Be careful

Forget Vancouver. House prices in Toronto are now swelling faster than a gland in puberty. It’s the epicentre of excess. The feeding frenzy of the wantonly indebted. The epochal blow-off of the terminally smitten. This, in short, could be HGTV’s finest, last hour.

It costs between $5,000 and $10,000 to stage the average house – and virtually every worthy SFH home in 416 gets the treatment. Vendors pay to have all their furniture moved out (they often move too for a week or so), the new stuff comes in, and suddenly it’s perfect. Granite countertops are enhanced with a splayed Italian cookbook opened to seafood recipes, held down by an expectant corkscrew. Rooms are upsized with downsized groupings of white sofas and contrasting leather ottomans. Pictures of trout and babes on velvet are replaced with Cezanne knockoffs and Picassian horses. A virginal white cotton comforter cradles an Emily Bronte casually discarded. And there is not. A dog hair. Anywhere.

“What’s really interesting,” a long-time agent told me, “is that at open houses I’m seeing the same furniture over and over again.” Of course. Because it works.

The average home price in Toronto topped $512,000 for the first time ever this month. It bested half a million just last month. The average single-detached in 416 is  $798,892, down a little from four weeks ago, but any hint of a cooling market for high-end houses has not hit the sweet spots of avarice and arrogance, like the Land Rover pockets of North Toronto.

On Tuesday at 6 pm a home in Leaside goes up for auction, asking 1.2 million. Leafy, sitting in a demand school area, and looking like the set for a Leave it to Beaver episode, it’s a current object of desire. Scores of couples have tromped through and there’ll likely be a dozen or more offers, all of them over the asking price. In fact the owner turned down $1.41 million on Friday, saying she was too occupied with personal issues to deal with it. Besides, she’d just bought a home nearby after overpaying in an auction, so why not force this miserable process on others?

Houses in this hood – all sitting on lots just thirty feet wide – have doubled in value within the last six years. No mansions, either. The two-storey, 80-year-old structures get rear additions reducing yards to the size of area rugs, while the bungs are snapped up by roving contractors and sell for land value – about $800,000.

Of course the families desperate to move here are not all headed by millionaires. The average income is north of $120,000, but you can’t earn that, afford two kids and amass a million in savings. So thank God for Mark Carney. Without the governor of the Bank of Canada, the owner of a Leaside home might be forced to amend her sked and entertain a bully owner, rather than spurning it.

To borrow a million with a 3.2% VRM and a 30-year am takes only $4,300 a month, and an income of $150,000. It’s just too tempting. And the longer emergency interest rates are in effect following the GFC, the more people expect them to remain. Just take a look at the outpouring of incredulous comments on this blog when I suggest otherwise. This is denial at its most eloquent.

Of course there’s a straight line connection between affordable mortgages and unaffordable houses. This is exactly what screwed Vancouver, jacking the average property price to $830,000, before it started to unravel in March. The social consequences are vivid. Xenophobia and racism, as rich immigrants get blamed for high values. Boomer-baiting, as young couples realize that, unlike their dippy parents, they’ll never own. And flight from a now-unliveable city.

Neighbours of mine – professionals both – just reappeared down the street after picking and up moving to new jobs and a better life in East Van last Spring. “The greed was too much,” they said as I dog-walked into a conversation. “All we could afford were shacks. There is nothing better there. What an incredible disappointment.”

Vancouver’s already crumbling under its own excess. But Toronto may take a nudge. After all, cities where average families can’t afford average houses don’t work for long – unless they happen to be London, New York or Shanghai. Then people simply stop expecting to own, and we’re decades from that.

Ironically, the nudger could be the same guy who created this thirst for house porn. On the weekend Mark Carney warned again that, “interest rates are going to go higher.” It’s hard to be clearer than that. Canadians, he added, should take steps now to ensure they can carry their debt, ”when rates are at a more normal level.”

“We’re warning of an issue at a time that we can still do something about it,” he said.

Economists think you should listen. “For consumers, the rate hikes would lead to tighter lending conditions, which should help curb growth in household debt – not necessarily a bad thing, as this is an area that the central bank cites as the number one risk to the Canadian economy and has shown a willingness to lean against,” says a TD Economics report. And, as this pathetic blog has reminded, higher rates will happen just as the bank cop, OSFI, slaps on tighter mortgage regs, about the end of this year.

“Ultimately,” say economists Craig Alexander and Leslie Preston, “moving the timetable for higher interest rates forward adds to our conviction that home sales and home prices are headed for a correction in 2013.”

But will this make any difference in Leaside, Tuesday night?

Can you reason with a gland?

236 comments ↓

#1 Farst on 04.22.12 at 8:31 pm

or Fartst?

#2 tired_of_idiots on 04.22.12 at 8:33 pm

Great post as usual. I remember the same frenzy in the late 80s, and this is the example I put forward when warning people about buying in this market. Doesn’t matter, the logic doesn’t phase them one bit.

#3 pathcontrolmonk on 04.22.12 at 8:34 pm

Realtor friend told me that many of the HAM buyers in Toronto are those that sold their house(s) in Vancouver. Apparently “they” think the Vancouver market became over inflated, and Toronto still has lots of “upward momentum”. Whats after Toronto then?

#4 Smoking Man on 04.22.12 at 8:35 pm

BOOM TIMES IN THE GTA

Back in the fall when I was telling you that the spring market was going to be hot, no red dots. I had no idea how right I was to become.

Unbelievable even to me, April is going to Break all Records in GTA sales and price. Carnage will only act if another set of good job numbers materializes and that may happen.

They cloak and craft the words carefully to let the investment class know the scoop, while tricking working class to think when the price of goods go up.

Words like this

(The output gap shrinking) Do any track 6ers even bother to figure out what it is he is saying.
Meaning the pool of available slaves is shrinking putting pressure on wages.

200 years ago Slave was called a Slave
Y2000 Slave was called an Employee
2005 Slaves are called associates
2010 Slaves are called resources
Present, West Jet gives them 1 share and calls them partners

LMAO Track 6ers

Anyone ever see the Movie The Island, Bombed at the box office made in 2005
Got no publicity an amazing flick
If you imagine for a moment that the clones are the track 6ers

WOW what a parity to today’s world.

#5 Can it be? on 04.22.12 at 8:36 pm

Indeed… Did my open house. Houses were not staged and there was dog hair at $2000000… Regardless prices are higher then ever.. In Mississauga… Oakville. Apparently some Asians are buying, unloading their properties in Hong kong and buying in oakville at 2000000…. I don’t get it…. I suspect that even those who built are getting out and selling now because they too know it will crash.

Ever been to Hong Kong? Then Oakville? Hilarious. — Garth

#6 Can it be? on 04.22.12 at 8:38 pm

Incidentally, older folks in south east oakville are telling me they will have to move because they cannot afford their property taxes any longer on their retirement income… I’ve never seen sooo many houses for sale in my life!

#7 Last on 04.22.12 at 8:38 pm

What the heck, no comments, where is everyone????

Besides that great pic

And yes the rules are getting tighter my niece and husband both employed just got turned down for a mortgage, both have jobs but not two years of solid income.

#8 Tyredandboard on 04.22.12 at 8:40 pm

“Ironically, the nudger could be the same guy who created this thirst for house porn. On the weekend Mark Carney warned again that, “interest rates are going to go higher.” It’s hard to be clearer than that.”

Yeah Garth, can’t get much clearer I guess. Except maybe, actually, possibly, RAISE the target rate? But no, no, talk should be clear enough right, yes, it really is funny no one listens to the exalted boy-man who cried wolf, and cried wolf, and cried wolf, and cried wolf, and cried wolf, and cried wolf, and cried wolf… But what is increasingly obvious, is that there is no wolf.

How’s the basement suite? — Garth

#9 Can it be? on 04.22.12 at 8:43 pm

I haven’t been to hong kong but I suspect it’s migt and day to oakville lol! No idea what the logic of these buyers is… Seems like nothing changes in oakville except the for sale signs seem to be increasing in number. Is there a market correction coming in Hong kong?

#10 Tyredandboard on 04.22.12 at 8:46 pm

“And, as this pathetic blog has reminded, higher rates will happen just as the bank cop, OSFI, slaps on tighter mortgage regs, about the end of this year.”

Garth will you claim victory if the target rates moves from 1.00% to 1.25% by year end? What about to 1.50% by end of 2013? Is that the great increase that is supposed to fix this thing? Because unless the us fed moves first, that is the most you can expect, and I doubt you’ll see that if the US fed doesn’t move first. And do you really expect the US fed to move? If the inmates weren’t running the asylum, maybe rates here would rise. But they are running it, and are hailed by the media as doing a great job at that.

See what I mean? — Garth

#11 thinker on 04.22.12 at 8:56 pm

If Carney is telling folks rates are going to higher and that is what everyone is talking about, are bidding wars really a surprise Garth? Carney’s threats to raise rates have been fueling the market higher along with F and gangs moves. Get in before they change…..

#12 s on 04.22.12 at 8:57 pm

I can’t say Vancouver is crumbling yet, still a lot of bidding wars I see. Many homes are still being sold above asking price.

But I can’t wait when it does crumble. This is unsustainable. Spain, Greece, Iceland, Portugal, the might USA all succumbed to real estate lust and went into financial turmoil. It will be no different in Canada.

The sooner the people realize the better, Vancouver has no industry.

#13 Toronto_CA on 04.22.12 at 8:59 pm

Toronto is beyond insane! You see some of these run down 1story shacks that you’d be embarrassed to have grown up in as a child that are going for more than Beverly Hills mansions. How can anyone think this is normal and warranted?

I crack up whenever someone tries to compare Toronto to London or Hong Kong or New York or Shanghai. We’re a long way from there, folks. While this post touches mostly on the SFD madness, I think the condo market will be the real bloodbath after the rate hikes. How can a city have so many big wasteful single level parking lots right in the downtown core AND have land that is allegedly worth so much?

I’m so happy renting across the street from work and saving like a demon. My rent hasn’t changed since I moved in 4 years ago, and is well below 20% of my take home. My downpayment grows and grows while I wait for the bubble to be pricked. If my downpayment gets large enough I’m taking it out of the orange guy’s pants and putting it into a REIT or Preferred ETF, it can start subsidizing my rent. If the bubble never bursts I’ll take my downpayment and buy something nice outright in a city that isn’t insane. I don’t think Toronto is all that after living overseas.

Great post!

#14 Tyredandboard on 04.22.12 at 8:59 pm

How’s the basement suite? — Garth

Funny question. Did I mention a basement suite? Guess my email gave it away? You do run this blog. Sucks actually. About ready to rent a nicer place, later this year I hope.

See what I mean? — Garth

If you mean people like me do not believe the repeated warnings that the sky is falling, you are right. Go here, and type in a starting date of 1996:
http://www.tradingeconomics.com/japan/interest-rate
What goes doesn doesn’t always go up, in our lifetimes.

I’m on your side, but why you believe “C” is beyond me.

#15 Pr on 04.22.12 at 9:00 pm

U.S.A. realestate style drop for CANADA? NO! Now it’s going to be worse.

#16 Katz on 04.22.12 at 9:01 pm

I wonder what is Carney’s reasoning. So, he admits that there is a danger in the real estate mania. But he does not want to stop it because he is afraid of the job loss (?). But then people who buy houses for such obscene amounts will be repaying forever and will have nothing left for investment, will reduce their consumption, which will affect GDP and job growth. Is he waiting for a fairy to offer a graceful solution? What’s the plan? What would Garth do?

#17 Suede on 04.22.12 at 9:02 pm

The Island – intriguing movie and was on earlier today. Holds some interesting lessons about wealth, classes and how business is conducted.

Tax farm slaves. Hmm. So if your marginal tax rate is 22-42% then you’re a slave and if you’re like Romney and pay less than 22% you’re an elite. Are doctors that make 250k+ a year considered slaves then? Lol

#18 Retired Boomer - WI on 04.22.12 at 9:03 pm

Wow. Party on for just a bit longer. Then sell. You’ll never hear the warnings

#19 Green Eggs and HAM on 04.22.12 at 9:04 pm

#9 Can it Be

There is no market correction coming in Hong Kong. Rich Chinese are moving their money out of China because they do not trust the Communist Party henchmen who run the show their. That and the fact it is hard to breathe in major cities and will only get worse going forward.

http://www.time.com/time/world/article/0,8599,2077139,00.html

#20 Tyredandboard on 04.22.12 at 9:04 pm

Garth let me be clear, I WANT you to be right. I’m just so, well, “Tyred” of waiting for it. It is indeed time to rent a decent pad, as you calculated a couple days ago. Plan to this year after dealing with a financial issue. This year is the plan, now lets see if I will actually move before C raises rates :). WE both appear to be in a rut.

#21 Carney`s Crack on 04.22.12 at 9:10 pm

Head drug pusher (read low interest setter) Markie Carney now tells his addicted crack addicts (read Canadians who have borrowed their brains out) that they are all a bunch of crackheads (read over indebted). So Carney the Crackman is going to reduce and make more difficult to get the available supply of crack because he fears the situation is out of hand (read tighten mortgage amortizations and increase down payments and interest rates).

#22 dutch4505 on 04.22.12 at 9:10 pm

an appraisr friend in Bellingham, WA told me he was talking to an appraisal colleague in the Fraser Valley, BC. the gossip is that the main business for my appraiser friend in Bellingham WA is now refinancing and purchases instead of foreclosures. In Canada it is has also switched…from refinancing and purchases to foreclosures.
Wondering if any of my fellow bloggers can confirm the gossip. Is it true that the majority of appraisals in the fraser valley of BC is now foreclosure work?? If it is true then things have really changed in Canada.

#23 GTA Girl on 04.22.12 at 9:18 pm

In my area north of Toronto, near a village…the homes for sale are stalled.

The usually dependable ‘fast sell’ RE agent was booted off her listing by a neighbor who refused to lower her price. She’s asking 1.4 mill….which made sense 2yrs ago, when a similar home 3doors down sold for $1.3.

Funny thing is we all bought our homes from a reputable builder in 2003 for $550+. Great huge lots. Etc.

But anything over $1 mill comes a lot of competition. LOTS of homes for sale.

When the new build developers start tieing balloons to their sandwich boards on local highways, you know things are bad…..builders are that cheap.

#24 Time to leave Canada for a better life on 04.22.12 at 9:18 pm

Canada is finished. Time to borrow as much as you can and when the time it right corner bankrupt and leave Canada will a pile of money and buy a home in the US. Canada is finished since workers can not compete with US wages. Once the RE economy crashes where will all those construction workers building all those condo and house find jobs? Canada will find out what is happening in the US. Mark Carney ruined Canada

#25 Smoking Man on 04.22.12 at 9:31 pm

Suded. Yes doctors are slaves. They got to be at work if they want to eat

An owner of 10 hotdog stands and has resources staffing them he is a free man

Or me selfmade man I work part time as a pure tax farm slave. Every dime of billable income goes to tax man my other business and investments make too much loot. Why do – do it then. Low boardom tolarence. And a big ass ego they some one comes along who is better than me at my hobbie I will hire him then retire

#26 Dontcallmeshirley on 04.22.12 at 9:32 pm

Give us more insight on the OSFI timeline.

Why do you believe the new regs won’t be installed until year end?

OSFI tribal elders have certainly run their spreadsheets and scenarios already. What’s the time consuming task that prevents new regs by June?

#27 Gypsy Kid on 04.22.12 at 9:32 pm

Do people think this is normal and sustainable????
Insane….
On a lighter note, Garth, you really have ways with words! Must be fun being you.

