Spoilers

“Before we get started, I just wanted to clear something up…” So begins a pitch email sent by a Charlie, a Royal LePage agent in Milton, where endless houses blanket cowless pastures. It’s the fastest-growth town in the nation, and proud of it. Kind of like a giant brothel for developers.

“Most people think you need a bucketload of cash to buy a home,” he says. “We talk to buyers all the time that think they need $20,000, $30,000 or even more to buy a home. Actually I just found out that there’s a way to buy a home with zero down, legally, in Canada. With one of the major banks no less.

“You would need to have 1.5% saved up for your closing costs, and be able to prove it. And you should have a good history of paying bills on time. A job helps too. :) But beyond that, you could buy a $350,000 house for $1,842 a month (plus property taxes), with only $5,250 for your extra costs, nothing more.

“I’ve seen two clients use this program this month, and they were both lifetime renters. Not any more. If you want more details, or if it sounds like something you’re interested in, just give me a call.”

This is no scam. It’s not illegal. And, yes, the money to buy a home comes from one of the major banks – all the money, even the down payment. This is 98.5% financing, and you’d be amazed how many people have gone from living in one-bedroom apartments to granite-&-stainless-&-hardwood designer houses for less money than the cost of an unbridled, full-frontal weekend in Lloydminster.

All a young couple has to do is borrow in the right place, like TD or the Royal. Take out a loan at the posted 5-year rate, for example (right now 5.4%), and the friendly bankers will give you 5% of the loan amount on the day of closing, in cash – up to $25,000. “The money is yours to spend any way you choose,” says TD. “The larger your mortgage, the greater your 5% CashBack reward.”

So, there ya go. Instant down payment. None of that inconvenient, unsightly or messy savings or investing. No sweating over the RSP Home Buyer’s Plan, or actually foregoing Chianti, lattes or pedicures. And you can put the closing costs on MasterCard! How dross life would be without free money.

Of course, a whopper of a mortgage like this needs to be insured (to protect the lender, not the borrower). So wouldn’t CMHC have a cow when buyers don’t actually have any money? Nope. Cool with them. In fact the government agency says: “A gift of a down payment from an immediate relative is acceptable… Additional sources of down payment, such as lender incentives and borrowed funds, are also permitted.”

So, obviously, government-sponsored 100% financing of residential real estate, fully insured by the feds and backed by the taxpayers of Canada is fine with Ottawa. Fine with the banks. Fine with Charlie. And fine with the young hormones who get a new $350,000 house for five thousand bucks.

It’s hard to discern the difference between this kind of lax lending and the subprime excesses which toppled the American housing market. By giving real estate to people with no skin in the game and almost 100% risk, we probably guarantee an unstable and sick market when an inevitable correction comes round. These buyers could be under water in a month. Or a week.

The gamble is stunning – buy now with nothing down on the certainty that prices will continue to rise, which (for reasons I have told you) ain’t possible. Will the feds outlaw cash-back mortgages, as the bank regulator has suggested? We’ll know in a few months. Meanwhile, with each one that’s issued, the danger augments. Every homeowner will feel it.

Of course this risk pales in comparison to one I have written about already once this week, the coming condo collapse. Three sexy new developments went to market last week in downtown Toronto, the hottest condo market on the planet (just over 2,000 sales a month). All three rolled out at close to $700 per square foot, and all of them bombed. Says a veteran developer who secretly reads this pathetic blog: “It went badly. Investors don’t like the prices, and end users aren’t even looking!”

By the way, a ton of condos may have been snapped up by armies of virgin investors, but industry insiders are starting to worry about the ones that aren’t selling. At the end of March there were an astonishing 15,554 unsold units – up a fat 37% from a year earlier. At current absorption rates, that is a seven-month supply, and yet another 20,000 units are due to hit the market within the next ten months.

So keep these two little spoilers in mind – 98.5% financing and the shadow condo inventory – when realtors dazzle you with the latest stats. Yes, sales and prices in the GTA are up. The average 416 property now costs $568,436 and a SFH is $831,214. There are bidding wars, multiple offers and asking prices that are only starting prices.

Thank god you don’t need money.

193 comments ↓

#1 TurnerNation on 05.03.12 at 8:14 pm

2nd?

#2 vatodeth on 05.03.12 at 8:18 pm

Would you pay $200,000 for this little crack shack right smack in the hood of Winnipeg?

http://homes.winnipegfreepress.com/house-for-sale/2-Bedroom-House-for-sale-1034-Ashburn-Street-Central-Winnipeg-West-End/id-14177/

It’s 70 years old, 600 sq ft and literally walking distance from prostitutes and crack dealers on bicycles. Oh, and did I mention it’s in Winnipeg?

It’s probably best to buy in, before you get priced out forever!

#3 AM on 05.03.12 at 8:22 pm

Ah yes. Your richer than you think!

#4 Mark on 05.03.12 at 8:26 pm

I’M FIRST!!!

Now then, let’s watch this market tank. I’ve been saying it’s coming for years, and everyone had countless “reasons” why it won’t happen here.

#5 Rick on 05.03.12 at 8:26 pm

> Actually I just found out that there’s a way to buy a home with zero down, legally, in Canada. With one of the major banks no less.

I’m not very good at telling the difference between lying and idiocy, but shouldn’t cashback mortgages be common knowledge to anyone who’s been an agent for more than, say, four or five hours?

It’s called ‘marketing.’ — Garth

#6 Mark on 05.03.12 at 8:27 pm

What the hell? Should have just put a “1”.

#7 thinker on 05.03.12 at 8:28 pm

I have seen worse, no document mortgage + cash back. If you are willing to pay 300-400 bps over the discount 5yr fixed, all kinds of products are available, including interest only. Just Ask!

Live, Work and Play all in one area – great till you have a wife and kids? Then out goes the condo and in comes the go train pass.

#8 Hate condos? on 05.03.12 at 8:36 pm

This one is a great reminder to virgins who buy unbuilt condo: http://www.cbc.ca/marketplace/condo_crunch/

#9 Anon on 05.03.12 at 8:37 pm

You mean this is the first time you hear about this? Was it as shocking to you as it was to me?
Hey, my friends are fine with this type of mortgages, and it seems I am the loony one who did not want a “free” house.
We are not only worse than US, we are *much* worse than Spain, Iceland Ireland combined. Almost as bad as the aussies.

