Half off

It sits on an acre and a half of rugged waterfront on a picturesque island north of Victoria, almost hugging the Canada-US border. The three-bedroom house has about 1,500 of space, comes with a wood-burning fireplace and French doors leading to a hot tub which gazes off to sea. Vaulted ceilings, zoning for guest cottage. And it even has potlights!

It used to be listed for $525,000. But no more. Now it’s $267,000 – half price.

Yesterday I pointed you to a Vancouver house which is now $1 million less than it was last week. You also got the address of a weird web site which does nothing but track falling prices in our most delusional city. Meanwhile in Victoria, and into the Parksville-Qualicum area, where wrinkles abound, MLS is clogged daily with price reductions. Up the coast, Jonathan tells me his GF’s mom and her two sisters are desperate to sell their condos – where monthly fees have risen sharply, and property values have cascaded 20%. But no offers. Hell, no showings, either.

So how do we square such things with the media headline hours ago, saying, “Home prices move higher in March”? CREA’s at it again, of course, announcing that its home price index “was up 1.3% in March on a month-over-month basis, and up 5.1% compared with a year ago.” The clear impression (intended, of course) is that real estate’s still on a tear, so you’d better grab some before rising prices and higher mortgage rates move it beyond your grasp.

In fact, though, the average Canadian house is selling for less today ($369,677) than it did a year ago ($371,591). Factoring inflation, houses in Calgary are 25% cheaper now than they were in 2007. The Okanagan and SW Ontario are property wastelands. Muskoka and the rest of GTA’s cottage country are having one of the worst Spring markets in memory. And prime maritime spreads in the Annapolis Valley or along Nova Scotia’s bucolic South Shore can now take two years to sell.

A few big sales in urban areas can vault average prices higher, even while most values are retreating. It’s why comparing, say, Halifax to Kelowna is meaningless. There is no national real estate market, and conditions now vary dramatically. Over the last couple of weeks I’ve taken you inside some of Toronto’s bidding wars, as middle-class couples offer a hundred thousand or more beyond the asking price for SFHs. But while that sizzles, unsold inventory piles up in condo towers, and in vast stretches of the country sellers pine for buyers.

The coming months and years will bring profound change for homeowners. F just tipped his hand, for example, unveiling Ottawa’s to get out of the mortgage insurance business. While that develops, interest rates will rise and new lending regs will come into effect later this year putting an end to cash-back mortgages and forcing banks to be a lot choosier about the houses, and the people, they finance.

It’s clear the damage that’s been done allowing people without savings to buy real estate using money loaned cheap and easy because taxpayers backed the loans. Why should bankers worry about having a mortgage when it’s insured against default, then sold off as security for a bond which raises money for more loans? Exactly. They don’t.

But soon, all that changes.

In the last 24 hours some profound things have been said. Like this, from Mark Carney, boss of the Bank of Canada:

“It is reasonable to expect that Canada will attract for the next decade or so sizeable foreign capital … and the question is what are we going to do with that capital? Are we going to build houses … or are we going to invest in our businesses and retool our competitiveness?”

Translation: when housing makes up 8% of the economy all on its own and real estate activities (financing, insuring, selling) are twice as big as manufacturing, we gotta stop. This is exactly what brought down the economy of California, which is the same size as that of Canada. Worse, we’re doing this on the back of debt, not wage gains or economic growth.

And this from F, as he bared all to a Financial Post editorial board:

“I don’t think it’s essential that a government financial institution provide mortgage insurance in Canada. I think what’s key is that mortgage insurance is available at a reasonable cost in Canada. I think there is a role to regulate but whether we, the Canadian people, have to be the owners and shareholders of a financial institution to do this is a question. I don’t think it’s essential in the long run.”

Translation: The feds will not be increasing CHMC’s debt ceiling. Mortgage insurance will soon be harder to find, and likely cost more. Ottawa might even privatize or eliminate the agency. At the least, it will now have the poop regulated out of it. And, as already reported, the feds won’t allow banks to use CMHC insurance any more to help sell their cheap bonds – used to create cheap mortgages.

See what I mean? Everything just changed.

You won’t recognize the country by the time this blog’s finished with it.

250 comments ↓

#1 TurnerNation on 04.27.12 at 9:00 pm

Is this an anti-F blog?

#2 Furst on 04.27.12 at 9:03 pm

FURST!!!! YEAHHH!!!!!

#3 s on 04.27.12 at 9:09 pm

Let’s hope they do something soon.

I have a lot of people down my neck for telling them the market was unsustainable and what Garth tells us.

#4 TurnerNation on 04.27.12 at 9:09 pm

More bad news for Widows and Orphans:

Manulife cuts back features on GMWBs

Income payout percentage on Manulife Pension Builder to be reduced

By Olivia Glauberzon | April 26, 2012 19:00

Low interest rates have forced Manulife Financial Corp. to reduce features offered on its guaranteed minimum withdrawal benefit products.

Starting April 30, the firm will reduce its income payout percentage on Manulife Pension Builder, a segregated fund that has a features cashable lifetime annuity, by 75 basis points, pending on the age the client begins making withdrawals.

The payout percentages offered on Manulife GIF Select IncomePlus, a variable annuity product with a savings component that offers clients a lifetime stream of income at retirement, will fall by 100 basis points at ages 55, 65 and 75. Thus, the withdrawal payout percentage for a client retiring at age 65 will fall to 4% from 5%.

#5 Pete in Barrie on 04.27.12 at 9:09 pm

Looks like the game is about to begin, and it ain’t gonna be pretty.

#6 Furst on 04.27.12 at 9:09 pm

Garth, there’s no way I was second. Did you deliberately bump me down and put turnernation first?…Dammit!!!!

#7 Mark W on 04.27.12 at 9:13 pm

From the Winnipeg Free Press:

http://homes.winnipegfreepress.com/winnipeg-real-estate-articles/new-homes/Consumers-the-winners-in-housing-market/id-2713/

“It seems as though Canadian economists and media outlets are spending an inordinate amount of time recently speculating on a housing bubble. Is one in our future?

Although most of this discussion is on a national level and seems to be aimed at larger urban centres such as Toronto and Vancouver, every region tends to be included. That is why it was so refreshing to read the comments of a TD Bank economist who said that a crash or bubble bursting situation was not in line for Winnipeg.”

Drinking the Kool Aid in The Peg.

#8 Devore on 04.27.12 at 9:14 pm

“It is reasonable to expect that Canada will attract for the next decade or so sizeable foreign capital … and the question is what are we going to do with that capital? Are we going to build houses … or are we going to invest in our businesses and retool our competitiveness?”

On the flip side, will Canadians continue to pour their lifetime earnings into real estate, or will they invest into Canada’s productive companies, instead of awaiting their share of the nation’s wealth to magically appear in the mail, just because they hold a piece of paper with a flag on it?

#9 Mass Debater on 04.27.12 at 9:16 pm

Jeffery Olin, CEO, Vision Capital — RE investment firm

“The Toronto condo market isn’t going to turn – it HAS turned” “the Toronto condo market has broken down”

Don’t believe these written words? then read his lips for yourself:
http://www.cbc.ca/video/#/News/Business/Lang_&_O%27Leary_Exchange/1319430780/ID=2228033832

#10 Sp on 04.27.12 at 9:17 pm

Wow what a nice gentleman. I would have told her to just come out of the water, and get her own stuff.

#11 Flynn on 04.27.12 at 9:20 pm

Just watching LA selling and they are struggling to sell a stunning Penthouse for $2 mill or a gorgeous home in Santa Barbara for $4 mill. I would never want to live in LA but in a heartbeat I would live in Montecito. A comparable penthouse in Vancouver would be well over $4. This market has a long way to go down.

#12 Inglorious Investor on 04.27.12 at 9:22 pm

More foreign capital to Canada. Oil. Gas. Water. Potash. The North West Passage. Garth Turner. Sure, makes sense.

So BoC Boss Carney asks if we should build more houses with that money or invest in the future. He’s right. But only because the housing market has reached saturation. I.E. it’s a no brainer, not some enlightened insight.

Plus, he seems to act as though the housing bubble somehow gestated and grew up all on it’s own, when it was his coital conduct that was largely responsible.

As for F, what’s he really saying but that now that the risks are at their highest levels, the government would like to sell off its insurance business to private interests.

In other words, both C and F are saying,” Game over.”

#13 JSS on 04.27.12 at 9:22 pm

I love Winnipeg

#14 a prairie dawg on 04.27.12 at 9:25 pm

http://business.financialpost.com/2012/04/12/canadians-still-piling-on-debt/

However there is no evidence that Canadians are using this interest rate advantage to whittle down the amount they owe.

“We know they are not paying down their debt, it is not happening, they are not deleveraging,” says Mr. Abdo. “I’m not sure if it’s a good news or bad news story.”

#15 50% correction predictor on 04.27.12 at 9:25 pm

This is what has been advertised in one Toronto’s ethnic real estate paper in this weekend edition:

Location: North York. Brand new condo. Buy or lease, choose from multilple floors. No need to wait for new condos. Just move in!
_________
Meanwhile, listings have exploded! However, still delusional prices.

#16 vreaa on 04.27.12 at 9:28 pm

Get Girls With Your Car; Keep Them In Your Condo

(Vancouver Condo Project Promo)

http://wp.me/pcq1o-41W

#17 Hoof Hearted on 04.27.12 at 9:28 pm

FFiiiirrrssstttt!!!!!!

#18 Freedom First on 04.27.12 at 9:31 pm

I just don’t understand. Home is wherever I live. The memories are about the events, the people, not the building. I buy anything when it is cheap, and I sell when it is expensive. A friend of mine asked me recently what it would take for me to buy real estate again? My reply: ” when I just can’t say no to it. His reply: “good answer”. I know that renting has been a steal. When buying is a steal, then I will think about it. Keep it simple. Listen to Garth. Diversify…….

#19 Jsan on 04.27.12 at 9:33 pm

Meanwhile in Toronto young couples cannot dig themselves into their deepest possible financial hole fast enough. It’s stunning to me how people who are not millionaires seem to have no qualm in taking on million dollar plus mortgages. Again, as has been said thousands of times on this webpage, this will not end well at all with this sort of “debt has no meaning”frame of mind gripping this fiscally lost generation. Talk about a generation living so far beyond their means.

http://www.theglobeandmail.com/globe-investor/personal-finance/financial-facelift/with-twins-on-the-way-couple-want-a-much-bigger-house/article2416278/

#20 a prairie dawg on 04.27.12 at 9:34 pm

And I know it’s a 2 week old story…

but the debt remains…

#21 Smoking Man on 04.27.12 at 9:35 pm

cmon Gartho you know your berded friend will never pull the plug on the pig called cmhc

the tax farm slaves will be galloping til the and

#22 Devore on 04.27.12 at 9:36 pm

I know Dunbar isn’t quite Point Grey, so maybe that’s why this seller is desperate and grasping at straws. You can buy it for $4M or rent it for $1700 available immediately. Please call, and stop the bleeding now.

Courtesy of VCI.

#23 Peter Pan on 04.27.12 at 9:36 pm

Is that the sound of 12,000 mortgage brokers’ sphincters clenching up.

Party’s over.

You can always use this website to get out of your Range Rover lease….

http://leasebusters.com/noflash_redirect.html

#24 Realtors are in a PANIC! Today is Day two of he housing crash! on 04.27.12 at 9:41 pm

It over….the crash is here and now. Prices to fall 50% over the next few years. It’s going to be a nasty crash!

#25 renters rule on 04.27.12 at 9:48 pm

@#11 Flynn

Hey! Did you stop drinking your koolaid?!

;-)

But, but, but……. it is so different here in they-aren’t-making-any-more-land, every-person-on-the-planet-wants-to-live-here-deludedville….er, I mean Vancouver….

I wonder if part of the timing of F’s moves is that the cons know that in the very near future CMHC is going to have a lot of non-performing mortgages, and at the very least they can say, well, at least we aren’t insuring any NEW ones….?

:-o

#26 Toon Town Boomer on 04.27.12 at 9:49 pm

Hey didn’t Harper say something like that? “You won’t recognize Canada when I’m through with it”.

Sigh. — Garth

#27 Dontcallmeshirley on 04.27.12 at 9:50 pm

That Flaherty kid, he planned it like this all along. There’s a storyboard out there in whitby (or wherever he hangs his hat) with Apr 27 =”D day” on it.

The green light was the majority gov’t.

Imagine we have that to thank.

Back in the day, i thought for sure a change in gov’t was the tipping point.

#28 truth hammer on 04.27.12 at 9:50 pm

I don’t agree at all that ‘F’ and the lapdog BOC are saying ‘game over’…..those are not the words they used at all. What both these mealy mouth morins have done is extend the ‘jawboning’ campaign that has been been in full force for the past 18 months …..coincidentally since the IMF has really started tearing strips off F’s ass and embarrassing the crap out of him on his glory runs to Davo’s etc proclaiming himself to be the financial genius of the G20…which he is clearly not.

Canada just had a rich gullible population with less personal debt than any other population in the G8…..well F and Carnage Carney have certainly straightened that out…..we are now the most indebted of any in the G8 ….including the most FAMOUS BASKET CASES……. US UK AUS GK SP BG…….I guess this is where the idiot Canadian media stands up and shouts “we’re # 1…..we’re # 1”.

This campaign of ‘suasion’ or ‘talking’ the market down has clearly a political rather than an economic foundation. The ZIRP has raped the seniors and indebted two additional generations to debt slavery….not to mention our national debt having skyrocketed with government borrowing from itself in mega amounts. A junior acct will be able to lecture you aabout how its bad to rob future spending from the economy……….how the hell will the economy ever recover after the mortgage implosion !!!!

Even at zero rates people are having problems paying the monthly nut…..the problem is that the government allowed the inflation explosion in house prices to get out of hand…..not a matter of stopping any more excess…….the lid has already blown off the pot !!

This is not a time for talk……this is a time for prison sentences and hard time for the pimps who created this mess………………….and no golden pensions while they’re doing time……..in fact make these a- holes pay for their incarceration.

#29 a prairie dawg on 04.27.12 at 9:55 pm

http://opinion.financialpost.com/2012/04/27/carneys-central-banker-speak-raises-ire-of-senators/

#30 Uh Oh Canada on 04.27.12 at 9:56 pm

“You won’t recognize the country by the time this blog’s finished with it.”

Garth- I recall a few months ago that you mentioned a conservative 15% national fall in housing prices. Since then, a few things have been thrown in the loop. What’s your opinion now? Would you say that a US style crash is upon us?

#31 Aizlynne on 04.27.12 at 10:00 pm

Garth. Sales in the Foothills region of Alberta has been flat as flat can be. The majority of property has been on the market for over a year. However, very few have lowered prices.

While it’s frustrating not being able to get stuff at market, I would prefer to sit it out until they get desperate.

#32 Mark W on 04.27.12 at 10:02 pm

If prices “crash” or “adjust” or “correct” then would not real estate agents be selling even more houses.

Since they work on commission they make money on the up swing and even more money on the down swing.

Sort of like playing poker when you realize that the game has been rigged and not for your benefit.

A major source of advertising revenue for newspapers is from the real estate industry who basically tell them the stories they are going to print.

These so called news stories are little more than press releases from the real estate board of your local city.

Drink your Kool Aid.

#33 Good Times over realtors! on 04.27.12 at 10:05 pm

Oh ya I shouldn’t forget the uneducated mortgage broker who lends money to people without money. The housing crash will be wonderful to watch. It would be nice if many who have committed financial stupidity end up in their cars after losing their condo or homes. The bill is ready to be paid and the dead beat 0-5% down morons don’t have the money. The house of cards needs to crash.

#34 FTP - First Time Poster on 04.27.12 at 10:08 pm

I love how F is able to make announcements with a furrowed brow, like this stuff has been keeping him up at night. Truth is, the announcement yesterday was prepared months in advance, the CMHC “stress test” has been done and failed, the writing is on the wall. Carney and F want to be beyond arms length when TSHTF, so they pine, warn, lament – all with a worried look. Makes me howl with laughter at what these idiots do. Can a politician get an Academy Award?

#35 Dontcallmeshirley on 04.27.12 at 10:09 pm

Now that the real estate market has wound up, how can we win?

Anyone notice that the 6 banks just got their oligopoly back?

I got two words of wisdom: “buy bank shares on monday”

#36 ANONYMOUS on 04.27.12 at 10:22 pm

Garth and everyone else here at this blog: We won’t live forever, so go out and enjoy your life while you have it. Its a simple as that.

Forget about real estate, and forget about buying right now as it looks as if the prices of homes will be doing the same thing as what the prices of gold and silver have been doing for the past few months.

Gold and Silver was so hot for a while, then when the momentum broke ….. well, that’s all it takes for a long time of slowly sinking prices to set in, happened with Gold and Silver, now its happening with home prices.

(When I say ‘long’, I mean about 10 years long.)