#28 45north on 04.22.12 at 9:32 pm

can it be: older folks in south east oakville

south east where?

#29 getreal-tor on 04.22.12 at 9:34 pm

“””
Ironically, the nudger could be the same guy who created this thirst for house porn. On the weekend Mark Carney warned again that, “interest rates are going to go higher.” It’s hard to be clearer than that. Canadians, he added, should take steps now to ensure they can carry their debt, ”when rates are at a more normal level.”
“””

re: Mark; Yes, and all the girls said that their knickers will drop too… We all know that eventually the rates will go up but what is Mark worried about? Of course nobody wants to destroy the economy but warning people without any real action is about as effective as crying wolf.

People are not going to spend unlike they feel the hurt. Let’s face it, the people these days have about as much financial responsibly as the Greek government.

#30 Financial idiot needs advice on 04.22.12 at 9:43 pm

Sold RE in June 2010

Gave all assets to CIBC W.G.

Made about 4% in first year, and lost about 2% since then.

Should I move to a different advisor? The MER is apparently about 1.5%

#31 GeneticistX on 04.22.12 at 9:46 pm

A couple of great documentaries to watch out of the US:
“Inside Job”
“The Flaw”

The Flaw is much more on point to what can happen to canada.

Although the factors here in Canada are much different than what happened in the US, what they outlined in “The Flaw” can happen in Canada and does… There was a flood of people getting HELOC’s in the USA to pay off credit cards and do renovations, but salaries remained flat (sound familiar??). The banks in Canada hope to dole out hundreds of millions of dollars in loans and get back hundreds of millions plus 10s of millions of dollars back in interest.

Again, think about, these mortgages being given out by the banks have a very low chance of being paid back in the terms they are offering. How many 35 year olds are really taking out mortgages until they are 70? Is this the new reality, mortgages until you’re 70?

#32 Tim on 04.22.12 at 9:47 pm

Vancouver house prices have increased over 100 percent in 10 years and they’ve fallen about 3 percent. I wouldn’t call that unraveling.

#33 Mark W on 04.22.12 at 9:48 pm

The prices in Vancouver hurt the economy in other way besides being too pricey.

It is almost impossible for companies to recruit talented people to Vancouver to work in a city where they soon realize that they will never live in anything more than a rabbit hutch.

Usually the pitch goes something like “Move to Vancouver and get 35% more money with our company than you earn now.” … and other such drivel.

These people quickly realize that unless the job is paying 200%+++ more then they actually move backwards when it comes to a real measured standard of living.

55,000 people have LEFT Vancouver for this very reason, but no one wants to talk about that … just keep drink’in the Kool Aid …!!

#34 eagle eyes on 04.22.12 at 9:48 pm

Can anyone tell me what the maximum tax rate is on capital gains from real estate in Canada? Asian real estate speculation is rampant. Most new immigrants don’t expect to pay taxes on gains from buying and selling investment properties. This is new to them. After all the expenses, most are shocked at the what is left at the end of the day from what seems like a huge profit.

#35 steve on 04.22.12 at 9:52 pm

Are people really this stupid ? i mean really ?

#36 blase on 04.22.12 at 9:59 pm

I wonder what the ratio is on the run-up in prices for houses in the $700,000-$2,000,000 range versus homes bought from $2,000,000-up.

I would guess that the higher above the pee-ons you go, the more house you get for the price. Suckers are horny for $1 million fixer-uppers, while $2.5 million dollar mansions have gone un-loved.

It reminds me of the mobs of women you will find fighting over $5 crap in sidewalk “sales”.

There’s a reason why it’s cheap.

#37 House Poor on 04.22.12 at 10:03 pm

What is Carney waiting for? I don’t understand if he is aware of the issue and feels raising rates would help then why hasn’t he done it? Why is he planning to wait till the end of the year or next. Doesn’t make sense. He is anticipating the economy to pick up later this year to raise rates. if the economy slow down or stays stagnate will he still raise rates.

If he could he would off, why wait ?

#38 VFG on 04.22.12 at 10:06 pm

“Granite countertops are enhanced with a splayed Italian cookbook opened to seafood recipes, held down by an expectant corkscrew”.

I think I saw a copy of The Greater Fool at one staged open house…

#39 Mainlander on 04.22.12 at 10:17 pm

This is it, can’t get any crazier. After getting my haircut my 24 year old stylist explained to me for the entire time spent cutting my hair that she was per approved for a $700k mortgage and after waiting and watching the Vancouver market continue to go up for the last few years there would be no way she could wait any longer. I do believe she is about to get the haircut of a lifetime.
I tried to explain to her there are many kinds of haircuts you can get in life but she couldn’t see the irony.

#40 steev on 04.22.12 at 10:18 pm

14 Tyredandboard on 04.22.12 at 8:59 pm

You realize that during the period in Japan that you referenced, housing prices have fallen continuously right?

#41 East Van on 04.22.12 at 10:27 pm

Hey Garth.

Suggestion for a future post:

Compare the current conditions in Canada to the run up to the Spanish housing bubble which American Enterprise Institute called “the mother of all housing booms.”

Thanks for the blog!

#42 GTA Engineer on 04.22.12 at 10:28 pm

I’m in Shanghai right now on business – this place is ridiculous. 2% of the population driving Land Rovers and Mercs, the other 98% taking transit and riding bicycles. There’s not much in the middle.. London or New York this definitely ain’t. Plus the pollution (picture Toronto at its worst – but EVERY DAY), traffic (every highway is a DVP at rush hour), lack of safety (seat belts in a cab? Pfffft…), and Toronto is looking like nirvana. Maybe $800k for a single detached in Toronto doesn’t sound so bad.. At least there the average engineer can afford a home. Here? Single detached homes don’t exist. The average engineer is renting a high rise cube..

Still.. I’m off topic – maybe just homesick ;)

#43 East Van on 04.22.12 at 10:29 pm

In 2006, “Spain started nearly 800,000 homes — more than Germany, France, Italy and the United Kingdom combined,” noted a 2009 IMF report. Construction workers represented one in eight jobs (the U.S. figure at the height of the American real estate bubble was one in 18). Even after correcting for normal inflation, Spain’s home prices more than doubled from 1995 to 2006

#44 Smoking Man on 04.22.12 at 10:35 pm

#35 steve on 04.22.12 at 9:52 pm
Are people really this stupid ? i mean really ?
……………………………………………………………..

They are, learn to work the herd…………

#45 Can it be? on 04.22.12 at 10:40 pm

#28… Morrison area.. Stopped by and talked to the locals to get some insight into what’s going on… Retirees are concerned about property taxes that are running $7000-$8000 a year. Say they will have to relocate… Advised us to offer people $750k for their properties to build. I’m not sure what the total number of for sale signs in south east oakville is… But it’s ridiculously high. Open houses were busy today… Last week Christopher invidiata had an article in the paper about how he hosted house buying to the Asian community and expects that this is the year that all those for sale signs will disappear… If the area is sold to HAM… It will lose its desirability to me. I want neighbors that actually live I their homes with kids that actually go to the schools… I’m waiting until next year to see how this develops. One agent told me they had an offer to sell close to asking $2.9 million, but the buyers wanted to wait a full year until closing. The market is strange out there. I dont think Carneys interest rates apply to the buyers that are out there. If its true and foreign money is buying up everything, I’ll be extra happy my house is paid for as I see it next to impossible for the young Canadians to get into the market at any interest rate now.

#46 Inglorious Investor on 04.22.12 at 10:52 pm

“We’re warning of an issue at a time that we can still do something about it,” [Carney] said.

Infuriating! That has to be the most disingenuous (read bulli$H!†) statement I have ever heard coming from the BoC Boss.

After over a decade of excess, this has been probably the greatest real estate bubble in Canadian history. Canadians are drowning in debt at a time when unemployment is still high and wages are stagnant at best. Home ownership levels in Canada are at or near all-time highs. And places like Ontario (read GTA) are about to endure austerity, while the RE bubble certifiably hits mania levels. Talk about proverbial horse leaving proverbial barn.

Exactly what does the big C think they still have time to do? Destroy the other 30% or so of Canadian families who as yet aren’t junior partners (read debt slaves) in home ownership with the banks?

I used to think that the BoC would not adjust rates higher because in reality the market is far more powerful than them. But with statements like that, I now question whether Mr. Carney’s Goldman Sachs pedigree isn’t showing through his mild-mannered, Canadian veneer.

Before all you muppets––I mean, Canadians!

#47 T.O. Bubble Boy on 04.22.12 at 10:53 pm

Everyone just wants to live near the Eglinton LRT. It’s worth $1.4M to be within walking distance to transit that you’ll never take (because you drive your Land Rover everywhere).

#48 Can it be? on 04.22.12 at 10:54 pm

My last obnoxious realtor story. 2 mill house, agent driving Amg merc, Gucci belt, etc… Clearly misrepresented the house in the mls listing and pics.. Much smaller in real life. I walk to what is apparently the “family room”… And ask, where is the family room. He says this is it… I said its ridiculously small, fits a desks and a single chair (ie. one person chair)… He says oh, you can fit a sectional here… In disbelief I just stare at him. Clearly the owners are not using this as a family room either…. Their tv is in the formal room… Regardless… I’m so annoyed with agents that think people are morons… I look forward to the day they have to bust it for a pay cheque. I’m sure there are some that do… But man or man… Some are useless. I know these are first world problems… But I hate wasting my time… Really wish they could be honest and quit using trick photography to get you in the door. I guess everyone wants 2 million dollars now… It’s the new 1 million standard. Agents gotta keep his lifestyle up.

#49 Tyredandboard on 04.22.12 at 10:54 pm

@40 steev

“You realize that during the period in Japan that you referenced, housing prices have fallen continuously right?”

My point was that interest rates can remain low indefinitely, it has and is happening elsewhere. Do we get a proper correction without a rate spike? Doubt it. Look at US you are about to say? Rates rose from 2005 to 2007, then the US bubble popped, and a popped bubble doesn’t spring back to life so easily now that rates are low again. Ours only now is ready to go, but sans the spike, don’t see it going bang. I don’t want 20 years of gradual erosion to high inflation, that is hardly good news to folks who want to buy in their lifetimes.

And @32 Tim is right:

“Vancouver house prices have increased over 100 percent in 10 years and they’ve fallen about 3 percent. I wouldn’t call that unraveling.”

#50 Stupesing in Cabbagetown on 04.22.12 at 10:57 pm

#26 Dontcallmeshirley – The time-consuming process that you question is: the posting of new regulations for a public comment period; the possible tweaking of those proposed regulations as a result of feedback received (which results in another public comment period); and finally the approval of some higher governing body (Dept. of Finance).

#51 Debtfree on 04.22.12 at 11:00 pm

Ottomans
Croissant
Son of a gun
Names and terms so politically incorrect . Yet used in everyday language with origins lost to history.
I just love history and the history of language .
Thanks Garth for the laugh.

#52 The Thing in the Basement on 04.22.12 at 11:00 pm

Damn that Willie Mitchell…..

#53 Devore on 04.22.12 at 11:08 pm

Toronto is just going through same thing that happened in Vancouver. It will end the same once people run out of money. Unless it’s different, as many will claim.

#54 Smoking Man on 04.22.12 at 11:08 pm

Mfg Music.

The young gen only gets to listen to sanctioned tunes, the machine slipped up in the 60’s and 70’s the creative’s slipped past the machines radar. So lucky, great tunes that taught us how to think, not what to think. Un censored rebellion, the rich were not rich yet.

Back then many players in the game of monopoly, anyone could win,

Kids today, school, mfg pop culture, and celebrity worship, you have no chance. Not even the Teachers know they are owned.

Listen me on here, I will teach you how lie, will teach you how to Boom the Boomers
( look up boom from the flick Couples retreat) If that’s to much work for you replace Boom with fk.

With everyday that goes by I’m more like Kurtz. Diamond tip clarity.

Lenord Cohen
Roger Waters
Bob Dylen

To name a few, kids you don’t know them.

And more importantly every major post I put out has a hidden message that not even the thought police algos at NSA can unravel.

Be a cold day in hell when software can beat me. I’m it’s God

#55 Canadian Watchdog on 04.22.12 at 11:09 pm

I’m afraid many on this blog are having great difficulties understanding the underlying problem to our financial system. If it’s not obvious by now, then the problem is your assessment of the status quo.

While Canadians keep being pumped with Carny’s lies and bluffs, the truth is Mr. Carney was the first to lead the clan of sociopaths to destroy the one rule that would have safeguarded our banking system and prevented banks from using customer deposits for prop trading—aka The Volcker Rule.

PDFs: Letters sent to the Fed by Canadian banks, regulators and institutions to stop the Volcker Rule.

BOC http://tinyurl.com/c7achu2
CBA http://tinyurl.com/c9cts2u
OFA http://tinyurl.com/7h9mulg
OSFI http://tinyurl.com/cpwnz84
Banks http://tinyurl.com/85tvjm8

In laymen’s terms, if our banks can’t speculate with your money earning 0% interest, our banking system will fail—that is why our regulators are not acting—they are terrified of the banks balance sheets—so they look the other way and kick the can down the road for their successor. Unfortunately, as history has proven again and again, nothing will change until Canadians vote a one-term government to go in and clean house, but until that time, many will have to lose their wealth before they start voting with their feet.

There are no rules. This is global looting.

#56 mr carney on 04.22.12 at 11:14 pm

Your right Garth ! Your blog is pathetic over and over you speel the same baloney . Toronto is becoming a international city and the people know it that why people keep coming and prices keep goin up … wake up …. pathetic is right !

#57 Devore on 04.22.12 at 11:27 pm

#14 Tyredandboard

http://www.tradingeconomics.com/japan/interest-rate
What goes doesn doesn’t always go up, in our lifetimes.

Really? Japan? I don’t think you want to go with that one as your example.

#58 ACP on 04.22.12 at 11:32 pm

“And the longer emergency interest rates are in effect following the GFC, the more people expect them to remain.”

GFC = Greater Fool Crisis?

#59 45north on 04.22.12 at 11:34 pm

Can it be: Morrison area.. Stopped by and talked to the locals to get some insight into what’s going on

thanks, real information is always good

#60 getreal-tor on 04.22.12 at 11:41 pm

Can it be?

“Regardless… I’m so annoyed with agents that think people are morons… I look forward to the day they have to bust it for a pay cheque. I’m sure there are some that do… But man or man… Some are useless. I know these are first world problems… But I hate wasting my time… Really wish they could be honest and quit using trick photography to get you in the door.”

Some? Most are useless… Placed a few phone calls last week to see properties. One realtor tells /me/ to call back next day after 6pm. Call bad after 6pm next day, tells me to give him my no# so that someone from the office can call back — guess if they called back?

Another one e-mails me back asking which property I was inquiring about as if it was not evident in the email that I sent three days prior. I answer only to get a response the following day to say it is no longer available.

I am not in a rush but clearly these realtors are simply relying on the crazy market to just hand them over the commission portion for zero percent effort… Again, I can’t wait until this market is disrupted because many realtors aren’t worth .25pct commission and yet they walk and talk as if they are gods gift to humanity.

#61 getreal-tor on 04.22.12 at 11:47 pm

mr carney @56

Guy, if you are going to do drugs then at least do the good stuff which doesn’t fry your brain and while I’d like to think that Toronto is the centre of the universe, I don’t think it has reached yet “international city” in the context that you are referring to.

#62 Tyredandboard on 04.22.12 at 11:48 pm

@57 devore

“Really? Japan? I don’t think you want to go with that one as your example.”

