Emotional rescue

Hmm. Could this be a harbinger?

Last Friday, as I told you, the owner of a house in mid-town Toronto listed at $1.285 million flatly turned down an offer of $1.45 million. This was interesting for a couple of reasons. By the way, here’s the house:

It sits in a solidly middle-class area and has curb appeal. But it’s not an au courant reno – no bamboo floors or multiple shower heads that squirt you in shocking places – and the corner lot’s long and skinny. No ensuite. But a garage. And it’s in a prime area where new infills sell for two million.

As is now the fashion in demand hoods, the listing agent had it on the market for a week, presided over busy weekend open houses, set a time for offers (last night) and fully expected a frenzied auction. So did the owner. Hence the rejection of the advance offer, which was firm and unconditional. As it turned out, there were just three bidders and the place went for $1,412,000, or 110% of list. It was also a hundred less than expected.

Meanwhile three blocks away, this house also went under the hammer this week, with high expectations and a list price of $1.35 million.

It sold for $1.438 million, or 106% of list. As you can tell, it’s modern, sophisticated, and dripping with bathroom fixtures. Similar lot, garage, upscale street. But few bidders. Another four blocks away a two-year-old $1.44 million urban palace sold last week for (brace yourself) ten grand below the list price. Number of suitors: one.

Compare these sales with the one I described two weeks ago – a similar home, on a like Toronto street, in an equal pocket of nice houses. In that case there were 15 sweaty bidders. When the smoke cleared, the selling price which was 130% of list. Or that bung up the road in Willowdale, with 13 offers and a sale price that was 153% of what the vendor asked.

In fact, as in Vancouver and Calgary, there’s a growing sense this market is topping out. It has nothing to do with interest rates, since mortgages are still dirt cheap. None of the tougher mortgage regs expected to chill the market next winter have yet been implemented (more news on that tomorrow). The economy is still crawling along at the same glacial pace. The stock market’s taken no dump. In short, no pivotal events to keep a realtor tossing all night. Just a nagging question: is this it?

Could be, according to the latest numbers out Wednesday. The Teranet-National Bank Index showed single-family house prices down a tad for the third time in four months, with falling values in six of the country’s 11 major markets. Those decliners included Calgary, Edmonton, Vancouver, Ottawa and Victoria.

About the same time, Bank of Canada governor Mark Carney was sitting in the Railway Committee Room of Parliament’s Centre Block, telling a bunch of MPs house prices in Canada, relative to income levels, are now running 35% above normal levels. And while that was happening, the Conference Board dropped a report saying consumer confidence is plunging. Seems people are starting to worry a lot more about their job security, and family economic prospects. About time. Pigging out on mortgages, plastic and lines of credit have taken Canadians to unknown levels of indebtedness at the same time wage gains have dropped below the rate of inflation.  The cost of almost every essential – food, gas, clothing, motorcycle insurance – continues to climb, while salaries don’t. It’s a financial vise.

This is why house prices in Toronto can’t continue to rise 7% a year. As I said here months ago, it’s unsustainable. The Victoria market is now falling apart, Vancouver’s decline has started, and Calgary is stalled. Even along the streets of North Toronto, where virtually every home is worth a million, the winds have changed.

Ottawa and Blog Dog Carney want nothing better than a soft landing for the Canadian housing market. Creeping rates and tightening regulations are part of that strategy. So are all these debt warnings. Everybody knows when the average Van house is $800,000 and a SFH in 416 not far behind, that trouble looms. Prices in places like Winnipeg and Saskatoon should never have hit current levels. Average families have reached to extremes, shouldered bloated mortgages and swallowed more risk than they ever imagined.

It’s a dangerous time. Even in leafy Leave-it-to-Beaverville.

Some days ago a woman emailed me, saying she yearns for the time when this blog talks about buying, not selling. We are. Closer.

191 comments ↓

#1 jackfrost on 04.25.12 at 8:28 pm

First!!!!!!!!!

#2 northerner on 04.25.12 at 8:33 pm

Here’s Australia’s national sport.. give it a go!!!
https://www.investorville.com.au/

#3 gladiator on 04.25.12 at 8:36 pm

in TO it’s more like 7% a month nowadays.
buyers just swarm sellers like crazy.
April will be the best ever month in terms of sales.
RIP, common sense… We’ll miss you.

#4 TurnerNation on 04.25.12 at 8:37 pm

Garth, did she ask to see your yield curve?

They all do. — Garth

#5 Cory on 04.25.12 at 8:40 pm

Won’t happen. It all makes sense but the madness will continue as long as there is cheap and easy money to be had. Its that simple.

Until those conditions are changed/restricted as they should be the party will simply go on and on and on.

One would think though, that when we are becoming a focal point of world media, Canadian politicians and decision makers would want to avoid this since it could jeopardize investment in Canada (bonds for example).

Anyways, the party continues.

#6 Publius Enigma on 04.25.12 at 8:42 pm

I had hoped for some insight into the OSFI bomb your elfin friend is about to drop on CMHC.

Tomorrow?

#7 patiently_waiting on 04.25.12 at 8:42 pm

So I guess Bernanke and Carney must be talking…seems U.S. rate increases are not far behind.

http://www.thestar.com/business/article/1167601–rate-hikes-a-distant-prospect-for-more-upbeat-fed

#8 Nick on 04.25.12 at 8:52 pm

Garth, is it stupid for Canadians to hold some US dollar denominated long-term securities? Would the long-term erosion of USD vs CAD burn a hole in profits when selling and converting back to CAD?

Actually, long term, it will be the C$ sliding against the US$. — Garth

#9 mel in victoria on 04.25.12 at 8:55 pm

So what do you think? Time to do a bit of nibbling??

http://stockcharts.com/h-sc/ui?s=RGLD&p=W&yr=5&mn=10&dy=0&id=p58489255802

#10 Time to leave Canada for a better life on 04.25.12 at 9:06 pm

The housing ponzi is so huge that the crash will be worse then the US . Canadians have borrowed to the point of bankruptcy. They have no intentions of paying the money back. When the going gets tough the tough get going. I believe you will see people by the thousands and maybe even tens of thousands will hop on a plane and leave Canada( like they did in dubai ) . Mark Carney and his fellow CONs have ruined a generation of Canadians. Canada continues to lose jobs to low wage US as workers there can work for 50% less and live in the same type of home since houses in Canada cost TWO TIMES more then a US home.

#11 If CHMC increases ceiling I will. Orrow until bankrupt on 04.25.12 at 9:16 pm

If this stupid Canadian CON government doesn’t do the right thing all h__l will break loose. I will goto a bank or mortgage broker who will allow me to borrow as much as I can with as little down. I will borrow from every option I have and I will borrow until I go bust. Do it you F’n stupid CONs I will join the party but I will leave Canada the bill. If they do not pop this bubble we dogs should go out and borrow until we all go bust.

#12 Paolo on 04.25.12 at 9:26 pm

Greed then fear…

Maybe we have finally hit the point of critical mass.

And this before interest rates rise or tighter rules come into play.

I always bet on the herd mentality…

People are people, human nature.

Greed for 10 plus years followed by fear…

#13 Timbo on 04.25.12 at 9:33 pm

http://economicaldepression.blogspot.ca/2012/04/fukushima-update-scary.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+EconomicDepression+%28Economic+Depression%29

home prices would of been in free-fall if this had actually happened, and it almost did……

#14 Mike used to be in Leaside on 04.25.12 at 9:38 pm

Admit this is bragging, but at same time I always took your warnings seriously Garth. So in late 2009 we didn’t buy a SFH for $850k with 5% down, which the bank would have approved of course. Instead we bought a $950k triplex with 5% down and two tenants that carry 3/4 of the massive mortgage. Just in today, a C03 sale of nearby identical property at $1.450M. A bidding war also, but only 97% of a high asking.

Best paper gain I’ve ever made. If loving my home is wrong, I don’t want to be right !

#15 Sask Girl on 04.25.12 at 9:38 pm

I can’t wait for the day to come when I can buy here in Regina. It’s amazing how condo complexes are selling out at high speeds (not as fast as Van though) and most tiny and worn out one bedroom rentals go for at least $950 now.

I really hope the market here takes a dip along with the rest.

#16 Jenn on 04.25.12 at 9:41 pm

Whooaaa Just a few more days – house is looking pretty spiffy – cleaners are just leaving now – a few flowers needed to say we are cool – realtor taking pics in
the AM – paperwork signed – bring em on- the tulips are in bloom!! I’m ready to sell.

#17 SGIP on 04.25.12 at 9:45 pm

It will be so shweet to watch harper go down in flames with the market crash all wrapped up inside him with the election fraud and jet buying in exchange for cash bribes ect ect ect

.
.
.
.

http://Www.leadnow.ca

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#18 jas on 04.25.12 at 9:48 pm

Since we have records of written human history,
acts of stupidity have been broken till now and will continue to be broken…
The catalyst for such acts can be anything.
(It happens to be real estate in current times)

#19 Renting In The GTA on 04.25.12 at 9:50 pm

Keep on rentin…….

#20 Market Bull on 04.25.12 at 9:51 pm

There were 330 sales in the City of Toronto over $1million in the month of March, according to the latest TREB stats.

I bet there will be well over 300 more sales over a ‘mil’ this month too.

So I take it that there are still bidding wars, but that they aren’t as wild and crazy as last month, and that this means the market in Toronto is turning?

Keep dreaming.

#21 rosie on 04.25.12 at 9:52 pm

#11
You go first. We’re all right behind you.

#22 50% correction predictor on 04.25.12 at 10:02 pm

Who are these buyers? Doctors, Lawyers, Financial engineers? It would be interesting if someone could show us a real buyer. They can not be all HAMs. Could they?

#23 panopticon singularity on 04.25.12 at 10:02 pm

word through the grapevine is RIM will be cutting a large chunk of its work force in the coming months, ive heard numbers as high as 4000 people, which if true would devastate the k-w region. this is about to get interesting…

#24 Retired Boomer - WI on 04.25.12 at 10:08 pm

#10 & #11…..

WOW!! Such sentiment makes you look like very unsteady citizens. Too bad. Your country Canada, will need the gumption of good citizens to plug along through your field of CON bullshit. Yes, we here in the U.S. now face an incredible budget deficit left from an idiot-CON in charge for 8 years, and compounded by a 2nd idiot that seeks re-election this year.

We have 2 wars “temporary” tax cuts that have now lingered for 12 with no end in sight. Don’t bother to come here, you just might be in better shape than you think. We can’t seem to even balance the dam budget, forget about
trying to reduce our national debt mess.

Think we are alone? Look abroad, most western nations are running the printing presses for “cheap money.”
Thank the Banking class for enabling the idiots.

Payback is where it will get very expensive.

If housing is unaffordable, wait don’t buy into the bubble, look at the deals to be had here now, and they’re getting a little cheaper every month. Your turn will come like the proverbial thief in the night.

-good luck-

#25 Not 1st on 04.25.12 at 10:09 pm

Haha..Saskatoon and Winnipeg on the meltdown soon, but Regina is ok, right??

#26 Investx on 04.25.12 at 10:12 pm

Is this anecdotal evidence a reflection of reality? Stay tuned, folks!

#27 Smoking Man on 04.25.12 at 10:13 pm

#4 TurnerNation on 04.25.12 at 8:37 pm
Garth, did she ask to see your yield curve?

They all do. — Garth
………………………………………

I just got up of the floor, think I really broke a rib laughing my guts.

