How not to spend a million

Jason lives in a ritzy enclave of suburban palaces on the northern fringe of the GTA. This is where Bimmers swim upstream to spawn, where developers are minor deities and the boulevards are clogged with delivery trucks from the Art Shoppe and Ginger’s. Despite his runaway materialism, and bourgeois taste for McMansions with fat foyers, this 1%er reads our pathetic blog. Then one weekend morning he gazed through his high-end, triple-glazed and saw… a riot.

“On Saturday, to much hype, they released phase 3,” he says, referring to the local bulders, Arista and Fieldgate. “There were a few dozen homes on 40, 60 and 80 ft lots. Needless to say it was pure anarchy. I heard that there were lineups and cops directing traffic into our subdivision.”

So, what we forecast would happen, did. The sales trailer was mobbed. People lined for hours for the right to snatch a seven-figure home in mere minutes. It was chaos, with desperate buyers packed around tables covered with site maps, making instant decisions.

“Our guests started streaming in at 11am this morning to get the first chance to look at the 41′ and 50′ singles options that we have available,” Arista said on its website, demurring the event. “This phase has 83 lots in total, with the 41’s starting from the low $800’s and the 50’s from the low $900’s. To celebrate the opening, we have added in a special dollar amount to be spent at our Decor Centre into the pricing of the lots.”

Yeah. Spend a million, and get upgraded towel bars!

“I kid you not,” says Jason, “I compared the price list from phase 2 to 3, and the prices have increased by $190K or more in a year and a half. The 80-ft lots were going at 1.3 million with lot premiums in excess of 60K (these are 4,000 ft plus size houses).

“This is clearly out of control and people bought these houses in a matter of minutes! It’s almost like people have a fear that no other opportunity will exist to buy a home and it’s now or never.”

And it’s not just the pasty pony set who have the hornies. Jeremy’s vice-president of a major development company in the godless GTA, who also frequents this blog. His report yesterday: “The low-rise market is still out of control in parts of north Brampton and Vaughan/Woodbridge. The South Asians and Chinese are eating everything without digesting…what happens next – indigestion?”

It’s a Maalox moment. In fact, when people with $1,000,000 to spend on a pre-build – in essence playing the futures market, at a time when the commodity being purchased has never cost more – do so in five minutes or less, we’ve probably reached a pivotal moment. The fact this is happening concurrently with a feeding frenzy for entry-level homes in déclassé burbs full of beater minivans is an even greater epiphany.

This kind of activity cannot last. When it abates – amid tighter lending controls and creeping rates, if not simple debt fatigue  – those people who lined up to join the final party become the greater fools. You can see them engaging in mindless bidding wars for dodgy properties in the 416. You saw them camping out for two nights to grab at condos in Vancouver’s Marine Gateway, where occupancy is three years distant. And Jason looked out days ago and witnessed a throng of millionaires with all the patina and polish of thirsty ticket-buyers at an MMA bloodletting.

“Out of control,” he mutters.

Remember these small scenes. Later you will say, ‘how did we not see this?’

257 comments ↓

#1 isampat on 04.03.12 at 8:18 pm

Hi Garth,

If CMHC turns off the mortgage insurance tap, wouldn’t a private insurer like Genworth step in and fill the void left by CMHC?

Genworth is also capped, and does not have 100% government backing. — Garth

#2 rbig on 04.03.12 at 8:24 pm

First

#3 Randy on 04.03.12 at 8:26 pm

Wow….What a huge gamble….They gotta be brain-dead…

#4 Toronto_CA on 04.03.12 at 8:26 pm

I don’t understand how anyone can see this as a good thing for Canada. The impending doom would be / is laughable from the outside looking in, but seeing how badly this will impact the economy and many innocent people when it all implodes is going to be very sad.

Austerity budgets mean no public sector raises or hiring, and most companies budgeting 2-3% raises and a wack of layoffs. Is supply really so low that demand for million dollar homes in far off burbs like Brampton and Vaughn result in feeding frenzies? Or is Canada (the GTA) just nuts?

#5 Claudius Emperor on 04.03.12 at 8:29 pm

what is the average downpayment in this case? what is the income needed to be approved for 1 mil mortgage?

#6 Buyright on 04.03.12 at 8:31 pm

This may have been posted already , but worth a second go around.

http://www2.macleans.ca/2011/03/10/bubble-trouble-two-charts-you-need-to-see-about-commodities-and-canadas-housing-market/

http://www2.macleans.ca/wp-content/uploads/2011/03/commodity-chart11.jpg

http://www2.macleans.ca/wp-content/uploads/2011/03/canada-with-us-house-price-chart1.jpg

http://www.ritholtz.com/blog/2011/04/case-shiller-100-year-chart-2011-update/

Quote
Two charts you need to see about commodities and the housing market
by Jason Kirby on Thursday, March 10, 2011

“Decide for yourself how much to read into the above charts. I’d just say that we’d all be wise to remember one thing: both resources and real estate are commodities, and rule #1 in commodities is what goes up, eventually comes down”.

.

#7 Sticky on 04.03.12 at 8:32 pm

Unfortunate, but i know people like this. They think that if they get in a new subdivision early then they will have guaranteed equity by the time it’s built. Sadly it has been true for years now…but I don’t see how it can continue.

The developed world will suffer austerity, and eventually severe inflation. Savers get little, retired get f’d and forced into riskier assets to earn enough to survive.

Home buyers this late to the game are bound to be stung.

Of the developed word economy most of what I hear goes like this…

“Debt restructuring is out of reach because the banking sectors are not strong enough to absorb losses”

If anyone has a link to something that will explain what would happen if the 99% decided that the banks would have to absorb the losses…and die please post it.

Surly new banks would be started, and it would be better then mountains of debt, austerity, and eventually severe inflation?

#8 mac on 04.03.12 at 8:32 pm

Where is this place? Can’t be on earth. There are no Chinese buyers?

#9 Shane on 04.03.12 at 8:33 pm

Garth, this is insane this tells me the market will correct even more further down…your thoughts?

Shane

#10 Don't Forget the Pot Lights on 04.03.12 at 8:33 pm

“Spend a million, and get upgraded towel bars!”

This is so (sad but) true, Garth!

I see this technique used quite frequently, as I am sure most of us do.

Can’t believe it still works–especially on million dollar properties.

Crazy Canadians.

You are spot on once again, Garth.

#11 Randy on 04.03.12 at 8:38 pm

If they are lucky …McGuinty and the Vote-Monkey Liberals will let some FAKE Green Energy Company build an industrial Wind Farm across the road with the FIT rates guaranteed for 20 years or more….so they will lose another 50% on their homes….

#12 Seven Stars and Orion on 04.03.12 at 8:39 pm

These stories don’t reflect the myth of Canada I have in my mind. How did we get this petty and foolish? You can’t say it’s the education system dudes, at least half of these gaudy oafs were “educated” elsewhere.
And in the same country, native communities without a pot to piss in. What do I tell my children? “It’s a tough racket out there kiddies, make sure you get your end!” Shame on us all…

#13 JW on 04.03.12 at 8:42 pm

Look like Dubai 2007. Can’t lose-must get in the game- lifetime opportunity.

That didn’t end at all when speculators turned out to be roughly 75% of the buyers. I saw it first hand exactly like your example. A swarm people given a token number to a second rate developer in a hotel banquet room. Two hours waiting for the doors to open. When it did, complete chaos. People buying without much thought to what they were purchasing. They just had to buy something, anything. I’ll never forget it. Looked exactly like your pictures of those folks around the table…is that a poker table? Sure looks like one.

#14 steev on 04.03.12 at 8:44 pm

Claudius Emperor:

Go check a mortgage calculator at a big bank.

150K income (before tax)
150K down

983K purchase price (3.5% and 30 year amort)

Mortgage of 5.5 times GROSS income…madness, it will collapse under it’s own weight soon enough

Cheers

#15 Don on 04.03.12 at 8:50 pm

Mac #8
All those people in line are place holders for Chinese buyers that could not fly in because of the fog.

#16 Paolo on 04.03.12 at 8:57 pm

Train wreck continues…

#17 randman on 04.03.12 at 9:05 pm

Here’s another reason why Canada is going down like the Titanic!

Shopping for meat in a local grocery store

Find Canadian Ribeye steak marked down from $29.99 per pound (kilo?) to $24.99 per…. i’m thinking great deal right???

Until I find the same cut from New Zealand for a reg
price of $19.99 and here’s the kicker…

It was a better looking piece of meat …better marbeling and color…!!!! Go figure

So….consider how much this costs to ship and refrigerate all the way from N.Z. and yet it’s still
cheaper than Canadian meat!!!

This country can go F**# itself !!

Oh yeah and in other news!! Albino’s are sueing over
Albino Rhino beer!!! OMG

#18 Freedom first on 04.03.12 at 9:08 pm

Interesting. In my short time on this earth, I have noticed when the masses are buying anything, crowds abound, and prices are at all time highs. By this time, the smart money is long gone, as when the smart money was buying, nobody was around. Brings to mind the famous quotes from Warren Buffett, “Be greedy when others are fearful, and fearful when others are greedy”, and “Buy only when there is blood on the streets.”
But then, who listens to guys like Warren anyways?

#19 boomer62 on 04.03.12 at 9:10 pm

@ Garth and
@ #1isampat on 04.03.12 at 8:18 pm

What’s the forecast for NYSE:GNW? and
Will it ever pay a dividend again?

#20 Can it be? on 04.03.12 at 9:12 pm

Line up for gas to save a buck, then line up to spend a million dollars like its nothing… Brilliant!

#21 zeeman on 04.03.12 at 9:12 pm

what is wrong with these people……these are the people that line up at a gas station for an hour just before prices will go up by 3 cents so that they can save 2 dollars on a fill up because they think they are helping their monthly budget…….they don realize they have burned more gas lining up at the gas station than they are saving and…….then these same people line up and fight with others to drop 1 million dollars on the spot to buy a house at a point when all banks and govt are saying that their could be a housing buble…..i am at a lost here……

#22 John on 04.03.12 at 9:14 pm

That image of the man reading the map in the sales center is chilling.

Is he aware of the bubble burst coming? No. Why not? Does he think his “money” is in a “Canadian” bank? Yes. He does. And that’s why he’s peering at that map.

As an international problem, an international conflict will be needed to explain away the internationally driven Canadian real estate speculation.

Canadian real estate is only one major asset class that can’t be absorbed and put into a Canadian company.

What about the teacher who’s money has been gambled around the globe? Who’s one of the bigger players in Southern Chile? Ontario teachers. Sorry man. That’s nuts.

I live in Chile…this site is a soap sell for people who don’t want to know. This place is debt-soaked and over-ramped. Today I was literally surrounded by new cars in traffic. The big kind. It’s desperate.

The teachers are bundled into some of it. The Canadian real estate scam wouldn’t exist without the rest of it.

But hey…up to now, all those nay-sayers on real estate blowing up in Canada have been 100% wrong.

Maybe it’a all just over-hyped. Maybe it’ll just kind of “blow through” somehow.

http://www.foreigninvestment.cl/index.php?option=com_content&view=article&id=57

But of course real estate will be the big event.

#23 mooncake on 04.03.12 at 9:14 pm

Pure madness, you watch the evening news and all you people are bitching about gas going up 4c a liter overnight here in the GTA. Yet they think paying $900K for a house is a bargain. We should rename GTA to idiot-ville!

#24 Mikey the Realtor on 04.03.12 at 9:15 pm

Pay attention pups, poodles and hermits. These are the people you should blame for the insane increase of prices. I was staring hard at the 3 pics posted tonight, looking for Waldo with a gun wearing his ‘ I am a Realtor’ shirt, I have not found him yet, if anyone sees him please point him out.

#25 Hello on 04.03.12 at 9:17 pm

Genworth is also capped, and does not have 100% government backing. — Garth

Genworth has 90% government backing. How is it so different from CMHC?

#26 Ralph Cramdown on 04.03.12 at 9:19 pm

That’s a heck of a development, all right. I hear the Sales Centre was designed by Temple Grandin.

And remember folks, no building inspectors at the PDI. Amateurs only, please! http://www.buildinghomes.ca/community/forums/showthread.php?t=10246

#27 Sebee on 04.03.12 at 9:22 pm

Look at all the jobs created at this site!

#28 Alberta_oilfield_worker on 04.03.12 at 9:25 pm

You know 100 K a year for us working in the “patch” was considered a lot a few years ago, but even at my wage I can’t keep up with everybody. Who knew I wasn’t making half of what most must be bringing home to afford this life style…..

Maybe I am missing out on something, can someone tell me the secret to everyone else’s success?

#29 Industrial Guy on 04.03.12 at 9:32 pm

I was check MLS.CA today to see how bad the shortage of single family houses was in the GTA.
This was my search criteria: Single detached house: 3 bedrooms under $400K
There are 2188 to choose from in the GTA

If we reduce the price by $100K ($300K) for other cities in Southern Ontario we get the following:
London, Ontario: 680 houses to choose from.
Hamilton, Ontario: 794 houses to choose from.
Barrie, Ontario: 413 houses to choose from.
Windsor, Ontario a staggering 1553 houses to choose from.

There doesn’t seem to be a shortage anywhere. Why are all these fools lining up?
I don’t know what they’re putting in the drinking water of the GTA, but clearly … it’s making people crazy.
Maybe we have discovered some new type of mass psychosis.

#30 MD on 04.03.12 at 9:32 pm

Garth when do u predict the real downfall and pain for housing????

#31 Elmer on 04.03.12 at 9:36 pm

I highly doubt most of these buyers have household incomes of anywhere close to 100k.

My guess is they are leveraging themselves much more than 5x income, probably more like 10x income. I hear if you say you will install a basement suite, you can get a bigger mortgage.

#32 Uh Oh Canada on 04.03.12 at 9:38 pm

The gaseous Canadian housing bubble is letting out air as we speak. The only thing you can fittingly compare it to is flatulence- silent but deadly. Ah yes, we can all smell it in the air.

#33 Mississauga on 04.03.12 at 9:41 pm

I’m quite sure the million dolar house buyers lined up at the gas station to make a real saving by avoiding the announced 5c increase!

#34 Dontcallmeshirley on 04.03.12 at 9:41 pm

Let’s repeat these numbers everyday for a month.

CMHC has ~$560 billion insurance in force with a cap of $600 billion.

Genworth has $245 billion insurance in force with a cap of $250 billion.

That’s $45 billion of remaining cap space. The bubble lasts until that cap is used up.

#35 Terra No-more on 04.03.12 at 9:43 pm

Wish we had this blog back in 89. Friend of the family just landed a nice condo in FL. Not by the sea but gated – 46K.

#36 Ralph Cramdown on 04.03.12 at 9:45 pm

Sales Centre designed by Temple Grandin.

#37 randman on 04.03.12 at 9:46 pm

BTW,,,That New Zealand Ribeye was delicious!!!

#38 Claudius Emperor on 04.03.12 at 9:46 pm

It is the fluoride in the water. drink distilled water /this is what I am doing/ and don’t watch TV/read newspapers.

#39 Randy on 04.03.12 at 9:48 pm

Wonder if these people are planning for interest rates to up along with utilities like hydro…..Property Taxes have nowhere to go but up either….How far away is $2 per litre gas ? Hope they have a Smart Car or a Honda CIVIC…There is a distance decay function that indicates these suburban homes should incur lots more commuting costs…Oh Well….Too late….You bought the farm…haha

#40 Smoking Man on 04.03.12 at 9:50 pm

For Every action an equal opposite reaction.