Why not, because it’s a real world example of interest rates staying at 0 indefinitely, which was the question being posed? What goes down must go up, it has been said. I am pointing out that that is not a given. Sorry if you find the facts inconvenient. Why are things going to go any differently in North America, because C says so?

#63 MM on 04.22.12 at 11:48 pm

#36 blase

There’s a reason why it’s cheap.

$1 million is cheap?

#64 Mr Buyer on 04.22.12 at 11:53 pm

Did somebody cite Japan again?

#65 Peter Pan on 04.23.12 at 12:02 am

Mark Carney is not a dumb guy, but he sure acts like it…

I’m sure Mr. Carney is well versed in the importance of expectations of inflation in the creating of future inflation. It’s like a chicken and egg argument.

At the same time, he seems to lend no creedence to the idea that interest rate expectations factor in the willingness of borrowers to continue accumulating debt at a frightening pace.
The comments I see lately say interest rates will NEVER go back up to 4-5%. 13 times in a row the Bank of Canada has refused to increase interest rates.
All Mr. Carney does is lecture us without actually doing the one thing which could change borrowers’ behaviour – increasing the BOC’s interest rates.

#66 Mr Buyer on 04.23.12 at 12:03 am

#54 Smoking Man on 04.22.12 at 11:08 pm….And more importantly every major post I put out has a hidden message that not even the thought police algos at NSA can unravel.
…………………………………………………………………
Dude you are starting to sound more and more like an Uncle of mine…he passed away in 2010 after a 20 year stint on a psych ward. He to would go on merciless binges and truly wild adventures. He shared his alternate understanding of things with me at great length when I was a teeny bopper and I could not quite put my finger on the familiar essence of your posts. It has finally come to me that you are not in fact a rebellious teenager but that I heard it all before when I was a teen…been there, done that, did not pan out.

#67 Tyredandboard on 04.23.12 at 12:06 am

Ps. I don’t want to get into a debate about is Japan the same as Canada, pop growth, immigration, demographics, GDP, nuclear meltdowns, whatever. Different countries are different. Just pointing out, what goes down doesn’t always come up quickly. Both countries found reason to go to 0, we have that in common. If you’re waiting for a .25% blip, sure you might get that this year, maybe, with all the blustering, I hope so. Maybe. But a real hike, of 2% or more? Long, long time for that.

#68 Stevenson on 04.23.12 at 12:17 am

Did multiple economists and this blog not predict a correction this year? Did we not say last spring this year prices will be lower?

Wrong, wrong, and wrong. Others who bought last year still banged out a good profit.

If a correction what are you all expecting? 10%? That’s going to hurt a very small part of the very small part of the buyers. Maybe only the ones that bought a year before the correction.

#69 TRT on 04.23.12 at 12:19 am

#12 S

“…Vancouver has no industry.”

You won’t need one in the coming multi-class society. India has a caste system and barely any industry for thousands of years.

Get used to it.

#70 Mr Buyer on 04.23.12 at 12:21 am

I have had the privilege of having many acquaintances explain to me how much they have lost in the markets but not a single person has shared tales of their good fortune. I am fully aware that bad news travels like wild fire while good news often propagates at the same pace as a glacier, but still. Not a single acquaintance has made money investing. Not one. I have read of many that have and I have been reading of various systems of investments but I have no direct examples of success in the markets. This is part of the inertia I labor under.

#71 John G. Young on 04.23.12 at 12:29 am

#58 ACP on 04.22.12 at 11:32 pm

I believe that GFC = Global Financial Crisis (2008)

#72 Nostradamus Le Mad Vlad on 04.23.12 at 12:41 am


Is that yellow burst in the pic part of The Gong Show? Maybe I’m as high as a kite and don’t know it!

“House prices in Toronto are now swelling faster than a gland in puberty. It’s the epicentre of excess.” — Similar to Eurozone countries and Oz which are breaking down — too much debt, forced austerity bought on populations, etc. The world is a mess.
*
#55 Canadian Watchdog — “This is global looting.” — See links on Oz and Euro countries getting their knickers in a twist. Good post and links.
*
Oil and Food Speculators continue to get rich, while middle class is ripped to shreds; UK economy His words are right; 8:17 clip Wells Fargo behind fir profit prisons. Is it any wonder govts. are locking people up?
Oil Exporter myth; Decoupling an Illusion Like divorce? 1:11 clip on DARPA; IMF bailed out Countries suffering internal, not external collapse; Great strategy Stay liquid and wait (forever); 611 Banxster resignations now; Eo Govts. Collapsing Time to bring in a UN – NATO – IMF NWO? Oz is screwed; Awash in Cash Then why are so many countries in debt?
*
1:09 clip Just as the RE market is imploding all over, so Mexico’s volcano is grumbling, rumbling and tumbling; Police State USA? With all these drones, cops won’t be necessary; Best of Enemies Turkey – Syria; Some people are not mentally fit to be parents; NDAA Good on Virginia! But NDAA “Supporters of locking people up without charge or trial are getting ready to play yet another trick on the American people.”; Cdn. TV porn on CHCH-TV in Hamilton; Hog Farming US and UK govts. are doing roughly the same thing — putting farmers out of business; Men Outliving Women? Not on ZZ Top’s Planet of Women; French election; Dark Matter If dark matter doesn’t exist, then it would be an electrical universe, with light all over; Dysfunctional World; Microwave Ovens Good for something; Within Three Years Power grid failure? Interfering Neighbors Fortunately, we have great neighbors;
*
disciple — Synchronicity Part 1.

#73 Rog on 04.23.12 at 12:48 am

You keep waiting for the market to drop and in turn loose hundreds and thousands of dollars. How many sold 2 years ago and are now renting. How much equity did you loose and how much rent did you throw away. You can’t time real estate. There’s a lot of good reasons to buy and equally good to sell. If you dont consider your home to be an ATM, why would you care if it goes up or down in value. It’s your home. Your neighborhood. Crazy to sell and be at the beck and call of a landlord. Crazy.

#74 NoName on 04.23.12 at 12:53 am

Canadian Watchdog on 04.22.12 at 11:09

How come that Moody’s is rating Canadian banks with AA?

http://ca.finance.yahoo.com/news/canadian-banks-safe-haven-turbulence-165750439.html

It is tax payer who is in trouble, not banks…

#75 A.Paul Gill on 04.23.12 at 1:08 am

The top is in in real estate and the bottom is in in junior market stocks.

I wonder if they have a inverse relationship?

Its Friday the 13th – get, get, get, out, out, out…..

GLTA

#76 Mixed Bag on 04.23.12 at 1:13 am

Garth, some people in are in denial of your warnings of an RE correction because they believe that Toronto has become like other unaffordable cities in the world, where an apartment costs a million dollars. I was having a conversation with a relative on Toronto RE. To you, the many T.O condo developments in progress are an indication that there will be a glut of condos and prices will drop. To him, they’re a sign of the opposite, that Toronto is becoming like Manhattan, like the major cities of Europe, a place of political and economic stability, with prices affordable in comparison to those cities. Interesting line of thought. More interesting, your hint “we’re decades from that”.

#77 Mister Obvious on 04.23.12 at 1:30 am

#54 Smoking Man

It has nothing to do with the subject of this blog but, in your typical rambling way you darned near articulated something valid.

During the late sixties and early seventies a clear anomaly occurred where unbridled creativity was able to slip practically unnoticed past what we now recognize as the ‘guardians of the music industry’.

Take as a case in point the genius of Frank Zappa. I doubt the world will ever see the likes of him again and the music world, nay the entire world, is much poorer as a result.

#78 Ex-Cowtown on 04.23.12 at 2:46 am

OK everyone, this one makes sense. It’s pretty heavy on the math side, but it explains a lot of what GT has been yammering on about. To sum it up, the big issue is that printing more money and giving it to the banks accomplishes nothing for the economy, and it explains why.

It also explains how easy credit gives rise to massive bubbles. It’s fairly heavy stuff, and the first part is technical, but don’t get bent out of shape if you can’t follow it. The important stuff is about the last 7 minutes or so.

GT, you need to be all over this one.

http://www.debtdeflation.com/blogs/2012/04/21/just-banking-presentation/

#79 daystar on 04.23.12 at 3:07 am

Either way one slices it, its truly amazing just how many of us are willing to blame the ongoing RE/credit bubble that befalls us on just one man, love him or hate him, Mark Carney.

Homebuyers? Bankers? Mortgage insurers? CMHC? OSFI? Elected federal government choosing our regulations literally, especially our PM and finance minister? Developers? Realtors? Speculators? Sellers? Media?

Not worth a mention, the blame must land solely on one man.

Remarkable.

In case readers missed the story:

http://www.cbc.ca/news/business/story/2012/04/21/pol-the-house-mark-carney.html

Try the audio link, by all means. Here are some quotes from Mark Carney:

“Whenever anybody borrows money over 25 or 30 years they should be sure to be able to pay off that debt in a more normalized interest rate environment. As we have in the past, we are warning of an issue at a time when we can all still do something about it and thats why me make the point.” – C

“Are we in a housing bubble?” – Evan Solomon

“There are issues in some segments of the housing market, um, there are issues particularly in some parts of the country in the condo market without question where activity has been particularly strong its reached back to valuation levels of the late 1980’s… um… and in some of our cities without question valuations are “extremely firm” to put it one way um… and so, you know, some caution is warranted in that environment ah, but you know, lets put it in context, there are a variety of defences against this issue.

They start with and first and foremost, its people that take out the loans and Canadians are smart prudent people and I’m sure the decisions will be right its the decisions of institutions, banks that lend to them, but then there’s measures that the bank regulator OSFI has taken to tighten underwriting standards for home equity loans, steps that have been taken to increase the capital that banks have to hold against all credit products as Canadian banks sort of widen their world leading position in terms of capitalization and then there are measures the government of Canada has taken on 3 separate occasions to tighten mortgage insurance rules in our view in an appropriate fashion so all of those things help to insure that the system is resilient.” – C

I must say… its getting harder for me to defend C not so much for what he has said (ok, maybe a couple things there), but what he could say more of. Most of us readers know that nationally, Canada has a major problem with high housing valuations and they didn’t get there overnight. The two largest cities have a huge problem on their hands and the next four largest don’t have it much better. Housing valuations have gone nutty pricing the middle class out of the market unless they want to risk going broke to buy a home so they buy a condo which is poised to be nothing but a financial sinkhole once rates rise and this credit bubble on our hands is a monster to put it lightly.

Who’s to blame? The buyers of homes and condo’s buyers can’t afford. (C is on record saying that normalized rates will put 1 in 10 at risk or more fully translated, risk of going broke). Developers and realtors who don’t care about the future, just make money today. Banks, most naturally and especially for they are hugely responsible in all this on so many levels, I don’t know where to begin. The media? God, yes. Self interest in the form of ad revenues and market share all the way. Realtors? Some of whats going on here is outright fraud. Sellers? Has there been just one seller who has ever considered whether or not their buyer can afford to buy their sold home? We all know the answer. Very few. Politicians? Absolutely, perhaps moreso than anyone for they were elected to serve us instead of themselves. Our Harper government had the power to stop this housing bubble in its tracks through CMHC at any time through regulations and instead, literally bought a majority with a wealth effect from a government juiced housing market. (too bad a poverty effect will follow) What really gets me worried is that now that they have a majority government, the Harper government has shown no signs of wanting to correct the course meaning Canadians should brace for the worst and suspect far worse than that.

Are the voters responsible? Anyone who supported our current Harper government has a share in the blame of what is to come. (i know, the rest of the choices but… we make mistakes, lets admit them and start looking for replacements within and outside of our elected government) Finally…. last but not least, does the Bank of Canada have a share of the blame? Interest rates are at record lows. Its not the reality that interest rates are so low for so long that bothers me. Its the fact that Mark Carney hasn’t been vocal enough in terms of implying the need for tighter CMHC regulations publically with the length of amortizations and higher down payments in a low interest rate environment which raises a simple question.

Can Mark Carney publically undermine fiscal (elected federal government) policy? Many readers might think so… but can any governor of the BoC do this and still somehow think this serves Canadians best? To do so literally undermines the system of democracy we currently have. We may not think this is the case, but it is and that in itself shakes confidence in our bond markets so I don’t believe Canadians should expect any governor of the BoC to openly criticize fiscal policy directly, especially if its done regularly. Fellow Canadians, I don’t believe its in the governor of the BoC’s job description to do so. Think about this point carefully.

However…

What Mark Carney can do is illustrate the dangers of historical failed fiscal/monetary models that couple government mortgage regulations of long amortizations and low to no downpayments with record low interest rates over several years, detailing what the causal effects are (for they are well known and easy to find for those who look). I believe this is on the table for a governor of the BoC to openly discuss frequently.

The unrealistic economic reliance of housing construction for economic performance and employment that lead to overdevelopment and oversupply as well as valuation sensitivity of higher interest rates breed recessions when higher rates come, typifed by long, drawn out recessions and high unemployment depending on the length of timelines. RE/credit bubbles are nothing new and we can learn from the historic examples other nations have left behind. This is a message I think Mark needs to deliver consistently from here on in and he’s implied it not long ago, but Canadians need to hear more:

http://www.globalnational.com/carney+says+he+would+intervene+if+housing+debt+got+out+of+hand/6442616347/story.html

Anyone can pick up a calculator and see it for themselves. Length of terms. Down payment. Interest rates. Next to income, these are the big three that decide just how much mortgage people can borrow. Our elected federal government decides the first two and majorly influences the third but our BoC governor still has the ability to oppose dangerous fiscal policy publically by way of talking about failed fiscal/monetary models with other jurisdictions historically, leaving Canadians to judge for themselves what is implied. I believe C’s predecessor David Dodge would have? And did so back in 2006. (does anyone remember David Dodge’s take on 40 year nothing down amortizations brought in by F & H?)

Mark said at the beginning of the interview, “we are warning of an issue at a time when we can still do something about it”. Well… is Mark doing enough “warning”? If not, lets face it. C is in very large company (precisely the reason why he needs to make his case more covertly plain for all to see, even if it means losing his job. History isn’t kind to central bankers that lead their nations into RE/credit booms gone bust with low interest rates).

#80 daystar on 04.23.12 at 3:25 am

The IMF has consistently warned of Canadian household debt and a potential housing bubble:

http://www.theglobeandmail.com/report-on-business/economy/imf-warns-canada-of-growing-debt-burden/article1979873/

http://www.theeconomicanalyst.com/content/imf-warns-canadian-debt-while-our-conservative-banks-ramp-their-antics

http://www.ctv.ca/CTVNews/TopStories/20111222/imf-warns-household-debt-housing-prices-111222/

#81 jay on 04.23.12 at 4:49 am

I was at a Vancouver “Westside” 55 year old party last night…All the people there lived on the Eastside.

The DWI (Dago Walk Index) has a new listing and one which has gone “by owner”.

In the wonderful old movie, The Graduate, an old guy comes up to a scary young Dusin Hoffman by the pool, and before Anne Bancroft and says:

Mr. McGuire: I just want to say one word to you. Just one word.
Benjamin: Yes, sir.
Mr. McGuire: Are you listening?
Benjamin: Yes, I am.
Mr. McGuire: Plastics.
Benjamin: Exactly how do you mean?

Think Graphite and you have the word for the teens.

And bank prefs of course.

#82 jay on 04.23.12 at 4:56 am

*Dog

#83 When will it end? on 04.23.12 at 6:01 am

Still seems insane on the west side of Van. Went to two opens. One was for a bargain basement price of 1.3m. Only 100 years old, backing onto a commercial alleyway with a terrible layout. Realtor conveniently forgot their key for the start of the open so it was madness outside.

