Suburbia, $853,825

Two years ago Andy’s buddy paid $199,000 for a 35-year-old, 988-square-foot house in Winnipeg with painted kitchen cupboards and vinyl countertop. Any HGTV host walking in there would immediately throw up, convulse heavily and require three episodes to recover. Oh yeah, and all the windows were shot. And did I mention it was in Winnipeg?

The bud got it for no money down, thanks to the Canadian banking system. As you know, lenders like TD or RBC will hand over 5% or more of the amount you borrow – in cash, released to you the same day the home loan funds are made available (closing). This money can be used for the 5% downpayment required to qualify for 95% financing. Yes, a snake apparently can eat itself.

Flash forward to a week ago. The junker was listed for $249,000, and sold for $299,500

“The whole world has gone nuts.” Says Andy.  “Ten years ago you could have bought that house in Winnipeg for under a $100,000!  Everyone says we are just catching up to the rest of the country. Like I said……gone nuts!”

This week the Toronto Real Estate Board released its monthly barrage of numbers. As I surmised last week, they were virile. Lots of hair and swelling. With a shortage of listings (unlike Vancouver right now), buyers are working themselves into a small panic. As a result, the average detached house in 416 has just hit a new crescendo: $818,815. If there ever was a number to get some HAM attention, there she be.

Remember that McMansion orgy in Richmond Hill I wrote about two weeks ago? You know, with people camped out all night waiting to buy unbuilt $700,000-plus houses in ten minutes?

Well, the latest numbers are out for York Region, the place you went not so long ago if you needed a cow. Those farm fields north of Toronto, once used to wastefully grow food, yielded $1.2 billion in real estate sales last month alone.

The average house price is now just one Fiat short of $600,000. In Vaughan it’s $610,000, and Richmond Hill, $675,671. In fact, in RH, with arguably the largest per-capita population of Asian extraction in the region, an average SFH is now $853,825. And (of course) you need at least one car to get anywhere, and lots of income for the property taxes and the fav neighbourhood game of competitive gardening. Think Desperate Housewives. With hot landscape guys.

See? I’ve just managed to showcase real estate excess, casino thinking and unbridled horniness without even mentioning Vancouver. This is how screwed we are.

If you participate in this, as thousands are doing right now, it’s the investing equivalent of that  guy who stuck his head in the tiger’s mouth every night on a stage in Vegas. It’s cool and people applaud, until the cat feels hungry.

Realtors do drive-bys all day on this site, wheeling in to say my timing sucks and the losers who worship my chiseled abs and ripply sixpack could have made serious money if they’d only have ignored the bearded guy. And they’re right. Those houses in The Peg, RH and 416 have all appreciated since 2009. But so has the certainty this will not be sustained. In so many places – Ireland, California, Barcelona or Cape Coral – realtors and property speckers said the same thing in the years before it all blew up. It isn’t different here.

In fact this pathetic blog gives a daily representation of how fear and greed pull our strings. As stock markets dipped 200 points in Tuesday (and I told you this was coming), the comment section filled with the wails and cries of those who claim it’s evidence we’re doomed. But with record corporate profits and US recovery underway based on jobs, it is what it is. An opportunity to diversify.

To repeat this week’s message: nobody should be buying Canadian real estate any longer with 5% down. Even the mildest of corrections will wipe away all equity, leaving only debt. Borrowing 95% of the purchase price of a property at rates 100% guaranteed to be higher upon renewal, defines danger. Thinking values will rise without end, canceling risk, is risk itself. If you are young, rent. If you are old, don’t allow your son or daughter to trod this path.

And if you eschew selling at this time, afraid of leaving some dollars on the table, you are the greatest fool.

(Breaking news on mortgage changes and RBC’s brand new Kool-Aid. I am updating these on Twitter – @garthturner.)

170 comments ↓

#1 TurnerNation on 03.06.12 at 9:52 pm

First?

#2 V on 03.06.12 at 9:53 pm

Second again man!

#3 NoName on 03.06.12 at 9:54 pm

Unbelievable
(Iceland’s ex-PM becomes first world leader to face trial over financial crisis)
http://goo.gl/tlZ70

Believable
(Brasil economy bigger that UK economy)
http://goo.gl/WCKbO

#4 Sir Lumpy Rutherford on 03.06.12 at 9:55 pm

THIRD DAMMIT ! Garth get a job your loosing your shirt!

#5 Uh Oh Canada on 03.06.12 at 9:57 pm

Think of the 80/20 rule. 20% of the masses will heed your advice and think for themselves based on the numbers. The other 80%, aka the herd, will suffer the consequences.

#6 Shane on 03.06.12 at 9:57 pm

Garth, yep I live in Markham I see the horny buying 1900sqft homes for 600k when will insanity stop?

#7 Benny Hill on 03.06.12 at 9:59 pm

stock Market go up 10% in 8 weeks and Garth predicts a 1.5% correction…
Housing prices double in the last 4 years and Garth predicts a 20 % correction ever since….still waiting….

crickets…

#8 T.O. Bubble Boy on 03.06.12 at 10:01 pm

25% over asking for something that looks like a schoolyard portable??? (and in WINNIPEG!)

#9 pathcontrolmonk on 03.06.12 at 10:02 pm

From George Soros’wiki:

“A current example of reflexivity in modern financial markets is that of the debt and equity of housing markets. Lenders began to make more money available to more people in the 1990s to buy houses. More people bought houses with this larger amount of money, thus increasing the prices of these houses. Lenders looked at their balance sheets which not only showed that they had made more loans, but that their equity backing the loans – the value of the houses, had gone up (because more money was chasing the same amount of housing, relatively). Thus they lent out more money because their balance sheets looked good, they were guaranteed by the Federal Government, and prices went up more.
This was further amplified by public policy. Many governments see home ownership as a positive outcome and so first home owners grant and other financial subsidies – or influences to buy a home such as the exemption of a primary residence from capital gains taxation – mean that house purchases were seen as a good thing. Prices increased rapidly, and lending standards were relaxed. The salient issue regarding reflexivity is that it explains why markets gyrate over time, and do not just stick to equilibrium – they tend to overshoot or undershoot.”

#10 Cory on 03.06.12 at 10:03 pm

This is just getting very ridiculous and stupid…not to mention frustrating!!!! I just wish they would raise fooking rates already and stop this stupidity from happening. Give the Feds credit, they have kept this charade going far longer than anyone else in the world.

#11 TurnerNation on 03.06.12 at 10:04 pm

Ah, this hyper-masculine (or is it hyper, masculine) weblog. It has hair Harper only wished he had.
Speaking of mortgage liquidity drying up, we have a low volume TSX downside romp:
(From my email inbox)

“Globe says TSX volumes down and nobody knows why

2012-03-06 08:04 ET – In the News
The Globe and Mail reports in its Tuesday edition the business of stock trading in Canada has shifted from roaring to boring in just months. The Globe’s Boyd Erman writes that for the first time in five years, the amount of stock changing hands in Canada is dropping. Despite individual days of huge ups and downs, each year, the total volume of stock bought and sold in Canada always rose. Starting about six months ago, that changed. Volumes slipped in summer as they always do, then just never came back. In the final months of 2010 and the first few months of 2011, total volume on all Canadian equity markets averaged about 26 billion shares a month. Since September, 2011, monthly volume has been more like 19 billion shares a month. Volume on the Toronto Stock Exchange fell to eight billion shares in February from 9.3 billion in February, 2011. It could be that Canadian investors suddenly and finally tired of the relentless volatility, or the long-term returns that have barely cracked positive territory. From anecdotal evidence of traders on Bay Street, it is clear that almost every category of buyer and seller is backing off. As Doug Clark at brokerage firm ITG Canada puts it, “Nobody is playing offence.”
© 2012 Canjex Publishing Ltd

#12 Uh Oh Canada on 03.06.12 at 10:04 pm

Garth, I do worship your chiseled ass but I refuse to join twitter.

#13 T.O. Bubble Boy on 03.06.12 at 10:09 pm

Apparently HAM likes spending an extra $800/month on condo fees for a townhouse that costs $700k:
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=11638921&PidKey=1076768066

#14 Victor on 03.06.12 at 10:12 pm

March 06, 2012
TD to Halt Non-Prime Mortgage Lending

Canadians are losing another non-prime mortgage lender.

Effective March 31, 2012, TD’s specialty lending division, TD Financing Services, is exiting the non-prime mortgage business.

A spokesperson said, “With today’s announcement, we have eliminated any non-prime lending in mortgages.”

The move was made “As part of a regular review of TD’s secured lending risk management strategies.”

“Ultimately, we decided it wasn’t a core part of our focus on building a franchise business,” he said, adding that “The (TDFS) portfolio has not grown to an economically viable size.”

TDFS mortgages comprised just 0.2% of TD’s overall mortgage book, he noted. TD says its TDFS customer base was not in the “tens of thousands,” but rather in the “thousands.”

Abnormal defaults were not an issue in this decision. “Our existing (non-prime) portfolio has performed quite well with minimal losses.”

“To remain competitive, it would have required us to increase (that) risk profile, something we’re not prepared to do.” (The spokesperson suggested that some non-prime competitors have been doing increasingly higher-risk lending and TD has chosen not to follow.)

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2012/03/tdfs-to-halt-non-prime-mortgage-lending.html

When the banks get out, why would you get in? — Garth

#15 Van guy on 03.06.12 at 10:16 pm

Winnipeg is the next BPOE. They got their hockey team back.

#16 The Peg on 03.06.12 at 10:23 pm

Garth

I am not a realtor nor do I want to pump Winnipeg Real Estate. But I think it is a terrible example to lead with. I imagine Andy put a few dollars into the place …new windows etc…..
And Winnipeg is far from the Shenanigans (did I spell that right) that goes on in the Real Estate Markets of BC and Ontario. Correction across the country …yes I would imagine but you have been pumping this for some time and I imagine if you say anything over and over again you will come up right sooner than later. In your case it seems later…but it maybe now. How much money has been left on the table by taking your advice of the last ….say four to five years. Look it Andy in two years he just made 50K (after the renos and paying the MLS guys..etc) and without a penny stagnating in some orange guys shorts. Risk and reward…..ya got love it baby and ya got love Winnipeg (sorry the last part was a pump…kind of contagious on this blog) :)

The greed that you and he show has made homes unaffordable. — Garth

#17 KingBubbles on 03.06.12 at 10:27 pm

But it’s different in Winnipeg.

LOL

#18 s on 03.06.12 at 10:36 pm

I don’t Flaherty has the guts to make any drastic changes to the mortgage rules other then what’s expected with the 30-25 year ammortization, and the stated incomes, I doubt this would be enough to do enough to get people to be more responsible.

#19 THIS IS WONDERLAND on 03.06.12 at 10:37 pm

HOW SOON IS SOON?

#20 Van guy on 03.06.12 at 10:42 pm

Garth,

Global BC said tonight that BC RE is forecasted to decline 4%. So much for pumping. You can only pump so much because, some people now know this could get ugly.

#21 a prairie dawg on 03.06.12 at 10:43 pm

#7 Benny Hill

crickets…

– — –

More like CREAtins.

#22 Republic_of_Western_Canada on 03.06.12 at 10:50 pm

Looks like the real secret to RE appreciation must be the rescue-orange house paint cued from equally colorful halibut fishing villages just slightly further east.

Image 20 thousand chinese in southern ontario painting their new McMansions bright, retina-searing blaze orange…

Anyhow, time to set up a nice bull spread on the VIX with the profits from Q1’s run-up.