As for that thing about enjoying your life: Buy a floating board and go to the beach and just float around in the water on a fun hot day. Buy a bicycle and explore some bike trails / rail-trails near to where you live and lose some weigh with all of that healthy exercise (wear a helmet, it protects your melon from splitting in a fall, which does happen once in a while.) Buy a canoe and go to Algonquin Park (always wear a life preserver, (or at least a water skier’s belt) just in case you fall in, it happens. And this way your life will be so much more fun, you won’t care about the economy or the falling house prices.

Take care and enjoy your life !

#37 Alan on 04.27.12 at 10:27 pm

http://www.moneyville.ca/article/1167175–why-cra-wants-these-30-000-hst-rebates-back

#38 Bottoms_Up on 04.27.12 at 10:32 pm

I truly feel sorry for those that bought in the past few years with little down for more than 3x income….there’s now going to be less 1st time buyers in the market…..and those in the market will qualify for less…..so nothing to propel the market forward (move-up buyers won’t be moving up)…..I think in a lot of places it will be a melt, and it could be many, many years of a melt……and if rates do go up significantly in the next few years, it could be the perfect storm.

We may never see house prices this high again in Canada. For a long, long time. [and this in fact is a good thing]

#39 SHUT UP Mark Carney on 04.27.12 at 10:45 pm

The past two weeks I’ve never seen so many strangers openly talk about RE as if they are experts . Two days ago in a doctors office three kids 22-23 with one maybe 25 tops talking about how smart RE is to buy and what are the good places to buy and that you don’t need a big down payment. Then a painter telling me of the condos going up near by and how good of an investment it is. The best was the guy at star bucks serving coffee to one of the regulars and giving RE advise. The last time I seen this madness was 2000 when the naz went from 4000 to 5000 in two weeks and everywhere you went or talked to had advise on what stock to buy. This is the top . It’s over now. Anyone who bought last two weeks bought the top (Toronto). Vancouver has already started crashing.

#40 Wasahomeowner on 04.27.12 at 10:48 pm

Bought and sold a few homes over the last few years. Sold all my houses and am renting a brand new spec house. Unfortunately it is half the size we are used to BC Rancher. Our master bedroom is now a storage room. Moved to NW BC, there are 3 or 4 towns here with zero house rentals, lots of apartments or basement suits,everyone is telling me to buy a house because of all the new mines opening in the next few years. I am with you Garth on the future of housing, but its hard to find a house here in northern BC to rent. Must say looking at a 8500 foot mountain out my front door is nice but cant see renting two apartments or a trailer and storage.

Should I move to the Brokanogan or stick it out?

#41 T.O. Bubble Boy on 04.27.12 at 10:52 pm

@ #1 TurnerNation

Is this an anti-F blog?

Yes, because more than any other individual in Canada, this mess is his doing.

Individual homeowners and “investors” have been risky and greedy, but this guy bet the entire economy on a housing bubble (while lying about his mythical economic stewardship the whole time).

#42 WaterlooResident on 04.27.12 at 10:54 pm

Can you guys please stop talking about “DRINKING THE KOOLAID”, you’re making me thirsty !

#43 Neta on 04.27.12 at 10:58 pm

Carney has been issuing his warnings for quite a time already, sighting the bloating personal debt as a single biggest threat to Canadian economy.
I applaud to our central banker; however, I have just one small remark.
Our regulators are instituted to REGULATE markets and the economy, and not to “warn” like a parrot or a broken record. For how long our brilliant and hansom governor will keep crying wolf?
It worth to mention that Alan Greenspan, once considered to be an economic genius, had also famously warned about the irrational exuberance…, did it absolved him from being blamed for the epic collapse that followed?
At least, Grinspan can claim that he couldn’t foresee the extend of the carnage. And what about our genius governor? Judging by his routine remarks, he understand damn well what is the greatest threat to Canadian financial stability.
Therefore, in my opinion, seeing it coming, understanding it like nobody else, warning us repeatedly for several years and doing absolutely nothing to stem it, while having all power in his hands to clam it down before it goes out of whack… It constitutes screaming failure of leadership, neglect of duties and, I would say, cawardness. It suggests me that our “fearlessly independent” central bank is too f’n far from being independent.

#44 a prairie dawg on 04.27.12 at 11:34 pm

#35 Dontcallmeshirley

Surely you meant 5 words… :p

#45 HUBERT HUBRIS on 04.27.12 at 11:37 pm

So how do we square such things with the media headline hours ago, saying, “Home prices move higher in March”?

…………………………………………………………………………..

As you say, Garth, somewhat difficult ‘to square’. Here on the southern island, a little north of Victoria, no houses are selling around us and particularly if the property is priced above $800,000. Price reductions, even in April, come in regularly but are generally identified as reduced or new prices only if the reductions are relatively small. If there are substantial price reductions, the houses have often been removed from the MLS for a short while and then re appear within a month, or a few, as new listings but, it is a fact that many were listed last year and have simply failed to sell. Coincidence maybe (!), but it seems very clear that houses and particulary those above $800,000, are sitting on the market for long periods without selling but it is simultaneously quite UNclear that asking prices are regularly falling. And, of course, no public or government agency tracks house sales of selling prices so it is very difficult to find, review or personally interpret all the figures that are published. I would very much like to see the provincial or federal governments offer the Canadian public a wholly neutral source of statistics on housing sales and house prices. Why exactly is this task entrusted to those with a vested interest?

I more than realise that many homeowners will be in trouble if house prices finally do fall but there are also too many who are already completely priced out of the market OR who have felt they have to take on entirely unreasonable levels of debt to have a home of their own. I feel for young people in particular and those in Vancouver especially, who find it difficult or impossible to buy in their home city. So go, Sandy Garossino and go Garth. There’s rather too much injustice and greed out there AND there’s also far too much manipulation.

#46 Blacksheep on 04.27.12 at 11:39 pm

DA,

“while yes indeed we do tend to follow the US economic situation not lead it. We follow a lot more closely on
the way back up.”
————————————————–
The US is on their way up (potentially) because they
have painfully endured a significant RE correction
(your 4 yrs) and are attempting to wring out their
debt sponge. This renewed credit could (potentially)
lead to more lending and thus stimulation of their economy.

In a complete contradiction to the US situation,
our national debt sponge is saturated to record
levels. We sir, are on our way down.
———————————————–
“We need bubbles as they are a cleansing phase
in any natural living and vibrant economy.”
———————————————–
Even you agree, wringing out the sponge, resets
the economy. Deleveraging can be painful, but in
a low growth, consumer based economy, it’s
absolutely necessary.

take care,
Blacksheep

#47 KingBubbles on 04.27.12 at 11:47 pm

@ #7

But it’s different in Winnipeg :-)

#48 Good Times over realtors! on 04.28.12 at 12:02 am

Watsa, Who Models Buffett, Sees Housing Bubble: Corporate Canada

http://www.bloomberg.com/news/2012-04-27/watsa-who-models-buffett-sees-housing-bubble-corporate-canada.html

The housing bubble in Canada is becoming more main stream.

#49 Re-diculous on 04.28.12 at 12:05 am

Update on the “re-diculous” priced 2 bdrm in my building in downtown Vancouver originally listed last weekend for $705K. Recall, I calculated that the price would need to fall 56% to $295K such that my current rent covered the carrying costs (@ 5% interest rate). Well, just noticed its ask has been cut to $680K…..its a start but a hell of a long way to go still.

#50 Sales stalling in the GTA? on 04.28.12 at 12:20 am

Not much seems to be selling…. so I am not sure where these so called bidding wars are going on? It seems whoever is buying today got 2.99% money and running out to buy before they are priced out forever…LOL. People without money are really stupid but then again…istn’t that why they don’t have money? Whoever sold in the last two weeks got top of the market dollar for their homes. Whoever bought….well we know what happens to them. Time to sit back and drink while the morons go bankrupt and lose their homes.

#51 mr gadget on 04.28.12 at 12:20 am

#39: The past two weeks I’ve never seen so many strangers openly talk about RE as if they are experts . Two days ago in a doctors office three kids 22-23 with one maybe 25 tops talking about how smart RE is to buy and what are the good places to buy and that you don’t need a big down payment. Then a painter telling me of the condos going up near by and how good of an investment it is. The best was the guy at star bucks serving coffee to one of the regulars and giving RE advise.—

There is a story that was told about Jospeh P. Kennedy, patriarch of the Kennedy clan. He was having shoeshine and the shoeshine guy started talking to him about the stock market and investment stretegies.

Kennedy supposedly left and pulled his money out of the market reasoning that if the shoeshine guy (who epitomized the ‘little guy’ was in it, it was time for the big boys to get out.

Kennedy pulled his money out of the market just before the bubble burst and the market crashed which triggered the Great Depression. Joe Kennedy emerged from the Depression richer than ever.

Just something to think about now that people with virtually NO ASSETS are “RE experts”.

#52 Rob on 04.28.12 at 12:29 am

Of course, that home on Mayne Island was first listed about 22 months ago for double the assessed value and only now is listed at slightly less than assessed value…that’s not so much about declining values as it is about listing at far more than the property will likely sell for. Who knows, sometimes a sucker will come along…but it doesn’t seem to have happened for this Seller.

However, the owner appears to have purchased the property in August, 2006 for $282,500 so that certainly shows that prices are lower after almost 6 years…a disappointment to those who think homes always go up in value. I’ve seen many examples of homes that are listed for less than they sold for in 2006 and 2007…especially waterfront.

I live in the Gulf Islands, and I am a Realtor, so I am familiar with that property.

#53 Timbo on 04.28.12 at 12:29 am

http://content.usatoday.com/communities/driveon/post/2012/04/ford-will-offer-to-buy-out-its-retirees-pensions/1#.T5tuXMU8CSq

“In the announcement, Ford said the offer is part of a long-term strategy to “de-risk its global funded pension plans.” It said if an employee takes the lump sum offer, Ford’s pension obligation to them is settled. It said the money for the lump sum would be taken from existing pension plan assets, not operating cash.”

Ah, the pension plan buy out. A sign of things to come.

http://chartporn.org/2012/04/26/the-illusion-of-choice/?source=Patrick.net

A pretty picture of our competitive marketplace leading us to higher wages. ;)

#54 ozy - balance now on 04.28.12 at 12:35 am

There are many many forces at play in the market, long, medium, shosrt term, personal, govt. or corporate, emotions and calculus, seeding and harvesting. Kanatian govt. is like “the dog that barks does not bite” – HERE’S THE THING:

#55 Mr Buyer on 04.28.12 at 12:36 am

Who ever is the last one to leave do not forget to turn out the lights (probably some really intoxicated RE type) I am going to bed, THE PARTY IS OVER. The buy your home cheap party will start shortly…

#56 ozy - balance now on 04.28.12 at 12:37 am

There are many many forces at play in the market, long, medium, shosrt term, personal, govt. or corporate, emotions and calculus, seeding and harvesting. Kanatian govt. is like “the dog that barks does not bite” – HERE’S THE THING: Imagine the worst lie& deception that can theoretically happen to your social class – and prepare for it, as IT IS PLANNED AND COMING, it is work on progress fellas. Wake-up, listen the the signs of the times, e.g. Smoking Man is not smoking weed, a true Toa. Respect.

#57 Nostradamus Le Mad Vlad on 04.28.12 at 12:41 am


“You won’t recognize the country by the time this blog’s finished with it. Everything just changed.” — Nice play on H’s words! Noticeable that H isn’t here while F – C do all the grunt work, relieving H of any undue pressure of actually having to answer questions. Also — 6:10 clip Another reason for prisons? And here. Plus Is Your Spending Normal? Fat chance. He’s spending our money.

These two (for me) are similar: — #12 Inglorious Investor — “More foreign capital to Canada. Oil. Gas. Water. Potash. The North West Passage.”
— and —
“It is reasonable to expect that Canada will attract for the next decade or so sizeable foreign capital … and the question is what are we going to do with that capital? Are we going to build houses … or are we going to invest in our businesses and retool our competitiveness?”

It is evident that events are happening so quickly in the world today, that no one can really keep up with anything anymore, so politicos are using the “Baffle ’em with bullshit” approach, to keep us off guard with upcoming incidents.

It’s worked regularly before and will work again, because sheeple, for the most part, are more concerned with vanity and show-posing.
*
#36 ANONYMOUS — Good reminder. Don’t sweat the small, or any stuff!
*
Micro Currency emerging in France; Cdn. Finance Blog Various links; Oligarchs War in China; Pubs hit Brits. are running out of money; Effective cost cutting (not);/a> China’s RE boom has peaked; Seven Brides for Seven Brothers? Not quite; Best Chance Disunion — end the EZone; Spain Plus Barcelona and Real Madrid are out of the Champions League; Twwelve Countries (Not two) bought gold recently; GDP miss; Spanish Depression; EZone swandives; Greece Is it still together?

5:15 clip Will gold buy a beer? Googlicious’ destruction, but Top Ten Reasons why Google is a pretty good company; Expect the Unexpected; Japan Invasion? Shanghai Take a walk around; Top Tax Rates Going up? Costco Employee Wine buyer; Higher Inflation; Shilling RE prices still headed south; Delaying Retirement; Silver to hit US$40?
*
Seeds All sorts. Beats Monsanto’s garbage; Landbridge between Turkey and China; Range Rover vs. Lamborghini Off-roading; Onboard the Dreamliner; Chemtrails A pic is worth a thousand words; The Secret Olympics No Pix Please, We’re British; 3.2 bln. pixels Gives good space shots; To HAARP? “. . . William S. Cohen, made a statement to the media where he outright admitted that there are environmentally-altering technological threats in existence.”; Microwave Ovens Why did Russia ban them? Looking Back It’s good to remember what govts. do with little or no fanfare. This is from March; US modernizing NATO? While they can’t afford to look after their own citizens properly; Fukushima Hanging on by the skin of its teeth; Irrational Humans; 4:41 clip Cloud of depleted uranium heading to Hawaii and west coast.

#58 thinker on 04.28.12 at 12:53 am

@ Mass Debater

I think the guy from Vision Capital is the fool, he claims to be a real estate expert and said he has been wrong for 5 years. Now he is calling for REITs to expand, I am sure that will go well, sell your REITs will you can. Would not give money to that guy. He said his top holdings in his funds don’t even have a yield! What a clown

#59 Victor on 04.28.12 at 12:57 am

CMHC could be pulled out of mortgage insurance business, Flaherty says

Apr 27, 2012

“Over time, I don’t think it’s essential that a government financial institution provide mortgage insurance in Canada. I think what’s key is that mortgage insurance is available at a reasonable cost in Canada. I think there is a role to regulate but whether we, the Canadian people, have to be the owners and shareholders of a financial institution to do this is a question. I don’t think it’s essential in the long run.”

http://business.financialpost.com/2012/04/27/cmhc-could-be-pulled-out-of-mortgage-insurance-business-flaherty-says/

#60 Z on 04.28.12 at 12:58 am

#36 ANONYMOUS on 04.27.12 at 10:22 pm
A good dose of Garth and a good dose of your advice
= a balanced ( healthy and prosperous ) life. :)

#61 van sucks on 04.28.12 at 1:12 am

F couldn’t balance a budget in Ontario. How the hell is he going to do it for the country?

#62 Timbo on 04.28.12 at 1:13 am

http://www.nytimes.com/imagepages/2011/10/22/opinion/20111023_DATAPOINTS.html?ref=sunday-review

http://kpilibrary.com/gallery/eurozone-dashboard

Interesting visualizations to help understand the mess in Europe.

#63 daystar on 04.28.12 at 1:43 am

http://money.ca.msn.com/investing/news/breaking-news/bank-of-canada-use-foreign-funds-on-business-not-homes

“It is reasonable to expect that Canada will attract for the next decade or so sizeable foreign capital … and the question is what are we going to do with that capital,” Carney told a business audience in Ottawa. “Are we going to build houses … or are we going to invest in our businesses and retool our competitiveness?”

Carney also repeated his warnings about excess household debt as Canadians take out mortgages at extremely low borrowing rates, saying the country should heed the lessons of the U.S. housing crash.

“We’ve seen this movie. It just played in a major cinema just south of here, over and over and over again, and it would be the height of folly to repeat those mistakes,” he said.

“There’s a variety of things we can do, have done and could do prospectively to make sure that doesn’t happen.”

He also repeated that the strong Canadian dollar is a challenge for the economy. The central bank is “not obsessed” with the value of the currency but it does play a big role in determining monetary policy, he said.
– Blog dog Carney

Lets talk about that… what we can do.

One of the things we can do collectively as buyers, sellers and lenders is to not buy, sell or lend to people who can’t take the true litmus test… a 10% spike in interest rates. Thats the true test concerning what is coming up for Canada. Thats right… 10%. Variable rates could briefly spike this high within 5 to 6 years. Indulge me.