Went to another listed for 1.5. Almost 100years old. Realtor claimed it had 4 bedrooms when it actually only had two. They are now waiting on 3 offers as the realtor purposefully ‘underpriced’ (according to my realtor) because in this area lots have been going for 1.6M.

1.6M for a freaking lot? WTF?

It’s maddening to witness. When will people wake up?

#84 Foggy on 04.23.12 at 6:57 am

If you read this blog long enough you will think HAM has 2 investment choices – to stay in China or buy RE in Canada (2 cities only). They have the whole world to choose from, not just one country. Rather than buy a 1 million dollar sh1tbox in Vancouver, you have your pick of thousands of beautiful properties in the US for a third of the price. Better weather, great universities, leafy established neighbourhoods and far better value. Minimal risk of further erosion in house values.
But it’s better to buy a squat, tiny bungalow in Leaside for over a million.
None of this makes sense….

#85 Virgin Toronto Couple on 04.23.12 at 7:09 am

Come on, raise those interest rates already! I’m 35, sitting on a down payment, and tired of renting. Anyone who says renting is better doesn’t have downstairs neighbours with a baby who cries through the night, or upstairs neighbours who cook food that smells like bug spray. Renting sucks…but being taken for a fool by greedy vendors and tacky agents is even worse. *sigh*

So, go and rent a SFH in the burbs. There are legions available at cheap rates. — Garth

#86 neo on 04.23.12 at 7:18 am

Speaking of “Be Careful”. How is that whole Europe is fixed thing working out? Netherlands in turmoil as austerity is bringing doen their eceonomy and government. The Slovaks and Czechs aren’t far behind. Terrible PMI’s in Germany, Spain, France, Italy, and so on. Bond spreads widening. Bond yields rising. Stock markets in Euro in red bug time and U.S. futures following suit. I’m guessing there will be a stick save at around 11:30am though and the U.S. equity ramp on low volume will occur. Otherwise, it will be an ugly day and as I’ve said nothing has been fixed in spite of your musings and things have been made more unstable by ECB actions. You cannot resolve an insolvency issue by issuing more debt and forcing austerity on economies with weak growth trends. The second half of this year will be verrrry interesting…

Tempus Fugit…

#87 Smoking Man on 04.23.12 at 7:25 am

DELETED

#88 Sky on 04.23.12 at 7:27 am

NoName # 74 – “How come that Moody’s is rating Canadian banks with AA?”

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

Only double A? Moody’s and S & P rated the junk subprime mortgages AAA.

Snippet:

“The Financial Crisis Inquiry Commission reported in January 2011 that: “The three credit rating agencies were key enablers of the financial meltdown.”

“The ratings of these securities was a lucrative business for the rating agencies, accounting for just under half of Moody’s total ratings revenue in 2007. Through 2007, ratings companies enjoyed record revenue, profits and share prices. The rating companies earned as much as three times more for grading these complex products than corporate bonds…”

http://en.wikipedia.org/wiki/Credit_rating_agencies_and_the_subprime_crisis

AA is credit agency code for ” Run For the Hills!”
When fleeing…Remember – Safety first. Those in Ontario and Quebec may need snowshoes or other anti-slip devices today. July weather in March followed by December weather in April. What’s wrong with this picture?

( Sorry, Canadian Watchdog. NoName’s post was for you but it was just SUCH a low hanging fruit.)

#89 Ret on 04.23.12 at 7:31 am

Carney and the OSFI will only respond after the train wreck in the Canadian economy. To do anything before that would possibly put there careers at risk as the economy will invariably slow down as a result of a tightened housing market. They aren’t going to end their careers on that hill.

The playbook is classic Greenspan Economics 101. Give the people the illusion of leadership while burbling about “minor” concerns in the economy. Don’t dare do anything to end the party.

#90 Timbo on 04.23.12 at 7:45 am

http://www.bloomberg.com/news/2012-04-23/china-manufacturing-may-contract-a-sixth-month.html

http://www.reuters.com/article/2012/04/23/us-german-manufacturing-idUSBRE83M0E620120423

contraction anyone? Seems that wages are not keeping up with inflation. If people are saddled with debt and worried about jobs they stop spending…..

#91 fancy_pants on 04.23.12 at 7:54 am

It is unfortunate that MC cried wolf too often. He has wedged himself into a position to which he is now largely ignored – kinda like the big barking dog next door that is afraid of it’s own shadow.

Too bad this will end with a surprise mauling for those who chose to play with the beast.

I find it hard to fathom how warning of your coming actions is ‘crying wolf.’ Seems to me it’s perfectly obvious what is coming. — Garth

#92 Can it be? on 04.23.12 at 7:55 am

The average person doesn’t understand the financial market… The average person understands it when their realtor says don’t worry…. I’ll get you approved and this is what your payments will be. What’s funny to me, is when you get a chance to see where your friendly realtor lives. Some are trying to live in the most desirable neighborhoods and struggling to get by, especially te last few months… Average people that I know who have yet to pay off their principal residence purchased investment condos… Most got out in time, but realized very quickly that the condo was a bad idea when they actually did the math. You can’t talk to most people about real estate, they just don’t want to hear it and every Agent says it will continue to go up and up… You can never lose. Just when I thought prices couldn’t get higher they did… Thank god for this blog… Reminds me to calm
Down and sit on the sidelines and not get sucked in. Realtors probably look down on us when we go to their open houses, they would probably be shocked by our net worth…. But I’d rather have a super high net worth the. A super high debt! Live within your means people…

#93 Can it be? on 04.23.12 at 8:03 am

45north… Kind of like this blog… You can find out a lot by talking to others. Forget msm. Fortunately my spouse likes to get out of the car and talk to people. People are surprisingly happy to tell you how things are going. Friendly people in oakville. Incidentally, both in Morrison and a couple of neighbors in other nice places… Retirees are helping make ends meet by talking on lawn maintanence work for the neighbors… Gotta pay those high property taxes somehow :)

#94 detalumis on 04.23.12 at 8:23 am

#45 the retirees you talk about generally are pulling your leg about being forced to move because they can’t afford the taxes. I live in a 1,200 square foot oakville south bungalow surrounded by a whole lot of them and to a man/woman they have incomes that are a whole lot higher than mine is. When it comes to seniors living in affluent areas a lot of times you can’t tell who has money because a whole whack of them don’t spend any money on their house or appearance, they just like to pile up the do-re-mi. When I am old and truly can’t afford the property tax I won’t expect people to feel sorry for me because I need to move somewhere cheaper with the 1 million they give me for the land.

#95 Steven Rowlandson on 04.23.12 at 8:27 am

Ironically, the nudger could be the same guy who created this thirst for house porn. On the weekend Mark Carney warned again that, “interest rates are going to go higher.” It’s hard to be clearer than that. Canadians, he added, should take steps now to ensure they can carry their debt, ”when rates are at a more normal level.”

Normal level or higher interest rates are a boon to savers but to government and real estate super debtors it could be the financial death penalty.
Then again may be that is what it takes to get them to change their ways and act responsibly, may be.
My gut tells me it might take the end of the world as we know it to smarten most people , markets and governments up or get rid of them for the good of the species.

#96 TurnerNation on 04.23.12 at 8:36 am

Is this a gland blog?

I noticed my saved MLS search (King West-ish condos) has exploded recently with dots (acne?)

#97 NoName on 04.23.12 at 8:39 am

#88 Sky on 04.23.12 at 7:27 am

168 NoName on 04.22.12 at 11:37 am
#128 Canadian Watchdog on 04.21.12 at 8:14 pm

“Ontario better pass that budget soon. Moody’s is watching.”

Don’t worry about what Moody think. They don’t do it very often…remember moody’s ratings on asset back securities…

Moody’s is watching…. hahaha

if you red this other day Mr.Sky you could see irony and sarcasm in post. Keep picking low hanging fruits, your talk is cheap because supply exceeds demand.

NoName

#98 TurnerNation on 04.23.12 at 8:42 am

““What’s really interesting,” a long-time agent told me, “is that at open houses I’m seeing the same furniture over and over again.” Of course. Because it works.”

Note: they are catering to HAM2 (Hot Anglo Money). It’s HAM2 who is paying 800k for a slanted Toronto semi.

#99 John Berkowitz on 04.23.12 at 8:50 am

I have to say that I´m 100% sure that Toronto is going in the same way as Vancouver. But this was a goal, was´t it?
Many people argue on this blog, whether it is a decision of an individual or an incentive from government, that shapes current behavior of home-buyers. I think that Garth named it in this post. It is the vicious temptation from the Central bank, followed by unintelligent behavior of individuals. And it creates a real estate trap with overpriced housing. In the end, it produces a nation-wide problem, as is well mentioned in How Dangerous is High Household Debt for the Economy.

#100 debtified on 04.23.12 at 8:53 am

Fort McMurray Real Estate Stats:

Mon-Year | Single | Multi | Duplex

Dec-10 | $685,970 | $419,422 | $443,786
Jan-11 | $719,305 | $395,488 | $489,233
Mar-11 | $705,835 | $430,461 | $503,400

Nov-11 | $755,181 | $408,005 | $512,235
Dec-11 | $729,092 | $387,244 | $550,983
Jan-12 | $724,209 | $392,261 | $618,700
Feb-12 | $755,756 | $458,089 | $543,000
Mar-12 | $774,538 | $403,590 | $543,545

Source: http://woodbuffalo.net/AboutCostHouse.html

Have a nice day!

#101 Mr. lahey on 04.23.12 at 8:56 am

Barb and I left Sunnyvale over the weekend to look at some of the real estate madness in Toronto first hand, to see if all this blog talk about crazy prices was in fact real(Randy stayed behind in case Cyrus and Ricky got into a shootout…) And madness it is! Carney and company have done a grand job getting Torontonians in a lather over real estate. Seems the need for a fix is so high (Barb loves my puns…)that anything under a million in the west end gets you a pad near a power station or fronts a busy street. You have to pass a cool million just to get something remotely decent… Repeat, remotely decent… Barb and I are heading back to good ol Sunnyvale where the trailers are under $20k and Bubbles brings his kittens over in the evening (Steve French is my favourite kitten). You can keep your insane real estate prices Toronto!

#102 Steve on 04.23.12 at 8:58 am

Garth, great info on Friday outlining investment strategies to stay liquid while achieving good returns. It is doubtful you need to worry about publishing this (online and for no charge) – people are not that good at doing the things they (should) know to be best.

This (Sunday) entry is also interesting. We will eventually have the benefit of hindsight, but until then, your thoughtful prognostications regarding the tipping point(s) are greatly appreciated. We are planning to sell SFH in RH (north GTA) this summer to lock in 14 years of Capital Gains before things tumble. Hope we beat the clock…

#103 Doug in Victoria on 04.23.12 at 8:59 am

Why is everyone blaming C for a problem F could and should have reined in long ago to prevent personal debt soaring while allowing business to recover/grow? C has done the right thing IMHO.

C has said as much several times, that others have “finer instruments” to correct the personal mortage/debt issue. But it seems F doesn’t get it, if you throw gas on a fire you should have a fire extinguisher at the ready. I have to think H has something to do with this.

2c

#104 charles on 04.23.12 at 9:01 am

I was with wife in a party last weekend. Came RE conversation, I said: I am waiting for market correction because in my opinion RE is too high because of cheap money given” Every single person look at me like I was from a different planet. Most of them think it wont happen in a country who accept 250,000 new inmigrants per year. I wonder if correction will happen considering the lots of fools out there.

#105 ozy - so sell and leave post-collonial kanata on 04.23.12 at 9:08 am

Sell your properties and leave post-collonial kanata, a.k.a. the neo-collonial canada.
The neo-empire has no geographical borders, no capital city and no queen, this time fellas, only Klass borders, and they are widening as we speak.
Sell and move to a land that has not been touched by neo-money-printing collonization

#106 Market Bull on 04.23.12 at 9:08 am

Toronto is a world class city. A truly cosmopolitan, sophisticated, monied and large metropolis.

Density within the the big smoke is going to happen for the next 100 years. Get used to it.

Timing the market is pointless. Real estate, over the long-term (25 years), is a definite buy in the T dot.

#107 disciple on 04.23.12 at 9:16 am

Update on the former grow-op in my burb subdivision: It was bought for 120K under current market values because of its history and the mention of “former grow-op” in its listing a few weeks ago. New owners installed new kitchen (yes, granite and stainless) and hardwood floors, and put up a wall to create an extra bedroom. Now listed for market value. And no mention of it being a former grow-op in the ad. But the whole neighbourhood knows. I wonder if the next purchaser/victims will bother to talk to the neighbours before buying?

Be careful out there…

#108 Inglorious Investor on 04.23.12 at 9:19 am

More Carn(age)ey:

With the Big C constantly castigating Canadians and prophesying higher rates, one wonders what is his real intent? Every time Canadians think rates are about to climb the markets get a conniption and Canada becomes bipolar.

“Sell now before rates go up and prices fall!”, warn some. “Buy now before rates go up and houses become unaffordable!” yell others, at the same time.

You, know if BoC Boss warned that rates would be going up, and then a few months later they actually did go up, that would be one thing. But Mr. Goldman Sachs North has been harping about rates for far too long.

His “Sword of Damocles” has put the country in a state of near panic where it’s been now for years. This kind of manipulation is egregiously irresponsible.

Maybe the muppets should go tell Mr. Carney to go shove his rate warnings in the same place where GS clients have been taking it for years.

#109 blase on 04.23.12 at 9:20 am

Not cheap price, cheap quality.

Ever notice on that love it or list it show, the lady always wants to knock out walls, and every time she’s shocked to find out that it’s there for a reason. so f’n stupid.

#110 disciple on 04.23.12 at 9:40 am

#35 steve on 04.22.12 at 9:52 pm
“Are people really this stupid ? i mean really ?”

Of course not. It’s a classic case of mind control, started early enough, and paired with peer pressure, the ancient technique is highly advanced and prevents any rational thought processes.

And not limited to Real Estate and finances. This market will turn on a whim. Confidence in increasing house prices is the only remaining leg on which it stands. The other legs, real wages, low interest rates, reasonable prices, etc… are all broken. Teeter totter. Tick tock.

#111 TurnerNation on 04.23.12 at 9:43 am

Definately on-topic! Van developer Peter Wall on a Harley…

http://www.vancouversun.com/life/Batmobile+buzzed+Cancer+Foundation+reception/6497276/story.html

But host Peter Wall had a special benefit for the singer. It was a 2012 Harley-Davidson Switchback motorcycle that rumbled up as he ended his second encore. Astonishing attendees as he had at La Scala Milan recently, Heppner accompanied himself singing I Don’t Want To Rock ‘n’ Roll No More. That supported UBC School of Music professor Richard Kurth’s contention that “song is the concentrated essence of our human character.”

#112 Can it be? on 04.23.12 at 9:47 am

#94, you are right… I won’t feel sorry for you when you have to move with a Million bucks in your pocket… however if you don’t want to move and you have to because you can’t keep up the house… that would suck. My own folks are in that dilemma. They can afford to stay for now… but wondering if they should just sell and downsize now… a million plus in cash and you can rent a gorgeous place for a long period of time… over 30 years if you rented a higher end place at $2500 a month.. and then if you invest the money.. you can just live quite well headache free…. not everyone in oakville or other high end places is well off…. it’s decision time for many. You cannot take your wealth with you when you die. I can afford to significantly upgrade but I haven’t … it’s nice knowing my investments are growing and there will be money for the kids school and a good retirement in the future. The extra money saved in property taxes allows for better vacations and cars… which I prefer at this stage… since I already live in a good neighborhood. These are interesting times and good problems to have the way I look at it. I’m going to wait and see what next year brings.