Damn it why do I keep coming to this pathetic place, never going to finish the book.
Thanks for all the great Characters Blog Dogs.
Vlad and Beach Girl worked you in nicely today.

Beach Girl named you Debbie, Vlad you’re Ivan.
Had a Vision, You know how cool stilettos would be on the tips of the letter V. now I know how that letter came to be.
Cool it rhymes too. I’m awesome.

To Business:
The American wrote yesterday, RBC = GOLDMAN

Really?

If RBC was like Goldman no charges would ever be laid.
MF Global ring a bell. Goldman Getting Greece into the EU, etc etc etc etc etc etc etc etc

Canadian banks are full of degree toting happy obedient rule following upper class slaves. They play by the rules. Many of you call them Banksters, now to me that’s funny.

It’s the bloody school system here. The employees of CDN banks actually do give a crap about clients, and people, and the climate, and charities, bla bla bla , they just don’t know any better. No Muppet slips here. They are incapable.

The way I see it, RBC must be kicking some serious ass down south, hence the allegations. And why would American regulators give a crap about a play that does not affect them at all. Should CRA not have a look at this, I’m sure they did those pricks leaving nothing on the table. So from this side of Lake Ontario all is fine.

This my friends is with out a shadow of a doubt:

Back Door Political Vendetta.

It’s a clue. A huge BUY sign for me.

Way I see it RBC must be Kicking ass and Seriously Smoking Rivals in the land of the free.

And now all the bubble heads know why Smoking comes before Man

So I loaded up on RY Huge Today.

More On WED

That’s how it’s done Grasshoppers. That’s how a Man does it.

#41 Canadian Watchdog on 04.03.12 at 9:50 pm

Gas prices could spike overnight by as much as 4.5 cents a litre in Ontario http://www.canadianbusiness.com/article/78129–gas-prices-could-spike-overnight-by-as-much-as-4-5-cents-a-litre-in-ontario

#42 Slim Jim on 04.03.12 at 9:51 pm

You know things are insane when a house just recently sold in Regina for 2.7 mil.

#43 OlderbutWiser on 04.03.12 at 9:52 pm

Hate to say it but I have seen it before. I remember back in 1988 being in just such a situation in a sales office in Newmarket. People were losing their marbles, pushing others out of the way to buy. People with glazed over “frenzied” eyes. Developers not even allowing purchasers to have their lawyers look over the contract. MADNESS. I walked away. Guess what happened to prices? We are back there today but the amounts in play are staggering. What couple can afford a million dollar mortgage? What happens when rates rise? Does no one have any sense anymore?

It’s not enough to just sit idly by watching the train wreck happen because when this bubble bursts we will all feel the effects. It is unconscionable that our government does not take active measures to allow for this bubble to deflate in a more controlled manner.

I must say that before reading this blog I used to think that there was no way that Canada could have a housing bubble – I had no idea that the lending practices of our banks had deteriorated so significantly. It sure wasn’t like that in the “old” days.

Now I am truly worried.

#44 Mr. Lee on 04.03.12 at 9:57 pm

“How did we not see this?”

Very simple, the same mind set did not see other bubbles before it so why would anyone think this to be different now.

#45 Stephane on 04.03.12 at 9:57 pm

Private insurers cap is now at 300 billion (Genworth and Canada Guaranty). The situation in Toronto and Vancouver doesn’t look good at all.

#46 Canadian Watchdog on 04.03.12 at 9:59 pm

#33 Dontcallmeshirley

Of which Scotiabank used up $17 billion of in December to pool a load of toxic condo mortgages.

http://i41.tinypic.com/kynmf.png
http://i42.tinypic.com/kcy003.jpg
http://i43.tinypic.com/5oxr2w.png

#47 Furst on 04.03.12 at 9:59 pm

Almost FURRSSTT!

#48 FI Guy on 04.03.12 at 10:01 pm

#33 – there is much more room than $45 billion. CMHC has cut back portfolio insurance for the banks. This represents $200-$300 billion of CMHC’s insurance book. CMHC’s plan is to replace it with high ratio mortgages. As a result, in a year or so you will soon see headlines indicating increased risk of CMHC’s book. The party could go on for a couple more years.

Last I heard they were increasing Genworth’s and Canada Guarantee’s limit from $250 billion to $300 billion.

#49 TRT on 04.03.12 at 10:05 pm

#40 Canadian Watchdog

Re gas pricing soaring…. Homeowners will just cut back on vacations….not going to affect housing in any way. Renters (lower incomes) will feel the effects.

#50 OnlyTheBankersLaugh on 04.03.12 at 10:06 pm

It’s all making sense. You buy a $400K shack in 2006 and it’s doubled in certain areas to $800K. You decide that it’s been a great ride and you double down and be a high roller to get to that $950K piece of North Woodbridge where every house looks identical and whose floors will squeak within a year from excessive cat walking. It’s the only way I can rationalize this non-stop excessive price gains when I thought that this was out of gas 4-5 years ago. Pure madness. It’s just making the kids stretch even further at the bottom of market with all of their student loans (and no down payments). Insane.

Bankers… Still Laughing

#51 MJG on 04.03.12 at 10:08 pm

#7: “Surly new banks would be started”

God, I hope not. The ones we have now can be surly enough at times, surely we don’t need any more.

#52 AG Sage on 04.03.12 at 10:08 pm

>#88 Terces on 04.03.12 at 5:48 am

>Six months before renewal they sent me a letter stating that the mortgage had to be paid in full upon expiry – no renewal. Period.

>So if you think that there is anything, or any reason that a mortgage lender is required or forced to renew, think again.

The price environment will change this. Right now the bank knows it can sell a property for a gain if needed. When that’s no longer true, when the mortgage in question is under water, the renewal will look like the better way to continue to make money.

#53 TRT on 04.03.12 at 10:09 pm

#25 hello

people can choose to be blind when they want to… Genworth will fill the gap left by CMHC.

90% backing means lots. It means with 5% down, Genworth only has to recuperate 5% more equity. This is done within 2 years of a 30 year Amortization period. The rest is guaranteed. Like genworth is scared.lol

But let the doomers here talk about the impending CMHC cap….too funny its sad!

#54 thisisnuts on 04.03.12 at 10:12 pm

Garth. Any idea if these are cash purchases? Are these folks walking in with preapproved huge mortgages from CDN lenders? ARe any of these things insured high LTV purchases? AS a taxpayer, these are the only things I really care about. if a much of hams pay cash for this stuff, whatever. but my bank better not be involved (says the shareholder).

#55 Tron on 04.03.12 at 10:12 pm

Looks like the REBGV stats are out for March. Missing are the March HPI numbers. You have to wonder if that is by design.

#56 Smoking Man on 04.03.12 at 10:24 pm

Can someone please post an opinion a bit before A and a wee bit past Z

This is getting boaring

#57 peter on 04.03.12 at 10:29 pm

Chilling pictures. The last one: should not this guy be downsizing, he looks like mid 50″S. Second picture: look at the guy with a neck collar….lol…he will get a huge headache when he gets closing costs, tax property…his neck will get stiffer!

#58 steev on 04.03.12 at 10:30 pm

Alberta_oilfield_worker

The answer to their “success” is a mountain of debt. At 100K you are kicking some serious ass…spend it wisely, save/invest a good portion of it and you will retire a wealthy man.

Cheers

#59 SpaceMonkey on 04.03.12 at 10:40 pm

@13, JW

Either a poker table or maybe a roulette table… “I’ll put my chip (sticker) on lot 32”

#60 Tim on 04.03.12 at 10:44 pm

Real estate prices remain high…

#61 sarah on 04.03.12 at 10:48 pm

#35

“Sales Centre designed by Temple Grandin.”

haha–GOOD one–so very true.

sarah.

#62 brainsail on 04.03.12 at 10:49 pm

Stop investing in Canadian real estate! Buy Apple shares. You will be much further ahead in the long run.

Either choice is insane IMHO.

http://www.thestreet.com/story/11482689/1/cramers-mad-money-recap-apple-1000-not-half-baked.html?puc=CNNMONEY&cm_ven=CNNMONEY

#63 connie on 04.03.12 at 10:50 pm

There must be a lot of “rich” people in Toronto. I wish in one way there was frenzy like this in Montreal where the houses just sit and for sale signs are everywhere.

#64 Al on 04.03.12 at 10:51 pm

I’ve had several friends in Toronto in the last year loose their middle management jobs. The insecurity of having a huge mortgage plus insecure work prospects is a terrible strain to live under. This is one of the worst side effects of globalization.
I tell them to come to Calgary, the air is clean, jobs are easier to find, the lifestyle is far less stressed. I guess some people have to hit rock bottom before they make the move. Sadly rock bottom might be coming to too many all at once. Hmm, now where is it I will vacation to this year, that’s my Calgary stressful decision.

#65 Stinky the Fish on 04.03.12 at 10:57 pm

Randman – do u have any leftovers for stinky?

#66 TaxHaven on 04.03.12 at 10:59 pm

Obviously these characters don’t fear unemployment.

Perhaps they should.

#67 Rog on 04.03.12 at 11:05 pm

Everyone’s been doom and gloom. All those that sold their homes and rented must feel crap. How much did you loose… The market is red hot and shows no signs of letting down. I remember this feeling in 89. If you didn’t buy then the next day the prices went out of reach. Something doesn’t feel right. How high can the market go. At the same time what if you get priced out of the market. In 2004 I saw a 500sq ft flat in London, England. At that time I thought 300000 pounds was ridiculous. Now the same property is worth 550000. I thought it was unsustainable. Boy I was wrong. crazy crazy crazy. What to do. Please help.

#68 Poorboy on 04.03.12 at 11:08 pm

Equities are going to experience a pretty big sell off in the next couple of months.

Don’t buy bonds (over-priced), don’t buy equities. Sit on cash and wait for the smart opportunities coming up.

Based on what? — Garth

#69 Jsan on 04.03.12 at 11:09 pm

Wow, this Canadian housing “Irrational Exuberance” is like watching a train wreck in slow motion. Who would have guessed there could be so many financial fools in this country?? It’s a race to see who can destroy their financial future the fastest.

#70 45north on 04.03.12 at 11:11 pm

found it!

http://vaughanvalleyestates.com/

does anyone recognize the music? string quartet?

Elmer: I doubt these buyers have household incomes of 100k.

Elmer I bet (a twoonie) they have been pre-approved by the big Canadian banks.

MD: Garth when do you predict the real downfall?

kind of like a big snowfall MD, you’ll know it after it happens

#71 Arshes on 04.03.12 at 11:15 pm

#51 AG Sage on 04.03.12 at 10:08 pm
>#88 Terces on 04.03.12 at 5:48 am

>Six months before renewal they sent me a letter stating that the mortgage had to be paid in full upon expiry – no renewal. Period.

>So if you think that there is anything, or any reason that a mortgage lender is required or forced to renew, think again.

The price environment will change this. Right now the bank knows it can sell a property for a gain if needed. When that’s no longer true, when the mortgage in question is under water, the renewal will look like the better way to continue to make money.
.——————————————

The bank can sell for a gain??? I dont think the bank is allowed to take any gain, they can only take what is owed to them. Could be they see bad times ahead and want out, so they “invest” that money elsewhere.

#72 Jsan on 04.03.12 at 11:16 pm

“#27 Alberta_oilfield_worker on 04.03.12 at 9:25 pm

You know 100 K a year for us working in the “patch” was considered a lot a few years ago, but even at my wage I can’t keep up with everybody. Who knew I wasn’t making half of what most must be bringing home to afford this life style…..

Maybe I am missing out on something, can someone tell me the secret to everyone else’s success?”

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

Debt makes everyone on the surface look like they are rich or “succssful”. Dig a tiny bit deeper and you realize that they are considerably worse off than the guy pushing his entire life’s possessions around town in a shopping cart. A few years down the road when you retire, these people who on the surface look well off will be serving you coffee at Tim Hortons because most of them will never retire. They just haven’t clued into this yet but than why would they, they think spending 1 Million dollars plus on a house worth a fraction of that amount is a smart investment.

#73 Keith in Calgary on 04.03.12 at 11:16 pm

I just came back from another trip to the good ‘ole US of A.

Stayed a week in Alamogordo, New Mexico………a city of 35,000 very pleasant nice salt of the earth folks where the median average income is $12.00 an hour. Driving down White Sands Blvd (their main drag) and it looks like this……no name burger joint….boarded up pub….boarded up convenience store…..no name restaurant…..an entire strip mall for rent…….Aaron’s Furniture Rental…….gas station…..storage lot…..GM car dealer……Walmart……no name burger joint…..McDonalds……Toyota car dealer…….no name used car dealer……Chamber of Commerce……boarded up ex-chain store of some sort……a railway museum of some sort…….a tatoo parlour…….and oh, yeah, a Chili’s where the bar closes at 10:00 PM……….you get the picture.

Houses there are $50-100K today and rent is $350 – $900…..$100K gets you today what $500K buys you right now in Calgary. No significant crime really exists because there is one tough ass police force on the beat……the city is financially well off…….everything is clean an dorganized….it’s 25-30 degrees year round with 300+ days of sun….and you can “open carry” your sidearm of your choice in public on your belt.

My kinda town…….

Houses there used to be $300K……..and Holloman AFB which employs some 2,500 air force members earning $40K ++ is the largest and longest term employer in town. Not even the base’s economic force could stop the eventual real estate crumble that took place due to RE speculation.

It’s our future folks……..

#74 Peterfromcalgary on 04.03.12 at 11:17 pm

BLOOD, SWEAT & TEARS
“Spinning Wheel”
(D. Clayton-Thomas)

What goes up must come down
Spinnin’ wheel got to go ’round
Talkin’ ’bout your troubles it’s a cryin’ sin
Ride a painted pony let the spinnin’ wheel spin

#75 patiently waiting on 04.03.12 at 11:19 pm

#21 Zeeman

what is wrong with these people……these are the people that line up at a gas station for an hour just before prices will go up by 3 cents so that they can save 2 dollars on a fill up because they think they are helping their monthly budget…….they don realize they have burned more gas lining up at the gas station than they are saving and…….then these same people line up and fight with others to drop 1 million dollars on the spot to buy a house at a point when all banks and govt are saying that their could be a housing buble…..i am at a lost here……
—————————————————————–

Bizarre isn’t it . . . the madness of crowds. The older I get the more I see how people are motivated by fear and greed – not logic. Right now the masses (or should I say sheeple) are still motivated by greed, and most (even educated people) are economically illiterate, spending more time picking out a new pair of shoes than educating themselves so that they can understand what is going on in the global village that they live in. . . . The Powers That Be know this, and they play the sheeple like a tune, manipulating government policy & using the main stream media to deliver the sheeple their marching orders over the 6:00 news. Unfortunately, I believe that until some fools begin to feel the pain of loosing money, the madness will continue . . . however, when their greed turns to fear . . . then we will see the SHTF . . . coming soon . . . 2013 is my bet . . .

#76 Suede on 04.03.12 at 11:21 pm

I bought off plans a year and a half ago and my place is finished next week. Had to sell my apartment that I bought dirt cheap, reno’d to the tens with more granite bust and crown moulding legs than a guy could handle. Learned my lesson. Played the future game. They didn’t teach me this in school or the kitchen table.

I consider it my tuition fee. Just like buying 360 networks at its all time high when i was still in high school back in 2000 just before it became worth less than a happy meal.