#10 JRance on 05.03.12 at 8:38 pm

“These buyers could be under water in a month. Or a week.” – Garth

If you consider the CMHC fees that are tacked onto the mortgage, they are effectively underwater immediately. I’d consider this to be 101% financing. Additionally, it would cost at least an extra 5% in transaction fees to sell.

#11 Gmac on 05.03.12 at 8:44 pm

Garth, you should run for office and stop this lunacy!

Tried that. They spat me out. — Garth

#12 CHMC = housing bubble on 05.03.12 at 8:45 pm

When this house of cards crashes it will be swift. I think garth is being very very conservative with his 15% drop and then slow melt. The amount of sub-primes is in the hundreds of billions. Canada has lied to the world and soon the world will see the little wee wee Canada really has when the tide goes out.

#13 Freedom First on 05.03.12 at 8:49 pm

Great blog Garth. Like the pic too:)

Wow, 98.5% financing and cash back…….man..o..man….the Americans don’t have nothin on us! Canadians, who would have believed after what has happened in so many other countries housing markets that Canadians could be so easy to screw:)…….Garth…..no offense with my choice of wording…….I know how much you abhor colourful lingo:)…..

#14 Rob on 05.03.12 at 8:52 pm

I lived in Vancouver and Toronto. Toronto is no where near the condo-crazed market Vancouver is. Maybe it’s the immense landmass that makes up the GTA but I know of only one person who has ever bought a condo. All the rest want land. They’ll take a townhouse/semi but prefer a detached. That’s why you see the crazy over-bids (especially in North Toronto where Iranian developers compete with Mr and Mrs senior manager who want their kids in a reasonably good public school). That’s why Milton booms (when Mississauga became too expensive for it’s dull 905ness). That’s why three towers that no one cares about bomb at $700/sq.ft. when even during bubble bursting times EVERYONE in Vancouver knows that Marine Gateway Project “sold out” or that there are four new projects launching around the still as yet unsold Olympic Village. In Vancouver it wasn’t just the HAM snapping up condos… it was everyone.

Maybe it’s because you can BBQ on your balcony in Vancouver while you can’t in T.O.?

#15 Blue Monster Lover of Meats and Vegetables on 05.03.12 at 8:56 pm

Time are strange, the whole monetary system is a wreck,

At least the old tunes are good.

http://www.youtube.com/watch?v=0bzgnEChkbI&feature=related

This must be the era of Garth!

#16 X on 05.03.12 at 8:58 pm

Enough families will be financially damaged by the coming RE correction. The new bank regulator has to protect them people from themselves. The longer this goes on, the worse I think this is going to be…

#17 AACI Okanagan on 05.03.12 at 9:00 pm

#256 };-) aka DA on 05.03.12 at 8:02 pm

Indeed I have been in the business a long time – maybe too long, been through a few market shifts and I do emphatically maintain; British Columbia is the last to feel depressed international economic conditions and the first to feel the good ones. Only Kelowna is more resilient, by a long shot, based on my observation over the past 35 years in which I paid any attention. I am surprised by your implication that you have not observed the same.

It is true; Kelowna, despite it’s flaws of which admittedly it has it’s fair share I’ll not go into at this time, does have a most resilient economy which is relatively well insulated from national and international economic falters and most quick to benefit from national and international economic gains. I’ve seen it time and time again and expect this time will be no different.
———————————————————
This is priceless, I am going to keep this statement and show it to all your colleagues so we can have a good laugh. Try telling your nonsense to the struggling lumber industry which has been on the decline for the past 10 years. Yea right Kelowna was the last to suffer after the economic crash in 2008 (not), I guess we should ignore the recorded number of foreclosures. Please humor me some more and tell us how Kelowna is well insulated from national and international economic falters and how we are so quick to benefit from national and international economic gains. I must be missing something, is it our fisheries? lumber mills? or maybe the mining sector? Kelowna has three things to build on, tourism, the wine industry and tech, all three suffer from national and international pains.

#18 FI Guy on 05.03.12 at 9:01 pm

Residential mortgage underwriting is so bad right now a lot of people have no idea.

I’ve seen 5% down, Genworth / CMHC insured, ~70 years old, 30 year amortization, 30-40% TDS. 70-80% LTV refinances, low credit scores (sub 650), TDS 40-50%. Cash back refinances given to sub 500 credit score borrowers.

None of it makes logical sense. This is what happens when you give banks unlimited funding.

#19 Blue Monster Lover of Meats and Vegetables on 05.03.12 at 9:08 pm

In the modern era, this is a great tune, smoking man lives this life!

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

poke her anyone?

#20 Nabatts on 05.03.12 at 9:09 pm

#7 – Great link
http://www.cbc.ca/marketplace/condo_crunch/

#21 Smoking Man on 05.03.12 at 9:09 pm

WOW 9% year over year in price
The Great Smoking Man nails another one out of the park. I’m better at calling markets than god. Read my posts from the fall.

GTA sales up Over 18 % 22% in single detached homes like mine.

Oh bubble heads where is your fat lady, she’s not singing anytime soon. The only song you will here is the machine ramp ping up the bubble talk, but clearly the herd aint paying attention. After the a few months when prices seasonally drop, The crash is coming the crash is coming. Carney spikes a 1/4 and the herd retreats for a bit, then Next spring they say aw screw it lets buy.

Why am I so good. Cause I just am.
No belief system no bias, just amazing powers of observation, Analyse and React .

It’s so easy for the un schooled.

Here is the cake. Kids take two bites.