#23 The recondite Richmondite on 03.06.12 at 10:50 pm

“The greed that you and he show has made homes unaffordable.” — Garth

So it’s come to moralizing now, has it Garth? Tsk…

I enjoy having some. — Garth

#24 Canadian Watchdog on 03.06.12 at 10:53 pm

A little search through TREB’s micro data reveals what really drove February’s 416 price up to $818,815.

Detached Homes

C01 http://i39.tinypic.com/23r7pxy.png
C02 http://i40.tinypic.com/260wg8w.png
C11http://i42.tinypic.com/a9vjmw.png

TREB Map http://www.torontorealestateboard.com/buying/district_map/index.htm

Three core 416 areas go up and the bulls start hyper-touting as if their property is worth TREB’s headline price. Little do they know what other prime areas have already started to drop in price. http://i40.tinypic.com/34yxj43.png

#25 City Slicker on 03.06.12 at 10:54 pm

So I have a question for the panel, why is it that when new condos/homes are offered to be built we see these retarded line ups (like Calgary at Gaurdian).
Why don’t they go to already built properties, I know there are condos on the market right now in Calgary that no one is lining up for?!

#26 Canadian Watchdog on 03.06.12 at 10:54 pm

A little search through TREB’s micro data reveals what really drove February’s 416 price up to $818,815.

Detached Homes

C01 http://i39.tinypic.com/23r7pxy.png
C02 http://i40.tinypic.com/260wg8w.png
C11 http://i42.tinypic.com/a9vjmw.png

TREB Map http://www.torontorealestateboard.com/buying/district_map/index.htm

Three core 416 areas go up and the bulls start hyper-touting as if their property is worth TREB’s headline price. Little do they know what other prime areas have already started to drop in price. http://i40.tinypic.com/34yxj43.png

#27 };-) aka DA on 03.06.12 at 10:55 pm

#169 Daisy Mae on 03.06.12 at 8:47 pm

and

#168 comfortably numb on 03.06.12 at 8:46 pm

You must both agree there is a particularly large number who have expressed on this blog their bitterness toward the current high prices, steadfast refusal to pay what others are so “stupid” to pay, and intent to wait for prices to fall to a level they consider “realistic” if not “affordable”. How would you interpret a state of mind as where such reasoning comes from?

I maintain that “the primary reason this blog is so popular is because of the resentment of the so many who feel excluded from owning a home who come here to vent their frustration by not telling of their want but their condemnation of those others who have that which they want.”

Criticism is a most sincere form of flattery and very often a manifestation of envy. Nobody kicks a dead dog.

#28 Sid on 03.06.12 at 10:57 pm

Garth,

I live in Winnipeg, recently graduated with my masters, got a decent paying job, one with a pension too, so I thought I would do the ‘responsible’ thing and look into purchasing a house.

I took a quick look around and couldn’t believe what I saw. It was a lot more of what you posted here. I’m making a little more than the median HOUSEHOLD income, yet anything in the price range of putting 20% down and keeping payments to less than a third of my income were basically sheds with carpeting.

Winnipegers pride themselves on being cheap, sorry, shrewd with their money, but the money people are throwing at houses is insane. My parents house more than doubled in value in the last five years. How is that even possible? This is a socialist, have-not province, income certainly hasn’t double in that time period.

For a while there I really thought I was missing something that everyone else knew. Thanks Garth for letting me know it’s the reverse and saving me from making a huge mistake.

Also, take it easy on the over zealous ‘doomers’. They’re the ones out there linking to your site on forums all over the Internet and generating page views for you; that’s how I found this pathetic site ;)

#29 a prairie dawg on 03.06.12 at 11:09 pm

#25 City Slicker

Flippers mostly. It gives them more time to sell for a profit before actual possession.

Because yanno, real estate always go up… lol

#30 };-) aka DA on 03.06.12 at 11:11 pm

It’s practically impossible for people to believe other than that which they want to believe. That does not make it a truth – but it can make it become righter than it was wrong.

#31 blase on 03.06.12 at 11:11 pm

Benny Hill,

Garth has not predicted a 20% correction in T.O.

The higher the run-up, the higher the fall. Speculators in condos and houses will get wiped out.

The banks know this, the Harper government knows this, why don’t you understand this? It’s not hard to grasp.

#32 brainsail on 03.06.12 at 11:12 pm

“Is Canada the world’s next superpower?”

http://outfront.blogs.cnn.com/2012/03/06/is-canada-the-worlds-next-superpower/?hpt=hp_t3

DO NOT read the comments!

#33 Mr.Lee on 03.06.12 at 11:16 pm

I agree, diversification in holdings is prudent no matter what happens. Is the US in recovery or are we wittnessing an election year infusion of liquidity that will yeild a bitter result come 2013? Is the UE crisis contained or is this just the begining of further economic malaise? Will Canadian housing defy the principles of macro economics and continue to rise or correct?

It does not matter if one is diversified.

#34 Smoking Man on 03.06.12 at 11:16 pm

BC Teachers Principle (Smoking Man) needs to see you in the office, NOW

It’s been brought to my attention that your behavior of late has been quite aggressive and disruptive.

It has been reported that you are unreasonable with authority and are radicalizing your peers.

You are aware that your actions can draw some serious consequences if you don’t align your behavior with our program.

Your monotonic demands are not acceptable and we strongly suggest you take some deep breaths and re think this through.

Although you exhibited superior writing skills and test scores are above average, It ‘s going to be a challenge to give you a passing grade if your behavior does not realign with the standard acceptable model.

This office recommends that you stop drinking bottled water , and only use fluorinated tap water, it’s good for your teeth.

I personally recommend that you seek help for your obvious condition of AAHD and ADD, they have excellent pharmaceutical solutions that can address and solve your behavior issue.

Now be a good boy and girl and you too can advance to the next level of your tax farm enslavement

#35 Deano on 03.06.12 at 11:19 pm

#12 Uh Oh Canada

1. Pretty sure Garth talks about his “abs”. Your Freudian slip is noted.
2. You don’t need to join twitter to read a person’s tweets. Just click on the link.

#36 Increasing that 1% on 03.06.12 at 11:23 pm

re: #1. Turner Nation
“First?”

You’re such an attention whore.

And, Garth, it’s nice to see the elephant in the room being addressed. somewhat. ( “..And they’re right.”)

#37 SpaceMonkey on 03.06.12 at 11:26 pm

I too refuse to join twitter. Keep the good stuff over here Garth.

#38 Retired Boomer - WI on 03.06.12 at 11:35 pm

I detect the natives are showing you Garth that they are getting restless, awaiting the long over-due RE correction. All I can say is be careful what you wish for people.

Here in the states, nobody expected the markets to break until there were subtle rumblings in sub0-prime investments in 2007. The stock markets had hit a new high in Oct I believe of 2007. A Bear Stearns and Lehman later look where RE was sitting. No, not a disaster (yet) it has been melting essentially since then. No, the entire place wasn’t as giddy priced as CA, AZ, and FL. They melted fastest, and hardest. Here in the rural midwest, land of cow $hit & beer fartz, we hardly noticed the 15% loss since recovered. But we weren’t CA, AZ,or FL either.

Interestingly, a lot of jobs went bye-bye leaving a lot of people earning less. Some bought with 5% down, they lost even with a 15% loss -or maybe gave up, who can tell.
There are daily foreclosures listed in the paper, a few each day. Somer will recover, others might be related to divorce, or shack-up break-up. Canada has both of these as well.

The sensible buyers suffer personal problems too, but they needn’t be RE induced. Buying here with a normal 20% down gets you a 3 br 2 popper for less than renting one. So, for the qualified why NOT buy here? Notice HE said “Qualified”….not qualified to get another credit card, or car loan, but a home loan!!

I was doing a little calculating today. RE value VS net worth. 90- age = percentage in RE. Happy to report my RE is less than half the allowed percentage. So WHAT if the markets falls 1.5% today, and each day til Greece finally pukes? So what if US real Estate should fall another 20%? How much will that change things in my world? Maybe a little, but no impending doom here. I’ll sleep well regardless.

They can’t repossess what they don’t own, and markets never have fallen to zero. Liquidity & diversified holdings protect, but they have to magical ability to save your but!!

#39 NotAGreaterFool on 03.06.12 at 11:35 pm

Nothing new to blog dogs, but nonetheless well packaged article:

http://canadabubble.com/bubble-watch/2324-canadian-bubble-trouble.html

#40 Canadian Watchdog on 03.06.12 at 11:38 pm

Everybody meet Toronto’s future sub-primes that TD just shipped in a covered bond to Europe, courtesy of LTRO. https://p.twimg.com/AnWqVvqCIAATxPJ.png:large

#41 Critical Mind on 03.06.12 at 11:47 pm

I’m amazed to see the avg GTA price eclipse the $500K milestone so soon. I was expecting this in May.

Supply and demand dynamics continue to portend major moves to the upside:
http://guava.ca/indicators.html

It will take a massive increase in new spring listings, like we saw in 2010, to temper the rise.

With the GTA Teranet Index having been among the lowest in the country for some time, this may finally be the beginning of true bubble-worthy price escalation.

There will continue to be money to be made on the run-up, but of course, heed Garth’s advice sooner than later if you have a weak stomach.

#42 HDJ on 03.06.12 at 11:51 pm

“Realtors do drive-bys all day on this site, wheeling in to say my timing sucks and the losers who worship my chiseled abs and ripply sixpack could have made serious money if they’d only have ignored the bearded guy. And they’re right.” Garth

Glad you decided to set your record straight. Keep up the good work. Your blog is one of the more interesting and useful things on the WWW.

You forgot the rest of the paragraph: “But so has the certainty this will not be sustained. In so many places – Ireland, California, Barcelona or Cape Coral – realtors and property speckers said the same thing in the years before it all blew up. It isn’t different here.” — Garth

#43 Rene on 03.06.12 at 11:53 pm

My first house in Winnipeg was quite similar. I paid 75k for it in 2002. It was as good a neighbourhood as you could find for such modest housing. Sold in 2006 for 155k. It would fetch at least 250-275k today. I wouldn’t touch wpg RE with a 10 foot pole.

#44 a prairie dawg on 03.06.12 at 11:56 pm

#27 DA

You’re deluded.

You’d have us believe this blog is patronized by a majority of the 30% in Canada who don’t own houses yet. And they resent those of us who do, so much so, that they hang here regularly and complain about it? That’s the best joke I’ve heard on here lately. lol

But if CREA members stopped coming here, Garth’s traffic would plummet by 20% or more…

Now that’s a fact. ;)

#45 whiny on 03.06.12 at 11:59 pm

I think what I like most about this blog is that Garth combines loving real estate with hating to watch what’s happening. Reading these posts are like having a motorcycle-riding deity on your shoulder reminding you to pay attention.

Garth, we all owe you thanks at least for keeping focus on the subject. When it happens, everyone will wish they were here.

#46 ANONYMOUS on 03.07.12 at 12:03 am

Oops, my ‘Bull-Crap’ words didn’t show up between the quotes.
I will repeat those words again, in a different way:

Quote: ((( “To repeat this week’s message: as long as rates stay this low, everybody should be buying Canadian real estate with no more than 5% down (even second, third, and fourth investment properties too).

There is no worry about the mildest of corrections wiping away all your equity, leaving only debt, because the government will never be silly enough to do such a thing as that, not for the next 100 years.

