The outcome

When F stands (it’s often hard to tell when this happens) on Thursday afternoon in the House of Commons, what will he say about the housing bubble? Will he murder the 30-year amortization? Announce no more insurance money for CMHC? Or just ignore the whole thing, setting up the country for a crash instead of a fizzle?

Looks like the third door. And it’s the wrong one. We’re surrounded by evidence the system is out of control.

For example, did you read this comment posted here some hours ago?

“I’ve been following this blog for some time, but am a first time poster. 28 years old with a wife and baby on the way. I’ve owned a place in the GTA (not downtown) since the mid 2000?s. It is a nice 3 bedroom townhouse with everything my wife and I will need for at least the next five years. It was and remains well within what we can afford. However, because we are expecting I figured I’d go look at a few places.

“I am a finance professional and will have an MBA done within the month, so I preface this by stating that I understand the concepts of interest and debt well, unlike many others in my age group who may or may not be virgins.

“A mortgage professional I spoke with indicated that the maximum mortgage we could qualify for right now was $1,200,000, with a final purchase price of $1,400,000 considering the equity we’ve built up in our current place and other investments. Imagine the granite we could get! Infinite pot lights!

“Here’s the kicker… I’m still in school – I’ve had ZERO income while I’ve been here. My wife makes well under $100,000. The decision was based solely on credit rating, my wife’s income, and my stated income for a job I have yet to start. No proof of job offer required.”

So a 28-year-old student with no earned income, in a marriage with a pregnancy and a no-income mat leave looming, is offered a mortgage of $1.2 million. At the same time, the Real Estate Council of Ontario (RECO) says it has received about 5,000 complaints in the past year from people caught up in bidding wars – mostly engineered by real estate agents.

Worse, here’s a BeeMo study released Wednesday that should shock F to his elfin core. Fully 43% of Canadians say they’re “unsure” about their ability to afford their homes if interest rates were to rise by 2%. And what are the odds of this happening in the next few years? Yes, 100%.

This may not register in Ottawa where everyone’s obsessed with robo-calls and the hairy new NDP leader, but it should be on your radar. The risks of a substantial real estate correction are growing right along with the unbridled river of cheap bank money which has swept away common sense.

Here’s more: Land speculation in the GTA is fevered again, with prices shooting higher as developers scramble to meet the demand rock-bottom mortgages have created. Urbanation, the industry bible, is telling clients “land prices are going through the roof, we may be headed for another 2009-like credit crunch, and there may be as many as 35,000 new units launch in 2012 (not a typo!).” As for condos, it now looks like the GTA alone will have 23,000 new units added to the housing stock this year alone.

Lax lending standards. Excessive mortgage approvals. Over-extended homeowners. Frenzied bidding wars. A new land rush. Massive over-building, with 80% of new units snapped up by speckers and flippers. And it appears the federal government’s about to ignore it all, letting new bank regs and the drying-up of mortgage insurance deflate the housing gasbag.

Trouble is, the banks won’t get slapped with new mortgage restrictions by the OFSI (their regulator) until the end of the year. And CMHC says no virgins will be denied their 5%-down or zero financing deal in the near term. So, while mortgage rates will be higher by the end of the week, the signal about to be sent out by F and the gang in this budget appears to be: party on!

“We think EXACTLY like the Americans did before the financial crisis,” says the MBA student with the $1.2 million mortgage approval. “Couple this with zero down, low rate mortgages, and all of my friends buying houses that are “better” than the one we just purchased.”

His point is poignant and precise, often made by Americans who come to this pathetic blog to watch us with amusement. The actions our government have taken to deliberately inflate a housing bubble are no different than those taken in the US years ago. Lack of regulation over residential lending. Too-low rates leading to borrowing excess. Government insurance wiping away lenders’ risk. Zero-down financing. Liar loans. Tax credits for homebuyers. And mindless promotion of the cult of homeownership, even as families are forced to commit half or more of their pre-tax income to shelter.

Given this, why would the outcome be different?

Every week I sit across the table from people who ask me to help them with their money. Every time I show the same thing. Markets that soared and then fell back to earth. On the way up, people were frenetic to get in. On the way down, they were panicked to get out. We’re going to do the opposite, I inform them. And we do.

Now tell me, where on this chart should you buy or sell?

195 comments ↓

#1 Farfetched on 03.28.12 at 7:54 pm

First!

#2 TimV on 03.28.12 at 7:56 pm

Last

#3 Canadian Watchdog on 03.28.12 at 8:04 pm

Important read for tomorrow’s budget. This is the center of it all.

Analysts Expect Ottawa To Clamp Down On Insured Mortgages In Covered Bonds

http://online.wsj.com/article/BT-CO-20120328-714296.html

#4 Helpful Advise on 03.28.12 at 8:06 pm

First and then second!

#5 Canadian Watchdog on 03.28.12 at 8:16 pm

Reposted with Google Link:

Important read for tomorrow’s budget.

Analysts Expect Ottawa To Clamp Down On Insured Mortgages In Covered Bonds: http://tinyurl.com/73lt4uc

#6 Julia on 03.28.12 at 8:17 pm

I had the same experience 2 years ago. I was approved for a large mortgage on a rental property without the rental income considered plus a huge line of credit guaranteed on the equity in the house that I could have bought a yacht with. I was a single person with a modest income. It was okay because I knew I had the rental income, but I was shocked that the bank didn’t care about that small detail of the extra $3000 per month. As it was I barely broke even so I took your advice and sold last month.

#7 Maxamillion on 03.28.12 at 8:23 pm

I ‘m whining about the expected 3 cent increase in gasoline in the GTA while people are being approved for $1.2 million dollar death traps.

#8 Bill Gable on 03.28.12 at 8:26 pm

So all of a sudden, pixie feet is going to do nothing?

For weeks you have been saying that Flaherty is going to lower the boom.

All of a sudden it’s NOTHING is going to happen.

I can’t get my head around any of this. I am totally and utterly confused.

“Waiter” – check please.

#9 city slicker on 03.28.12 at 8:27 pm

at this point its obvious what is happening, like playing the blow off top on a pump and dump penny stock. People taking thier chances trying to play the top for a few extra bucks. Then just be sure you’re not the bag holder when it all comes down.

#10 JO on 03.28.12 at 8:28 pm

I lend money as one of my core duties working in a financial role for a reputable FI. I have several mortgages on the go right now. I also have several long time colleagues who work for RBC and TD.

There is no doubt in my mind most of the terrible applications are being taken / approved by aggressive mortgage brokers. There are cases where an application is referred by a bank branch to their internal broker sales force and somehow approved.

It is a pathetic joke. I left lending late 2005 to move to a different area of the business in large part because i was repulsed at the blatant attempt to load society with debt when they came out with 40 yr amorts, 0 down mtgs as long as your beacon is 680, etc. It is even worse now.

This is a massive tax on most of us and an incredible transfer of wealth to senior execs in banks/lenders, RE and related industries. Not to mention a massive tax for your government. And a major windfall for those lucky enough to have bought before the massive credit/infation growth since 2001.

Not only do the younger generations have to take huge mortgages with home prices at inflation adjusted record levels and rates at record lows, they also have to subsidize inflated public sector pensions and pay tuition that has risen 300 % since 1990.

If it sounds similar to a Ponzi scheme, that’s because it is.
JO

#11 Pat on 03.28.12 at 8:31 pm

“When F stands (it’s often hard to tell when this happens) …”

Did the pot just call the kettle black? :))

You know him? I do. — Garth

#12 Steven Rowlandson on 03.28.12 at 8:31 pm

So a 28-year-old student with no earned income, in a marriage with a pregnancy and a no-income mat leave looming, is offered a mortgage of $1.2 million. At the same time, the Real Estate Council of Ontario (RECO) says it has received about 5,000 complaints in the past year from people caught up in bidding wars – mostly engineered by real estate agents.

One should not be surprised by this as real estate agents have a serious interest in prices getting bid up to lofty heights. That interest being their comissions which are a percentage of the sale price. Moral ,social ,political and fiscal responsibility is trumped by greed ,plain and simple.

#13 Freedom first on 03.28.12 at 8:34 pm

Garth, your message today, as usual, is nothing but the truth. I listen to the majority of people around me who are caught up in this housing bubble being never ending in Canada, and say nothing, as it is futile confronting arrogance face to face. Even sadder, is I believe that F is going to do exactly what you say, and I can hear it already from the brainwashed. Party on is right……a tragedy in the making. Sad indeed.

#14 Mikey the Realtor on 03.28.12 at 8:37 pm

Oh Garth, you give too much credit to politicians, they are liars, cheaters and just down right unethical people, you expect anything different? It’s called the survival of the fittest, if housing were to crash you will know who the winners are.

As opposed to realtors? — Garth

#15 Sebee on 03.28.12 at 8:40 pm

Party on Garth.
Party on Wayne.
Party on Virgins.
Sha-wing!

Garth, wait!
I fell on my overpriced house keys!

#16 Debt's Dark Embrace on 03.28.12 at 8:42 pm

I’ve been sayin’ this since you started this pathetic blog: the “Powers That Be” engineered this bubble and will do anything and everything to keep it inflated. Cuz if the bubble pops the economy is toast for a very very long time.

#17 gumby greeks pokey on 03.28.12 at 8:46 pm

eighteenth!!!!!!!!!

#18 Walknut on 03.28.12 at 8:55 pm

This will happen on F’s watch and he’ll blame everyone else. Suddenly it will become an unavoidable situation caused by the problems in the Eurozone.

#19 Rex on 03.28.12 at 8:55 pm

Real estate prices are way out of line with reality in Canada. That said, the prices keep increasing and this blog keeps saying that this cannot last. This has been going on for a number of years, prices still rising. I am noticing more SOLD signs where I live than I have in a long time.
Hard to argue with reality however “unreal” it might be.

#20 Jeff on 03.28.12 at 9:01 pm

I have read this article, but I cannot disagree more with the sentiment of it. First of all, there is one case of an anonymous MBA student saying he can be qualified for 1.2 million using stated income from a fictional job. Either this is a total fabrication, the “mortgage professional” is new at the job, or there is some kind of fraud occurring to allow him to approve this.

If the MBA owned his own business, he would need to be in business for 2 years before anyone could even consider a stated income program for them. If he was in a salaried position, the approval would be subject to him actually having the job. They could use his wife’s income, but the income that she makes would not qualify them for anywhere near 1.2 million.

The article also makes reference to our situation paralleling the US situation, and that is also utter nonsense in so many ways that I wouldn’t even start to get into them all. We do not offer loans at 100%+ LTV, we do not offer teaser loans to subprime clients and qualify them on the teaser rates, and we do not offer NINJNA (no income, no job, no assets) mortgages. As it is, in the Vancouver market, it is quite difficult to qualify people for mortgages even for the amount of house they need. The government has done plenty to put the brakes on the Vancouver market as it is. The harder the government makes it to lend money, the more that the market tilts in favor of the wealthy and the more difficult it will be for average and lower income earners to get ahead. That is a much greater thing to fear for the future.

I have said this many times, but the lending that really needs more regulation is the credit card and unsecured lending industries. What regulation have they been scrutinized under other than a regulation that requires them to disclose how long it takes to pay off a credit card bill with minimum payments? It is that ability to spend money so easily at such high interest rates that is really hurting people. However, the housing market is the one that gets constantly attacked. “Pay no attention to that man behind the curtain.”

I live and work in the highest priced market in Canada, and this is where it is hardest for people to buy. In most of Canada, housing is SO much more affordable than here. Most of the country has nothing at all to worry about.

You are a credit to mortgage brokers everywhere. — Garth

#21 FI Guy on 03.28.12 at 9:07 pm

I am employed with an FI. People are being allowed to leverage up like crazy. 80% LTVs are about twice as more frequent since the start of the year. Hopefully the OSFI rules get in place sooner rather than later.

The insurers are not checking a thing. CMHC and Genworth never audit the FIs. All they ever see is in the case where a claim is submitted, the file is sent over. Where there is mortgage fraud on the part of a broker (such as faking income), CMHC covers the losses on the mortgages. Heck, for portfolio insurance the bank’s buy, CMHC does not even consider TDS/GDS ratios. In most cases CMHC insures nearly all mortgages up to an allowed allocation with little questions.

#22 FI Guy on 03.28.12 at 9:12 pm

For some perspective on how much someone can borrow, try out ING’s calculator.

http://www.ingdirect.ca/en/tools/calcs/Mortgage_Payment.html

According to this calculator, if I have a $50,000 BEFORE TAX income I can borrow $275,860 with a monthly payment of $1,233. Purchase price of $290,379 and downpayment of $14,519 and 30 year amortization.

Absolutely nuts.

#23 Smoking Man on 03.28.12 at 9:17 pm

When F stands (it’s often hard to tell when this happens)

Grath when am I going to see you at yuk yuks

Ba hahahahahahahahah

#24 Can it be? on 03.28.12 at 9:19 pm

The competitiveness of the 20 and 30 something year olds is right on. Gotta have a better house, better car, better appliances, more vacations… I’ve been saying for ages that we have become exactly as the Americans were. Materialism at its finest. You can’t tell on the street who has money and who doesn’t… But there are tell tale signs out there of the impending doom. Not a day goes by where I don’t hear people complain about rising costs… What happens of they lose their job… Wondering how they are going to pay for things. It’s sad really to think what the future may hold for many. There are people who can afford to live the high life… People who are high earners, stable work, savings, diversification… Etc… Then there are the others, spending money they don’t have, playing te lottery like its going to save them… Interesting times ahead.

#25 bubu on 03.28.12 at 9:22 pm

I have a question…. How a bank can offer a mortgage for 40 years to somebody who is 45 or 51? ( These are examples I know). I assume they offer 30 years with 0 down to people in their 40s or 50s now. Do you think those guys are going to pay mortgages when they are 80-85 years old? To me, long term this would be a bigger issue than 25 vs 30 years mortgage…

#26 Can it be? on 03.28.12 at 9:22 pm

Agree with the comment that this false economy was engineered by the powers that be… All for an uglier crash. I see no way out, no one will want to give up their lifestyle unless thy are somehow forced. I went to a foreclosure auction house once to check it out before the bidding… To my shock there was a family still living in it… Magically the day of the auction, the owner paid up their debts… The system in Ontario is strange.

