtown condo would go from 500K to 400K. Still seems a tad expensive to me but that’s a 20% discount!!!!!! I can guarantee you if that happened international money would flood the market and scoop up everything and the prices would back to normal with a couple of years. Now would that happen in Chilliwack, no way, but again who wants to go to Chilliwack, sorry Bart, so don’t expect to see huge price declines.

So I guess what I am trying to say is believe what you want, if you think the sky is falling grab an umbrella, but if you putting off a real estate purchase waiting for the big one to happen get yourself a 6 pack, big bag of chips and settle into some more good reading here. My best advice is that you all missed the chance to strike a good deal years ago when we the last brief big dip, so going forward go back to what my grandmother Omi had to say, buy the BEST you can afford and pay cash!! By the way, has anyone heard anything about Mount St. Helens lately, I think she is ready to blow again? Some pretty good deals I here!

#234 CD on 02.22.12 at 1:23 pm

Garth – Thanks for being so concise and to the point. I find it so fascinating Realtors would spend the time to post negative comments. If they weren’t scared why bother with your updates?

I sent in an email about a north york house that sold for 55% above asking price (sold yesterday). I would love your thoughts on my comments regarding ridiculous prices being an excellent form of Birth Control for my generation.

Look forward to your thoughts and future blogs!

PS – it would be most helpful if you linked some of the acronyms you use! Cheers.

#235 disciple on 02.22.12 at 6:35 pm

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One of your best. — Garth

#236 Steph on 02.22.12 at 8:00 pm

I always thought we were in better shape than the US, and didn’t have a subprime problem. Then one day we had a former banker for dinner. He told us he had left one of the Big 5 banks because his conscience would no longer allow him to work there. When I asked abit more, he said that he was expected to help customers “fudge” their salaries so that they could take on bigger mortgages (and make more money for the bank). He knew many of these families were putting themselves into a dangerous position (especially when interest rates rose), but they were completely unaware, because the bank was assuring them it was a great financial move. So he got out.

That got me thinking and reading, and that’s how I ended up here. I appreciate the blog although I don’t always like the way it’s presented in crass terms since it’s not particularly family-friendly. But I do find the financial information helpful as I sort through what is going on in our economy.

Crass? You better explain that, babe. — Garth

#237 Steph on 02.22.12 at 9:41 pm

Sorry if that was unclear. What I meant by “crass” is that you use sexual analogies to explain much of what is going on in the real estate/financials market. No disrespect intended, and this is your page, so you’re free to use whatever analogies you like. It’s not my preference but it’s your page. Enough said.

Perhaps you should wear some protection when you visit. — Garth

#238 Pokey on 02.22.12 at 10:19 pm

I quote “We‘ve systematically lowered mortgage lending standards, encouraged banks to take excessive risk…” All CMHC-insured mortgages are not a risk for The Banks. They benefit as long as payments are made. They are not on the hook. This is why banks are more than happy to have little to none put down on a property; taxpayers are left holding the bag.

#239 Jayar on 02.24.12 at 12:11 am

Haha! Too funny… That’s my friend in the photo.

Garth, I can set you up with her. She’s horsey set and debt free. ;-)

Great post. Getting caught up, as you can see this comment is late to the party. Cheers!