Borrowing 95% of the purchase price of a property (who’s price is all but 100% guaranteed to be higher in a year from now) at rates that will remain at rock-bottom for decades to come, will only help to make you richer than you think. ” )))

Now DON’T LISTEN TO THAT, its crap, those are the typical lies a realtor will tell you so don’t listen to them. But its just that for year after year that is exactly whats going on, so my question is this:

WHEN IS IT GOING TO END?

WHEN IS NORMALCY GOING TO RETURN TO HOUSE PRICES?

WHEN WILL BIDDING WARS COME TO AN END IN THE TORONTO AREA?

#47 peter on 03.07.12 at 12:09 am

ok garth, time to admit you were very wrong! it is time already.1
!

About what? — Garth

#48 Fort Mac Flatlander on 03.07.12 at 12:19 am

Just an amazing piece on the Fed’s corruption. Caution. Don’t judge the message on the medium. http://dont-tread-on.me/?p=14151

#49 not 1st on 03.07.12 at 12:33 am

Why should governments be so aorried about a segment of the market who has overextended themselves buying over prices real estate? I mean it can’t be a large number. Of the 70% who own homes, its probably only 10% of that figure who are in deep enough to take a serious fall if RE slips back. Thats not going to have a serious impact on our economy.

It reminds me of these bond holds in greece who everyone tip toes around. You bought the crap investment, now take your medicine. The world will be better off for your folly in the long run.

#50 TaxHaven on 03.07.12 at 12:43 am

I completely agree with you on housing.

But obviously you do not subscribe to the notion that Americans are returning to the NEW normal. Perhaps a little caution ~ or a LOT ~ is in order before pronouncing a U.S. recovery.

http://www.theburningplatform.com/?p=30405

Simple stats. Read in particular the lengthy paragraph beginning “The Big Lie of austerity and consumer deleveraging…”.

How can any economy “grow” in this way?

#51 Terra No-more on 03.07.12 at 12:52 am

“Is Canada the world’s next superpower?”

Yeah sure with lumber tariffs and British Leyland U-boats.

#52 };-) aka DA on 03.07.12 at 1:07 am

#44 a prairie dawg on 03.06.12 at 11:56 pm

Would you like to try again after checking the logic of your “facts” and consequential accusation of who’d be “deluded”?

FYI – here are a couple of “facts” to get you started; Population of Canada = approx. 34,000,000. CREA membership = approx. 100,000. The math and logic you can take from there…

But again I maintain, although I have no stats to back it up, I truly do believe the primary reason this blog is so popular is because of the resentment of the so many who feel excluded from owning a home who come here to vent their frustration condemning and criticizing those others who have that which they want but are not prepared to pay the price to acquire.

Life is a risk, there are no guarantees. If you worry about what the future may or may not bring you will never take advantage of today’s opportunities.

#53 Zoronqueen on 03.07.12 at 1:07 am

#25 If you have read the blog long enough, you may say that some of these are staged, so that the few greater fools can get the “best deal”

#32
Now I want to read the comments, yes it was a waste of my time….

Been a blogger since 2007. Again, not saying this is smart, but we are renting out our house in Edmonton and going out to Vancouver to rent….

Even if we sold our house at 535K and broke even, our equity still would be only about 150K, not even enough for a basement suite in Vancouver…..

#54 Living in AB on 03.07.12 at 1:10 am

Its super tuesday, Apple set to announce something big tomorrow and now Garth.? I think I’ll have take tomorrow off. Hehe.

#55 HDJ on 03.07.12 at 1:11 am

You forgot the rest of the paragraph: “But so has the certainty this will not be sustained. In so many places – Ireland, California, Barcelona or Cape Coral – realtors and property speckers said the same thing in the years before it all blew up. It isn’t different here.” — Garth

No, I didn’t forget the rest of the paragraph. I too fail to see how current real estate prices can be sustained, unless the US and Canadian economies miraculously turn and charge upward, something I can’t imagine happening in the next decade. Taxes, debts and costs will likely continue to increase, while the prices of homes will fall – salaries will probably stagnate and government services decrease or become more expensive to access. By how much will real estate decrease in value in the near future? And when or will it significantly drop, to the point where much suffering results? I don’t know. But the housing market is currently not the place to securely store wealth or take risks.

#56 Zoronqueen on 03.07.12 at 1:11 am

I like to use this calculator for rent vs selling:
http://www.forbes.com/fdc/rentorsell.shtml

Right now it tells me to sell, so logically I should, however since we are moving to a less affordable housing zone, we may as well keep it…..

#57 Devore on 03.07.12 at 1:12 am

#14 Victor

With so may lenders ramping down sub-prime lending there will probably be an increase in deals falling through due to financing.

#58 Cowpoke on 03.07.12 at 1:14 am

Here is an exercise. A couple(dinks)earning combined $70 per hour x 1920 hours a year = $134,400 income x 32% =$43,008 – $3,600 property tax = $39,408.00 / 12 months = $3,284.00 available for a mortgage payment, 25 year amortisation, 5 year term at 10.50% interest = a house worth $356,783 or 2.65 times annual income. At 5.24% house is worth $553,998. At 3.10% ‘vrm’ house is worth $688,229 or 5.12 times income, payment stays the same in all 3 cases. Question? Who’s interests are better served? Does it really matter after 25 years?

#59 Crash Callaway on 03.07.12 at 1:26 am

Yeah people could have ignored Garth and bought into the realtor fiasco and reaped the mega buck harvest.
But at what cost? Is it really necessary to surrender your sanity to get a house?

It’s completely nuts alright and I pray there are enough sane ones left to put it back together after the lunatics are done partying.

#60 John G. Young on 03.07.12 at 1:29 am

#27 };-) aka DA

“It’s practically impossible for people to believe other than that which they want to believe. That does not make it a truth..”

#52 };-) aka DA

“But again I maintain, although I have no stats to back it up, I truly do believe…”

So when you say “people” you mean “DA”, and you’re lecturing to yourself.

#61 Devore on 03.07.12 at 1:30 am

#25 City Slicker

Why don’t they go to already built properties, I know there are condos on the market right now in Calgary that no one is lining up for?!

Possibly people still believe there is money to be made flipping presales? That train left years ago, when every Tom Dick and Harry got onboard.

http://www.youtube.com/watch?v=o3IrWk0hy6Q

#62 Math is Fun on 03.07.12 at 1:31 am

non-prime! stated income loans! cash back at closing, covered bonds!!…talk about twilight zone – unless you don’t get cnbc.

cue the fat lady.

#63 Nostradamus Le Mad Vlad on 03.07.12 at 1:37 am


“Desperate Housewives. With hot landscape guys. Lots of hair and swelling. Remember that McMansion orgy in Richmond Hill I wrote about two weeks ago? Any HGTV host walking in there would immediately throw up, convulse heavily and require three episodes to recover. Realtors do drive-bys all day on this site, afraid of leaving some dollars on the table, [you] are the greatest fool.”

“Yes, a snake apparently can eat itself.” — So, if a snake eats itself, what’s for leftovers?
*
BPOE, Mikey the Realtor and others Guess you already knew this; Ice Cream Truck There’s an idea here, somewhere; Gas Prices How govts. rip citizens off; China buying NAmerica up; Yesterday a link said some Brits. were living on two pounds percday, per person. Today, it’s America, with people living on less than US$2 per person, per day; ECB blowing up for self destruction.

Retailers Manipulating Consumers; US Fed and fixed incomes; Cyber War underway; Doubled Extreme poverty in US; Falling Consumer confidence, but Underestimating It will take a few years, and there is no right or wrong; Recession Eurozone points to it; Natural Gas Chrysler to produce new truck; Warning Sign for Jobs; North Dakota I’m missing my calling as a stripper (US$3K a night)! Morgan Stanley Weird; 15 Black Swan events that could change everyone’s economies.
*
5:20 clip “I think it makes sense, to believe that the BP gusher was a destabilizing force for the entire Louisiana river basin, and that the entire Mississippi river and tributaries could collapse.”; Desperate govts. do desperate things; PJ Proby Falling on hard times; HarpoCall has replaced robocall; Obomba Kiss the US ‘konomy sayonara; George Orwell was dead accurate, a prophet; Changing the Morphic Field A novel concept; Sounds loud enough from the sky setting off car alarms; Big Brother is all around, even cell phones; Solar Storm One in eight chance we’ll be involved; California adopts Agenda 21 As refreshing as Monsanto’s junk; Vitamin K for osteoporosis?

#64 Devore on 03.07.12 at 1:38 am

#37 SpaceMonkey

I too refuse to join twitter. Keep the good stuff over here Garth.

Why? Just because legions of monkeys use it to post their daily minutia and assorted inanity, doesn’t invalidate that for most legitimate and productive things people want to use social media for, Twitter is pretty good (and way better than Facebook).

#65 DM in C on 03.07.12 at 1:42 am

“But again I maintain, although I have no stats to back it up, I truly do believe the primary reason this blog is so popular is because of the resentment of the so many who feel excluded from owning a home who come here to vent their frustration condemning and criticizing those others who have that which they want but are not prepared to pay the price to acquire. ”

Blah blah blah — you keep saying it, but no matter how pretentious and SMRT you (think you) sound, I doubt it’s true. I know for a fact it’s not true for me.

Isn’t it time for you to get pissed off, offended and leave again? It’s almost all full moon, maybe that’ll set you off.

#66 Patiently Waiting on 03.07.12 at 1:46 am

25 City Slicker

So I have a question for the panel, why is it that when new condos/homes are offered to be built we see these retarded line ups (like Calgary at Gaurdian).
Why don’t they go to already built properties, I know there are condos on the market right now in Calgary that no one is lining up for?!
—————————————————-

The reason they line up is that it is a pre-sale which usually only requires a few thousand deposit. So in effect, they are using the developer to finance their purchase to speculate that they can flip the contract for a substantial profit before they are required to complete on the deal a year or so down the road. It works really well unless of course the unit is worth less . . .
I had coffee with an engineer friend the other day, he said his wife’s hair dresser bought 5 condos (in Vancouver), all with only $5,000 down expecting to sell them before she has to complete when construction is finished. She makes around $35,000 a year . . . makes me wonder how many other like her are out there gambling with cheap money . . . I have a bad feeling about this . . .

#67 Ex-Cowtown on 03.07.12 at 2:08 am

The big problem that GT has with his detractors is that they all take the delay in the crash as evidence that he is wrong.

Personally I disagree with GT on several business/investment issues, but I agree with him in that the meddling in normal business cycles by various levels of government has pushed this bubble out far longer and far higher than would have occurred under normal economic conditions.

I sold my house in an upscale Cowtown neighborhood long ago and former neighbors who are selling now are getting similar prices to what I got. The difference is that their houses were worth $250K-$300K more than mine was back when I sold.

GT will be proven right, but it will not be anything to be proud of. It will be like saying ” I was right…. I knew if I ate all those cheeseburgers I’d have a heart attack”.

#68 vanlocal on 03.07.12 at 2:09 am

Only a fool would move to Vancouver…….even to rent.

#69 Jane24 on 03.07.12 at 2:16 am

Prices in TO are now officially insane. There are better buys right now in good hoods in London, England and that really is a world class city with a population of 8 million.

My daughter has just brought a nice, new one bed flat in Crystal Palace, 20 mins from Covent Gardens where she works via tube for $224,000. Separate kitchen and lovely bathroom with granite. Property taxes are $1760 per year and maintenance is $400 a year as downtown so no gardens.