#27 For and Mark Carney should be arrested? on 03.28.12 at 9:24 pm

These two criminals should be locked up for financial crimes against humanity in Canada. They are lucky Canada is a fascist country.

#28 I'm stupid on 03.28.12 at 9:24 pm

Garth how can you keep beating the same dead horse? Don’t you get tired? People will do what they want, they are herd animals. The fact they will never repay their debts and will work till the day they die should not be your problem. Hop on your Harley and F them.

I don’t quit. — Garth

#29 Deb on 03.28.12 at 9:27 pm

Well we don’t even get to listen to the budget speech anymore, as it’s actually being delivered, do we? As soon as F opens his mouth, we are given the colour commentary from the network anchors, whose representatives had read the document several hours beforehand under the cone of silence on the Hill.

We know that this will be an austerity budget. We know that the death by a thousand cuts will amount to roughly $7-billion, and that the federal civil service is about to get bloodied and knocked to the ground. But will that be it? Will the only thing really new on Thursday afternoon be F’s shoes? Specifically, will he lower amortizations from 30 to 25 years? Will he do the right thing by doing so?

We are in a crisis in this country. We don’t have the time to wait until Christmas for the new OSFI rules to be put into effect. We need action now to help fix the mess in the real estate market that this Conservative government is responsible for creating in the first place. Given their track record up to this point, I am not optimistic on this score.

#30 Smoking Man on 03.28.12 at 9:29 pm

#8 Bill Gable on 03.28.12 at 8:26 pm
So all of a sudden, pixie feet is going to do nothing?

Makes perfect sense to me.

Harpo has an agenda to transform this country, he is driven by big backers, One ter is not enough time to make a USA styled political system, 2 parties , where the two leaders are under the ownership of a few billionaires

If a real estate correction happens on his watch, the dreams of the hard core right extremists hiding in the shadows will be lost.

They will do everything in there power to prevent that correction.

Lets face it The herd can’t think for themselves, Thank you school . My money is on the Billionaires

#31 Mr Buyer on 03.28.12 at 9:30 pm

The party has been over for a while now. These last bastions are mere outliers. The level of sales activity in a bubble is far higher than normal sales volumes, and all traditional economic indicators are of no meaning or value as the bubble is a self contained entity requiring only the fuel of access to money (interest rates are almost meaningless as well really). Bubble Mechanics mark the top of a bubble as a fall in sales with an ensuing CRASH in prices, sometimes with bear rallys during the crash and sometimes without. BUYER BEWARE. THE BUBBLE HAS TOPPED. SALES ARE FALLING ACROSS CANADA. NOW IS NOT THE TIME TO BUY A HOUSE. THE PARTY IS OVER :(

#32 TurnerNation on 03.28.12 at 9:31 pm

Two recent, interesting mega-high-volume days on XIU (TSX ETF):

http://stockcharts.com/h-sc/ui?s=XIU.TO&p=D&yr=0&mn=9&dy=0&id=p33686032321

#33 Stevo on 03.28.12 at 9:32 pm

http://www.theglobeandmail.com/globe-investor/genworth-using-internal-resources-to-deal-with-foreclosures/article2384578/

#34 TaxHaven on 03.28.12 at 9:33 pm

“And what are the odds of this happening in the next few years? Yes, 100%.”

They will bend over backwards to prevent this. And it’s not F but the Counterfeiter-in-Chief, Mr. Carney, who will resist this to the death.

Interest rates depend on long-term bond rates. These will be set by other nations’ central bank purchases: see the recent incestuous and surreptitious euro-dollar swap lines made available by the Fed. The BoC will purchase, or purchase mortgage assets, as will the usual mega-funds and institutional investors worldwide.

Canada is – wrongly, as we know – seen as a paragon of fiscal prudence and financial stability. European peripheries have sold off and Japan will do so long before Canadian government bonds go wanting bids.

I can’t see rising (artificial) interest rates for at least 3 or 4 years…

Then you are blind. — Garth

#35 TurnerNation on 03.28.12 at 9:34 pm

LMAO! Is it April 1st? Note final paragraph.

House panel OKs gold, silver as legal tender
By MEG KINNARD – Associated Press
COLUMBIA, S.C. South Carolina residents would be able to use gold and silver coins as currency under a bill advanced Tuesday by a House panel.

The measure approved by the House Judiciary Committee would let people use the precious metals as money as long as businesses agree to take them. Legislators had made the argument that they didn’t want to force businesses to take the metals and have to figure out the worth of the coins from one day to the next and amended the bill to remove such a requirement.

Advocates of the measure say the metal coins are more stable than the dollar, although Rep. Greg Delleney, who chaired the subcommittee that studied the bill, has previously warned that, if the dollar collapses, people will be in trouble no matter what the metals are worth.

#36 Toon Town Boomer on 03.28.12 at 9:35 pm

I’m not surprised at all. Government care about the welfare of Canadians? Nope!

#37 Victor on 03.28.12 at 9:36 pm

Genworth using internal resources to deal with foreclosures

Last updated Wednesday, Mar. 28, 2012 8:07PM EDT

Genworth MI Canada Inc., the country’s largest private sector mortgage insurer, has set up its own internal group of real estate agents to deal with foreclosure sales.

The move is one of the steps mortgage insurers are taking to minimize their losses after seeing claims rise for the first time in decades. The insurance sold by Genworth and its main rival, Canada Mortgage and Housing Corp., compensates banks when homeowners default. The majority of it is backstopped by the federal government.

http://www.theglobeandmail.com/globe-investor/genworth-using-internal-resources-to-deal-with-foreclosures/article2384578/

#38 Makavelli on 03.28.12 at 9:37 pm

You know him? I do. — Garth

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

Let’s see tomorrow how much you know this guy.

Knowing a man and what the PMO tells him to say are two different things. But you should know that. — Garth

#39 Mr Buyer on 03.28.12 at 9:51 pm

I have noted a few itterations now of x,y and z indicate a,b and c followed by x,y, and z have not been fully realized so a,b and c do not hold true. These successive rounds of the sky is falling may well be counter productive in that there is a mixed message along with an implied message which goes something like this… a,b and c are rarely if ever fully realized thus the likelyhood of even a correction (note little c correction) being fully realized must be the same. Along with this there is the implied message that the government has a level of control over this mess that it really does not. The government has a precise chance of engineering this debacle from start to an optimal finish of about 0.0000000762987% (that is far far less than 1% if the decimal is throwing you off). Even if free access to debt continues forever there will come a point at which people will stop buying. The entire population may own 7 or 8 billion dollar houses and there will be absolutely no one left to sell to. At the point at which sales fall a CRASH will ensue. Bubbles are simple creatures to understand. They do not require alignments of planets or flocks of black swans to move them from start to finish. The only requisites are access to money and sales/buyers. Once the sales fall the bubble has topped, plain and simple. After this a CRASH ensues (A CRASH ENSUES). A bubble is a plain and simple confidence trick and the notion of balancing bubble prices on the head of a pin is as well. THE PARTY IS OVER. BUYER BEWARE. SALES ARE FALLING ACROSS CANADA. NOW IS NOT THE TIME TO BUY A HOUSE.

#40 Canadian Watchdog on 03.28.12 at 9:57 pm

#33 TaxHaven

The gov cannot prevent anything, they are BROKE. We are heading for a major recession and when the bond market starts reading that Genworth is sending employees to paint foreclosure homes, the lending stops.

This is precisely why it goes from euphoria to crises mode very abruptly.

#41 CrowdedElevatorfartz on 03.28.12 at 10:01 pm

Soooooo CMHC will be allowed to continue gauranteeing mortgages ?

$600 BILLION wasnt enough?

Jayzus

#42 Fabrega on 03.28.12 at 10:06 pm

My bet: F is going to ignore the problem and do nothing.Harpo & Elfie don’t have the balls to do what is needed.
This buble has a long way to go.

#43 TaxHaven on 03.28.12 at 10:09 pm

#39 Watchdog,

Well, let’s hope you’re right and the manipulated, mangled, tinkered bond markets still function in some vaguely free market-ish way…

I appreciate honesty. I worship truth. I want to see who has been swimming WITH a swimsuit. I’d like to sock it to all those spendthrift characters I see in my supermarket buying dozens of cokes, dinners from the deli and milk at $5+/liter.

I want to see whose mortgage borrowing, whose businesses and whose jobs are REAL and SUSTAINABLE and not utterly dependent on the pulled-forward demand of cheap money-fueled consumer spending…

So I’d LOVE to see rates actually rise. But I’m skeptical.

#44 AprilNewwest on 03.28.12 at 10:10 pm

So party on for another several mths. For the risk takers still time to flip.

#45 brainsail on 03.28.12 at 10:10 pm

We’d love to watch his speech tomorrow but we live in the US. Out of the 200 satellite channels we receive the only one we know that has Canadian content is HGTV.

Any ideas?

#46 99% on 03.28.12 at 10:11 pm

Interesting fact – there is a sudden surge of age restricted townhouses on the market in Richmond. Restricted to 19 yrs+ (basically couples without kids or kids who have moved out) Could the boomers be sneaking out the back door quietly? Unfortunately they are all vacant and waiting for price reductions. Asking over $500k. Perhaps the plan to sell, buy a small apartment cubicle and retire to Arizona? I would say that the slide has begun.

#47 John on 03.28.12 at 10:11 pm

Garth – You have always been rather civil when talking about ‘F’, where did this hostility come from?

Hardly hostile. — Garth

#48 Bottoms_Up on 03.28.12 at 10:17 pm

I’m curious as to whether this ‘mortgage professional’ was working for one of the big Canadian banks, or whether they were a sleazy broker trying to entice potential clients?

If buddy stepped up to the plate and actually had to get the official approval for the mortgage, it might be a different story in terms of qualification.

Those that follow this blog regularly know that I was turned down for a very modest mortgage by a major bank…twice…and I was in a similar boat as this guy (coming out of school, great credit rating and great job prospects, but no actual money)

#49 Blue Monster Lover of Meats and Vegetables on 03.28.12 at 10:17 pm

Everyone must see this!

Jesse Benton Smacks Down Establishment Opinionist

http://www.ronpaul.com/2012-03-24/jesse-benton-smacks-down-establishment-opinionist/

Also, very funny episode of CBC National News tonight, I always howl when Jim Stanford, CAW economist talks. I think the rest of the group was try not to roll their eyes. I would of, multiple times, or howled

Owhoooooo

#50 NoName on 03.28.12 at 10:18 pm

There are some things in Canada that need fixing, one of them is emotion soaked RE and hysterically exaggerated returns and prosperity that owning a house will bring to the families. Now days what i think that biggest problem, we face is that younger generations are “not allowed” to question or express their true sentiment towards what is going on. Unfortunately younger generation is trying to mimic what their parents did, under the careful guidance of their mentors and assumption that RE always goes up. Studies by educational researchers suggest that approximately 83% of human learning occurs visually , monkey see monkey do…. Unfortunately majority of population is in so called “middle class”, where RE was a silver bullet; it was a status symbol, shelter, investment vehicle, emergency fund and “form of crowd control”. In one of the books i red that companies favored employees with houses, because they are more likely not strike.
Fact that in today’s job market that good jobs are harder to find, and it harder to save, In last 10-ish years was carefully marketed as sure thing, you can see example everywhere… Now that RE is losing its luster, gold is a next thing, “an ounce of gold, is always worth and ounce of gold”, just ask any farmer he will tell you, “an ounce of manure, is always worth and ounce of manure”. http://i39.tinypic.com/rroao2.jpg
I reed older Bloomberg, bussinesweek magazine last night it shows gold prices vs nyc taxy medallion vs inflation, you can clearly see when RE start going down gold start going up… But real hedge for inflation is owning taxy in NYC.
http://i44.tinypic.com/2hfnlmd.jpg
My point is that we need more people that think outside of the box in government. we need NERDS running a country, not some bureaucrats.
Why NEERDS?
Nerds are funny:
http://youtu.be/zam0xpuWUVY
Nerds are s3xy and smart:
http://www.geeksaresexy.net/2011/02/18/beauty-brains-and-badassery-the-sexiest-geek-girls-alive/
And most important things
Nerds to tend to learn from mistakes
http://www.tensionnot.com/pictures/Funny/Science_Lab_Experiment_Fire

#51 Bottoms_Up on 03.28.12 at 10:19 pm

#31 TurnerNation on 03.28.12 at 9:31 pm
——————————————–
That’s interesting. Is that tax season buying/selling, or perhaps a budget leak?

#52 Cory on 03.28.12 at 10:24 pm

“#8Bill Gable on 03.28.12 at 8:26 pm
So all of a sudden, pixie feet is going to do nothing?

For weeks you have been saying that Flaherty is going to lower the boom.

All of a sudden it’s NOTHING is going to happen.

———————————–

Yep, just as I said and was criticized for a few posts ago. The party will never end in this country…..NEVER!! This website is aptly named for us…those who clearly see the bubble and credit abuse…..since WE are the greater fools for believing that logic dictates it should end anytime now.

There is no hope no matter how much you write Garth……house prices will go up forever.

#53 obert on 03.28.12 at 10:29 pm

So the downgrade of Canadian bonds is coming…

#54 Jsan on 03.28.12 at 10:30 pm

The Looting of the Canadian middle class

What’s happening in Canada seems to be taking a very similar route to what transpired in the US. The only thing left is to deliberately knock the engineered Canadian house of cards down. Look at the levels of not only Mortgage debt but personal debt overall in this country in only the last 5 years or so. It’s staggering!!!!! Yet the government not only has done nothing to reign it in, it is clearly seen in housing that they have created it. Is this the looting of the Canadian middle class???