Learn from your own mistakes and those of people that aim to educate you – or at least keep an open ear and always question the source of information and its purpose and means of delivery.

Next time I buy, i have to feel it. Or else it’s like an arranged marriage that’s even harder to get out of.

#77 Leslie on 04.03.12 at 11:21 pm

Apparently all of these new buyers believe they will always have income, will never have to pay to take care of a spouse, a parent or a child. That the gravy train of debt and income will continue forever.
Well here is a tale for you. The company I worked for sought Bankruptcy Protection last July. All employees were dismissed with just wages owed. No accrued vacation pay or severance. In a market place with 8+% unemployment and a projected GDP rate of 2% for the foreseeable future. That is the bad news.
The good news. My husband and I don’t have a mortgage, we own our home outright. We have very little debt and more in retirement & regular savings than what our home is worth. And he is still employed. So while not what we would have hope to happen to us, we are okay. We can sleep at night. I honestly don’t know how these new buyers do it!

#78 Arshes on 04.03.12 at 11:26 pm

Your CMHC insurance doesn’t protect you

http://tinyurl.com/cqhemno

#79 BC Bring Cash on 04.03.12 at 11:26 pm

I don’t know if Cam Goods latest sales pitches have been discussed here. Remember he was the helicopter salesman impressing the HAM over the Vancouver area. Here is his latest pitch. Groupon style sales of condos.
http://whispersfromtheedgeoftherainforest.blogspot.ca/2012/04/helicopter-cam-shifts-to-groupon-for.html

#80 jesus'revenge on 04.03.12 at 11:28 pm

Tulip bulbs. South Sea bubble. Florida land boom. 1929. Gold 1980. NASDAQ. American mortgages.

Canadian real estate?

#81 Dad on 04.03.12 at 11:30 pm

Is that a neck brace?

#82 GTA Girl on 04.03.12 at 11:32 pm

Yes it’s Vaughan Valley Estates.

How is it that in my area of Kleinburg, that 4,000 sqft homes on 65×350….yes, that’s correct 350. Enormous lots 6 year old homes CANNOT resell for $1.3???

These lots are a quick leisurely jaunt (with feet, no car needed) into the heart of the village.

Yet the Vaughan valley estates, on muddy farm land, in no where, across from stacked town homes, semis…further north, with postage sized lots are selling for over a million, no upgrades included, no landscaping, no schools, no sidewalks..and selling out in an hour???

This is insane

#83 Harlee on 04.03.12 at 11:32 pm

Smoking Man
Any chance of putting a character named “Penny” in your forth-coming book ?
My first love – and…you know the 1 cent coin is on it’s way out too… It’s a natural,izn’t it ?

#84 Not 1st on 04.03.12 at 11:34 pm

But Garth, I thought that all that south east asian and chinese money was just a rumor?

Turns out what the blog dogs were telling you was right – foreign funds are washing upon shore big time and are buying everything from real estate to farm land to oil sands leases.

#85 johnny5z on 04.03.12 at 11:39 pm

How much of a deposit do the buyers have to put down on one of these lots? When do they have to ante up on the building costs?

#86 Frank on 04.03.12 at 11:42 pm

or perhaps these people that are buying now in a few years will have made a few extra dollars and then we will say I wish I had bought. Remember that the past does not equal the future.

#87 ozy - the builder should have sold with $100000 more on 04.03.12 at 11:43 pm

The builder should have sold for $100000 more, it looks they surely deserved it! Maybe $200000 more, so that they get really scared to buy today or never.
I hope all builders read this blog and take note. Why sell so cheap, when these folks are going to borrow the million way under-inflation rates? Why sell so cheap, when these folks can pay more, they do not look overworked, so must have nice paying jobs at $120000+ per year each. And they could use some overtime, or second jobs to pay for the granite. Beautiful women should be more expensive than that, to please :)

*****************
As #24 Mikey the Realtor said on 04.03.12 at 9:15 pm
These are the people you should blame for the insane increase of prices.
*****************
VERY TRUE Mikey, thanks for pointing that out

#88 Foggy on 04.03.12 at 11:44 pm

Well can’t muster any sympathy for that enlightened mob, but it begs a few questions. With those $1million price tags one would assume most of these people are move-up buyers currently owning a home. And of course speculators. Can these move-up buyers put in the usual condition of full payment dependant on the sale of their own home? Or is this an ironclad contract. If so how would you get financing from a bank to pay the full amount? If you’re speculating, how do you sign a contract without financing in place?

#89 The Patient on 04.03.12 at 11:46 pm

When is this friggin’ correction going to arrive, dagnabbit?

I ask various “people on the street,” all walks of life, if they think there’s a bubble and if they think prices are going to soften; I ask if they are thinking of buying (or selling); I ask my financial advisor, a bigwig at a big bank, if he sees cracks; I cruise my old neighbourhood and note the few for-sale signs, look up the askings and they’re all 20% above what I sold for a year ago; I look for signs of weakness stateside that might presage a softening economy here; I look at foreclosure rates, and they’re still miniscule, on the whole. Things keep edging up and up. Not roaring up, just edging. Hardly seems out of control.

And I have to wonder: Garth, you’re in Year 5 (Year 5 for gawdsake!) of correction calling. And still nothing. Anyone who invested in real estate in 2008 would be sitting on a tidy profit here in early 2012. Double-digit gains, year after year, beating most everything but gold, and maybe even gold.

So, c’mon already, lets have a correction. This is getting silly. Like sitting on your hands and not buying Nortel at $70/share because “it just can’t go any higher — it’s overvalued!”

Oh really?

I’m getting impatient.

Short of building a rural shack stocked with Alpo, high powered rifles and waxed Amazons to do the dishes and nag about lack of stamina, seems the only thing left to do is cry into my beer and apply the Grecian Formula.

Is our greatest fear perhaps that there will be *no* correction, because there is *no* bubble? Just a steadily rising hard asset (a house). (Yes, yes, it’s out of whack with historical multiples of household income — welcome to the new normal.)

People will sacrifice all the baubles they have to to afford their homes. They have to live somewhere. Nine million wrinkly boomers may be selling their homes in the coming years but, heck, it ain’t gonna happen overnight. And many of them say they’ll move out of their homes feet first. Well-heeled new immigrants will need a place to live, too. And there’ll be ever more of those, employable ones, too, and probably some job creators/employers, not just illiterate cab drivers.

It’s a big country with a small population and lots of land and big immigration numbers and a resource-based economy that ain’t gonna run out of gas anytime soon. Doesn’t that math alone indicate that housing is gonna be a bull market for years to come, and in such a happy-go-lucky country as ours?

The only thing that is going to bring about a real estate correction greater than 10% is a recession that produces unemployment and foreclosures. Or an uptick in interest rates (like *that’s* gonna happen — it would be career suicide on Flaherty’s/Carney’s part.)

So, wtf?

And no, I am not a realtor. Just a grumpy, impatient vulture in waiting…

#90 Poorboy on 04.03.12 at 11:48 pm

Based on what? — Garth

1. No QE3. OTTGD is not recovering despite being at its lowest point relative to gold in 4 years. It’s an anchor on the TSX and it ain’t changing anytime soon.
2. Corporate earnings reports will underwhelm. They will be fine, but underwhelm. Perception is reality.
3. Fresh Europe concerns – Spain particularly. Another negative European PMI report coming.
4. Declining Iran fears / increasing oil inventories.
5. Commodities and markets are way over-bought according to way too many technicals. Enough money is traded technically for this to be dismissed.

Fundamentally we’re not in horrible shape, but you know as well as anyone Garth that fundamentals don’t dictate the day to day of the market, only the macro-trend.

I cannot tell you what the catalyst will be, but it will only take one to start the sell off. Don’t think we’ll see a crash, but I can pretty much promise it will be way more severe than these down-day, up-days we’ve been seeing lately. Bet on a multi-day, sustained sell-off. It will be significant enough to wipe out (and more) any gains someone investing right now will make investing in a “balanced, diversified portfolio” at the present time.

So if that’s anyone’s intention, sit on cash for a couple of months and wait for the opportunity that will soon present itself. Or build a “balanced, diversified portfolio” out of inverse ETFs.

I’ll come back to this post at the end of May.

#91 Soylent Green is People on 04.03.12 at 11:50 pm

Repost from CONservatives L0ve TO LIE – 12:31 PM on September 25, 2011

Thanks Dalton for not firing thousands of much needed nurses as the Harris ideology driven tax cut CONservatives freakbars did.

Thanks Dalton for eliminating the 6 Billion dollar deficit left by J Flaherty and the ideology driven tax cut CONservatives freakbars .

Thanks Dalton for restoring peace in Ontarios education system.

Thanks Dalton for not killing 8 people and sickenilng 2000 others as the Harris ideology driven tax cut CONservatives freakbars did by eliminating accountable reporting to MNR and MOH officials by public health labs.

Thanks Dalton for NOT behaving like a bunch of redneck barrelsuckers in love with guns as the Harris ideology driven tax cut CONservatives freakbars did in Ipperwash .

Thanks Dalton for good clean,open, transparent and accountable government.

http://pushedleft.blogspot.com/2011/09/fresh-merger-talks-raise-question-is-it.html

.

#92 Tim on 04.03.12 at 11:51 pm

Spending a million on a crappy house pales in comparison to the price tag for those fighter jets. Harper has once again lied to Canadians and really #$^% up the procurement process. He should resign over this. He should be held accountable. Garth, you probably won’t put this on your blog because you don’t want to offend your right wing buddies

#93 getreal-tor on 04.03.12 at 11:53 pm

Went to the event with the wifey… They were sending her emails about the homes starting at 700k two weeks prior and on the day of the prices elusively went up to 800k+.

#69 – To be exact the it is called Cold Creek Estates as the city wouldn’t allow them to name it Vaughan Valley for some reason, maybe they didn’t pay off the politicians.

I’d say the large majority of people was speculators and realtors as you can spot them like zombies at events like this trying to be all decked out in their bimmers and sunday best.

When we saw the line up we decided to walk over to Arista… Same BS – Prices went up, no firm prices were offered – high 700s starting, and final prices would be given later once they decided how much they could fleece the people for.

Didn’t even bother to wait for either line… I was really hoping to score some free coffee or donuts but I guess since the developers are bleeding money since they would much rather pass on the savings to us, nothing was offered.

I’ve got the flyer for the Fieldgate homes in the car… if not mistaken, it was 10k credit for the 41′ foot lots in their designer centre and 20k for the larger lots. Yeah, like that is a bargain considering that everything in the design centre is marked up 100x actual cost.

The location is north of major mac on weston and if I am going to shell out that kind of money, I might as well go to Kleinburg or Nashville Rd east of it.

Anyways, I did feel smarter and more confident as I walked around the neighbourhood so maybe it is worth the money if it makes me smarted and more privileged. :)

#94 ozy - for Rog on 04.03.12 at 11:53 pm

************************
#66 Rog on 04.03.12 at 11:05 pm
What to do. Please help.
************************

Look in a different place?

#95 };-) aka DA on 04.03.12 at 11:54 pm

“How did we not see this?”
Very simple, the same mind set did not see other bubbles before it so why would anyone think this to be different now.

And so too, every bit as equally, may it be said instead; the same mind set did not see the other bottoms of the market until long after they were past so why would anyone think it to be different now.

They bail out every bit as too late as they are to get in on it and they get in on it as too late as they are to bail on it.

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

#96 tmg on 04.03.12 at 11:56 pm

Anyone know if commercial real estate is as overinflated as residential in Vancouver?

#97 Prime on 04.03.12 at 11:57 pm

“And it’s not just the pasty pony set who have the hornies”

Come on Garth you and I both know there are no rich white canadians, it can only be rich chinese. Give your head a shake.

#98 getreal-tor on 04.03.12 at 11:57 pm

#83 – I can double check the flyer I got but I believe it was 60 or 80k within 120 days. It was essentially 20k increments from signing to due date.

Fine print I believe also said net of tax (hst). If anybody cares, I can scan in the flyer for Fieldgate.

#99 randman on 04.04.12 at 12:03 am

Stinky….No scraps …

Dad taught me to eat everything on my plate!

#100 Westsider on 04.04.12 at 12:05 am

Where is all the money coming from??????

#101 getreal-tor on 04.04.12 at 12:08 am

#80 – GTA Girl

The market for one million + is a different beast…

Right next to the Fieldgate office a schmuck put a ComFree sign up. For giggles, I called the number… No answer. One of the folks said that the owner tried to sell it for 1.3m but couldn’t off load. Believe I saw it on ComFree the other day for ~970k.

If I am going to purchase for one mill + then I’d be looking at Pine Valley North of Langstaf. Two lots for sale, one older home but large corner lot for 990k and the other 1.3m for newer home.

Come to think of it, at that price I’d be seriously thinking of just building my dream home… You can buy some nice land on Nashville Rd for 700-800k and 500k will build you a /really/ nice home.

Two properties on Pine Valley south of Langstaff have also been listed for months now with no action… Prices have been reduced but still nobody is biting… These schmucks are high on their own fumes where they think they build their home on a gold foundation to demand these prices!

I am a patient man so I am going to wait a bit longer until this market implodes.

#102 ozy - Do you want these folks as your neighbours? on 04.04.12 at 12:10 am

Honestly, did you asked yourself:
Do you want these folks as your neighbours?

Materialistic, Selfish, Greedy, Gullible (Easy to Manipulate), the perfect TFS (see below).

Tax-farm slave (TFS) under copyright @ The Smoking Man, he is filling a patent :) for it

#103 the Grateful WASP on 04.04.12 at 12:11 am

Nice Pic Garth.

Finally a pic of a white horny boomer buying into one of these frenzies. How old is he? He’ll never pay off the million dollar mortgage in his lifetime. What a moron! I love reading this pathetic blog every day. Keep up the good work Garth. I’ve been sharing this blog with lots of friends who thank me after you’ve shown them the way… and they see the madness. It’s amazing how obvious the sign are when you can step back and look at the big picture. I am selling my 1 bedroom condo here and buying a six-plex in Florida. thanks

#104 ANONYMOUS on 04.04.12 at 12:14 am

THIS IS THE RESULT OF ‘ESSENTIALLY FREE MONEY’.

#105 getreal-tor on 04.04.12 at 12:16 am

#87 – The Patient

I’m with you there… When is this market going to correct itself? I can’t keep the wife at bay much longer as she likes to point out how we should have bought two years ago and made money. I told her that we wouldn’t have made real money since /all/ real estate went up in price so it is a moot point but have you ever tried arguing with a woman who has her heart set on something?

Read today that Marc Farber is saying that the USA won’t do well for a while longer and, duh, that investors should look into Canadian real estate amongst other countries!

I understand the government can’t put a hard stop to all this craziness but come on, wtf, are we going to wait until we are like spain and greece before we realize what the hell we are getting ourselves into?

#106 renting in whistler on 04.04.12 at 12:20 am

The interesting thing about real estate is that, like ice cream on a scorching day, it melts from the edges. First the farms, cottages and recreational properties. Then small towns were buyers are thin at the best of times. After that, the village and semi-rural enclaves on the edges of urban areas. Then the burbs, where now live the majority of equityless people. Finally the cities, and lastly the demand neighbourhoods where arrogance and exclusivity often ward off sanity.”