Last year (2011 est), Canada’s gross public debt to GDP, the summation of all federal, provincial & municiple debt was estimated at 83.5%.

http://www.indexmundi.com/canada/public_debt.html

Note the bottom chart on the above link (as well as how quickly debt has grown since 2006 under Harper). in 2009, gross public debt (intergovernmental) to GDP GDP growth was 83.3%. In 2010, it was 83.9%. CIA factbook has it estimated at 83.5% in 2011. We remember all the deficits governments ran up during this time since 09′ so one would think that these numbers would be much higher, right? Note the loonie appreciating against the greenback over the last decade or more:

http://www.cbc.ca/news/interactives/loonie-greenback/

http://www.tradingeconomics.com/canada/gdp

Simply put, our strengthening loonie has grown our GDP because its priced in U.S. dollars and as a consequence, diluted gross public debt lowering intergovernmental debt to GDP ratios. Our appreciating loonie will no longer work in our favor from here on in. If anything readers, it will work against us.

Note the correlation GDP growth has with the loonie in the above 2 links, since our GDP is priced nominally in U.S. dollars. Our loonie appreciation has also created drama with Canada’s gross debt to GDP ratios.

Here is what we know now. The 2011 revenue year has been estimated to be at 83.5% according to CIA with the loonie worth 1.03 on April 1st of 2011 but thats the estimate. In April 1st of this year, the loonie was worth a dollar or a 3 cent drop from a year ago. Factor in 2.6% growth for 2011 and our GDP drops .4% nominally in U.S. dollars for 2011. Factor in an estimated 5% gross public debt to GDP worth of intergovernmental budget deficits plus a nominal GDP drop of .4% and 83.9% gross public debt to GDP (2010) grows 5.4% to 89.3% gross public debt to GDP which should be where Canada is right now. (you are all welcome to check my calculations if you like)

http://www.xe.com/currencycharts/?from=CAD&to=USD&view=1M

Compare the charts to dial it in. I’m saying we are now at 89.3% gross public debt to GDP as we speak (thats the summation of all government bonds federal, provincial and municipal against our estimated current GDP). If Canadian governments run deficits equal to last year again this year and next and the loonie flatlines at a dollar and GDP grows by 2% this year, by April of 2013 Canadians will be around 92.3% intergovernmental debt to GDP.

Now… lets price in a recession flatlining GDP growth for 2 years, coupled with intergovernmental debt at 5% of GDP annually as governments, even with cutbacks get swamped with social spending increases they don’t expect and revenue growth flatlines for 2 years (I think thats generous). Lets price in loonie appreciation of… 2.3 cents to make it easy math and by April of 2015 we are at 100% intergovernmental debt to GDP with the loonie at 1.023 and the world wondering if we are the next nation asking for a bailout with, you guessed it, bond investors pricing it in. The last time Canada briefly hit this number was in 1995, peaking at 101.5% in 1996:

http://www.tradingeconomics.com/canada/general-government-gross-debt-in-percent-of-gdp-imf-data.html

10 year bond yields back in the day were… well… check it out to reflect the risk (note: external debt to GDP at the time was at 45% of total gross public debt):

http://www.tradingeconomics.com/canada/government-bond-yield

These interest rates are rates of treasury bonds, readers.

BoC rates were between 5 to 8% during the mid 90’s and chartered variable rates go up from there:

http://www.bcrealtor.com/d_bkcan.htm

Spreads between the BoC and our chartered banks would be similar to what we see today with the BoC setting rates relative to treasuries and inflation. Are Canadians beginning to see the picture yet in terms of what interest rates could truly hold in a very short period of time in Canada? Readers are welcome to check my math (please do) but I believe I’m accurate or I wouldn’t waste your time. Are mortgage holders worried yet? Because they should be. History is setting itself up to repeat but this time is different. We now have a RE/credit bubble unwinding through our near future to come.

My thoughts are that we’ve got about a years grace…. maybe less before rates go up and they will go up slowly… and then 2 and 3 years from now… accelerate with a vengence to where I believe BoC rates could hit 8% briefly within 5 to 6 years depending on government responses.

Over the next few quarters, we’ll get a teaser from the BoC unless foreign investors believe the loonie will continue to appreciate over the U.S. dollar over the next few years. Readers, oil will stay strong. We could see the loonie hit 1.05 and stay there for a year or more, thats realistic but isn’t realistic is to expect the loonie to stay strong forever considering what would happen to consumer spending especially as this housing bubble unwinds leave a whole lot of people in negative equity or worse. The U.S. dollar would have to collapse over the next few years and it won’t, that I can assure you (2017… 2018 we should see the U.S. dollar depreciate noticably unless they wage an expensive war).

We have too much public debt on our hands to keep the loonie lofty and if one really thinks about it, this is why Harper is so intent on oilsands development at all costs to our environment, science, global warming, you name it, anything else that could oppose. Its more than just a U.S. appetite for cheap oil. Its about money and oil production to drive loonie appreciation at the start to keep driving up the loonie until one of two things happen. Commodity valuations plummet leaving us (as well as bond investors) staring at huge piles of debt and big question marks concerning who will pay for it… or the U.S. dollar appreciates due to world events leaving us wondering how to pay our debts and finally, the unthinkable, electrification of transportation but its years away and we’ll be full of fear well before then.

What I can see is a worse case scenario developing over the next few years compared to our currency/public debt crisis back in the mid 90’s. We didn’t have a real estate bubble back in 1995 – 1996. We do now and we know what it brought to the U.S. Japan. Spain. Portugal. Iceland. Dubai. Argentina (back in 2001, the reason why the nation went broke, look it up). Ireland. All of these nations are in terrible public fiscal shape publically as a result of real estate nations gone bust, 2 of which are too big to fail.

Now on the large screens we have bubbles bursting in Singapore. Australia. The U.K. . France, yes, France. Talked about them earlier on the last thread, France has a bubble as well as a high intergovernmental/gross public debtload and major exposure to Italian treasury bonds not to mention major trade with Italy and Spain spelling major trouble for them:

http://worldhousingbubble.blogspot.ca/2012/02/checking-in-on-frances-housing-bubble.html

http://www.adrianleeds.com/french-property/insider/french-property-insider-past-issues/archive/view/listid-3-french-property-insider/mailid-123-fpi8-3-12

http://uk.reuters.com/article/2011/07/01/uk-france-property-idUKTRE7602IY20110701

Belgium is in a real esate bubble:

http://www.theatlanticcities.com/housing/2011/12/worlds-housing-bubble/734/

… as is China. And Hongkong.

We aren’t alone but… its leaves us no solace.

I can only hope we can adjust socially to our adversities going forward but hard times are coming. For some, this year. For many… next and the years to follow as this nasty RE/credit bubble unwinds. Prepare!

#64 Makavelli on 04.28.12 at 2:07 am

#22 Devore on 04.27.12 at 9:36 pm

I know Dunbar isn’t quite Point Grey, so maybe that’s why this seller is desperate and grasping at straws. You can buy it for $4M or rent it for $1700 available immediately. Please call, and stop the bleeding now.

Courtesy of VCI.
————————————

OMG!!! What the hell are you smoking? Rent that place for $1700. First you say point grey is ordinary, now you dis Dunbar. You can’t even f$&@ng rent a 4000 sq/ft home in Surrey for that money. This site actually has adults reading and posting. You my friend, are a little child hidden behind a screen. Pathetic, and nice try trying to bs. Go back to watching sesame street and power rangers.

#65 PoorgEoisie on 04.28.12 at 2:10 am

I wonder if the conservative party is working on another name change. If I were Harper I would call an election tomorrow and try like hell to lose so I could blame the whole mess on the NDP or whoever wins. Or perhaps a few conservative MP’s could decide to form their own party to reform the Canadian right, some kind of alliance… Like the conservatives but less progressive and so forth.
Or Harper could sit tight until 2015 and win the distinction of being the last conservative PM in Canadian history.

#66 NoName on 04.28.12 at 3:29 am

Lately I can see that many of regulars are beating their war drums and chanting CRASH CRASH… I am surprised that some regulars seem to believe that crash will make thing right, and everything will reset to the point where prosperity for nation will kick in, and that from that point it will be all god…
But unfortunately we all know that is exactly what is not going to happen, what is coming is going to be bad for all, people that spent their monies stupidly, and those who did their best to save, it will affect them, their kids, and maybe their parents…
Some people and institution will prosper from RE correction, wealth gap will widen, and there are good chances that many will reevaluate priorities but unfortunately it will be to late.
Garth, How bad it will get for GenX?

#67 DonDWest on 04.28.12 at 4:32 am

“The feds will not be increasing CHMC’s debt ceiling. Mortgage insurance will soon be harder to find, and likely cost more. Ottawa might even privatize or eliminate the agency.”

What private corporation in their right mind would want to inherit the CMHC? A corporation that has a suicide wish perhaps? Wait a second, that’s what all those idiotic multi-millionaires coming by the millions from China are for! If they’re willing to pay 2 million to buy a Vancouver shack; they’ll be lining up to purchase the CMHC!

So maybe, just maybe, our government is smarter than I thought. . .

#68 debtified on 04.28.12 at 4:33 am

Garth, you animosity towards F is quite apparent. Don’t let him occupy your realm of consciousness too much. He is just trying to be a good politician. It has long been established how bad a public servant he really is (not to mention how elfin ugly looking he is).

You are doing great in documenting this government’s reckless behaviour. One thing is for sure, even in the middle of the real estate correction that you have warned us all so many times, you will still be not as popular as H, F and C. Imagine a homeowner struggling to keep his/her house. Who do you think he will like more? The guy who says I told you so or the politician who says I will bail you out? Unfortunately for you, he/she is just one of those who belong in the 70%+ homeownership club.

I like it better when you focus your attention and energy on the positive things that we can do to prepare us for a bleak future. There’s no point playing the blame-game.

Thank you for all your efforts in educating us. Take care.

#69 Mr Buyer on 04.28.12 at 6:03 am

I was just checking out hi-speed internet connections in Canada as we are thinking of returning there. I need HD quality video chat capabilities to carryout business and the like. I was pleasantly surprised to see fiber optic internet offered. As I looked into it further it turns out it is nothing more than plain old DSL with a big load of baloney advertising push suggesting something new has happened and homes accross Canada are getting hooked up directly to a fiber optic connection. This is plain old lying in my book but we have grown so tolerant to lies that they are accepted as a matter of course in any shrewd deal. I have a Fiber optic connection To The Home (FTTH). This means two fiber optic lines into my house (Up and Down I guess) that go into a fiber optic modem on my desk and there and only there it is converted to an electrical signal carried over 1GB network cables in my house. I have 100Mb down and Up capacity and a salesman dropped by the other day to offer me 1GB down and up (That is right, 1GB). I pay $80 a month for internet, TV, and Phone. Video chat with others on the fiber optic network with HD webcams is stunning. The phone and cable companies are dragging their feet because they would be almost extinct if there was open bandwidth available across Canada and they did not control it somehow. Monopolies hampering progress, plainly and simply.

#70 Joey on 04.28.12 at 6:13 am

Garth are there any decent websites that you can recommend for residential real estate stats in Vancouver and Victoria? Ones that track median prices would be great. As you regularly allude to, Im also VERY tired of the spin doctoring on VREB and CREA backed sites. thanks for any ideas.

#71 JW on 04.28.12 at 6:58 am

http://www.theglobeandmail.com/globe-investor/personal-finance/financial-facelift/with-twins-on-the-way-couple-want-a-much-bigger-house/article2416278/

How’s that for advice Garth? Even the “experts” are in on train ride. Incredible they would be advised to purchase such a house with so some much risk on the table….

#72 Deb on 04.28.12 at 7:03 am

Mr. Flaherty’s comment yesterday to The Globe and Mail’s editorial board:

“I also talk to developers, and I hear from some of them who are in the business of building condos that they don’t really have a plan, they’re just going to keep building them until people stop buying them. It’s not exactly a fiscal plan. It will lead to a crash.”

I am more than a little surprised by his choice of words.

#73 Q on 04.28.12 at 7:16 am

Garth, you’re right about Canada not having a “national” real estate market, albeit the entire colony will share in the coming onslaught (no mere correction here). End result prediction (by yearend): Toronto down 50%; Muskoka down up to 60%; Vancouver down 60%; Winterpeg down 30%; Kelowna (aka the worlds’ largest strip mall)down…well, frankly who cares?; toy farms north of the 401 down 50%+……..looking forward to buying another pretend farm soon. All this will of course lead to higher taxes to cover CMHC so the poor banks don’t get hurt for writing all that bad (fraudulent?) paper…leading to more foreclosures and even lower prices…and let’s not forget the increased property taxes, based on the “tip of the market” values.

#74 TurnerNation on 04.28.12 at 7:21 am

#6Furst on 04.27.12 at 9:09 pm

Come here Son. Buck up, I was not even trying and I mosted you on First. Are you related to Josef?

#75 John on 04.28.12 at 7:28 am

Toon Town Boomer wrote:

“Hey didn’t Harper say something like that? “You won’t recognize Canada when I’m through with it”.

Sigh. — Garth”
——————————————-

So what’s up with this? The F,C,Harper scam is what it is. These people are NOT involved in the unfolding situation and never have been. It’s not that they are low-powered players, they are non-players. Literally.

Do you know the names of the last three finance ministers in Australia? Prime Ministers? Central Bank thugs? No you don’t. Why would you. And how ridiculous would it be to talk about the takedown of that place using those names. Absurd.

You have no idea how nonsensical your comment looks from outside “Canada”.

What’s more, those that won out on real estate simply due to an enslaved Chinese labour force and a central banker run-up don’t have much to say about the 25-35 crowd drinking kool aid.

The early gamers aren’t any better off than the late gamers. They plan to go after all “assets”, and your inflated “portfolio” and “low debt” position isn’t a “sweet deal” when your COMMUNITY is in trouble.

Nobody is talking about that. “Harper government”. What the hell are you talking about. Wow.

Do some research…Canadian people are good, smart people. Get educated about what’s happening in the world right now. Your comment is utter nonsense. There’s no other way to put it.

#76 Mr Buyer on 04.28.12 at 8:01 am

I know not to rush to make a post between appointments. It is 1Gb (that is 1 gigabit, not 1Gbyte). Think of it, open unrestricted bandwidth at blazing speeds. It is a reality in Japan and Korea and who knows where else. I guess we have to labor under self serving monopolies. I have had 1Mb transfers from clients while simultaneously video chatting in crystal clear HD. All the technology is here and now, it is just the lack of fiber optic connectivity (FTTH, fiber optic to the home). It is as if they are in the room with me. No baloney. The latest generation of HD webcams are head and shoulders above the cameras from even a year ago. Time to form a true internet company concerned with providing unrestricted FTTH along with an independent Canadian alternative to the .com. I think we should break the present phone and cable monopolies that lord over the net. They are only concerned with limiting the web’s impact upon their bottom line. I can not even begin to imagine how such bandwidth could be utilized (I am not smart enough). All I know is that I have become accustomed to it and can not see myself returning to 1998 bandwidth profiles. Who is with me?

#77 Yuus bin Haad on 04.28.12 at 8:10 am

Just follow Garth’s new F Scale. In under a year it’s gone from “elf” to “pecker”!

#78 Mr Buyer on 04.28.12 at 8:11 am

#69 debtified on 04.28.12 at 4:33 am
I like it better when you focus your attention and energy on the positive things that we can do to prepare us for a bleak future. There’s no point playing the blame-game.
……………………………………………………………………
This catastrophe must be well documented and everyone must know exactly what happened. There should be a clear widespread understanding come voting time next election. The story must be told and retold and made part of the record easily accessed by means of Google for now and who knows what in the future. Even with all of that a generation from now the same nonsense will be foisted upon the people again.

#79 Mr Buyer on 04.28.12 at 8:14 am

I think FTTH (Fiber Optic to the Home) should become an infrastructure project under taken by the next government. Maybe my priorities are a little messed up though.

#80 Mr Buyer on 04.28.12 at 8:17 am

My two fiber optic lines actually are one. The line itself is two but only one is used (sorry about the up and down line nonsense)

#81 Ben on 04.28.12 at 8:32 am

Banks used to say a safe mortgage was a maximum of 3 times the buyer’s annual income with a 20% downpayment.

That was pre bubble era though.

#82 Dontcallmeshirley on 04.28.12 at 8:32 am

Carney and Flaherty were both refreshingly frank in their public remarks yesterday.

I suggest moving past wanting a mea culpa from those two fellas. Not going to happen.

Instead lets turn our imaginations to what systemic change plays out over the next 12 months. Noah just got the call to build an ark guys.

First thing, non-deposit taking lenders (mono-lines) are going to find their funding dry up. That means they and their mortgage broker corps are toast. Goodnight Merix, MCAN, Xceed, etc.

That’s an investable event people.

#83 md on 04.28.12 at 8:35 am

Forget vancouver in calgary tell us more about price declines in the
t dot

#84 Mr Buyer on 04.28.12 at 8:43 am

“Over time, I don’t think it’s essential that a government financial institution provide mortgage insurance in Canada.
………………………………………………………………………
The CMHC serves a purpose and that is to provide backing for families to get a house that normally could not. When the government uses it to set the RE market on fire then it is not in fact CMHC any longer but rather Bubble initiation machinery but how am I supposed to know.

#85 Bottoms_Up on 04.28.12 at 8:44 am

The NDP failed to stop the inflation of this bubble.