When TO RE prices are double this, then Canadians have really lost it especially with the cost of living being so high there. Last time I visited my parents I nearly had a heart attack at the price of groceries when I took them shopping. In fact I really don’t know how Canadians make ends meet now, the cost of everything is so high compared to the EU and yet up to 5 years ago, it was a much cheaper country to visit. Something very strange happened to the place and I think it was too cheap money.

Actually the even stranger thing is that my fellow Canadians don’t seem to have noticed how expensive their ‘home and native land’ is but then i do know a lot who don’t travel that much. I mean really, you would have to pay me a lot of money to live in the snow in today’s featured bungalow.

#70 Observer on 03.07.12 at 2:35 am

@ };-) aka DA

Life is a risk, there are no guarantees. If you worry about what the future may or may not bring you will never take advantage of today’s opportunities.

In my opinion, opportunities can come from being bearish. It’s called “shorting the market”. Probably lots of free market capitalist bears with money out there who are sitting on the sidelines refusing to buy into a market that they believe is artificially overinflated by the Bank of Canada. Being skeptical is a valuable survival instinct.

#71 mac on 03.07.12 at 2:58 am

Can the speckers in that photo please turn around so we can see their faces?

#72 So Ronery on 03.07.12 at 3:05 am

*sniff* You know, sometimes, I just wish people would just stop talking about real estate and, you know, do your thing. If you rent, great! Now Shut up! If you’re going to buy, Fantastic! But don’t get up on your soap box and start doing impressions of an economist with an extensive background in demographics (Not you, Garth “The NEW James Brown” Turner). I don’t want to read about how a home is not an investment or how mobile you are without a mortgage should you find a better job somewhere else. *sniff* Please, for the love of Britney, shut up!

Garth, thanks for letting me express myself but may I make a suggestion? If you go on tour again, could you get yourself a horn section and some background singers?

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

#73 betamax on 03.07.12 at 3:06 am

#27 };-): “Criticism is a most sincere form of flattery and very often a manifestation of envy. Nobody kicks a dead dog.”

You’ve mistaken rhetoric for reality. Criticism is not flattery. Consider for just a moment a sample of the people you have criticized in your lifetime, then question how many you were actually flattering. Answer: zero.

Regarding your recent New Age-y insights: Yes, perception can be informed by bias. As Milton wrote over 300 years ago: “The mind is its own place, and in itself can make a heaven of hell, a hell of heaven.”

However, if you apply your newly acquired ideas to their logical ends, then you’d realize that your biases are shaping your beliefs no less (and lately much more) than that of which you accuse everyone else. (Perhaps you merely envy them and were attempting flattery.)

Tend to the log in your own eye, ’cause it’s a doozy.

#74 a prairie dawg on 03.07.12 at 3:07 am

#52 DA

I knew I should have just said ‘a large number of them’, instead of giving a sarcastic percentage figure.

But your wild ass guess about the poor 30% of those still renting, who visit here en masse to complain, is pure fabrication.

At least my bullshit is much closer to the truth than your bullshit.

The lesser of two evils, Devil.

Now go chase a foreclosure…

#75 Duckworth on 03.07.12 at 3:07 am

Check out these charts at : http://www.chpc.biz/

Brian Ripley is a pretty smart guy and his analysis projects prices to re-test 2005 levels

#76 Freedom first on 03.07.12 at 3:19 am

Great message today Garth!…….seeing some of the replies to your message is indeed mystifying:)………most unfortunate, it is very, very clear…….that some people will have to get hit over the head with a sledgehammer, to see, and feel the pain, of the reality of the housing meltdown anguish, that so many other countries have already been assaulted by……most unfortunate…..

#77 timmy on 03.07.12 at 5:45 am

You keep warning about a crash- for about 3 years now, and it just keeps going up. If you keep warning long enough you will eventually be right lol

#78 Linda on 03.07.12 at 7:38 am

I grew up in this neighbourhood.

It has some really nice pockets (and Diamond Pizza is close!), but it also has some really run down and shoddy housing options, like this one (in my opinion).

I wonder what my parents would say if they were still alive to see the asking price on this shoebox of a house:

http://www.realtor.ca/propertyDetails.aspx?propertyId=11560594&PidKey=1298219582

#79 Kip on 03.07.12 at 7:58 am

“Well, the latest numbers are out for York Region, the place you went not so long ago if you needed a cow. Those farm fields north of Toronto, once used to wastefully grow food, yielded $1.2 billion in real estate sales last month alone.”

I live in York Region, moved from Scarborough 2 years ago and it is beautiful. Maybe that’s why millions of people want to go there! Bring em! More people!

#80 GregW, Oakville on 03.07.12 at 8:08 am

Hi garth,
On CTV corporate news media this morning I hear houses are becoming more affordable.

I wish I could learn to candy coat my marketing pitches that well. There is some much good and informative information to be gained in the 30 second corparate news media messages. Not.

#81 real estate bear on 03.07.12 at 8:16 am

Sorry DA. I am one of the bears. I already own a paid for farm and am waiting patiently for a recreational property. I simply refuse to put saved cash against someone elses credit. End of story. My time wil lcome

#82 Bigrider on 03.07.12 at 8:20 am

Wow Garth, you been talking to my dad or something about Richmond Hill ?

When we moved up here in 1978, Bathurst was a dirt road at 16th ave/carrville side road and we had a small farm with a bull in it’s yard next to us . My brother and I watched it do things to cows we didn’t understand at the time. Another farm accross the street which sold tomatos and strawberries now a mega store complex with a Longos, Royal bank and a slew of others.

My parents still live in same house and are assaulted almost on a weekly basis by Rabi looking to buy their home as a possible site of a synagouge or schuul as lot size is quite large and location to the all important Lebowick center is walking distance.

Pheasants and deer in our backyard back then, now traffic and high density congestion everywhere.

My how ugly everything has changed

#83 Bigrider on 03.07.12 at 8:23 am

T.O Bubble Boy.

Understand that next to the demand for the 416 area code, Richmond Hill (Rich-man Hill) is next in demand for house horny individuals.

Especially if you have a lot of 8’s in your address.(no 4’s)

#84 Mike Rotch on 03.07.12 at 8:26 am

Linda, You’re close to the subway there. That’s about the only nice thing one can say about that neighbourhood and that house.

I found similar when I was house-shopping in West Scarborough/East Toronto years ago.

No matter how crappy and small the place was, it was priced higher than 4x average household income.

#85 Bigrider on 03.07.12 at 8:28 am

As for the competitive gardening in R.H Garth, you are completely correct, but until you have tasted a tomato, onion, garlic, cucumber, beans ,spinach, radicchio, potatos, Frissee, blackberries, strawberries and more from my dads very large garden(basically mini farm) ,all organic, you have not eaten.

We only need that longos down the road from us in the winter ,occasionally.

Thank God for the old school boys while we still have them. My middle age generation can only grow facial hair.

#86 Pr on 03.07.12 at 8:31 am

This Canadian real estate look like the bubble in japan, Ireland or USA every passing day. Canada was such a nice place to be and to live before you have to buy a house today 3 to 4 time the price it was 10 little years ago.

Those in place of power in the government know what they are doing to this country. Bubble destroy life’s and families. Please be advise and get inform…NOW!

#87 Incubus on 03.07.12 at 9:05 am

Human specie is stupid, we are due for the sixth global mass extinction.

Extinction? Dude, chill. It’s only about houses… — Garth

#88 City Slicker on 03.07.12 at 9:05 am

#61 Devore on 03.07.12 at 1:30 am

#25 City Slicker

Why don’t they go to already built properties, I know there are condos on the market right now in Calgary that no one is lining up for?!

Possibly people still believe there is money to be made flipping presales? That train left years ago, when every Tom Dick and Harry got onboard.

http://www.youtube.com/watch?v=o3IrWk0hy6Q
———————————————————
Thanks! Pretty clear.
At this late stage in the game you gotta be crazy to speculate.

#89 Amazed on 03.07.12 at 9:11 am

C10 is down in price… A sign of things to come. People were willing to pay ridiculous prices there last year at the peak and the homes sold quickly. Should be interesting this spring/summer when quite a number of speculators put their new builds on the market at the same time.

#90 Amazed on 03.07.12 at 9:13 am

One more interesting tidbit… I know certain houses are for sale, ie. the sign or the open house, yet it’s not in MLS. Are people trying to save $$$?

#91 Mr Buyer on 03.07.12 at 10:05 am

Yes houses are indeed becoming more affordable as they drop in price and will continue to do so for many more years. BUYER BEWARE. THE BUBBLE HAS TOPPED. NOW IS NOT THE TIME TO BUY A HOUSE.

#92 Uh Oh Canada on 03.07.12 at 10:11 am

Canada become a superpower? Ha. Ha. I’m more apt to believe the US will invade us with their ‘all powerful army’ and takeover our natural resources.

#93 bill C on 03.07.12 at 10:15 am

Australia mortgage rates are double Canada’s. Thats the only reason Canada real estate is booming. Cheap cheap cheap rates. Everyone and his sister are getting cheap mortgages. Now its only time. Budget on march 29th will be a shocker to many.

#94 Kris on 03.07.12 at 10:22 am

For weeks I’ve been saying there’s no evidence of a slowing market in my nook west of the GTA. When I quote cases of homes selling briskly nearby, blog dawgs respond saying it is ‘hot air’, asking MLS# as proof. Hopefully Garth’s posts of late have answered these people who think the entire country is in the midst of a RE crash already..

Like it or not, the market is still hot in many parts of the GTA. By all means, wait for a correction (I’m waiting too), but guyz, NOT okay to put blinkers and refuse to see ground realities.

Was ‘reality’ not the subject of this post? — Garth

#95 Ozy - Zero hope from insiders, brace for impact on 03.07.12 at 10:57 am

Article below proves once again to all non-believers, that there is zero, none, nada hope from industry profiteers like banks, builders or government to moderate in the 12-th hour.
They sing on same old tune, there is more affordability now than ever. These guys are not on drugs, but they want you to be led to buy asap so they can cash % in mortgage sale commission, which we know they pocket a handsome $3000 a deal.

So now the country is split, neck to neck, pumpers versus suckers, so it will be a Crash for the history books in the world, and not a soft-landing, protect yourself, do not borrow at the top of the bubble

http://business.financialpost.com/2012/03/07/home-ownership-is-getting-more-affordable/

#96 Canadian Watchdog on 03.07.12 at 11:05 am

Anybody aware if TREB publishes weekly sales stats and if so which services publish this information?

#97 Kip on 03.07.12 at 11:06 am

I am so glad you picked York Region to poop on today. People are coming there to buy single family homes while they still can. Even in wide open York Region you will see less SFH and more high rise and townhouse developments.

With a GTA population set to smash through 9-million people in 20 years, the future looks bright for York Region.

#98 Renters Revenge on 03.07.12 at 11:19 am

“Only a fool would move to Vancouver…….even to rent.”
As a renter in Vancouver I would have to agree. Get me out of here!

#99 Linda on 03.07.12 at 11:20 am

#84 Mike Rotch

Yes, the prices are totally insane for the neighbourhood.

I was raised in one of those small brick post-WWII bungalows that pepper the landscape in East York. Ours was a bit farther north and closer to Vic Park and St. Clair, which I agree is very nice and handy for accessing public transit. Depending on whether we went left or right outside our front door, we could catch either the VP or the Dawes bus, so that was (and still is) a plus.

If you look at MLS, there are some newly built McMansions going for close to a million in the area because the lot sizes are generous by new-build standards.