#107 NoName on 04.04.12 at 12:34 am

Off topic

Not recommended for those with hypertension

All summed up together: homecoming queen,
amazon babes, apliance poЯn, zomby bikers and more…

http://youtu.be/b-z54EP0EhM

#108 Terces on 04.04.12 at 12:44 am

#51 AG Sage on 04.03.12 at 10:08 pm
>#88 Terces on 04.03.12 at 5:48 am

>Six months before renewal they sent me a letter stating that the mortgage had to be paid in full upon expiry – no renewal. Period.

>So if you think that there is anything, or any reason that a mortgage lender is required or forced to renew, think again.

The price environment will change this. Right now the bank knows it can sell a property for a gain if needed. When that’s no longer true, when the mortgage in question is under water, the renewal will look like the better way to continue to make money.
.——————————————

The bank can sell for a gain??? I dont think the bank is allowed to take any gain, they can only take what is owed to them. Could be they see bad times ahead and want out, so they “invest” that money elsewhere.

The point you are missing here is the bank no longer owns these mortgages, and likely will not be the one administering them. When the market gets tough, and appears to be declining, the administrator of these mortgages, who is controlled by actuaries and bean counters, will almost for sure demand payment and deal with the immediate consequences.

At any rate, they will not be required to renew them, and will only do so if it makes good sense and their shareholders agree. There is no way that the government can force them to renew these mortgages.

#109 Rent4ever on 04.04.12 at 12:47 am

Here is a funny story i have about an absolute piece of decaying crap in Toronto listed for $399k last November. Went to see it and nothing less of just tearing it down is required. Sells for $419k to an apparently blind DIYer. Fast forward 3 months house back up for sale at $450k. Was curious to see the new and improved home looked like. Guess what … The dump was still a dump not even a paint job. Sells for $440k to an even more ambitious blind fellow! Fast forward 4 weeks back on the market for $500k. I will go see it again because it is just a couple of blocks away. I hope they at least painted over the ever flourishing mold! Simply retarded!

#110 Donnie on 04.04.12 at 12:52 am

Garth – You’re the investment genius! How do we short the Canadian Real Estate market????

#111 jay on 04.04.12 at 1:06 am

Ralph Cramdown #35…you win the thread!

#112 Van grrl on 04.04.12 at 1:21 am

Maybe dude got whiplash from scanning those plans so quickly.

#48 TRT- renting doesn’t necessarily equate to lower income, at least not where I live. I think it would be fascinating if we all woke up tomorrow and could only function, for say a week, on cash. That’s it. No credit cards, debit, not allowed to drive your car if you’re still making payments, AND… if your home isn’t paid in full (or in the case of a renter, your month isn’t paid yet) you have to sleep in the street. THEN we’d see who is really wealthy and “successful”. Bikes allowed- but hey, most middle aged folks in this country wouldn’t get a block without huffing and puffing.

That would be fun. I would live exactly like I did today, driving my beater, using cash I actually have and sleeping under a roof I can actually afford into the near future.

#113 Gandalf on 04.04.12 at 1:29 am

All I can say is “You can’t fix stupid”!

Everyone gets all uptight about the market going up or down. Everyone should just chill out and enjoy the entertainment!

I rent and have a great lifestyle. Nothing to worry about. I go on lots of vacations, just got back from Cancun, Hawaii at Xmas, planning another trip. Once I get back to Vancouver everybody seems so stressed out and all they talk about is real estate. It’s getting boring to listen to.

Markets are driven by fear and greed! That’s it, nothing more to understand.

Sit back and sip on a Mojito, enjoy life :)

#114 Brooks on 04.04.12 at 1:39 am

Garth, do you have any opinion on Sentry REIT?

#115 Peter Pan on 04.04.12 at 1:53 am

These lemmings better not ask for government bailouts after they’ve jumped over the cliff…

Tax payers are going to go all “Guy Fawkes” on Parliament if the feds ever bail out these financial illiterates…

#116 JIM on 04.04.12 at 1:57 am

Here is an interesting article on foreclosures:

http://www.nuwireinvestor.com/articles/banks-fail-at-due-diligence-in-foreclosures-58998.aspx

#117 AprilNewwest on 04.04.12 at 2:25 am

Patient #87- Have you forgotten the downturn 2008/09 which Garth predicted and then our % rates were lowered to almost giving money away and up went the bubble again. You should know RE doesn’t go up nor down in all areas at the same time. There are so many mixed messages out there and so many outright lies being spread in the media all in the name of keeping the bubble intact. Some people see the bigger picture but too many don’t…yet.

#118 Mark on 04.04.12 at 2:29 am

“90% backing means lots. It means with 5% down, Genworth only has to recuperate 5% more equity. This is done within 2 years of a 30 year Amortization period. The rest is guaranteed. Like genworth is scared.lol”

Its not that simple. The 5% down doesn’t get paid to Genworth. That’s the owner’s equity (which is certain to be obliterated). Genworth collects an insurance fee up-front, but that’s their only revenue from the transaction.

Nice try at obsfucating things though. Last I heard, outfits like Genworth were only collecting around, at best, 3.5%. So they’re still ahead of the game if only 1 in 3 of these high risk loans defaults. But if 2 of 3 of the loans default, then they lose. Plus Genworth has be seen by the marketplace as a credible guarantor. If they do not have the $$$ to back the defaults, then their bonds/debt gets dumped, and the MBS that have the Genworth guarantee on them trade at 90 cents on the dollar (ie: the value of the CMHC guarantee).

Of course, if ‘guaranteed’ paper started trading at 90 cents on the dollar, that implies a [i]much[/i] higher interest rate, roughly 200bp for a 5 year term (+ a risk premium). An extra 200bp against Genworth’s “guaranteed” customers specifically pretty much deep-sixes both the customers of Genworth, as well as Genworth itself (ie: a disproportionate number of Genworth guaranteed loans end up defaulting).

#119 Mark on 04.04.12 at 2:31 am

BTW, just further to my above post, Genworth still has to pay CMHC to re-insure (for the other 90%) the mortgages. So Genworth doesn’t get to keep 100% of the premium either. Genworth’s position, of taking a first loss position in subprime CMHC mortgages, seems to be economic suicide for Genworth and its stockholders.

#120 Mark on 04.04.12 at 2:33 am

“Or build a “balanced, diversified portfolio” out of inverse ETFs.”

Betting against Flaherty/Carney’s printing press?

Might work in the short term, but you’re still insane.

Why, oh why, does Garth attract the crackpots?

#121 Sydneysider on 04.04.12 at 2:43 am

Your analogy with futures markets is a good one.

People with 25y mortgages are also playing in the employment futures market.

#122 new-era on 04.04.12 at 2:45 am

I just can’t wait until the horny Debt addicted Canadiens line up to the US border to go on shopping sprees.

Thanks the F & C cheap money train. I expect debt to soar to level that makes the US crisis look small. Then I expect Canadian retail shops to start tanking.

Then the hangover will begin coming soon (my prediction May 11thn 2012)

For now Party on and keep those registers ca-chinging. Keep on feasting of cheap money Canadiens, because you may never have the means to pay it back.

#123 new-era on 04.04.12 at 2:49 am

BTW garth I just bought some real gold,

Just in case the canadian dollar goes to hell.
Like you said diversify….

#124 Fifty-fourth on 04.04.12 at 2:54 am

Where is all this money coming from? Sure the mortgage lenders are getting insured against any risk but they have to have the money to lend to begin with. Does the Bank of Canada essentially hand over money to the banks?

#125 Beach Girl on 04.04.12 at 3:51 am

#39 Smoking Man on 04.03.12 at 9:50 pm

For Every action an equal opposite reaction.

Damn it why do I keep coming to this pathetic place, never going to finish the book.
Thanks for all the great Characters Blog Dogs.
Vlad and Beach Girl worked you in nicely today.

Beach Girl named you Debbie, Vlad you’re Ivan.
Had a Vision, You know how cool stilettos would be on the tips of the letter V. now I know how that letter came to be.
Cool it rhymes too. I’m awesome.

___

Glad to know I am your thoughts. Which seem quite random. I hope the moniker Debbie, was not in relation to any of those low grade, boring pornos of the 70’s. You are worthy of much more imagination than that. The only good things about old porn are mustaches up and down. LOL. That is before every primate had the urge to shave any amount of fur on them. What is with that? Of course I am with the program. But a bald man everywhere. Kinda ICKY. Call me old fashioned.

Crazy dog insists to shit at 3 in the morning.

Night guys and V the Smokin Man. What is smokin with you? Don’t bother quitting drinking, you are going to die anyway. LOL.

#126 Aussie Roy on 04.04.12 at 4:16 am

Aussie Update

That darn GFC…

The number of new homes being built will plummet below levels seen during the 2008 global financial crisis if current building approval trends persist, a housing body forecasts.

Housing starts – when a new home begins construction – are forecast to fall by 12.4 per cent in 2011/12 to 137,820, following a decline of 5.6 per cent in 2010/11, according to the Housing Industry Association’s quarterly National Outlook for Residential Building.

“Local government building approvals point to the risk of housing starts falling below the 2008/09 GFC-induced trough,” the HIA said.

http://www.smh.com.au/business/worse-to-come-on-home-building-front-hia-says-20120404-1wc4h.html

My Aussie state is in recession, but no-one is listening.

SOUTH Australia is in recession, with poor housing, manufacturing and population growth, a leading economist warns.

Bill Evans, from Westpac, has also questioned the benefits to SA in the short term of the proposed Olympic Dam expansion, saying much of the money to be spent on the project would flow overseas.

http://www.adelaidenow.com.au/recession-biting-our-state-bank-warns/story-e6frea6u-1226317963456

Fed Govt told “just go into debt” by the neo classical economists, we need more spike, in the punch bowl.

Yesterday I noted that the AFR had backflipped its editorial direction on the need for a Budget surplus. Today it’s official:

Standard & Poor’s and Fitch Ratings delivered a timely wake-up call with their warning in this newspaper ­yesterday that federal Treasurer Wayne Swan needs to deliver a tough budget next month in order to protect Australia’s coveted AAA credit rating. Mr Swan, to his credit, seems to understand the economic imperative of returning the budget to surplus in 2012-13 in order to send a strong signal about the importance of responsible fiscal ­management.

But it is worrying that business groups such as the Australian Institute of Company Directors, as well as most economists working in the financial markets, seem to think achieving a ­surplus next year is neither here nor there.

http://www.macrobusiness.com.au/2012/04/the-afr-calls-for-a-recession-by-david-llewellyn-smith/

This is what happens when house prices move beyond the average workers ability to pay.

Another week, another housing report. This time it’s from a new Sydney based think tank, the McKell Institute. This one has many suggestions for freeing up supply including slaughtering some sacred cows like phasing out negative gearing and capital gains concessions.

http://www.macrobusiness.com.au/2012/04/mckells-new-housing-report/

#127 Aussie Roy on 04.04.12 at 4:19 am

Bill Evans, from Westpac, has also questioned the benefits to SA in the short term of the proposed Olympic Dam expansion, saying much of the money to be spent on the project would flow overseas.

Sorry for all those wondering Olympic Dam is Australias largest Uranium mine, in the middle of the worlds largest know uranium reserves, in outback South Australia.

#128 gmc on 04.04.12 at 5:39 am

The sad thing as we watch this from the sideline, is that this will affect us all, we should all be outraged and make the government accountable, and maybe it will happen when the conservatives gets wiped out. Meanwhile the middle class in this country is no more. several years ago when there was talk of the Amero dollar, it was obvious that Canada was not going to participate, we where too rich, but now once this housing collapse happens maybe the 13 th district of the FED reserve will be able to pull it off, yes we have many resources, but blowing up financially, our wealth
will be owed to others. Enjoy it while you still can steal it away from your kids, shame on all of you. We had the greatest thing going, and now going going gone!!!!

#129 Deb on 04.04.12 at 5:53 am

“Our guests started streaming in at 11am this morning….”

——————————————————-

I guess we will always have to live with tautology, in one form or another.

#130 I'm stupid on 04.04.12 at 6:30 am

#27 Alberta oil patch worker

Maybe I am missing out on something, can someone tell me the secret to everyone else’s success?

That’s easy it’s called Heloc. I bought a nice watch last year, the lady at the store asked of I wanted to finance it. I flat out called her crazy. She said lots of people do. Think about that for a minute. An item that is pure luxury is financed.

#131 Kip on 04.04.12 at 7:03 am

“And Jason looked out days ago and witnessed a throng of millionaires with all the patina and polish of thirsty ticket-buyers at an MMA bloodletting.”

Well, if they are all millionaires they don’t need CMHC or the banks so what’s the problem? They didn’t get mommies permission? What?

#132 T.O. Bubble Boy on 04.04.12 at 7:17 am

All of this stupidity is just because the sheeple have been taught that new/pre-build is always better than existing. These people in line are paying well above the re-sale market price to get that “new house smell”. (is there such a thing?)

Look at the sucker in the last picture… He’s probably 50-60 years old, and right at the point when he should be free&clear of all debts. But, what is he doing? Lining up in a mud pit to pay $1M for something that will be selling for $700k by the time it is built. Better hope the NDP get elected and raise OAS to about $8000/month.

#133 Charles Ponzi on 04.04.12 at 7:23 am

Remember these small scenes. Later you will say, ‘how did we not see this?’

Ponzi schemes don’t happen by accident. Those who saw it coming were ignored, ridiculed and verbally abused.

#134 Raging Ranter on 04.04.12 at 7:32 am

The last photo of that guy bent over the table speaks volumes. It is a position these hordes are all too willing to assume.

#135 Bigrider on 04.04.12 at 7:38 am

Interesting to me that whether I have a conversation about housing prices in T.O and Vancouver with a housing bull or a housing bear, one question gets answered consistently the same way.

I will ask the question to both if they believe house prices could be less ten years from now,from where they are today.

Those fearful of current prices ,who are bearish ,do not believe for a moment that prices could possibly be lower ten years from now from where they are today.

When I bring up the situation in the U.S ,where prices are remarkably lower today than they were six years ago in 2006 with virtually no chance of recovering in 2016 to high’s in 2006, I get a blank look.

Their is no doubt that the RE infection is alive and well.

We are all host bodies.

#136 pbrasseur on 04.04.12 at 7:47 am

Keith in Calgary #72

“I just came back from another trip to the good ‘ole US of A……”

Nice post, best of the lot so far today I think.

I think what this illustrates is how awesomely more competitive the US is becoming over Canada. For any company wanting to setup shop the cost structure is so much lower down there it’s not even funny. Everything is cheaper down there, salaries, gasoline and of course housing. And that’s without mentioning our extra regulations and legislations favorable to unions.

We’re in sooooo much trouble!

#137 Steven Rowlandson on 04.04.12 at 8:01 am

All those people buying homes are adults and responsible for their actions. God help them all if their pay packets are too small relative to their fiscal obligations.
That being said, I think they are a tad cuckoo for paying so much for so little. I expect they will find out the hard way.

#138 GTA Girl on 04.04.12 at 8:05 am

GetReatTor:

Yes the estates on and around The National golf club. Many are/will be white elephants. Though the older ones sit on good sized lots.

For kicks we drive thru there to look at all the new builds. 10,000+ square feet Venetian/French replicas of Versailles and villas of Italy. Underground 10car garages with built in car washes. Marble fountains. Wrought iron gates topped in copper.

Some of these gems must have 15mill poured into them….yet… If you look at the older mansions, they haven’t maintained their prices.

Insane.

#139 Alister on 04.04.12 at 8:09 am

The banks must be handing out free money again. After they mobbed the sales trailer they run down to their car dealer and got a % car deal according to last months car sales.