#86 TurnerNation on 04.28.12 at 8:48 am

Hello, has anybody developed a Firefox add-on to block DA’s posts? Any codesmiths here?

#87 Smoking Man on 04.28.12 at 8:49 am

Just got in from another romporo at the casino, made out like a bandit, thats how its don bubble heads.

As I was playing and lokking ahed I noticed donald at my table, yes the trump himself.

Im a litle wasted so forgiv my spelling this morning, those rummys sure tatsed nice.

#88 Inglorious Investor on 04.28.12 at 9:16 am

#67 NoName brings up a good point. Many commenters on this site rub their hands together at the prospect of a real estate crash.

While a (relative) decline is needed to bring the market back into balance and to clear away excess, there is another side to that scenario. Namely, that many people will be severely wounded financially by a US-style crash for the reasons constantly cited on this blog.

A housing crash will be inextricably linked to the economy. So the only people who could benefit are those with lots of cash and who don’t necessarily need a job or at least keep their job.

A better scenario for the country as a whole would be a steady decline in real (inflation adjusted) prices. In other words, the markets get back to balance via the economy and real wages catching up to real estate/mortgage debt.

However, under that scenario the nominally minded who are itching for affordable housing will have to wait for years before they feel wealthy enough (and qualify) to actually buy.

In short, be careful what you wish for.

#89 W-Hat on 04.28.12 at 9:19 am

Mr Buyer – they don’t run two fiber lines with the intent of “one up and one down”. A single fiber line is enough to supply all the bandwidth and throughput a house needs for TV/Phone/Internet. The second line is run because the expense is in the running of the lines not the lines themselves, so, might as well run a backup incase something happens to the first (fiber is fragile).

While i am not a defender of Bell/Rogers in the least, it is also important to understand that FTTH in the US is mostly found in the land of McMansions where home ages are less than 7 years or so. Go to the older parts of New York, Chicacgo, etc and you won’t find FTTH.

The houses in my neighbourhood (inner suburb of Toronto) still have phone run to the house above ground, as well as power. It’s an old place. The cost of running FTTH in this sort of density is astronomical and not practical in the least. This is true in US cities and Canadian cities. Look for wireless technology to be the solution here long term.

#90 Form Man on 04.28.12 at 9:36 am

#88 smoking man

apparently you never lose at the casino. Anyone with an understanding of probability realizes this is not possible. You are full of bullsh*t

He’s also the most impersonated person on this blog. — Garth

#91 blase on 04.28.12 at 9:49 am

Garth,

If Calgary houses have dropped 25% since 2007, how much more of a drop to you expect at minimum? It seems the prices now are about 4-5x gross incomes.

#92 jen on 04.28.12 at 10:08 am

Whats going on? Now government MPs are talking about ‘bad’ housing policy in the United States.

http://www.youtube.com/watch?v=wWkUaJId7pM

It seems obvious they know this is going down the tubes. They are preparing to tell the narrative ‘we told you so’.

#93 getreal-tor on 04.28.12 at 10:10 am

#70 Mr Buyer on 04.28.12 at 6:03 am

If you value your bandwidth then move to S Korea or stay where you are because Canada sucks when it comes to Internet bandwidth to the home.

We are most likely one of the worst countries when it comes to bandwidth as related to cost for a developed nation. Robbers and Billus will simply not cave in until the government gives them a kick in the pants and permits more foreign investments to compete with them…

Who else is tired of their p0rn video feed freezing up on them at crucial moments? Let’s march in solidarity for better bandwidth because North America’s economy was built on sex so lets make our fore fathers proud and give everyone good bandwidth to their homes. :)

#94 Daisy Mae on 04.28.12 at 10:10 am

#66PoorgEoisie on 04.28.12 at 2:10 am
“I wonder if the conservative party is working on another name change.”

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

Dunno. But I do know the provincial BC Liberals are considering a name change….

….as if it’d do any good.

#95 Joey on 04.28.12 at 10:12 am

Garth where can I find clean real estate stats for Victoria and Vancouver without the realtor spin doctoring?

#96 Mr Buyer on 04.28.12 at 10:17 am

I watched the guys run the fiber optic line down my block and hook up exactly one house (me). They were done in 45minutes (that is running a new branch up my block). It can be done and not astronomically.

#97 Market Bull on 04.28.12 at 10:18 am

Haven’t we heard this all before?

Every time F tweaked the mortage rules it was supposed to be “the end” of the bubble. Didn’t happen. Then it was the introduction of the HST – didn’t happen. Then it was the doubling of the land transfer tax in Toronto that was surely going to cool things down – didn’t happen.

Now we’re supposed to believe that some further minor tweaks to the regulations will be the sure-fire killer? How ominous.

Get real.

#98 Daisy Mae on 04.28.12 at 10:19 am

#69 Debtified: “Who will he like more? The guy who says I told you so or the politician who says I will bail you out?”

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

Finance Minister (and I use the term loosely) Flaherty won’t be bailing homeowners out of the mess he created for all of us.

We taxpayers will be doing the bailing….

#99 Mr Buyer on 04.28.12 at 10:28 am

#89 Inglorious Investor on 04.28.12 at 9:16 am
A better scenario for the country as a whole would be a steady decline in real (inflation adjusted) prices
……………………………………………………………………..
Yes. And an even better scenario would be to lower interest rates while expanding housing insurance and dropping criteria so house values can inflate and people can borrow money on the new inflated values of their houses and the ECONOMY can continue to absorb multitudes of job losses to 2nd and 3rd world labor forces and let the borrowing frenzy continue until everyone has a head ache and it is finally over and the houses gently float down in value with successive rounds of buyers losing a little bit on a house as it changes hands rather than one seller getting stuck with the one massive price drop. All we have to do is convince everyone to keep borrowing to buy something dropping in value for forever. Maybe we shouldn’t word it like that, I know lets call it a soft landing.

#100 Daisy Mae on 04.28.12 at 10:30 am

#79 Mr. Buyer: “This catastrophe must be well documented and everyone must know exactly what happened. There should be a clear widespread understanding come voting time next election….”

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

As stated yesterday, the present governments’ incompetence and arrogance is already being noted, as the cons presently tie with the NDP in recent polls.

#101 getreal-tor on 04.28.12 at 10:32 am

#19 Jsan

Interesting read. Thanks for the link… I agree, people are delusional.

The couples expenses are also quite high for clothing, food (i assume they eat out a lot), and they spend $90 a month on prescriptions at an early age (you’d think their benefits would be better) and for their net worth their insurance premiums are low so you’d wonder how much they have insured each other for as the loss of one income due to illness could be quite sever to their life.

People need to start living below their means instead of maxing out their lifestyle with each increase or bonus, as it will rain from time to time and you need to have a good umbrella to protect you.

#102 Abitibi Doug on 04.28.12 at 10:33 am

Wow, I’m flabbergasted. You mean to tell me it ISN’T different here in Canada?

#103 Mr Buyer on 04.28.12 at 10:33 am

Wireless does not seem to be the way to go. I say bite the bullet and wire us up. We built the railway and we can sure as hell run fiber optic line into peoples homes. Wireless has wildly fluctuating bandwidth for god knows what reasons.

#104 Daisy Mae on 04.28.12 at 10:37 am

#85 Mr Buyer: “The CMHC serves a purpose and that is to provide backing for families to get a house that normally could not. When the government uses it to set the RE market on fire then it is not in fact CMHC any longer….”

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

Exactly. No excuses. Let’s call a spade a spade. All this government is doing is back-tracking. An attempt to right the wrong.

#105 Mr Buyer on 04.28.12 at 10:37 am

I watched the guys hook up my connection and maybe I am missing something but it did not look that challenging and you can not electrocute yourself so I am guessing people can be trained to get the job done fast and somewhat inexpensively (just keep the house install crews away from the main trunk)

#106 Mr Buyer on 04.28.12 at 10:38 am

It can be done. We just have to decide to do it. I’ll try to cost it out someday.

#107 Daisy Mae on 04.28.12 at 10:39 am

#86 Bottoms_Up: “The NDP failed to stop the inflation of this bubble.”

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

Did they even try? Seems to me we haven’t heard a single word from the opposition….

#108 Makavelli on 04.28.12 at 10:41 am

He’s also the most impersonated person on this blog. — Garth
———————–

Why not block this if you know it’s happening?

I’m not his security detail. — Garth

#109 };-) aka DA on 04.28.12 at 10:50 am

#89 Inglorious Investor on 04.28.12 at 9:16 am

Well said.

#110 Furst on 04.28.12 at 10:54 am

#88 smoking man

Smoking man, given that you`re unemployed or underemployed, gambling at the casino is probably not in your best interest. Seriously, go get some professional training, take a university course and upgrade your skills. Spend your time job hunting and you`ll find something. It`ll be more fulfilling than the casino, I assure you.

#111 D-dawg on 04.28.12 at 11:30 am

#87 Hello, has anybody developed a Firefox add-on to block DA’s posts? Any codesmiths here?

Second that. Throw in Nostra on that add-on. I know a plethora of blawg dawgs that will pay handsomely for this.

#112 Timbo on 04.28.12 at 11:40 am

http://www.creditwritedowns.com/2012/04/breaking-down-first-quarter-2012-gdp-numbers.html

“Real per-capita disposable income shrank at an annualized -0.27% rate during the quarter (from $32,699 per capita to $32,677 per capita) — and it remains lower than it was 5 quarters ago.”

incomes are dropping but housing are rising?! Something does not jive unless debt is growing again…

http://mondediplo.com/openpage/locking-down-an-american-workforce

“So convicts were leased to coal-mining, iron-forging, steel-making, and railroad companies, including Tennessee Coal and Iron (TC&I), a major producer across the South, especially in the booming region around Birmingham, Alabama. More than a quarter of the coal coming out of Birmingham’s pits was then mined by prisoners. By the turn of the century, TC&I had been folded into J.P. Morgan’s United States Steel complex, which also relied heavily on prison laborers.”

slave labor at dirt cheap prices….we can compete against this right?

#113 Realtors and mortgage broker's crying about the free market on 04.28.12 at 11:44 am

Realtors and mortgage broker’s hate the free markets which is why they are crying about the end of CHMC. They all face an uncertain future since their easy no work cash cow CHMC will be stopped. They know the RE market and HELOC is a house of cards backed by CHMC. This will hit the economy hard as the fake economy crumbles. Soon people will see the lies of HAM since their is no HAM buy rather BAM (borrowed Asian Money) . Realtors and mortgage broker’s know it’s a lie. Thousands of mortgage brokers and construction workers will be out of a job. Watch home Depot and other beneficiaries of HELOC to see their profits and sales go down. People know how to spend money they don’t have but do not know how to pay it back. Many have spent their way to bankruptcy.

#114 Rosebery on 04.28.12 at 11:46 am

#53 Rob

Maybe you have an explanation why the MLS # 280084
refers to a listing in Campbell River, not Mayne Island???

#115 Dontcallmeshirley on 04.28.12 at 11:46 am

#89 Inglorious Investor,

A housing crash will be inextricably linked to the economy. So the only people who could benefit are those with lots of cash and who don’t necessarily need a job or at least keep their job

———

Nonsense. There will be winners and losers like in anything else.

Some of us will be hammers, others will be nails.

Employment will still be 80%+ no matter what the go forward scenario.

Wealth and savings is where the effect will manifest.

#116 lookoutbelow on 04.28.12 at 11:57 am

Good Move by F, maybe too late, though.

About time the Government realized that this is a major financial institution. Infact, I would call it “Systemically Important” or simply “Too Big to Fail”.

CMHC is engaging in a business that has MORAL HAZARD written all over it.

If foreclosure rise, there is simply not enough capital in its coffers to pay out those poor banks who hold the default insurance. It only has about $12 Billion in cash on a portfolio of over $540 Billion. And who we have running this Corporation, property developers, mortgage brokers and a plumbing company person. Time to wake up the Board, Hurry up OSFI !

Lastly, can anyone explain to me, why our Government is backstopping two private mortgage insurance companies to the tune of 90% ? Both Genworth and Canada Guaranty are insured against catastrophic drops in house prices by the Canadian Taxpayers.

But the Bubble won’t pop and the tooth fairy will come.

That’s what they said in the US and here they are 5 years later with their house prices still dropping. Maybe the Federal Government didn’t read that story.

#117 kilby on 04.28.12 at 12:03 pm

Just to be accurate, the house on 1.5 acres is on Mayne Island, it’s a nice location but not waterfront, 2 minute walk to the beach. Still a great price.

Walk to the beach, not the waterfront. Check out Google Earth. — Garth

#118 Kane on 04.28.12 at 12:29 pm

Prices are still rising in Saskatoon and Regina isn’t far behind. What is there in Saskatchewan that could possibly be causing that?

Van, TO, and Calgary have jobs/oil money/etc but there is nothing in Saskatchewan – no jobs; less nightlife – and soon to be even less if the Ag market crashes like it should.

#119 Bottoms_Up on 04.28.12 at 12:44 pm

#108 Daisy Mae on 04.28.12 at 10:39 am
——————————————
Just a joke but good point. Didn’t you hear the NDP didn’t want to fight Hitler? ; )

http://www.ottawacitizen.com/news/national/6531833/story.html

#120 Not 1st on 04.28.12 at 12:58 pm

Garth, it seems the calgary market is very stable in fact. The prices fell about 10% back in 2008 and they haven’t moved much since then. Calgary still has a lot of new people moving in so I don’t see how prices can drop until in-migration slows.

#121 Not 1st on 04.28.12 at 1:01 pm

#119 Kane on 04.28.12 at 12:29 pm

“Prices are still rising in Saskatoon and Regina isn’t far behind. What is there in Saskatchewan that could possibly be causing that?”

Kane, the one thing that sask has going for it is that it finally rid of a socialist hold back development government. The whole province is 25 years behind in economic growth so its now catching up fast.

#122 zeeman on 04.28.12 at 1:19 pm

hi

some of the changes happening to the mortgages that you have mentioned will have very little impact……its the same old stuff….carney and flaherty talking down the market which has not worked for years and it will not work….rates will stay low and and they buying will continue…i think the celebration is premature

#123 Dontcallmeshirley on 04.28.12 at 1:34 pm

#117 lookoutbelow

Lastly, can anyone explain to me, why our Government is backstopping two private mortgage insurance companies to the tune of 90% ?

——–

To create competition in mortgage insurance.

#124 The Thing in the Basement on 04.28.12 at 1:56 pm

115 Rosebery – the MLS number is correct – Mayne Island.

“It sits on an acre and a half of rugged waterfront” – Garth.

This is what threw me and maybe 118 Kilby. It is not waterfront.

And two ferries just to get to the big island??

#125 wopaholic on 04.28.12 at 2:13 pm

I don’t believe anyone is begging/wishing for there to be a market collapse, but all the reckless dreamers and their RE’s with the help of “F”, “C” and CMHC have paved the way to this bloodbath. Other countries have pulled through or are currently sorting their way through it, no reason why Canada won’t. Sadly, it seems like Canadians, with a 4 year crystal ball in it’s possession, weren’t going to be satisfied until we did it to ourselves as well. Those who predicted it and are cash rich are assuming vulture position, I’m sure.

#126 Daisy Mae on 04.28.12 at 2:18 pm

#68 Poorg: “Or Harper could sit tight until 2015 and win the distinction of being the last conservative PM in Canadian history.”

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

Oh, as usual — and always so transparent — they’ll expect to ‘have turned their fortunes around’ by then. Same old crap, you know?

#127 Canadian Watchdog on 04.28.12 at 2:32 pm

Details regarding CMHC oversight.

Actions and Enhancements

i) CMHC to report to OSFI instead of HRSDC
ii) OSFI to revamp CMHC’s board of directors.
iii) OSFI to perform rannual stress tests to manage CMHC’s risk.

Amendments to the National Housing Act:

i) CMHC is to create and maintain a bond registry to identify issuers and bond programs.
ii) covered bond collateral is limited to ‘uninsured’ loans made in Canada only.
iii) insured mortgage loans by CMHC or any private insurer will ‘not’ be eligible as covered bond collateral
iv) loans over 80% LTV are ‘not’ eligible as covered bond collateral
v) statutory protection for bondholders in the event of an issuers insolvency.

Excluding all insured mortgages as collateral for covered bonds removes the sovereign guarantee (CMHC backed by the government), thus moving risk back to bondholders. This will have a significant impact on covered bond yields that will increase borrowing costs for banks. One issue I see is that our banks are likely to use more derivatives to mitigate risk, making them even more leveraged and exposed to global systemic risk. Overall, the exclusion of insured mortgages into covered bonds is a good start to wind down the housing market.

All aside, a key event to watch for next week is Genworth’s Q1 financials to be released on May 2nd. If loss on claims comes in higher then expected, mortgage lending will be restricted even further.

Not what the bulls were expecting.

#128 Don on 04.28.12 at 2:48 pm

#3 s on 04.27.12 at 9:09 pm Let’s hope they do something soon.

I have a lot of people down my neck for telling them the market was unsustainable and what Garth tells us.