“Catherine Austin Fitts The Looting Of America”

“Former Assistant Secretary of Housing under George H.W. Bush Catherine Austin Fitts blows the whistle on how the financial terrorists have deliberately imploded the US economy and transferred gargantuan amounts of wealth offshore as a means of sacrificing the American middle class. Fitts documents how trillions of dollars went missing from government coffers in the 90′s and how she was personally targeted for exposing the fraud…….

Fitts explained how when she was in government she tried to encourage the creation of small businesses, new jobs and new skills to compete in a globalized world otherwise the American middle class was toast, only to be forced out by the feds using dirty tricks. The elite instead wanted Americans to take on more credit card, mortgage and auto debt that corporations and insurers knew they couldn’t afford, while quietly moving their jobs abroad in the meantime.”

http://www.youtube.com/watch?v=oUlQ7vElqqo

a

#55 Peter Pan on 03.28.12 at 10:31 pm

At what point in time will the banks step in and start doing appraisals?

Seems like they should be interested in the real estate they’ll be stuck with selling in 3-4 years.

#56 The Original Dave on 03.28.12 at 10:33 pm

what a mess this all is. If this guy and his wife are pre-approved for 1.2 million, then what is a family with 2 incomes going to be pre-approved for? Madness. Prices aren’t close to that point just yet, so maybe this bubble stil l has steam.

#57 Gypsy Kid on 03.28.12 at 10:37 pm

Garth, what IF there is no crash? What happens then? I cant wrap my head around the scenerio of there being no crash. yet wow! this is really really dragging on and on…
I’m really afraid for this country and for all of us when the crash comes. It’s going to be hard, I think.
There is no other scenerio that makes sense but a crash. But we are living in an insane time so who knows???? Everything is irrational by design, it seems.

#58 renters rule on 03.28.12 at 10:42 pm

Uh oh…. 42% of the folks in Vancouver have already figured it out! Too bad, so sad, bpoe….guess it’s back to flipping burgers?

http://www.vancouversun.com/business/mortgages/Real+estate+Metro+Vancouver+Survey+shows+consumer+sentiment+divided/6375493/story.html

#59 Tony on 03.28.12 at 10:45 pm

Well like they always say in the financial post when interest rates can only go higher they end up going lower. Reading the same thing today you can expect mortgage rates to fall, interest rates to plunge especially American interest rates. The clueless simpletons better take a look at the falling commodity prices without much of an increase in the U.S. dollar. The United States is in a free-fall as is the rest of the world. Interest rates will go lower even when they tell you they can only go higher in the newspapers.

#60 Terces on 03.28.12 at 10:46 pm

#99 Daystar from yesterday – that was the most telling piece of information I have seen. This is how I read it – am I right?

It has been a struggle for the US Fed to keep intervening in the bond market to keep interest rates low – but they had no choice – that is until all of the Adjutable Rate Mortgages reset.

I had not seen the chart of when the bulk of these mortgages will be renewed, locked in, or forced into receivership, but you have shown that final chapter is coming very soon – or perhaps we are at the end of this chapter as we speak.

The adjustable rate mortgages are now locked into the low rate, and severe damage will no longer be inflicted if rates in the US are allowed to rise.

The US would probably like to keep interest rates lower longer, but to do so comes at great risk and expense of future inflation. So now that the ARM’s have reset, the Fed can back away from such extreme intervention in keeping the bond rate low – after all, they need to compete on the world market to finance their massive debt.

This means that the international bond market should be more free to set rates – and rates will now rise.

And as much as Mr. bigshot F thinks he controls rates in Canada, he really has very little to do with it. When rates in the US rise, Canada’s bond rates will also rise. And when bond rates rise, mortgage and heloc interest will rise – just in time for our 40 year, no down payment, super low interest rate mortgages to start the process of resetting at higher rates.

The meltdown in the US did not have to face higher interest rates during the recovery process. The meltdown in Canada will happen in the face of higher – perhaps much higher – rates.

The timing of this catatstrophe is much clearer now.

It’s been a long agonizing road, but I am very happy to be on the sidelines of this one, and sad for my family and friends who would not listen.

#61 DUI on Money Road on 03.28.12 at 10:49 pm

Hey Garth, I think Flaherty went for shoes that give him an extra inch! lol

http://www.cbc.ca/news/canada/story/2012/03/27/federal-budget-anxiety.html

#62 TurnerNation on 03.28.12 at 10:54 pm

I hope our forum hosts rests-up for what will undoubtably be a banner blogging/tweeting/facebooking day tomorrow.

By the way the latest distraction is Pintrest. Here’s an example of its use:

http://pinterest.com/wbrettwilson/

And, from honourary blog dogs – the FML’sters:

Almost 5k monthly carry on a house, inclusive of utilties, insurance, etc.

http://fmlistings.tumblr.com/

http://www.realtor.ca/propertyDetails.aspx?propertyId=11481476&PidKey=-1027950873

2 bedroom, 2 bathroom townhouse on the beach in Toronto. $879,000 plus $592.90 maintenance. And that’s just builder’s estimated maintenance. A brief example; I bought a pre-construction condo years ago and maintenance on our unit was to be something like $350 a month. Once it was built and registered and they found all the builder problems (and there will be problems), maintenance went up to $600 a month.

Anyway, you could own this townhouse on the beach in Toronto if you have $175k down, for $3,519 a month, plus maintenance and property taxes. So, that’s around $4,300.00 a month. And the land transfer tax is another almost 30k

#63 T.O. Bubble Boy on 03.28.12 at 10:54 pm

Garth – what happened in the latest “Real Estate Roundtable” in Post City Magazine? You posed the first question (to Sherry Cooper, of course), but weren’t around to participate?

Lots of classic bubble quotes from the RE pumpers in that article:

Brad J Lamb
– (on the rising price of SFHs) “What’s happening here … is the Manhattanization of Toronto
– (on SFHs becoming unachievable) “And you have to apply new math to the situation here. The numbers that Garth Turner and all these other people have talked about are based on an old system, but when the market’s being driven by money from people from a lot of different places, that math doesn’t work anymore. The tools you would use to check whether our market is overvalued are thrown out the window. They don’t count anymore.”

Sherry Cooper
– “You have to move further and further away from the city in order to afford something, and that’s true of New York and London and many many other cities”
– (on proximity to TTC driving prices) “People also want to have public transportation for their cleaning lady.

Matthew Rosenblatt (condo developer)
– (when asked where will we be in 12 months) “I think that if interest rates stay in and around the same range that they’re in now, there’s still smooth sailing”

Carol Hall (Realtor for multi-million-dollar homes)
– “Whether you start today or you start tomorrow, it’s very important to own a house, free and clear, at the end of your life”

Here’s what I learned from these ‘experts’ (none with any vested interests, or course:
1) SFHs will only go up in price, because there are no houses being built in the GTA, and no land becoming available.
2) It’s a good time to buy, but only for a “lifestyle choice” (i.e. not for investing)
3) Things aren’t unaffordable, Toronto is just unique and in a new paradigm!
4) Both Brad J Lamb and Sherry Cooper sold their properties recently… hmmm. (Sherry did note that she bought an even more expensive condo when she sold her $3M house)
5) There are bidding wars for all houses under $2.5M-$3M.
6) Harry Stinson is the most sane of all these realtor ‘experts’ — which is SCARY.

I was on an airplane to Halifax that day and unable to attend. The magazine’s publisher asked me to pose a first question to the panel, which I texted en route. — Garth

#64 Narrowgate on 03.28.12 at 10:57 pm

Love it Garth. You are a true Canadian hero. I am anxiously awaiting how the budget will unfold tomorrow. Thank you for your continued honesty and, to be frank, balls.

#65 randman on 03.28.12 at 10:58 pm

Oh yeah…..land of the free ..home of the brave!!!!

“Moreover, we have evidence all around us that the U.S. government has willingly chosen the Dickensian “social policy” of warehousing millions of their own people in prisons. Indeed, CNN’s Fareed Zakaria just referred to the U.S. as the “Incarceration Nation”.

The U.S. incarcerates about nearly six times as many people (760 per 100,000) as it’s northern neighbour, Canada (131 per 100,000). It imprisons five times as many people as the UK, more than seven times as many as France, more than eight times as many as Germany, and more than twelve times as many as Japan.

The obvious question which Americans should be asking themselves is this. Is their own population really five times more “criminal” than the worst “hooligan” nation in Europe; or is their own government simply five times more evil?”

http://bullionbullscanada.com/us-commentary/25299-the-us-prison-cell-economy

yeah…we should all buy a house there…rigggghhhhttt

#66 Arshes on 03.28.12 at 11:00 pm

#51 Cory on 03.28.12 at 10:24 pm

Yep, just as I said and was criticized for a few posts ago. The party will never end in this country…..NEVER!! This website is aptly named for us…those who clearly see the bubble and credit abuse…..since WE are the greater fools for believing that logic dictates it should end anytime now.

There is no hope no matter how much you write Garth……house prices will go up forever.
.———————————————–

Funny cause I live in Edmonton and house prices have already fallen, and have been falling for quite a few years now.

#67 Chaddywack on 03.28.12 at 11:01 pm

I believe the guy. I remember a financial institution told me in 2008 or so “Well you can’t afford a condo in Vancouver, so let’s just say you made an extra $20k in ‘bonus money’ and that will get you qualified to where you can afford something.”

I’m still renting to this day…..

#68 sexy dex on 03.28.12 at 11:04 pm

hey garth,going to buffalo tomorrow to get some mega millions ticket you in?

#69 City Slicker on 03.28.12 at 11:05 pm

But if F isn’t going to put any restraints on the RE market, what happens next, it will keep inflating until it finds it’s prick?
Then what they’ll do what the US gov is doing now, implementing rules stricter standards so this never happens again – even though they are doing the exact same thing that caused it in the first place. Messed up indeed. And no the housing market in the US is not recovering:

http://usawatchdog.com/recovery-housing-says-its-a-hoax/

#70 V on 03.28.12 at 11:05 pm

“Do you think those guys are going to pay mortgages when they are 80-85 years old?”

Recall Japan at the height, 100 year amortizations were the rule. Google 100 year mortgage!

#71 sexy dex on 03.28.12 at 11:07 pm

ohh forgot to mention jackpot is $500,000,000 and counting!!!

#72 Cato on 03.28.12 at 11:26 pm

I don’t think budget should come as any surprise. Plenty of pork spending and kicking the can down the road. I’m not surprised, the bad actors in government involved in various trade missions I see pass through silicon valley don’t seem to have any fear. Our american friends would call the back scratching I see going on fraud but I’m just an evil capitalist so maybe I have an un-canadian view of things.

Its looking like personal interests of those holding power override the needs of the nation. We’re going to be driven to a crash no one saw coming because our government wishes it so. I’m sure we’ll get a few last desperate gasps in an attempt to keep the bubble inflated, just long enough for the various actors to slink out of office. If Canadians are willing to mortgage the future of the country on housing so be it. What doesn’t kill us will only make us stronger but the pain and suffering to follow is going to leave scars. We’ve now past the point of an orderly unwinding and into a crash.

#73 Canadian Watchdog on 03.28.12 at 11:29 pm

Shhhhh.. March condo data from http://tosolds.ca/

https://docs.google.com/file/d/0ByrPFSoPLahJMjZkLXk4SzBSdlNFMTFua3h1RHl4QQ/edit?pli=1

#74 Uh Oh Canada on 03.28.12 at 11:30 pm

Looking at the chart, I now understand why the US housing bubble popped before ours. In 2000, house prices were relatively the same here and down south. It’s not until 2007 that we surpassed the US. And look at us now! We have grown above the peak (2006) when the the US bubble finally popped. (It took 3 years until 2009 to drop back to 2002 price levels.)

I suspect that the our bubble has already popped or will be popping this year. Only time will tell. I guess we’ll have to wait until 2015 to see major price reductions.

#75 Carpe Diem on 03.28.12 at 11:33 pm

Friends of ours are divorcing. Sad but it’s good if they can’t stick together.

He’s keeping his house he owned before they married.

She’s hardfast on getting a home near the new school our kids are destined to go to. It’s not a cheap neighborhood, even for 150K + income family. She’s a teacher … so I think without a correction in prices, its a bad call but how can we help house horny people that think housing will keep going up?

#76 Gordeaux on 03.28.12 at 11:34 pm

I sold my house yesterday, in Winnipeg, for about 15 per cent over asking. I bought it in the fall of ’03 for just about a third of what someone is paying for it today.
The sale is the result of a pending and totally unexpected divorce. My ex actually bought again before we sold this place.
I think I’m going to go and sit on my share of the proceeds in my two bedroom rental condo in Osborne Village and enjoy the show. I have a feeling that karma may be just about to catch up to my lunatic, house obsessed ex…
BTW, Garth, your rental rates were a bit off — I’m paying more than $1100. They’re into me for a whopping $1103.

#77 Mike as in Mike on 03.28.12 at 11:50 pm

“#44 Brainsail
We’d love to watch his speech tomorrow but we live in the US. Out of the 200 satellite channels we receive the only one we know that has Canadian content is HGTV.

Any ideas?”
—————————————————-
CBCNews.ca will have a special live page starting with pre-budget coverage at 2 p.m

#78 Suede on 03.28.12 at 11:51 pm

Vancouver has matured. Celebrate responsibly. Trevor Linden said so. He owns lots of Vancouver real estate – don’t make him start paying insurance deductibles for damage.

http://www.youtube.com/watch?v=-svO4e_yKms&feature=relmfu

#79 a prairie dawg on 03.28.12 at 11:56 pm

#51 Cory

There is no hope no matter how much you write Garth……house prices will go up forever.

– — –

Are you trying to get a leg up on next years Darwin awards?

#80 Skatch on 03.28.12 at 11:56 pm

The reason people who have never bought a house before are called “Property Virgins” is this:

When you buy a house you get F####d.