(#85 Bigrider: I, too, have great memories of being sent out to the backyard to pick fresh lettuce, tomatoes and green beans for dinner from our home garden. I miss that.)

The sad reality is that we’re priced out of that area now. My husband and I are both professionals, and even with my husband’s above-average salary as an engineer, we cannot afford to buy the house in which I grew up. Not that I have any desire to move back to that area, but that’s not the point.

My sister is in Oakville, and she bought a townhouse for $165K in 1998. Right now, her neighbour is selling an identical unit and asking $340K.

When I told her the price they were asking, she burst out laughing because she knows how poorly built hers is. She has had to sink quite a bit of money into her home just to deal with emergency issues that popped up due to subpar workmanship and cheap materials used in construction.

Oh, and beware townhomes heated with electric baseboards. How does an $800 hydro bill sound? How many horny home buyers factor such amounts into their budget for utilites? And yes, she has new windows. Makes you wonder what they used for insulation, or if they used any at all.

#100 bill on 03.07.12 at 11:30 am

British Leyland U-boats.
and the electronics a manifestion of the ‘ prince of darkness’ ,joseph e lucas himself.

dirt on the decks i wouldnt doubt and zenor diodes scourced from the old triumph factory.

#101 JOJO on 03.07.12 at 11:31 am

Despite rising household debt, home ownership becoming more affordable! Canadian Press

http://ca.finance.yahoo.com/news/despite-rising-household-debt-home-095942236.html

Oh, about Oakville RE Over valued prices! Lets say at least 50%. Toronto and Vancouver are Ok.

#102 stevo on 03.07.12 at 11:32 am

Garth and the blog dogs seem to like stories. Here is mine I would like to share with you:

This blog entry brings back memories of early 2009. My mom (who is a real estate agent) took me to see a listing of hers in south Etobicoke. The house was a small bungalow (~1000 sq. feet), no garage, and the interior was from the 1970’s. A very nice old lady was living there alone. The house was listed at $330,000.

Only 6 months earlier in June 2008, I had graduated from my engineering program, my daughter was born, and I started a full time job (This all happened on the same day, so I had to miss my grad ceremony and the first few days of work to be with my gf and daughter). I spent a few months staying in mom’s basement with my new family until I could get on my feet financially. In late 2008, we moved into a 2 br apartment and rented.

When I had the opportunity to buy that house in 2009, and after going through the numbers and considering my situation, I decided not to buy. (I was also reading this blog, so that might have had an effect too!) In hindsight, it was a local low point in the real estate market. I assume the house could sell for about $500k today.

Do I regret not buying that house? Not really. Could I have made alot of money by buying that house and flipping it now (thanks to cheap money and leverage)? Of course. Hindsight is always 20/20. It’s like that stock you are following that you never have the balls to buy and goes up 50%. A good return but massive risk. In 2009 summer i got really interested in financial stuff (given the GFC and all). I started saving alot and investing. It has paid off quite well. In 3 short years I feel alot more financially secure, without the burden of a mortgage and sleep like a baby.

I may be too young, but if I could give some advice to other young people just starting out it would be:
– get out of debt and save your money
– invest set amounts on a regular basis (pay yourself first)
– think for yourself, question authority
– don’t stress – live your life! “this too shall pass”

I hope everyone has a great day. Be thankful we live in such a great country (oh and don’t forget to call/email your local MP and bitch about robocalls…fight for democracy!)

I’m getting a bit off topic so i’ll go now. PEACE.

#103 Abitibi Doug on 03.07.12 at 11:43 am

@aka DA, post #52 said: I truly do believe the primary reason this blog is so popular is because of the resentment of the so many who feel excluded from owning a home who come here to vent their frustration condemning and criticizing those others who have that which they want but are not prepared to pay the price to acquire.

Well, not all of us fit that description. I don’t have a desire to own a house right now. I came here because I thought real estate was in a bubble and this blog confirmed my suspicions. Hey, I’ve seen other bubbles in my 51 years of living. As soon as the tech bubble collapsed, I heard some analyst on a TV show say: there will be another bubble, the only thing we don’t know is what kind of bubble and when. I come now (1) because I get advice on where I should invest my money (and what to avoid) and(2) it’s out of personal interest watching another bubble unfold. The psychology is always the same, like this time is different, and other excuses. It absolutely AMAZES me that it has continued so long, in this day of more knowledge and information than ever before, so we should know better. It’s like watching an event occur that defies the laws of nature, such seeing a working perpetual energy machine. The Canadian real estate market WILL eventually return to prices in line with long term trends , just like they did in the United States or European countries. It’s a matter of when rather than if.

#104 Grantmi on 03.07.12 at 11:46 am

#77 timmy on 03.07.12 at 5:45 am

You keep warning about a crash- for about 3 years now, and it just keeps going up. If you keep warning long enough you will eventually be right lol

Yea… And Timmy you predicted that ALL world-wide Feds would drop interest rates to Zero for 4 years to help goose a real estate market that has Never seen before.

Use your brain!!!!!!

#105 Babblemaster on 03.07.12 at 11:50 am

Garth has been preaching the same message for a long, long time. His message makes sense. However, very, very many people are not listening. Logic and facts don’t matter to them. They react on instinct and go with the herd. They will continue to do so even when events make the herd change direction. Their risky behaviour has been rewarded immensely. The prudent logical types have been left out in the cold. I think it’s obviously very difficult to predict the future and it’s quite possible that there may be more money to be made in Canadian Real Estate.

Is there significant danger of RE trending down? Garth thinks so. However, in the absence of a significant rise in interest rates, I don’t think so.

Will interest rates ever rise? What would happen if they did? Can the Cdn. Govt. allow that to happen? I think that you just have to ask yourself, “What is good for the banks?” The govt’ helps Bay street first and foremost.

You do not understand monetary policy. Just wait. — Garth

#106 Van guy on 03.07.12 at 12:01 pm

#66 Patiently Waiting on 03.07.12 at 1:46 am
———————————————————

I don’t think this is true. Many developers will not accept a $5000 deposit on any presale condo. The least is 5%. Some are even 15% deposits. And for gambling with cheap money, she won’t even be approved for more than 1 mortgage with a 35k income. So if she does have 5 units (unlikely but….) she won’t be able to close these deals. She needs to flip the units as an assignment sale or risk the chance of getting sued by the developer. the reason why I think this is bs because a $5000 deposit is extremely risky for the developer. If the market slides just 5%, this hairdresser could just not close and then the developer is screwed. They’re not that dumb. Don’t believe everything you hear. This is just he said, she said BS.

#107 eaglebay - Parksville on 03.07.12 at 12:27 pm

More workers needed in BC.
Housing may suck in Vancouver and Victoria but the economy will do fine.

http://www.vancouversun.com/workers+needed+keep+pace+with+booming+construction+industry/6260826/story.html)

#108 DonDWest on 03.07.12 at 12:31 pm

Now that the Canadian dollar is getting wrecked, I wonder if F will seize this opportunity to rise interest rates?

*Dum, da dum dum!*

#109 SpinDoctor on 03.07.12 at 12:42 pm

#25City Slicker
Since the developer is Chinese they are bombarding Chinese papers, radio and TV. Seriously, commercial every 10 minutes on the radio in Mandarin and Cantonese. Chinese poeple believe that real estate is the best form of investing the developers are working this angle.

#110 Uh Oh Canada on 03.07.12 at 12:48 pm

Exerpt from Trends Journal, published by Gerald Celente- Autumn 2011 edition:

In 2011, with the exception of a very few countries
and very select areas, real estate was still a “not-to-invest-in” investment.

The relatively recent real estate trend cycle – in which
young newlyweds, couples and even singles moved out
of the family home and bought, rather than rented, a
house or condo — has been broken. While home buying
and home building will remain depressed, the home/
apartment/multi-dwelling rental market will continue
to maintain value and, depending on locale and demographics, prove profitable.

Throughout most of the US, home price declines, adjusted for inflation, have already fallen below Great Depression levels, and will continue to fall. The commercial sector, sustained by low interest rates, has maintained relative stability in premium markets but will not withstand the “Greatest Depression” downturn.

In Canada, Australia, and in the currently booming
BRIC nations, real estate bubbles will burst as the US
and Europe slip deeper into Depression and their appetite for foreign imports severely slackens. As goes the US, so goes Canada, which exports over two-thirds of its goods to America.

#111 Randy on 03.07.12 at 12:57 pm

We now live in the MOOCHER Society…When there is a correction everyone will blame Harper and be looking for a bail-out…They might even get one !!

#112 AprilNewwest on 03.07.12 at 1:03 pm

#49 Not 1st… apparently your wrong. It’s that 10% that’ll bring the rest down.

#113 Tea leaves are more accurate on 03.07.12 at 1:23 pm

Garth, I notice you haven’t made a specific price forecast for Calgary this year. Are you scared to be humiliated again? Year after year, CREB has outperformed you. I believe you’re so humiliated, you won’t even publish this comment.

Why not? Always great to hear worthwhile comments from area realtors. — Garth

#114 DUI on Money Road on 03.07.12 at 1:39 pm

#69 Jane24 on 03.07.12 at 2:16 am
————————————-
Over in London, England, salaries are about 1/2 ours…meaning your daughter bought the equivalent of a $448,000 condo with $3500 taxes and $800 maintenance.

#115 wollyone on 03.07.12 at 1:54 pm

99th………….

#116 Bill Gable on 03.07.12 at 2:08 pm

I spent last evening at a meeting (everybody was coughing, and I felt like I was at a waiting room at a TB ward) and at the coffee break, it was really fascinating. I talked with a number of people and each of them, brought up Vancouver RE, in various ways. That seems to be the number one topic here in Crapville – and most of the comments were along the line of trying to get out of Vancouver, as soon as they get rid of their RE.
This City has degraded, and has turned into a suburb of Kowloon, and a lot of people are struggling.

The lineup at the small food bank, at a Church near me, is around the block.

Restaurants are busy, but not packed.

Safeway was nearly deserted, when we did our weekly shop, and the only lineup was at the “coin gobbler”.

All of this adds up to something, and I don’t think it’s a return to this once bucolic and lovely City, I used to adore.

Right now, I have a feeling Fonzie is getting on his water skis, and the prop guys are getting the shark blown up, for the big jump.

I also note that we had an open house for one of the joints in this half full high rise (we rent and the list is topped out) – the agent was twiddling her thumbs and the concierge said not one lookie loo.

One apt sold in this building, in the last year.

Telling – to a Banker, transferred in from Montreal.

Mr. Turner will have plenty of ammo for this blog – just watch what is going on here.

Wow.

#117 Realtors in a PANIC! on 03.07.12 at 2:19 pm

How many out of work realtors are on this blog? The stats are cooked like enron. Driving through the GTA all you see is for sale signs . The odd ones sell but majority do not. Forest hill., annex , young and sheppard and nothing ia selling in these areas. The crash is here which explains the worried realtors who post here.

#118 Preciousss on 03.07.12 at 2:44 pm

I completely agree with you on housing.

But obviously you do not subscribe to the notion that Americans are returning to the NEW normal. Perhaps a little caution ~ or a LOT ~ is in order before pronouncing a U.S. recovery.

http://www.theburningplatform.com/?p=30405

Simple stats. Read in particular the lengthy paragraph beginning “The Big Lie of austerity and consumer deleveraging…”.

How can any economy “grow” in this way?
____________________________________________

Thanks for this link.