*******************
I know how you feel – but now I stay silent – sit back grab the popcorn and be patient. Greed seems to trump intelligence.

#129 Cory on 04.28.12 at 2:49 pm

These “tweaks” dont matter. The party will continue as I have been saying. PPL are delusional but it matters not….borrow borrow borrow…it is now the way of the world and will remain that way.

I make very good money and I can hardly afford to eat and it pains me everytime i have to fill up my truck at $140 a pop!! then there is the dozen egges that were only ~$2 a few months ago but are now $2.80!! thats a 40% increase!!!!

I dont know how people do it.

#130 T.J. BONES on 04.28.12 at 2:53 pm

Sir Garth: Those are not ” Cups ” they’re ” Pitchers”

#131 daystar on 04.28.12 at 3:01 pm

Looks like my #64 post was a tad complicated, too long and missing pieces. (should have marinated) I’ll attempt to simplify. Most readers have seen this link on Garth’s “Finally” piece.

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html

Here’s the rundown of this all important chart that sets the climate for the choppy waters Canada is about to face within the next 5 years (notice the U.S. should be on this chart of most indebted nations in the world but they didn’t include intergovernmental debt or gross public debt as its called, just federal debt. Thats the crafty CIA for ya!).

1 Zimbabwe 230.80 2011 est.
2 Japan 208.20 2011 est.
3 Saint Kitts and Nevis 200.00 2011 est.
4 Greece 165.40 2011 est.
5 Lebanon 137.10 2011 est.
6 Iceland 130.10 2011 est.
7 Antigua and Barbuda 130.00 2010 est.
8 Jamaica 126.50 2011 est.
9 Italy 120.10 2011 est.
10 Singapore 118.20 2011 est.
11 Ireland 107.00 2011 est.
12 Barbados 103.90 2011 est.
13 Portugal 103.30 2011 est.
14 Sudan 100.80 2011 est.
15 Belgium 99.70 2011 est.
16 Saint Vincent and the Grenadines
90.00 2010 est.
17 Egypt 85.70 2011 est.
18 France 85.50 2011 est.
19 Belize 83.60 2011 est.
20 Canada 83.50 2011 est.

I went through great pains to explain that Canada’s gross public debt to GDP is presently at 89.3% for good reason. (lets give ourselves a healthy +/- margin of error of 1%) The number to my knowledge is solid and beats estimates by 5.4%. The biggest reason for the rise is a drop in currency of 3% from April of 2011 to April 1st of this year. Canadians should be alarmed at this (its alarming me!). We shouldn’t be a frog in a blender concerning a nation that suddenly wakes up one day only to ask, “geez how did all this government debt get here?” only after soaring interest rates effecting everyone’s mortgages and credit prods us to to ask why and we collectively finally find that government debtloads have soared so high no one wants to lend to Canada without pricing in the escalating risk. To do so is sadly reactionary and comes way… to… late.

Lets put it another way. Most of the nations that are on the top 20 list here are going to have a hard time staying solvent or at the very least will experience some kind of currency crisis if they can find the political will to turn it around. This includes high interest rates unless they have a Paul Martin on their hands to bring it back and I can tell you (like Paul Martin “can tell you” little joke there) that once nations approach the 100% gross public (intergovernmental) debt to GDP ratio threshhold, it gets awefully difficult to bring it back. Debt service begins to soar in the bond markets making it highly difficult for nations to run a government effectively. In some ways, you actually need luck (higher commodity manufacturing demand, trade, we are not an island) besides brains, will and the best laid plans that steer the course to dramatically increased taxes and cuts to social spending that most of us can accept.

Paul Martin did it, he brought us back (but he had luck. Smuggless Canadians. No housing bubble. Higher demand for commodities/manufacturing. A low dollar as a starting point). Check the link:

http://www.tradingeconomics.com/canada/general-government-gross-debt-in-percent-of-gdp-imf-data.html

Note the 101.5% intergovernmental debt to GDP peak Canada faced in the mid 90′s. Paul Martin had plenty to say about this era at a luncheon earlier this month:

http://www.youtube.com/watch?v=I7Lgq1odQfs&list=PLD122A0085E58EA94&index=10&feature=plpp_video

… and thats why I’m so long winded on the subject because in 3 short years, we could easily be there again only this time luck may not be with us because of F & H’s ugly RE/credit bubble gone bust dragging our economy.

What gross public debt to GDP ratios at 100% would do to interest rates at these high household debtloads never mind public debt…

It could get very ugly and Canadians need to be warned. There are two things I don’t know before getting into accurate predictions of when things could seriously unravel for Canada if the Harper government continues to steer us towards our doom. I don’t know what the external/domestic gross public debt breakdown is (it’s significance cannot be understated, it matters who you owe, ask Japan). Nor do I know when intergovernmental bonds are set to mature but logic tells me bond maturity issues are 7 years away so bond maturities are not a near term risk (due diligence is still needed to verify that this is the case) but the external/domestic breakdown of our gross public debt is a big need to know going forward, I can’t find it and… Blog dog Carney, are you there? Got an answer for me with this one? (I would have such better access to info working for them… nice fantasy)

Either way… the conclusion is the same. Canadians should be preparing for more than “normalized rates” (whatever that is) from the BoC over the next few years. Within a 6 year horizon, Canadians should be preparing for “above normal” rates (5 year mortgage terms from our chartered banks briefly spiking past 10%, variable rates could do it too, you dogs feel me?) especially considering we have a majority elected Harper government for 3 more years who has precided over not only a 23% increase in gross public debt to GDP over 3 short years (that should drop our jaws right there), but a lofty RE/credit bubble that has yet to significantly damage Canada. We can start by using 10 year terms on mortgages and realistically perceiving large mortgages as the destroyer of families because this is what a good chunk of them will become.

#132 Harlee on 04.28.12 at 3:01 pm

For information about Saskatchewan:

http://www.esask.uregina.ca/

#133 Van grrl on 04.28.12 at 3:06 pm

Re #19 Jsan:

I find it hard to believe these people are real. I noticed the mistake re: the nanny. Their current childcare cost is $1,100. It says this will double with a live-in-nanny, adding another “$13,000” to their bill. Doh. Is there no editor at the G&M? That should be $1,300. No nanny makes $13,000. In most cases they probably deserve to, but seriously…

The comments were pretty interesting. Almost exclusively deriding them. With good reason.

#134 Westernman on 04.28.12 at 3:36 pm

Kane @ # 119,
What could there be in Sask. that could be causing continued rising RE?
You are looking in the wrong place for the answer, it’s not based on production or any kind of value added to society…
It’s based on the mass delusion of approx one million inbred drunks sitting in splended isolation from the outside world telling each other how important they are and feeling a little less depressed because of it.
It will come to an end when reality comes a-calling … not too far in the future.
You will hear the crying all the way to both coasts when it happens…

#135 Timbo on 04.28.12 at 3:57 pm

http://www.ritholtz.com/blog/2012/04/doubling-down-in-europe/

“Sell in May and go away” is an old Wall Street axiom that has gained traction, after working well in 2010 and especially last year. In fact, it has worked well for a long time. As the graphic shows, since World War II, a $100 investment in the S&P only in October-April of each year grew to $9,329, versus $99 in the May-September window of each year”

http://www.youtube.com/watch?v=S8H2FIf1oH4

classic….

#136 45north on 04.28.12 at 4:44 pm

The feds will not be increasing CHMC’s debt ceiling.

up to now, with defaults running 0.5%, CMHC operates an enormously profitable business. I am thinking that CMHC simply gets a little more choosy about whom it insures.

Daisy Mae: Bottoms_Up: “The NDP failed to stop the inflation of this bubble.”

Did they even try? Seems to me we haven’t heard a single word from the opposition….

Thomas Mulcair said he would fight for Canadian families. However he didn’t say whether he would lift the limit on CMHC or really anything.

Makavelli: referring to the Smoking Man He’s also the most impersonated person on this blog. — Garth

Why not block this if you know it’s happening?

I’m not his security detail. — Garth

well there’s not much he can do, it’s your blog Garth

GregW from Oakville: – everybody has a cross to bear – from your post yesterday Pesticides are killing bees and threatening our food supply.

reminiscent of Utopia’s post: Agriculture and Agri-Food Canada announced a commitment of 370,000 dollars to support research into the causes of the bee die-off in Saskatchewan and other provinces.

http://www.greaterfool.ca/2011/08/26/in-the-real-world/#comment-120706

I haven’t seen Utopia here for a while

#137 canadian housing market set to crash on 04.28.12 at 4:56 pm

Zeeman #123

I don’t think you fully understand what just happened and what’s going to happen . Housing in Canada is going to crash hard. prices will drop anywhere between 30-50% over the next few years. every ponzi scheme falls why would it be different in Canada.

#138 Engineered on 04.28.12 at 5:07 pm

Anybody else notice the subtle message sent by the Government with the re-location of CMHC? That a programme that was once intended to develop and encourage this country’s human resources, is now a liability that must be regulated for the good of the country?

#139 Tyredandboard on 04.28.12 at 5:12 pm

#123 Zeeman

“some of the changes happening to the mortgages that you have mentioned will have very little impact……its the same old stuff….carney and flaherty talking down the market which has not worked for years and it will not work….rates will stay low and and they buying will continue…i think the celebration is premature”

I tend to agree.

#140 zeeman on 04.28.12 at 5:20 pm

#139-canadian housing market set to crash

listen, i am not saying that housing is affordable here…it is overpriced and needs a correction but these changes that garth has mentioned will have very little impact….housing will only come down when rates go up 3-4 percent higher to their normal levels and we know this is not going to happen for all the reasons that i am sure you already know…..

#141 tres tres bien goat on 04.28.12 at 5:23 pm

thank youF you goof.we should put CHF in the space shuttle and shoot into space while these 3 are sleeping under sus-spended animation.maybe thats how long it will take them to wake up and smell the coffee.oh did you notice I put H in the middle just in case the chaps have nightmares .PAPAS close by to hug and squeeze.

#142 Toronto_CA on 04.28.12 at 5:28 pm

Garth, can one of your posts soon be a speculation on what will happen to the overall economy in Ontario or BC say *if* (when?) overall housing drops 15-20% say in the next year followed by slow/steady year over year erosion similar to the US?

Obviously the realtors would be affected by lower commissions due to lower sales # and prices directly. Indirectly tho, there’s everything from insurance to financing to property tax declines; and then the contraction of everything when large amounts of consumers stop spending on non-necessities because they are underwater on their mortgages.

I know I’ve sort of answered my question but I think it would make a good post. Thanks!

#143 borrowedcarbon on 04.28.12 at 6:04 pm

The two sites I visit every day are mls.ca and greaterfool.ca A crystal ball would be good right about now!

#144 Steev on 04.28.12 at 6:08 pm

I’m hearing a lot of F this and H that, and yeah these guys are to blame, but their alternatives are no better. I havn’t heard Rae or Mulclair (or Iggy or Jack) take a stance about RE anywhere close to Garth. Simply put “Elect me, I’ll correct housing” is a sure fire way to lose an election.

#145 disciple on 04.28.12 at 6:25 pm

Why do dogs have to be kept on leashes? That’s cruel. Just like your dogs, you also have owners. There is no true freedom except like the kind you take with both hands and a firm grip, snapping your leash. I like the canoeing in Algonquin idea. Thanks.

#146 Inglorious Investor on 04.28.12 at 6:25 pm

#100 Mr Buyer on 04.28.12 at 10:28 am

I think you misconstrue what I say. I’m not saying we need more cheap credit to engineer a soft landing. Actually, if that continues the worse the correction will be when it finally happens.

What I’m talking about is if economic growth and wage inflation accelerate during a period of relative home price stagnation. That could bring home values back into balance with the long-term trend more gradually. Residential RE would be a dead asset class for years, but at least we would not have the painful knock-on affects of a US-style crash.

Recall what happened after the last big boom of the late ’80’s. That’s not to say it would be all sunshine and lollipops, as many people lost their homes during the recession of the early ’90’s. But it would be much better than what happened in many parts of the US.

#147 Marshy on 04.28.12 at 6:28 pm

Westernman @ 136 & Kane @119

Maybe it has something to do with a booming economy … an abundance of natural resources that are in demand … potash,oil and gas,uranium,agriculture … the lowest unemployment rate in Canada.

I guess we aren’t doing that bad for a bunch of “inbred drunks living in ‘splended’ isolation” … or did you mean splendid.

#148 Monster Cookie on 04.28.12 at 6:34 pm

When I get to hell it’s going to be worse, because now I’m here.

#149 Inglorious Investor on 04.28.12 at 6:36 pm

#116 Dontcallmeshirley on 04.28.12 at 11:46 am

“Nonsense. There will be winners and losers like in anything else. Some of us will be hammers, others will be nails.”

Yes, if there is a crash the winners will be those with cash, as I said. But a housing crash will not happen in an economic vacuum. It will be linked to the economy, meaning many people could lose their jobs. Meaning there will be more losers than some anticipate. So many people who think they will suddenly be able to afford a home may have more pressing problems. Like paying their bills.

“Employment will still be 80%+ no matter what the go forward scenario.”

20% unemployment? So, are you predicting a depression?

“Wealth and savings is where the effect will manifest.”

There would be a huge negative wealth effect and much equity would get wiped out, certainly. Those who retain actual savings (liquidity) to draw on may be in a position to take advantage of a crash. But will they want to? How many people will actually have the stones to buy a home after the market crashes? Revulsion has a funny way of making even cheap assets unwanted.

#150 Chaddywack on 04.28.12 at 6:37 pm

Interesting email I got randomly from my Vancouver credit union “lending specialist” today:

There are some predictions of a “housing bubble” that will “pop” at any time. However, historical trends have shown that property values, inevitably, increase. The Canadian government has taken significant steps to protect the real-estate market. Additionally, the only thing that virtually all economists agree upon is that the current low interest rates will increase within the next year.

Therefore, this is a good time to get into the real-estate market. It is not likely that mortgages will be available at the current low rates in the next decade. Waiting to invest will result in a missed opportunity for the current low rates, and property prices are likely to rise along with them.

#151 Smoking Man on 04.28.12 at 7:19 pm

last chance to buy the GTA. it’s on fire. buy and flip..this baby still has room to rise. high as a kite. *hic

#152 David B on 04.28.12 at 7:30 pm

Toronto_CA on 04.28.12 at 5:28 pm

With all due respect and not to be unkind, look south, look north, look east and yes west …. turn on the TV … pick up a newspaper buy a copy of the Economist … search the web. It’s all the same wrt the fallouts caused by the bust in housing in their country. case closed.

#153 Daisy Mae on 04.28.12 at 7:41 pm

120Bottoms_Up on 04.28.12 at 12:44 pm
#108 Daisy Mae on 04.28.12 at 10:39 am
——————————————
Just a joke but good point. Didn’t you hear the NDP didn’t want to fight Hitler? ; )

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

The NDP party didn’t exist during that period in history, so it was a stupid comment….

#154 Daisy Mae on 04.28.12 at 7:45 pm

By HARPER…

(Don’t mean you, Bottoms_Up! LOL)

Tried to download a picture of Harpers’ sheepish reaction, but failed…

#155 Daisy Mae on 04.28.12 at 7:46 pm

Stephen Harper shouted down for saying NDP didn’t support fight against Hitler
Josh Visser Apr 26, 2012 – 3:44 PM ET | Last Updated: Apr 26, 2012 4:53 PM ET

Reuters/Chris Wattie

This combination image shows NDP Leader Thomas Mulcair (L) and Prime Minister Stephen Harper in the House of Commons.

Prime Minister Stephen Harper was shouted down during a debate in question period Thursday on the Afghanistan mission for suggesting the NDP – not yet in existence – didn’t even support Canada’s military involvement in the Second World War.

#156 Daisy Mae on 04.28.12 at 8:01 pm

#130 Don: “I have a lot of people down my neck for telling them the market was unsustainable…”

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

On the other hand, I have family/friends who have remained silent. Haven’t said a word. I assume they’d prefer to listen to the media, CREA….and poor ‘Daisy Mae’ is off by a country mile. After all, prices can only go up — it really is different here. LOL

#157 jess on 04.28.12 at 8:19 pm

satirical Sheila Bair
Fix income inequality with $10 million loans for everyone!

http://www.washingtonpost.com/opinions/fix-income-inequality-with-10-million-loans-for-everyone/2012/04/13/gIQATUQAFT_allComments.html#comments

#158 Dontcallmeshirley on 04.28.12 at 8:55 pm

#151 Inglorious Investor

Yes, if there is a crash the winners will be those with cash, as I said

——–

I understand, you’re saying there would be many unintended consequences.

I disagree, that’s an exaggeration. The vast majority Canadians have paid off houses. A correction would mean little to them.

The point is, Flaherty et al, don’t care either way. Thinking that hardship amongst the citizenry will stop what is planned for CMHC is a profound misunderstanding of the scenario we have today.