#81 truth hammer on 03.28.12 at 11:59 pm

According to the best minds in the country there is no mortgage crisis or housing bubble in Canada. When F stands….or kneels……budget in hand….we will learn the fical political reality of a country that has allowed it’s GDP to be ruled by 35% Real Estate speculation…..and 25% civil service overhead. The net result is that the Cons will continue to exploit opportunism in real estate and increased employment in defined benefit positions. Without either….the pyramid will collapse. Revenues must continue to inflate in order to continue to slogh off pandering jobs to the 350,000 immigrants per year who would be immediately unemployed in a country shedding private sector jobs outside of real estate speculation if it weren’t for government largesse. You see…..it’s a virtuous circle…….screw you if your taxes have passed 80%……we have politics to consider.

People….listen to the experts…real estate will continue to go up……..no one will ever forego a mortgage payment to feed grandma….or the kids……leased cars are better than owning….and all the doubters should watch the CBC or Global more often……you’re not getting the message !

#82 BC Bring Cash on 03.29.12 at 12:07 am

Whistler RE is down by 50%. Is Vancouver RE next. Maybe.
http://whispersfromtheedgeoftherainforest.blogspot.ca/2012/03/noose-tightens-whistler-is-down-50.html

#83 Alberta Ed on 03.29.12 at 12:23 am

I stopped expecting the F-man to behave ethically a long time ago.

#84 Nostradamus Le Mad Vlad on 03.29.12 at 12:32 am


“. . . that should shock F to his elfin core. Or just ignore the whole thing, setting up the country for a crash instead of a fizzle?” — F couldn’t care less about Cdns., that much is obvious. I lean to the third option, but C – H – F’s day in the sun may well be short-lived following the cycle change.

“. . . along with the unbridled river of cheap bank money which has swept away common sense. The actions our government have taken to [deliberately inflate] a housing bubble are no different than those taken in the US years ago.” — Yes, it was all pre-planned, but I’m not sure what those in the bowels of power hope to accomplish with this.

There are numerous unexpected things yet to happen.

“And mindless promotion of the cult of homeownership . . .” — In any dictionary, the only definition of cult is worship, just as blinkered investors worshiped Bre-X and Nortel. The cycles never stop, they simply spawn off new ones.
*
#16 Debt’s Dark Embrace — “. . . the “Powers That Be” engineered this bubble . . .” — Just about now is the right time to pop the bubble. Not only here, but — Cdn. Mortgage Risk? Is this guy for real? See the first line in red.

#29 Smoking Man — “. . . the dreams of the hard core right extremists hiding in the shadows will be lost.” — Except they have a majority. Click link here and see who now controls Canada and the US.

It ain’t the politicos, plus Joke of the Day See headline and here.
*
62% drop Ireland’s apts. (flats), compared to world’s most expensive places; 1962 Okuns law; Obombacare a plane wreck in motion; Free Energy in abundance; Entrepreneur Google scared of him? Race and Economics; Nine Economic Myths; US Fed buying 61% of govt. debt; Corporate Bonds looking good; BRICS rally against western policies; Spain sinks and Europe speeding up.

UK economy contracts; Keen on Krugman Nice chart; Japan breath; The Closer Links in; Fifty two min. documentary End of suburbia; Russia Value for money; Economic Cycles.
*
Edgar Cayce, Japan and the US Clips; CC Counterfeit China; Stealing a lawn? Sure, there’s grass (pot) and there’s green grass; Habitable Planets and one (not here) for politicos, etc.; Soros and his gang; Fukushima Reactor #2 increasingly dangerous; Windows 8? I’m still on the last version of XP! Oil Fields in Sudan. Fighting continues — another grab by the west.

#85 Stuck on the Island on 03.29.12 at 12:34 am

“Now tell me, where on this chart should you buy or sell?”

That’s the problem. In many places you can’t even sell. I have been watching the local market add listings almost every day and not a single sale. I don’t think there has been any sales in weeks.

My window of opportunity already passed. Now we are planning out our next move, which means somehow sticking it out on the Island for who knows how long.

#86 AKatz on 03.29.12 at 12:41 am

#8 Bill Gable on 03.28.12 at 8:26 pm

“All of a sudden it’s NOTHING is going to happen.”

They think you are omniscient, Garth…

#87 TRT on 03.29.12 at 12:51 am

Loving it!

The higher the prices go… the bigger the eventual fall in the end!!

Just time it to get out (if you’re in) – easier said than done… by about 2015 IMO (see demographics!)

If you’re a Bear, root for no changes and a higher CMHC limit. Trust me, it’ll be better for you in the long run. You don’t want a soft landing.

If you’re a Bull…wait a little longer to cash out…maybe next spring. Have an exit strategy after the fallout (minimize taxes paid, etc.). Remember, wealth and economic standing is all relative (to your neighbours) and not absolute!

#88 Furst on 03.29.12 at 12:51 am

FURST!!!! YEAAAHH. I was on vacation, did everyone miss me?

#89 Milk Man on 03.29.12 at 12:52 am

US recovery is underway, Oil is high, Commodities are in demand in Asia… Its going to be a Party in Canada… Great escape by Canada (except maybe Vancouver and Toronto though not much) . So go ahead and ROCK ON.

#90 Anon on 03.29.12 at 1:05 am

In physics, not economics, you learn that any continuous positive feedback system soon destroys itself. For prices to rise in nominal terms, growth in outstanding debt against the pool of assets (houses) must accelerate. Nothing can accelerate for ever, you cannot have exponential growth in outstanding debt because you will run out of liquidity on the input at some point, even if QE24 kicks in. High double digit price rises on an annual basis cannot be sustained. Houses, unlike stocks, are non performing assets. Equity cannot be created other than via the provision of debt to boost overall house prices. Houses don’t invent iPads, or build cars, or code software. They are depreciating assets. Good luck with the high prices forever strategy.

#91 betamax on 03.29.12 at 1:07 am

#7 Maxamillion: “I ‘m whining about the expected 3 cent increase in gasoline in the GTA while people are being approved for $1.2 million dollar death traps.”

Oddly, those same people being approved for $1.2 million mortgages are also whining about gas going up 3 cents. Penny wise and pound foolish.

#92 NFN_NLN on 03.29.12 at 1:23 am

#51 Cory on 03.28.12 at 10:24 pm

“This website is aptly named for us…those who clearly see the bubble and credit abuse…..since WE are the greater fools for believing that logic dictates it should end anytime now.”

Hahaha, the irony. Garth is going to sell his domain for big bucks to a realtor specializing in low income housing.

#93 Suburban Princess on 03.29.12 at 1:35 am

#24 bubu:

I used to work in the industry and I’ve seen 45-year-olds get approved for 40 years. It’s expected the kids inherit the mortgage. Yay!

#94 NoName on 03.29.12 at 1:36 am

The attitude of Apple sympathizers and fans is viewed by many as being “cult-like”.

http://i41.tinypic.com/1fzdb9.png

#95 Property Manager on 03.29.12 at 1:40 am

Bubbles always end. CMHC has a full property management department to look after properties they buy by taking over the first mortgage they have insured after the banks advise them there have been three missed payments.
The high ratio CMHC insured people will be chewed up first, by the same government agency that got them in to the house or condo in the first place. Sad, really…

#96 Canuck Abroad on 03.29.12 at 2:05 am

Take a look at Garth’s chart. Then take a look at the charts in this article and ask yourself if you really want to buy at current prices?

http://www.nakedcapitalism.com/2012/03/housing-bubbles-house-prices-and-interest-rates.html

“This column looks at the effect of a deviation in interest rates from the Taylor rule and finds that keeping interest rates ‘too low’ can explain up to 50% of the overvaluation of the property market in these countries and elsewhere…”

http://www.voxeu.org/index.php?q=node/7799

#97 John on 03.29.12 at 2:10 am

Well, the 28 year old actually appeared. He has no community, no culture, offers “MBA” to his fellow man, wants a household led by his wife, and talks about dancing or not dancing with financial institutions…who are plugged into the largest ponzi scheme in the history of the planet.

He didn’t even mention any of that. He’s not aware of it.

#98 Canuck Abroad on 03.29.12 at 2:13 am

44 / brainsail – If you can get a livestream of one of the Canadian news channels you should be able to watch it on your computer?

#99 Bryan on 03.29.12 at 2:37 am

It is funny that there are renters out there who think if you need a mortgage then all you have to do is to step inside a bank and state the loan amount you need. You’re saying this because you never actually applied for a mortgage. I’m sure if mortgages are that easy to get qualified for, then virtually all renters would rush their assess to the bank to get one for themselves. I just went back from a visit to a major bank today to apply for a new mortgage. Guess what, I put down 35% and we are talking downtown Toronto so that’s a few hundred thousand dollars. I have the rental income to support the payments but I still didn’t get the approval.

Garth is a talented writer and I don’t think I can find another Blogger who can write about the same topic year after year and still make it so refreshing. I love the comment section because there are many real life stories I can learn from. However, I never blindly listen to or follow anyone. I do my research, work out my numbers and make the decision that I feel confident that the odds of winning are on my side. Except for death, nothing in life is guaranteed. I’m amazes that there are people who’ve been wanting to buy a house since…1999. I also wanted a house at that time but I couldn’t even dream about it as I was only a broke highschool kid receiving an allowance from my parents. 13 years later, I got further than I could ever imagine and the people who wanted a house in 1999 are still crunching numbers, except that they’re now doing less of it because they have this blog.

I learn many things from Garth’s blog. There are things I learn here that I can never find in any books.

To the dude who called me indecent and inhumane the other day when I said landlords of which I am one, are not in this business to lose money so stop thinking that they’re financial idiots by carrying a negative cash flow property indefinitely. You see, when landlords who have to dip their hands into their own pockets to meet that mortgage payment, you call them stupid, but if they make the property self-sustaining from the rental income then you call them indecent and inhumane. Little did you know that I’m operating a business, not a charity.

Lastly, my great joy is to think about counting the years this blog is in existence. I’m at 5 now.

#100 Aussie Roy on 03.29.12 at 3:25 am

Aussie Update

The tide is going out, attitudes towards debt have changed. This is called deleveraging. Prices will keep falling?.

AUSTRALIANS are paying down mortgages at the fastest rate since the peak of the global financial crisis, with home owners putting in almost double the minimum monthly repayment on loans.

The trend provides more evidence of the rapid shift in the behaviour of Australians in recent years, with many taking a cautious approach towards debt

http://www.theage.com.au/business/owners-in-rush-to-pay-home-loans-20120328-1vys3.html

The most disconcerting trend to come out of the Stockland downgrade announcement was Matthew Quinn’s observation that banks were not offering financing to their buyers.

He said house-and-land buyers assessed as qualified for financing by Stockland were often getting knocked back by banks.

http://www.propertyobserver.com.au/residential/land-prices-coming-back-to-earth-as-developers-start-discounting/2012032754043

Largest non bank lender in Australia, says.

Aussie Home Loans founder John Symond has warned that “borrowers will burst like tomatoes unless the RBA cuts rates”. He still hasn’t woken up to the FACT it’s bond buyers who have more influence on rates, not the RBA.

Tomatoe soup anyone?.

http://www.propertyobserver.com.au/mortgages/john-symond-urges-out-of-touch-rba-to-cut-rates-or-borrowers-will-burst-like-tomatoes

You’re no doubt more used hearing from Fujitsu about air conditioners. But it’s a little known fact that they run a small financial services consulting unit which today, in conjunction with J.P. Morgan, released a pretty bearish assessment of the prospects for Australian housing.

The semi regular Australian Mortgage Industry report concludes:

…that the biggest driver of housing credit growth in the 15 year period between 1992 and 2006 was more households taking on debt as they adjusted to lower interest rates. This dynamic accounted for nearly half the average 15.2% p.a. housing credit growth during the period with income growth (3.9% p.a.) and higher gearing tolerance (3.9% p.a.) much less significant. From 2007 onwards, despite income growth accounting for ~4% p.a. housing credit growth, the proportion of new households taking on debt has more than halved to 3.3% p.a. and higher gearing tolerance is absent (and actually negative in the last two years).

http://www.macrobusiness.com.au/2012/03/fujtisu-mortgage-report-vs-anz-housing-reportby-david-llewellyn-smith/

Property in Australia is ridiculously expensive by world standards, although no one wants to hear this because of vested interests. Property in Australia was like it was in China – it became a lubricant in itself. Now the game is over.

http://www.smartcompany.com.au/economy/048891-rich-list-investor-kerr-neilson-gives-his-outlook-for-global-markets.html

Australias most well known vested interest spruiker, writes “I’m in denial and it’s all good FOLKS and that’s a FACT”. Here are my lovely graphs based on my hedonic (read manipulated) data.

http://www.propertyobserver.com.au/mortgages/aussie-home-loan-arrears-are-falling-not-increasing-christopher-joye

#101 ANONYMOUS on 03.29.12 at 5:25 am

Didn’t someone here on this blog say that $400,000 homes would soon be selling for $800,000.

And that $800,000 homes would soon be selling for $1.2 Million ?

And every nut-bar here at this blog ridiculed him and made fun of him, saying he was ‘NUTS’?

Now you are talking about $1.2 Million dollar homes like it is the new ‘AVERAGE’ home price?

So is it the readers here who are NUTS, or that other fellow who was trying to open the eyes of everyone to the real truth?

Umm?

#102 Linda Pearson on 03.29.12 at 5:58 am

#44brainsail on 03.28.12 at 10:10 pm

You’ve obviously got a computer as evidenced by your e-mail message here. Why not log on to one of the Canadian news websites, CBC.ca for example, to watch either live coverage or extensive newshour coverage?

#103 I'm stupid on 03.29.12 at 6:29 am

I don’t quit. — Garth

I did a long time ago. What keeps you motivated? I know it’s not money, since you have no ads on your site like zerohedge. (notice all the gold ads on zerohedge and wonder why they keep pumping pm’s)

It must be the marriage proposals and the constant women telling you they love you.