It’s 2007 all over again. WHEEEEEE

Mean while, they have started rioting in Spain over austerity, which is rotating around the world from Greece to Ireland now to Spain.

#140 The American on 04.04.12 at 8:46 am

At 38: SmokingMan, you may want to reconsider your post. First, RBC is ANYTHING but “kicking ass” in the U.S. market. The bank itself has less than 2% of the U.S. market share, which isn’t shit in the game of banking, and it has actually shrunk in the past 18 months in our market. It is not a widely-recognized or accepted brand in the U.S. Using your smoke-filled logic, the U.S. government would sooner go after HSBC, Bank of Tokyo Mitsubishi Union, Royal Bank of Scotland, Barclay’s, UBS, Deutsche Bank, or ING Bank – all banks with larger market shares that offer real potential competition to U.S. banks – not some Canadian bank our population rarely considers. Keep in mind the U.S. government is not rooting for U.S.-domiciled banks as would probably be the case in Canada. Our government is not vested in our system as it is in Canada. After a two-year investigation, trust me, the allegations are well-vetted and the charges matter. This isn’t a case of laughable jealousy. My gawd, is this what you really think? The regulators care because it does affect Americans – it happened on U.S. soil and it was a complete lack and callous disregard for the rules (not that Goldman Sachs is any better). I think by your post alone, you think like most Canadians – Canadian banks are “fair,” “play by the rules,” or “conservative.”

Your banks have followed the rules just like our banks followed the rules of engagement to conduct business. Look how it turned out for us. This in no way makes either side of the border conservative in nature. The primary difference is the collapse happened in the U.S. first and all terminology, including “sub-prime,” “adjustable rate mortgages,” and “zero down” were recognized as nasty terms from this point forward. The Canadian banking system AND GOVERNMENT have been swell at snowing the Canadian masses by using different terminology for the exact same practices. And yes, Canada offers zero downs, believe it or not. When a bank gives you the 3%-5% down payment at closing, its the same damn thing. You say tomato, I say bullshit. Does anyone ask any questions in Canada, or does everyone just sit around and drink the same kool-aid day in, day out?

#141 fancy_pants on 04.04.12 at 8:48 am

yup, right on schedule for a major holiday weekend…
gasoline prices rise to the occasion!

Also note the price is about eight per cent higher than a year ago, even though crude oil prices are lower.

of course, no fleecing or price fixing is going on. My hunch is we ain’t seen nothing yet.

#142 CTO on 04.04.12 at 8:51 am

#28 Industrial Guy

There doesn’t seem to be a shortage anywhere. Why are all these fools lining up?

They get off the plane, they see T.O and say “God bless Canada!” London? That’s in England. Barrie? That’s burried under snow 7 months a year!

Get what i, sayin?

#143 HHR on 04.04.12 at 8:51 am

It is a pyramid scheme fueling on itself helped by the “F”. The more money a home costs the more tax the “F” collects. The more homes are packed in apartment high rises the more tax the “F” collects for the same land. And lets not forget the land transfer tax which does not make sense in apartment buildings. On the same square size land you have 30 – 50 floors or more paying tax for it. The “F” is in with this scheme of home price inflation. They are ruining the opportunity for the new generations to ever enjoy what their parents enjoyed. Shame on you “F” for fueling this insanity.

#144 peter on 04.04.12 at 8:57 am

very stupid, if they are so careless and anxious to spend 1M in 5 minutes, why not to buy an already built home with schools and park? Insane, they prefer wait 2 years, eat dust for another year and walk their dogs in mud. By the way, I mention before: shouldn’t the guy in the last picture be downsizing? He looks mid 50’s, he must be the greatest fool on earth!

#145 safetypup on 04.04.12 at 9:23 am

This reminds of 2002 when I lived in Northern California (Silicon Valley). I was chatting with a financial advisor and he mentioned that he could loan me a million dollars, and it would only cost me $3000/month. This was after the Federal Reserve had lowered interest rates drastically. I remember thinking to myself “A million dollars has no value anymore”.

It’s going to be a brutal and slow process for those couples taking on million dollar loans, to pay off these loans.

#146 Dontcallmeshirley on 04.04.12 at 9:43 am

#45 Canadian Watchdog – that’s smart of Scotiabank, i’d also use up as much insurance as I could if I were writing mortgages.

#47 FI Guy – cutting back portfolio insurance doesn’t make more cap space, it only serves to not use up remaining space. CMHC will be releasing their insurance-in-force figures “soon”. They should be well above $550 billion.

I haven’t been able to find any reference to Genworth’s cap being raised. Politically, it makes little sense to raise Genworth but not CMHC…but it could happen.

Canada Guaranty’s cap is anyone’s guess. They’re private.

#147 refinow on 04.04.12 at 10:04 am

Not sure how CMHC is going to “kick out” conventional insured mortgages currently in their portfolios.

There is no term associated with Mortgage insurance other then the amortization. Not like a rate term. The premiums are paid for in full upfront.

So CMHC tells the Bank’s we are cancelling all the conventional mortgage incurance, because we over extended ourselves.

In a market of reducing values, you think the Bank’s will say…….OK we understand.

Well RBC maybe, they are a little distracted at the moment with a little $100,000,000 tax problem.

#148 disciple on 04.04.12 at 10:05 am

Those pics above are photoshop-ed or photofit-ed. Proof? Well, that’s easy… no HAM.

#149 dd on 04.04.12 at 10:08 am

Peter Schiffs take on the US recovery. This guy is a little closer to the action.

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

#150 Mixed Bag on 04.04.12 at 10:09 am

People are stupid. For $1,000,000+ the developer should be courting YOU. Stupid, stupid people. Standing in line like cattle.

I could never do that – it’s so demoralizing!

I feel the schadenfreude growing.

I’m sounding like a broken record.

#151 Mike on 04.04.12 at 10:17 am

I don’t understand why the Government will put restrictions on foreign ownership of corporations, but not on houses.

#152 dd on 04.04.12 at 10:20 am

Europe Recovery will not matter?

Ya. Sure.

“At the open: Dow falls 100 points over Spanish jitters
david berman Globe and Mail Update Posted on Wednesday, April 4, 2012 10:08AM EDT”

#153 Dontcallmeshirley on 04.04.12 at 10:27 am

#47 FI Guy,

My apologies FI Guy, CMHC has 2 caps.

One is “insurance in force” and the other is “guarantees in force”. each is $600 billion.

And you are correct, the guarantees-in-force (applying to securitizations like covered bonds) has plenty of room. CMHC has used up only $334b of the $600b. Meaning bank’s fund raising is only limited by their imaginations!

#154 Herb on 04.04.12 at 10:28 am

#55 Smoking Man:

“This is getting boaring [sic]”

Oh dear, you certainly are.

#155 Market Bull on 04.04.12 at 10:43 am

TORONTO, April 4, TREB reported 9,690 sales through the TorontoMLS system in March 2012. This result was up by almost eight per cent in comparison to the 8,986 deals reported during the same period in 2011.

The average selling price in the GTA was $504,117 in March – up by 10.5 per cent.
in comparison to March 2011.”

California, circa 2006. — Garth

#156 Cory on 04.04.12 at 10:43 am

27Alberta_oilfield_worker on 04.03.12 at 9:25 pm
You know 100 K a year for us working in the “patch” was considered a lot a few years ago, but even at my wage I can’t keep up with everybody. Who knew I wasn’t making half of what most must be bringing home to afford this life style…..

Maybe I am missing out on something, can someone tell me the secret to everyone else’s success?
—————————————–

I completely understand what you’re saying. I also work in O&G making a very nice living as you do AND my wife works and we can’t live this lifestyle others seem to be able to. It is baffling and frustrating all at the same time.

Praise the debtors, punish the responsible I guess.

#157 steve on 04.04.12 at 10:44 am

These people are completely insane! In the near future, they will be cringing that they ever dropped a million such things, and when things go down, they are still going to have to pay up! Their future will be held to debt.

#158 };-) aka DA on 04.04.12 at 10:45 am

The US economy is showing growing signs of strength.

The Canadian economy always lags behind that of our greatest trading partner – the U.S.. We lag behind them when they fail and we lag behind them when they prosper. But because we lag so, the astute recognize that we generally have time to foresee what is coming.

That the US economy is showing growing signs of strength ought to give us fair warning that growing strength will spill over our boarders soon enough and as such we will not fall nearly so far as so many believe we are poised to – if at all.

Growth – our economies depend on it to such an extent that it is a part of our social being. There is no stopping growth in a free enterprise based democratic economy. As such there is no stopping inflation. Accept it. It’s the way it is. House prices; like oil, a loaf of bread and everything else, will continue to go up. You don’t want it to break – you don’t want to negate the advancing of the wheels of the economy, for if and when it should it will be real nasty – real nasty.

#159 Cy on 04.04.12 at 10:48 am

#27

I look around my hood in Grande Prairie, Alberta all I see is snowmobiles/ATV’s, a brand new car and truck in the driveway, a big house, people decked out in all the latest gear, kids with the newest shit. I get looks from people in my hood, people literally smirk at me because I drive a 700$ car and I wear cheap clothing. But I bank everything I make, the Bank owns everything these people have. It’s going to be a nasty decline.

#160 The Patient on 04.04.12 at 10:50 am

#115 – April Newwest

“Some people see the bigger picture but too many don’t…yet.”
——————————————–

Emphasis on *yet.* What’s it’s going to take for prices to drop 15% – 30%? Seems that only a recession with unemployment north of 9% or interest rates north of at least 5% will chill sales and reign in price increases that are typically triple the rate of inflation in *most* Canadian urban centers.

If Garth’s right about America bouncing back (and taking us with them), that must be music to the ears of realtors across the land. And if Bernanke is promising emergency-low interest rates well into 2014 (!), the RE bull is catching second winds left, right and center.

All this artificial stimulation and reflation have created an oxygen tent for homeowners and homebuyers alike (not to mention many corporations). Who’s going to pull the plug? Not H, not F, not C.

Short of a sharp recession in Canada or a spike in interest rates, the only headwind to CDN real estate is affordability. Prices can’t keep rising at the current rates forever, agreed, but they just might “merely” flatline, and we might have to settle for *that* as the “correction.”

#161 Ralph Cramdown on 04.04.12 at 11:01 am

…an absolute piece of decaying crap in Toronto listed for $399k last November. […] Sells for $419k […] still a dump not even a paint job. Sells for $440k to an even more ambitious blind fellow! Fast forward 4 weeks back on the market for $500k.

Classic mortgage fraud scenario. They find the cheapest, nastiest house in the neighbourhood, sell it back and forth between a few straw buyers. On the final sale, they run with all the cash. Loan defaults, bank sends out an appraiser, and “What the Hell? The computer said this place was worth $500k!” The involved RE agents are always crooked, and often the lawyers are, too. Penalties are light and the investigative process is long.

http://www.thestar.com/news/article/1111810–flipped-junction-homes-taken-on-a-wild-real-estate-ride-ending-in-fraud-allegations

#162 getreal-tor on 04.04.12 at 11:09 am

#148 – Mixed Bag

Wouldn’t you stand in line to get a whiff of the gold rush? If things go according to the plans of the developers and the real estate agents, those properties could be worth 2m by the time they finish them. :)

#163 Makavelli on 04.04.12 at 11:17 am

These buyers do not look like first time home buyers. They are likely successful flippers that haven’t lost money yet in this game. Until they lose, they will get even hornier.

#164 daystar on 04.04.12 at 11:17 am

#144 Dontcallmeshirley on 04.04.12 at 9:43 am

http://money.ca.msn.com/investing/news/breaking-news/scotiabank-ceo-cautious-on-housing-no-plans-to-leave

Its smart of their CEO to milk CMHC for every last dime of 100% insured mortgages for easy shareholder profit, sure but under the pretext of what he’s saying in this link its not moral. (classic case of suck and blow if I ever saw one) Scotiabank’s CEO suggests banks can self regulate and the government need not tighten lending regulations so one would think upon reading this that they will restrain lending themselves right? Wrong, the proofs in the pudding and its a classic case of suck and blow if I’ve ever heard one, reeking of self interest.

Its not as though Scotiabank is really looking after their customers here by saying banks can look after the mortgage industry themselves because they won’t. Does Scotia bank care if they run up a credit bubble? Not as long as its 100% insured, profitable and doesn’t cost them when it collapses, they don’t. CMHC can keep business going as usual because business as usual as we all know is bloating this grotesque mortgage credit bubble we now have and putting their customers at risk to negative equity and/or bankrupcy.

I’m betting Scotiabank isn’t pushing HELOC’s either like some of the other chartered banks are doing, just going after 100% insured mortgages. Don’t get me wrong, I think Scotia bank is smart as well with their choices and from a shareholder point of view I like them but that changes the moment I view them without a self interest in mind. You take what your government gives you to a point. To subject their customers to risk like that over profit, we can add greedy and immoral as well and for what its worth, I can’t say the same about TD with their calls for tighter regs.

#165 harden on 04.04.12 at 11:20 am

Here’s a morning laugh.

The comedic headline on April 3rd ‘News Release’ from The Real Estate Board of Greater Vancouver:

“INCREASED SELECTION helps maintain balance in Greater Vancouver housing market”

#166 torontorocks on 04.04.12 at 11:34 am

hey American – your posts are always refreshing b/c they give a perspective that Canadians can’t or don’t see. whenever I’m in the US, using my PAR Canadian dollar, the most aggressive, arrogant and mean drivers I see are the ones with Ontario license plates. we all drink the same kool-aid, we all pay our taxes like dutiful idiots, this bubble or whatever is ALL backstopped by the CMHC and we will fund the CMHC through our taxes and shut up and eat $hit with a smile. that’s what we do here. our premier wastes BILLIONS on e-health, gets re-elected. he promises no taxes, then introduces a surcharge. gets re-elected. our prime-minister and his finance minister are doing canadians over a barrel by jacking them out of their OAS etc then sit back and rake in their pensions. they don’t challenge the unions, who are making bank left and right. the MP’s and MPPs laugh at us, sit on their a$$, get paid an MPP pension and run a medical practice (Dr. Shafiq Qadri, anyone) and yet, no one says squat. They kill each other to save 70 cents per litre (say $40 bucks) for a one-time fillup. Scurry over to Buffalo to load up on ‘cheap’ goods but don’t insist that a Lexus, manufactured in Ontario and selling for $10,000 less in Buffalo, be priced the same. its all bull$hit, as you say. we’re sheep, we follow the leader and they blind us with cheap food. keep eating and shut up. and pay your taxes so the politicos can live like kings. the CMHC is run by developers and housed inside of HRDC. WHY?! can’t anyone see the conflict?

and what do we do? nothing.

bubble shmubble, we’ll pay for it. because we’re canadians. our banks are “solid”, our country is the best in the world, we have the bestest two cities in the world (TO and Vancouver), Calgarians are dumb hicks and east-Coasters leave their hometowns and trade their goodness for TO doucheness.

#167 arctodus on 04.04.12 at 11:36 am

Growth – our economies depend on it to such an extent that it is a part of our social being. There is no stopping growth in a free enterprise based democratic economy. As such there is no stopping inflation. Accept it. It’s the way it is. House prices; like oil, a loaf of bread and everything else, will continue to go up. You don’t want it to break – you don’t want to negate the advancing of the wheels of the economy, for if and when it should it will be real nasty – real nasty.

Ahhhh…but there is a way to stop such growth…and it is here….