Actually, 57.9 per cent of people have mortgages. Besides, an equity dump would erase hundreds of billions in family net worth. Hardly little effect. — Garth

#159 Westernman on 04.28.12 at 9:45 pm

DELETED

Another comment like that and you are history. — Garth

#160 TurnerNation on 04.28.12 at 10:03 pm

Society’s obsession with organized, competitive, sports for children may, yet, be another form of tax slave conditioning.

Yes, team sports build skills, exercise, discipline.
But always within the context of serving/pleasing the coach/boss as just one of the team.

Do not stick your head out, just follow coach’s orders. Do your job. Do not think. Do your job. Follow orders. Do not let the team down.

Perfect conditioning for future tax farm cubicle slaves. Do not excel. Do not stick your head out. Just do your job for the team and you’ll gain aceptance. Follow orders. Do not try anything differently.

#161 The Thing in the Basement on 04.28.12 at 10:07 pm

Actually, 57.9 per cent of people have mortgages – Garth

I can comfirm that ratio but it is 57.9% of homeowners, and it’s from 2005.

Today that would be somewhere around 5M households. With $1T total mortgage debt, that’s a $200K average
mortgage. Considering some people will have very small mortgages, well, you get the picture.

Of course it’s homeowners (duh). And the source year is 2006 – latest available, it seems. — Garth

#162 MP on 04.28.12 at 10:28 pm

The quote of the week coming to you from Mr. Opalka outside Orlando, Florida…

“His down payment was just $3,000 – or about 1.5 percent of the total loan.

Less than two years later, local real estate estimates now value Opalka’s home at no more than $110,000.

“I’m at least $80,000 under water,” Opalka told Reuters. “We never expected to go under water. We never expected prices to fall like they have. We definitely didn’t see this coming. If I’d known this, we probably would have rented.” ”

http://www.reuters.com/article/2012/04/26/us-usa-housing-negative-idUSBRE83P12E20120426

#163 Westernman on 04.28.12 at 10:38 pm

Garth,
I’m not kidding, they really do sit in Regina and watch amateur football ( Rider’s fans claim it’s pro football but it isn’t really ) with hollowed out watermelons on their heads. If you don’t believe me catch a Rider’s game on the tube sometime.
You can’t make this stuff up…

#164 AG Sage on 04.28.12 at 10:54 pm

>#163 The Thing in the Basement on 04.28.12 at 10:07 pm

Using CAAMP’s survey, I estimate the fraction of households that own their residence with no mortgage at 29%

#165 Not 1st on 04.28.12 at 10:55 pm

Westernman, thanks for your keen insight. You truly are an oracle.

#166 Nostradamus Le Mad Vlad on 04.28.12 at 10:55 pm


#89 Inglorious Investor — “So the only people who could benefit are those with lots of cash and who don’t necessarily need a job or at least keep their job.” — Good point. Who presently has the most cash? Corporations and a few individuals.

Western govts. are being bailed out left, right and centre, and these govts. are using severe austerity measures to keep their citizens in line, such as here.

But who is profiting from this? The warmongers, so it ain’t gonna stop anytime soon.

#113 Timbo — “slave labor at dirt cheap prices….we can compete against this right?” — Slave labor is what Obomba, Cameron and Harper want — cheap labor with no benefits. The middle class is wiped out and is now poor (well under way), and eventually, two classes of society are left.

See the French Revolution for further details.

#136 Westernman — “It’s based on the mass delusion . . .” — That’s the trouble with ‘society’ or ‘the establishment’, and why Smoking Man’s posts are so accurate.

Sheeple have located their comfort zone, mostly by way of public education and society, and they don’t want to let go of it. More’s the pity that there aren’t free thinkers like Steve Jobs around.

#150 Monster Cookie — “When I get to hell it’s going to be worse, because now I’m here.” — There’s not much distance or difference between earth and hell. so you’re not going to fall too far!
*
Oil Sands; Stacked huge; Tax Avoidance by Apple; The No Retirement Plan; Giant Sucking Sound; What About Bob? Nuts! Gold standard or nothing at all; US slowdown slowing the world’s economies; Fracking Paid off handsomely for one; Knowing and believing are two separate ideals; The demise of the US$; 1:57 clip WH calls for a global tax; Oblastit Economic stats. he doesn’t want anyone to know about; China – Iran Barter “Barter avoids the interest paid to the Federal Reserve Bank on all use of the Federal Reserve Notes.” wrh.com; Recession and Sleaze Politicos and lobbyists love getting down and dirty; Occupy’s back as well as the money junkies; Failed Bank List Five more joined yesterday; Crisis increases Profits Computer HDD stuff; Holland Doesn’t like outsiders smoking their dope.
*
0:50 clip If you like really strong winds, don’t fly in them — trying to land is guaranteed to make one throw up; Microsoft doesn’t like CISPA anymore; Agreement China and Russia both agree on Syria; 3:15 clip Anonymous vs. CISPA; Fatal Problems F22 Raptors. There’s a bunch of them parked just outside Iran. What if none of them worked? 1:39 clip Tide detergent — clean clothes and cancer-causing agent; Russia Preparing for a US – Israeli strike against Iran; Beating Monsanto at their own game; 2:57 clip Orwellian hate speech laws here; 2:56 clip “Canadian Minister of Foreign Affairs, John Baird, appears on the Qatari state media and affirms Canada’s partisan support for the Syria rebels. Baird asserts that Canada’s Middle East policy is motivated by Human Rights concerns yet he appears scared to criticize the human rights abuses of Israel in the occupied Palestinian territories.”; DSK and Sarkozy What goes around comes around again.

#167 Raj on 04.28.12 at 11:21 pm

Get real

Speaking of warnings, I’m not the only asset manager sounding the alarm on residential real estate. Mr. Chou reiterated his view that Canadians who need a home should rent, and if they feel compelled to buy, they should use as little debt as possible. The team at Mawer Investment Management advanced the debate by asking, “Why should the average house in Canada sell for 84 per cent more than the average house in the United States over the long run?”

http://www.theglobeandmail.com/globe-investor/investment-ideas/features/the-buy-side/why-the-smart-money-is-cutting-back-on-bonds/article2416547/

#168 45north on 04.28.12 at 11:21 pm

Daisy Mae: Stephen Harper shouted down for saying NDP didn’t support fight against Hitler

well Harper didn’t have it exactly right since the NDP didn’t exist at the time but its precursor the CCF (the Co-operative Commonwealth Federation) did.
http://en.wikipedia.org/wiki/J._S._Woodsworth

and J.S. Woodsworth one of the founders of the CCF did not support the fight against Hitler.

World War II defined moral struggle, the struggle to defeat nazi Germany which sought to subjugate whole peoples based on ethnicity. It’s ironic that Woodsworth was deeply and apparently honestly concerned about right and wrong but missed that one.

#169 Westernman on 04.28.12 at 11:31 pm

Not 1st @ # 167,
You are very insightful … you know, it’s not easy to speak truth in this age of political correctness but it is the duty of intelligent men to do so…

#170 Marshy on 04.28.12 at 11:35 pm

Westernman,

Some Rider stats from last year … $6.6 million profit,$38 million in total gross revenue,$11.3 million in gate receipts, and $10.3 million in merchandise receipts (including watermelon hats/helmets)

In fact, I think they even pay some of their players.

#171 Alberta Ed on 04.29.12 at 12:18 am

Well, let’s hope F has a big jar of that stuff.

#172 Mr Buyer on 04.29.12 at 12:18 am

#162 TurnerNation on 04.28.12 at 10:03 pm
Society’s obsession with organized, competitive, sports for children may, yet, be another form of tax slave conditioning.
Do not stick your head out, just follow coach’s orders. Do your job. Do not think. Do your job. Follow orders. Do not let the team down.
…………………………………………………………………….
You clearly have never played a team sport (at least not on a championship team) and in particular hockey. Do not think do your job is not an optimal team mate and not the making of champions. I would put up a championship team against any collection of psychopaths any day. How about this for a team. An entire society looking out for one another and giving each other the heads up when something not quite right is afoot.

#173 Westernman on 04.29.12 at 12:25 am

Marshy @ # 172,
All of those numbers prove only one thing…that there is sweet-F-all to do in Sask. except sit with a hollowed out watermel on on your head and watch amateur football…

#174 Mr Buyer on 04.29.12 at 12:33 am

#148 Inglorious Investor on 04.28.12 at 6:25 pm
What I’m talking about is if economic growth and wage inflation accelerate during a period of relative home price stagnation.
Recall what happened after the last big boom of the late ’80′s.
…………………………………………………………………..
This is not an event with a previous example to reference. The 80s, 90s, 70s whatever, none of them have anything approaching this epic bubble (except possibly the 30s but that was not Real Estate that initiated that but a bubble all the same). There is no norm to reference like normally when bubble’s like this have occurred in the past…there is no bubble like this in Canada’s past regarding Real Estate. There are other Real Estate bubbles to reference and wages have not caught up to stagnant house prices. We left normal behind a long long time ago (it is bubble time now). Wages catch up to prices. Well good luck with that as more and more of our manufacturing is farmed out overseas.

#175 PoorgEoisie on 04.29.12 at 12:39 am

I always wanted to be wage slave like Gretzky…
I know what you mean TurnerNation but organized sports also show kids to how to try, and that trying is fundamental to achieving success. Sports also show kids that sometimes trying still results in failure but that there is always another chance to succeed, you learn from your mistakes and come out with a better effort next time.

#176 Robert on 04.29.12 at 1:10 am

# 170 45 North.. Parroting the Con party line is hardly likely to win you friends here. J.S. Woodsworth, as an ordained minister, felt obliged to follow the commandments of the founder of the faith. Many misjudged Hitler, including Conservatives of all stripes and on both sides of the Atlantic. Every time Stephen Harper wraps himself in the flag of righteousness my skin crawls. As Johnson so rightly pointed out, patriotism is the last refuge of a scoundrel.

#177 Phil on 04.29.12 at 1:26 am

What island is that??

#178 lookoutbelow on 04.29.12 at 2:03 am

#124 Dontcallmeshirley

Craetin competetion by subsidizing them on the backs of Canadian Taxpayers!

They are supposed to be running a profitable business. But it appears they can’t unless the Canadian Taxpayer gives them a guaranty that limits their losses to 10%…

I’d like to run a business like that…..

#179 Westernman on 04.29.12 at 2:03 am

I really do like Saskatchewan, its just too inbred and rough for me. That and its not conducive to my *ahem* type of lifestyle, if you will.

#180 new-era on 04.29.12 at 4:21 am

FTP – First Time Poster on 04.27.12 at 10:08 pm

I love how F is able to make announcements with a furrowed brow, like this stuff has been keeping him up at night. Truth is, the announcement yesterday was prepared months in advance, the CMHC “stress test” has been done and failed, the writing is on the wall. Carney and F want to be beyond arms length when TSHTF, so they pine, warn, lament – all with a worried look. Makes me howl with laughter at what these idiots do. Can a politician get an Academy Award?
============

Totally agree with you on this. F & C announced weeks ago that it should be up to the banks to regulated mortgages. They were positioning themselve to wash their hands in the mess they created and blame it on the banks.

Now its going to be up to the banks to correct the inflated markets. This will not end well

#181 live within your means on 04.29.12 at 6:18 am

#131 Cory on 04.28.12 at 2:49 pm
These “tweaks” dont matter. The party will continue as I have been saying. PPL are delusional but it matters not….borrow borrow borrow…it is now the way of the world and will remain that way.

I make very good money and I can hardly afford to eat and it pains me everytime i have to fill up my truck at $140 a pop!! then there is the dozen egges that were only ~$2 a few months ago but are now $2.80!! thats a 40% increase!!!!

I dont know how people do it.

…………………………

On credit. Know so many who are so in debt it’s unbelievable. Their motto is ‘hey you only live once’. Don’t know how they can sleep at night.

#182 99% on 04.29.12 at 6:21 am

Guess it’ll take awhile before the mainstream feels any kind of effect from the changes in credit policies. Buyers are still partying on. Bob Rennie announced that his pre-sale condos in Richmond BC sold 203 units today. Upside is that the idiots that lined up for Marine Gateway a couple of weeks ago may have been too exhausted to camp out overnight for this project. Maybe they were all busy lining up for the Ikea opening. After all they were offering free hot dogs. Or did Rennie forget to pay for the people to sit in lawn chairs overnight?

#183 neo on 04.29.12 at 6:50 am

At 161 ans 163,

I think you both need to look south of the border. The actually percentage of homeowners with a mortgage was very similiar to Canada only the average per household’s mortgage was much less since the average house in the U.S. peaked at 230K. The percentage of home ownership went from 69.2% to 66.6 percentage 3 years after the crash. That is a slightly different metric than households with a mortgage, however, than small in that short a period was catostraphic to not only households with mortgages but ones without because of the meltdown in the economy. What do you think precipitated the 1990’s recession. Of course it was the housing meltdown. People with mortgages drastically cut spending to hold onto their homes wchich kills domestic consumption. 65-70% of our economy is personal consumption so you do the math. A 15-20% housing correction would hurt everyone. Not to mention the CMHC which would need to be bailed out by those non-mortgage holders as well.

#184 eddy on 04.29.12 at 7:06 am

buyers are being called delusional,, irresponsible etc. If someone has virtually nothing, they have nothing to lose. it’s the banks who are to blame, they’re just loan sharks- banks create money out of nothing, if something is created out of nothing, why is collateral needed? The bank’s loss is fictional. If a dead beat fails to pay, the bank gets the house, which has value. Why is insurance needed when there is collateral?

#185 GregW, Oakville on 04.29.12 at 7:15 am

Hi Nastra, re: the FOOD you are being made to eat!

http://www.seedsofdeception.com/

Have you really informed about your food and what they are doing to your Families Food, GMO’s! This is a must see info video.
(Scrowl down to feature video) Tell your freinds & MP.
http://www.seedsofdeception.com/

Then go here and sign up to receive email so you can help yourself and others & network to help, it’s not totally hopeless you know, but you can’t be complacent.
http://responsibletechnology.org/

And #168 Nastra Thanks for your links, ‘Beating Monsanto at their own game’

#186 John on 04.29.12 at 7:41 am

Kane’s comment:

“Prices are still rising in Saskatoon and Regina isn’t far behind. What is there in Saskatchewan that could possibly be causing that?

Van, TO, and Calgary have jobs/oil money/etc but there is nothing in Saskatchewan – no jobs; less nightlife – and soon to be even less if the Ag market crashes like it should.”
——————-

The real estate dynamic in Canada is just a reaction to the movements of a world banking cartel.  An uneducated, docile and overly-compliant population was just seen as an easy target.   It’s done now anyway, but it’s important to connect the dots. 

Nobody’s digging into jobs and what people are actually doing.  Do that and you’ll see that the operation was cartel-driven.  Sovereignty is definitely not involved. 

In a free market there is no such thing as too big to fail.  Too big not to fail yes…which is really good.  The Canadian media is either deluded and blind…or corrupt.  But it is absolutely clear that the public is uneducated.  

Now that real information is widely available, you can see that it’s more a case of all-to-human not wanting to know. 

Saskatchewan being used to pump coffers in London, England.  It’s deep…people are very clever.  

The most important part of all is to begin to understand who has MY best interests at heart. Me and my community. Right now? None of that dynamic is in effect in the current leadership paradigm. What might happen if the average Canadian is a pure drag on the ponzi? Without usefulness as a consumer or debt slave, led by fake media, how are we actors in the system.

That’s one hell of a vaccum, matched by the current political vaccum in Canada.

Imagine waking up one cold winter day in Whitby inside a drywall box bunched together with other lost souls on a nameless street…none of whom know each others name…realizing it’s a ponzi.

Not a pretty thought.
—————-

#187 ANONYMOUS on 04.29.12 at 8:06 am

Quote from the South ( http://www.reuters.com/article/2012/04/26/us-usa-housing-negative-idUSBRE83P12E20120426 ):

( “Hey, did not any of you hear that we are in another depression. This is how it was in the 1930s. You bought merchandize to resell, it went down in value and you made less profit or none. You had to be a good business man in the 1930s to keep solvent. That is where we are now. All the crap being spewed by the politicians to get reelected is just that “crap” “)

#188 Onemorething on 04.29.12 at 8:13 am

Hey Didnt you hear! Renting is now trendy!

#189 Smoking Man on 04.29.12 at 8:41 am

#167 Not 1st

hey, i’m the only oracle on this site…burp, burp

#190 WaterlooResident on 04.29.12 at 9:14 am

ATTENTION: Tonight I will attempt to travel back in time and change history.

You will know I’ve succeeded if Germany loses World War II, and Wednesday comes after Tuesday.

#191 Dontcallmeshirley on 04.29.12 at 9:21 am

Actually, 57.9 per cent of people have mortgages. Besides, an equity dump would erase hundreds of billions in family net worth. Hardly little effect. — Garth

———-

Garth not long ago you blogged that a significant portion of that family net worth was “fictitious mark-to-market”

My parents paid off their 35 yr old 20 yrs ago. They haven’t a clue what the market value is and don’t care. Market move affects them not at all.