Nominal investment gains are being destroyed by increased cost of essentials for living, increasing taxation, increasing fees and service charges, and debt carrying costs. Nominal wages and nominal investment returns are not keeping up.

Stagflation is nasty.

When the next round of debt deflation strikes, people will once again wonder why their “paper profits” have vanished.

#119 Do these pants make my butt look big? on 03.07.12 at 2:53 pm

Garth, “I’m a Bad Bad Man”, Turner, how does one nominate someone for the Order of Canada? I’d like to get a movement going to have YOU nominated. Have you seen the comment section to this article in The Gob and Male about how housing is affordable in Canada? There is over 400 comments with the majority stating they don’t believe the article at all!

http://www.theglobeandmail.com/report-on-business/economy/housing/home-ownership-becoming-more-affordable/article2361147/

You did it, Garth! You stuck to all those old white men where it hurts. Keep it going! And while you’re writing your twitter updates and taking pictures of your parties with your amazons, I will start a Facebook page to get you an Order of Canada prize while Harper is still in office. Who’s with me and enjoys poutine?

#120 Form Man on 03.07.12 at 2:55 pm

#102 stevo
#103 Abitibi Doug

good posts

#121 Poorgoisie on 03.07.12 at 3:02 pm

I wanted to see what people were thinking in Ireland prior to their crash. I came across http://nss.ie/pdfs/Completea.pdf
It’s the national spatial strategy for Ireland 2002-2020. Everything was roses in 02 the Celtic tiger was roaring and property values were soaring. The document calls for 500,000 new dwellings by 2010 (pg102). I’m not sure how many they ended up building, what we do know is that in the year 2010 they had 300,000 empty houses…http://www.irishcentral.com/business/300000-houses-lying-empty-in-Ireland-including-200-ghost-estates–82080852.html
DA, you’re half right, as a 31 y/o making 110k a year, I am frustrated that buying a house in TO is out of reach for me (regardless of what re agents and bankers tell me), I could not in good conscience put my family at such risk. I do not however feel contempt for those who have bought, we are told to trust the bank and all too often young people forget the bank is a business.

#122 Milk Man on 03.07.12 at 3:06 pm

RBC report shows that Calgary and Edmonton are the most affordable amongst major cities and with rising income and jobs in Alberta , their market will be the most stable in short term.

And you believe this? — Garth

#123 };-) aka DA on 03.07.12 at 3:10 pm

#117Realtors in a PANIC! on 03.07.12 at 2:19 pm
How many out of work realtors are on this blog?

There are never any out of work Realtors – just listless Realtors.

};-)

#124 TnT on 03.07.12 at 3:11 pm

Thanks Garth for this Blog.

Sold my house last December for record profits (40% in 18 months) in a small town north of Toronto (Stouffville). Sold mostly because we are sick of raising kids in the sub-burbs and having the record profits sitting in this house made it easy. Renting a place in Toronto now (Upper Beaches). I spent weeks trying to convince my wife of renting instead of buying in Toronto and this site made it possible. Wife is now hooked on this site and we finally formed a realistic long term vision of our finances. Only arguments now are with family members who think we are crazy to rent in our neighborhood where they are still having bidding wars.

#125 eagle eyes on 03.07.12 at 3:26 pm

I have been reading this blog for the past few years, always keeping an open mind. I enjoy your witty dry humorous writing style and intelligent viewpoint. However, lately I’ve noticed a tone of back-pedalling. Up to now, you’ve been speaking ground-zero mainly in Vancouver and Toronto has arrived and it’s too late. Yet, now it’s bidding wars in Toronto, line-ups for condos, etc. means that we will be doomed sometime in the near foreseeable down the road future. I agree that there must be a slowing of real estate prices and activity in Canada due to the effect of global recession. But when a major downturn will happen? Your guess is as good as mine. I have no idea.

The longer iy is delayed, the more upsetting it will be, and the more important this message. — Garth

#126 Chris no longer in England on 03.07.12 at 3:44 pm

Rate rises in UK http://www.dailymail.co.uk/money/mortgageshome/article-2111627/Massive-rate-shock-hits-Bank-Ireland-Bristol–West-borrowers-face-50-payment-hike.html

#127 Van guy on 03.07.12 at 4:20 pm

Milk Man is drinking the RBC kool-aid.

#128 Milk Man on 03.07.12 at 4:29 pm

And you believe this? — Garth

Of course I do, and I see it real time. The current status here is Edmonton is that the inventory sucks.
So in some case mutiple offers and biddings are happening. Sales are not that great only due to lack of good inventory.
New homes are very competitive when compared to resale homes and are selling very well because of it.
So far no BOOM and no BUST either, just stable.

#129 nufio on 03.07.12 at 4:40 pm

my monthly redfin US RE status email:

December Numbers Finally Came In. They’re Bad
Yikes, the numbers just out for December 2011 show another 1.1% price drop:

Market MoM Price Change YoY Price Change Date of Max Price Change from Max Price Prices Last at
This Level # of Months
of Decrease
Phoenix 0.8% -1.2% Jun-06 -55.2% Mar-00 0
LA -1.1% -5.2% Sep-06 -40.8% Aug-03 5
San Diego -0.7% -5.4% Nov-05 -39.9% Sep-02 5
Bay Area -0.8% -5.4% May-06 -41.1% Dec-00 5
Denver -0.9% -0.4% Aug-06 -11.9% Apr-02 4
DC Area -1.2% -1.6% May-06 -28.4% Apr-04 3
Atlanta -1.8% -12.8% Jul-07 -36.0% Dec-97 5
Chicago -2.0% -6.5% Sep-06 -34.6% Mar-01 4
Boston -1.2% -2.6% Sep-05 -18.6% Feb-03 5
Las Vegas -0.8% -8.8% Aug-06 -61.4% Jan-97 6
New York -1.2% -2.9% Jun-06 -24.4% Dec-03 4
Portland -0.4% -4.0% Jul-07 -28.8% Sep-04 3
Dallas -0.7% -1.3% Jun-07 -10.5% Apr-02 4
Seattle -1.3% -5.6% Jul-07 -31.9% May-04 5
20 City Index -1.1% -4.0% Jul-06 -33.8% Feb-03 4

#130 nufio on 03.07.12 at 4:44 pm

for those looking to buy condos in vancouver can buy a condo in seattle eastside just with the downpayment and from the rental income rent a condo in vancouver, something which I am seriously considering… and seattle is becoming a tech hiring hotspot. thanks to microsoft, google, amazon, facebook, zynga(?), expedia, etc etc
while all vancouver has is declining number of EA employees.

#131 Devore on 03.07.12 at 4:50 pm

#52 };-) aka DA

Life is a risk, there are no guarantees. If you worry about what the future may or may not bring you will never take advantage of today’s opportunities.

Being aware of what the future may or may not bring is how you spot opportunities today in the first place. Anything else is just pure gambling, way beyond even speculation. This seems to be a common theme with you.

#132 Banks say home ownership becoming more AFFORDABLE on 03.07.12 at 5:04 pm

Canada’s housing market to “cool”…

http://www.thestar.com/business/article/1142303–canada-s-real-estate-market-to-cool-not-crash?bn=1

“Home ownership is becoming…more affordable,” says banks.

Written by Susan “Pigg”–another outstanding independent journalist!

#133 Shane on 03.07.12 at 5:36 pm

OTTAWA — The Bank of Canada will likely keep its trend-setting policy rate unchanged at one per cent Thursday despite recent positive economic developments, economists say.

However, even doves on interest rates now speculate that with the economy showing signs of improvement, bank governor Mark Carney may not keep rates on hold for all of 2013 as many had assumed.

Scotiabank economist Derek Holt says that given last week’s upgrade of economic performance from Statistics Canada, the central bank may conclude that the output gap will close as early as the start of 2013, three-quarters earlier than its previous assumption.

And that may lead markets to start factoring in that interest rates are poised to start climbing sooner than previously believed, possibly even sometime this year.

Even the hint of movement on interest rates — the bank rate has been at one per cent since September 2010 — may be enough to apply upward pressure on the Canadian dollar, analysts say.

Read more: http://www.ctv.ca/CTVNews/Canada/20120307/bank-of-canada-interest-rate-announcement-preview-120307/#ixzz1oT9pnd3S

#134 Westernman on 03.07.12 at 5:39 pm

Uh Oh Canada @#92,
Invade Canada? Don’t be silly, boy. All the U.S. has to do is place a phone call and the slavelike Canadian sheeple will rush to fill said order. No need for messy gunfire.
It’s all done via phone, bank transfers and the stroke of a legislative pen…

#135 patiently waiting on 03.07.12 at 5:44 pm

106 Van Guy
———————————————————

I don’t think this is true. Many developers will not accept a $5000 deposit on any presale condo. The least is 5%. Some are even 15% deposits. And for gambling with cheap money, she won’t even be approved for more than 1 mortgage with a 35k income. So if she does have 5 units (unlikely but….) she won’t be able to close these deals. She needs to flip the units as an assignment sale or risk the chance of getting sued by the developer. the reason why I think this is bs because a $5000 deposit is extremely risky for the developer. If the market slides just 5%, this hairdresser could just not close and then the developer is screwed. They’re not that dumb. Don’t believe everything you hear. This is just he said, she said BS.
==================================
I agree that while this is anecdotal evidence, I have worked for developers managing the sales & marketing of high rise condos, and I can tell you for a fact that we did sell condos with an initial deposit of only $5,000 – though increases in the deposit were required as construction progressed. Total deposits taken were not all that much in comparison to the selling price (around 10 – 15%). The construction is to take about 18 months, and apparently she has enough cash to make the increase in the deposits. She is expecting to flip the units before the need to obtain bank financing for completion . . . essentially gambling because real estate always goes up . . . that is until it doesn’t . . .

#136 Cato on 03.07.12 at 5:49 pm

I’m convinced bubbles rarely end by people suddenly waking up and realizing valuations are out of whack. They end when the financiers of the bubble are no longer willing to lend to those who are willing to speculate. Like a ponzi scheme the bubble will keep growing until new money stops coming through the door, then the whole charade collapses.

It was gov’t, not the banks, who were the true financiers of the bubble. Had the risk been borne by the banks market discipline would have been forced on lenders long ago and any bubble would have quickly dissipated.

Like many other countries in the world Canada’s housing bubble continued to grow because our gov’t willed it so. I strongly suspect like the gov’ts of Australia, Scandinavia and Canada made a deliberate decision to inflate consumer spending under the misguided belief we could boost internal demand while waiting for our largest trading partners to get back on their feet. It was a gamble and we lost, we all pay the price.

The bubble now represents a clear and present economic danger so its not surprising we are finally seeing action against it. As lending is pulled back the bubble will come to an end. We are about to see an unwinding that will probably be talked about for a generation to come. Future generations will probably refer to our stupidity no differently then we do now when we look at the stupidity of previous generations at the dawn of the tulip bubble.

#137 DodgedBullet on 03.07.12 at 6:02 pm

#132

Feel the squeeze, yet?

http://www.huffingtonpost.ca/megan-yarema/housing-crisis-canada_b_1181866.html

#138 Onemorething on 03.07.12 at 6:03 pm

Bubble Mentality Shattered for Decades to Come

The key take-away is home prices still have not bottomed in most areas. Moreover, nothing stops a renewed decline in those 8% of areas that did not decline.

Also bear in mind that first chart shows nominal prices. Inflation adjusted prices have likely taken back the entire rise in prices, except of course for property taxes.