I am constantly showered with underwear. — Garth

#104 House on 03.29.12 at 6:33 am

The truth has finally dawned. Stevie and Jimbo are going to use lax lending and environmental rules to prop the economy up during their rule and leave someone like Obama, in the US, to clean up their mess. No doubt Canada and taxpayers will be the poorer in the long run for this incompetence.

#105 Kip on 03.29.12 at 6:59 am

“His point is poignant and precise, often made by Americans who come to this pathetic blog to watch us with amusement”

Amusement? That coming from a country that has trashed it’s own currency by at least 30% since 2008 to bail liars and thieves on Wall St.

A country mired in 15 trillion in debt not including 3-4 trillion in the never ending war on terror. A country that chose to hammer it’s middle class following 8 years of clown like mismanagement of the economy?

Yes, amusing indeed!

You just proved it. Comedic. — Garth

#106 Jimmy O'Flarety on 03.29.12 at 7:44 am

People, people, people, get a hold of yourselves. You sound as if this crash is going to happen next week. Listen, between you and me, any type of correction is going to happen over a long period of time. Housing doesn’t just slam on the brakes, 2 feet before hitting a brick wall after driving 100mph. Here’s how it will play out. First, poor people will get screwed. But no one really gives a rat’s ass about them anyway. Then it will be old people but they’re going to die off soon anyway so all their bitching and moaning isn’t going to bother anyone. Students and the younger generation are toast but because they have 30, 40 maybe 50 years ahead of them, they may be able to catch up but who cares about those freaks anyway. Then it will the middle class. That’s going to be at least 10 years down the road. Toss them a few tax credits and they’ll be happy. By then, the cycle will start back up again and like always the best will survive and thrive. Until then, lower your expectations.

http://www.youtube.com/watch?v=Ob9qVfN4ydY

#107 Kip on 03.29.12 at 8:25 am

“As for condos, it now looks like the GTA alone will have 23,000 new units added to the housing stock this year alone.”

Well, you heard it here first. Myself and others have been saying there will be no slowdown. The first quarter is now over and it appears 2012 will be a very good year for construction in the GTA. You just don’t want to hear anything positive.

Adding 23,000 units into a nearly-saturated market is not positive. People like you, in the trades, should have learned by now that boom leads to bust. — Garth

#108 FTP - First Time Poster on 03.29.12 at 8:39 am

Garth,

I have to commend you. In 2008 you were saying the same thing about prices, interest rates, etc. and have been wrong for the last soon to be 4 years. While your timing is off (who can be right with gov’t intervention), your message is on target.

The Mrs. and I have decided its time to get out of Edmonton. Taxes continue to climb, we have a mayor who gives our resident billionaire both hand outs and hand jobs, our infrastructure is in decline, etc. We’re selling this fall will buy an acreage or another home outside the city for the same price as what we sell ours. Our mortgage is about 1.2X our annual income and I like not being house bound.

While you wont get the Order of Canada (a sham as far as I’m concerned anyway) you do have the gratitude of thousands who’ve heard your message and haven’t been swept away by the herd.

Thank you. AS far as being ‘wrong,’ remember that Canada is not one seamless housing market. There are vast areas that have already fallen into a real estate swamp with people unable to sell and prices declining. Smug owners in selected markets should try to take a wider view. There but for the grace of F go they. — Garth

#109 CTO on 03.29.12 at 8:48 am

Garth

“Now tell me, where on this chart should you buy or sell”?

Awesome question and the answer is so easy!
I know where those points on the chart are…

#110 Stevenson on 03.29.12 at 8:59 am

If areas with the largest so called bubble effect and where majority of Canadians buy RE is not in trouble. How in the world have people been here chosen the correct choice? It’s obvious most of you have been wrong and continue to do so.

You look at the market like its an equation with constants, but in reality its full of uncontrollable fluctuating variables. That’s why the “speculations” here have been wrong. There are too many factors out of your control to predict a certain direction.

One thing you can not admit is that you have been wrong and the market has been appreciating at record levels in front of your eyes. While you decide to wait or worst off, sell.

If everyone in Canada was thinking so risk adverse and frugal as people here. The Canadian economy would tank in a second.

Spoken like a true realtor – endless growth and price appreciation is good and natural. Except they are neither. Valuations always return to the mean, and those who argue otherwise misled. If innocently, it’s naive. If by design, it’s deceit. — Garth

#111 tomohawk on 03.29.12 at 9:01 am

@#24 bubu

About four years ago my then-GF (now-wife) wondered if we were really “Richer Than We Think” and could get a mortgage here in Ottawa and if so for how much. The young guy at the bank took a look at our credit rating and finances and told us we were excellent risks and could borrow up to 105% of the cost of a home valued up to roughly 5x our combined annual pre-tax income then pay it back over 40 years.

I asked him two questions:
1) Why would a bank lend to people who don’t have any skin in the game?

2) Didn’t he realize we were both in our mid-40s and wouldn’t have the loan paid off until our mid-80s?

The guy’s answers were astonishing. He told us not to worry about about number one since houses only go up. As for number two, our children could assume the mortgage and pay off the house. When I told him we didn’t have any children, he referred us to number one: houses only go up.

We left there laughing our @$$e$ off. At that moment I understood what to that point I had only sensed: when it comes to real estate many people have lost their minds.

#112 GregW, Oakville on 03.29.12 at 9:03 am

Hi #14 Mikey, re: Oh Garth, you give too much credit to politicians, … , you expect anything different?

Your broad stroke description of politicians thankfully isn’t all of them. (hopefully)
Even is if it seems that way some times.
G might have struck fear into TPTB, so they worked hard to get him out?

Perhaps Mr. G.T. did expect something different.
At least he tried!

#113 eaglebay - Parksville on 03.29.12 at 9:06 am

#44 brainsail on 03.28.12 at 10:10 pm
“We’d love to watch his speech tomorrow but we live in the US. Out of the 200 satellite channels we receive the only one we know that has Canadian content is HGTV.

Any ideas?”
________________
Ever heard of the Internet (web)?

#114 Steven Rowlandson on 03.29.12 at 9:11 am

Re: #20 Jeff

Affordable real estate in Canada Jeff?
For whom? Lottery winners, millionaires, billionaires, civil servants, doctors , lawyers, politicians ,bankers?
People who get paid a sum that is the equivelant of having many millions on deposit at a bank?
Surely you are not saying workers and tradesmen can afford to buy real estate in Canada based on their meager pay are you? As a consummer good, real estate prices have been jacked up so high that buying at even low mortgage rates is a dangerous proposition.
It might surprise you but a man needs some serious after tax and after mortgage or after rent income to survive in this world. Most of that income if not all of it comes from an employer and there are limits to what they will pay a man for his efforts.

#115 Whatever on 03.29.12 at 9:31 am

An interesting happened at my local watering hole north of Toronto (i.e. local bar). I’ve noticed a train wreck of drunken financial professionals from Toronto crying the blues. When these guys get a few drinks in them they start talking, most of them are worried about the debt load and the mortgage markets in Canada. When I asked one guy what would happen if interest rate were to increase by 2% the response was “leave town, you don’t want to be around!”

#116 Kip on 03.29.12 at 9:32 am

“Adding 23,000 units into a nearly-saturated market is not positive. People like you, in the trades, should have learned by now that boom leads to bust. — Garth”

As a veteran of four recessions I know it weep. What would you have me do Garth, quit my job on the premise that we’ve built too much? More comic relief!

I don’t need a degree to survive in my world, I went to the school of hard knocks and Screw U.

The work I mentioned before in GTA is not just condo related but industrial, commercial and institutional is set to boom as well. The construction industry is alive and well and running flat this year no matter what you think.

Knock the chip off your shoulder. It’s unbecoming and unnecessary. I hope you are banking lots of cash during this period. There is a drought coming. — Garth

#117 eaglebay - Parksville on 03.29.12 at 9:34 am

#84 Stuck on the Island on 03.29.12 at 12:34 am

Everything sells at the right price.
Too much mortgage on your property?
Something wrong somewhere.

#118 Daisy Mae on 03.29.12 at 9:41 am

#8 BILL GABLE: “So all of a sudden, pixie feet is going to do nothing?

For weeks you have been saying that Flaherty is going to lower the boom.”

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

Pixie Legs would have to admit he was wrong. He’s not going to do that.

#119 Kip on 03.29.12 at 9:42 am

Sorry for the typo in my last post. Should be construction industry is running flat out as in, out of people, we need more, lots more.

#120 disciple on 03.29.12 at 9:43 am

I posted this comment on several media outlet websites yesterday:

“Why do you only have comments from the same old national policy think-tanks and bank officials? Where are the comments from groups concerned for the interests of children and seniors and students and why do you only represent the views of corporations?”

Only two posted it: Maclean’s and Canadian Business. I honestly didn’t expect any of them. Each of the articles I was commenting on that were on the upcoming federal budget, a representative of one of the Big Four policy thinktanks in Canada were quoted (CDHowe, Fraser, CanCouncil Chief Execs, ConfBoard), so the relevancy of my comment was there. Even the ironically-named Winnipeg FREE Press chose not to publish it. Jokes.

#121 dd on 03.29.12 at 9:44 am

Wow! The US Federal Reserve is buying 61% of debt issued by the US Treasury.

This is continued money printing!

http://www.moneynews.com/Headline/fed-debt-Treasury/2012/03/28/id/434106?s=al&promo_code=E8AA-1#ixzz1qVdD8vCK

#122 eaglebay - Parksville on 03.29.12 at 9:55 am

The Budget.

Small changes to the CMHC.
Some civil service deadwood eliminated saving billions.
Cuts to some red tape regarding natural resources and small businesses.
Elimination of some so-called “loop holes”.
Increase spending in, and facilitation of infrastructure projects.
Increase spending and tax credits for skills training and trades upgrading.
Changes to regulated pension plans.
Jobs and the economy will be at the forefront.

#123 Steven Rowlandson on 03.29.12 at 9:55 am

Here is an interesting essay that all should read and carefull consider. Although it sounds like something Adolph Hitler wrote in Mein Kampf, I think what it says is still valid. Hitler thought cities were economic,racial/ biological and cultural death traps.

http://canspeccy.blogspot.pt/2012/03/how-west-destroys-its-own_27.html

#124 Mr Buyer on 03.29.12 at 10:13 am

BUYER BEWARE. THE BUBBLE HAS TOPPED. SALES ARE FALLING ACROSS CANADA. NOW IS NOT THE TIME TO BUY A HOUSE. DO NOT BUY INTO A FALLING MARKET.

#125 Daisy Mae on 03.29.12 at 10:13 am

#41 FABREGA:

http://www.cbc.ca/news/politics/story/2012/03/28/pol-budget-elements-to-watch.html

#126 City Slicker on 03.29.12 at 10:29 am

Well today’s the big day. I couldn’t sleep all night I’m so excited. I know F is going to anex the 30 amort.

#127 Bryan on 03.29.12 at 10:30 am

To FTP: I don’t think Garth was wrong the last four years. What he was wrong about was the fact that people in power would do anything to any extent of detriment to make them stand on good terms. In 2009, my realtor who was one of the best producers In her firm could not close a sale in months. Everybody thought “that’s it! This is the end!” but I knew the gov would step in soon and do something…and here we are.

I wonder how Garth could put up with the amount of profanity thrown at him. I admire your patience, Big Man. You’re giving a lot of good advice for free and I’m very grateful for that.

#128 $$$BPOE#1 on 03.29.12 at 10:34 am

Folks nothing ever goes up in a straight line forever. I’ve stated this many times.Many people have been on the wrong side of the bet for years now. You need to look at the long term trend and not the day to day and month to month gyrations. A house is not a day trading stock. F is going to do absolutely nothing just as I predicted.

#129 Linda on 03.29.12 at 10:34 am

#51 I can’tbelieveit – Vancouver video.

Interesting that the woman in the video is well into her 50s and singing about how the city of Vancouver is the one in which she want to grow up. Talk about delusional.

#130 The American on 03.29.12 at 10:35 am

At #20: Jeff, you said, “We do not offer loans at 100%+ LTV, we do not offer teaser loans to subprime clients and qualify them on the teaser rates, and we do not offer NINJNA (no income, no job, no assets) mortgages.”

Actually, Canada is the largest offender of subprime lending standards of the entire G20 on a per-capita basis. And, yes, Canada does offer the equivalent of $0 down. Your system just doesn’t use verbiage that recognizes it for what it is. When a loan is offered as a 3% or 5% down, yet the down payment is also coming as cash back from the bank, then its the same thing as $0 down. To make claim you do not offer subprime loans is hilarious. I know Canadian cab drivers who own multiple investment properties as a result of “stated income” verification loans, which is the identical thing as a NINJA loan. Additionally, let me point this out… Canada has been riding on “emergency rates” since 2008. The typical STANDARD loan in Canada resets every 5 years. We would call it an ARM (adjustable rate mortgage in the U.S.), of which less than 30% of all the loans taken in the U.S. at peak of market were this kind of loan, and it certainly is no longer a preference of Americans after having experienced exactly what this kind of practice produces. In Canada, it is well over 90%. You sound just like a mortgage broker to me. Face it, you’re screwed.

#131 Linda on 03.29.12 at 10:38 am

Correction: #51Can’tbelieveit on 03.27.12 at 10:23 pm

#132 Beach Girl on 03.29.12 at 10:53 am

There is a time and place for everything.

The twenties are are a time to exaggerate, build one’s ego. Will I be better than my piers? Will I succeed? This, is the show off time in life. When you basically have nothing. The teachers who teach you, realize you are not unique, having gone through this phase year after year. They are bored to death and don’t care, as well they should be. As it is just a pay cheque. You are like the line at McDonalds.