#113 };-) aka DA on 04.23.12 at 9:53 am

“Neighbours of mine – professionals both – just reappeared down the street after picking and up moving to new jobs and a better life in East Van last Spring. “The greed was too much,” they said as I dog-walked into a conversation. “All we could afford were shacks. There is nothing better there. What an incredible disappointment.”” – Garth

People too often underestimate the apparent laid back west. It’s competitive here – real competitive.

Of those I help move here from the east I would estimate that 30% fail and soon retreat back east to where they came from. In fact the number of those who fail is so that I have made it a ritual of my initial consultation, while on a courtesy orientation tour of our city, to carefully explain to them the social realities of living here. It’s a tough town – all of British Columbia is. Everyone, it seems, wants to live here and that creates a most competitive social environment. (Oh and BTW; yes, this “courtesy” two to four hour orientation is given before they are presented a BRA for signing if they wish to proceed).

Too many underestimate and think us bush league” and tire of our “boring myopia” that the west is all of that – right Garth? (reference Back to normal April 15th, 2012) But it is not so much myopia as it is warning.

I keep telling you that Beautiful British Columbia is truly the “Best Place on Earth” and while there is great truth in that and of all the places I have traveled I have found none I would rather call home, it (BC) too is not so far from “Paradise Lost” as the ugly underbelly of competition amongst man to carve out a piece of that paradise causes there to be hapless victims as some win and others lose.

The recent increase in western real estate prices was too be expected and well warranted as we find our equilibrium on the way up – competition will do that. Prices rightfully increased to the point those prices eventually deterred some and then many from moving here. Now they seek to carve out a nest or crib back where they came from justifying so with the cognitive dissonance demonstrated in their saying ““The greed was too much,” they said as I dog-walked into a conversation. “All we could afford were shacks. There is nothing better there. What an incredible disappointment.”” The reality is; they were incapable of competing for their piece of paradise against the so many others who seek it too. And so the demand shifts somewhat back from here to there allowing our prices to abate slightly while putting pressure on yours to rise.

And now, you know the rest of the story. };-)

#114 disciple on 04.23.12 at 9:55 am

I thought Boston Pizza was a family restaurant. Went to the “outhouse” location on the weekend with the kids. The waitresses were half-naked! Even my teen daughter was outraged. That’s saying something… Don’t know who was the more desperate party, the franchisees looking for revenue, or the poor girls who have to prance around constantly pulling down their skimpy one piece body suits… I enjoyed my Parmigiana and put down a couple of Queen Elizabeth’s green paper for the tip and will never return again, ever.

#115 };-) aka DA on 04.23.12 at 10:00 am

#69TRT on 04.23.12 at 12:19 am
#12 S

“…Vancouver has no industry.”

You won’t need one in the coming multi-class society. India has a caste system and barely any industry for thousands of years.

Get used to it.

Good point.

#116 };-) aka DA on 04.23.12 at 10:03 am

You makes yer money where ya has ta. Ya spends it where ya wants ta.

BUT… you need to make it FIRST. Not everyone can afford Paradise.

#117 };-) aka DA on 04.23.12 at 10:05 am

Fewer jobs, lower wages higher real estate values…

Is it worth it? Only you can anser that for yourself. British Columbia is not for everyone… we don’t have the room.

#118 eaglebay - Parksville on 04.23.12 at 10:19 am

#24 Time to leave Canada for a better life on 04.22.12 at 9:18 pm

Looking at your command of the English language, based on your post, I wonder what kind of job you can get in the US.
Maybe picking lettuce in Arizona with the other gringos.
You won’t be missed.

#119 Pt Bob on 04.23.12 at 10:27 am

Leaving the West Coast http://online.wsj.com/article/SB10001424052702304444604577340531861056966.html?mod=WSJ_hp_mostpop_read

#120 Ronaldo on 04.23.12 at 10:40 am

Wanna see what a trillion looks like. Check this out.

http://demonocracy.info/infographics/usa/derivatives/bank_exposure.html

#121 disciple on 04.23.12 at 10:42 am

#77 Mister Obvious… Frank Zappa had some musical talent as did Jim Morrison, but they were progeny of military families and never did speak out against war. Jim’s dad was the U.S. Navy Admiral George Stephen Morrison, who was responsible for the Gulf of Tonkin incident. The entire 60’s Hippie movement was a sham by Cointelpro (counter intelligence professionals). It’s time to awaken out of your slumber… Google “Inside the LC Laurel Canyon”

#122 jess on 04.23.12 at 10:43 am

“Economists think you should listen”

.. ‘they posed no foreseeable risk of loss to the federal insurance fund.” Mr. Greenspan regarding Lincoln Savings which “collapsed in 1989, at a cost of over $3 billion to the federal government. Some 23000 Lincoln bondholders were defrauded …

Homo economicus
http://www.informationclearinghouse.info/article31107.htm

occams razor : AS IS

stagers,appraisers, brokers, banks, agents, taxes, investors

occams razor : AS IS

#123 Bill Gable on 04.23.12 at 10:43 am

Over an overpriced steak, he smiled.” We bought for 18 k in 1960, sold it for 1.4 mill yesterday”.
He bought the steak.
Now he rents a mansion, pool, the works.
Somewhere an Amazon was smilimg.

One more thing. Been to China? I have many times. People in HK don’t aspire to Oakville, ok?

Guandong car assemblers maybe.

Sheesh.

#124 disciple on 04.23.12 at 10:45 am

#81 jay… graphite was so 2010. I think what you meant was “graphene”, right?

http://www.google.ca/search?sourceid=chrome&ie=UTF-8&q=graphene

#125 steev on 04.23.12 at 10:47 am

#105 Market Bull

Once could have said the same thing in ’89…what has changed exactly that turned Toronto into a real estate gem that outperforms other international cities?

Your arguement lacks any substance.

#126 getreal-tor on 04.23.12 at 10:48 am

#85 Virgin Toronto Couple on 04.23.12 at 7:09 am

At least you have the chance to simply move without any real repercussions when you rent. If you own the house and your neighbors are less then stellar it is a bit harder to simply move due to associated costs… As they say, you can choose your friends but you can’t choose your neighbors.

#127 getreal-tor on 04.23.12 at 10:49 am

#78 Ex-Cowtown on 04.23.12 at 2:46 am

If only ink was cheaper then I would also look into printing money. :)

#128 condopoor on 04.23.12 at 10:52 am

If I could buy a condo in downtown toronto right now, rent it and come even close to carrying costs, I would do it in a second. To me, until this gap narrows, it just doesn’t make sense.

#129 getreal-tor on 04.23.12 at 10:54 am

#111 Can it be? on 04.23.12 at 9:47 am

For $2500 you could get a decent condo in some areas but forget any detached homes in the city. With tear downs selling for 600+ in the city the folks who own them think their renting ability is at least $2500. I blame it all on the asbestos people inhaled in the old homes…

#130 TurnerNation on 04.23.12 at 10:55 am

#79daystar on 04.23.12 at 3:07 am

hehe, C said: valuations are “extremely firm”

I guess he’s been reading this sophmoric weblog!

#131 disciple on 04.23.12 at 10:58 am

#65 Peter Pan…”All Mr. Carney does is lecture us without actually doing the one thing which could change borrowers’ behaviour – increasing the BOC’s interest rates.”

100% accurate, on-the-money, absolutely, and undeniably, without a shadow of doubt, crystal clear, and smoking-gun TRUE-er words never were spoken.

I believe he is simply goosing the bubble bigger as many posters here alluded to. Bipolar? Yuuuuup. What’s another word for that? You guessed it… mind control.

#132 Abitibi Doug on 04.23.12 at 11:17 am

Lately I’ve made less comments as it’s now time to get a drink and bag of popcorn, put my feet up, and watch the show. We’ve seen this movie before, and I’m reliving that nostalgia trip of 1989 more than ever before. Say, how’s the cleanup of the mess from the Exxon Valdez oil spill going?

There’s much mention of glands in this topic. A small minority of us, myself included, have glands that give us a massively supercharged dopamine rush from the awesome heavenly feeling of being debt free.

#133 The madness continues on 04.23.12 at 11:18 am

Sister and BIL, teacher and new pharmacist, married last year and now on the hunt for a starter home in Burnaby – at around $850k. The plan is for both sets of parents to lend them $50k, and to put in their “savings” to cover closing costs, transfer tax, etc.

Now that they’re married it’s the next step right? I’m tired of saying anything so at this stage I’m just hoping they can’t find anything they like in their price range…

#134 Mark "the talk" Carney on 04.23.12 at 11:24 am

More and more Canadians are starting to wake up to what seems like financial crimes being committed by Mark Carney. This man has ruined Canada and many will have to leave Canada for a better life. When the house of cards come crashing down and all those employed in this FAKE RE economy are out of work then what? Canada will wake up to a RE problem bigger then the US. It’s just a matter of time but how fair is it to those who have to put their lives on hold because of these crimainls who reward those who gamble on RE with money they don’t have backed by the other peoples money.

#135 Can it be? on 04.23.12 at 11:26 am

#129… Condo is the definition of downsizing… Port credit has more then nice available condos for under $2600 overlooking the lake… Under $2000 for luxury in Vaughn… More and more condos available every day. Town homes work too. Too each his own I guess. 1 million goes a long way when you are renting.

#136 Can it be? on 04.23.12 at 11:29 am

#109 too funny

#137 bigrider on 04.23.12 at 11:35 am

#106 Market Bull = Brad Lamb

#138 Tony on 04.23.12 at 11:37 am

As world stock markets crash and burn commodities tank and the worldwide depression deepens rates have no place to go but lower. The full brunt of deflation will be seen in the near future.

The only depression is the one that descends when you post. — Garth

#139 Snowboid on 04.23.12 at 11:38 am

#73 Rog on 04.23.12 at 12:48 am…

“How much equity did you loose (sic)…” None, the home we sold on Vancouver Island has gone down in value by about 11% since the spring of last year!

How much rent did you throw away? Again, not much considering how low rents are in the Okanagan compared to the carrying costs of ownership.

“Beck and call of the landlord” – that’s funny! We are more independent than when we owned. We found a better deal on a condo, and it only took a bit more than a month to move on.

Try doing that when you discover your ‘home’ is falling apart and losing value, and your ‘neighbourhood’ has gone to the dogs.

I agree you can’t always time real estate – but this is a crazy time to be buying in Canada, especially in the Okanagan – end of story.

#140 Mark "the talk" Carney on 04.23.12 at 11:39 am

Garth I don’t understand how you can defend your buddy Mark carney? How many times can a man warn and then warn and then warn again but never doing anything? He is not the only one to blame and the CONs take some of it but to warn and warn and warn and warn to the point NO ONE in Canada cares or believes what he has to say. These guys are taking Canada to a bad place where lives will be ruined for their gain.

#141 bigrider on 04.23.12 at 11:40 am

IF these financial markets get clobbered again (I emphasize if) for the umpteenth time past decade, you might as well scuttle this blog for good Garth.

Nobody going to choose financial asset investing over hardwood and granite.

Net redemptions from equities will continue and only accelerate.

So what? Human nature, and servitude to greed and fear, will lead most people along the wrong path. This blog will continue to point in the right direction. — Garth

#142 Sticky on 04.23.12 at 11:43 am

@#112 };-) aka DA

Maybe…jut maybe… some people moved there, and found it to be over rated, and then decided to leave?

Maybe they didn’t like the fact that they rarely saw the sky for months at a time?

BC is nice, but BPOE is a marking slogan. The only people who think it is the BPOE have not seen much.

#143 Snowboid on 04.23.12 at 11:47 am

#112 Can it be? on 04.23.12 at 9:47 am…

Great post!

#144 salonist on 04.23.12 at 11:48 am

moneyville, toronto star
“Here is Ontario.
They invite you to immigrate, then brainwash your educational and professional background, then after ten years working in low pay jobs you finally put one foot at the door, don’t forget that they are taking 30% of all money you are doing, then they want you to buy a house and be a slave of the system for life. No, Thanks Ontario. 400K would buy a farm or a lsmall hotel in Central and South America wher I can be really happy.”

#145 Market Bull on 04.23.12 at 11:51 am

steev wrote:

#105 Market Bull

“Once could have said the same thing in ’89…what has changed exactly that turned Toronto into a real estate gem that outperforms other international cities?’
_____________________________________________

And if you bought real estate in Toronto in 1989, where would you be today?

Real estate is a long-term committment.

#146 DonDWest on 04.23.12 at 12:03 pm

#3 pathcontrolmonk on 04.22.12 at 8:34 pm

“Realtor friend told me that many of the HAM buyers in Toronto are those that sold their house(s) in Vancouver. Apparently “they” think the Vancouver market became over inflated, and Toronto still has lots of “upward momentum”. Whats after Toronto then?”

Hate to say it, but most likely Halifax, where I’m currently residing. Halifax has a similar climate to Vancouver. There are a lot of Chinese international students here. As hard as it is to believe, they may make a final push here, which leaves me on the fence whether I should buy.

This ill-gotten Vancouver wealth unfortunately has a ripple effect across the nation, as people flee to housing market after housing market trying to conserve their ill-gotten gains that originated in Vancouver.

The problem is betting on this theory is an enormous risk proposition because:

A) The Halifax job market is filled with nothing but minimum wage service jobs; and has nothing to support higher housing prices. Then again, the same could be said for Vancouver.

B) HAM could very well end up getting buried in Toronto as Garth is predicting, in which case they would have no money to move.

C) I could be wrong. HAM has no interest in Halifax at all.

D) Without a “HAM factor,” all fundamentals point to a correction in Halifax real estate in the next few years. Nothing dramatic, but expect dips of anywhere from 5% to 10% in the Halifax area. Some long time empty bubbly homes in the peninsula may finally take a much needed dive as owners can no longer afford the higher taxes and interest rates. I’m predicting these empty “heritage houses” will drop 25% in value.

Probably best not to buy in Halifax currently, but as a Vancouver refugee I’m keeping an eye on it. My funds are very liquid. I will dive in as soon as I see any indication of Halifax becoming HAMifax. I simply don’t have enough young years left in my life to wait out yet another speculative housing bubble.

#147 Nemesis on 04.23.12 at 12:05 pm

Well, OldChap… I know, gloating is such bad form – nevertheless, your prior assertion that, “Europe is contained.”, is… looking a tad over optimistic this morning.

I particularly ‘enjoyed’ the G&M leader, “Euro fiscal pact ‘a smoking ruin,’ global markets tumble.”

Never mind, Garth – your ‘Squirrel On A Stick’ Recipes will, I predict, prove exceedingly popular/timely in the weeks and months to come…

One last for Nostra (from a trained FortuneTeller): For quite some time of late, economics has been the ‘new’ politics… we are now on the cusp of politics as the new economics.

#148 fancy_pants on 04.23.12 at 12:06 pm

I find it hard to fathom how warning of your coming actions is ‘crying wolf.’ Seems to me it’s perfectly obvious what is coming. — Garth

sorry, to me nothing is obvious with this man’s verbal alarms anymore. this is the same song he sang well over a year ago. But, yes, it is worth annotating that nobody can say he/she hasn’t been warned.

Looking forward to the apex of the warnings.

#149 daystar on 04.23.12 at 12:17 pm

#130 TurnerNation on 04.23.12 at 10:55 am

“Extremely Firm” is one way of putting it (chuckles).

#150 MARTIN on 04.23.12 at 12:22 pm

”’After all, cities where average families can’t afford average houses don’t work for long – unless they happen to be London, New York or Shanghai””

-why is london, new york or shanghai any different?!