Once there is a bottom, and we are certainly closer to a bottom than a top, expect home prices to generally languish due to immense shadow inventory, anemic wage growth, anemic job growth, boomer downsize demographics, and most importantly psychology.

Housing prices were a once-in-a-multi-generational bubble, now gone bust. The mentality that “your home is your retirement” is dead for decades to come. A similar bust will happen in Canada, Australia, and China.

#139 Habbit on 03.07.12 at 6:33 pm

Looks like a neighbour house here in Regina. His was built in 74. Cost at that time 34K. Same stupid thing has happened here. Now sells for 300K and most of the appreciation has taken place in the last 5-8 years. Have another good friend that bought his for 13K in 69. These houses were a step and a few hundred square feet up from homes built in the 50’s. We have become so needy. Middle Canada (the wasteland) is doing fine right now. Agriculture may turn out to be it’s biggest resource.

#140 Sidney Schadenfreude on 03.07.12 at 6:50 pm

Hah! I peddled overpriced RE here in Arizona until ’03. Saw the writing on the wall early and bailed. I guess I could’ve plucked the low-hanging fruit for another 4 years or so.

One of the top agents in our office was way full-of-herself with all her “winnings”, drank her own KoolAid and invested in lots of (you guessed it) overpriced RE.

When the music finally stopped she hadn’t had a sale in a year, her properties were getting foreclosed one at a time, she declared bankruptcy, and has some IRS difficulties. Oh, the humanity . . . .

I’m setting aside some popcorn for the big show when all the Canadian knife-catchers get hosed. It’ll be a hoot, I guarantee.

#141 maxx on 03.07.12 at 6:57 pm

#118 Preciousss on 03.07.12 at 2:44 pm

Wow. One of the most fascinating and sobering commentaries I’ve read. Thanks for sharing that.

#142 TRT on 03.07.12 at 7:27 pm

30 year Mortgages coming to Canada!!!

BMO announces a 10 year mortgage today.

Flaherty working on a low rate 30 year just like the USA. If that happens soon, any correction?? FORGETTABOUTIT!!

If it happens, and it can, People that bought in 2009 or before will have won the lottery!

Ten-year loans have been around for a long time. Thirties will never materialize. — Garth

#143 Bill Gable on 03.07.12 at 7:30 pm

“Canada’s housing market will cool off over the next 24 months with home sales and prices remaining flat near 2011 levels, but it will avoid the sharp plunge seen in the United States during the recession, Bank of Nova Scotia said on Wednesday.
A slowdown in global growth over the past year has sapped some of the strength from Canada’s formerly hot real estate sector, particularly in major urban centers such as Vancouver and Toronto.

“Currently, it looks like an environment where home prices will likely be relatively flat on an average basis,” said Scotiabank senior economist and real estate specialist Adrienne Warren.

>>Relatively flat? SURE, Ms. Warren. What is she smoking?

http://tinyurl.com/7uz4rj9

#144 Billyclub on 03.07.12 at 7:40 pm

Garth,
I don’t own a home buy have a bit of money saved to invest. What do you propose I invest in if not real estate? I want to make sure this investment keeps up with my ability to buy a property as real estate prices rise. I live in Etobicoke.

#145 Milk Man on 03.07.12 at 7:45 pm

The great migration towards the west…

http://www.edmontonjournal.com/business/Immigrants+will+fuel+labour+market+growth+until+2015/6259200/story.html

Advantage Alberta !

#146 a prairie dawg on 03.07.12 at 7:52 pm

BMO lowers rates again on fixed rate mortgages.

http://business.financialpost.com/2012/03/07/mortgage-wars-round-2-bmo-slashes-rate/

Betcha the banks jack the variable rates and heloc rates way to make up the spread…

Gotta keep those shareholders happy.

#147 Nostradamus Le Mad Vlad on 03.07.12 at 8:08 pm


Little Johnny and Lucy SleazeBag

Little Lucy was not the best student in Sunday School. Usually she slept through the class.

One day the teacher called on her while she was napping, “Tell me, Lucy, who created the universe?”

When Lucy didn’t stir, Little Johnny, an altruistic boy seated in the chair behind her, took a pin and jabbed her in the rear.

“God Almighty! ” shouted Lucy and the teacher said, “Very good,” and Lucy fell back asleep.

A while later the teacher asked Lucy, “Who is our Lord and Savior?”

But Lucy didn’t even stir from her slumber. Once again, Johnny came to the rescue and stuck her again.

“Jesus Christ!” shouted Lucy and the teacher said, “Very good,” and Lucy fell back asleep.

Later, the teacher asked Lucy a third question. “What did Eve say to Adam after she had her twenty-third child?”

And again, Johnny Jabbed her with the pin. This time Lucy jumped up and shouted,

“If you stick that damn thing in me one more time, I’ll break it in half!”
*
#122 Milk Man — “. . . rising income and jobs in Alberta, their market will be the most stable in short term.”
— and —
#136 Cato — “The end when the financiers of the bubble are no longer willing to lend to those who are willing to speculate.”

Two separate posts, two different POVs. Chances are that Cato has the edge on MM.
*
Gumment Efishunsy at the highest level; Rest well, America. Your time is at an end; UK Deflation triggered (as if we didn’t know); China Rise, fall and re-emergence; Poverty in America Can be applied to the continent; EU austerity madness; Unclogging the housing mess, , but Huge Spike gives the opposite side; 65 to 260 One banxter down.
*
Blackout Caused by a burping sun, and X-Flare and CME coming to a planet near you! Wasn’t March 8 the date the FBI wa supposed to shut the ‘net down? May explain all those cut cables; Another form of depop, and Parents against agenda; Mr. Apocalypse is beating the war drums; God Particle “The Big bang is not science. It is religion disguised as science. The claimed Big Bang is inconsistent with Einstein’s theory of General Relativity.” wrh.com. Look up the word cult in any dictionary, and see what the one and only definition is; Hacking Groups Govts. run them to further control the ‘net; ‘Net Shutdown ‘Tho the current solar storm could affect it; Neocons = Perpetual war, which is why the present cycle must end soon, by getting rid of those pesky neocons; Three Branches of govt. merging, hence dictatorship.

#148 Onemorething on 03.07.12 at 8:13 pm

sorry dogs, forgot to note the above is from MISH latest posting talking about US RE market.

Thought I’d take a look at the Case Shiller for year end 2011 and yes down another 4.0% for Nation Avg. from 2010. At a rate of 3.5 – 4.0 per year my guess is bottom for US RE is 2017.

I think this is what Garth is referring to as the long thaw.

This is to make sure the US RE market doesnt implode by having consumers marginally stay in homes and potentially buy to the bottom.

Imagine what is in store for us Canadians Eh!

#149 };-) aka DA on 03.07.12 at 8:17 pm

#131 Devore on 03.07.12 at 4:50 pm

#52 };-) aka DA
Life is a risk, there are no guarantees. If you worry about what the future may or may not bring you will never take advantage of today’s opportunities.

Being aware of what the future may or may not bring is how you spot opportunities today in the first place. Anything else is just pure gambling, way beyond even speculation. This seems to be a common theme with you.

More to the point; you make your money when you buy – you realize it when you sell. Of course you have to be able to spot today’s opportunities which enable you to buy right. But to spend too much time waiting for that perfect opportunity to present itself is fortune telling and fortune telling is speculation pure and simple.

He who hesitates is lost.

So I suspect we do agree more than you think we do – it’s more a matter of the semantics of our respective comments that we debate.

Welcome aboard. };-)

#150 jess on 03.07.12 at 8:25 pm

#3 NoName

Cameron declared his nation was entering the “Age of Austerity” – the U.K. has officially been overtaken by Brazil as the world’s sixth largest economy. Does that mean more early deaths? In that case what about verticalization and tombs with a view.
Perhaps Mr. Cameron should have a look at Santos Memorial Necrópole Ecumênica, a 14-floor tower and the world’s tallest cemetery. Vastly more modern and accommodating than the pointed ones of the past.

http://staggeringcapacities.com/
http://www.thepolisblog.org/2012/01/misusing-city-statute-in-sao-paulo.html

..”Some of the ZEISs were located in São Paulo’s 13 central districts. These well-located and transportation-rich neighborhoods suffered from abandonment during the past three decades, as de-industrialization impoverished the working classes, and the middle and upper classes abandoned the areas for newer parts of the city. Many buildings were squatted, as the poor struggled to hang on in one of the most expensive cities on the planet.

http://thechive.com/2011/03/30/the-worlds-largest-squat-in-a-window-by-julio-bittencourt-25-photos/

#151 };-) aka DA on 03.07.12 at 8:31 pm

#128 Milk Man on 03.07.12 at 4:29 pm
”And you believe this?” — Garth

Of course I do, and I see it real time. The current status here is Edmonton is that the inventory sucks.

So in some case mutiple offers and biddings are happening. Sales are not that great only due to lack of good inventory.

New homes are very competitive when compared to resale homes and are selling very well because of it.

So far no BOOM and no BUST either, just stable.

Ditto for here in Kelowna too. I agree with Milk Man!

Inventory here sucks.

Good intelligently priced homes are in receipt of multiple offers and sell faster and for more money. If there were more “intelligently” priced homes, good or bad, volumes would be way higher. As it is they are just OK. But OK is a lot better than most on this blog think.

New homes are competitive but generally lack the “location, location, location” thing. Still there are many who are into “Stainless, granite and hardwood” still rather than that “location” thing.

No Boom but no Bust either… stability ROCKS!!!

#152 Junius on 03.07.12 at 8:36 pm

#136 Cato,

You make some good points (as usual).

For those that haven’t read them before here are the 7 Stages of a Bubble from the master:

Hyman Minsky’s Universal Framework For Identifying Bubbles

The late Hyman Minsky knew that there was nothing new under the sun. If her were alive today, he would have understood exactly the dilemmas raised by today’s explosive growth in real estate prices.Minsky developed a simple universal framework for understanding all bubbles. The circumstances of each bubble may differ, but each one goes through seven stages.

Stage One – Displacement

Every financial crisis starts with a disturbance. It might be the invention of a new technology, such as the internet. It could be a shift in economic policy. For example, interest rates might be reduced unexpectedly. Whatever it is, the world changes for one sector of the economy. People see the sector differently.

Stage Two – Prices start to increase

Following the displacement, prices in the displaced sector start to rise. Initially, the price increase is barely noticed. Usually, these higher prices reflect some underlying improvement in fundamentals. As the price increases gain momentum, people start to notice.

Stage three – Easy Credit

Increasing prices are not enough for a bubble. Every financial crisis needs rocket fuel and there is only one thing that this rocket burns – cheap credit. Without it, there can be no speculation. Without it, the consequences of the displacement peter out and the sector returns to normal.When a bubble starts, the market is invaded by outsiders. Without cheap credit, the outsiders can’t join in.

Cheap credit is the entrance ticket for outsiders. For example, gas prices have risen sharply in recent years. However, banks aren’t giving out loans so that people can store gas in their garages in the hope that the price will double in three months. The banks, however, are prepared to give loans to people with poor credit to hold condos in the hope that they can be quickly flipped.

The rise in easy credit is also often associated with financial innovation. Often, a new type of financial instrument is developed that miss-prices risk. Indeed, easy credit and financial innovation is a dangerous cocktail. The South-Sea Bubble started life as new-fangled legal innovation called the limited liability joint stock company. In 1929, stock prices were propelled into the stratosphere with the help of margin calls. Housing prices today accelerated as interest-only mortgages emerged as a viable means for financing overpriced real estate purchases.