The thirties. Now this turns nasty. You have managed to be employed at a rather shitty job, no matter how good it is. You have encumbered yourself to a spouse (male or female), have bought a residence. When essentially you are renting from the bank. And it is harder to get out of. In all this, you decide to have children before it is too late. If life wasn’t bad enough, you realize you don’t like each other. Big surprise.

The forties, well hell is busting out. Maybe I should go out there and fornicate and have some fun, before my good looks fail (male and female). The forties are famous for F***ing. Now this is fun. Support payments suck but are worth every dime. LOL.

The fifties. WOW, I am free. I don’t care if you like me. Just like being a teenager again. And you get to listen to young peoples’ angst, like they invented it.

If you are 20, backpack the world.

If you are 30. Be in love without all the toys and drama.

If you are 40, and still love your spouse, endure the course. If not party till its 199999.

When you are 50, have fun, “Our Day Will Come and We’ll Have Everything.

To cold to hit the beach. Miss Daisy and Beach Girl.

#133 Kris on 03.29.12 at 11:03 am

One of my friends said he knows a realtor who runs one of the largest Royal LePage operations in western Canada. The RLP guy apparently claimed they’d sold about 30 homes, all million-dollar or more, in BC in the last 6 months – None of them had a mortgage on it – All were cash deals, to buyers from Orient & Arab countries.

You can walk into Canada if you have $500K of non-mortgaged RE, i.e., land here first, then apply for permanent residence. Thus, the immig limit (of 250,000 people per year, or whatever) doesn’t apply.

Consider what worldwide demand did to London, Paris real-estate last 50 years. Maybe Canada is experiencing the growing pains of becoming the world’s sweetheart.. It’s conceivable these prices are here to stay (much as I hate to admit that)

#134 Wage Slave on 03.29.12 at 11:11 am

53 Jsan on 03.28.12 at 10:30 pm:

The Looting of the Canadian middle class
What’s happening in Canada seems to be taking a very similar route to what transpired in the US. The only thing left is to deliberately knock the engineered Canadian house of cards down.

Not only is it the looting via debt that’s coming to Canada, this is next/already going down as we type:

http://www.forbes.com/sites/stevedenning/2011/10/19/retirement-heist-how-firms-plunder-workers-nest-eggs/

#135 Mister Obvious on 03.29.12 at 11:25 am

#132 Beach Girl

And when you are 60… sit back in your wooden paneled library beside a 19th century globe. Look out over your manicured estates while enjoying a cognac and fine Cuban cigar. Contemplate the endless cycle of history. Then make peace with your irrelevance.

#136 Smoking Man on 03.29.12 at 11:42 am

George Zimmerman and the Little Green Man

To all you bubble heads, basement dwellers, and fence sitters, here is another example how MSM works.
There is a little green man in the back room who comes out with talking points. Orders are distributed and every main street media outlet will push and push hard.

So the only way you’re going to get herd to capitulate on real estate is when Mr. Little Green Man wants it to happen. Lucky for owners of property The little Green Man has his hands full right now.

Example how can this be relevant. Case of George Zimmerman Shooting the Kid.

Every and I mean Every MSM, TV, RADIO, PRINT are all pushing this line.

“Zimmerman, who is half white and half Hispanic,”
“Zimmerman, who is half white and half Hispanic,”
“Zimmerman, who is half white and half Hispanic,”
“Zimmerman, who is half white and half Hispanic,”
“Zimmerman, who is half white and half Hispanic,”

Why the little green man went nuts with this one and thought it was important to point out Zimmerman is ½ white and ½ Hispanic, is anyone’s guess.

The fact that it is uniformly distributed, and pushed hard means.

The Little Green Man Owns the herds mind.

#137 Aussie Roy on 03.29.12 at 11:50 am

Aussie Update

Scuba diving anyone?

Record number of Aussie homes loans ‘under water’

Banks are desperate to keep lending despite a record number of Australians being “under water” on their mortgages

Banks and other lenders relaxed their lending criteria in 2008, partly by lifting new borrowers’ loan to valuation ratios (LVRs) amid cuts to interest rates, which spurred (Govt) a doubling of first home buyers entering the market.

Those home loans are now “under water”, driving the proportion of properties nationwide “under water” up to a record 6.4 per cent, according to RPData, JPMorgan and Fujitsu.

#138 Aussie Roy on 03.29.12 at 11:51 am

Sorry here is the link

http://www.sbs.com.au/news/article/1637985/Record-number-of-homes-loans-%27under-water%27

#139 Colin Laney on 03.29.12 at 11:56 am

#28 Deb
&
#44 brainsail

Have you guys ever heard of CPAC?

CPAC – the Cable Public Affairs Channel

It has a live feed of parliamentary proceedings and you can watch it on the website or on a TV if you have the channel.

#140 Arshes76 on 03.29.12 at 12:03 pm

#99
I just went back from a visit to a major bank today to apply for a new mortgage. Guess what, I put down 35% and we are talking downtown Toronto so that’s a few hundred thousand dollars. I have the rental income to support the payments but I still didn’t get the approval.
———————————————————
With 35% down tha bank is the one taking the risk, try again with 5% down (which would qualify for a CHMC insured loan). With a CHMC ack load the risk shifts from the bank to CHMC.

#141 weekend open house tour on 03.29.12 at 12:06 pm

#133… another reason not to live in Toronto :)

#142 debtified on 03.29.12 at 12:08 pm

Don’t put too much importance on what F does or doesn’t do, Mr. T. He is playing politics and this whole RE bubble thingy is playing out exacty how he and his boss H designed it. Good job on documenting their evil deeds on this blog so history will remember but you know deep inside that they can and will use this to their advantage on elections day. They are much better politicians than you. You have this thing called principle and a genuine desire to serve the public. When the public has drunk the kool-aid, you will not win an election – the evil empire will.

Personally, I focus more on what I can do to avoid the inevitable RE crash, and the economic implications of it. I don’t dwell on blaming people like F, H, the RE Agents, the Banks and BPOE. It’s a waste of time. Blaming them will not change their behaviour nor will it change the outcome. They are all doing what it is they need to do to protect and advance their own interests – a predictable and normal human behaviour. Better to focus all my energy on preparing for the outcome to make sure that I’ll be okay (and my loved ones).

Thanks to you, Garth, I have learned several things to make sure I come out of this okay.

#143 Suede on 03.29.12 at 12:19 pm

Why not try and balance the budget yourself? What would you do with the FP, ROB et al documenting your every move and opposition groups salivating at your every mis-step?

http://www.theglobeandmail.com/news/politics/so-you-wanna-be-finance-minister-see-how-you-do-balancing-ottawas-books/article2371543/

#144 daystar on 03.29.12 at 12:31 pm

#59 Terces on 03.28.12 at 10:46 pm #99 Daystar from

It has been a struggle for the US Fed to keep intervening in the bond market to keep interest rates low – but they had no choice – that is until all of the Adjutable Rate Mortgages reset. – Terces

Correct. I wouldn’t say a struggle, but they had no choice and until the last of the ARM’s reset to higher rates forcing bankrupcies north of 50% as ARM holders can’t make payments that often reset to 50 to 100% higher mortgage payments. In the face of negative equity/oversupply, rates need to be kept artificially low through the feds buying their own bonds with QE.

…that final chapter is coming very soon – or perhaps we are at the end of this chapter as we speak. – Terces

The last of the ARM’s reset by this fall. There will be a lag which is hard to nail but its likely 6 months thereafter meaning it would surprise me if the Feds keep interest rates low beyond the spring, summer of 2013 and once government stops buying their own bonds, their biggest customer has just left meaning interest rates will have to go up to attract investors in treasury bills.

The adjustable rate mortgages are now locked into the low rate, and severe damage will no longer be inflicted if rates in the US are allowed to rise. – Terces

Incorrect. This chart below:

http://av.r.ftdata.co.uk/files/2010/03/9085247.gif

…indicates when ARM’s reset into much higher rates which has led to bankrupcies north of 50%. The real estate sector in the U.S. is getting hammered by it even now. When you have 30 to 40 billion worth of ARM’s reseting each month leading to mortgage payments going up by 50% to 80% once they reset, it triggers between 50 to 70% mortgage defaults within 3 months of the reset or has been. Its the losses to the financial systems and combined with lost jobs and asset devaluation leading to negative equity and housing over supply combining all at once with large enough numbers that are forcing Bernanke to keep rates artificially low through QE. Without low rates, their housing bottom would be more servere, without question. New homebuyers need that incentive to get back into this market, they really do. Once this last wave of Alt A/ARM mortgage spawned bankrupcies hit the books, Bernanke can then allow rates to rise.

You are right with the rest of it. Bernanke really can’t stop intervening in the bond market until it runs it course but once it does, again as you know, the biggest buyer of bonds will have left the building and new buyers of debt will have to pick up the slack. Will they do it for peanuts? Not a chance and up up, rates go and once they do, Mark Carney will be forced to compete with higher rates in the U.S. meaning they rise in Canada pretty much simultaniously.

Once that happens the rest is predictable except for… the possibility of Mark Carney trying QE in Canada to keep rates low should our RE bubble deflate too quickly and bankrupcies become too extreme. Lower rates after all, would keep the problem at bay. The problem with using QE in Canada however, is that rates will normalize once QE is stopped and for that matter, rates will be higher than normal precisely because a QE event took place to begin with depending on where public debt levels are at so again, we need to look at the differences between the two nations, Canada and the U.S..

Canada has at best, 10 year terms and 5 year terms have been the most popular, promoted by banks which profit with each renewal. The U.S. has 30 year terms which need no renewal (but once they sign that mortgage, the contract is non-negotiable). The only way out for Canada once all Canadians realize the absolute seriousness of the extreme of our RE bubble is to introduce 30 year terms in Canada with a significant round of QE over say… a 2 year period that allows every mortgage holder a chance to lock into a cheap rate over a 30 year term with no renewal. This is Canada’s only way out that I can see going forward. It will be expensive on our public treasury, it will hammer bank profits which will sour mutual/RRSP growth in financials and it will cheapen our currency regardless of how much oil we pump, it will hurt this nation with drama but the alternative from what I see is far worse which is, y’know, what F says he wants and has yet to deliver regardless, which is the allowance of free market forces.

Once america’s nightmare is over and rates normalize, our nightmare begins and as Garth suggests, it will be a crash not a fizzle. With F not lowering ams to 25/5 terms and OSFI reg changes nothing but noise for 9 months, our credit bubble continues to grow regardless of whether RE values flatline or even drop 5%. As Garth suggests, we’ve already got a RE bubble, and its not likely going any higher but our credit bubble sure is!

So what happens 9 months from now? Tough OSFI regs take effect. Consumer credit hits a wall. Interest rates will begin their ascent. Listings will balloon and oversupply will be transparent. Things will have to get worse and the negative numbers will have to come in before a reaction from Carney takes place. Thats just how its going to play out and like I say, if we don’t go to 30 year terms at cheap rates induced by QE, then all QE will do is delay the inevidable like it did with Japan only we aren’t Japan. If we do QE here without the right governmental policy going forward, the risk is public debt to GDP inflation that skyrockets out of control… just like Japan only the largess of our public debt could be owned by foreigners meaning we aren’t Japan and thats the worst of all nightmares.

As it stands, RE in Canada is set for a major fall and the negative numbers will have to come in before Mark Carney can react and like I say, if we don’t go to QE and introduce 30 year terms, Canada could experience a severe, long lasting recession. I think we’ll get this anyway, tumbling RE values will have that effect and nothing Canada can do will save us from that but what will get us out of it? What can save us from major bankrupcies and systemic failures or QE attempts that simply buy time with no solutions is to go to 30 year terms like the U.S. and our banks campaign hard for it regardless of their dent to profits. I’m talking about financial survival here and some tough choices will have to be made.

#145 Bigrider on 03.29.12 at 12:39 pm

So long as houses have appreciated in value for the past 13 years and stock markets have languished for same, punctuated only by gut wrenching, eviscerating losses, house obsession will continue.

Not saying it`s right, just accepting reality

#146 Beach Girl on 03.29.12 at 12:40 pm

#135 Mister Obvious on 03.29.12 at 11:25 am

#132 Beach Girl

And when you are 60… sit back in your wooden paneled library beside a 19th century globe. Look out over your manicured estates while enjoying a cognac and fine Cuban cigar. Contemplate the endless cycle of history. Then make peace with your irrelevance.

___

Sounds great to me. I’m in.

You might even get hired for yard maintenance.

#147 Bigrider on 03.29.12 at 12:42 pm

Kip and Stevenson.

The sickiening, vomit inducing ,emotionally based obsession with real estate that has captured what seems to be the loins of everyone in Canada should be repulsive to you, not something to embrace.

Canada, the land of particle board, drywall and granite.

What a shame

#148 CD on 03.29.12 at 12:48 pm

RE: The MBA student.

AT 28 claims to have owned a place since the mid-2000’s…. So he was in his late teens/early 20’s when he picked up a 3 bedroom townhouse, and still comfortable enough to carry the mortgage with “zero” income…. Interesting….

Assuming the house price doubled in the past decade, there would be ample room for a sizable downpayment. This probably satisfies the bank.

One of my peers did exactly the same thing as this young man last month….. With parents help he bought a condo in 2005 for the low 200’s….. Sold it last month for $390, & put $200k down on a $800,000 (905) 4 bedroom McMansion….

30 years old, $800,000 mortgage, baby on the way…. Fixed in 2.99 for 5 years….

The ironic thing is that he won’t be able to furnish the McMansion, but hey – he can do that the rest of life….

His parents are delighted, their boy has a bigger house then they do! He is happy because he has a giant back yard and the sellers “threw in a BBQ”.

Garth – your blog almost lost me a friend…. by asking these questions I no longer get call backs from my buddy.

1) Why do you need such a giant house for you, your girlfriend, and an incoming baby?

2) What happens if interest rates rise?

3) What happens if you get laid off?

#149 Julia on 03.29.12 at 12:55 pm

And in Toronto, just wait for the next market value assessment (MVA) on property taxes. Many places going for hundreds of ks over asking are not realizing that the property taxes on the listing were for 2011. Hope they budgeted for and extra grand or three in taxes!