I did not use that phrase. Be more careful with your recall. As for your parents, if the bulk of their net worth is in the house and they lack adequate liquid investments to finance their after-work years, they’re at risk. Perhaps it would be more useful for you to assist them than to justify. — Garth

#192 Dontcallmeshirley on 04.29.12 at 9:29 am

#180 lookoutbelow

They are supposed to be running a profitable business. But it appears they can’t unless the Canadian Taxpayer gives them a guaranty that limits their losses to 10%…

I’d like to run a business like that…..

———-

No kidding, who wouldn’t.

Many different sorts of businesses enjoy gov’t assistance in the form of a backstop, a major customer, or legislated entry barriers.

Take your pick, pharmacies, accounting firms, mortgage insurers, telcos, road builders, nursing homes, etc.

The list is long.

#193 Dontcallmeshirley on 04.29.12 at 9:38 am

Ok Garth, i absolutely do not want a “he said, she said” battle.

Your blog that fateful day derided the pride and comfort people took in monthly average house price gains as merely an unrealized mark-to-market effect.

I concede this is not the same thing as when applied to net worth.

#194 Inglorious Investor on 04.29.12 at 9:53 am

#176 Mr Buyer on 04.29.12 at 12:33 am

I hear you. We’ve even eclipsed the boom of the late ’80’s in real terms. Mania, plain and simple.

I’m not saying that I am actually predicting a slow rebalancing of housing values. But it is one possible scenario IMO. I say this because in a global economy the forces acting on the markets are largely external and varied. An economic downturn in Canada could be off-set somewhat by growth (and thus demand) from outside, foreign investment, etc.

Also, I do think the world has its eye on Canada (stable, resources, educated work force, standard of living, Arctic, not US but like US). Plus, if the world is indeed warming, this will be good for Canada’s economy.

And besides, many experts are now calling for a US-style crash. How many of these experts predicted a US-style crash in the US? Like they say, consensus is usually wrong.

I think no matter what happens in the economy or housing, SFH may become a dead asset for a long time. Maybe much longer than anyone thinks possible. But I believe that in Canada’s case, it does not necessarily require an outright crash. We’ll see.

#195 Islander on 04.29.12 at 10:00 am

Daystar: Good reading (I think). Could you break the various debt categories into broad components for better understanding? and possibly which categories matter most? Maybe some can be “disappeared” at the stroke of a pen!! To who’s pain…

#196 Timbo on 04.29.12 at 10:07 am

http://www.ksl.com/?nid=148&sid=20169843

“Last month, South Salt Lake police, the city fire marshal and the Salt Lake County Health Department found people living in at least five units at A-1 Storage, 3202 S. Davis Drive (460 West).”

self-storage takes on a whole new meaning……..

http://www.philly.com/philly/blogs/inq-phillydeals/Wall-Street-feeling-dissed-by-US-is-moving-to-China.html

“Bove’ says his banking industry sources tell him other giant banks are preparing to “move key business outside the United States” due to the “hostile” attitude of the federal and New York State governments. Politicians here “have made their careers bashing banks,” while the Chinese are eager for U.S. banking help.”

yup, when your finished fleecing Americans its time to relocate offshore….

#197 Ret on 04.29.12 at 10:21 am

Backstopper and taxpayer extraordinaire. That’s me!

Taxpayers need to be out of the “business” of backstopping the CMHC, government gold plated pensions, losing car companies, universities and student loans, the CBC, Air Canada, and many other of GSE’s (Government Sponsored Enterprises.)

Municipalities and Provincial governments do the same backstopping deals, so the taxpayer gets a triple whammy.

#198 md on 04.29.12 at 10:33 am

Ingloriouse investor # 89 said the smartest comment of all comments ive ever heard on thos blog to date….very well put.

#199 The Thing in the Basement on 04.29.12 at 10:35 am

Of course it’s homeowners (duh). And the source year is 2006 – latest available, it seems. — Garth

Actually, we should fine-tune that even more. It is I believe 57.9% of owner occupied houses. What the figure doesnt tell us is the mortgage status of the rental stock. A mortgage free homeowner may own a rental with a substantial mortgage, which puts him at considerable risk in a falling market due to the leverage.

My source was the 2006 census, but the data is 2005. I am anxiously awaiting the latest numbers.

#200 Mr Buyer on 04.29.12 at 11:02 am

#196 Inglorious Investor on 04.29.12 at 9:53 am
…………………………………………………………………….
There are too many maybes to to become likely. Bubbles are much more predictable and largely entities on to themselves. There will be the usual dramatic end to this one in all likelihood.

#201 Doug in London (formerly Abitibi Doug) on 04.29.12 at 11:15 am

@Inglorious Investor, post #151 who said:
How many people will actually have the stones to buy a home after the market crashes? Revulsion has a funny way of making even cheap assets unwanted.
That is so true, and it’s called the capitulation stage where most people have given up. Paradoxically, that’s the best time to buy, and that’s where the housing market is in many American cities right now.

@Turner Nation, post #162:
That’s consistent with my observations also. It’s almost like there’s something wrong with you if you don’t want someone else organizing yours or your kids lives. Hardly a day goes by that someone isn’t bellyaching about how we need to be more creative to boost productivity and create wealth going forward. In this kind of conditioning to be conformist, it’s easy to see why the creative, independently minded, free thinking spirit is so hard to find. It also explains why so many so called educated people let the sub prime crisis, or other crises occur. Everyone’s been conditioned not to think outside the box, and don’t rock the boat whatever you do.

#202 The Thing in the Basement on 04.29.12 at 11:49 am

166 AG Sage – thank you. I found some figures on page 24 of the following pdf

http://www.caamp.org/meloncms/media/Report%20Fall%202011%20ENG%20web.pdf

I’m not sure exactly how they are counting the HELOCs as there could be a zero balance (or one that varies considerably over time), but they are still registered as a mortgage. They give an average of $150-200K.

#203 Daisy Mae on 04.29.12 at 12:44 pm

#183 LIVE BEYOND YOUR MEANS:

“On credit. Know so many who are so in debt it’s unbelievable. Their motto is ‘hey you only live once’.”

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

Exactly. They’ve never known hardship — weren’t around during the ‘great depression’ — so they can’t comprehend what’s ahead.

But, they will….very soon.

#204 Daisy Mae on 04.29.12 at 12:52 pm

#184 99%: “Upside is that the idiots that lined up for Marine Gateway a couple of weeks ago may have been too exhausted to camp out overnight for this project. Maybe they were all busy lining up for the Ikea opening. After all they were offering free hot dogs. Or did Rennie forget to pay for the people to sit in lawn chairs overnight?”

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

FREE hot dogs at IKEAs opening??

Bottom line is people don’t think. They just react.

#205 };-) aka DA on 04.29.12 at 1:08 pm

If anyone could offer me conclusive evidence that Canadian real estate is doomed I would gladly hop onboard that bandwagon. But day after day I visit this blog along with many other real estate specific sources of opinion and fact only to find no such evidence. Four years I have been visiting this blog thinking maybe, just maybe Garth or one of his Blog Dawgs will offer some thought provoking reason why we are facing the worst yet still to come only to find none and leave maintaining the worst, of this particular cycle, is over. We are in a reparation phase.

The exuberant time leading up to the market peak in 2007/2008 was very concerning to me. The economic engine then was clearly reving out of control. There was good reason to fear then that it was about to break. And it did. We sold personal revenue holdings in mid-2008 fearing the worst was about to happen, and by all accounts those fears did materialize – somewhat – but they did not result in the pandemonium we feared was about to happen through that economic crisis which peaked in the fall of that year. The relief that we had sold out with such foresight and good timing was short-lived as things never did fall off that economic cliff.

Having divested ourselves of those revenue properties we now find ourselves further behind in our retirement plan than ahead. We well enough knew about the capital gains taxes we’d have to pay but what we had not accounted for was that those properties would be worth every bit as much today in 2012 as they were when we sold them in 2008. In retrospect it was a stupid move as we are quite sure we’ll never be able to replace them in a manner which puts us back where we were. Had we not sold them we would be way further ahead. We got scared. We panicked and we sold out abandoning our long term plan.

There is a lesson to be learned at our expense if you will just give it some thought. Understand that I too was once a bear. I had good reason to be then – we all did, but how did it unfold? Certainly not nearly as bad as was predicted.

While I am sure there are many who can and will gleefully explain why we did the right thing selling those properties and that we will soon enough will see those property values tumble, but I am not so sure about that. In fact I rather doubt it. If I could negate those sales I surely would. It’s been four years and nationally and internationally we have dealt with some pretty scary economic times coming through it all relatively unscathed. I think if there is indeed something looming over the horizon it is something we cannot nor ever would have been able to see and that is always thus the case no matter what the economic climate is of that day.

I know there are a lot of concerns on the economic front but I see none we are not dealing with as best we can and more to the point none quite so ominous as those of the fall of 2008 were. We are dealing with it and I do believe we will continue to deal with it staving off even such a tough predicament as that of 2008. Of course there are no guarantees – there never are. But one thing I know for sure – if you think you can you are probably right and if you think you cannot you are probably right then too. Fortunately there are a lot more “can doers” out there than one might think after visiting this blog.

The Blog Dawgs can rest soundly at night knowing there are many who will maintain the integrity of our economic system despite its structureal flaws here and there. We don’t want it to fail and won’t let it fail. We are “Can Doers” and we will do.

So don’t worry we’ll keep it together. Or is that something you would rather see us fail at as yours is a hidden agenda of a different motive.

#206 Paul on 04.29.12 at 1:29 pm

DA, In the spring of 09 you advised us to lower our price on our lower mission home even though we did not have to sell at that time. 2011 was our planned date to sell. You have since stated that our house would not get the same price today as it did then. Make up your mind.

#207 Mister Obvious on 04.29.12 at 1:36 pm

#89 Inglorious Investor

“In short, be careful what you wish for.”
——————————

There’s need to be careful since it doesn’t matter in the least what you or myself or any particular person might ‘wish for’. Wishing is the domain of the magical thinker. For example, individuals with no grounding in mathematics or probability.

The Canadian residential real estate drama will unfold as dictated by real forces already firmly in place. We have years of cheap money and foolish speculation to thank. Wishing will neither hurry or delay the outcome in the slightest.

#208 Westernman on 04.29.12 at 1:37 pm

Westernman @ # 181,
I must be somebody on this blog, I now have imposters…

#209 McLovin on 04.29.12 at 1:57 pm

DA #207 – I call BullSH%T! If your revenue properties were in Kelowna where you live they are 20-25% cheaper today. Furthermore, your are asking for proof a crash is coming. The was no proof in the US in 2006 and then it just happened. Surely, you can see it with your own eyes in Kelowna. No matter what you say, prices are down over 20% from the peak there and going slowly lower quarter by quarter. Things are just getting started. Stick around (But please stop posting)

#210 Inglorious Investor on 04.29.12 at 1:58 pm

#202 Mr Buyer on 04.29.12 at 11:02 am

Yeah, maybe. But bubbles are like conspiracies: when one is widely suspected it almost always is not so, and vice versa.

#211 McLovin on 04.29.12 at 2:00 pm

DA –

Here’s your evidence:

Record High Consumer Debt
Record High Average Prices
Record High Home Ownership
Record High Price vs Rent ratio
Record High Price vs Income Ratio

Record LOW interest rates.

I know you are a troll and dumb as well but please connect the dots.

#212 wopaholic on 04.29.12 at 2:02 pm

};-) aka DA, your long winded prayer doesn’t even merit an intelligent response or debate. We “doomers” will keep using statistics, hard facts/figures, historical data, and you and other “can dorkers” racked with debt can just keep your fingers and toes crossed. Like, I said, no one truly wants this collapse, but it’s coming, bet on it.

#213 Whiny on 04.29.12 at 2:03 pm

Attention: I love this blog for the following reasons:

– people sit around hoping to say “first” before the next poster. What does that have to do with anything?
– people come hoping to argue Garth’s sources or figures, even when he’s just trying to illustrate a concept.
– it has a cast of characters, some so popular they get immitated (smoking man).
– Even though Garth can sometimes be a dick, he allows 99.9% of people to post their often ridiculous opinions and rants without censorship.
– There is a huge amount to be learned, whether the housing market crashes or not, from being here.
– Garth’s replies to comments.
– it’s free.

That is all.

#214 bill Stevens on 04.29.12 at 2:31 pm

Hi Disciple what is your view on religion, any good books for reference. How can someone contact you by email

#215 MD on 04.29.12 at 2:35 pm

We have run for Cancer, heart and stroke, diabetes and many more diseases. Soon there will be run for housing debt, indian real estate agents funds and run for mortgage brokers future security.

#216 villain? on 04.29.12 at 2:52 pm

#207};-) aka DA

“The relief that we had sold out with such foresight and good timing was short-lived as things never did fall off that economic cliff. ”

And so, this time will be no different.
And the R.E prices will go up, and up, and up, and ……………, go canada!

Should that be the case, best wishes to all those lucky homeowners !

#217 daystar on 04.29.12 at 3:14 pm

#197 Islander on 04.29.12 at 10:00 am Daystar: Good reading (I think). Could you break the various debt categories into broad components for better understanding? and possibly which categories matter most? Maybe some can be “disappeared” at the stroke of a pen!! To who’s pain… – Islander

All nations essentially have 3 forms of debt: Household debt, public debt and corporate debt.

In Canada, household debt to GDP is currently 151% of GDP as media (and Mark Carney) now constantly reminds us.

Gross public debt to GDP is 89.3 presently from what I can tell. My number could be 1.5% too high considering GDP is averaged (and I went year over year) meaning I’m revising this number to 87 – 88% but the hard numbers will be coming out soon. If we go by these numbers from John Robson of the Sun:

http://www.torontosun.com/2012/04/26/swimming-in-red-ink

Federally we are at $662 billion and provincially we are at $518 Billion. If you want provincial breakdowns, TD released this report not long ago:

http://www.td.com/economics/analysis/canada/public-policy-government-finances/gov-finances.jsp

Readers should be aware however, that:

http://www.td.com/document/PDF/economics/budgets/govt_budget_20120419.pdf

… links like the one above use the lower of two provincial budget debt classifications. As an example, BC’s budget uses 2 numbers in determining provincial debt.

http://www.fin.gov.bc.ca/OCG/pa/10_11/PA_2011_ProvDebt.pdf

TD used taxpayer supported debt numbers on their chart, while BC has two classifications, taxpayer supported debt and net debt that includes debt of crown corporations and agencies, a more realistic number to go by. The difference is 13.3 billion for BC alone, hardly a small difference to go by so readers should make note of such differences when using the charts of private banks such as TD and the difference has to do with bond classifications (public/corporate).

Muncipally the numbers aren’t easy to find but it should add up somewhere between 87 – 90% of 1.719 trillion (2012 budget nominal GDP estimate for 2011). If we go with 87% of 1.719 trillion (1.495 trillion) and subtract $662 bil (federal) and $518 bil (prov), we end up with $ 1.495 – 1.180 = $315 billion worth of municipal debt. I can’t confirm this as a hard number obviously due to the way its been assessed and I can’t find totals online for now, but at least you know how I’ve arrived at this number.

Corporate debt to GDP I can’t find, I don’t work at the BoC. It’s likely higher than I thought a week ago, I think Garth mentioned it a couple years ago and I’m now guessing (note, I said guessing) its between 150 to 160% and I’m largely basing it on collective bank portfolio’s. (I did find, however, external federal debt to GDP at 41.8% in 2010. This percentage will increase going forward)

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

If readers have taken the time to look at this stuff, why is it so important? Governments and banks will tell us that debt service costs are cheap, leading us to think that taking on more and more debt is ok (look at the size of mortgages relative to income for example as proof). Unfortunately, as mortgage terms and bond maturities come due, we all have to refinance and borrowing climates just don’t stay the same. They change and considering the escalating debt levels of Canadians on all 3 levels of debt (household, public, corporate), as risk of default increases, it gets priced in with higher interest rates.

Right now, 2 major changes have occurred in Canada especially since Harper. Canadians have taken on increasingly larger amounts of debt not just in households but through governments. These debt increases are obviously not sustainable and while Canadians are lulled into believing we can afford to borrow more now, lower interest rates will not stay there forever. Risk will inevidably get priced in and as it does, so increases our service to all this debt.

We also have a major currency risk developing with public debt that has currency intrinsically linked to nominal GDP priced in U.S. dollars. The effects of high oil prices have had a dramatic effect on our monetary supply heavily influencing our loonie and thus, nominal GDP. The U.S. dollar has also taken a major slide relative to world currencies over the last decade and as consequence, Canadian nominal GDP priced in U.S. dollars has swelled diluting public debt but the party is almost over.

The Harper government is betting heavily on future strong oil prices and a continued weakening U.S. dollar to continue to drive up our nominal GDP. If, for whatever reason, oil prices weaken substantially (another world recession) or the U.S. dollar strengthens (think about the effects of Italy, Spain, Portugal and France leaving the Euro over the next 2 to 5 years and what this would do to the U.S. dollar), our nominal GDP would take a big hit (including gold) and as a consequence, Canadian gross public debt would soar. This is the #1 international risk to Canada that is very real and I’m sure its a major concern to Mark Carney because it could trigger much higher interest rates than expected (due to a dramatic pop in intergovernmental debt to nominal GDP ratios), potentially at a time when our RE/household credit bubble is unwinding with drama.