Market Remains Tight with Sales Up in April
TORONTO, May 3, 2012 – Greater Toronto REALTORS® reported 10,350 transactions
through the TorontoMLS system in April 2012. This level of sales was 18 per cent
higher than the 8,778 firm deals reported in April 2011. The strongest sales growth
was reported in the single-detached market segment, with transactions of this home
type up by 22 per cent compared to a year ago.
“Interest in single-detached homes has been very high, both in the City of Toronto
and surrounding regions. Growth in single-detached listings has not kept up with
demand, which means competition between buyers in this market segment
increased. With this in mind, it was no surprise that the strongest annual price
increase was also experienced in the single-detached segment,” said Toronto Real
Estate Board President, Richard Silver.
The average price for April 2012 transactions was $517,556 – up 8.5 per cent
compared to April 2011. While price growth was strongest for single-detached
homes, the better-supplied condominium apartment segment experienced a more
moderate annual rate of price growth, at four per cent.
“Monthly mortgage payments remain affordable for home buyers in the Greater
Toronto Area. While interest rates are generally expected to increase over the next
two years, the extent and timing of rate hikes has been thrown into question by
slower than expected economic growth in the first quarter of this year. On net,
borrowing costs are expected to remain a positive factor influencing home sales
through 2012,” said Jason Mercer, TREB’s Senior Manager of Market Analysis

http://www.torontorealestateboard.com/market_news/market_watch/2012/mw1204.pdf

#22 Smoking Man on 05.03.12 at 9:16 pm

Blue Monster Lover of Meats and Vegetables

Thanks for the tunes

#23 Smoking Man on 05.03.12 at 9:27 pm

Young People your only salvation is this, listen to this over and over, just for fun play wiz of oz start at the lion…

Cause your screwed don’t know who did it to you but this will make ya feel better.

Will give you amazing powers of observation

http://www.youtube.com/watch?v=_fvFeW8fgaw&feature=related

#24 Keith in Calgary on 05.03.12 at 9:33 pm

Garth,

Wouldn’t it be good fun to make a blog post full of Flaherty and Carney videos and quotes where they emphatically have stated over the years that there is no sub-prime mortgage market in Canada, and that our mortgage lending standards are different than the US….etc….etc….I’d bet you could compile at least 10+ individual quotes/videos where each one of them said that over the last 5 years.

#25 Form Man on 05.03.12 at 9:40 pm

#17 AACI

excellent post. DA suffers some serious delusions that can only be explained by a skilled psychologist. Kelowna’s housing market corrected immediately after the GFC and continues to decline. Prices are now down over 20% from the peak………..

#26 Devore on 05.03.12 at 9:46 pm

#14 Rob

Maybe it’s because you can BBQ on your balcony in Vancouver while you can’t in T.O.?

Nope, of all the condos owners (and renters) I know of in Vancouver, none can BBQ on their balconies (assuming they have a balcony). Seems to be a building thing, maybe something affecting the insurance the condo company takes out for the building?

#27 CJOttawa on 05.03.12 at 9:46 pm

This was one of your best posts Garth. Concise and chilling. Even the “unconverted” would have a hard time ignore the message.

I wish I could say the issue didn’t matter to me (renter, living well below my means, positive net worth, no debt) but I don’t see this ending well for anyone.

If you feel like taking a crack at this question: how do the sane among us shelter our investments from the coming storm?

#28 Smoking Man on 05.03.12 at 9:48 pm

#24 Keith in Calgary on 05.03.12 at 9:33 pm

There is not a sub prime mtg Market in Canada

I Read it in the National Post

Canada has a Non Prime Mtg Market

LMAO when I read that

#29 TurnerNation on 05.03.12 at 9:48 pm

Some bearish Toronto condo news. Worth a read:

http://www.remaxcondosplus.com/blog/aprilmay-market-report-2012-4/

March sales on the Toronto Real Estate Board continued the trend of previous months. Sales were 8% higher than March of 2011, and average prices were up by almost 10% from a year ago. These overall results mask a clear division within the market. Condo sales were unchanged from this month a year ago. Within the 905 Region, condo sales were ahead by 3%, whereas the 416 Region recorded a 2% drop from March of 2011. In terms of downtown condo sales, the results were even worse – sales were lower by 13%! Condo sales for the Etobicoke waterfront, which usually trails the downtown market, were up 10% from the previous March. Sales from the first two weeks of April confirm these trends that first began in February. House sales are outperforming the condo market in terms of sales growth and price appreciation.

So how do we explain the downtown condo market? A lack of overall listings is not the simple answer. In fact Active Listings are up 6% over March of last year. Either the number of end user buyers for condos is levelling off or buyer needs are not matching available listings. Developers better hope it is the latter and that they need to build bigger units. That’s a challenge as the product in the pipeline – preconstruction sales –consists of even smaller condos on average than units in today’s resale market. Buying opportunities exist in the resale market, particularly in bigger units over 1,000 sf. Condo resale prices continue to appreciate but at a much smaller pace – less than 4% on average.

#30 Xindai Shan on 05.03.12 at 9:53 pm

I really appreciate Garth’s books and common sense investment advice.

While we were discussing 15% corrections at the start of this year (and we did,) Toronto is close up 8.5% YOY for April and average prices are pushing 520K. Average SFH in Toronto is 831K.

The greater fools may well be the people who think that a market correction is remotely imminent. As we talk of bubbles, the Toronto market may be less than a few years away breaking a million dollars for SFH.

I am a blog dog and not a realtor. I imagine I am going to get all kinds of smart-assed, “Go buy some spec condos” kind of replies for this post, but that simply denies that fact that even with a big correction, Vancouver and Toronto will not be affordable to average people.

Unless you want to be a slave to the banks.

Garth is right, but it could take years for this to unwind.

#31 Smoking Man on 05.03.12 at 10:01 pm

Pen pal no accolades for the great smoking man, where have you been, shower i guess.

#32 Loan money to anyone on 05.03.12 at 10:07 pm

There was a time when banks in Canada actually had lending standards. I can recall wanting to buy a townhouse in Vancouver around 1994. One of the big banks turned me down for a mortgage despite me having held a good job for several years with a good company and a 10%+ downpayment.

Sadly, I think F will be remembered as the Finance Minister who bankrupt the country with his stupid policies.

#33 How many realtors on garths blog? on 05.03.12 at 10:07 pm

Keep celebrating sales in Toronto cause the crash will be even greater. The CHMC ponzi has gotten so big it matches our nation debt. The job losses from RE and spin off jobs will take Canada to a depression. It’s funny watching realtors like smokingman who is obviously and proudly uneducated believe he is so smart. Why anyone would be stupid to believe anything a realtor would say at face value is a joke. I can only imagine the fraud from realtors and their fake bidding wars. I’ve heard of so many stories from people who were told their in a bidding war and after refusing to bid were called after a few days. In any case it doesn’t matter as CHMC limit will not increase and thus the crash is 100% going to happen. Realtors know this and will cheat and lie to sucker as many as they can. The crash and the economic downturn will devastate tens of thousands of families. 40-50% discount in a few years.