TurnerNation best one liner of the year,

#28 Mr Buyer on 04.25.12 at 10:19 pm

#11 If CHMC increases ceiling I will. Orrow until bankrupt on 04.25.12 at 9:16 pm
If they do not pop this bubble we dogs should go out and borrow until we all go bust.
……………………………………………………………………….
BUYER BEWARE. THE BUBBLE HAS TOPPED (Even in TO). NOW IS NOT THE TIME TO BUY A HOUSE. SALES ARE FALLING ACROSS CANADA AND A CRASH WILL SOON FOLLOW. As for abandoning the bear position in real estate I assumed by default due to an extended absence from Canada, why would I do that now? I had a student painting company with a few friends a hundred years ago (we were working for a guy that was hammered all the time and we realised we could do at least as bad a job as he was). Anyways we noticed that we were doing great work right up until the last day on some jobs and sometimes even the last hour only to have some silly mistake cost us an additional day or two. We committed to finishing with the same focus we started with and greatly minimized these lapses of concentration near the finish line. Years later a cousin of mine was in the dumps and was wondering out loud how he went so wrong. I said to him not to worry as it is not over yet and it is how you finish that matters most. I will not be purchasing a house for a few years. BUYER BEWARE. THE BUBBLE HAS TOPPED. NOW IS NOT THE TIME TO BUY A HOUSE. SALES ARE FALLING ACROSS CANADA. (I bet the guy that put in the winning unconditional bid did not expect to win and is sorry about it now)….The bubble can not be managed apart from initiating it and possibly re-inflating it a few times but when the end is apparent there will be the usual rush to the bottom.

#29 Tom on 04.25.12 at 10:20 pm

Although Garth often sounds like a broken record, he will someday be right, to some extent. I have two places which i call home and have a for sale sign or two next door in both places. Price reductions and realtor changes on both and still no sale in months. The weird thing is that vacant building lots are selling fast and tough to find. I guess lots of small and medium sized builders still think they can make a buck in this market??

#30 45north on 04.25.12 at 10:25 pm

Timbo: Fukushima : Arnie Gundersen warns about the possibility of a collapse of the nuclear storage pools. It’s just about the worst thing that you can imagine.

http://www.fairewinds.org/

#31 Mr Buyer on 04.25.12 at 10:26 pm

I mean really. Think of the logic of a soft landing. Purchasing at inflated prices that are guaranteed to fall for an extended period of time and will likely never rebound to the similar inflated level within the life span of the house itself. Where is the logic there? I suspect the bubble initiators knew this going in and decided they just have to make up some story about a fictional soft landing that has some how been thwarted.

#32 Smoking Man on 04.25.12 at 10:27 pm

Why we have bidding wars.

Been Crippled By Intellectual Idiots?
By Brandon Smith from Alt-Market

Wish I could write like this guy, wink

As far back as I can remember, the overarching message of the American social atmosphere has been one of idolization. Oh to one day join the ranks of the “professional class”; that 5% to 10% of our culture which enjoys unparalleled respect and an assumed position of knowledge, so much so that they are rarely even required to qualify themselves to anyone besides their own compatriots. The goal of every person I knew during my formative years with a desire to succeed was to one day hold in their hands an official looking embossed document announcing their ascension to the ranks of the intellectually anointed. I was never so keen on the idea…

Why to long for on here.

Can read the rest here , the writer did a great job.

http://dyslexicsmokingman.blogspot.ca/2012/04/has-america-been-crippled-by.html

#33 Canadian Watchdog on 04.25.12 at 10:27 pm

Want to know where our banks are heading next to avoid any rules, guidelines and regulations imposed by OSFI, Flaherty et al?. Search no more as this weekend you can register for $1,799 to be informed on how to play the latest greatest hyper-speculative OTC market regulated by, well.. nobody.

(Don’t forget to read the fine print at the bottom that reads: Media Advisory: No media passes available; no on site media coverage is permitted.)

OTC Derivatives Regulatory Reform: PDF http://www.infonex.ca/1016/1016.pdf

“Going beyond speculation and clarifying timelines: preparing for what is imminent in over-the-counter derivatives reform.”

That’s right, to boldly go where no Canadian investor (including banks) has gone before, because now, instead of insuring pooled mortgages with CMHC or private insurers like Genworth (whose CDS is now trading with a 43% chance of default within five years) , banks and the gang can do it themselves into perpetuity with credit default swaps! Of course, who wouldn’t want to make excess profits off Canadian mortgages going underwater, like duh.

If you’re in Quebec, congrats. You’re the latest to have access to bet on Canada’s housing collapse: http://investor.marketaxess.com/phoenix.zhtml?c=176475&p=irol-newsArticle&ID=1686418&highlight=

And for those who missed it, here is the PBS documentary explaining how banks use credit default swaps to hide losses and profit from underwater mortgages. This is not a doomsday video, this is real. http://www.pbs.org/wgbh/pages/frontline/money-power-wall-street/

Remember, if you have a mortgage, you only ‘think’ you own your home.

#34 Mr Buyer on 04.25.12 at 10:29 pm

#20 Market Bull on 04.25.12 at 9:51 pm
Keep dreaming.
…………………………………………………………………….
Best of luck over the coming weeks, months and years. The bubble has topped. BUYER BEWARE.

#35 Uh Oh Canada on 04.25.12 at 10:31 pm

I’ve lived in both Vancouver and Toronto. Can’t believe both city houses go for a million and plus. During my time in each place, I wouldn’t even pay half a million to live in any Vancouver specials or narrow TO houses. We have reached the point of insanity.

Greed only ends up with one result- disaster.

#36 Market Bull on 04.25.12 at 10:39 pm

England falls into recession. PM Cameron vows to keep interest rates low.

http://www.thisismoney.co.uk/money/news/article-2134870/UK-lurches-recession-0-2-GDP-fall-signals-double-dip.html?ito=feeds-newsxml

Australia looking at sizeable rate cut: http://www.businessspectator.com.au/bs.nsf/Article/CPI-opens-way-for-sizeable-rate-cut-ACCI-TNAPP?OpenDocument

Canadian dollar going throught the roof, and this just in:

“Federal Reserve Chairman Ben Bernanke on Wednesday said the U.S. central bank “would not hesitate” to launch another round of bond purchases to drive borrowing costs lower if it looked like the economy needed it.”

http://www.bnn.ca/News/2012/4/25/Fed-sticks-to-late-2014-rate-hike-time-frame.aspx

#37 Smoking Man's Psychiatrist on 04.25.12 at 10:43 pm

#161 Smoking Man

“Kale. Maybe your new here. I had a Near death expence , had a tour of the universe. Went throught the universal consiounes consolidator”

Now, now, Smoking Man. Let’s put down the keyboard and get ready to put on your comfy little straight jacket. Time to go beddie bye bye in the nice little rubber room. You can talk to your blog dog buddies tomorrow…

#38 Bubble Boy on 04.25.12 at 10:54 pm

#14 Mike Used to be in Leaside

Congrats Mike on your $500k paper gain! As the bearded oracle that runs this blog would say, crystallize those gains, capital gains tax and all. Your point should be noted by other blog dogs. There have been a select few in this low interest rate madness who have invested in real estate and made large gains in the last decade. Not everyone has gorged on consumer debt. Some like Mike have made great gains in this low interest rate environment. Mike’s gains are miniscule to what some have made

#39 squidly77 on 04.25.12 at 10:58 pm

Canadian Watchdog on 04.25.12 at 10:27 pm

Powerful stuff man.

Mortgage owners only own debt. Not houses.

#40 Devore on 04.25.12 at 11:02 pm

#36 Market Bull

That’s great, but while we know low cost of money has served to fuel the bubble, we also know a rising cost of borrowing is not necessary to end it. You’re grasping at straws.

#41 squidly77 on 04.25.12 at 11:02 pm

Canadian Watchdog on 04.25.12 at 10:27 pm

Wow! Upon further reading, where do you get that stuff.

A crime in the making.

#42 Yb on 04.25.12 at 11:05 pm

But there was an article a few days ago that said Toronto’s housing price continues to rise and won’t drop for the next couple of years. We been waiting and waiting til the day finally comes like you been saying but when is the price dropping ?

#43 torontonian on 04.25.12 at 11:13 pm

yeah but unlike vancouver and calgary toronto actually has a real economy.

#44 Monster Cookie on 04.25.12 at 11:18 pm

Interesting premise by Jim Sinclair theorizing that gold could pop to $3k/oz due to a paper short squeeze while trying to cover in physical delivery where owners of physical will not sell since most are not traders, they’re mainly long term holders guarding against inflation, so the whole paper market could cause the physical gold price to rise on June 28 when China starts transacting in gold with Iran for purchases of oil since that’s the date the US will block transactions with the SWIFT system.

The US’s embargo on Iran will be the trigger that once again sets gold at the forefront of international money untouchable and uncontrollable by western dickheads, ehm, politicians and bankers.

http://www.jsmineset.com/2012/04/25/sinclair-shorts-now-trapped-gold-could-gap-up-to-3000/

#45 Calgary's OK on 04.25.12 at 11:27 pm

I am having a hard time believing in stories about sellers refusing firm offer on the property listed for sale. I don’t know how it works in Ontario, but if the seller refuses to close the deal after receiving unconditional offer in writing at listing or above listing price in Alberta, the seller is obligated to pay listing realtor full commission (from the point of view of a Realtor the house was sold). This condition is specified in every standard listing contract and basically ensures that the seller is serious about his intentions to sell the property and RE agent is getting compensated for the work (however little) he or she has done. I wouldn’t imagine it would be different in any other provinces, including Ontario, otherwise half of the time RE agents would be working for free. Anybody from Ontario can clarify how it works there? Just to be clear, I am talking about normal RE contracts with licensed Realtors listed through MLS, not funky “sell it yourself” kind of deals.

#46 Al on 04.25.12 at 11:31 pm

We still have the majority of sales over asking price in the GTA.

#47 Blasé on 04.25.12 at 11:45 pm

but Garth, Calgary doesn’t have a housing bubble; oil justifies the price. (the argument of certain realtors in cowtown)

#48 Smoking Man on 04.26.12 at 12:02 am

#37 Smoking Man’s Psychiatrist on 04.25.12 at 10:43 pm

Teachers so predictable

#49 Ex-Cowtown on 04.26.12 at 12:06 am

GT – Youa re so wrong I can’t believe it.

My motorcycle insurance dropped this year. Get with the program.

#50 thinker on 04.26.12 at 12:11 am

Garth, I think just that people are getting paid only stupid prices and not super stupid prices doesn’t indicate an end. I believe we still have a few steps grow a) non cmhc loans growth b) The Vancouver “mortgage helper” will move to Toronto to help c) Jobs are still strong. Until we see that all out of whack, then prices can down. Rates move up by even 1%, people will still reach. But no job, rates can be 0% and prices will still drop or the leverage knob goes down.

#51 Furst on 04.26.12 at 12:12 am

FuRsT!!!! YeAh!! Who misses me?

#52 Furst on 04.26.12 at 12:16 am

#32 Smoking Man: Don’t worry, one day you will be part of the professional class. Just work hard, focus and pay your dues. It will eventually happen. don’t give up hope my friend.

#53 Canadian Watchdog on 04.26.12 at 12:17 am

#36 Market Bull

You honestly believe the banks give a crap about your RE investment? These are TBTF banks that profit by creating and destroying entire industries in a two wager market. That’s why you heard Ed Clark say ‘Yes, regulate us, please tip the housing market off a cliff, so we can profit even more!’

Oh let me guess, you’re still convinced that Canada is isolated from the world, including countries you just mentioned above (whose house prices are falling), or if I remember correctly, when Vancouver sales started going south, you said Vancouver was an “anomaly.” Is it now?