What does all this mean, translated? Higher interest rates… maybe much higher than anyone expects beyond Mark Carney’s control within a 6 year horizion and if such international risks play out with the same timelines as our number one domestic risk of an imploding housing/credit bubble, it means that anyone who voted for Harper who, under his leadership did everything he possibly could to encourage Canadians to take on more debt, as well as anyone who took on large mortgages with little down or is even contemplating it… is a fool. (its ok, we all end up being fools in this existence in on fashion or another but lets learn from our mistakes, control the damage and move on)

#218 };-) aka DA on 04.29.12 at 3:16 pm

It is practically impossible to convince someone to believe what they don’t want to believe.

Believe and do what you want… it’s your life. I will believe and do as I think best.

Good luck to you.

};-)

#208Paul on 04.29.12 at 1:29 pm

Did we ever meet? Did I preview your home? Or are we talking about little more than an idle chat? Address or MLS number or even just the street would help me provide a more appropriate response.

#219 Devore on 04.29.12 at 3:52 pm

#193 Dontcallmeshirley

My parents paid off their 35 yr old 20 yrs ago. They haven’t a clue what the market value is and don’t care. Market move affects them not at all.

This is fallacious logic. Just because they are ignorant and do not care, does not mean they are not affected. They (and you) should open your eyes.

#220 Westernman on 04.29.12 at 3:55 pm

MD @ # 217,
No kidding! Canadians response to everything is to organize a bunch of do-gooders and have a run … then posture for the cameras…

#221 Blacksheep on 04.29.12 at 4:25 pm

DA,

“We don’t want it to fail and won’t let it fail. We are
“Can Doers” and we will do.
So don’t worry we’ll keep it together.”
———————————————————
I admire your “can do” attitude. Unfortunatly…feel
good catch phrases will change absolutely nothing.
Your emotional belief that events can simply be willed into, not following their natural path, is folly. Bubbles
are driven by emotions until they run full speed into
a Macroeconomic brick wall and reality sets in.

Does any critical thinking person, honestly believe we
can somehow compete and sell into the US market,
with our homes at double the average price of theirs?

take care,
Blacksheep

#222 };-) aka DA on 04.29.12 at 4:58 pm

#208 Paul on 04.29.12 at 1:29 pm

More to the point Paul is the I have always maintained that I do not, nor do any of the Blog Dawgs, have a crystal ball. This is most clearly exemplified in my post at #207 where I admit to having made a mistake selling personal holdings in anticipation of a more significant market correction in 2008 than that which took place shortly thereafter. I would love to be able to undo that costly mistake if I could. That is a mistake I made with my own investments which were intended to be long term but I got seduced by the unwarranted equity gains I was sure would not last. I gambled (speculated) it was better to crystalize those gains. I was as wrong as any speculator might be. I deviated from our long term plan. I have learnt a valuable lesson through that exercise I thought I would share with the Blog Dawgs that the might take some benefit from it too.

If you did indeed ask me for an opinion of value I would have given you one for that period in time that you requested it and certainly not some day in the future as, again, I would be the first to admit I do not have a reliable vision of the future lacking that crystal ball others appear to possess. I know very well what the market is doing today but that is certainly not guaranteed for tomorrow. Hence, if you asked in the Spring of 2009 I would have given you an opinion of value for then when you asked and not 2011. It would have been entirely unprofessional for me to have done otherwise.

That you did not need to sell until 2011 is immaterial other than it demonstrated a lack of motivation which would likely have caused you to be more aggressive on your price than that “opinion of value” I might have given would warrant. It was 2009 not 2011. So how did that work out for you? There were still a lot of greater fools about then; did you land yourself one who paid your price or did you sell for closer to that which I said someone would probably be willing to pay in the Spring of 2009?

Actually I remember the conversation; you were listed with a REALTOR who’s initials are M.C.. you were listed for $419,900 and I told you you needed to be no more than $400,000. You did then reduce your price to $399,900 and quite quickly thereafter sold for $389,000. That was a good price then and one which today too would be a good price. You must agree that little pocket of homes is not particularly popular, certainly can’t compete with those in the cleaner more consistent neighbourhood across Gordon Drive. You did well, what are you complaining about?

#223 };-) aka DA on 04.29.12 at 5:04 pm

#214 wopaholic on 04.29.12 at 2:02 pm

Actually the only good thing to come out of selling those personal holdings we today wish we hadn’t is that we now do not have any debt. };-) Still if I could reverse it I would… all things considered it was good debt.

#224 new born goat on 04.29.12 at 5:08 pm

not winning in richmond .rennie sold another 200 plus condos. HERE A CRANE THERE A CRANE.I guess they are not a endangered species after all.LOL.

#225 rosie on 04.29.12 at 5:15 pm

#198 Timbo
Difference is that in China these Banksters would be shot for their dirty deeds and their organs sold to the highest bidder. This could be a win win.

#226 Casual Observer on 04.29.12 at 5:20 pm

#207 };-) aka DA

I understand your regret. I share some of those same feelings. On the one hand, I feel vindicated because I watched from the sidelines prior to the subprime mortgage crisis, acurately predicting that the housing market would crash. On the other hand, I felt frustrated because it seemed to crash everywhere else but here.

I was not expecting our Gov’t to pull out all the stops in order to support the housing market. At the same time they were rewarding borrowers by lowering interest rates to zero, and coming up with tax rebates for homeowners, they were penalizing savers/renters by these same actions.

There were more than a few times I felt the urge to “borrow myself into oblivion”. After all, if I got into trouble, then the gov’t would come to my rescue, but if I was responsible, then all I would get is the privilege of paying for the mistakes of the irresponsible ones.

Here we are, four years later, and things are still in limbo. Canadians’ belief in RE is relentless. It has almost become a religion. I cannot come up with a good,logical reason how RE prices are being sustained, other than the fact that people seem willing to “sacrifice” all other aspects of their financial life (saving for retirement, etc.) to their idol of “home ownership”.

My feelings have alternated between bitterness, jealousy, regret, dissappointment, frustration, and finally resignation.

I am resigned to the fact that I do not know what the housing market in Canada will do. I know what it should do, if everyone was being logical, but face it, people are not logical, and home ownership decisions are some of the most emotional decisions that people ever make.

#227 Furst on 04.29.12 at 5:22 pm

#75 TurnerNation on 04.28.12 at 7:21 am
#6Furst on 04.27.12 at 9:09 pm

Come here Son. Buck up, I was not even trying and I mosted you on First. Are you related to Josef?
________________________________________
TurnerNation, have you thought about the fact that maybe I let you go first, but this time only? I’m a gentleman of the highest order but next time my friend, I won’t give you such an easy break. It’s game on from now on ;)

#228 Furst on 04.29.12 at 5:23 pm

Smokigman, please get a job so you have something to do. Like I said many times before, take some courses, knock on doors and before you know it, you’ll be employed.

#229 };-) aka DA on 04.29.12 at 5:28 pm

#213 McLovin on 04.29.12 at 2:00 pm

See now even you, by your own proof sources, must admit; in a capitalistic free democratic society predicated upon growth everything goes up none-the-least of which so does housing.

#230 disciple on 04.29.12 at 5:43 pm

#216 bill Stevens… Thanks for your inquiry… Religion is for children, originally intended as a way for us to begin our understanding of the universe, like fairy tales. My wife and I were just discussing the “Apple of Eden” (we don’t know what fruit it was – it’s allegory anyway), and why Apple uses it in their logo, and she remarked how Snow White was tricked into eating an apple. I just thought it was an interesting comment; but, totally reverse in its meaning. But then I thought, was it? Perhaps the God(s) of Eden was/were not friendly.

But since most of us would rather not grow up and out of fairy tales, your real rulers take full advantage. Human civilization has been on the earth for millions of years, regardless of what the mind-controllers try to convince you of in school. And this is extremely important because it colours your worldview, doesn’t it? Only those who care enough to look into it would know, like me… and now, you… More than anything we have lost our communion with ourselves, and it is not by accident, but by design. We need ritual, we need superstitions, but we also need to respect our ancient shamanistic intuition. The truth is within us.

You can email me directly from my blog… thanks, bill…

#231 };-) aka DA on 04.29.12 at 6:12 pm

#223 Blacksheep on 04.29.12 at 4:25 pm

We have done so in the past and I am confident we will continue to in the future.

BTW my “can do” attitude works and is not contingent upon luck but rather taking stock of the situation today and setting about getting what needs to be done today done, rather than fearing the future in such a manner that I throw up my arms in surrender to what might surely be if I sit and wait for it to be.

Again; if you think you can you are probably right and if you think you can not you are probably right then too. Don’t believe me? Try it… really try it. The mind is a most powerful thing. You know the 80/20 rule… Why do you think that it is so?

#232 PoorgEoisie on 04.29.12 at 6:16 pm

Reasons why I love this blog:
When furst actually gets the first comment. When I see Zero comments at the bottom, I get filled with giddy anticipation and I think to myself “oh boy, it’s furst’s time to shine” and just before I hit refresh I pause for a moment and say “c’mon fursty we need this” I then do a Sammy Sosa style double chest tap followed by a peace sign to the sky. But this time you got owned, you let me down, you let all furstamaniacs down. I was telling the little lady “the first comment is going to be by a guy named furst” she tried to act like she didn’t care but then I said “not first with an I, with a U” and she was like… Totally into it. But you weren’t first man, you weren’t first at all.

#233 Mr Buyer on 04.29.12 at 6:18 pm

#212 Inglorious Investor on 04.29.12 at 1:58 pm
#202 Mr Buyer on 04.29.12 at 11:02 am

Yeah, maybe. But bubbles are like conspiracies: when one is widely suspected it almost always is not so, and vice versa.
………………………………………………………………….
Ah, there is no bubble. Just houses finding their new normal. Nice try but there has not been a new job created in my home town since I was a kid, tons of jobs have evaporated and almost half the population has left yet houses doubled in price in the last few years. That is a bubble.

#234 jess on 04.29.12 at 6:22 pm

we won’t recognize this country ..”

Maybe what Ms Jacobs was saying in her book, “Dark Age Ahead”
..
the decay of five key “pillars” in North America: community and family, higher education, science and technology, taxes and government responsive to citizen’s needs, and self-policing by the learned professions.[1]:p24

She argues that this decay threatens to create a dark age unless the trends are reversed. Jacobs characterizes a dark age as a “mass amnesia” where even the memory of what was lost is lost.[1]:p4
(wiki)

#235 steev on 04.29.12 at 6:34 pm

#207 };-) aka DA on 04.29.12 at 1:08 pm

I’m somewhat confused by you here. On the one hand you’re looking for irrefutable proof that the scenario Garth has outlined will come to pass. On the other you seem eager to believe the bull case for RE. Obviously irrefutable proof for either scenario doesn’t exist, as neither side is privy to a crystal ball.

You`ll have more success around here if you leave your bias at the door.

#236 Jeannie on 04.29.12 at 6:49 pm

Hi Nostradamus Le Mad Vlad…enjoyed the articles, very interesting to read about the guy who lives off nature…if one could call that living.
Eccentric as hell, but still, there’s something admirable about someone who turns their back on todays money obsessed society. Here’s hoping his book sells a million copies!

#237 Mark W on 04.29.12 at 6:59 pm

http://articles.chicagotribune.com/2012-04-24/news/sns-rt-us-usa-housing-reboundbre83n0sk-20120424_1_housing-rebound-high-gas-prices-robert-shiller

Chicago Tribune. No housing rebound for a generation.

#238 John Prine on 04.29.12 at 7:22 pm

#226 new born goat on 04.29.12 at 5:08 pm

not winning in richmond .rennie sold another 200 plus condos. HERE A CRANE THERE A CRANE.I guess they are not a endangered species after all.LOL.
______________________________________________

Richmond has 1,431 townhouses and apartment units listed for sale today.

In the last 7 days there has been 36 completed sales. That is a dead market any way you look at it.

#239 Smoking Man on 04.29.12 at 7:27 pm

Furst. Are you an idiot man. Can’t you tell differance between fake and real. This is the first post this weekend got my ask kick by a bouncer at barbaralas on friday night.

Ottawa mike hope you saw it. Poor bounce one hour after he sucker punched my he was picking his teeth of the floor talk about luck

#240 };-) aka DA on 04.29.12 at 8:12 pm

#237steev on 04.29.12 at 6:34 pm

I am not really looking for irrefutable proof that the scenario Garth has and continues to outline will come to pass. That was a rhetorical request intended more to point out that you can offer none just ans I cannot to support my supposition. And you are right, I do not have a crystal ball. I have admitted that several times.

As far as my bias is concerned, hell ya I am biased in favour of slow, steady warranted growth as required by our economic system. I don’t want to see unwarranted growth nor unnecessary regression. I don’t know for sure what the future holds in store. I know which I would prefer and I do admit that I “think” it is the most likely to come to pass but I have no proof just as you and Garth have no proof that what you “think” is going to happen will.

Another thing I know is, as I keep repeating, if you think you can you probably will and if you think you cannot you probably will not. I think we can and I think we probably will continue to stave off that which has been predicted on this blog as we for the past four years until eventually even the Blog Dawgs must agree it’s not going to happen the way they thought and we have things under control.

Of course you can seek to censure or have me banned because I frequent this blog offering you a “Devils
Advocate” alternative point of view (but one I might believe and practice more than offer merely for arguments sake) but wouldn’t that say a lot more about you than it does me?

#241 Daisy Mae on 04.29.12 at 8:19 pm

#232 DISCIPLE: “Religion is for children, originally intended as a way for us to begin our understanding of the universe, like fairy tales…”

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

Agreed. And even as a child — attending Sunday School because it was the thing to do in those days — still, I didn’t buy into it. A crutch is all it is.

#242 Peter Struk on 04.29.12 at 8:28 pm

Hello Garth
Maybe you have answered this and I have missed it.
Do you know of anywhere in the world where a situation
somewhat similar to Canadian (GTA and GVRD especially)
real estate activity is happening??
In other words how alone are we in our current situation of
ultra low interest rates, relatively loose lending and
plenty of house hornies??

#243 ANONYMOUS on 04.29.12 at 8:30 pm

In the early 1980’s Canada, America, and the rest of the world was in an economic recession, but interest rates on mortgages were way over 12%.

Now in the early 2010’s, America, and the rest of the world is in a similar economic recession, and for many places in Europe interest rates for mortgages are way over 12%.

So what is the difference this time for America and Canada, why is our mortgage rates at ROCK-BOTTOM and not way up over 12%, it doesn’t make sense?

#244 Furst on 04.29.12 at 11:03 pm

#234 PoorgEoisie on 04.29.12 at 6:16 pm

I apologize to you and all my fans for not getting FURST! I do try and will be back again to fight another day. Keep the faith alive and you shall one day see me prevail again….

#245 Roland on 04.30.12 at 6:30 am

Woodsworth was a devout Christian and a pacifist, who held to his beliefs.

There was a split in the CCF caucus on the war issue. Woodsworth, although party leader, was in the minority.

e.g. Tommy Douglas, at that time an MP for the CCF in Ottawa, voted in favour of declaring war.

The other party leaders in Ottawa in 1939, notwithstanding the tense situation, respected Woodsworth’s adherence to his principles–something that our current prime minister, living in safe and easy times three generations afterwards, somehow cannot seem to manage.

Just goes to show how weak and degenerate our political leaders have become.

#246 spaceman on 04.30.12 at 12:27 pm

You hit the nail, the Gulf Islands are ground 0, Vancouver Island is a close second, but the Fools are still alive in Victoria. (Kinda like a mini Toronto ?) Friends on Gabriola, had their cottage on the market for a year, and no bids, yes dropped a couple of times, finally took it off for the summer, they can rent it out, but its a pain.

#247 spaceman on 04.30.12 at 12:29 pm

I put a bid in on a property, didn’t think it had value until I saw the yard, full 1/4 acre with manicured landscaping, looks like Butchard Garden. So I have a question, what will hold value better more land, or more house?

#248 Mike C on 04.30.12 at 3:39 pm

#245 ANONYMOUS
It doesn’t make sense because Canada is different from 30 years ago. More boomer retiring, fewer workers to support seniors, population are about 35 million, national debt at the highest. So if interest rate rises by 1%, then GDP will decrease. Less consumer spending, less taxes connected and more interest paid to service debt. You can’t compare apples to oranges.

#249 Tony on 04.30.12 at 4:46 pm

Safe to say after the release of the Canadian GDP figures for February Canada will be back in recession before the fall. As the housing market collapses we’ll see figures like minus five percent GDP for the year 2012.

You certainly like to embarrass yourself. — Garth

#250 Tony on 04.30.12 at 4:50 pm

Re: #249 spaceman on 04.30.12 at 12:29 pm

More house will hold it’s value better in the major cities.