#34 Expat on 05.03.12 at 10:10 pm

Full-frontal weekend in Lloydminster?

Ooooh, baby!

#35 Keeping the Faith on 05.03.12 at 10:19 pm

Stevenson !?!?! … FOOD FIGHT!!!

#36 Kim on 05.03.12 at 10:19 pm

What happens to RE when CHMC stop lending and banks have to lend their capital? My banker friend says 20% of people have not been able to qualify for mortgages as of late and the situation will get worse. I guess this is happening as the limit is getting reached? What happens when 80% of people won’t qualify?

#37 Just Say No on 05.03.12 at 10:33 pm

economic stimulation…bubble creator……just eliminate income tax……Watch real estate sore to new heights? Does anything matter any more? Just imaging the fun we could have with this. Houses always go up blah blah blah…..until……..the next band aid.

#38 accountability on 05.03.12 at 10:34 pm

So, obviously, government-sponsored 100% financing of residential real estate, fully insured by the feds and backed by the taxpayers of Canada is fine with Ottawa. Fine with the banks. Fine with Charlie.

Enough reasons for me to vote with the ones that’ll promise accountability, by arresting all the MPs and members of the gov that supported CMHC, confiscating all their wealth and forcing them to physical work until all the taxpayers debt has been paid off.

Same thing goes for the bankers.

#39 Not 1st on 05.03.12 at 10:36 pm

Toronto..the worst of all worlds. Terrible weather, no culture, elitist yuppie attitude to boot. Couldn’t pay me enough to live there.

That’s a relief. — Garth

#40 furst on 05.03.12 at 10:36 pm

Not FuRsT today!!!! I am your leader.
FURRRSST!

#41 Kaganovich on 05.03.12 at 10:41 pm

WOW 9% year over year in price
The Great Smoking Man nails another one out of the park. I’m better at calling markets than god. Read my posts from the fall.

GTA sales up Over 18 % 22% in single detached homes like mine.

Oh bubble heads where is your fat lady, she’s not singing anytime soon. The only song you will here is the machine ramp ping up the bubble talk, but clearly the herd aint paying attention. After the a few months when prices seasonally drop, The crash is coming the crash is coming. Carney spikes a 1/4 and the herd retreats for a bit, then Next spring they say aw screw it lets buy.

Why am I so good. Cause I just am.
No belief system no bias, just amazing powers of observation, Analyse and React .

It’s so easy for the un schooled.

Here is the cake. Kids take two bites.

Wow. Your posts strike me as an attempt to mimic Nietzsche’s bombast in ‘Ecce Homo’. A poor one mind you, but an attempt nonetheless.

#42 ozy - This will not end well on 05.03.12 at 10:48 pm

This will not end well, be careful you do not want to be the last fools.
To buy is still theoretically OK, but not anything like a herd. Even in this market some homes have more true value than others (even when they sell at same price). Maybe 1 in 100 you are loking at is worth buying, dont’ become a statistic. Open your eyes, do not be stupid, this is don’t be a “know-it-all” – consult with your genuine honest but smart friends (non-comission).
Find real value or wait.
And don’t buy kandos from builder or sellers (new or used) whatever you do, the kandos wave turned, totally free fall in 6 months, I repeat Don’t buy kandos whatever you do, the kandos wave turned, totally free fall in 6 months.

#43 Mr Buyer on 05.03.12 at 10:48 pm

#21Smoking Man on 05.03.12 at 9:09 pm
WOW 9% year over year in price
………………………………………………………………………..
Exactly how much was sold in dollars. Total number of dollars compared to last year dude? Did you call that too? Not average price but total dollars in sales. Smoking man, you like to tell half truths along with taking long shots.

#44 ozy - This will not end well on 05.03.12 at 10:53 pm

This will not end well, be careful: You do not want to be the last fools.
To buy is still theoretically OK, but not just anything like the herd. Even in this market some houses have more true value than others (e.g. even when they sell at the same price). Maybe 1 in 100 houses you are looking at is worth buying, so don’t become a statistic.
Open your eyes, don’t be stupid, this is: Stop being a “know-it-all jerk” – so consult with your genuine honest but smart friends (non-comissioned :) obviously).
Find real value… or wait it out. It will calm down by June 2012.
And whatever you do, how horny you get, DO NOT BUY KANDOS neither from builder or sellers (new or used). The kandos’ wave has turned, totally free fall in 6 months, I repeat: DO NOT BUY KANDOS (copyright ozy)

#45 daystar on 05.03.12 at 10:54 pm

#30 Xindai Shan on 05.03.12 at 9:53 pm

Assuming that there are no changes to the length of amortizations, size of downpayment and interest rate hikes, housing values will flatline so the housing bubble stalls but the credit bubble continues to grow until one of these 3 components change. What we know is this:

– F will not change the length of amortizations or size of downpayments regulated by CMHC.

– interest rates are unlikely to change this year and if there are hikes, they will be small.

– OSFI will make changes in due course, but it the fall is the most likely timeline for changes.

As far as I can tell, there is absolutely nothing coming up in the next 3 months to make mortgage payments more expensive in buying a home. More realistically, OSFI could be 6 months away from meaningful regulatory changes to CMHC but they will come. It will have to come because what we also know is that CMHC’s debt ceiling won’t be raised past 600 billion and this means major changes to covered bonds and a great deal more risk put onto the shoulders of the private sector.

Naturally, there is a great deal of worry and concern over the non-prime RE sector estimated to be worth 200 billion already. This number could balloon until higher interest rates come. I

– CMHC reaches its 600 billion limit likely by the end of year.

#46 Smoking Man on 05.03.12 at 10:55 pm

#41 Mr Buyer on 05.03.12 at 10:48 pm

You outed me brother be proud.