#151 steev on 04.23.12 at 12:26 pm

#145 Market Bull on 04.23.12 at 11:51 am

So you are advocating buying in at the top of the market when all conventional indicators show that we are going to experience a correction?

I don’t intend to catch the knife perfectly but I don’t have to. After the ’89 correction was played out in TO there was a 3-4 year period where prices just went sideways. That’s a nice long window in which to make a long term commitment.

Buy low sell high trumps buy high sell higher.

#152 Debtfree on 04.23.12 at 12:33 pm

Ebpv. Picking lettuce with the other gringos ? Gringos picking lettuce . Stop it I can’t take anymore. The only place you’ll see the other gringos picking lettuce is in the AnP or SAMs club.

#153 };-) aka DA on 04.23.12 at 12:38 pm

#142Sticky on 04.23.12 at 11:43 am
@#112 };-) aka DA

Maybe…jut maybe… some people moved there, and found it to be over rated, and then decided to leave?

Maybe they didn’t like the fact that they rarely saw the sky for months at a time?

BC is nice, but BPOE is a marking slogan. The only people who think it is the BPOE have not seen much.

Well I’ve seen plenty enough to form what I believe to be a well enough informed opinion on that matter and while BPOE (Best Place on Earth) most certainly is a marketing slogan it is so for good and valid reason.

And on that “they didn’t like the fact that they rarely saw the sky for months at a time” thing, you really ought to have traveled around the well diversified eco-system climates of British Columbia. We do have deserts too you know. I traveled through it just the other day. Just as Hawaii has it’s wet and dry regions so too do we but our are – better ;-) seriously. Way more flora and fauna on all accounts.

You think it over rated? Then don’t come here. We kinda like it the way it is quite frankly and like BMWs, Apple, Starbucks and so many other of the “better” things in life people boo hoo because they can’t justify the expense… you want a piece of our action we’re gonna charge you handsomely for it. If you deem that charge to high… we understand. We wish you well wherever it is do you choose to live… feel free to come visit us from time to time. We promise to show you a good time in our four seasons vacation wonderland.};-)

#154 TurnerNation on 04.23.12 at 12:42 pm

#114disciple on 04.23.12 at 9:55 am

Are you sure it wasn’t a Hooters?

Should have bought BP shares – BPF.UN year low $10.30, last = $18.10!

Yielding 6.49%…

What recession?

#155 Two-thirds on 04.23.12 at 12:50 pm

Other jurisdictions could learn from formerly bubblicious Edmonton, where a large ultra-expensive development just changed direction 180 degrees after stalling for 3+ years:

“When the Century Park plan was first proposed in 2004, it was the largest infill project of its kind in Edmonton, and the plans met with intense opposition from the surrounding neighbourhoods.

It was designed, in partnership with Vancouver developer Westbank, by Vancouver-based architect James Cheng. City council approved the design with 24-storey towers, and 100 people lined up and camped out overnight to buy units in the first building. That seven-storey structure sold out within a day.

Then the economy soured, and construction stopped after the completion of four mid-rise buildings and the parkade structure for the first tower, a 21-storey structure.

This time ProCura isn’t offering pre-sales.

“Our direction here is not to go condominium. We want to go luxury rental. It just speeds up the whole process,” Schluessel said.

By going rental, the financing is less complex, and ProCura can still sell off the units as condos in five or 10 years after construction ends.”

http://www.edmontonjournal.com/opinion/plans+Century+Park+throw+Vancouver+look/6500701/story.html

Even developers agree: renting makes more financial sense than buying right now! :)

#156 VICTORIA TEA PARTY on 04.23.12 at 12:52 pm

A GLAND IN THE HAND? NOPE, HEAD FOR THE BUSH!

Government austerity policies in the West, it seems, is the current whipping boy (person?) amongst the addled unhappy masses of financially-starved middle class wretches.

Greg Valliere, a Washington DC financial guru, said it was so during a Bloomberg News broadcast this day.

For this reason, France seems headed for Socialist Hell; the Netherlands’ conservative government, so supportive of German austerity plans for the rest of Europe, toppled today; Greece is finished; Spain almost finished, Italy should be finished shortly; the US is waitin’ to die; Japan is done like dinner; China’s manufacturing is experiencing a “bump in the road.”

The common thread here is simple: it’s all about the fall-out from the Great Financial collapse of 2007-08.

The collapse, therefore CONTINUES at its own pace, in its own time and no thanks to the trogs, minions and various political hacks everywhere, King Canutes-all, who believe that a few strokes from a cat-o-nine-tails on the incoming tides of financial gloom can stop, the financial gloom!

That’s why Mr. Carney’s sterling collection of ball-bearings keep wearing out in his hands.

Having given up on worry beads last year, the young buck of Canada’s Central Bank, must know that if he raises interest rates, our real industry will collapse, because if he does NOT increase interest rates, our real estate industry will collapse!

A lesson in current history, Mr. Carney: NOTHING IS TOO BIG TO FAIL!

Review the events of 2008 for supporting data.

#157 bigrider on 04.23.12 at 1:03 pm

#141 Garth’s reply to Bigrider- ” So what ? Human nature…This blog will continue to point in the right direction”

Ok got your point Garth.

Hopefully we do not avoid the ‘fire’ just to ‘drown in the lake’

#158 TurnerNation on 04.23.12 at 1:09 pm

Frustrated First Time Buyer: So Nonna nicola walks into
Biga rider’s sale centre and says “I wanna fixa uppa …your face”.

#159 GregW, Oakville on 04.23.12 at 1:11 pm

Hi #72 Nostra, FYI This is a must see information talk!
There are many other interesting ones too. Audio $10ea
I attended some of the “Total Health Show 2012”.
Here is a link to buy audio or video of the speakers.
**If you see nothing else I think everyone need to see/hear this one #320!!! That is if you want to stay healthy and have kids and grand kids! Send it to all your freinds and MP’s!

http://softconference.com/120420
-320: Are Genetically Modified Foods Damaging Your Health? Jeffrey Smith
(more info at http://responsibletechnology.org/
and http://www.seedsofdeception.com/
His new book is “Genetic Roulette”)

These info talks do kind of support the other one;
-290/290A/290B: Panel: The Corporate Takeover of Food, Medicine & Water
Jeffrey Smith, Alan Cassels, Paul Connett, Mark Kastel
-330: Personal Health Freedoms
Shawn Buckley

#160 bigrider on 04.23.12 at 1:16 pm

I read a well written article over the weekend regarding passive investing using index and ETF’s at a 40/60 bond to equity split and re balancing once or twice a year(sound familiar) over active portfolio management and market timing.

No doubt which has done better, the first.

It entails of course, ignoring the noise and more often than not “doing nothing”

Here is the kicker. Passive ETF and index porfolio would have returned a gross gain of 360% from 1982 through to 2000. This in a period of roaring equity markets and declining interest rates..bonds and stocks won.

Guess what return has been from 2000 to today same allocation? Just 55%. That 55% coming predominantly from fixed income component as interest rates have collapsed to historical ,desperate lows thereby mitigating losses on equity side as bonds rose.

My point?

If equity markets do not turn around, and in the face of higher interest rates as our host so strongly and rightly suggests, you can kiss goodbye to ANY kind of a reasonable return on one’s financial assets for equal amount of historical risk.

We need equity markets to turn around, period.

#161 bigrider on 04.23.12 at 1:18 pm

#147 turnernation.

Im not nor ever have been in RE sales and am as bearish as our host. Just to clarify.

Most of the people around me on the other hand foam at the mouth when they see so much as a roofing shingle

#162 truth hammer on 04.23.12 at 1:27 pm

In the past it could be explained away that established buyers were ‘trading up’ to newer homes from the starter home they had amassed substantial equity in so that they could afford the larger home….but this isn’t the case at all in todays market.

http://www.theglobeandmail.com/globe-investor/investment-ideas/features/at-the-bell/why-our-young-may-save-the-housing-market-from-tumbling/article2409619/

The fact is that aside from the ubiquitous HAM and the ill gotten gains being laundered in Canada’s forgiving no questions asked political machinery…it is young well paid sheeple being led to the slaughter by the lure of low down low monthly payment low rate bait and switch deals that are scheduled to cost them a lifetime of financial agony and will correct in the future when it is realized that robbing from the future economy is leading to a huge mess.

I read from this article that a reasonable person might take away from the philosophy behind the move by government ZIRP to fleece the young is akin, at least in my mind, like pedophiles grooming children for rape. Because it’s a ‘bangin’ these ‘young people’ will get when they realize they borrowed a million dollars and now have to spend the rest of their lives huddling in the dark afraid to order their kids a pizza on Friday night for fear that they will collapse their savings.

Great move Carnage Carney..Flaherty…Harper and the Cons…….

Just what is behind this Machiavellian destruction of Canada anyway? Whats coming down the pipe?

#163 Devore on 04.23.12 at 1:27 pm

#62 Tyredandboard

Why not, because it’s a real world example of interest rates staying at 0 indefinitely, which was the question being posed? What goes down must go up, it has been said. I am pointing out that that is not a given.

So what? You believe low interest rates alone are sufficient to continue the bubble, something clearly shown to be wrong in Japan (your example, 2 decades and still counting) as well as US, UK, Australia and Spain, and others.

And it has been said that what goes up must come down (not the other way around as you assert, no one is saying that), because something that goes up to unsustainable levels will not be sustained. And it has been shown to be unsustainable in US, Japan, Australia, Spain, UK, and others. Canada will be no different.

In fact, our rates will stay low, and the bubble will burst anyways. A credit fueled bubble will go up as far as credit allows, and only as long as there are sufficient buyers present who can continue to buy. That’s why prices in Vancouver, Victoria, Toronto, the bubbly high demand areas, all stall around the same point, does that ever make you wonder? That’s where average people run out of money, and cannot borrow any more.

The meme you are looking for, if absolutely you must have one, is reversion to the mean, which tells us things eventually reset to their long term trend.

Sorry if you find the facts inconvenient. Why are things going to go any differently in North America, because C says so?

On the contrary, I find facts extraordinarily convenient. You, on the other hand, insist on putting words in people’s mouths and using strawmen to support your points.

#164 45north on 04.23.12 at 1:28 pm

disciple: I thought Boston Pizza was a family restaurant.

we went a year ago in Ottawa, it was fine

#165 penpal on 04.23.12 at 1:35 pm

@ # 150 Martin

World class (Tier 1) cities command a premium.

No Canadian city is considered Tier 1 and certainly is not world class (although, in fairness, it contains some world class elements).

#166 Devore on 04.23.12 at 1:49 pm

#85 Virgin Toronto Couple

Anyone who says renting is better doesn’t have downstairs neighbours with a baby who cries through the night, or upstairs neighbours who cook food that smells like bug spray. Renting sucks

I’m sure if you were to buy the same unit, all those pesky neighbours would disappear in a puff of smoke. That’s how “pride of ownership” works.

Pay more money, find a nicer place to rent.

#167 Can it be? on 04.23.12 at 1:53 pm

Buying real estate today is like juggling knives… it could turn out pretty messy if you are not prepared for the potential disaster.

#168 penpal on 04.23.12 at 1:54 pm

@ # 106 Market Bull(sh!t)

You are either delusional, a liar or you simply have not travelled / lived in a “world class city”, which precludes an intelligent person from listening to anything you would have to say on the matter.

Toronto is a tier 2 city, albeit a very expensive one, and nothing more.

Why don’t you declare your (probably professional) bias in your postings.

At least DA, for all his shortcomings, has been up front about being a RE agent and declared his bias.

#169 disciple on 04.23.12 at 1:58 pm

45north… so did I. A lot has changed in a year. Don’t tell me you own BPF.UN? 6.49% yield. Jumped 4 bucks this year alone. But so what? They should have proper uniforms for their employees…

#170 Sticky on 04.23.12 at 2:00 pm

@#153 };-) aka DA

If you think it is the best place on earth, well, good for you enjoy!

…ok everyone that has ever been there wishes that they could live there for ever, and everyone who has not made it there yet is laying awake at night dreaming about when they can move there! Everyone who left did so under extreme stress, kicking and screaming, and is in therapy because they can’t stop thinking about when they used to live in BC.

I have been there many many times. And in the summer it can be very nice…like many other places. Yawn…

#171 getreal-tor on 04.23.12 at 2:10 pm

http://blogs.hbr.org/erickson/2012/04/gen_x_hits_another_bump_in_the_1.html

Interesting article from Harvard Business Review — Excerpt:

Unfortunately, X’ers’ home purchases came at the top of the housing market after prices had been driven up by the large bulge of home-buying Boomers that preceded you. During the first half of the 2000’s decade, the combination of still-increasing housing prices and your trade-ups to costlier homes caused the median value of homes owned by those in the 35 to 44 age cohort to rise by 20 percent. Unfortunately, during the same period, the amount of your generation’s home-secured debt rose even faster, by nearly 30 percent. When the housing crisis began, Gen X owned the most expensive homes in the country.

#172 Tyredandboard on 04.23.12 at 2:20 pm

Ps devore, you said:

“And it has been said that what goes up must come down (not the other way around as you assert, no one is saying that)”

WRONG. That is exactly what I was responding to in the first place. Why not read the article. The point I was addressing was Garth’s assertion that rates will rise, and soon, because C said so. So yes, someone has asserted that what went DOWN (rates) must go UP. I pointed out that that is not always true, Japan doesn’t count though right. As to whether the bubble here can burst without a hike, we disagree again, big shocker. I’m done with this “debate”, feel free to get the last word and feel like the big man.

#173 Inglorious Investor on 04.23.12 at 2:20 pm

#160 bigrider on 04.23.12 at 1:16 pm
“We need equity markets to turn around, period.”

I understand your sentiment, but what we really need is real economic growth, not just more currency units in the system (which the surest way to goose equity markets).

The central planners act like economic growth just naturally follows the creation of more money. But in fact, it’s the other way around. Monetary inflation is just how banks make their profits, but it’s not how people actually become wealthier.

#174 Dorothy on 04.23.12 at 2:20 pm

One of the major themes of this blog has always been that it is people considering RE to be an investment rather than just a roof over their head that has led to rampant speculation and rising prices. And the overiding consensus has been that such activity has been a bad thing.
Yet over and over, I keep reading comments that STILL refer to RE more as an investment than just a roof over ones head. Do we never learn??????

When I consider my overall financial situation, my home is the roof over my head, and my portfolio contains my investments. The two are completely seperate in my mind. And that is how is SHOULD be.

The criteria used when buying (or renting) a home should be cost (can we afford to live here), proximity to work (is it a reasonable commute), proximity to family members (if that’s important to you), and will we ENJOY living here? NOT, are we going to make a profit or a loss on this place when we eventually sell it?

Although a home consumes a large portion of our income, it’s still an asset like any other (e.g. car, RV, appliances, furniture, whatever). When we buy an expensive item such as a car, our main criteria is comfort, affordablity, and personal preference. The value of the car at the point of resale is very low down the list, and not even considered at all by many. And believe it or not, there was a time when people viewed their homes in a similar light.

When I was planning my financial future and saving for my retirement, my home was not part of the equation. My financial portfolio was of much greater concern. Nevertheless, I did still choose home ownership over renting because that was my personal preference. And, as with ALL purchases, I shopped around and negotiated the best price possible for the house, the mortgage, the lawyer, and everything else related to my home.

The end result is that I’m going into retirement with a paid for roof over my head, and a modest but adequate financial portfolio. I’m not going to be able to sell my home and make a “killing” like some, but then that was never my intention (although obviously it would have been nice if it had worked out that way). My point is that people need to STOP viewing their homes as investments, and start seeing it as an asset they may want to consider buying purely and simply because they would enjoy owning it.