Growth economics is nothing more than the bastard brain damaged child of cheap energy……it will die, it IS dying now, as we begin the rapid descent down in energy intensity….peak oil is NOW.

Nasty does not even begin to describe what is happening……the rise of totalitarian states throughout the western world is the sign that it is occurring.

The divide and conquer/the bread and circuses of the late stage Roman Imperium is being reinacted in modern times and at warp drive.

Rapid collapse of human civilization is occurring now…just most folks living inside the collapse cannot even see it.

Garth called my comment the other day re: people living under bridges as a sign of doom….an inane comment……it reveals the cognitive dissonance that exists everywhere…..

We are in collapse throughout the western world now…..88 million are unemployed stateside at least…similar numbers are throughout europe…..and these are the “best” places where there are actual reports.

#168 Derek Speed on 04.04.12 at 11:39 am

Would people stop referencing these buyers as “Rich Chinese”, in this particular case being in Vaughan, +80% are “Rich White” as most in that neck of the wood are Italians. So stupid people come in all shapes and colours.

#169 DM in C on 04.04.12 at 11:41 am

Cheese and crackers, it`s back. 93 & 156

Garth, wasn’t DA banned.

#170 Market Bull on 04.04.12 at 11:47 am

Industrial Guy:

“I was check MLS.CA today to see how bad the shortage of single family houses was in the GTA. This was my search criteria: Single detached house: 3 bedrooms under $400K.

There are 2188 to choose from in the GTA…”
_____________________________________________

It may seem that there are alot to choose from, but the GTA is a huge market. The latest TREB stats indicate that 4,764 single detached homes (all price ranges) sold last month alone in the GTA.

#171 AprilNewwest on 04.04.12 at 11:55 am

To #158 – Why would anyone believe Bernanke. Click on link above at $147. Schiff is not the only person who sees the bigger picture and what’s really going on behind the scenes. Canada is not likely to flatline for long if at all. According to several credible people including Garth, if I remember rightly, we’re doing exactly the same as they did in the US. Pretend there’s no bubble, pretend everything is honky dory. F and H included. Our banks and mortgage people are doing the same as they did in the US though the methods are labeled differently here. Why would it be different here????? Rent and enjoy life. There are other places in the world to live besides rainy Van.

#172 Ralph Cramdown on 04.04.12 at 11:56 am

‘News Release’ from The Real Estate Board of Greater Vancouver:

“INCREASED SELECTION

Yep, it’s the best market in years — in terms of choice.

http://www.youtube.com/watch?v=I8Em6JQGcLA

#173 Nemesis on 04.04.12 at 11:57 am

@CowTownKeith/#72…

Cheers for the SITREP… “It’s our future, folks.” – Keith

Shame you couldn’t linger a few more days… regardless, you may well enjoy this… (I know Nostra will)…

http://tinyurl.com/685so6f

Psst… Don’t eat the Trinitite.

#174 Preciousss on 04.04.12 at 12:04 pm

#27

I look around my hood in Grande Prairie, Alberta all I see is snowmobiles/ATV’s, a brand new car and truck in the driveway, a big house, people decked out in all the latest gear, kids with the newest shit. I get looks from people in my hood, people literally smirk at me because I drive a 700$ car and I wear cheap clothing. But I bank everything I make, the Bank owns everything these people have. It’s going to be a nasty decline
____________________________________________

You are an anomaly. Congrats. Lots of mushy brains in GP that are hell bent on keeping up with Joneses or worseyet, setting the pace.

Fill your jeans. Cheers.

#175 Two-thirds on 04.04.12 at 12:06 pm

Situations such as this would be completely irrelevant to many of us, if it were not for the fact that the consequences of these people’s actions will have an impact on us – courtesy of CMHC.

When the bubble pops, how can those who abstained from the madness protect themselves from the consequences? The indebted outnumber us by a wide margin and the government will no doubt bail them out at our expense.

If one finds him/herself in the madhouse, is the only sane option to go mad too?

#176 It's a turd, It's David Blaine. No, It's me, Smoking Man on 04.04.12 at 12:13 pm

Ladies and Gentleman, I wish to bestow my wisdom on you the way Prometheus brought down fire from the gods! You should be thanking me because I’m in the middle of plagiarising, I mean, writing a book. And here it is. The system was unintentionally designed to make everyone, and I mean everyone, even you Gartho, into slaves. Why do think the measure of success is based on the level of education and acquiring of material objects? Why do people plan their lives to go to grade school, graduate high school, then university, get a job, get married, buy a house have kids, work for 40 years, retire, then die peacefully in their beds surrounded by a caring family? That never happens unless it’s a Disney movie. Your only reason for being born is work off a debt, similar to the christian belief of original sin, that has nothing to do with living your life. Who cares if someone is willing to lend you a zillion dollars? That’s not its purpose. It’s to keep you working until you die. So buy a house or don’t buy a house, who cares? What’s the difference to someone who borrows $800k or $1million, to someone who makes $75k a year, they’ll never pay it back in their lifetime.

#177 cramar on 04.04.12 at 12:15 pm

#28 Industrial Guy on 04.03.12 at 9:32 pm

If we reduce the price by $100K ($300K) for other cities in Southern Ontario we get the following:
London, Ontario: 680 houses to choose from.
Hamilton, Ontario: 794 houses to choose from.
Barrie, Ontario: 413 houses to choose from.
Windsor, Ontario a staggering 1553 houses to choose from.
—————–

There are 480 houses in Windsor for sale UNDER $100,000!!

#178 eagle eyes on 04.04.12 at 12:16 pm

Repeat after me “ONE MILLLLLLLLION DOLLARS” folks. That’s a lot of money, yet people don’t think so anymore. There’s something wrong. Years back, I don’t think people would fathom that dollar figure as being within their grasp. Even on this blog, some are saying “Well, for a million I’d rather buy this than that.” There are some countries (namely China) with approx 960,000 millionaires who can speak of $1m as chump change. Those guys are swarming to the USA, not Canada. Obama is welcoming them with open arms. The Chinese consider the US much superior to Canada. So Canadians do not have to worry about HAM buying all our property and driving up prices anymore. The open sign is up, but the customers are no where to be found. There are bidding wars in LA, San Fran, and NY for high end properties (driven by the Chinese) Developers in the States are courting the Chinese with the red carpet treatment. Those speculators and realtors in the pics have arrived at the party too late. I’m afraid that the music has already stopped in Canada.

#179 coastal on 04.04.12 at 12:20 pm

Almost as delusional is the Victoria Real Estate Board saying sales were down cause “families went away for holidays” and the weather was rainy. Really ? What excuses will be used next ? I guess the last many years families never went on holidays at spring break and the weather sucked last year and sales were higher.

The denial is as bad as the rookie Victoria real estate agent house blog who keeps the numbers fed to the board so he can pump his business to the phony bears who are creaming their jeans to buy when the market drops another 5% or are already caving in one by one. Thank God for Garth’s blog where sanity and a sense of humor prevails.

#180 Dontcallmeshirley on 04.04.12 at 12:40 pm

#162 Daystar,

The NBA instituted the 3-point line in 1979. Some basketball stakeholders were happy, other weren’t. The 3-point line made some players obsolete, but also created opportunity for others. Scoring was permanently inflated. See what i’m saying here?

I’m past troubling myself over the morality and ethics of a focused economic initiative like what we’ve gone through with the RE push of the last 12 years.

All of us should just be trying to figure out how to win.

#181 Canadian Watchdog on 04.04.12 at 12:49 pm

#153 Market Bull

Same TREB manipulation as usual. Pre-cons included vs last years revisions.

Mar2011 Sales http://i42.tinypic.com/ak8woi.png
Mar2011 Sales Revised http://i42.tinypic.com/2loz68.png

The average price can be calculated by total dollar volume divided by sales. http://i41.tinypic.com/33xdetz.png With pre-cons included, the average price appears higher by adding future sales (properties not even built). What’s debatable is when should pre-con sales be counted, but obviously TREB is including pre-con sales/dollar volume to boost the average price, while removing pre-con sales from last year (revising down) to make current sales appear higher.

I’m going through the data now. Toronto central area condo sales are down by 11%, and this is with 2.99% mortgages and remarkable weather.

#182 Mark W on 04.04.12 at 12:49 pm

The Bare Naked Ladies have a song entitled “If I Had a Million Dollars” … they should rewrite the modern version.
“If I Had a Million Dollars I Still Would Not Own Most Homes in Vancouver City Without Being Mortgaged to Death.”

#183 dddd on 04.04.12 at 12:56 pm

uncle ben says no more candy for you!!!

equity markets immediately take a swan dive (-200dow)…

connection or coincidence?

look out below.

After a 12% advance in 90 days a correction is welcome. Condolences about your gold, however. — Garth

#184 disciple on 04.04.12 at 1:01 pm

#165 arctodus… You are wrong about Peak Oil. Natural gas, propane, and electrification wait in the wings for their chance in the spotlight that has continually been denied them by the oil cartel. We literally don’t know what to do with all the natgas that fracking has enabled us to inventory. Harper has only now been forced to consider selling to the emerging markets. U.S. Congress just sucked up to the oil lobby and denied Westport and others in the fuel injector technology business a headstart at creating fleets of vehicles that run on natural gas. No more “bringing democracy to the Middle East” which is a euphemism for “maintaining the monopoly on oil for New York and London”.

But you see, it’s not about money, it’s not about politics, it’s not about limitations in science and tech, it’s simply about control. There’s that word again.

Beijing as of last year made it a rule that nobody can buy a new car unless it’s electric. China is the world leader, not only in auto sales, but in adoption of EV. You just don’t have a handle on what’s really happening. The oil cartel sees the writing on the wall, and they are squeezing every last ounce of blood from us, until such a time that they have re-mobilized to take advantage of the new and emerging paradigm. They are already scrambling to implement their patents on green energy that they had acquired two or three decades ago.

You can safely put that scam of Peak Oil into the recycling bin located at the headquarters of Big Oil where it originated…Oh yeah, throw in Global Warming with it while you’re at it…

#185 canus on 04.04.12 at 1:13 pm

Canadians suffer from “im-not-american-itus”. It is not possible for Canadians to learn from Americans and what led to the US real estate meltdown. Every argument and discussion I have with my Canadian friends and family boils down to a belief of “we are not irresponsible like Americans”.

Back in the US, I just put a deposit on a new construction build, final price of 3X income, 1/3 acre, 3050 sq. ft. home in an excellent neighborhood and schools. It has made my Canadian friends and family nervous for the first time that there might be something wrong in Canada.

#186 MoneyMyHoney on 04.04.12 at 1:15 pm

If predictions were true, we would have seen multi-year melt at least for the past 2.5 years. But what happened was a multi-year astronomical climb up in prices. Predictions and reality are two different things.

Actually there is a fine melt underway in many markets. Try not to be so regional. — Garth

#187 gladiator on 04.04.12 at 1:23 pm

The worst thing is: the government will not let these crazy home buyers fail.
The government’s goal is to stay in power. The home ownership is at 70%, and this is the majority of voters too. Guess on whose side will the government (who needs votes) be?
We the renters are screwed, because we’ll be footing the bill for this folly. Pity today’s kids who will bear the brunt of (much) higher taxes while competing with cheap labour from the developing taxes – when they grow up, of course.

#188 Benny Hill on 04.04.12 at 1:49 pm

XIU.to breaks a head and shoulders top .

#189 reasonfirst on 04.04.12 at 1:53 pm

#156 };-) aka DA

Hmmm – I guess interest rates will be up sooner than expected.

#190 Smoking Man on 04.04.12 at 2:01 pm

Beach Girl,
a 10 for creativity, You got it Girl :)

American,
ah ha fema camps, enjoy the land of the sheep.

Herb,
You need a 10 hour energy drink

It’s a turd, It’s David Blaine. No, It’s me, Smoking Man,
I give you the wheel, VIVA la Party time on way to Airport.

Have a good one bubble heads oxoxoxoxox

#191 househornyhousewife on 04.04.12 at 2:11 pm

Garth,

There is absolutely NO WAY that there are that many people with a million dollars to spend. NO WAY.

This means that many of these idiots are planning to stretch themselves super thin and borrow on virtually nothing, all in the hopes of a get rich quick scheme. Their very behaviour tells me that they don’t have that kind of money to spend.

Anyone who truly has that kind of coin has gotten there by taking care of their money and not by being stupid (although, granted, stupid luck does exist an I have seen it with my own eyes).

No matter what people choose to believe, that rich and swanky, hunter green mercedes driving, wheeler and dealer with the blonde bimbette waiting for him at home with a scotch on the rocks only exists in the movies (and ads for Tannoy speakers).

People with money are often even closer to it than ones without it (not necessarily an attractive trait) and for such an illiquid asset one has to be SURE they are making the right decision and buying smart. Something these people obviously are not doing.

No one is fooling me. As long as my hard earned income and income taxes don’t have to bail these idiots out, they are free to do whatever the heck they want to. Why not send them over here where igloos are a much better deal at just slightly less than a million .. but they had better buy quickly ’cause it’s a limited time offer which will expire soon ;)

HHHW

#192 gladiator on 04.04.12 at 2:33 pm

I meant “developing countries” – tax increases I can see materializing in the not-so-far future are too much on my mind lately :(
I have my passport ready though – if it goes out of control in Canada, I will vote with my feet.

#193 John on 04.04.12 at 2:39 pm

“Equities are going to experience a pretty big sell off in the next couple of months.

Don’t buy bonds (over-priced), don’t buy equities. Sit on cash and wait for the smart opportunities coming up.

(Based on what? — Garth)”

It’s starting to look like this exchange isn’t going to happen. Exaggerated responses, doomers, reasonable analysis, solid well-thought-out consideration of the facts. It’s all brushed off. It’s a “work backwards” deal. The facts are unacceptable. The debate isn’t allowed.

The same kind of stuff going on in the Canadian Real Estate debacle. It is what it is.

#194 Dodged-A-Bullit-In-Alberta on 04.04.12 at 2:45 pm

Greetings: # 182 [Disciple] I challenge you to find me a jetliner that will fly on anything other than petroleumn products!! Peak Oil is here and no amount of wishful thinking will change this. Arctodus is exactly correct. World consumption of oil is increasing at the same time that the mega fields are in decline. I suggest you research the decling of the Prudhoe Bay field and the impact it is having on the Alaska pipeline. Research the melting ice caps in the Canadian arctic. You ain’t seen nothing yet.

#195 Herb on 04.04.12 at 2:49 pm

All right, this is serious! Which blog dog has eaten the Harper Government’s homework F-35 file?

#196 TorontoBull on 04.04.12 at 2:53 pm

@179 Canadian Watchdog
I find your post pretty informative. However, I don’t understand the TREB data argument. I thought that TREB reported resales only, while BILD reported new home sales. Are you suggesting that this is not the case?

#197 Fred on 04.04.12 at 2:56 pm

I’m curious. When people agree to buy an as yet unbuilt pad for a million dollars, do they have to put money down straight away (if so how much) or do they just promise to pay once the place is built and available to move in?

Do banks lend money for as yet unbuilt properties like these? I would suppose they do, but that would mean you’d be paying off the loan and not even have a house to show for it.

#198 VICTORIA TEA PARTY on 04.04.12 at 3:02 pm

TRIAL BALLOONS, BUBBLES: BANG!

“Canada steps up housing market oversight”.

That innocent enough looking headline in this day’s Financial Post online issue is more than it seems.

To those who know about politics and business such a headline is aka a “trial balloon.”