Keep touting the average price headline because at this point it makes no difference, as even Vancouver gone wrong alone will pull the plug on the entire housing market and force the banks to retreat on lending across the board. Why? BECAUSE ALL LIABILITIES FALL ON THE BANKS’ AND CMHC’S BALANCE SHEET. And with the amount of leverage they hold it only takes a national 15-25% correction to wipe out their equity to insolvency.

But yes, our banks and CMHC will be bailed out, and yes Carney may even drop rates to 0%, but that’s still irrelevant, because once they print more money and send Canada’s debt-to-GDP over 90%, you can be assured (now that Canada is a full blown OTC derivatives member) the hedge fund hyenas and bond vultures will circle and prey on Canada like they are with Europe, leaving our government to impose draconian austerity just to stay solvent—something you might want to think about for your kids’ future, if any.

It’s too bad you told everyone your retirement plan is all tied up in RE. Good luck with that.

#54 Harlee on 04.26.12 at 12:21 am

#43 torontonian
“… toronto actually has a real economy.”
Based on what – Financial institutes ? Manufacturing?
How 2011….

#55 BC Bring Cash on 04.26.12 at 12:29 am

On this Blog we hear words about the fragile recovery from H and of course their is a recovery happening in the US. How about the fact that officially according to US data the recession ended in 2009. How is it that at the height of the recession there were only 35 million Americans on food stamps. Today 3 years later and deep into recovery America has 45.5 million Americans receiving food stamps. My guess is that the so called recovery is phony.

http://www.silverbearcafe.com/private/04.12/fog.html

#56 getreal-tor on 04.26.12 at 12:33 am

http://www.realtor.ca/PropertyDetails.aspx?PropertyID=11801864&PidKey=1473156452

Virtual Tour – http://gpphotoca.zenfolio.com/p947535771?slideshow=1

Here is the pictured property… What Garth failed to mention is that the property included a Broan Hood Fan & Warmer Rack which easily drove up the price. :)

#57 fiendish Thingy on 04.26.12 at 12:34 am

Would the long-term erosion of USD vs CAD burn a hole in profits when selling and converting back to CAD?

Actually, long term, it will be the C$ sliding against the US$. — Garth

Garth, when you say long term, do you mean months, a year, or years (2,5,10)?

#58 getreal-tor on 04.26.12 at 12:43 am

http://www.realtor.ca/PropertyDetails.aspx?PropertyID=11823745&PidKey=-539659560

This “as-is” handy man special sold for $451,000 after being listed at $299,900 – 150% List after 5 days on the market.

Seems like speculation is still rampant.

#59 Ben on 04.26.12 at 1:13 am

#10 Time to leave Canada for a better life

Canada continues to lose jobs to low wage US as workers there can work for 50% less and live in the same type of home since houses in Canada cost TWO TIMES more then a US home.
——————————————————–
Excuse me, I left Canada for the U.S. because my salary is double what it was in Canada and the cost of living is half. Less then half if your talking housing.

#60 Canadian Watchdog on 04.26.12 at 1:19 am

S&P Drops Ontario Outlook From Stable To Negative http://www.theglobeandmail.com/report-on-business/sp-drops-ontario-outlook-to-negative-from-stable/article2414068/

It’s coming Ontario…

#61 Riding the Pine on 04.26.12 at 1:42 am

The Canadian housing market will be nothing more than a squished ant under the foot of the failing world economy. Regardless of what banks and government do in Canada, we are mere bystanders to what happens with China, Europe, US. Maybe those that keep their house with little debt will at least have a tangible asset when the world economy goes sideways. I hear prices are dropping in TO ;)

#33 Canadian Watchdog:
Big Canadian banks are already exposed to the derivatives market – RBC over 5 billion. Is this digging the hole deeper?

#44 Monster Cookie
China, Russia, Japan, Iran are all moving away from the US dollar standard. That’s some bold writing on the wall.

#62 Scott in Gibsons on 04.26.12 at 2:13 am

Why worry about it? House prices can’t fall any more than 15%, and if they did, it would take years to happen. Garth is slipping into the “doomer” camp.

#63 Ralph Cramdown on 04.26.12 at 3:00 am

Interesting premise by Jim Sinclair theorizing that gold could pop to $3k/oz due to a paper short squeeze […] The US’s embargo on Iran will be the trigger that once again sets gold at the forefront of international money

Yeah, because we all know that the government of Iran, desperate for money to, you know, do stuff and buy things, is just going to sit on the gold that they receive. Why can’t metalheads just stick with a straight supply and demand story instead of the continuous conspiracy theories? How’s that JP Morgan silver market thingy working out?

#64 jay on 04.26.12 at 3:28 am

The BMW’s are in next door which means realtors and another listing on the DWI (Dog Walk Index). Across the street has let his listing agreement lapse, down the street has a shiney “New Price” badge on the sign – dropped it 50K still 200k too high.

Over a million in Victoria and you are going to be very lonely. Apparently the Feng Shu is bad…we are on the testicles of the dragon. So no HAM for us.

Most importantly, Victoria – even me – does not make anything or generate much wealth. My clients are in Vancouver, Calgary and TO (thank God I’m not). The market here is boomers trying to sell to snow bound boomers so they can downsize. But a million bucks buys a big house here and the downsized boomers don’t need them.

Supply meets demand, price feels faint.

#65 betamax on 04.26.12 at 4:10 am

#22 50% correction predictor: “Who are these buyers?…They can not be all HAMs. Could they?”

According to a very successful realtor I know, they’re largely move-up buyers who take the bubble profit from their bungs, townhouses and condos and plow it right back into more expensive housing, all the while congratulating themselves on their keen financial acumen.

The thinking goes: why restrict yourself to double-digit appreciation on a place worth half a mill when you can borrow to the max and get double-digit appreciation on a million plus?

The fact that they have also greatly increased their indebtedness bothers them not, because everyone knows prices will go up forever. The fact that they can barely make the payments also isn’t a problem, because HELOCs are readily available for life’s little emergencies like renos, vacations, groceries and gas.

If you wonder what they look like, picture a middle-class noob gambler, flush with first winnings and a comped night at the casino hotel, convinced of their genius and ready to lose it all the next day.

#66 House on 04.26.12 at 5:18 am

Actualy according to CP Markie told the Committee things were “improving”, no doubt after a long sitdown with Jimbo. So if that’s what Markie is telling the people, looks like it’s back to the binge and no rate increase for two to three years. It’s all in the interpretation I guess.

#67 jess on 04.26.12 at 7:20 am

#13 Timbo
and don’t forget about space hurricanes (cme’s) which can take out the grid.
http://solarscience.msfc.nasa.gov/SunspotCycle.shtml

#68 Dontcallmeshirley on 04.26.12 at 7:26 am

#33 Canadian Watchdog

OTC Derivatives Regulatory Reform: PDF

—–

This seminar is talking about setting up a central clearing function for derivatives, defining manipulation, requiring counterparties to prove collateral.

These are good things vs the current OTC setup.

#69 cb on 04.26.12 at 7:30 am

oh god,

here goes puff daddy again on another “anti-teachers” rant lol

#70 John on 04.26.12 at 7:38 am

Mark Carney ( if the discussion forces his inclusion) talks about ratios to income levels.

If we want to do that, the most important factor of all…is jobs. That’s the economy.

So what about it? Look south of the border in “service sector hell”. You can’t suck and blow at the same time. The Fed issued bonds to China in a deal that ended up in cheap labour, a destroyed manufacturing sector, blown-out competitiveness, and a systemic way to drive the GDP to 72% consumption.

That party is over. If anyone thinks it isn’t, go ahead and lay out the argument.

Better yet, expose what “jobs” North Americans might use to pay for the bank debt grab. Wait…maybe the bank isn’t in controlled debt saturation plan. Let’s all pretend. Back up. So what jobs would North Americans be using to pay for their “home investment”.

The answer is very clearly spelled out and available on the net. And almost none of it is “opinion”. What I’d like to hear is a counter-argument.

High corporate profits is a dud. I wouldn’t hold my breath on hearing a legitimate argument regarding that, so lets move on to jobs.

What is Mark Carney talking about? What constitutes a Canadian’s income? What could we expect regarding the impact of global movements on his income?

Carney is irrelevant. Time to move on to what’s relevant and build real solutions based on reality.

#71 jess on 04.26.12 at 7:41 am

44 Monster Cookie
Since Japan’s reactor problems I wonder how the Iranian people feel about this form of energy?
—————————-
San Marino has a population of about 30,000 and claims to have been an independent republic for the last 1,700 years, making it the world’s oldest.

So how does it achieve such efficiency and wealth?
Money laundering never seems to get a downgrade.

according to wiki: The country’s economy mainly relies on finance, industry, services and tourism. It is one of the wealthiest countries in the world in terms of GDP (per capita)

#72 John on 04.26.12 at 7:55 am

Look… ( link below) Tridel, The Toronto Star and the banksters are using their advertising program as “content”. Nice editorial room koolaid going around. Uhh..it’s the “business” section. Nice.

Speaking of jobs, let’s talk about the educated, liberated, “protected” 34 year old, hard de-polarized single woman living on the 29th floor of a Tridel-Bankster Fantasy Tower, with “virtual” “consierge”.

She’s added $395,391 to the Banker Debt Saturation Scheme. Three of her breaks a million.

Nah, forget that. Let’s actually look at her income. Nah, that’s bank fakery. Let’s look at her JOB.

Oh Canada.

http://www.thestar.com/iphone/Business/article/1167414

#73 KL on 04.26.12 at 8:03 am

#57 fiendish Thingy on 04.26.12 at 12:34 am
Would the long-term erosion of USD vs CAD burn a hole in profits when selling and converting back to CAD?

Actually, long term, it will be the C$ sliding against the US$. — Garth

Garth, when you say long term, do you mean months, a year, or years (2,5,10)?
——————————————————————-

Garth is good at predicting. Just not good at telling you when it will happen…..
5 years and counting

#74 TurnerNation on 04.26.12 at 8:11 am

“$8.7B Pulled in 1 Week, $500B in 5 Years from Stock Funds
By Tom Steinert-Threlkeld

Investors have now yanked almost $30 billion this year from mutual funds that invest in U.S. stocks, according to the Investment Company Institute. And $500 billion since the start of 2007.|

#75 CTO on 04.26.12 at 8:16 am

#43 torontonian

What?
As a person living and working in GTA.
There are a few thousand bankers and service providers! The rest are all employed in:
building condos,
unemployed or
under-employed working at shopping malls!
But be rest assured they will all try to imitate the few actual rich people. And why? Because they can with 2% mortgages and helocs galore!

#76 Carney and CONs to bankrupt Canada...one Canadian at a time on 04.26.12 at 8:21 am

Canada is on its way to going bankrupt. People have borrow sums of money that will never paid back. Wages are frozen or falling and many companies are closing shop to move to cheaper wages. People continue to borrow on their HELOC for everyday expenses and in some cases to pay their mortgage. We have all heard the stories of those buying automobiles ,taking vacations, doing reno’s and even buying condos and all with money they don’t have all thanks to HELOC. The amount of fake jobs is another factor which will hit Canada hard. Mark Carney and the CONs have planned to bankrupt Canada..one Canadian at a time? It sure looks like that.

#77 Victor on 04.26.12 at 8:25 am

“I wouldn’t characterize the possibility … that it may become necessary that some of the considerable policy stimulus in Canada may need to be withdrawn … as hitting the consumer with a two-by-four,” he added, repeating a description used by Ottawa-area Senator Mac Herb.

http://ca.finance.yahoo.com/news/carney-plays-down-impact-possible-212629513.html

======

Soothing words from C.

#78 The American on 04.26.12 at 8:28 am

Another false notion Canadians have… Most jobs in the U.S. pay MORE than the equivalent job in Canada, yet cost of living in the U.S. is significantly cheaper. Jobs in the U.S. typically DO NOT PAY LESS. This is a contributing factor why so many Canadians have left Canada for the U.S. as a percentage of Canada’s population.