I’m not worthy

got a good buz going

Kids

Dark side of the moon
The Wall
Wish you where here

It’s all you got to know

#47 BigAl (Original) on 05.03.12 at 10:57 pm

I have no problem with zero down mortgages. Don’t see the big deal. Maybe people just feel like schmucks for all of that sacrifice they themselves went through to actually save a down payment. I’m one of them that had to use savings (along with the profit from the sale of my previous house). Don’t have much sympathy for the banks, nor for people who don’t assess their own risk (information is everywhere these days), nor for the taxpayer who isn’t politically active enough to engage in real change at CMHC.
For the guy who has a relatively secure income, calculates their own risk by assessing their ability to pay if rates shoot up (a personal debt stress test), finds a good priced modest home (either in a major city or somewhere else in the country), who pays their bills but only has a bad habit of spending all his disposable income and saving nothing…then why not?

Given the above scenario (more common than you think), then why sentence the guy to rent slavery for life?

I don’t buy the airy fairy “in theory….” BS that renting is better than buying for the average middle class person (for the same reason I don’t buy free trade theory…because it assumes a set of ideal conditions that are unrealistic and almost impossible to meet). Remember, economics is classified as a social science and not a pure science for a reason.

#48 Mr Buyer on 05.03.12 at 11:00 pm

I think I may have made a serious gaff in estimating sales in total dollars in TO. If so I stand corrected and defer robustness in Toronto sales to Smoking man’s assertions (for the next few weeks at any rate, it seems I have lost the ability to add and multiply today).

#49 Smoking Man on 05.03.12 at 11:02 pm

#41 Kaganovich on 05.03.12 at 10:41 pm

Really, sorry you feel that way.

You have a belief system which makes you weak.

I blame your teachers.

I can help you , but you won’t listen.

#50 SomeguyinVan on 05.03.12 at 11:13 pm

Gotta agree that it could take years to unwind this big ole’ ball of yarn that we’ve bundled up here in Canada. Like others here I earn a healthy income, rent for peanuts vs. buying, no debt and some good savings built up.

I had heard that the number of seniors in 2020 will be about double what it is today in Canada. So I’ve put that as my target window to buy (give or take), and have prepared myself for the notion that any purchase could see values plummet further for another 5-8 years after that. Not a pretty thought, but hopefully I can at least have a 50% DP by then and never become a bank slave!

I actually feel sorry for all the unwashed who are about to be fed their proverbial lunch in the coming years. I feel BAD for them… I feel WORSE for me for having to listen to them bitch and whine for the next uh… decade or so (and probably the rest of their sorry lives). Makes me wish I could just teleport away somewhere and come back in 10 years and people would be sensible and prudent again.

Still can’t believe so many people would line up to make half mil, $1.5+ mil financial transactions and not even performed the basic due diligence to discover what is so painfully obvious to so many on this blog.

#51 2muchdebt on 05.03.12 at 11:15 pm

So does anyone have any ideas how to make some money from this “correction” or “crash”? In the states it was possible to bet against the banks, short the home building stocks, buy CDS (although not for the small investor) How can we place a bet on the housing decline here in Canada. The major banks have offloaded most of the crappy mortgages on the CMHC (the taxpayer) The big 5 banks profitability may take a hit if they are forced to be more selective with their mortgage underwriting and carry these mortgages on their books. Does anyone have any ideas on how to make some money on this disaster…any thoughts would be appreciated.

#52 Smoking Man on 05.03.12 at 11:15 pm

#41 Kaganovich on 05.03.12 at 10:41 pm

Nietzsche’s bombast

I goggled it, fk, too shit faced to under stand . Will try in the morning

#53 Cory on 05.03.12 at 11:20 pm

As I keep saying, don’t expect it to end.

#54 John on 05.03.12 at 11:21 pm

Loan Money to Anyone, wrote:

“There was a time when banks in Canada actually had lending standards. I can recall wanting to buy a townhouse in Vancouver around 1994. One of the big banks turned me down for a mortgage despite me having held a good job for several years with a good company and a 10%+ downpayment.

Sadly, I think F will be remembered as the Finance Minister who bankrupt the country with his stupid policies.”
—————————————————

It’s downright amazing. This kind of perception continues to exist no matter what is revealed, no matter what is said.

The current housing situation and economy could not exist without the derivatives scheme.

What about that math…and where are people getting this idea that F is involved? He’s not.

Canada does have a well-behaved and exceptionally well-trained technocrat in Mark Carney. That’s well known internationally…thus his “whispered” (barf) potential appointment as the head of Bank of England.

In 1994 it was harder to buy a house in Vancouver because the Glass Steagall Act of 1933 was still in place. This was legislation to stop riverboat gambling. It was removed by Goldman Sachs ( through the US Treasury appointments of Goldman Sachs mafia…the fox running the henhouse).

The towers fell, and the “war on terror” was launched. Derivatives went nuts. Thus the super-ponzi..used by Mark Carney’s bosses to sell cheap money to a deluded over-consuming public.

In Chile, at 7:18am this morning “Banco Falabella” ( a department store) is hawking loans to an ever-more indebted “middle class” …using cheery local media personalities. It’s worldwide. It’s one bloody system, and that’s the deal. There’s no “conspiracy”, and this sure aint no theory.

The paddles on the riverboat are spinning wildly, and muddy water is spraying everywhere.

So. Why would you be talking about F? I mean, don’t you think that’s an outrageous misperception at this stage of the game?

#55 Mark on 05.03.12 at 11:21 pm

So what happens to banks when this thing implodes? Bankruptcy? Or does the government step in and paper over it? CMHC can’t really handle the fallout. When there’s smoke from every corner, what do we do?

This is why with all due respect to Garth, I don’t understand why he’s so hostile toward gold and silver?

The US is set for another banking crisis. Debt levels are astronomic the world over. It seems like default or inflate are really the only options here, stateside, Europe. Why not hold a signigicant portion of your wealth in gold and silver until this thing is settled?

I’m not suggesting we’ll be transacting in it, but I do think it will be among the few things that hold value. I know we’ve seen weakness in pm’s of late, but I think stock market gains are largely an illusion, lately mostly driven by Apple. I’ve been long precious metals for five years now, and see no reason to change course.

#56 Suede on 05.03.12 at 11:29 pm

Follow the yellow brick road…”Money, it’s a sin….”

I’m more of a GnR aficionado. When I read the blog I think Welcome to the Jungle, we got fun n games..