#150 Al on 03.29.12 at 1:00 pm

There’s a ton of new for sale listings in the Richmond Hill area all of a sudden. Probably the end of sales above asking price.

#151 Rene on 03.29.12 at 1:01 pm

79. The reason people who have never bought a house before are called “Property Virgins” is this:

When you buy a house you get F####d.
*******************************************

If you’ve ever watched the show, they always ask the couple at the end of the show what it feels like to lose their property virginity. I’m waiting for one of them to say it felt like sodomy.

#152 jess on 03.29.12 at 1:04 pm

Too have is to owe

http://canopycanopycanopy.com/10/to_have_is_to_owe
=====
Will one lose his sir title?

The four directors of the failed finance company Lombard Finance, including former cabinet ministers Sir Douglas Graham and William Jefferies,
http://www.stuff.co.nz/dominion-post/business/6474191/Lombard-directors-found-guilty

put into receivership in April 2008, owing $125 million to 4400 investors.

Secured creditors were expected to be repaid less than 24 cents in the dollar.

#153 TnT on 03.29.12 at 1:06 pm

#133 Kris

Consider what worldwide demand did to London, Paris real-estate last 50 years. Maybe Canada is experiencing the growing pains of becoming the world’s sweetheart.. It’s conceivable these prices are here to stay (much as I hate to admit that)
_________________________________

I’m concerned of the shear numbers of potential “new canadians”, were talking billions of people at our front door (if given the chance) vs. Canada’s 35 million.

Is this possible Garth? Is there any stats to confirm if this is possible?

#154 tkid on 03.29.12 at 1:18 pm

#152 Rene – thank you for the laugh. I’ll have to remember to not drink tea while reading Le Blog, tho’.

#155 cageyF on 03.29.12 at 1:19 pm

When I was thinking about buying the same thing happened to me. I have an MSc in computer science and HAD a decent paying job ($75K a year). Calculated what kind of monthly payment I would be comfortable with and figured out what I could buy with it at current interest rates, and at 5% and at 7.5% because I feel it’s reasonable to expect that interest rates will go back there sometime in the next 25 years. I figured I could afford a $300,000 mortgage paying $1500 a month at current interest rates because when rates head up to more normal levels I’d have some of the principal paid off. Mortage broker returned saying I could have more than a $550000 mortgage if I wanted it. Even at 3% interest this is $2600 a month! After tax that only leaves me $1300 a month for food, living, car, insurance, condo fees? Even at current interest rates, it was bonkers.

#156 jess on 03.29.12 at 1:34 pm

136 Smoking Man

What about the woman from Irag who was beaten to death in california with a note pinned on her telling her to go back to your own country.
==============
http://www.prwatch.org/books/tsigfy10.html
=

The problem for Shumlin and his allies is this: it will take five years before Vermont can fully implement its new system, partly because the federal health care reform law prohibits states from undertaking more far reaching reforms until 2017 unless granted waivers from the feds to do so. And though Vermont’s Congressional delegation is on board to pursue a waiver that would let the state set up a single payer system two years from now, the insurance industry’s friends in Washington are not keen to let that happen. That’s because they want to use those five years to persuade Vermonters that they really don’t want to go the single payer route after all>…

Insurers and employers have been collaborating for the past several years in a mutually beneficial effort to shift more of us into high-deductible policies. The higher the deductible, the less insurers and employers have to pay for our care. This collaboration has been so successful that increasing numbers of American families filing for bankruptcy are, at least theoretically, insured….

The Battle for Vermont’s Health — and Why It Matters for the Rest of the Country
by Wendell Potter — February 8, 2012 – 11:29am

#157 John G. Young on 03.29.12 at 1:47 pm

#113 eaglebay – Parksville on 03.29.12 at 9:06 am

“Ever heard of the Internet (web)?”

Ever heard of manners?

You are rude.

#158 Terces on 03.29.12 at 1:49 pm

Daystar #144, soooo, if I read you right, interest rates could indeed stay low until sometime next year. If that is the case then real estate may, or may not commence a strong move down for another year. And perhaps this means the bubble could continue to inflate in Van and TO for a while longer???

I’m guessing that when the elections are over rates will start rising.

Another ugly scenario is that mortgage “products” morph in ARM’s with low initial rates to keep things going a while longer.

And one other unknown factor is the price of oil. The natural gas leg has already been kicked out from the stool. If and when the price of oil heads south again, cities like Calgary and Edmonton will get hit hard.

#159 brainsail on 03.29.12 at 1:50 pm

#139 Colin Laney

CPAC it is. Thankyou. Commercial-free on our Smart TV with beer. It has been years since I have watched a parliament session. I wonder how many minutes I will last.

#160 GregW, Oakville on 03.29.12 at 1:51 pm

Hi # 28 Deb, re: “Well we don’t even get to listen to the budget speech anymore, as it’s actually being delivered, do we? As soon as F opens his mouth, we are given the colour commentary from the network anchors,…”

You can watch it all here live! OnLine or sometime through your cable provider too.

CPAC – Canada’s Politics TV
http://www.cpac.ca
CPAC – the Cable Public Affairs Channel – is your number one source for all that is Canadian politics and for current events within Canada’s government, the House of Commons …

Finance Minister Jim Flaherty delivers the federal budget at 4pm ET / 1pm PT inside the House of Commons. Watch live on CPAC and http://www.cpac.ca.

Question Peiriod starts at 2pm ET. Mon-Thur with Statement first, Friday it’s at 11am if I recall correctly.

#161 daystar on 03.29.12 at 1:53 pm

#28 Deb on 03.28.12 at 9:27 pm
Cato, Jo and so many others….

Absolutely right. Our RE bubble may have hit the peak but our dangerous credit bubble continues to grow while F delays and does nothing. The longer this credit bubble is allowed to grow, the darker our future becomes.

Lets go back 6 years readers, shall we? The Harper government decided before winning their first election to encourage Canadians in every way they could, to borrow their brains out on non performing assets. We don’t want to grow asset valuations through income or productivity, no, we have to do it through credit and hence, 40 year nothing down mortgages with wide open CMHC regs. Any tightening of CMHC regs came in the face of long lasting emergency interest rates meaning monthly payments became cheaper regardless and on and on, our RE/credit bubble grows.

Lets think about this policy decision (likely 10 years old or more in Harpers head) to boost employment through construction and financials through credit with non performing assets which do perform while valuations escalate, but drag the economy on the way down when valuations inevidably tumble and all the while meaning what do they really do over the long term, all valuations aside?

Non perform.

Meanwhile, all the fluff and noise about opening up the north to assets which do perform for decades once one off construction is concluded, from valuable deposits and liquids in the form of commodities, our high dollar’s best bet… goes to the wayside. Performing assets? What, we need a few railroads and power built to develop them? Lets not, for these assets perform. Tar sands development? Full steam ahead but everything else from “economic action plans” to infrastructure has to be done in Conservative ridings and they have to be one off construction intitiatives that, you guessed it, don’t financially perform. No, we need to overdevelop these non performing assets and little else, for it would actually be good for this country and bad for quick, near term profits on Bay St.

Never once was there ever a national discussion on the consequences a high dollar would have on this nation, particularly in manufacturing and commodities. Did you hear one? I didn’t. Not once, not ever from our federal government. What we do hear from the BoC is how productivity and household debt is a becoming a huge problem as Canadians overdevelop non performing RE assets and ugly credit bubbles grow. This blog is a testament as to what Canadians think they hear from Mark Carney instead of what’s being said. Honestly, we can’t read between the lines.

If productivity is off in this nation, why is it? Why, for the last 5 years, have we averaged 18% employment in the area of real estate alone? Think about it, is it normal for nearly 1 in 5 Canadians to be employed with putting a roof over our heads, isn’t that extreme? You bet it is. It should be more realistically 1 in 10 (and will be well within 3 years). Why did our Harper government (as they prefer to be called) decide to divert the nations talents to build one off non performing assets?

Because they no vision. No talent. No morality unless total incompetance is their best defence… when one factors in the debt hangover, devastated economy and ruined families to come (poor kids), only self serving motives to blame and it has everything to do with Bay ST., developers and foreign lobbies which kick it back one way or another. I can’t prove it, but it smells of corruption, of a leader who is nothing more than a U.S. lobbyist Bilderburger with no sovreignty in his bones, his marrow hollow of any love for this nation, its history or its strengths.

So should it surprise readers if I ask for F’s resignation on a near daily basis? It’s failed unimaginative no talent policy (that comes from his leader, truth be told). Should it surprise readers my pleas for them to recheck the way they vote and why?

I don’t have to see the effects of policy fail first to know its a failed government policy. Such policies in RE and credit have proven themselves to be failures everywhere else in this world with no exceptions, why would it be different here? What, Canadians weren’t aware of the rest of the choices (including the good ones) that this government could have made these last 6 years concerning the economy, they droned votes to the Harper party for the sake of change and like the color blue?

Canadians have been and will continue to be betrayed by this government. The only thing that changes between now and the next election day is that more and more of us will become aware of it as Canadians begin to lose their equity, their jobs and sadly, if left unchecked, their homes. May God help us all.

#162 disciple on 03.29.12 at 1:58 pm

#53 Jsan… I was studying your link and listening to Catherine Austin Fitts, and my Spidey-Sense acted up, because of the manner in which she speaks which is not consistent with her supposed credentials. She was in the Federal Housing Dept under Bush and now she is an investment banker. I did some more research and have come to a tentative and very unpleasant conclusion. She is not what she seems. Why would she point out the obvious now? Corporations have been looting America for a century…
I could point out other discrepancies but I think I’ll let you do that… study her website and what she was doing in Montana etc… or not, up to you…

#163 jess on 03.29.12 at 2:03 pm

backlash

Largest charter network in U.S.: Schools tied to Turkey
By Valerie Strauss
The Gulen schools

Another concern for the federal investigators is the number of H1B visas obtained by the Gulen network for militant Gulen supporters to act as teachers and administrators.

Gulen schools are among the nation’s largest users of the H1B visas
Gulen schools are among the nation’s largest users of the H1B visas. In 2009, the schools received government approvals for 684 visas – more than Google Inc. (440). The Harmony School, a Gulen-related institution, has applied for more H1B visas than any educational institution in the country.

H1B visas are supposed to be issued to attract foreign workers with math, science, and technology skills to jobs for which there are shortages of qualified American workers.

Ruth Hocker, former president of the parents’ group at the Young Scholars of Central Pennsylvania Charter School in State College, began to raise questions about the Gulen school in State College when popular, certified American teachers were replaced by uncertified Turkish men who often spoke limited English and were paid higher salaries.

“They would tell us they couldn’t find qualified American teachers,” Mrs. Hocker told the Inquirer.

This argument, she added, makes no sense in the hometown of Penn State University, which produces thousands of certified teachers every year in all subject areas.

Other school parents have testified to the federal investigators that uncertified teachers on H1B visas are moved from one charter school to another when their “emergency” teaching credentials expire and point to a persistent pattern of sudden turnovers of Turkish business managers, administrators, and board members.

http://www.washingtonpost.com/blogs/answer-sheet/post/largest-charter-network-in-us-schools-tied-to-turkey/2012/03/23/gIQAoaFzcS_blog.html

========
EDUCATION
credentials come under increased government scrutiny.
Kaplan University /Washington Post Washington Post Corporation with 58 percent of its revenue.
http://www.alternet.org/education/154717/what's_keeping_the_washington_post_so_quiet_about_accreditation_scandals_at_kaplan_university?page=entire

Systematic Cheating Is Found in Atlanta’s School System
By KIM SEVERSON
Published: July 5, 2011

=

SAT and ACT to Tighten Rules After Cheating Scandal
By JENNY ANDERSON
Published: March 27, 2012

#164 GregW, Oakville on 03.29.12 at 2:14 pm

Hi #83 Nostra, Didn’t the NDP just use electronic voting and vote counting! And there were issues!!!

PM H as told elections Canada to get ready to do the same! We’ll all be so screwed when that happens. The local and Party’s election using electronic vote count now is just to condition the masses(us) into believing it is ok.

“Believe in myth avoid the discomfort of thought”.

Our present paper ballots electroral system, counted by our fellow human beings hands, is the only way to know is it not Rigged!!!

#165 Van grrl on 03.29.12 at 2:17 pm

Re Brainsail in the US and suggestions he catch the budget on CBC, I don’t think folks in the US can watch CBC content, as I’ve tried to send documentaries to my brother in the UK and he can’t access the content.

#166 Steven Rowlandson on 03.29.12 at 2:25 pm

http://www.theglobeandmail.com/news/politics/so-you-wanna-be-finance-minister-see-how-you-do-balancing-ottawas-books/article2371543/

I don’t know about the rest of you but as finance minister I wiped out the 25 billion dollar deficit and created a 23.6 billion dollar surplus in order to pay down the national debt that the fake Tories built back up. Being in debt is bad. Having huge savings accounts earning good income from good investments is good!

#167 Steven Rowlandson on 03.29.12 at 2:48 pm

I had another go at the cut the budget game and had a surplus of 24.5 billion and no deficit. So can I have Jim Flaherty’s job?

#168 Debtfree on 03.29.12 at 3:10 pm

@ 122 jobs like these.
http://thetyee.ca/Blogs/TheHook/Labour-Industry/2012/03/29/petrochina-northern-gateway-bid/

@ 156 he’s from alberta land of truck nuts.

#169 brainsail on 03.29.12 at 3:35 pm

#165 Van grrl

Thanks for the concern. We are able to both CBC and CPAC.

#170 Devore on 03.29.12 at 3:36 pm

http://whispersfromtheedgeoftherainforest.blogspot.ca/2012/03/boomer-trigger.html

An ordinary looking bung in Richmond for sale since Feb 2008 (yes, 2008) for $2.4M finally sells, after lowering asking price to the auspicious number of $1.888M, for $1.428M. Apparently HAM cares only for dollars and cents, lucky numbers are for lottery winners only. Houses listed with lots of 8s in the price always settle for a smaller, less lucky number. The mighty dollar speaks louder than baseless superstitions.