#79 eaglebay - Parksville on 04.26.12 at 8:56 am

#43 torontonian on 04.25.12 at 11:13 pm
“yeah but unlike vancouver and calgary toronto actually has a real economy.”
_____________
Ha, ha, ha, ha, ha, ha…

#80 disciple on 04.26.12 at 9:28 am

I live in a world of fantasy,
So keep your reality away from me.
I see what I want,
I want what I see,
And that is all okay by me. – Itzah C. Kret

#81 Low Interest Rate Louie on 04.26.12 at 9:33 am

What seems to be missing in all of these discussions on the low interest rate environment we have been basking in for the past decade is that there are some who have used these low rates to invest and make money. Leaside Mike in today’s posts is an example. There are two sides to the low interest rate coin and the banksters never put a gun to anyone’s head to gorge on debt.

#82 };-) aka DA on 04.26.12 at 9:39 am

In this age of the internet everybody is a real estate expert and, apparently, clairvoyant too. };-)

#83 ThiNg on 04.26.12 at 9:42 am

Garth (and other blog dogs),

Where is personal responsibility in all of this mess? I don’t understand how people can just take on $400k ++ of mortgage debt just because it’s available. When did we lose all self control?

#84 Inglorious Investor on 04.26.12 at 9:46 am

What’s even more disturbing about the sale of that first house is that the mother duck in the photo was the advance bidder.

(I guess almost anyone can get pre-approved these days.)

Mother Duck took her brood of disappointed ducklings and waddled away in disgust. She was heard grumbling under her breath, “Qü@çk qü@çk qü@çk qü@çk…”

#85 disciple on 04.26.12 at 9:56 am

I have the power to rescue you emotionally from the mind-controlling power of the greatest hoax ever: Christianity, one of the last of the great Roman inventions…
http://xdisciple.blogspot.ca/2012/04/christianity-was-roman-invention.html

#86 Kris on 04.26.12 at 10:06 am

Garth, the first picture on this linked page seems like a worthy candidate for your blog entries. Perhaps a metaphor for the Cdn consumer bloated with debt?

http://www.bbc.co.uk/news/science-environment-17829665

#87 Renting in Regina on 04.26.12 at 10:09 am

#25 Not 1st

I fear it may get worse. People are moving here for jobs at the refinery. I’m seeing so-so places being listed for $600,000+. Rentals, are nearly non-existent. The city has one of the lowest vacancy rates in the country.

Here is a blurb from the City’s latest press release

“With our current economic situation, we are experiencing unprecedented prosperity in our city. However, this impacts the availability of adequate housing for our residents,” said Mayor Pat Fiacco. “In public focus groups and surveys conducted by the City through the Design Regina process, housing consistently was identified as an urgent priority for citizens. We need to ensure we are doing all we can within our purview to ensure people from all walks and stages of life are welcomed to live in Regina.”

http://www.regina.ca/press/news-and-announcements/city-to-develop-a-municipal-comprehensive-housing-strategy/

A link to a story about the vacancy rate:

http://regina.ctv.ca/servlet/an/local/CTVNews/20111214/sask-vacancy-rate-111214/20111214?hub=Regina

#88 Canadian Watchdog on 04.26.12 at 10:16 am

#61 Riding the Pine

RBC $5 billion? LOL Try $7.6 Trillion. http://i48.tinypic.com/2dhe48x.png

#68 Dontcallmeshirley

You just said it, ‘defining manipulation.’ What comes first, the game or the rules?

#89 Tyredandboard on 04.26.12 at 10:22 am

“Ottawa and Blog Dog Carney want nothing better than a soft landing for the Canadian housing market.”

What is a “soft landing” anyway? Is that when housing slowly erodes to high inflation over 20 protracted years, only finally reaching stability in 2030? That doesn’t sound that great to me or other people trying to own in their lifetimes. How about we raise mortgage rates already and pop this thing like those lucky SOBs south of the border, who can now actually rebuild.

#90 Ralph Cramdown on 04.26.12 at 10:25 am

Where is personal responsibility in all of this mess? I don’t understand how people can just take on $400k ++ of mortgage debt just because it’s available. When did we lose all self control?

The DEMAND for bad loans has always and everywhere been more or less infinite. The lender’s job has traditionally been to limit SUPPLY by saying ‘no’ a lot. Oh look RBC has a new credit-ish card that lets you borrow $40k interest free for six months.

#91 FTP - First Time Poster on 04.26.12 at 10:27 am

Actually, long term, it will be the C$ sliding against the US$. — Garth

Based on what metric? I don’t see a single thing, other than the US having the “global currency” status going for it – and even that will come to an end. Numerous countries including China have starting making the move away from the USD. It’s manufacturing base has been decimated, $1 Trillion in student loans outstanding (with a 25% default rate), more money printed and spent by the US Gov’t since Bush than in the combined history of the republic, record debt. We’re not witnessing a recession in the US, we’re witnessing the collapse of an empire. It’s happened before and will happen again.

#92 cory on 04.26.12 at 10:31 am

#56 Getreal-tor

That is a very nice house. I could see how there would be a bidding frenzy. Double car garage in the city is so rare. Thanks for posting.

#93 };-) aka DA on 04.26.12 at 10:35 am

#83ThiNg on 04.26.12 at 9:42 am
Garth (and other blog dogs),

Where is personal responsibility in all of this mess? I don’t understand how people can just take on $400k ++ of mortgage debt just because it’s available. When did we lose all self control?

Don’t worry about it. Think of it as a survival of the fittest thing. It can give you a competitive advantage if you don’t fall victim to it yourself. Darwinism in a modern context. As smoking reduces smokers so too can debt debtors. };-)

#94 disciple on 04.26.12 at 10:45 am

Here is that ultra right-wing mind control thinktank, The Fraser Institute, trying to stay relevant. Thanks for telling us what we’ve known for years now…

http://www.torontosun.com/2012/04/26/canadians-pay-more-in-taxes-than-basic-necessities-report

#95 Dr. WAYNE on 04.26.12 at 10:47 am

The other day Carney said things were stabilizing and household debt was moving to a more positive position … while last week or so he said household debt was going to create a big real estate problem. Which is it … flip, flop. I don’t think even this guy is sure what’s going on.

#96 Victoria on 04.26.12 at 10:50 am

My husband, who is French, was speaking with a friend – a lawyer in Paris.

He says that many people are now thinking of buying property in Canada or even trying to immigrate because it is a “safe” country . They are worried that the socialists mights get in in France.

#97 This is Wonderland on 04.26.12 at 10:53 am

#57 fiendish Thingy

I would think for a real return you are looking at 10+ years.

#98 Bottoms_Up on 04.26.12 at 10:57 am

#22 50% correction predictor on 04.25.12 at 10:02 pm
————————————————-
Exactly. The people that actually have that type of coin don’t have time to be house shopping and getting all wrapped up in bidding wars. I think that is pretty telling.

#99 Ydnew on 04.26.12 at 11:00 am

In our old neighborhood, the list on house prices on unextended properties are roughly at where we sold two years ago, BUT they have had a ton of money put into them – new bathrooms and kitchens, etc. Houses with dug out/underpinned basements and extensions are correspondingly dearer, but not a huge premium on the cost of improvements (especially if you factor in a salary for the “investor” and carrying costs).

So, maybe house prices may seem to have risen, but the quality of the houses has, too. Apples are being compared to oranges. Not the same thing at all.

Here, two liters of gas each way, above the 401 and where we have been renting for the past two years, things are getting interesting.

Despite the breathless urgings of agents claiming that vendors are getting the Best. Price. Ever! house listings have doubled in the past year while selling at the same rate.

#100 Bottoms_Up on 04.26.12 at 11:06 am

#65 betamax on 04.26.12 at 4:10 am
——————————————
That is probably the logic a lot of them use…however it can (and will) work in reverse.

I would rather be in a $250,000 townhouse that loses 20% ($50,000) than a $750,000 SFH that loses 20% ($150,000). There is also the regular payment difference in property tax, heating, hydro, maintenance that never goes away…..

#101 Bottoms_Up on 04.26.12 at 11:12 am

Ontario’s finances….boy are we screwed (check out the graph, public finances essentially fall off a cliff):

http://worthwhile.typepad.com/worthwhile_canadian_initi/2011/03/ontarios-public-finances-a-fiscal-primer.html

#102 Ralph Cramdown on 04.26.12 at 11:14 am

[The US] manufacturing base has been decimated,

You’re not confusing manufacturing employment with manufacturing output, are you? The US still makes an awful lot of stuff, but manufacturers are more efficient. Check the figures, and google for charts.

#103 johnny5z on 04.26.12 at 11:26 am

I’ve heard that “builders will build as long as lenders will lend.”

Perhaps that should be revised to “people will borrow (with bank encouragement) as long as lenders will lend.”

#104 45north on 04.26.12 at 11:34 am

disciple: I have the power to rescue you from the greatest hoax ever:

too late

#105 ANONYMOUS on 04.26.12 at 11:51 am

My lady friend who just bought a 2nd-floor condo at ‘Waterfrontcondo’ for $310,000 asked me if in 20 years when here mortgage is finished, will it be worth $1 Million.

i told her that with the rates that home prices in the GTA are rising, that her place will be worth $1 Million in 10 years time, never mind 20 years.

Look at it this way: in 10 years time our interest rates will be 1% lower than they are now, we will have another 5 Million new immigrants living in the GTA and all of them need a place to live, so its a NO-BRAINER that her place will more than tripple in value over the next 10 years.

But this is what I told her also: “Don’t think of it as an investment, instead look at it this way: You are paying in mortgage and maintenance feels LESS than what you would have been paying in rent for the same place, so in 20 years if you were to rent a same place then at the end of those 20 years you would have paid EXACTLY THE SAME AMOUNT either way. The only difference is that this way at the end of 20 years you get to KEEP your rental place and only pay the maintenance fees as your new rent, which will be substantially LESS than any possible rent on any place will be at that time. And if worse comes to worse, you can always leave Canada and move back to Europe to your native homeland and let the Canadian Taxpayers be on the hook for the amount you owe, you know, like the foreigners in Dubai did when they couldn’t keep up with their payments. So relax, don’t worry, enjoy ! ”

That’s what I told her and she was much happier after that.

#106 GTA BOY on 04.26.12 at 11:52 am

Flaherty moves to tighten CMHC supervision

http://www.cbc.ca/news/business/story/2012/04/26/flaherty-budget-update.html

#107 Makavelli on 04.26.12 at 11:55 am

#43 torontonian on 04.25.12 at 11:13 pm
“yeah but unlike vancouver and calgary toronto actually has a real economy.”
_____________

Toronto has idiots that spend massive amounts of money on the Maple Leafs. $300 a seat for nosebleeds will keep the owners laughing.

#108 Dontcallmeshirley on 04.26.12 at 12:05 pm

Does anyone have a link to the text of Flaherty’s budget implementation bill this Thursday morning?

Canadian business journalism is horrible, they don’t clearly explain what’s in the bill.

The only things for certain are
1. OSFI is now in charge
2. covered bonds can’t use insured mortgages as collateral
3. CHMC did not get their insurance limit raised

It’s also implied that CHMC may no longer be doing portfolio insurance. That would be significant, if true.

#109 Anonymous on 04.26.12 at 12:14 pm

Oh God, my mind must be slipping!
Just look at how many spelling mistakes I made in my last posting !

Sorry about that everyone!