Not ALL markets are outrageously priced, and interest rates are very low right now. So if you live in an area where home ownership is affordable, would enjoy owning your own home, and have the financial wherewithall to buy without compromising your ability to continue to save for your future, then I see absolutely no reason you should not go ahead and buy, if that is what you want to do.

Home ownership is not for everyone, and there are many for whom renting suits their lifestyle much better (people whose jobs render them very mobile come to mind). But if you would like to own, don’t let people put you off by telling you its a bad investment. Because buying a home is NOT an investement choice. Never has been, and never will be. Thinking like that is a mugs game, and is what got many into the mess they currently face.

#175 disciple on 04.23.12 at 2:46 pm

Doing my taxes… There’s no rent deduction for Ontario taxes this year? I was so looking forward to that this year as a new renter, and they go and take that away… Well, it seems like everyone is renting out their basement, I wonder how many people actually claim that income on line 120 of their T1?

#176 Opinionator on 04.23.12 at 3:20 pm

People’s obsession with real estate is so tiresome, as it’s picked to death. Toronto may not be in the league of the global financial capitals like London, New York, Hong Kong, Singaore, or Zurich. It may not even be in the same ballpark of regional financial centres like Moscow, Chicago or Frankfurt, but most would not dispute it is a national financial centre in a G-20 country. The jump we’re seeing in prices is not a bubble, it’s a reversion to the mean. Where can you buy a house – not a condo – for $1 million downtown? Even in the most downtrodden, debt-laden city in Old Europe, houses are not affordable for average people, running into the millions. Average people in Berlin, Rome, Geneve etc. wouldn’t dream of buying a house – unless they they hit the jackpot. They aspire to buy condos/apartments, and those cost as much as a house in Toronto. As for most average people in these places, i.e. 50%+ of the population, they rent. The average price of a condo in Kuala Lumpur – still considered a developping is $500/square foot. That’s about the price of Toronto. We’re not in the same league as Hong Kong, but their average price is $4500, and we’re miles away from that. So, there’s more to grow, of course not in a linear straight line. Zigs & zags along the way, but the trend is always up, so keep your nerve.
P.S.: No, I’m not a realtor, never have been.

#177 safetypup on 04.23.12 at 3:25 pm

A lot of upper-middle class white/waspy couples in Toronto flock to Leaside and the Beaches. Each neighbourhood is somewhat of a socio-economic white enclave in Toronto.

#178 Victoria on 04.23.12 at 3:26 pm

Penpal

My husband has lived in Paris, London and New York and Toronto certainly is not comparable to those places. We lived in Toronto for 6 years.

#179 };-) aka DA on 04.23.12 at 3:28 pm

#165penpal on 04.23.12 at 1:35 pm

@ # 150 Martin

World class (Tier 1) cities command a premium.

No Canadian city is considered Tier 1 and certainly is not world class (although, in fairness, it contains some world class elements).

In your opinion maybe.

Don’t be selling Canada short Penpal. While, clearly, I am a devout loyal British Columbian, all of Canada, in my opinion, exceeds that which most others only dream they could offer.

If that which you claim truly were the case, then why do so many notable Canadian cities command such high prices? And seriously, does the premium a city might be able to command truly reflect its “class”? If you think so you might truly be showing your own lack of the same.

Just because someone can “afford” something or to live somewhere does not mean they bring to that community “class”. Indeed I would suggest that in many an instance the influx of such people tends more often to degrade the class such a community may have once had. So the very least we can and should do is to, albeit hypocritically prostituting ourselves by, charging an exorbitant price of admission hoping it will abate some of the influx and preserve our sanctuary for as long as possible.

Yes, apparently, we are just that “myopic” we think with good reason though… for now… but it will pass as sadly paradise becomes lost and the “bush league” ambiance is lost to a world becoming more and more homogenous in its pursuit of a misdirected definition of “class”. };-)

#180 Victoria on 04.23.12 at 3:29 pm

Truth Hammer,

I think there are too many people with an invested interested in RE. Agents, builders, contractors, investors. With 70 percent of the population owning homes and 27% somehow employed in the RE/Building industry you don’t want to piss too many people off. Who cares about seniors – they will die soon and kids are young enough to get back on their feet – someday maybe.

#181 jess on 04.23.12 at 3:33 pm

check out this ranch
http://ruleaks.net/1901

=======
Spanish desalination plant
…Financed with Spanish taxpayers’ money and €55m of European Union regional development funds, the Torrevieja plant has been challenged on environmental and financial grounds repeatedly.

With a heated dispute brewing in Brussels over rising EU spending at a time of austerity, plus tensions between Europe’s fiscally self-righteous north and poorer neighbours in the south, the fate of the plant will be watched across the continent.

The idle plant also risks becoming another example – like the €1bn empty airport at Ciudad Real in central Spain – of the dangers of a highly devolved political system where power is shared between the state, 17 regions and more than 8,000 municipalities.

The plant has fallen victim to intense political rivalry between the Spanish Socialist party, which runs the national government in Madrid, and the rightwing Popular party, which controls the Valencia autonomous region and Torrevieja’s town council….read more

http://www.thebureauinvestigates.com/2011/04/27/eu-waste-massive-spanish-desalination-plant-lies-idle/

#182 Bottoms_Up on 04.23.12 at 3:37 pm

If the Canadian housing bubble pops…does it make a sound?

#183 Bottoms_Up on 04.23.12 at 3:38 pm

#164 45north on 04.23.12 at 1:28 pm
—————————————-
Agreed. Been a couple times in Ottawa this past year and had great times….very family friendly.

#184 John on 04.23.12 at 3:42 pm

Canadian Watchdog wrote:
“I’m afraid many on this blog are having great difficulties understanding the underlying problem to our financial system. If it’s not obvious by now, then the problem is your assessment of the status quo.

While Canadians keep being pumped with Carny’s lies and bluffs, the truth is Mr. Carney was the first to lead the clan of sociopaths to destroy the one rule that would have safeguarded our banking system and prevented banks from using customer deposits for prop trading—aka The Volcker Rule.

PDFs: Letters sent to the Fed by Canadian banks, regulators and institutions to stop the Volcker Rule.

BOC http://tinyurl.com/c7achu2
CBA http://tinyurl.com/c9cts2u
OFA http://tinyurl.com/7h9mulg
OSFI http://tinyurl.com/cpwnz84
Banks http://tinyurl.com/85tvjm8

In laymen’s terms, if our banks can’t speculate with your money earning 0% interest, our banking system will fail—that is why our regulators are not acting—they are terrified of the banks balance sheets—so they look the other way and kick the can down the road for their successor. Unfortunately, as history has proven again and again, nothing will change until Canadians vote a one-term government to go in and clean house, but until that time, many will have to lose their wealth before they start voting with their feet.

There are no rules. This is global looting.”

————————

There’s no counter-argument here. This is what’s going on. The only thing being kicked now is denial.

#185 new_era on 04.23.12 at 3:46 pm

Good read. right up your alley Garth

http://fullcomment.nationalpost.com/2012/04/23/jesse-kline-government-is-to-blame-for-canadas-housing-bubble/

BTW – The Vancouver Wannabe has been eliminated early. Just in case you Vancouverites thinks its different this time. NO!!! it been the same for over 40 years. Loser city and loser hockey team. Deal with it boys and girls!!!

#186 Bottoms_Up on 04.23.12 at 4:01 pm

#50 Stupesing in Cabbagetown on 04.22.12 at 10:57 pm
——————————————————-
The ‘time-consuming process’ also provides time for industry to devise ways to SCREW the consumer:

For example:

Department of Finance website as at Sept 30, 2009 on changes to credit card regulations:

http://www.fin.gc.ca/n08/09-089-eng.asp

“Lower interest costs by mandating allocations of payments in favour of the consumer.”

And DoF website as at Sept 1, 2010:

http://www.fin.gc.ca/n10/10-076-eng.asp

“Lower interest costs by mandating allocations of payment in favour of the consumer. For example, any payment made in excess of the required minimum must either be allocated to the balance with the highest interest rate first or distributed proportionally to each type of balance (cash advances, purchases, etc).”

Obviously the credit card lobby was successful in changing the 2009 regulations that were meant to protect consumers. The 2010 regulations are more harmful to the consumer.

#187 brainsail on 04.23.12 at 4:04 pm

http://www2.macleans.ca/2012/04/23/the-under-the-radar-changes-that-may-soon-deflate-or-pop-the-housing-bubble/

#188 Tyredandboard on 04.23.12 at 4:07 pm

@ devore

I think I was unnecessarily rude, after revieiwng my posts. I apologize for that. We do not agree on the bubble-rates connection, but we do seem to agree that rates are unlikely to ride much soon. That is all I was trying to say, albeit I was overly emotional.

#189 Derek R on 04.23.12 at 4:12 pm

#78 Ex-Cowtown on 04.23.12 at 2:46 am wrote:
OK everyone, this one makes sense. It’s pretty heavy on the math side, but it explains a lot of what GT has been yammering on about…

…GT, you need to be all over this one.

http://www.debtdeflation.com/blogs/2012/04/21/just-banking-presentation/

Total agreement from me. Steve Keen is a must-read for anyone who wants to understand the economics behind it all. Makes much more sense than the economist guys who ignore debt.

One of the three blogs I check every day.

#190 Regan on 04.23.12 at 4:13 pm

I just spoke to a realtor regarding a house that seemed appealing – a semi with a first floor rental unit. He said they were expecting multiple offers and for it to sell well over asking. In the rest of my shopping experience, this is called bait and switch. I know people should have a fair opportunity to offer more, but getting into a blind bidding war where you aren’t told what anyone else is bidding is a terrible position for a buyer. The removal of that competition in a slowing market will drop housing prices by 10-15% alone, since that seems to be the premium over asking that people rack up in this process.

#191 Abitibi Doug on 04.23.12 at 4:23 pm

@bigrider, post #141:
Great, I hope you’re right that financial markets get clobbered and net redemptions from equities accelerate. Not only that, I hope they go down as much as in early 2009. That will create an AWESOME BUYING OPPORTUNITY for some good dividend paying stocks, at a fire sale price, that ultimately results in a higher percent yield.
As I said a year ago, stock buying should behave like an engine with a governor where, the more the speed drops below the setpoint, the more the governor opens the throttle to give it more fuel to produce more power to offset the speed drop. Similarly when stocks drop, just like the governor, it’s time to pile more money in to get those cheap fire sale prices. Stock market drop you say? Bring it on!

#192 anon on 04.23.12 at 4:25 pm

#150 Anyone who claims Vancouver is a world-class, has never been to a world-class city. Beautiful yes. World-class? Far from it. It makes me laugh that people would even consider Vancouver the same.

#193 Van grrl on 04.23.12 at 4:47 pm

To those of you reading aka DA’s posts:

I apologize for his arrogance in touting BC as “all that”… it’s embarrassing and there are plenty of us here who love it but are a wee bit more humble. I’ve lived in other countries and other parts of Canada and the nature is spectacular, indeed. Funny that aka mentions “Apple, Starbucks and BMWs” as a BC thing?? Pathetic. A Vietnamese iced coffee in my hood wins hands down over Starbucks any day.

It’s NOT the BPOE. Overrated to stupidity. Rains waaaaaay too much. (But damn I love the mountains). And on that note I’m off to have my vitamin D supplement…

#194 Ben on 04.23.12 at 5:06 pm

L.A. all of Canada thanks you.

#195 Canadian Watchdog on 04.23.12 at 5:17 pm

Anybody notice that CMHC still hasn’t published its Q4 financial report? It’s April already.

#196 };-) aka DA on 04.23.12 at 5:20 pm

#168penpal on 04.23.12 at 1:54 pm

… At least DA, for all his shortcomings, has been up front about being a RE agent and declared his bias.

Gosh, after such a compliment I almost regret having chastised you for “selling Canada short” as lacking the ability to compete on a “world class” level.

#174Dorothy on 04.23.12 at 2:20 pm

You get it. They don’t . Some do, some don’t, many never will. Congratulations you are one of the few who do.

#192anon on 04.23.12 at 4:25 pm
#150 Anyone who claims Vancouver is a world-class, has never been to a world-class city. Beautiful yes. World-class? Far from it. It makes me laugh that people would even consider Vancouver the same.

Tell us one better.

#193Van grrl on 04.23.12 at 4:47 pm
To those of you reading aka DA’s posts:

I apologize for his arrogance in touting BC as “all that”… it’s embarrassing and there are plenty of us here who love it but are a wee bit more humble. I’ve lived in other countries and other parts of Canada and the nature is spectacular, indeed. Funny that aka mentions “Apple, Starbucks and BMWs” as a BC thing?? Pathetic. A Vietnamese iced coffee in my hood wins hands down over Starbucks any day.

It’s NOT the BPOE. Overrated to stupidity. Rains waaaaaay too much. (But damn I love the mountains). And on that note I’m off to have my vitamin D supplement…

I didn’t mean that Apple, nor Starbucks nor BMW were a BC thing – although they do enjoy great favour here.. They are iconic in how they stand against their competition for providing a premium level of quality and service for which they charge a premium price. I was likening their marketing approach to that of British Columbia. Of course you can stand in line at “Timmy’s” have them fix your coffee for you most often getting not enough of this or too much of that in it and then offer you a hard uncomfortable chair to sit on if you insist on loitering around the place.

Or how about LULULEMON… now there is a distinct British Columbia born and breed company which charges a premium for its premium product – and rightfully so! Making assess all over the province look better and doing a damned fine job of it. Amazing… did I say “amazing”… more like mesmerizing. Always a joy to stand in that lonnnnngggg line at Starbucks thanks in great part to Lululemon.

On your need of vitamin D supplements Van Girl… why not come on up to the Sunny Okanagan Valley once in a while no passport required. And don’t forget to bring your Lululemons. };-)

#197 };-) aka DA on 04.23.12 at 5:25 pm

Rain = liquid sunshine, snow you don’t have to shovel.

I like the rain, greens things up and cleans them up too.

http://youtu.be/VJ1GQFtHGxU

Don’t like the rain? Move.

#198 mike from oakville on 04.23.12 at 5:37 pm

burlington builder competing with resale homes – offering secret discount?

http://www.buildinghomes.ca/community/forums/showthread.php?t=19248

#199 Bigrider on 04.23.12 at 5:43 pm

#191 abitibi Doug response to bigrider.

Your comment and analogy assumes you are taking profits at the “top” or near top . If not , all you are doing is going up and down and accomplishing nothing, hence the poor results of most investors since turn if century.

I would argue that in a deflationary environment your dividend paying stocks will eventually burn themselves out. No growth means no ability to support share price, dividend simply a drain on corporate resources.

#200 gtrz4peace on 04.23.12 at 5:49 pm

#77 Disciple — Met Frank Zappa, also saw most of his shows period from 1973 til his death. YES he spoke out against WAR and did so cleverly in his songs. “Billy The Mountain” is about an attempt to draft a friend of his. And there are more. Say, why don’t you sit down with the Youtube version of “Jesus Thinks You’re a Jerk” and FZ’s library? You may learn something…

#201 jess on 04.23.12 at 5:55 pm

4 Smoking Man
…”the so called Red Queen races, where however fast you travel, no-one ever wins.” Unless you run in nanoseconds.

#202 Nonno Nicola on 04.23.12 at 5:58 pm

#160 Bigga Rider

“We need equity markets to turn around, period.”