Originally, the property was aimed at developers (neighboring lot also for sale for similar price), but it’s a tough sell at that price without rezoning already in place. When you’re holding a depreciating lottery ticket, the first one to panic and cash it in panics best.

#171 daystar on 03.29.12 at 3:37 pm

#158 Terces on 03.29.12

Soooo, if I read you right, interest rates could indeed stay low until sometime next year. If that is the case then real estate may, or may not commence a strong move down for another year. And perhaps this means the bubble could continue to inflate in Van and TO for a while longer??? – Terces

I can’t see RE crashing until monthly payments i.e. borrowing costs move upward. RE is credit driven so unless CMHC reg amortizations shorten or down payments (to a lesser extent) increase or OSFI actually puts stronger regs into effect or rates actually rise, RE values should goes sideways or fall slightly from consumer debt exhaustion. RE inflation at least in terms of value has in my view, hit it’s peak but!!!! This viscious credit bubble we have in this nation will continue to grow and thats the damage this Harper government could control today, but likely won’t.

I’m guessing that when the elections are over rates will start rising. -Terces

Thats a good guess:

http://en.wikipedia.org/wiki/United_States_presidential_election,_2012

… but I’m thinking rates won’t rise until the spring of 2013. Y’know, its funny. I sensed a lull in the U.S. economy in 2013 since last year and I didn’t understand fully why until recently and it has to do with rates rising in the U.S. and what that will do to their economy but I see 2014 as the year the U.S. economy truly takes flight (mainly because rates will rise everywhere else). Europe, Asia, Japan and nations like Canada essentially surrender market share to the U.S. from this time on due to their own internal problems (debt) weakening their ability to remain competitive so they surrender market share to the U.S..

Another ugly scenario is that mortgage “products” morph in ARM’s with low initial rates to keep things going a while longer. – Terces

It could happen here but I doubt it. I doubt that Canada’s banks would go for this. Bankers bonus’s in Canada just don’t reward this kind of behavior to my knowledge.

“And one other unknown factor is the price of oil. The natural gas leg has already been kicked out from the stool. If and when the price of oil heads south again, cities like Calgary and Edmonton will get hit hard.” – Terces

I see oil as being strong regardless of what world economies do now. Peak oil is legit:

http://www.youtube.com/watch?v=8vljIei1PwM&feature=fvsr

Peak oil inevidability has been delayed by 3 factors:
1) Oceanic discovery/development
2) horizontal drilling
3) Africa and tarsands adding to future production

If it wasn’t for this, peak oil would have forced governments to go electric years ago. I think now… we’ve got 10 years until supply and demand factors force the electrification of transportation and if we aren’t ready for it, it could collapse economies.

I don’t think I’m alone with this view from an investors point of view and as such I don’t see oil going back to below $60 a barrel ever again. I’m guessing the bottom in terms of valuations is higher and if anything, $150 is a more realistic expectation than $70 regardless of what world economies do.

On the electification side of things, long range capabilities are the challenge with e-cars as well as changes to consumer patterns and it really hinges with China. China is the worlds largest manufacturer of cars, their government’s ability to push e cars much more feisable and China’s own consumers much more pro electric (as an example there are now 12 million e-bikes on the road, most of them in China) but hurdles like long range capabilities and tech challenges remain and I can easily point the equities which stand the most to gain from the transition in Canada, but we are at a minimum of 5 years away from demand taking root for me to encourage investors to take a look now because its just not their time and as such, there are better sectors to generate profits.

Thanks for the feedback, I appreciate it!

#172 eaglebay - Parksville on 03.29.12 at 3:42 pm

#157 John G. Young on 03.29.12 at 1:47 pm
#113 eaglebay – Parksville on 03.29.12 at 9:06 am

“Ever heard of manners?
You are rude.”
____________
Do you tippy toe when you walk?

#173 Debtfree on 03.29.12 at 3:50 pm

wrong # @ 157 he’s from alberta land of truck nuts.

#174 vic_guy on 03.29.12 at 3:56 pm

@ Kris on 03.29.12 at 11:03 am

One of the biggest RLP operations in western Canada sells 30 million dollar homes in 6 months for cash to buyers from the Orient and Arab countries [whatever that means?].
BCREA has about 6000-7000 residential sales per month in BC for 2011 (eye balling the graph, read it yourself if you want absolute numbers, find in on the BCREA site).

So … 0.07% of the sales doesn’t seem too significant ? Multiply by 5 say (wild guess) for the other large firms (Re/Max, etc) and now that looks like 0.3% of the sales might (anecdotal only from your friend of a friend) be cash buys from Orient and Arab country buyers. And 99.7% weren’t these types of buys ($ and country of origin) during the same 6 months.

As the Vancouver residential average is around a million $, and there are a lot of Canadian Asian & Arab country buyers (did your friend of a friend check their immigration status ?) this doesn’t look significant ?

Am I missing something ? That is maybe 5 *average* properties in Vancouver/month for RLP firm and 25/month (assuming 5X for the other firms) if they all bought in Vancouver.

Still seems pretty small potatoes ? I guess if only one realtor handled all the sales it would be significant to them, but it sounds like it was across the whole firm.

#175 Steven Rowlandson on 03.29.12 at 4:06 pm

6 Billion cut over 3 years, your fired Jim for toe nail clipping on the job.

http://news.sympatico.ctv.ca/home/budget_to_cut_spending_nearly_6b_over_3_years/9db66427

#176 Smoking Man on 03.29.12 at 4:13 pm

I googled

Zimmerman, who is half white and half Hispanic

347,000 matches.

That’s Power Baby

Little Green Man, I am not worthy

#177 TRT on 03.29.12 at 4:27 pm

Budget is an attack on the younger generations…greedy boomers.

Why is the new civil servants retirement age being pushed to 65 from 60???

OAS to 67…. why not institute it now?!! share the pain!

why not share the pain? oh, i forgot…boomers. They have ruined this country!

#178 bill on 03.29.12 at 4:27 pm

”Hitler thought cities were economic,racial/ biological and cultural death traps.”

wow there’s a guy we can all get behind.
certainly the gypsies ,poles ,jews ,russians and anyone else that pissed of the nazi’s would agree he was a murderous nasty little dictator .

#179 F on 03.29.12 at 4:27 pm

#53 Jsan

Excellent link to Catherine Austin Fitts!

#180 John G. Young on 03.29.12 at 4:40 pm

#172 eaglebay – Parksville

“Do you tippy toe when you walk?”

My real name is John Young.

What’s your real name?

#181 new_era on 03.29.12 at 4:56 pm

CMHC tightening

http://business.financialpost.com/2012/03/29/ottawa-to-toughen-cmhc-oversight/

#182 John G. Young on 03.29.12 at 4:56 pm

#123 Steven Rowlandson on 03.29.12 at 9:55 am

“Although it sounds like something Adolph Hitler wrote in Mein Kampf, I think what it says is still valid. Hitler thought cities were economic,racial/ biological and cultural death traps.”

Didn’t you say that God was the only leader who had found grace in your eyes?
Now it’s God, and Hitler too.
Hitler makes perfect sense, given your anti-Israel, anti-gay hateful rants.
God, not so much.

#183 brainsail on 03.29.12 at 5:00 pm

Well, I couldn’t listen to his speech for very long. It was just too silly, too much patting on the back, no details, no substance, just promises and lies. The video and sound feed from CPAC was horrific. I felt like I just heard a speech from some third world Carribean island. Sorry if offended anyone.

Who was the trophy blonde sitting behind him?

#184 JIM on 03.29.12 at 5:13 pm

http://www.theglobeandmail.com/globe-investor/genworth-using-internal-resources-to-deal-with-foreclosures/article2384578/

In the above article they state that they are understanding and forgiving of people who can’t make their payments, then in the next breath note they are getting more ag sgressive with their foreclosures.

Actually, what intersted me most about the article was it confirmed what I have suspected. That lending institutions are simply not foreclosing on defaulters.

#185 bill on 03.29.12 at 6:47 pm

I envision eagle bay as a Rhotacistic [?] little guy with a big red hunting hat.
hunting rabbits with his big truck and boat.

#186 Westernman on 03.29.12 at 7:46 pm

Brainsail @ # 44,
You live in the U.S. and you want to watch some 2-bit Canadian A-Hole politician bullshit? You must have something better to do…
I do have an idea for you though, go out and enjoy life in a free country and forget about socialist Canada… it’s a lost cause.

#187 brainsail on 03.29.12 at 9:00 pm

#186 Westernman

Once in while we talk about returning and after today’s event my wife said some words that I can not repeat even on this pathetic blog. Thanks for your comment.

#188 eaglebay - Parksville on 03.29.12 at 9:04 pm

#122 eaglebay – Parksville on 03.29.12 at 9:55 am

“The Budget.

Small changes to the CMHC.
Some civil service deadwood eliminated saving billions.
Cuts to some red tape regarding natural resources and small businesses.
Elimination of some so-called “loop holes”.
Increase spending in, and facilitation of infrastructure projects.
Increase spending and tax credits for skills training and trades upgrading.
Changes to regulated pension plans.
Jobs and the economy will be at the forefront.”
______________
My post in the previous blog.

More details will come out on the budget. Not as bad as most doomers on this blog seems to think. Look at the big picture. I think that Canada will do fine even with a correction in real estate.
All I hear is CMHC and the frucken pennies.
Don’t bet against Canada.

#189 eaglebay - Parksville on 03.29.12 at 9:13 pm

The penny is and has been irrelevant for quite some time.
The physical coin will be gone but it doesn’t matter as most financial transactions are now digital or should be.
The penny will still be here.
Ask the people at Tim’s with their customer’s use of credit cards to purchase a coffee.

#190 eaglebay - Parksville on 03.29.12 at 9:18 pm

To John Young and Bill.
My real name is Jack Meoff.
And no, I don’t hunt rabbits. That’s for poor people.
I’m into moose and elk. And, hunting with a boat, is illegal.

#191 bill on 03.29.12 at 10:09 pm

ooooh moose and elk..are you sure? not moose and squirrel ?
wow a moose hunter. thats a tough one to hunt eh?they are so small and all. is the gun a BIG one?

hunting with a boat, is illegal. uhh not for ducks .
real good shot to I bet.
be vewy vewy quiet…I’m hunting mooooose

#192 First Wave Boomer on 03.29.12 at 11:26 pm

Garth to answer your Question: If you read the chart Vcr has gone parabolic and so an excellent time for speculators. They will have enough time to get out without too much of a loss relative to the amount of $$$ they have made in the past. Speckers have been right to just ride the trend of the last 11 years.

But for Joe Blo just stay out. Buy buy the US, but many of their own citizens as my in-law in Florida are not buying as even without a mortgage she claims your carrying costs are high: Insurance, maintenance fees and taxes.

In 1991 I was a Chicken and did not buy in Vcr as i just got a job which was only suppose to last a year.
Now 11 years later I am still renting and waiting for a big correction. But if a crack shack goes down by 50% and interest doubles from 3.5 to 7% in 5 years I still would not be able to afford a crack shack unless I practice getting a green thumb in my basement.

#193 anon on 03.30.12 at 9:01 am

Garth, when will HAM run out? I know probably something you can’t speculate on but it’s getting crazy on the Westside of Vancouver.

We had an email update from our realtor, one of the top sellers out this way. 78% of ALL of her detached SFM in 2011 went to Chinese buyers.

It’s frustrating to say the least. I really don’t care who is buying – I know when you talk about this word like ‘xenophobe’ and ‘racism’ come out – but someone needs to be monitoring the impact of foreign money.

Why? Canadians (or most earning an income here) can’t compete with foreign salaries. My husband and I are probably in the top 10% of income earners and we can’t reasonably afford a decent SFM in this market.

Locals who have bought in are the ones that will be most negatively impacted when the market falls. Yet no one is monitoring foreign investment in the RE market? Insanity.

#194 Mortgage Broker – “The government has done plenty to put the brakes on the Vancouver market. It is quite difficult to qualify people for mortgages even for the amount of house they need.” | Vancouver Real Estate Anecdote Archive on 03.30.12 at 9:02 am

[…] “The article makes reference to our situation paralleling the US situation, and that is also utter nonsense in so many ways that I wouldn’t even start to get into them all. We do not offer loans at 100%+ LTV, we do not offer teaser loans to subprime clients and qualify them on the teaser rates, and we do not offer NINJNA (no income, no job, no assets) mortgages. As it is, in the Vancouver market, it is quite difficult to qualify people for mortgages even for the amount of house they need. The government has done plenty to put the brakes on the Vancouver market as it is. The harder the government makes it to lend money, the more that the market tilts in favor of the wealthy and the more difficult it will be for average and lower income earners to get ahead. That is a much greater thing to fear for the future. I have said this many times, but the lending that really needs more regulation is the credit card and unsecured lending industries. What regulation have they been scrutinized under other than a regulation that requires them to disclose how long it takes to pay off a credit card bill with minimum payments? It is that ability to spend money so easily at such high interest rates that is really hurting people. However, the housing market is the one that gets constantly attacked. “Pay no attention to that man behind the curtain.” I live and work in the highest priced market in Canada, and this is where it is hardest for people to buy. In most of Canada, housing is SO much more affordable than here. Most of the country has nothing at all to worry about.” – Jeff Evans, Richmond mortgage broker, posting as ‘Jeff’ at greaterfool.ca 28 Mar 2012 9:01pm […]

#195 disciple on 03.30.12 at 1:17 pm

#183 brainsail…”Sorry if offended anyone.

Who was the trophy blonde sitting behind him?”

I dunno, maybe ask your wife? Or you already did and that is the reason she “said some words that I can not repeat even on this pathetic blog”