#110 Canadian Watchdog on 04.26.12 at 12:43 pm

Here it is… Flaherty cites Toronto condos as need for CMHC oversight

http://toronto.ctv.ca/servlet/an/local/CTVNews/20120426/mortgage-cmhc-bill-fed-toronto-condo-120426/20120426/?hub=TorontoNewHome&cid=top

“Flaherty said the booming condo markets in Canada’s major cities were at the core of the decision.”

Now why would F link CMHC to Toronto condos? You got it, because the entire condo market is about to collapse.

Bailout now imminent.

#111 J.I.M. on 04.26.12 at 12:51 pm

I was up at 4 this morning, insomnia. Turned on the TV to , well, kill time. PBS was showing a 1 hour special called “The Crash of 1929”. . Watching ; I was amazed, and then appalled at the parallels between then and now! It was like reading this blog.

#112 John on 04.26.12 at 12:52 pm

Canadian Watch Dog. Good stuff. I sent your link to a high level risk guy here in Chile. Good that people know what the mafia is doing.

It’s not fun to be staring at blue and red pills, but in the end, it’s got to be better. Ouch.

————————

Want to know where our banks are heading next to avoid any rules, guidelines and regulations imposed by OSFI, Flaherty et al?. Search no more as this weekend you can register for $1,799 to be informed on how to play the latest greatest hyper-speculative OTC market regulated by, well.. nobody.

(Don’t forget to read the fine print at the bottom that reads: Media Advisory: No media passes available; no on site media coverage is permitted.)

OTC Derivatives Regulatory Reform: PDF http://www.infonex.ca/1016/1016.pdf

“Going beyond speculation and clarifying timelines: preparing for what is imminent in over-the-counter derivatives reform.”

That’s right, to boldly go where no Canadian investor (including banks) has gone before, because now, instead of insuring pooled mortgages with CMHC or private insurers like Genworth (whose CDS is now trading with a 43% chance of default within five years) , banks and the gang can do it themselves into perpetuity with credit default swaps! Of course, who wouldn’t want to make excess profits off Canadian mortgages going underwater, like duh.

If you’re in Quebec, congrats. You’re the latest to have access to bet on Canada’s housing collapse: http://investor.marketaxess.com/phoenix.zhtml?c=176475&p=irol-newsArticle&ID=1686418&highlight=

And for those who missed it, here is the PBS documentary explaining how banks use credit default swaps to hide losses and profit from underwater mortgages. This is not a doomsday video, this is real. http://www.pbs.org/wgbh/pages/frontline/money-power-wall-street/

Remember, if you have a mortgage, you only ‘think’ you own your home.

——————–

#113 Nostradamus Le Mad Vlad on 04.26.12 at 12:55 pm


Tried posting four times between 10 and 10:20 last night, but each time a message showed “Indistinguishable Fairies engaged in violent sexual bondage acts prevented Greaterfool.ca server from accepting this.” Hence, comment and links from last night.
*
“The cost of almost every essential – food, gas, clothing, motorcycle insurance – continues to climb, while salaries don’t. It’s a financial vise. It’s a dangerous time. Just a nagging question: is this it?” — Vancouver, Toronto, Calgary and Montreal are outta Stanley’s Mug, so I figure their fans are presently going Hells Bells. Nice place to visit, wouldn’t want to live there.
*
Cdn. tax hit on dividends in taxable accounts; DD (not Double Diamond) for UK; Cdn. Retirement Not just the money, lifestyle as well; Sandwich Generation and insurance policies; Retirement One and Retirement Two;
Plummeting US durable goods, but US Gas Prices are lower than last year; Russia and Mexico Buy gold and hold! Benny’s Funny Money Good enough reason to buy gold; Freedom 77; British Industry Already been done to US industry, soon Cdn.; US Factories Lights out.

State Finances; Going Solo; Oz and Chinese Credit Bubbles One supports the other, and both are ready blow; Oil Sands; Ten Corporations Unless we go to Farmer’s Markets and the like; BoA Full blown rally approaching; EZone Going down a rathole; 16 Reasons to move to Iceland; USPS Almost gone? Affluent Cdns. Prepared; Forecasts Fiscal and weather forecasts are unpredictable; Global food prices plus higher oil; I Se Dead People cashing govt. cheques; Canada’s auto-parts sector losing ground.
*
0:46 clip The most unexpected incidents happen; The Kali Yuga, a.k.a. The Iron Age We’re in it, the fourth of four ages; Squirrel and Snake? Plenty of ideas here; The G-Spot Either a variation on Stonehenge or between men’s ears (nothing else there); Vaccines and doctors irrational fears; Rethuglikans anti-union measure fails; War for Profit Courtesy NGOs, and Soros’ Color Revolutions; Freedom of Speech? It appears that freedom is being lost, and 3:33 clip Obomba declares free speech a felony.

Chernobyl Clean up abandoned, and will be like that for centuries; Agenda 21 a.k.a. the end of the west; Cosmic Ions from Jack Daniels neat; Diabetes (from Aspartame?) Banrupting UK’s NHS within a generation; Megachurches They are there for the money!

#114 dd on 04.26.12 at 1:06 pm

50 months of subpar US growth. Oh look a recovery … . Not!

Debt will have to b cleared for substantial growth.

#115 Dontcallmeshirley on 04.26.12 at 1:11 pm

#110 Canadian Watchdog,

Now why would F link CMHC to Toronto condos? You got it, because the entire condo market is about to collapse.

———-

Whoa, slow down…lets get CMHC out of covered bonds and construction loan insurance first.

#116 Blue Monster Lover of Meats and Vegetables on 04.26.12 at 1:14 pm

#91 FTP – First Time Poster on 04.26.12 at 10:27 am

Actually, long term, it will be the C$ sliding against the US$. — Garth

—-
Having the world’s reserve currency is instrumental in their downfall. They have been given a lot of rope that is about to get taught real fast at 100mph and rip their heads off. Ouch!

Canada has much less rope since we are not a reserve currency. We’ll have a lot of inflation but no crash and capitulation when the world pukes up their USD reserves. The avalanche will be huge, nobody will want to hold any USD currency or denominated debt. It’s all trash!

The CAD long term will appreciate against the USD as it goes to zero.

Gold will appreciate against all trash fiat.

Only on your planet. — Garth

#117 ThiNg on 04.26.12 at 1:18 pm

#93 DA

Doesn’t that only work if the government isn’t backing the loans? I realise in a true capitalist scenario, this is the best way to separate the wheat from the chaff. BUT, I don’t think it will play out like that. In a democracy, if the majority decides to do something foolish, then they have the power to bail themselves out.

Who wouldn’t elect a government that promised to forgive all mortgage debt when so many will be upside down?

#118 Burnaby Aquarium in the Sky on 04.26.12 at 1:23 pm

31 married 3 years ago with a combined income of around $250k/year. SOLD yesterday with no subjects and a quick close (end of the month). $175k addition to the downpayment fund for a total of $475k invested in stuff that pays me to own it (expecting to shoot off $1500/month income) . Living rent free in North Van with dividend income covering my expenses while I wait for the next shoe to drop…

#119 Canadian Watchdog on 04.26.12 at 1:25 pm

From yesterday.

“Is the financial sector special?” Carney asked during an appearance at the Commons finance committee. “If you have a family farm and crop prices are down and you have a bad harvest, things happen. If you have a small business or a big business and you make a series of mistakes and things move against you (such as increased) international competition, you fail.”

But “if you have a large financial institution, what we learned during the financial crisis is that (READY?) you have to be rescued,” he said, although he pointed out that this was not needed on a large scale in Canada.

Not needed on a large scale? Compared to what? The $20 trillion OTC derivatives market? Today’s move was not for CMHC oversight, rather to ring-fence CMHC’s risk under OSFI, because as F just hinted, CMHC is no longer a quasi-government crown cooperation, it’s a large financial institution backed by the government, that Carney sees as an entity that will “have to be rescued.”

No wonder why CMHC still hasn’t reported its Q4 financial report.

#120 spaceman on 04.26.12 at 1:28 pm

“The Victoria market is now falling apart”

Not as of the last 6 weeks, with a small drop in prices, the greater fools are in full force, snapping up anything that is half way decent. The rest of the crap sits.

Realtors in Victoria are very busy right now. (and no I am not one… no vested interest to pump RE)

House Hunt Victoria (google it) gives you an idea what is happening locally.

http://househuntvictoria.blogspot.ca/

So my question to you Garth is what is happening? Why don’t they get it? I am hoping it is just a spring feeding frenzie, and by July it will roll over … or not….

#121 ronthecivil on 04.26.12 at 1:43 pm

Garth,

How the heck can you say the Canadian dollar is going to slide vs. the US? There’s no hope of them acheiving a balanced budget even remotely soon and while the price of oil might go down short term due to a depressed world economy long term it and other commodities that drive our dollar are going up up up.

Until the US gets it’s politics in order I wouldn’t be putting my faith in the US dollar.

So don’t. You will lose. — Garth

#122 EB on 04.26.12 at 1:44 pm

#91 FTP – re: American Empire, Fall of. In the long run of course this will be true, but the question is how confident are you that this particular crisis is really The End? Bet your life? Diversification has the advantage of being thesis-agnostic. For an all-in bet you’d better be pretty darn sure of your projections.

#123 Canadian Watchdog on 04.26.12 at 2:07 pm

Not even an hour after F’s announcement and we already get this just posted at RedPin.

X2 Condos: Only 10% Total Deposit! Plus receive up to $4,402 in cash back through TheRedPin rebate. http://www.theredpin.com/blog/condo-deals/x2-condos-only-10-total-deposit

This is scheduled for Fall/Winter 2013. Any speculators? There’s 40,000+ more if you don’t like this one.

#124 John Prine on 04.26.12 at 2:07 pm

120 spaceman on 04.26.12 at 1:28 pm
“The Victoria market is now falling apart”

Not as of the last 6 weeks, with a small drop in prices, the greater fools are in full force, snapping up anything that is half way decent. The rest of the crap sits.
_____________________________________________

Victoria, Esquimalt, Oak Bay and Saanich. 1,639 listings

Last 7 days, 65 new sales and 90 price changes. pretty dead.

#125 bill on 04.26.12 at 2:11 pm

if it walks and talks like a duck … it is a duck or get your ducks in a row already…..
thanks again garth.

#126 Blue Monster Lover of Meats and Vegetables on 04.26.12 at 2:12 pm

Only on your planet. — Garth
——
I live in the world of objectivism as laid out by Miss Ayn Rand, one smart cookie! I this world, gold is money and wealth is a function of capital, production, liberty and morality. We recognize thieves as thieves.

#96 Victoria on 04.26.12 at 10:50 am

My husband, who is French, was speaking with a friend – a lawyer in Paris.

He says that many people are now thinking of buying property in Canada or even trying to immigrate because it is a “safe” country . They are worried that the socialists mights get in in France.
—–
France is already socialist, I guess it could get worse kinda like if Canada hands power to the NDP. The best thing to do is to move all wealth out of the country and quite working (like Greeks, go black market) then live off the idiot handouts until the whole charade collapses. Most of one’s wealth and one foot out of the country is smart preparation for sure. I highly recommend it.

#127 Bill Gable on 04.26.12 at 2:40 pm

One last word please – Fukushima.

Hard to sell RE = when the half life of the plutonium in the infested nest is a billion years.

#128 abraxas on 04.26.12 at 2:45 pm

When I look at those house prices I’m in despair. My house which I bought for 5 figures about 10 years ago in Atlantic Canada is worth little more than 140K today (although no mortgage). My savings (including the RRSP and TFSA contributions) adds to just a bit over 400K.

If I moved to any other part of the country the money from the house and the retirement savings would barely be enough for a downpayment. Am I really this poor or has this country gone off the rails completely.

Don’t people realize what it takes to actually EARN 1 million dollars if you’re not a surgeon or a mafia boss?