Stage Four – Over-trading

As the effects of easy credit kicks in, the market starts to overtrade. Overtrading stimulates volumes and shortages emerge. Prices start to accelerate, and easy profits are made. More outsiders are attracted, and prices run out of control. Accelerating prices attract the foolish, greedy and the desperate to enter the market. As a fire needs more fuel, a bubble needs more outsiders.

Stage five – Euphoria

The bubble now enters its most tragic stage. Some wise voices will stand up and say that the bubble can no longer continue. They put together convincing arguments based upon long run fundamentals and sound economic logic. However, these arguments evaporate in the heat of the one over-riding fact – the price is still rising. The wise are shouted down by charlatans, who justify insane prices by the euphoric claim that the world is different and this new world means higher prices.

Of course, the “new world” claim is true; the world is different every day, but that doesn’t mean that prices run out of control. The charlatan wins the day and unjustified optimism takes over. At this point, the charlatans bolster their optimism with the cruelest of all lies; when prices finally reach their new long run level, there will be a “soft landing”. The idea of a gentle deceleration of prices calms the nerves.The outsiders are trapped in knowing denial. They know that prices can’t keep rising forever, but they rarely act on that knowledge. Everything is safe so long as they quit one day before the bubble bursts.Those that did not enter the market are stuck in a terrible dilemma. They can not enter but neither can they stay out. They know that they have missed the beginning of the bubble. They are bombarded daily with stories of easy riches and friends making massive profits. The strong stay out and reconcile themselves to the missed opportunity. The weak enter the fire and are damned.

Stage Six – Insider profit taking

Everyone wants to believe in a new brighter future but a bubble takes that desire and turns it upside down. A bubble demands that everyone believes in a brighter future, and so long as this euphoria continues, the bubble is sustained.However, as madness takes hold of the outsiders, the insiders remember the old world. They lose their faith and start to panic. They understand their market, and they know that it has all gone too far. Insiders start to cash out. Typically, the insiders try to sneak away unnoticed, and sometimes they get away with it. Other times, the outsiders see them as they leave. Whether the outsiders see them leave or not, insider profit taking signals the beginning of the end.

Stage seven – Revulsion

Sometimes, panic of the insiders infects the outsiders. Other times, it is the end of cheap credit or some unanticipated piece of news. But whatever may be, euphoria is replaced with revulsion. The building is on fire and everyone starts to run for the door. Outsiders start to sell, but there are no buyers. Panic sets in; prices start to tumble downwards, credit dries up, and losses start to accumulate.

No one can predict the end. Just that it will happen.

#153 Van guy on 03.07.12 at 8:36 pm

#135 patiently waiting on 03.07.12 at 5:44 pm
————————————————–

On a 1 bdr unit in van will cost at least $300 for a smaller unit. So she needs to fork out about $30k for each unit. Maybe even $45k each unit. For a hairdresser that makes $35k, that’s a big chunk of money. She must have a night job (an escort) or she is probably a gold digger with a rich boyfriend (a shady boyfriend that needs to clean money)

#154 jess on 03.07.12 at 8:51 pm

tension

The photograph spread around the world fast: it shows residents of the Pinheirinho favela in the state of São Paulo, donning helmets, shields and building barricades to resist an eviction order. Such events are not unusual in Brazil, though this one has attracted international attention.

Pinheirinho has been squatted for eight years, with no government effort to regularise the area or develop an adequate infrastructure. Home to roughly 6,000 people, the land belongs to a notorious financial market fraudster arrested in 2008. Spurred by Brazil’s property development boom, the local administration has recently become active in pursuing the eviction, aided and abetted by judges who seemed to wish to make that happen as quickly as possible.

http://www.guardian.co.uk/commentisfree/cifamerica/2012/jan/24/brazil-pinheirinho-eviction-inspiration?CMP=twt_gu

#155 Timbo on 03.07.12 at 8:51 pm

http://nfbpsh.blogspot.com/2012/02/perth-apartment-fire-sale-starts.html

down under is going under……

http://www.nytimes.com/2009/11/20/business/20limits.html?_r=1

In its efforts to prop up a shattered housing market, the government is greatly extending its traditional support of real estate, including guaranteeing the mortgages of middle-class and even upper-class buyers against default.

they are just throwing the money around….

http://latimesblogs.latimes.com/lanow/2012/03/la-superior-court-poised-to-take-extraordinary-measures-lay-off-350-employees.html

Budget cuts: L.A. County court system to lay off 350 employees

the city’s are broke and services will be hurt. Calling the cops will require a credit card soon…….

#156 Pr on 03.07.12 at 9:05 pm

Breaking news on mortgage changes …i look at twitter and here, but nothing! Watts the news?

#157 Devore on 03.07.12 at 9:20 pm

#149 };-) aka DA

So I suspect we do agree more than you think we do – it’s more a matter of the semantics of our respective comments that we debate.

I just read what you write, sometimes, and it keeps making no sense to me, so I will have to take your word for it.

How you say things contributes far more to communication than you think it does. In life, you can choose to be right, or you can choose to be happy. On this blog, you continue to choose to be right (as you believe it to be), and I don’t think you live a happy existence here, talking mostly to yourself. I hope you have made better choices in real life.

#158 Trailer Park Boys on 03.07.12 at 9:23 pm

We were thinking..if we borrowed Randy’s HAARP device..we could turn Loserpeg into Summerpeg…

#159 Timing is Everything on 03.07.12 at 9:29 pm

Ten-year loans have been around for a long time. – Garth

Not at 3.84%. 15 year product on the way?

Nope. — Garth

#160 Abitibi Doug on 03.07.12 at 9:31 pm

@Junius, post #152:
Wow, that’s quite a lengthy posting, but it is very accurate. I don’t live in or follow the market in the Toronto area, but it looks a lot like stage 5. We know what comes next, just like in the early 1990’s.

#161 GeorgeB on 03.07.12 at 9:34 pm

You could buy that house in Miami for 70k and never have to worry about a -20 or -30 degree day in your life. I choose Miami.

#162 Devore on 03.07.12 at 9:50 pm

#149 };-) aka DA

Here goes, I might regret it tomorrow, but it’s only my free time.

More to the point; you make your money when you buy – you realize it when you sell. Of course you have to be able to spot today’s opportunities which enable you to buy right. But to spend too much time waiting for that perfect opportunity to present itself is fortune telling and fortune telling is speculation pure and simple.

He who hesitates is lost.

You said those who worry about what may or may not happen in the future cannot take advantage of opportunities today.

Worry is nothing more than fear. Investors NEED to fear. The market is not about going from fear to greed. The market is about fear AND greed. Investors need to be greedy, but they need to be fearful at the same time. Fear is what makes them do analysis, due diligence, diversification, risk analysis, hedging. It is when investors lose fear is when they are lost.

You continue to equate this “fear” and “hesitation” with loserdom and failure, and “bravado” and “impulsiveness” with success and wealth. Your statement “He who hesitates is lost.” exemplifies that. Jumping on what you passingly perceive to be an opportunity is what can generate spectacular returns, which you boast about, but also leads to spectacular losses, which you undoubtedly dismiss.

A considered analysis leads to wise decision making. Thrashing about excitedly leads to poor decisions. This is “paralysis by analysis” as you might suggest, but only exists in the domain of the amateur and inexperienced. The anti-dote to that is not rash decision making and impulsiveness and skipping all that “boring stuff in between opportunity and commitment”, but education and experience.

A good and fearful investor never waits for the “perfect time” as you claim, because he knows market timing rarely works. He makes decisions when it makes sense. No need to divine the future. He does not jump on an “opportunity” blindly just because it’s there, and does not regret it when it passes by. He knows another one will come by shortly.

Living your life is what you live for, and you use money to pay for it. You need to be careful and wise with money in so far as to enable you to live your life. Take chances there, sure, the consequences are usually trivial in the big scheme of things, and experiences and memories priceless, but know you always have the financial cushion to fall back onto. Nothing worse than putting your life on hold because you’re flat broke and in debt over your head. If you cannot manage your money yourself, give it to someone who can ;) I’d rather have an exciting life than an exciting portfolio.

#163 Timbo on 03.07.12 at 9:56 pm

http://www.nakedcapitalism.com/2012/03/lynn-parramore-schools-without-toilet-paper-the-pain-in-spain-falls-mainly-on-the-plain-folks.html

Austerity brings schools lacking in toilet paper or heat. :(

#164 Devore on 03.07.12 at 9:57 pm

#149 };-) aka DA

More to the point; you make your money when you buy – you realize it when you sell.

By the way, that is a truism, and says nothing by itself. You can only make money consistently, ie have more winners than losers, when you have thought about what may or may not happen in the future. If you jump at every opportunity, then you are rolling the dice. 50/50 chances in a perfect world. In the real world, your outcome is the same as a momentum investor: you get creamed when the market turns.

#165 Westernman on 03.07.12 at 10:11 pm

Habbit @ # 139,
You are, as usual, completely delusional. The wasteland ( middle Canada ) as you refer to it, is not immune to the coming RE crash…as a matter of fact – it will suffer the most as people don’t want to live there even when it is doing relatively well…
Oh and by the way, the rest of the world had discovered and developed agriculture thousands of years ago-it wasn’t invented in backwater Sask. as you think.

#166 maya on 03.07.12 at 10:11 pm

Another round of low interest rates come again by BMO toady,

http://www.theglobeandmail.com/report-on-business/bmo-kicks-off-new-mortgage-fight/article2362256/

#167 Victor on 03.07.12 at 10:13 pm

#156 Pr on 03.07.12 at 9:05 pm

Breaking news on mortgage changes …i look at twitter and here, but nothing! Watts the news?

===================

Here ya go.

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/bmo-kicks-off-new-mortgage-fight/article2362256/

#168 Ozy - banks throwing the TOWEL fast on 03.07.12 at 10:14 pm

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/mortgage_broker_news/

Read these articles:
TD to Halt Non-Prime Mortgage Lending
The State of Stated Income
Peter Aceto on Debt, BMO & Bubbles
CIBC’s Mortgage Gamble

#169 };-) aka DA on 03.08.12 at 1:10 am

#157 Devore on 03.07.12 at 9:20 pm

#149 };-) aka DA
So I suspect we do agree more than you think we do – it’s more a matter of the semantics of our respective comments that we debate.

I just read what you write, sometimes, and it keeps making no sense to me, so I will have to take your word for it.
How you say things contributes far more to communication than you think it does. In life, you can choose to be right, or you can choose to be happy. On this blog, you continue to choose to be right (as you believe it to be), and I don’t think you live a happy existence here, talking mostly to yourself. I hope you have made better choices in real life.

Some do crosswords, others do Sukudo and yet others do logic puzzles. I enjoy the challenge of doing battle with Garth’s Blog Dawgs. And yes I must agree it’s more about me than it is them. I’m not always talking to them so much as I am to myself. More often than not they are but a sounding board which reflects back worthy challenge to my thoughts that causes me to think, investigate, learn and adapt. Where else could I be the ass I need to be in order to garner such response with relative impunity. Time well wasted I’d say.

I’m still waiting for Garth and his Dawgs to cause me to remove myself from my convictions. And the most ironic thing is; I came to here just over three years ago from where they are today.

#170 Van guy on 03.08.12 at 2:28 pm

Is this bmo 2.99 special here for 2 weeks again? Garth, how come you haven’t commented on this yet?