Ah Bigga Rider, Nonno Nicola tella you overa year ago dat you better stay awaya from da pazzo stocka marcato. You a smart younga fella Bigga Rider, you a go to da universita but you still no capice dat da stoca marcato is filla with da crooka who just robba your hard earned moneta Bigga Rider. Youra paesani who are in da real estata, now they maka da real moneta no the people who giva da moneta to da so calla “financial advisora”. They alla crooks Bigga Rider. You putta da moneta in da real estata and just kicka youra feeta backa and watcha da moneta grow, just lika da peacha on Nonno Nicola’s peacha tree. Listen to a me Bigga Rider. Your no listen last a time and you keepa gettin burna. Nonno Nicola he been arounda da blocka, he knowa what he a saya!

#203 jess on 04.23.12 at 6:02 pm

184 John

arms races in banking
http://taxjustice.blogspot.ca/

http://www.evb.ch/en/commodities

#204 John on 04.23.12 at 6:03 pm

Re: Daystar’s post about Mark Carney

Since the man and his position are not drivers in the process, it’s hardly an issue to even bring him up.

When technocrats and politicians are “issuing warnings”, do you take that seriously?

#205 spaceman on 04.23.12 at 6:06 pm

This is a great link about CMHC, and the coming changes.

http://www2.macleans.ca/2012/04/23/the-under-the-radar-changes-that-may-soon-deflate-or-pop-the-housing-bubble/

#206 Devore on 04.23.12 at 6:13 pm

#172 Tyredandboard

I’m done with this “debate”, feel free to get the last word and feel like the big man.

Holy crap, project much? I do not derive my sense of identity or self-worth from posts on an anonymous internet blog, so I care little about getting the last word or being a big man. Is my e-honor or e-manhood at stake here?

I am glad you have come to your senses though. I recommend stepping back for 5 minutes and breathing deep before hitting that ‘submit’ button. You’ll find most of the time you will cancel your post and resume your life. (Less work for Garth too.) It’s just pixels on the screen. Don’t become like DA, poor guy.

#207 Devore on 04.23.12 at 6:16 pm

#192 anon

Anyone who claims Vancouver is a world-class, has never been to a world-class city. Beautiful yes. World-class? Far from it.

In the global context, it’s just a village. Even worse, it’s becoming a resort town. Not that there’s anything wrong with that. It just ain’t the next New York.

#208 NoName on 04.23.12 at 6:22 pm

#191 Abitibi Doug on 04.23.12 at 4:23 pm

I agree with you, it will be great buying opportunity.

bigrider its not a market that is not working its [email protected] too busy issuing mortgages that she often tend to forget to rebalance customers portfolios, and she has to sell flawed DCA and banks MF to customers.
In a “bad or sideways” market staying nimble, rebalancing and taking profits is only way to grow portfolio.

http://i43.tinypic.com/15xsmk6.png

nothing is wrong with market, pretty [email protected] and buy and hold mentality is the problem.

#209 Bigrider on 04.23.12 at 6:43 pm

# 207 noname and abitibi Doug.

This whole idea you both have about re balancing, being nimble, trading and the like means that you need to be right on your entry and exit moves more than the next guy who is taking the other side of each and evryone of your trades/moves.

Good luck with that.

The ugly truth is that without rising asset values in financial markets , it is a zero sum game.

I resubmit, in order to grow wealth , the asset your wealth is invested in must rise, one way or another.

Nonno Nicola, put downa the vino and understand that T.O soona to be lika da rest of the worlds when it comma to reala stata.. Caputo .. Capice?

#210 Nostradamus Le Mad Vlad on 04.23.12 at 6:51 pm


#84 Foggy — “None of this makes sense….” — ‘Sright. Many weird and wacko things happening all over

#89 Ret — “Carney and the OSFI will only respond after the train wreck in the Canadian economy.” — Another case of “We never saw this coming.” Politico bafflegab. Politicos, lobbyists and the m$m are designed and taught to confuse us. That’s why it’s a good idea to ignore them.

#91 fancy_pants — “. . . MC cried wolf too often. He has wedged himself into a position to which he is now largely ignored – . . .” — See response to #89 Ret — same thing.

#110 disciple — “It’s a classic case of mind control, started early enough, and paired with peer pressure . . .” — See response to #89 Ret.

#132 Abitibi Doug — “A small minority of us, myself included, have glands that give us a massively supercharged dopamine rush from the awesome heavenly feeling of being debt free.” — Dopamania rush? Whatever! It sure feels good to realize no one controls us or tells us what to do!

#141 bigrider — “Nobody going to choose financial asset investing over hardwood and granite.” — Respectfully disagree. If our circumstances were to change from now, we would be more than happy to put a healthy sum into what Garth recommends, then rent a TH or condo.

#147 Nemesis — “Never mind, Garth – your ‘Squirrel On A Stick’ Recipes will, I predict, prove exceedingly popular/timely in the weeks and months to come…” — Is that with or without BBQ sauce?!

#156 VICTORIA TEA PARTY — “NOTHING IS TOO BIG TO FAIL!” and #154 TurnerNation — “What recession?” goes with #147 Nemesis’ last para., of how economics have become the latest politics. Don’t fall into the trap of believing the m$m at all.

#159 GregW, Oakville — Hi Greg. Interesting stuff. Thanks for the links!

#162 truth hammer — “Just what is behind this Machiavellian destruction of Canada anyway? Whats coming down the pipe?” — Hint: Harper, Rae and Mulcair are all self-professed zionists. Their duty is not to serve Canada, it is to serve someone else. Sheeple here are only to make the numbers up, that’s it.

#185 new_era — “Deal with it boys and girls!!!” — 1994 – lost, riots; 2011-12 – lost, riots. If the trend continues, it will be 2028-29, lost, riots. By then, the present jackasses should have been dealt with!

#211 Westernman on 04.23.12 at 6:57 pm

Disciple @ # 114,
Girls prancing around in one piece body suits?… Oh, you poor man – how awful! How will you EVER recover from the psychological damage done to yourself….
I suspected there was something preternaturaly wrong with you from your posts but this confirms it…

#212 Bigrider on 04.23.12 at 7:05 pm

Nonno Nicola

The stocka marcato is lika the thermometer in the assa of the economia.

Shesa telling you itsa sicka. Run a Bigg fever ci
Capito?
If da fever getta worsa no parta ofa da body including la terra can feela good.

#213 Westernman on 04.23.12 at 7:06 pm

Mister Obvious @ # 77,
The world is much poorer as a result. Really? As far as I can tell Frank Zappa was born, lived and died and the world was not changed, influence or affected in any quantifiable manner whatsoever..
People who invent real things like internal combustion engines, electric motors and so forth have impact on the world… dope addled guitar players do not…

#214 Form Man on 04.23.12 at 7:45 pm

#210 westernman

preternaturaly ? please provide the source and description for this word. I think you are addled with dope yourself…….

#215 Nonno Nicola on 04.23.12 at 7:54 pm

#211 Bigga Rider

“The stocka marcato is lika the thermometer in the assa of the economia.”

Nowa youa talking mya language Bigga Rider. Firsta, I gotta saya dat Nonno Nicola always tinka better after he drinka un gallono di vino… Ifa you gotta be in da stoca marcato, thena Nonno Nicola recommenda you a reada da booka by Stephen Jarislowsky calla The Investment Jungle. Youa gonna lika thisa booka Bigga Rider. Someone tella Nonno Nicola dat dis autoro, he a bigga shota billionairio. Nonno Nicola’s nipoto, he a reada me this a booka (I only go to a grada 5 but I maka da milioni, imagineo iffa Nonno Nicola went to grada 6 and could speaka da gooda Inglese…). I hopa da booka helpo you Bigga Rider. Nonno Nicola was in da Campania regione of Italia in Marzo to visit la famiglia. I gotta go now Bigga Rider, nonna she giva me da looka romantica if you a knowa what I meana Bigga Rider…

#216 Westernman on 04.23.12 at 7:58 pm

Form Man @ # 213,
Source? My people call it a dictionary… try looking under the letter ” P ”
You have heard of the dictionary… right?

#217 Nostradamus Le Mad Vlad on 04.23.12 at 8:01 pm


Trouble in Russian stock market? Europe sank today; Dutch govt. collapses; 16 bln. pounds in cuts and this. Idea is starting to look pretty good. Fire the govt., all politicos, lobbyists and have the HoP turned into a tourist arena! GM in China So much for the bailouts; Dutch PM quits; Dumping blns. into China That’s where all the jobs have gone; 5:33 clip Power companies exposed; Iran Disconnecting oil terminal after hack attack; Prostitution While economies tank, prostitution increases; Greece in depression. Makes sense to go to a barter system.
*
Put these two together — May and May. IF the US is busy scrapping with China in the SE Pacific in May, it paves the way for Ssshhhhhhh . . . U-Know-Who to attack Iran; Oblastit Using excuses to dumb us down here; Egypt No payments? It is their right to cancel; US Interference Now it’s SE Asia;
Ron Paul takes Iowa and Minnesota, ‘tho the m$m will never admit it; Live Long and Prosper in Somerset, England; Oppose Monsanto — Receive threats; UN seeks new powers to remake world; Pentagon’s Pain Ray “If the military is concerned about “negative propaganda” from the use of this weapon overseas, look for its ultimate refinement so that it can work in snow or rain; a shorter boot up sequence; and expect it to be used domestically in the United States.” wrh.com; Smoking Man — In case you missed the previous link; Scientists At last they have something right (banning chemicals), not GW. Eight inches of snow in Buffalo today, and the eastern seaboard?

#218 Easternman on 04.23.12 at 8:01 pm

#212 Westernman

Well put Westernman! I for one have never listened to Zappa and life has been just fine for me… All those who think being a dope head is cool can sleep peacefully tonight knowing that the drug cartels of Mexico are carrying out horrific and barbaric acts of violence against their own citizens all to keep the dope heads of the west happy and sedate.

#219 Bigrider on 04.23.12 at 8:07 pm

Nonna Nicola # 214 .

Nonno you maka Biggs impressianoni on me.

Stephen Jarislowsky, investment Jungle.. Yes I readable da book. So ting tells me u getta pasta grada 5.

Anyway grada 5 or a PH a D from a universitia or a papa hasa dough maka no differenza.

You millionara a la real estata cause u liva a Toronto at the righta time.

Ci stata fortunato nonno

#220 Kilby on 04.23.12 at 8:32 pm

While visiting my doctor today he said that there were over 29,000 listings in the Greater Vancouver area, hasn’t been numbers that high since 2008.

#221 Junius on 04.23.12 at 8:34 pm

#192 Anon,

I think as with most things it is all in the definition. You could make the argument that Vancouver has some World Class aspects including lifestyle and even some restaurants. However in economic and business it is not even remotely World Class.

This is where the description becomes laughable. Particularly in regards to the high cost of living and low wage environment.

#222 U-The Man on 04.23.12 at 8:52 pm

Hey Nonna bigga coolo you make me laugha..hahaha. Sella the reala estate to the HAM while you can….no more bigga baccala coming over to save reala estate after the crasha.

#223 The Thing in the Basement on 04.23.12 at 9:30 pm

165 penpal 192 anon

Vancouver is 22 in the global power index. Must be more going on there than we think

http://en.wikipedia.org/wiki/Global_city

#224 SE Asian Expat on 04.23.12 at 9:41 pm

@ #174 Dorothy

Nice one!

#225 Bigrider on 04.23.12 at 9:46 pm

# 221 U- the man.

Well u the man .

And by da way Nonno , only crooks are the f-kina ones bribing re powers that be to getta da permits for all a da f-kina cranes we see in this licka da bricks paesa.

#226 getreal-tor on 04.23.12 at 10:23 pm

#181 jess on 04.23.12 at 3:33 pm

You paparazzi… when are you going to stop photographing my home.

Isn’t that the Black Sea Palace? Nothing like some new Russian money to make up for the lack of culture in the past.

#227 look Out on 04.23.12 at 10:26 pm

Bring prices back to 2008!!

Garth in early 2008 you said to expect a 10-15% drop followed by years of lower decline. Going back to 2008 prices is still insane and renders your warnings (although I agree with the absurdity), well pointless.

Actually that was not what I said. But thanks for the pointless comment. — Garth

#228 John G. Young on 04.23.12 at 10:30 pm

#193 Van grrl on 04.23.12 at 4:47 pm

re #196 };-) aka DA on 04.23.12 at 5:20 pm:

“And don’t forget to bring your Lululemons.”

Inappropriate — but then what would you expect?

#229 TurnerNation on 04.24.12 at 6:59 am

disciple, I’ve never owned BPN.UN.

Another intereting one is Pizza Pizza trust. PZA.UN – had a massive run yet still yielding 6-7%? Pizza, these days a staple , is recession proof!

#230 disciple on 04.24.12 at 9:49 am

Pizza is God. I own this stock. For a long, long time, it was privately held. No Boston needed.

#231 Abitibi Doug on 04.24.12 at 10:31 am

@Bigrider, post #208:
I’m 51 years old and that’s long enough to observe many stock market cycles. For example in the recessions of 1981-81, the early 1990’s, 2008-09, as well as many stock market corrections there are ALWAYS doomsayers who say it will continue to go from bad to worse, and from then on even worse. Yet somehow, the economy and stocks always seem to recover and in hindsight those pullbacks represented a good time to buy. If you’re still worried, why not buy stocks of companies that produce or transport something EVERYONE uses like utilities? Everytime I use electric power to start up my computer to log on to this sad blog I worry about the future of this amazing, easily transported, and versatile form of energy. Similarly, every time I see or go to a petrol station or hear the gas water heater or furnace come on (which has happened many times as it is cold outside today) I worry about the future of pipelines. Now I will sign off and see if I can scoop up some more cheap dividend paying stocks. Say, what’s Northland Power (symbol NPI on the TSX) trading at these days?

#232 disciple on 04.24.12 at 10:38 am

#217… It’s not the drug cartels of Mexico that are responsible for the mayhem, it is the CIA and US Border Patrol that maintain the market and the artificially high prices through the FAKE War on Drugs. Nobody would willingly hurt their own fellow citizens on this scale. Nobody thinks being a dope head is cool. It’s just a handful of families that are responsible. As usual.

#233 bill on 04.24.12 at 12:21 pm

#212 Westernman on 04.23.12 at 7:06 pm
dope addled guitar player??? maybe not….
great American composer? gets my vote.

http://www.youtube.com/watch?v=aX1uBcMfBl8&feature=related

http://www.youtube.com/watch?v=a7Vi1zusI3s

http://www.youtube.com/watch?v=R0y23ga49fA&feature=related
http://www.youtube.com/watch?v=1LDIGL3vWCQ

#234 bill on 04.24.12 at 12:32 pm

disciple
frank zappa never did speak out against war?
well frank certainly did.
among other statements…
”star wars wont work…starwars wont work,the gas comes right through , it will get right on you …starwars wont work…and what about the germs….star wars wont work ,its a piece of shit etc.etc.” [from ”make a jazz noise here”]
my apologies if this isnt an accurate transcription I typed from memory.

#235 bill on 04.24.12 at 12:35 pm

#217 Easternman on 04.23.12 at 8:01 pm

please see: 232 bill on 04.24.12 at 12:21 pm

#236 disciple on 04.24.12 at 6:48 pm

bill, you’re always on my case…If you call that anti-war, then I’m the Easter bunny. And according to Wikipedia, Billy the Mountain was not anti-war, it was mindless gooble-dee-gok. You guys are really stretching the veil of deception really thin on this one so as not have to face the truth.

Why do you and others ignore the fact that Zappa and his buddies were raised on military installations? The whole fake Hippie movement was Co-Intel-Pro, if you care to look. Now you know and you have no further excuse to continue to delude yourself.