#129 };-) aka DA on 04.26.12 at 2:58 pm

#117ThiNg on 04.26.12 at 1:18 pm
#93 DA

Doesn’t that only work if the government isn’t backing the loans? I realise in a true capitalist scenario, this is the best way to separate the wheat from the chaff. BUT, I don’t think it will play out like that. In a democracy, if the majority decides to do something foolish, then they have the power to bail themselves out.

Who wouldn’t elect a government that promised to forgive all mortgage debt when so many will be upside down?

Again, don’t worry about it. It’s just a game.

Rich and poor are what they are because of their habits. If the rich did what the poor do they too would soon be poor. If the poor did what the rich do they soon would enjoy riches. You know the old story about where most lottery winners end up – right? And you’ve heard that if you took all the wealth and redistributed it equally amongst everyone not long after having done so you would find that wealth found it’s way back to the same unequal redistribution it was at prior to your doing so… right? Why do you think that might be so? The reason is because the poor have not learned how to play the game as well as the rich have. You need a lasting skill to maintain your postition in the game. You need to learn how to play the game.

The poor spend first and invest, if they have anything left to invest, later. The rich invest first and spend what they have earned. The rich don’t say “I can’t afford it” they say “How can I earn what I need to afford it”.

Everyone elects the government but the rich control the government. So if you consign yourself to being poor you hand yourself over to the whim and fancy of the rich. Do you really think they are going to bail out anyone without there being something in it for them to do so? To a degree they will because there IS, in fact, something in it for them to do so – it’s called a continuity of a vibrant economy. But they will only go so far as the cost provides returns to them benefit.

This is not a conspiracy theory, this is real life.

Don’t worry about it, just learn to play the game in a manner that keeps you in the lifestyle you wish to maintain. If you aren’t there then learn to play a better game.

#130 alkali on 04.26.12 at 3:48 pm

#128 abraxas on 04.26.12 at 2:45 pm

You do realize that you’d probably make more money anywhere in Canada compared to the Maritimes. And contrary to what you read here, $100K is a very good downpayment in most parts of Canada (excluding Vancouver and Toronto). If you’re serious about moving, do your research.

#131 VICTORIA TEA PARTY on 04.26.12 at 3:48 pm

CAGING THE CONSUMPTION BEAST, WE CAN ONLY HOPE

Is today the beginning of the end for those economically-challenged, endlessly debt-addled lives of too many Consumption-crazed Canucks; or is it the end of the beginning?

The Mother Corp’s on the story!

“Ottawa moved to bring the Canada Mortgage and Housing Corporation under the purview of the country’s top financial regulator Thursday.

…The CMHC insures the vast majority of Canadian mortgages, as well as guaranteeing mortgage-backed securities..backed by taxpayer(s)…

…the changes outlined Thursday will give the Office of the Superintendent of Financial Institutions…and the Department of Finance ultimate authority over CMHC’s actions.

…”It is a recognition that CMHC has become a significant financial institution,” Flaherty said. “CMHC was created to assist in social housing [but] it’s become much more than that.”

Mortgage-backed security oversight

The bill also calls for the establishment of a registry to monitor how many mortgage-backed securities known as covered bonds that Canadian lenders have outstanding…”

…The federal government has already moved to tighten the rules for who can obtain a CMHC-insured mortgage twice in the past two years.”

GOOD NEWS…

unless there is the possibility of some kind of “leakage” around these rules once they’ve been promulgated.

Now Mr. Carney must move in with a big stick of monetary policy tightening.

Lower consumer debt levels are best in these uncertain economic times we’re being propelled through.

As I pointed out just the other day, for our betters to either do nothing or do something,the end result will be horrific pain for those who’ve not been minding the store.

I have no sympathy with those, but if they learn lessons in the process, our overall economy will, in the medium term, be somewhat more resilient.

Because we have no clue how Europe will turn out, just as we don’t know what might shake from the trees in the US, and Asia.

Travel light and carry a big stick!

#132 TOFriend on 04.26.12 at 3:49 pm

As one of the earlier posts stated very accurately, something that happened in US as well, when the shit hits the fan, many people with dual citizenship just pickup and go… there were lots of illegal immigrants in states that just left.. same applies to Canada, especially TO and VAN… after a boom.. TO and VAN will look very empty.. just like in Dubai did, perhaps not to the same extend but impact will definitely be felt.

Interesting fact.. and this does not include illegal immigrants who do not hold CAN citizenship.

Statistics Canada estimates there are more than four million immigrants who hold dual citizenship with Canada and at least one other country.

#133 new-era on 04.26.12 at 3:51 pm

S&P downgrades Ontario’s outlook to negative. Soon credit will not be cheap. That is when the Sh$$$it
will hit the fan!!

Canada is tax so much already. How much more taxes can they raise when this happens.

http://www.theglobeandmail.com/report-on-business/top-business-stories/debt-and-taxes-how-you-know-youre-in-canada/article2414701/

#134 Toronto_CA on 04.26.12 at 3:54 pm

Not a big surprise here, Ontario wage gains are below inflation:

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/ontario-wage-gains-not-keeping-up-with-cost-of-living/article2414880/

Now throw in a housing bubble with wages below inflation (only a 0.7% y-o-y gain?) and why do we live in Ontario again?

Hold on to your hats, it’s going to be a big long fall when the GTA condo bubble bursts and the general economy after that!

#135 Smoking Man on 04.26.12 at 3:56 pm

O Kale. Where are you. EFR.

God I’m good

#136 penpal on 04.26.12 at 3:56 pm

@ # 119 Cdn Watchdog

I fear that you are correct about CMHC.

Do you know if, in fact, they are also providing construction finance for residential and/or commercial construction?

#137 Mark "the talk" Carney on 04.26.12 at 3:58 pm

Canadian Watchdog on 04.26.12 at 12:43 pm
Here it is… Flaherty cites Toronto condos as need for CMHC oversight

http://toronto.ctv.ca/servlet/an/local/CTVNews/20120426/mortgage-cmhc-bill-fed-toronto-condo-120426/20120426/?hub=TorontoNewHome&cid=top

“Flaherty said the booming condo markets in Canada’s major cities were at the core of the decision.”

Now why would F link CMHC to Toronto condos? You got it, because the entire condo market is about to collapse.

Bailout now imminent.
____________________________________________

Toronto is in the biggest condo/housing ponzi bubble in CANADIAN history unmatch by no other bubble in the world and all backed by 0-5% down and borrowed HELOC money. Realtors, mortgage brokers , and every other vested interest KNOWSthe bubble is beyond massive and stupid. One realtors told me he wouldn’t invest my money in the condo ponzi scheme. Are you a greaterfool who bought a condo?

#138 Canada = US housing crash! on 04.26.12 at 4:04 pm

Canada housing bubble is backed by CHMC/HELOC…..HAM is a MYTH for the weak minded fools who believe realtor propaganda of lies. When it comes crashing down the US housing crash will look good.

#139 JRoss on 04.26.12 at 4:09 pm

DA,

“And you’ve heard that if you took all the wealth and redistributed it equally amongst everyone not long after having done so you would find that wealth found it’s way back to the same unequal redistribution it was at prior to your doing so… ”

Where exactly did you hear that? Glenn Beck?

Since you love quotes –

” The really big fortune, the swollen fortune, by the mere fact of its size, acquires qualities which differentiate it in kind as well as in degree from what is possessed by men of relatively small means. Therefore, I believe in a graduated income tax on big fortunes, and in another tax which is far more easily collected and far more effective-a graduated inheritance tax on big fortunes, properly safeguarded against evasion, and increasing rapidly in amount with the size of the estate.”

Care to guess what pinko wrote that?

#140 Engineered on 04.26.12 at 4:10 pm

Why not bet against the USD?

Because the US has already had their crash, and are already starting to rebuild; through the miracle that is the free market economy, US workers (who may also be derelict homeowners) are in the process of discharging their debts, and starting to rebuild, finding work for wages that are lower than their Canadian counterparts. Fortunately, housing is cheap there now, so workers can afford to work for less. Also, Obama-care has further lowered the cost of labour for companies, increasing productivity.

Compare this scenario to Canadian firms, where workers demand higher wages to keep up with a rising cost of living (driven by high housing prices), while the Canadian dollar remains high against its international peers, because Canada exports so much high-price oil. Canadian companies are paying more, but getting less, and is being outpaced by its competitors. Even its traditional ace-in-the-hole, Universal healthcare, has been nullified.

Canada’s productivity gap is wide and will be widening rapidly in the future, and the country, (government, labour, finance, and industry) can’t see this, let alone develop a shared solution to address it.

This country, friends, is HOOPED.

#141 Market Bull on 04.26.12 at 4:10 pm

Well, TREB busted through 300 sales over a million already this month.

As of today, there have been 327 sales over $1million in the city proper (Districts C01 – W10). Highest sale price thus far for April is $4.2million (C02 – Casa Loma).

I’ll keep y’all posted for month-end numbers for the “million-dollar-club,” as they are finalized.

#142 abraxas on 04.26.12 at 4:23 pm

@ #130 alkali on 04.26.12 at 3:48 pm
I actually doubt what you’re saying. Similar jobs in the Maritimes pay about the same as in the rest of the country. They are just much harder to come by. Professional engineers, accountants, doctors etc make as much here as they would in Skatch or Manitoba or Quebec. And pretty close to what they pay in Ontario. Had a few friends move to Toronto, all with professional jobs. Not one of them managed a salary hike of more than 15% vs their old jobs in N.S. and P.E.I.

#143 Arshes on 04.26.12 at 4:40 pm

#121 ronthecivil on 04.26.12 at 1:43 pm Garth,

How the heck can you say the Canadian dollar is going to slide vs. the US? There’s no hope of them acheiving a balanced budget even remotely soon and while the price of oil might go down short term due to a depressed world economy long term it and other commodities that drive our dollar are going up up up.

Until the US gets it’s politics in order I wouldn’t be putting my faith in the US dollar.

So don’t. You will lose. — Garth
——————————————————-

People dont seem to realize there is a supply and demand element to currencies. When the Canadian housing markets tumble and the economy goes with it, people arent gonna want to invest in Canada as much (Ie less demand for the Cdn $). The US economy is slowly going back up,, while other economies around the world are going down, or will be in the future (housing bubbles in Austraila and China are just starting to pop) or haven’t recovered yet. In that situation everyones gonna want currencies from the most powerful economic country in the world. US. In the near future people will be investing in the us or in the least purchasing US Tbills. This in itself will make the USD $ rise and the CDN$ drop.

#144 John Prine on 04.26.12 at 4:40 pm

#141 Market Bull on 04.26.12 at 4:10

I’ll keep y’all posted for month-end numbers for the “million-dollar-club,” as they are finalized.

WTF? “Y’all”

#145 getreal-tor on 04.26.12 at 4:55 pm

#83 Thing
When did we lose all self control?

What is “self control?” Heard of it once when I pee’d in my pants and my parents told me that I should show more self control. :)

#146 penpal on 04.26.12 at 4:55 pm

@ # 140 Engineered

Pretty good assessment of the situation I believe.

Although I am not sure I would bet on a quick turnaround for the US consumption based economy due to the lowered wages (which now spend more on necessities as a percentage of income and less on discretionary items).

I find it almost unbelievable that the RE cheerleader posting immediately below you (# 141 Market Bull) cannot understand the negative import of having over 300 houses sell for more than $ 1 million in a month in a second tier city like Toronto.

I guess, like for many Canadians, having most or all of your net worth tied up in RE, in a country with horrible productivity growth and high costs, it is all you can cheer for! LOL

#147 FTP - First Time Poster on 04.26.12 at 4:56 pm

“I’ve been concerned about CMHC for some time, in this sense, it’s become an important financial institution in Canada and it was not subject to the same supervision” as banks, he said.