#57 daystar on 05.03.12 at 11:32 pm

…that sucked, one got away on me. If higher rates don’t come and record low rates continue, this segment of the mortgage market:

http://www.cbc.ca/news/business/story/2012/04/16/subprime-mortgage-market.html

…. could explode. The longer rates stay at record lows, the more this sector of the mortgage market grows. If record low rates lasted a couple years from now, it could lead to a U.S. style housing meltdown regardless of recourse loans in Canada (Albertan mortgage holders, by the way, can throw their keys to the bank and walk away).

Here’s what I think will happen. When OSFI gets around to going from draft to regulation and sort out their new responsibilities, they will turn the taps off of CMHC spending. Its speculative on exactly how they’ll do it, but CMHC won’t be pushing past 600 billion and we are what… 3 to 4 quarterly’s away from getting there? The moment OSFI tightens regs, banks will dramatically tighten lending practices and rates in the covered bond market will shoot higher. When will OSFI get around to this and what kind of draft recommendations will end up written in stone? Public input ends in June but the way governments move, its really at F’s discretion. It could be September… it could be December.

F & H really backed themselves into a corner. They pushed oil development which is fine in one sense, but it jacked up our currency to the point where 500,000 jobs have been lost in manufacturing over the last 10 years. No problem says F & H, we’ll create employment through construction and the number I read lately from statscan is that construction employs 1.4 million people so the moment government puts the brakes on housing is the moment unemployment ticks higher… maybe much higher.

The question I’d like an answer to is how many construction jobs were self sustainable with a reasonable approach to housing in the first place? One million? Less? How many of us are going to be on the street looking for jobs that don’t exist, for the sake of oil development and a high currency? Surely F & H thought this far down the road, correct? Or does Canada continue to overdevelop supply driven by cheap credit the way of Spain? If anyone has been listening to Mark Carney, commodities (the one’s in demand) and emerging markets are the only play’s we’ve got. We can’t go back to a cheap currency, unless we want to look at higher interest rates as a consequence, really, we haven’t got much choice.

The longer this Re/credit bubble continues the worse it will get and what gnaws at me is how perilously close we are to a currency sensitive spike to 100% gross public debt to GDP ratios should oil tumble or the U.S. dollar strengthen. If neither happens, in 3 short years we’ll be there regardless the way Canadian governments run deficits and this spells disaster for Canada because it could mean above normal interest rates (BoC rates at 5 to 6%) as bond markets price this kind of risk in, especially with foreign lenders knowing our situation in housing and we all know what higher rates would do to housing and foreclosures regardless of recourse loan laws. We would be utterly stupid not to know what high rates would do to Canada now.

No… Canada has to end this housing bubble now. We need a sharp drop off in sales to slow down the ugly credit bubble thats still growing. If we don’t get it, uggh…. its a RE/credit led recession that will last years like it does anywhere else a RE/credit bubble implodes. The economy will still suck, we could still see a couple years of recession like conditions, but the alternative in doing nothing… The degree of severity we can still control but Flarhety and Harper show no signs of stopping this with more than words until I would think, the fall at the earliest which is another 6 months of damage. Why F doesn’t lower amortizations and/or hike downpayments is beyond me other than deluded thinking combined with a large want to cover his own ass.

Carney should hike rates. Send a psychological message to consumers… a .5% rate hike. He can always take it back if the market worsens but he should do it and do it quickly because F, who could have shortened the length of amortizations, asked for larger down payments (10% would have done it) or both… has chosen to do neither. I can’t see how he’s leaving Mark Carney much choice.

#58 Bottoms_Up on 05.03.12 at 11:46 pm

#51 2muchdebt on 05.03.12 at 11:15 pm
—————————————–
Grow up. You sound like the type of person that should be working for GS. And ps., your question has been repeatedly asked here over several years.

#59 };-) aka DA on 05.03.12 at 11:49 pm

#17 AACI Okanagan on 05.03.12 at 9:00 pm
#256 };-) aka DA on 05.03.12 at 8:02 pm
Indeed I have been in the business a long time – maybe too long, been through a few market shifts and I do emphatically maintain; British Columbia is the last to feel depressed international economic conditions and the first to feel the good ones. Only Kelowna is more resilient, by a long shot, based on my observation over the past 35 years in which I paid any attention. I am surprised by your implication that you have not observed the same.
It is true; Kelowna, despite it’s flaws of which admittedly it has it’s fair share I’ll not go into at this time, does have a most resilient economy which is relatively well insulated from national and international economic falters and most quick to benefit from national and international economic gains. I’ve seen it time and time again and expect this time will be no different.
———————————————————
This is priceless, I am going to keep this statement and show it to all your colleagues so we can have a good laugh. Try telling your nonsense to the struggling lumber industry which has been on the decline for the past 10 years. Yea right Kelowna was the last to suffer after the economic crash in 2008 (not), I guess we should ignore the recorded number of foreclosures. Please humor me some more and tell us how Kelowna is well insulated from national and international economic falters and how we are so quick to benefit from national and international economic gains. I must be missing something, is it our fisheries? lumber mills? or maybe the mining sector? Kelowna has three things to build on, tourism, the wine industry and tech, all three suffer from national and international pains.

Please do share my comment with all of my colleagues. I am confident most would concur but being congnitive of your bent won’t necessarily state so.

Struggling lumber, mining, fisheries tourism wine and tech industries? Yes they falter somewhat as the pipeline dries up but the taps are never turned off so quickly as when the floodgates open back up that the torrent quickly flows through those pipelines as the demand for our product increases rapidly again. But more to my point as I’ve said before “you earn your money where you have to and you spend it where you want to”. There are a swack of people here in British Columbia, and especially in Kelowna, who earned their money elsewhere and are spending it here and they are a very real and present moderating force in the otherwise wild swings other parts of the country which don’t have that are forced to endure while the pipeline slows to a trickle. No that money is not so much that we don’t ever see a slowing. If the recession is prolonged we do. But often the recession is short enough that we hardly notice as those floodgates when opened gush forth catching up and adding to the trickle long before it ever arrives that when it does the trickle is all but non-existent.

BTW: More in tune with this entries topic; wrote a deal today on which the buyer is financing a substantial amount of money but still less than 70%. I warned that rates wouldn’t stay this low forever. The buyer responded “Hell I’ve got the cash but with rates this low why would I use my own money. IF they go up anytime soon that it makes sense to pay it out I’ll do it then but to my way of thinking that’s not nearly on my immediate radar. In the meantime these rates are a gift!” Ther are a lot of other borrowers doing the same thing. Think about it…

#25 Form Man on 05.03.12 at 9:40 pm

#17 AACI

excellent post. DA suffers some serious delusions that can only be explained by a skilled psychologist. Kelowna’s housing market corrected immediately after the GFC and continues to decline. Prices are now down over 20% from the peak………..