Normally governments (and business–lobbying efforts) float ideas in the MSM to check on any public feedback, a sort of field test of a proposed policy of some kind.

But THIS trial balloon is a different kettle of fish in that the federal government has ALREADY spilt the beans about upcoming real estate constrictive policies in last week’s federal budget.

So, this headline is a trial balooon from the banks and the real estate industry, a push-back, a realization that maybe F is totally serious about reining in this real estate monster, much sooner than anticipated.

Therefore this banksters’ trial balloon is that it’s too late.

BTW,here is what they belatedly want from government:

‘The government should “hit the pause button” to take stock of the new rules put in place, since the financial crisis, and whether such changes may have “unintended consequences,” Terry Campbell, president of the Canadian Bankers’ Association, said yesterday in a speech in Ottawa.’

And this gem:

‘Canadian authorities are stepping up oversight of the nation’s housing market even as lenders such as Bank of Nova Scotia warn that tougher rules could threaten the economic recovery.’

While this pleading and wheedling goes on, and people who can’t afford the plastic lawn chairs they’re spending all night sitting on outside some “proposed” real estate nirvana-place, the banksters want their cake and eat it too: “Regulation if necessarily, but not ever applying to me!”

Side issues designed to fuzzify the issue in the public’s eye will be for naught.

Those include protecting lenders from wobbly mortgage holders through issuings of covered bonds; increases in CMHC insurance ceilings; and this: urging the slow down of this next process: ‘…The country’s banking regulator, the Office of the Superintendent of Financial Institutions, said Tuesday it will boost supervision of private mortgage insurers while examining “emerging” risks to the financial system in several areas, including residential mortgages.’

Now the near-term outcome (ignore the floweries, here) as announced not by Flaherty but by some minion from the CD Howe Institute:

“…Flaherty…appears to be taking a “wait-and- see” approach to determine if the market is headed for a soft landing before he acts again, said Finn Poschmann, vice president of research at Toronto-based think tank C.D. Howe Institute. “If the growth in mortgage credit and home-equity lines of credit doesn’t tame itself, we can expect the finance minister to respond,” he said.”

Bottom line is simple. The feds have to act soon because the real estate/consumer debt pain will be so horrific as a result that it’ll take until the next election year for everyone to fuggettabout it!

Political processes are so very fascinating to watch especially when so many lifestyle oxen are about to be gored for a good and very long time.

#199 daystar on 04.04.12 at 3:06 pm

#178 Dontcallmeshirley on 04.04.12 at 12:40 pm #162

I see what you are saying. With every systemic change there will be winners and losers.

I’m not past troubling myself over the morality and ethics of a focused economic initiative because I know what it takes to truly win and by that, I mean victory is hollow if it can’t be shared. If winning comes at the expense of so many others, can one call it winning? (exploitation perhaps which doesn’t make us immoral persay to exploit the weaknesses of a system, but it can’t in my view be defined as winning) We are all products of our own environment are we not?

I see the same things repeating themselves over and over with wealth effects. Whether its pride giving birth to judgment or judgment gives birth to pride, somewhere along the way we go from telling ourselves “we are better off” to “we are better than”. Equity grows through RE for example and whether its the U.S. RE bubble of 2002 through 2006 or the Canadian RE bubble of 2007 through to 2012, the moral causal effects it has on the masses is the same. The causal effect of wealth (I know, not a golden rule) creates that “smugness”, that pride which breeds apathy and lack of empathy, all to familiar to recognize… not to mention a blindness that leads to an all to familiar conclusion of having lost one’s way. Winning is great, but its the loss I speak of that I wish to avoid not just within myself but for others and morality has everything to do with it, at least for me. I’m not implying anything here concerning you personally, just expressing where I’m coming from.

#200 Mark W on 04.04.12 at 3:08 pm

http://www.realtor.ca/propertyDetails.aspx?propertyId=11574185&PidKey=-597802963

Here is a house in the town of Maple Ridge BC. This is a suburb about 30 miles outside of Vancouver in the Fraser Valley which is largely white and working class.

This exact home was for sale one year ago for $599,000 and now it is still listed (been listed serveral times in fact) for $438,000 and still not sold.

http://www.realtor.ca/propertyDetails.aspx?propertyId=11559345&PidKey=1039259406

Here is another Maple Ridge house that has been on the market for almost a year and has been reduced about $130,000 from it’s original asking price.

Still not sold.

In Greater Vancouver when you get out of the big bucks coming in from China zone then it changes dramatically, especially when you look at white, working class areas.

This is the real index for Greater Vancouver and not places like the link below out near UBC on the west side of Vancouver.

http://www.realtor.ca/propertyDetails.aspx?propertyId=11624465&PidKey=-2125569582

Property values in Vancouver border on the schizophrenic!

#201 Arse on 04.04.12 at 3:12 pm

#165arctodus

#192Dodged-A-Bullit-In-Alberta

—————————————————————-

With respect to Peak Oil, I agree with you two of you.

Another fact that causes the price of oil is the U.S. dollar. When the U.S. dollar depreciates, the price of crude goes up. When price of crude goes up, everything goes up. The printing of insane amount of money in the U.S. has lead to the downward pressure of the dollar.

#202 Uh Oh Canada on 04.04.12 at 3:16 pm

Just ran into a friend who works as a clinical lab technician at a scientific firm. “What are you doing here on a Wednesday afternoon?” I ask. Apparently there isn’t enough work for her so she’s now working 4 days a week.

Gas was $1.48/L today. Yikes! We’re marching right into tougher times. So glad I have savings to fall on.

#203 Ralph Cramdown on 04.04.12 at 3:19 pm

I challenge you to find me a jetliner that will fly on anything other than petroleumn products!

Been done, and not such a big deal. Oil’s got the job, as long as its cheap enough. When it isn’t, someone will find a replacement.

http://www.independent.co.uk/environment/climate-change/first-biofuel-flight-dismissed-as-virgin-stunt-786847.html

#204 Abitibi Doug on 04.04.12 at 3:31 pm

So, is this frenzy of buyers, complete with bidding wars where buyers line up and the seller’s trailer is mobbed also going on in American cities, where property values have corrected and are at multi year lows?

#205 The Patient on 04.04.12 at 3:43 pm

#169 AprilNewwest

I watched the Schiff video you suggested. Thank you for that. Schiff: “This phony recovery is going to come to an end.” He seems rather bearish on the U.S. economy. Yet Garth seems rather bullish. You lend credulity to both views? Hmm.

You write: “According to several credible people including Garth, if I remember rightly, we’re doing exactly the same as they did in the US. Pretend there’s no bubble, pretend everything is honky dory.”

I, too, used to think Canada was going down the same treacherous road as the U.S., but that’s not the case. There *are* eerie parallels (publicly backed CMHC subprime mortgages), but they weren’t securitized and resold around the world as foundational A-grade investments to later teeter and fall like dominos. Also, most of those subprime U.S. mortgages were unsecured — owners could walk away if need be. And walk they did. The bulk of Canadian mortgages are secured and people will trudge to the local foodbank and stop buying teeth whitener and German SUVs before they default on their holy mortgages. *Big* difference! So, Canadians are way more motivated to service their mortgages than the Yanks ever were, of necessity. They’ll open a vein for them, if necessary. Therefore, U.S.-vs.-Canada is apples-vs.-oranges. Yes, they’re both fruits but they aren’t the same, not by a long shot.

I agree with much of what Schiff says in the clip, particularly with his claim that low interest rates sustain a housing bubble. Until *our* interest/mortgage rates quickly dart up to 5% or more, or the U.S. recovery is revealed as a dead cat bounce (but then hello QE 3) and drags us down with them, a flatline price scenario seems most likely best-case scenario for us cash-liquid renters who would prefer to own a reasonably priced residence without having to move to Lilooet, B.C., Shubenacadie, N.S., or Marmora, Ont….or some other backwater where men are men and the sheep are scared.

#206 GregW, Oakville on 04.04.12 at 3:49 pm

Hi Garth, Someone might be interested? Not sure if he’ll say to much?
“On Tuesday, May 1st (11:30AM), Canada’s podium of record is proud to recognize Mark Carney, Governor of the Bank of Canada, as our 2012 Canadian of the Year award recipient.”
http://www.canadianclub.org/Events/EventDetails.aspx?id=3190

#207 Engineered on 04.04.12 at 3:53 pm

@ Dodged a Bullet in Alberta, #192:

A plane that runs on LNG: http://en.m.wikipedia.org/wiki/Tu-330

It’s also worth noting that gas turbines have been burning natrual gas for decades for power generation. Really, LNG jets would not be hard to achieve.

#208 Rene on 04.04.12 at 4:13 pm

I recommend a new feature for this Blog: I’d like to suggest instituting a DPD Award (Dumbest Post of the Day).

On second thought, it might become a contest for the same three people who repeatedly post garbage on this site, who would then brag about being an 18-time DPD award winner. They might then request a DPD Hall of Fame.

On second thought, maybe this request is the DPD.

#209 Form Man on 04.04.12 at 4:16 pm

#156 DA

this is grade 2 arithmetic. House prices are dropping because of oversupply ( especially in Kelowna ). No amount of realtor spin can alter that fact. You need to get out of the valley once in a while. Truth and facts are eluding you again.

#210 ozy - the crash is coming, Scotia sweats on 04.04.12 at 4:18 pm

http://business.financialpost.com/2012/04/04/canada-steps-up-housing-market-oversight/

#211 Form Man on 04.04.12 at 4:19 pm

#203 the patient

Hate to break the bad news to you, but CMHC insured mortgages are being securitized and sold around the world as AAA, because they are implicitly backed by us, the taxpayer. Where have you been ?

#212 Bill Gable on 04.04.12 at 4:24 pm

To quote Bugs Bunny (who has more brains than most of these folks) – “Maroons”.

Unbelievable!

#213 industrial Guy on 04.04.12 at 4:30 pm

Market Bull on 04.04.12
I used $400,000 as my search criteria because anything higher is frankly insane. Yes, TREB stats indicate that 4,764 single detached homes (all price ranges) sold last month alone in the GTA.
If we change the search criteria on MLS.ca to say …. single detached homes all ranges.
There are over 10,000 properties listed all over the GTA. So why are these fool lining up? ….
Why are there bidding wars in the GTA. Supply exceeds demand by over 50%. Something seriously stinks here.

Cramar on 04.04.12
“There are 480 houses in Windsor for sale UNDER $100,000!”
I know …. it’s a virtual free fall. The Las Vegas housing market comes to Canada.
The sad news is … It may actually get much worse down there.

#214 Mixed Bag on 04.04.12 at 4:34 pm

#160 getreal-tor on 04.04.12 at 11:09 am

#148 – Mixed Bag

Wouldn’t you stand in line to get a whiff of the gold rush? If things go according to the plans of the developers and the real estate agents, those properties could be worth 2m by the time they finish them. :)

—————-

If things go according to the plans – that’s a pretty big if for a $1million investment.

I’ve gone to a couple of these years ago, took a look, and left. It’s a personal flaw.

Now, I’ve got my 40’+ frontage in the GTA, deep lot, no neighbors behind, purchased for one quarter of the price. And that was with waiting for savings to build, while the markets kept rising. But we’re not selling. (1) It’s our home. (2) We’d just be moving with the market. (3) It’s our home. Yes I repeated that on purpose.

#215 Mixed Bag on 04.04.12 at 4:40 pm

Sometimes the herd is right – my better half points me to the people stocking up on sale items at the grocery store, telling me it must be a good price if everyone else is buying. This may be true for toilet paper and detergent.

#216 NorthOf49 on 04.04.12 at 5:12 pm

Do you think if any of them would have seen this article first, they might have changed their minds?

“Apartment Vacancies Decline in U.S. to Lowest Rate Since 2001”

http://www.bloomberg.com/news/2012-04-04/apartment-vacancies-decline-in-u-s-to-lowest-rate-since-2001.html

Naw, I didn’t think so either. You know what they say…”You can’t fix Stupid!”

#217 The Patient on 04.04.12 at 5:20 pm

#209 Form Man

Touche, but our banks’ covered bonds (rooted in CDN mortgages) are nowhere near as likely to teeter and collapse precisely because they originate in secured loans, not unsecured as was the case in ‘Merica. I doubt they’d sell very well if they were “just like the U.S.” products.

I *have* been paying attention, that’s why I’m increasingly of the mind that this bull ain’t nowhere near tired yet. Gonna take a recession/unemployment/foreclsoures or a sudden and substantial goosing of interest rates to tucker out the house horny.

And again, no, I am not a realtor. Just a vulture with a full bladder.

#218 Jimmy on 04.04.12 at 5:41 pm

Any comments on this article Garth ?

http://news.yahoo.com/blogs/sideshow/next-great-depression-mit-researchers-predict-global-economic-190352944.html

No. — Garth

#219 Canadian Watchdog on 04.04.12 at 5:52 pm

#194 TorontoBull

Realnet reports completed condo sales and also provides data on inventory and units under-construction. All pre-cons are booked on MLS on the initial sale.

#220 jen on 04.04.12 at 6:10 pm

Garth, Shouldn’t Genworth fall under the OSFI (same as the proposal for CMHC) ?

#221 Torquemada on 04.04.12 at 6:14 pm

#182 disciple on 04.04.12 at 1:01 pm

“They are already scrambling to implement their patents on green energy that they had acquired two or three decades ago.”

Ummm…won’t those patents be expiring about now?

#222 Mark W on 04.04.12 at 6:28 pm

http://www.canadianbusiness.com/article/74982–private-real-estate-service-launches-in-b-c

Canadian Business Magazine has a new article about a new real estate website for rich Chinese immigrants who are buying up Vancouver and ripping the guts out of the middle class in this city.

#223 jess on 04.04.12 at 6:35 pm

Qui facit per alium facit per se?

australian property market
http://michael-hudson.com/2012/03/film-real-estate-4-ransom/

http://neweconomicperspectives.org/2012/04/we-were-regulators-once-ed-grays-finest-hour.html#more-1863
http://www.finance-watch.org/wp-content/uploads/2012/04/Basel3eng21.pdf
http://www.huffingtonpost.com/janet-tavakoli/mf-global-jpmorgan-produc_b_1401059.html?

#224 Westernman on 04.04.12 at 6:36 pm

Just think of it this way folks,
When this artificially supported RE house of cards collapses just think of the millions of story’s of of woe that you will be able to laugh at … no better value for your entertainment dollar I say…

#225 Harlee on 04.04.12 at 6:43 pm

Back in the late 70s an American sports writer referred to “Vancouver,Canada” as a “village”. Oh,what an outrage from the citizens there was. The Nerve of him ! But in the years since, Vancouver has proved itself to be just that. A few days ago provincial NDP leader Adrian Dix was caught on the skytrain without a ticket. In any other city in Canada this would be minor news and easily laughed-off. But not in a “world class city” like Van. ,no ! The outrage,the scandal,it’s just too much ! That this so-called “news” would cause such a brouhaha just proves what a village Vancouver really is. And I think it shows why people in that village-city would go all out to pay the ridiculous prices for crappy houses and especially cheaply made condos like they do. When the bubble “pops” (like a bad pimple) it’s going to pretty messy indeed !

#226 Harlee on 04.04.12 at 6:53 pm

#210 Bill G.
Bugs Bunny is a favourite cartoon character of yours ?
Mine too. Har Lee = Hare’s Meadow.