Under the changes, CMHC will be subject to annual “stress tests” like those that currently exist for banks to ensure its financial soundness under extreme economic conditions.

Read between the lines – F and Carney fully expect a housing meltdown and want to cover their asses. Announcing “Stress tests” are a good indicator that they have already done them and identified gaping holes in the system. Now they want to plug the leaks. If they’ve announced it – its already too late.

#148 getreal-tor on 04.26.12 at 4:58 pm

#92 cory on 04.26.12 at 10:31 am

Cory, you see double car garage and I see two rental opportunities… Anybody remember the son who put his mom into the garage. I heard he put in the winning bid as his mother in law needed a place to stay as well. :)

#149 getreal-tor on 04.26.12 at 5:03 pm

#96 Victoria on 04.26.12 at 10:50 am

That would be good for RE in Quebec although I am sure they are not that fond of the French after they failed to embrace them when they wanted to separate.

With Europe being as fragile as it is, I think we will see another immigration burst but housing used to be way more affordable during the last exodus of Europeans to Canada.

#150 getreal-tor on 04.26.12 at 5:05 pm

#111 J.I.M. on 04.26.12 at 12:51 pm

People can’t remember what they did last week, when they actually did something fun, and you want them to remember 1929?

#151 };-) aka DA on 04.26.12 at 5:17 pm

#139JRoss on 04.26.12 at 4:09 pm
DA,

<

“And you’ve heard that if you took all the wealth and redistributed it equally amongst everyone not long after having done so you would find that wealth found it’s way back to the same unequal redistribution it was at prior to your doing so… ”

Where exactly did you hear that? Glenn Beck?

Since you love quotes –

” The really big fortune, the swollen fortune, by the mere fact of its size, acquires qualities which differentiate it in kind as well as in degree from what is possessed by men of relatively small means. Therefore, I believe in a graduated income tax on big fortunes, and in another tax which is far more easily collected and far more effective-a graduated inheritance tax on big fortunes, properly safeguarded against evasion, and increasing rapidly in amount with the size of the estate.”

Care to guess what pinko wrote that?

Ummmm uhhh let me guess… Theodore Roosevelt?!?

And I cannot deny him on such thinking as the heirs were not necessarily responsible for the amassing of the fortune in the first place and if not taught how to master the game would surely squander the it in any event.

On the other hand, were the “family” truly proficient at “the game” they would have played in a manner which would assure the retention of the estates fortune in any event and even if lost find little difficulty in reclaiming it once again.

Teddy knew this and could afford to buy the votes of they who knew not. };-)

Shepple…

Oh and of the wealthy, what percent might you think rent rather than own? };-)

#152 penpal on 04.26.12 at 5:20 pm

@ # 65 Betamax

Great post!

I think that is a really good look at one of the chief drivers of this bubble and its mentality.

#153 Canadian Watchdog on 04.26.12 at 5:22 pm

#141 Market Bull

There was 430 sales over $1 million in GTA last April.

Keep touting.

#154 penpal on 04.26.12 at 5:25 pm

@ # 62 Scott in Denial

Sources?
Links?
Facts from somewhere to support this thesis?

Oh, right……

I get it… IT”S YOUR OPINION based on YOUR FEELINGS, or should I say, based on you FEARS!

Why even waste the bandwidth?

#155 penpal on 04.26.12 at 5:28 pm

@ # 64 Jay

“Supply meets demand, price feels faint.”

Funny!

#156 Just In Viber on 04.26.12 at 5:33 pm

Good time to buy in US?
http://www.bnn.ca/News/2012/4/26/Falling-US-home-prices-drag-new-buyers-under-water.aspx

#157 Regan on 04.26.12 at 5:33 pm

It makes sense that at some point the market will move without any change in interest rates. Low rates make monthly payments more affordable… but when we’re talking monthly payments on a $800K mortgage it doesn’t matter if the interest rate is 0. Most people just don’t qualify, can’t afford and would never live long enough to pay back the higher prices. And so, the market finds its own limits where they are fewer buyers, even with the boost of cheap credit.

#158 Canadian Watchdog on 04.26.12 at 5:37 pm

BOOOM!

MOODY’S DOWNGRADES ONTARIO’S CREDIT RATING
http://www.theglobeandmail.com/report-on-business/moodys-downgrades-ontario-credit-rating/article2415219/

#159 Toronto_CA on 04.26.12 at 5:44 pm

RBC calling Vancouver’s market in danger zone today.

http://www.theglobeandmail.com/report-on-business/top-business-stories/vancouver-vulnerable-to-housing-bust-rbc-warns/article2414876/

MSM finally catching on to Garth’s point of view?? Let’s hope so!

#160 René Kabis on 04.26.12 at 6:04 pm

I think that the retail climate is also showing something ominous for bubble cities like Kelowna, BC.

I do accounting and tech work for a few businesses in Kelowna. Jan and Feb are usually their slowest months, and things typically get screaming busy by the end of April to the middle of May. We are now very close to the end of April, and things haven’t changed one whit from the first two months — things are just as dead. One of my biggest clients is actually slower now than they were in February – typically their slowest month of the year.

Talking to other small business owners around the valley, I have noticed that nearly ALL of them are saying the exact same thing — that things are dead, Dead, DEAD; and that this might be The Year Without A Summer. Unless things begin to change very fast very soon, many businesses I know will remain deep in the red throughout the end of this year.

Some will be able to survive (thanks to prudent saving in times of plenty and lines of business credit), but many will not be able to hang on until 2013. And that’s assuming that things will get better in 2013.

Heck, even the restaurants are feeling the pinch, and to a degree that has not happened in this tourist town in a very long time:
http://www.kelownacapnews.com/news/146167055.html

#161 McExpat on 04.26.12 at 6:17 pm

#105 Anonymous
I hope that you aren’t truly good friends with your condo buyer aquaintance. Your calculations and deductions are so far off base, I would expect that you are probably in need of some serious prescription drugs right now.
As for fleeing Canada, just like they did in Dubai, if things go pear-shaped, why don’t you have a chat with some of the hundreds of expats languishing in UAE prisons because of loads gone bad after the credit crisis. Apparently they are having a great time sleeping in crap on the floor in the bathroom stalls because the prisons are heaving at the moment.
Great advice…can I be your friend too???

#162 Westernman on 04.26.12 at 6:19 pm

JRoss @ 3 139,
Although DA is usually wacked out this time he has it exactly right. Study the difference how the rich think and behave and how the poor think and behave and therin lies the the key to why some people are fabulously wealthy and successful and other seemingly intelligent people are poor as dirt.
I could list all the behaviors but then this post would be as long as a book.
Forget that liberal socialist ” the man is keepin’ me down horseshit “… spoiled rotten, lazy, world-owes-me-something-cause-I’m-here Canadian attitude… you won’t get anywhere with it…

#163 ronthecivil on 04.26.12 at 6:26 pm

#143 Arshes and Garth

I get that in dire times there might be incentive to run to the US dollar (in fact I think that’s part of the reason it’s not lower already).

I am simply pointing out that there’s enough potential for things to bring the US dollar down that saying that it’s going up as though it was a sure thing is a little overconfident.

In fact I still own some EFTs that own US stocks and bonds, but they are hedged to Canadian dollars……..

#164 Riding the Pine on 04.26.12 at 6:30 pm

#88 Canadian Watchdog

Whoops…right you are. Mixing up Bs and Ts. is easy to do when the number get so ridiculous. Canadian Banks exposure to derivatives:

http://www.greatponzi.com/articles/20090915-big5banks.html

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

Some info/experience on mortgage penalties, for those dealing with them.

Currently dealing with Scotia, who’s looking for $12K in penalties from us! First, we maxed out the extra payments we were allowed to make on mortgage using credit line, knocking $5k off. With $7K left in penalties we started bargaining with them. ie. how much would they reduce the penalty if we invested $250K profits from our home sale with them? First answer was $1200. If we committed $150K of investment, they would reduce the penalty by only 10%. Wow, $600. Thanks. After nearly a lifetime of patronage, paying over $100K in interest over the past 7-8 years on our mortgage alone, that was their offer. Well, once they were faced with some competition (I was in talks with another investment company) they somehow could do better than their “best” offer. They then offered a 35% reduction in the remaining penalty…but that was IT.

So the lesson here is nothing new these days…You need to bitch and complain for many hours over days or weeks to get a bit of a break. Grind them down. They will all BS and say that X is all they can offer.
Scotia has lost our investment business, bank accounts, RRSPs, future mortgage, etc, for being greedy. I realize we’re small clients in the grand scheme of things, but I feel better that they aren’t making money from us anymore.

#165 John Prine on 04.26.12 at 6:32 pm

Colwood, just outside of Victoria BC.

2,165 sq. ft. condo listed for $679,900. Taxes (2011) are $6,652 and Strata fees are $503.00 per month. So without any mortgage payments you are paying out $1,057 a month for stainless and granite, likely with poor workmanship.

Just can’t understand what would motivate anybody to get buried in something like this, especially with all the politicians and MSM warning like there is no tomorrow (for condos anyway)

#166 Tyredandboard on 04.26.12 at 6:44 pm

#157 Regan

If interest rates do not move, than yes they can pay back an $800k mortgage, by making the monthly payments over the amortization period. Monthly payment and amortization are all that matter, IF rates do not move. 800k at cheap rates vs. 400k at an imaginary higher rate, both require payment M over 25 or 30 years, doesn’t matter how you get there. Total paid is the same. Savers who want to pay of a home early? Now we are punished, because rates are so low, that you could pay off very early or even buy the house outright and barely save anything, it’s all principal. This environment favors perpetual indebtedness over financial responsibility.

#167 TaxHaven on 04.26.12 at 6:46 pm

“…virtually every home is worth a million…”

You of all people should be aware of the meaning of that weasel-word “worth”…

As soon as you utter it the houses in question are NOT “worth” XXXmillion$$$…

So does “worth” really have any meaning anymore?

From now on, try “priced at” instead. Or “hoping for”…

#168 Nostradamus Le Mad Vlad on 04.26.12 at 6:52 pm


Cooling Job Market “Recovery”, my astrolabe!” wrh.com; Debt Collectors Scum of the earth is better than this bunch of gas bags; Ten Things Partly fiscal, partly war so another view on what could happen to the US (not Israel) if they decide to attack Iran; Indonesia With mad cow disease in the US? Slave Traders Private prison corporations; SEC playing dirty; Bahrain Eat, drink and be merry while the peasants are whacked (Rome #2?).
*
6:03 clip Think Fukushima and Chernobyl were bad? Look at the US plus Chernobyl The anniversary; Bluff-a-Mania “. . . the general indirectly admitted Israel is bluffing Iran; . . .”; Sept. 11 #2? France Saying adieu to the Euro? Kaspersky Apple is a decade behind MSoft in security; Energy Resources The US has plenty; Orwellian Nightmare The US in the 21st century; Nutrition Blogger State threatens to shut him down; May (again) Turning Syria into Libya II, ‘tho Russia and China might have something to say about it; Smart Meters California’s a right basket case; SCarolina Wasn’t it Tennessee or Vermont that rejected Agenda 21? Data Sellout = Enslavement. We have become our own worst enemies; Lasting Pride “IF this is what “success” looks like in Iraq for the US politicians and military…what would US “failure” have looked like?!” wrh.com; War Games How many more ‘games’ have to be played before the real thing starts? Cyber Criminals Lots of data being stolen.