Silly Man.

The Kelowna housing market did not correct immediately after the Global Financial Crisis – it cooled back to a normal market from what was before then an abnormally exuberant market. Volumes first abated by about a third returning them to pre-boom levels and then prices followed falling by about 15% on average but still well above what they were pre-boom from which when they peaked they were up over 100% so the 15% is of little consequence in the whole scheme of things.

#60 alkali on 05.03.12 at 11:53 pm

daystar on 05.03.12 at 11:32 pm wrote


F & H really backed themselves into a corner. They pushed oil development which is fine in one sense, but it jacked up our currency to the point where 500,000 jobs have been lost in manufacturing over the last 10 years.

Carney should hike rates. Send a psychological message to consumers… a .5% rate hike.

He would probably love to hike the rates to cool things down, but it would send the Canadian $ even higher, and we would lose even more manufacturing jobs; we already have a hard time competing with US and other manufacturers with the Canadian $ being around par with the US $

#61 NFN_NLN on 05.04.12 at 12:11 am

#51 2muchdebt on 05.03.12 at 11:15 pm

So does anyone have any ideas how to make some money from this “correction” or “crash”? In the states it was possible to bet against the banks, short the home building stocks, buy CDS (although not for the small investor) How can we place a bet on the housing decline here in Canada.

—-

I don’t have the berries to short a stock with a 7.7% dividend – TSE:MKP
Too bad I didn’t buy it a long time ago though :)

#62 Kilby on 05.04.12 at 12:12 am

EVERYONE in Vancouver knows that Marine Gateway Project “sold out”

Did it? pretty doubtful.

#63 Narrowgate on 05.04.12 at 12:12 am

Hi Brad Lamb, the veteran developer who secretly reads the pathetic blog. So obvious. I know you don’t really believe the lies you are always pumping out, you’re just ABCing (Always Be Closing). Guess we won’t be hearing much from you in the near future, which is good cause we’ve already heard so very much over the last decade.

#64 Nostradamus Le Mad Vlad on 05.04.12 at 12:22 am


“Spoilers. This is no scam. It’s not illegal.” — And the ponzi scheme keeps rolling, with one wheel on its wagon. This is where #57 daystar — “…. could explode. We need a sharp drop off in sales to slow down the ugly credit bubble thats still growing.” — When it drops, it will drop quickly which leads to the ex- / implosion, ‘tho as #53 Cory says — “. . . don’t expect it to end.”

It will end, but how and when is uncertain.
*
Huge Profits for auctioneers; 28:04 clip Central banks are waging war on supply and demand; The Future Of which no one knows; It begins; Gold Standard and TPTB; Is the US killing the Euro? Gangbusters “More Americans Stashing Cash in Home Safes” (MarketWatch)”; Chart only Economic – Political continuum; Ford Explosive Chinese demand; Rare Earths – Lost Glory; Stimulate when all else fails; Brazil and China; France and stuff.

Payday Loans still suck; Cash and Cheques Good idea; EZone Depression; New Fraud; Top Ten Cities Live well for less; Legal Tender Gold and silver in some states; Debt fatigue; IMF You don’t say; AIG Bailed out, profits double; Sarkozy vs. Hollande Bad for CEOs; UK Recession Plus lost jobs; Chinese Weetabix? Seems so.

Argentina Going down again? Warning Sign; Massive Sinkhole Describes RE quite well; New Startups have fallen; Pensions It’s worse than a mess; Geithner State of the economy; Trash Talk; Banxters? Yes; My Generation Be afwaid! Ten Cities for 4closed homes; 12 Items not to buy in bulk; Expensive Megaprojects; Selling Your Home?
*
Pentagon surrounds Iran ‘Victory’ would take 21 days; CBC Journalists To keep their jobs? 2:24 clip Planetary update, Yellowstone, etc.; War Retaliation for cutting off oil and gas supplies? Saturday Night Supermoon Fever! Coming to a planet near you, and Venus Showing signs of life; Enormous Mess Incl. map and pic; 6:34 clip Scary train ride in Ecuador; Adele Still rolling on.

#65 Carpe Diem on 05.04.12 at 12:49 am

Life should be simple.
But in the end it’s like a pimple.
Don’t pop it and it looks ugly.
Pop it and you look look really silly.

H, C & F have a plan
Shit will hit the fan
And for heaven’s sake
Don’t beleive all the fake

Figure now
You know how.

#66 truth hammer on 05.04.12 at 12:59 am

I repeat, the government has no intention of doing anything to derail the real estate train…..think of the lost tax revenue alone….to them and the minor governments…..TO just announced that it is finally afloat on RE dollars alone….nope nothing will be done. We are hearing the burps and farts from Carnage and the Midget because two things are happening at once….they are getting ahead of perception by selling an idea that they are aware of the issue…..next they have effectively jawboned the foam off the latte with the last few months of big spending on ad space blowing hot air around the country about what they’might do’…..ain’t happened…ain’t gonna happen.

My advice to the horny young couples in the cow pastures……buy two…..with $5 grand turning to ten every month you’ll be driving a bimmer next door just to collect the rent. PS…the ZIRP is permanent.

#67 Kaganovich on 05.04.12 at 1:01 am

#41 Kaganovich on 05.03.12 at 10:41 pm

Smoking Man wrote:

Really, sorry you feel that way.

You have a belief system which makes you weak.

I blame your teachers.

I can help you , but you won’t listen.

Ha! What belief system would that be? I am all ears.

#68 Wise up on 05.04.12 at 1:18 am

All these fools out there rushin into commitment – either buyin a house or gettin married Fools, smarten up – use yo $ to rent – buyin and marryin is just stupid
Why buy marry something that just be gettin run down with time – Nice ladies like the one in Gart’s pic be given it away free

#69 villain? on 05.04.12 at 1:32 am

#2vatodeth

No, but take a look on MLS what 200thou will get you in edmonton. Like the one in winnipeg, only older and even more of a crack shack. And yet, people are still buying those.
I just noticed a “new listing” yesterday, of a home listed at $209k.
Kicker is, that same shack was listet well under $200K
about 6 month ago.
No downturn here it seems.