#227 Alberta Ed on 04.04.12 at 7:09 pm

From a vulture’s perch, those folks look just like road kill…

#228 truth hammer on 04.04.12 at 7:12 pm

Fat bald ugly and working for the government…of course you don’t worry about price……..pensions people pensions pay for everything forever….no worry about signing a fifty year mortgage….the taxpayer will soak up the oversweat for the rest of your life……..the laws of having to pay back the dough are suspended in the civil service……….thats why when you have people who are not currently spending 100% od their disposable income on mortgage overhead there is only one class of people who can afford to take the risk……..the rich and coddled civil service.

#229 The American on 04.04.12 at 7:29 pm

At #203: The Patient, I should correct you. The bulk of mortgages in America are SECURED – not unsecured. This is a common, misguided and completely inaccurate assessment of the U.S. that Canadians have. We really have no idea where this notion came from. For the record, there are only 12 states in the U.S. that are nonrecourse. The rest of the state, including all U.S. territories, are full recourse states. Of the states that are recourse (as it would be in most places in Canada, but not all), some of the hardest-hit real estate came. These states included the likes of New York, Virginia, Hawaii, D.C. Metro, Maryland, New Mexico, Michigan (Detroit ring a bell?)

#230 ANONYMOUS on 04.04.12 at 7:32 pm

So, from what I hear, those $1 Million dollar homes are now being re-sold for $3.5 Million?

They are unbuilt. But feel free to make an offer. — Garth

#231 FI Guy on 04.04.12 at 7:35 pm

#144 Dontcallmeshirley on 04.04.12 at 9:43 am
#151 Dontcallmeshirley on 04.04.12 at 10:27 am

A large portion of the CMHC portfolio insurance that was issued is what is called “term insurance”. It expires soon. The other type of insurance amortizes down over a specified period of time. As a result, $200-$300 billion of insurance will open up for insurance at the individual’s level over the next few years. The $45 billion you mention is actually a lot larger.

Secondly, the $300 billion (or so) of “guarantees” CMHC is issuing is simply relating to securitization. Every single time a Canada Mortgage Bond (CMB) or Mortgaged Back Security (MBS) is issued, CMHC “guarantees it”. This limit is less important – for now.

Also, I read about the potential for Genworth and CG to have the cap increased from $250 B to $300 B here:

http://www.theglobeandmail.com/globe-investor/investment-ideas/streetwise/genworth-sees-opportunity-in-cmhcs-limit/article2328182/

#232 Westernman on 04.04.12 at 7:42 pm

Truth Hammer @ # 226,
You hit it right on the button again, Chief.
By the way, Canada, how does it feel to pay taxes out the ass to carry these worthless pieces of bilge debri in the lap of luxury for the rest of their lives? Like it, huh… don’t you?

#233 Just(not)AnotherSheeple on 04.04.12 at 7:43 pm

Re:#189 househornyhousewife on 04.04.12 at 2:11 pm

Garth,

” There is absolutely NO WAY that there are that many people with a million dollars to spend. NO WAY.
This means that many of these idiots are planning to stretch themselves super thin and borrow on virtually nothing, all in the hopes of a get rich quick scheme. Their very behaviour tells me that they don’t have that kind of money to spend.”
=====================================
HHHW

There are a lot of people with money and I suspect the majority of them are “public servants” – after all one in five people in Ontario work for one or another form of government, crown corporation, agency, etc…

The top earning 78,914 people devour exactly $10,149,557,163 -or if you add the pension matching and the other generous benefits you will find out that these are responsible for 10% of the total Ontario expenditures.
And beneath them are almost 1 million other “public servants” with tens if not hundred of thousand earning over 90k, over 80k, etc….
These guys are guaranteed to retire with 50-60-70% of their best 5 years salaries and these are inflation protected (for now and shortfalls backstopped by all taxpayers)

Obviously these are smart enough to know that $3k/month mortgage now is going to be different from $3k in 5 years, never mind 10 years or more in the future.
And given the fact that they probably did not earn any sizable return in the last 10-20 years I suspect they do not see any downside to use the extremely low interest rates and to jump as deep as they can chew…

To summarize:
1. Stock market bulls – people like Garth
2. Gold bull – people ridiculed by Garth
3. RE bulls – people ridiculed by Garth and the gold bulls.

One of these group will hit the jackpot in not so distant future. Hopefully we will see which one…

I am a bull on balanced, diversified investing across a number of asset classes, of which real estate is just one, as are equities and commodities. That always wins. — Garth

#234 jess on 04.04.12 at 8:03 pm

transparency price

“terror of the millionaires.”
http://www.spiegel.de/international/europe/0,1518,825443,00.html

although, the main witness is dead!
==============

.. a former HSUS investigator details the dangers of HR 589 makes it illegal for investigative reporters to take jobs at factory farms in iowa

http://www.theatlantic.com/health/archive/2012/03/the-ag-gag-laws-hiding-factory-farm-abuses-from-public-scrutiny/254674/

Saturday, March 31, 2012
A new regulation (alien species )developed by the state’s Department of Natural Resources (DNR) will prohibit the fur-covered pigs. State officials claim the pigs represent a threat to pig farmers

#235 Market Bull on 04.04.12 at 8:05 pm

Canadian Watchdog on 04.04.12 at 5:52 pm
#194 TorontoBull

Realnet reports completed condo sales and also provides data on inventory and units under-construction. All pre-cons are booked on MLS on the initial sale.
____________________________________________

Au contraire monsieur Watchdog.

Pre-construction condos are rarley listed on MLS. They are almost always sold exclusively by the developer’s own sales staff. Even if commission is paid to a realtor who brings in a buyer it is done on an exclusive basis with a commission agreement, not on MLS.

If it is not listed on MLS it cannot be reported as an MLS sale.

#236 jess on 04.04.12 at 8:11 pm

226 truth hammer on

Regulatory Arbitrage

Victor Fleischer
University of Colorado Law School

March 4, 2010

U of Colorado Law Legal Studies Research Paper No. 10-11

#237 Bobby on 04.04.12 at 8:17 pm

For #128 I’m Stupid,
Everything now is financed. It is not the price it sells for, but how much does it cost a month. For many people it is a house of cards. One missed paycheck and it all comes tumbling down.
For #177 Coastal
I live in Victoria and there is not a lot selling. Condos in Aquattro that were supposedly listed one time at $1 million, now $575k and still not selling. The average is skewed by a few higher priced sales, the median is tending down. There are over 1100 realtors in Victoria with less than half that number in sales. Many realtors aren’t getting paid. Spoke to one realtor that hadn’t sold a house in over a year.
Remember the Victoria Real Estate Board’s purpose is to promote the real estate market. If there is a reduction in sales, then realtors don’t get paid. If they are using the rain as an excuse, they are running out of ideas.

#238 Increasing that 1% on 04.04.12 at 8:23 pm

Re: #164. toronto rocks;
wrt, when going to US, noticing the most aggressive, arrogant, and mean drivers had Ontario license plates

Noticed this when driving out West and back. In general, it was so obvious, the difference. Unless you’re right in the bigger cities maybe.

Ontario driving; Welcome to the land of tailgaiting, bad lane changing, lack of lane changing, sitting in your blindspot, and too often a f-u mentality.

hmmmaybe aggression in the car, due to passivity most other times

#239 Dontcallmeshirley on 04.04.12 at 8:31 pm

#229 FI Guy,

Yes, the CMHC insurance in force “churns” as insured mortgages mature and fall off the books. Got it.

What would be interesting is to know what that timetable looks like. Is the relief 1,2,3+ years away?

The Globe article is ancient (Feb12). Again, don’t understand how Genworth gets a raise and not CMHC.

The guaranty cap affects the rate at which banks can raise funds. I’ve read that banks say without the covered bond financing they’d have to charge 0.5 to 0.8% more. Not a big deal really.

#240 Canadian Watchdog on 04.04.12 at 8:43 pm

#229 FI Guy

CMHC and private insurers can not raise their limit without additional capital. Rating agencies would downgrade them if they leveraged themselves more then they are.

#241 Stupesing in Cabbagetown on 04.04.12 at 8:49 pm

Is this a future Canadian story if the OSFI rules go through as predicted? See: http://www.dailymail.co.uk/news/article-2124803/Fears-millions-mortgage-prisoners-trapped-loans-taken-boom-years.html

Astonishing that people don’t realize this: http://www.moneysense.ca/2012/04/03/your-cmhc-insurance-doesnt-protect-you/

#242 Herb on 04.04.12 at 8:56 pm

Truth Hammerer,

was your #226 a propos of anything, or did you merely want to get your westernmoronic echo exited?

#243 Westernman on 04.04.12 at 9:14 pm

Herbie @ # 239,
That made absolutely no sense whatsoever…

#244 cramar on 04.04.12 at 9:24 pm

213 Mixed Bag on 04.04.12 at 4:40 pm
Sometimes the herd is right – my better half points me to the people stocking up on sale items at the grocery store, telling me it must be a good price if everyone else is buying. This may be true for toilet paper and detergent.

————–

Tell your better half that she is correct to a certain point. When toilet paper, detergent, shoes, and most every item in the world goes on sale, people buy, buy, BUY! (Can you say Boxing Day?) When price goes up they don’t buy, or buy less. The exceptions are stocks, Real Estate, and other “investments”. Then they don’t want to touch them when the price is low (i.e. stocks in March 2009, gold at $300, RE now in Windsor and parts of the U.S.) and want to buy when prices have risen astronomically (like stocks now, gold at $1700, and RE in Van. & TO). It’s called herding! You would be surprised at how many investors would not touch Apple at $70 in Jan. 2009, but everybody wants in at $600+ because it just has to go to $1,000! Dumb, really dumb! But that is human nature.

#245 The Thing in the Basement on 04.04.12 at 9:24 pm

138 American – I’ve been sensing a bit of an “edge” to
your posts lately. Not sure what the hate-on for RBC is (I
mean besides the usual what they deserve). From the
links supplied, sounds like they took an aggressive tax-
stance. They claim they cleared it with regulators years
ago. I guess the lawyers will figure it out.

Also, given the size of our countries economies, 2% of the US market would make it comparable to a 20% share of Canada, which is probably pretty close.

#246 Canadian Watchdog on 04.04.12 at 9:27 pm

#233 Market Bull

“Assignment Of Sale”

And stop making up a million names and running around from blog to blog like a fairy.

#247 FI Guy on 04.04.12 at 9:38 pm

#237 Dontcallmeshirley

I don’t understand how Genworth get’s a raise either. Just read about it. Perhaps it was legislated. We’ll need to see that happens.

It’s not necessarily related to mortgage security. A lot of the book is just 3 to 5 year term insurance which expires either when the mortgage is renewed / refinanced or when the insurance expires. For a large portion of the insurance, the insurance will expire within the next three years, creating a lot of room to fill with 5% down mortgages.

0.5% to 0.8% doesn’t seem right to me. Covered bond issuances are only a maximum of 4% of bank book’s (4% of costs).

#248 Market Bull on 04.04.12 at 9:49 pm

#233 Market Bull

“Assignment Of Sale”

And stop making up a million names and running around from blog to blog like a fairy.
____________________________________________

As I said, if it’s not on MLS it’s not reported as such.

Assignments are a miniscule part of the market. Why didn’t you identify the market segment you were referring to in the first place?

#249 The Patient on 04.04.12 at 10:15 pm

#227 The American

I stand corrected but, still, the 12 states where non-recourse mortgages do prevail contain 119.4 million people — a rather significant chunk — with carnage leaders California, Florida and Arizona being on that list of 12.

Source:

http://www.cbsnews.com/8301-505123_162-41240261/what-happens-when-you-walk-away-from-a-mortgage-loan/

The 12 non-recourse states are:
Alaska – (population 722,000)
Arizona (6.4 million)
California (37.5 million)
Connecticut (3.6 million)
Florida (19 million)
Idaho (1.6 million)
Minnesota (5.3 million)
North Carolina (9.6 million)
North Dakota (684,000)
Texas (25.5 million)
Utah (2.8 million)
Washington (6.8 million)

Total: 119.4 million souls

(Source: http://en.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_population)

#250 WPGWALDO on 04.04.12 at 10:25 pm

I think I saw Snookie in the first pick!!!!

#251 disciple on 04.04.12 at 10:31 pm

#221 Torque… Yes, exactly. Shelved them for this long, and now any enterprise willing to use them will be decades behind; that is, if they can find them. Not to mention also they were acquired nefariously…

#252 disciple on 04.04.12 at 10:46 pm

Gas price spikes due to Refinery problems? Do any of you buy this Crapola? Do any of you know that Al Gore is a character played by Bruce Willis? Or that Octo-Mom is actually Angelina Jolie in prosthetics? See my blog for the scoop…

#253 Steven Rowlandson on 04.05.12 at 8:55 am

I think it would take the destruction of Canada and civilization to end this real estate mania. Restraining prices is not on the agenda.

Home owners, realtors, banks and governments have no incentive to allow lower prices if they have choice in the matter.

They all have skin in the game and they think they are immune from losing or taking a big loss.
If you can make laws and have skin in the game the laws of supply and demand don’t mean a thing.
The interests of government and its allies trumps all other considerations.

It would take something like a nuclear war, mass die off due to pandemic (Black death ),ice age, medieval interest rates or a dark age to wipe out the real estate mania and then may be.

Sometimes it takes something rather severe to correct bad habits when your dealing with fanatics.

#254 getreal-tor on 04.05.12 at 5:23 pm

#191 – househornyhousewife

You’d be surprised as to how much the bank would be willing to lend you these days if you have a good credit rating… You’d be even more surprised as to how many mortgage specialists are running a scam where they will furnish people with fake employment letters for a few thousands so that they can borrow more.

Money is flying off the shelves at the banks as if it was on sale. A lot of them even have that, f**k it attitude, where they say they will simply declare bankruptcy and the banks can go and f’ themselves…

It hurts my head to hear peoples logic these days on finances and why I should join the rush since I am losing money on a daily basis because a house bought last year is now worth 60k more… Yeah, no thanks, I can wait a bit longer.

#255 Andrew on 04.05.12 at 6:48 pm

A million dollars in Vaughan??? There is nothing to do in Vaughan. There is a big CN rail yard, a big CP rail yard, a big industrial area near the CN rail yard, some office parks near the industrial area, and endless acres of big box retail stores. To the west is Brampton (low income area), to the south is Rexdale (low income area) and it is a long way to the jobs in Markham, Mississauga, North York and downtown Toronto. You can buy a house at *Yonge and Eglinton* for less than $1M.

#256 getreal-tor on 04.06.12 at 9:20 am

#255 – Andrew

But is there any strip clubs around Yonge and Eglinton?

Near the rail yards you’ve got the Pro Cafe and Whiskey ‘n Gogo. :)

In all fairness, there aren’t that many homes near the rail yards and CN is selling off land for more business parks and or condos to be developed.

1m in Vaughan also buys you more land and a bigger home than Yonge and Eglinton and besides I don’t see too many folks planting rapini and tomatoes in the core… This is just another way to save money for the mortgage, plant your own real life FarmVille in Vaughan and save on veggies.

#257 getreal-tor on 04.06.12 at 10:52 am

For those who don’t believe that most of the real estate is speculation, two houses for rent coming up in the Vaughan Valley / Cold Creek Estate.

http://toronto.kijiji.ca/c-real-estate-house-rental-Brand-New-Home-For-Lease-Vaughan-Valley-Estates-Woodbridge-W0QQAdIdZ369050354

At 2,600+ most people can carry their own mortgage but why not help others and carry their mortgage. :)