#169 Engineered on 04.26.12 at 7:04 pm

@ penpal #146:

The workers I refer to in my post are those who accept lower pay ‘just to be working’. But the depression in US housing helps everyone, especially those who maintain high wages, (leaders in their fields, value builders, or those with over-inflated senses of self-worth). For workers in this class, who managed to avoid losing everything when the bubble popped, profit from high earning potential AND low prices on consumer goods.

These people will re-inflate the consumer economy, until increasing numbers of “me too” consumers settle their debts, have their wages grow, and can start consuming again. It’s called trickle-down economics.

#170 Ret on 04.26.12 at 7:20 pm

CDN vs. USD

Okay everybody. 99.9% of your assets are valued in CDN. How many of you want to ride that pony back down to a 60-75 cent CDN where it was stuck for years? That would be a lost opportunity in the order of15-25%.

Garth, I count eleven hands up.

If we break parity and hit $1.05, I’ll start buying more USD and US investments in USD. A little diversification in USD is a good thing IMO.

#171 Form Man on 04.26.12 at 7:40 pm

#136 penpal

CMHC has been insuring developer construction financing for housing for years.

#162 westernman

It was a Liberal government who cleaned up the financial mess left behind by the Mulroney Conservatives, put the budget into surplus, and began paying down the debt. Harper has reversed all those gains and then some. Canada cannot afford Canservative governments. What part of those facts do you not understand ? please enlighten us………if you are able…which I highly doubt.

#172 Form Man on 04.26.12 at 7:44 pm

that should obviously read ‘Conservative’, rather than canservative ( freudian slip )

#173 };-) aka DA on 04.26.12 at 7:47 pm

#154penpal on 04.26.12 at 5:25 pm

@ # 62 Scott in Denial
Why worry about it? House prices can’t fall any more than 15%, and if they did, it would take years to happen. Garth is slipping into the “doomer” camp.

Sources?
Links?
Facts from somewhere to support this thesis?

Oh, right……

I get it… IT”S YOUR OPINION based on YOUR FEELINGS, or should I say, based on you FEARS!

Why even waste the bandwidth?

Seems to me Penpal that you are excessively incensed by Scott’s suggestion prices can’t fall more than 15% too quickly. Why so sensitive? Does the prospect prices might stay relatively buoyant scare you? Do you have any irrefutable evidence that proves Scott wrong? Or is this affront against Scott spurred by your own “feelings” and “fears”?

It’s been four years since the economic crisis of 2008 Penpal and prices have after a modest capitulation of about 15% remained very consistent across the country with some areas experiencing notable gains. Our largest trading partner, the US, is showing undeniable signs of recovery. Four years is a long time, so long some might say that gig we endured in 2008 is over and any ahead might well be considered a new event. When will that new event arrive? Who knows? Baring some unforeseen black swan looming just over the horizon it could be quite a while for most certainly we are not so stupid as to ignore that which lies clearly at hand.

Many would say we are, at least, in a reparation phase, tending to an ailing economy that is recovering. Wouldn’t you agree that such a mindset is more conducive to achieving such a goal – unless of course you have ulterior motives?

};-)

#174 Junius on 04.26.12 at 7:55 pm

#171 Form Man,

You may want to add that the Republican Presidents in the US have been much worse than the Democrats for running up deficits.

Do people actually read Westernman? Why waste your time?

BTW – when is that firewall going up for Alberta? It works both ways, correct?

#175 Devore on 04.26.12 at 8:02 pm

#120 spaceman

Realtors in Victoria are very busy right now. (and no I am not one… no vested interest to pump RE)

Ever notice realtors are always “busy”?

#176 JRoss on 04.26.12 at 8:06 pm

DA 151,

I see. So progressive taxation = buying votes. And middle class folks people who vote their own interest at odds to the elite are sheeple. Yep, must have been Glenn Beck.

“Oh and of the wealthy, what percent might you think rent rather than own?”

Firstly correlation is not causation.

Secondly, your implication complete balderdash. Thirty second on google:

http://blog.mortgage101.com/2010/11/29/wealthy-trade-in-mortgages-for-rent/
http://www.mainstreet.com/article/real-estate/renting/why-wealthy-are-renting
http://realestate.msn.com/article.aspx?cp-documentid=13108363

Even without US real estate being in the toilet, the wealthy often choose to rent, because they can afford to pay someone else to take the risk and responsibility of ownership.

But don’t let the facts interfere with a good meme.

Awaiting your next tired cliche.

#177 Westernman on 04.26.12 at 8:14 pm

Form Man @ # 172,
Minor punctuation errors really distress you, don’t they?

#178 TurnerNation on 04.26.12 at 8:21 pm

Not really an ERF blog, but contrats to everybody, track6ers, who caught the tradeable botttom on ERF, yesterday. :)

#179 Devore on 04.26.12 at 8:38 pm

Although house prices in US seem to be bottoming out, and in some cases owning is cheaper than renting, more than 1 million Americans who have taken out mortgages in the past two years now owe more on their loans than their homes are worth. The good news is the market has bottomed out now. Right?

#180 It's over realtor scum on 04.26.12 at 8:42 pm

The day of reckoning is here realtors and today marks day one of Canadas housing crash. Sure there are a few no money 2.99% greaterfools bidding up homes they are going to walk on. The day has finally come. BPOE, smokingman your days of uneducated easy money for no work is over today.

#181 Steev on 04.26.12 at 8:43 pm

DA

Oh and of the wealthy, what percent might you think rent rather than own? };-)

Point taken I suppose, but they also drive more expensive cars, eat more expensive meals, imbibe more expensive beverages, and purchase more expensive Tiger repelling rocks…yet none of these things imply causality. Try again.

#182 };-) aka DA on 04.26.12 at 9:03 pm

#176JRoss on 04.26.12 at 8:06 pm

Interesting links.

Don’t get me wrong I didn’t for a minute think there were no wealthy people who rented. I too, not that I am particularly wealthy, am considering cashing in the old abode and renting. Of course part of our plan is to reinvest the proceeds from the sale of our home back into revenue property. Still, it’s a difficult transition as this is our “home” and we look forward to many more good times here with the kids when they come home and someday bring their own families along with them. I don’t care what anyone says continuity and roots are a good and welcome thing. I know, I didn’t have them growing up so much and I don’t want my children enduring that which I wish I never had to.

Renting though would liberate us in many ways. We could travel and rent a place here and there on extended holidays. I suspect many of those referred to in those articles you provided links to are doing just that. We looked at buying a vacation home in the South but ultimately decided we didn’t want to restrict ourselves to one place. Renting here and there makes sense. So JRoss, I’m not going to argue with you as I quite agree with you in some respects.

But back to my unsubstantiated implication which I proposed to you in the form of a question; what percent of the wealthy do you think rent rather than own? Of those wealthy, throughout the ages, what percentage might you guess most directly amassed their fortune through ventures in land? If you had a conversation with any random sample of 25 considered wealthy people what percent might boo-hoo a well thought-out investment in land?

And on your comment that “correlation is not causation” I sincerely do believe, based on my experience, that while the correlation may not in itself be the cause I suspect it is a pretty good indication that were you to investigate it with a more open mind you would probably be very surprised to find just how many have amassed a significant fortune through their real estate ventures and many more a comparatively modest but most welcomed nest egg of wealth through the simple long term plan of purchasing a home rather than renting one.

But you should do whatever floats your boat JRoss. };-)

#183 penpal on 04.26.12 at 9:23 pm

@ # 173 D(umb) A(hole)

Usually guys like you pontificate because you have too much time on your hands.

In your profession, your availability of time indicates little to no business being carried on.

Your response to my seeking the factual basis of a third party’s opinion tells me just how slack your business really is.

I guess your “hot wife” gets tired of your bullshit too, so you post the crap that you do.

Don’t you have a handful or two of a barbiturates that you could wash down with a nice zinfandel?

Sucks to be you.

#184 The Thing in the Basement on 04.26.12 at 9:40 pm

165 John – you mean this one?

http://www.realtor.ca/propertyDetails.aspx?propertyId=11242942&PidKey=1521398110

#185 Westernman on 04.26.12 at 9:46 pm

Junius @ # 174,
Wrong oh dweller of mom’s basement – if you get past your socialist brainwashing you will see that democrats and republicans increase the debt about the same each time – except for the current Obomination… he has increased the debt more than all the others combined – try not to watch too much CBC propaganda kid, it’s not good for you…

#186 };-) aka DA on 04.26.12 at 9:47 pm

#183 penpal on 04.26.12 at 9:23 pm

Actually just cleaning up the finishing details of income tax return. You no doubt will be one of the more significant beneficiaries of the cheque I am expected to write albeit not made out directly to you.

And I don’t work an 8 hour shift with a manager breathing down my neck so I am at liberty to amuse myself from time to time here on Garths blog as I take a breather between follow up phone calls in my business.

But what you really need to understand is; the leaner the business the HARDER you HAVE to work not the more free time you have. I don’t expect you to understand which is why you are exactly where I expect you are which is where you don’t want to be and a big part of your problem.

Learn to play the game Penpal… you’ll be happier for it.

#187 TurnerNation on 04.26.12 at 9:56 pm

#27Smoking Man on 04.25.12 at 10:13 pm

I lobbed a softball, our forum host hit it out of the park :).

Didn’t see you at the Bay St. Childrens Charity poker tournament last nite…1 king west.

#188 penpal on 04.27.12 at 1:30 pm

@ # 186 D(aft) A(hole)

I retired young.

I’ve got lotsa time and money.

Therefore I find it highly presumtious that a working stooge like you is going to tell me how to be successful.

You make a fool of yourself every single time you post, but especially so when you make unfounded assumptions about others.

Your idiocy and lack of success is visible to all in your daily postings – no need to guess about your miserable existence.

#189 Dan on 04.27.12 at 2:18 pm

Surveys show that people who buy and sell real estate are risk takers and are very goal oriented. What is more interesting is that many real estate agents also invest in gold, stocks and forex. If you feel that this is something that interest you, there is another extremely unique opportunity that is causing a lot of commotion on the market. As unbelievable as it sounds many pro investors are saying Soviet Gold is the hottest investment of 2012! Yes you heard it right. This investment idea is so strange and unexpected that it blindsided everyone and appeared totally unannounced. Currently it is available to everyone and many average folks are profiting. Personally I though it was another marketing trick for some gold company but when I checked it out I was surprised to find the whole this was legit. If you are even a little curious see for your self, here’s their site: http://www.SovietJewelry.com

If you are wondering why I written some much on the subject it is because the originators of Soviet Gold investment idea have this concept of free public market and social marketing. When combined together it allows investors themselves to increase the value of their investment by tweeting, blogging and so on. That is what I am doing and what many other people who like this idea are doing so you will see much more of similar info. In short it makes us money. Check it out, the investment idea is out of this world but at the same time the strategy is very simple. I like it, know it is profitable, recommend it.

#190 };-) aka DA on 04.27.12 at 2:25 pm

#188penpal on 04.27.12 at 1:30 pm

Well I’ll be damned. I am generally a fair judge of character. Guess I got you figured wrong…

or not.

On the Net you can be anyone you want to be.

};-)

#191 Timbo on 04.27.12 at 7:54 pm

http://www.bbc.co.uk/news/business-17866382

“Earlier this week, the Bank of Spain said the economy contracted by 0.4% in first three months of this year, after shrinking by 0.3% in the final quarter of last year.

Other figures released on Friday showed that Spanish retail sales were down 3.7% in March from the same point a year ago, the 21st month in row sales have fallen.”

5.64 million unemployed and rising. Anger grows when your unemployed……oh wait….

http://www.euractiv.com/elections/romanian-government-toppled-confidence-vote-news-512401

“Romanian government toppled in no confidence vote”

the domino’s fall first with the small ones. Nationalism is going to make a comeback..history repeats.