#70 Stevenson on 05.04.12 at 1:39 am

So this means people where able to put no money down and leverage 98.5%? With RE inflating 20-30%? Damn now I can understand how it feels to be missing out on opportunities.

Could of use those down payments on more units. Oh well I don’t think RE will ever be low enough for people here to buy anyways.

#71 ANONYMOUS on 05.04.12 at 1:44 am

Garth; do you think that the Canadian government will simply ‘FORGIVE’ all of the debts of homeowners?

You know, like Iceland has just done?

http://truedemocracyparty.net/2012/04/iceland-forces-debt-forgiveness-total-us-media-blackout-when-debt-is-fraud-debt-forgiveness-is-the-last-and-only-remedy/?source=Patrick.net

Get off the drugs. — Garth

#72 Aussie Roy on 05.04.12 at 4:29 am

Aussie Headlines

The lack of expansion in the Australian private credit markets is certainly having an adverse effect on commerce in the post 2008 financial crisis period. Annual private credit growth has averaged 3.5%, since it dropped down to single digit figures in October 2008.

http://www.debtdeflation.com/blogs/2012/05/02/nowhere-to-grow/

Chart of the Day: Australian Credit Growth Has Collapsed

http://www.creditwritedowns.com/2012/05/chart-of-the-day-australian-credit-growth-has-collapsed.html?wt=2

You’re faced with a serious drop in demand for your product, and you need to get turnover moving quick smart, to start shifting that product off the shelves.

What do you do? You don’t need to be versed in the subtleties of economic theory to work it out. The answer is simple. You cut your price, or at the very least offer a better, more competitive service.

That is exactly what is happening across Australia and throughout the developed world. That debt-fuelled consumerism of the past few decades suddenly has been replaced by a new conservatism when it comes to purchasing goods and has been accompanied by an aversion to debt.

http://www.theage.com.au/business/banks-playing-risky-game-with-rates-20120420-1xc3z.html

Australia is Screwed

In short, Australia is screwed, retailers are screwed, home owners are screwed, home builders are screwed, those long Australian stocks will be screwed, and those expecting strong commodity prices to bail out Australia will also be screwed.

http://globaleconomicanalysis.blogspot.com.au/2012/04/point-of-no-return-australia-is-screwed.html

It was different here, until it wasn’t.

#73 Mr Buyer on 05.04.12 at 6:31 am

#66 truth hammer on 05.04.12 at 12:59 am
I repeat, the government has no intention of doing anything to derail the real estate train
………………………………………………………………………
I repeat, the Real Estate train has derailed. The bubble has topped. BUYER BEWARE. NOW IS NOT THE TIME TO BUY A HOUSE. SALES ARE FALLING ACROSS CANADA.

#74 Market Bull on 05.04.12 at 6:57 am

Despite attempts to paint lending in Canada as sub-par or irresponsible, somehow “Canadians Dominate World’s 10 Strongest Banks”

http://www.bloomberg.com/news/2012-05-02/canadians-dominate-world-s-10-strongest-banks.html

98.5% financing is irresponsible. — Garth

#75 jess on 05.04.12 at 7:05 am

“Shadow Elite” and subprime

Professor Wedel’s Flexians or Flex-nets

…”Over forty years ago, working for the Senate Antitrust Subcommittee, I investigated mortgage fraud in several large American cities including New York and Boston. The fraud involved falsified appraisals, unqualified buyers, “flipping” of properties, and in some cases purchases by non-existent buyers. One of the institutions involved in the New York situation was Citibank–a bank that provided warehouse loans to the mortgage companies involved in the fraud. Needless to say, the same bank and some of the same people have been involved in each of the succeeding cycles of fraud. And, each time the bank has had a squad of lobbyists and “independent experts” selling the idea that continued unregulated mortgage lending was a good idea….Jack Blum

http://www.huffingtonpost.com/jack-blum/shadow-elite-are-they-res_b_423884.html

#76 neo on 05.04.12 at 7:10 am

I have a better question for Garth. When did dealerships start offering 96 month financing for new cars. That’s even more idiotic for a consumer than 40 year amortizations. The ad I saw was $96 bi-weekly for 8 years! Are you kidding me. We all know in 2-3 years that car has depreciated 30-40%. Much like homes, extending the amortization may lower the monthly payment, but ultimately increase the sticker price of the vehicle. I guess dealers have discovered that just like housing, consumers only care about the monthly or bi-weekly payment.

What did I say about financial illiteracy? — Garth

#77 bigrider on 05.04.12 at 7:19 am

Garth, it is going to be real ugly for this blog you run, if prices in the GTA rise this year, yet again, for the umpteenth time this past decade, while the financial markets tank, yet again, for the umpteenth time again, this past decade.

If the above happens, I know I will be a great supporter of Deageo profitability..LOL

#78 PoorgEoisie on 05.04.12 at 7:45 am

I didn’t know it was a poetry blog but here goes…

It’s different here
Half a million is nothing
Lamb like spruikers

#79 Ric in gta on 05.04.12 at 8:03 am

Let me tell a bank story. In 1997 I wanted a $14,000 line of credit for my business, they wanted personal only line not a business line of credit. I was in business for 15 years. Okay fine. In 1999 I canceled the line of credit. In 2006 the bank automatically gave me a $30,000 unsecured line of credit for my business. (I didn’t, ask for it) Then in 2007 the bank gave me $150,000 line of credit. (I went to the bank for a new account and a new Visa card only). So you see even if you don’t, ask for money the banks give it to you.

#80 Cowboy on 05.04.12 at 8:12 am

Garth, I am a High School Teacher, your pic is in their Social Textbook. I fill them in. Are you sure you can’t get back into politics? (you may not want to as I am sure they were vipers and I see Drama and backstabbing at my level so I can imagine the evil that is present in Politics…) But, Are you sure?! We sure need it as I have noticed a real shift in negativity in the last few years in a lot of areas in our society…

Thank you for the encouragement. But apparently I am not enough of a sycophant or blind partisan to succeed at that game. There’s no room for independent thought in our political system, and I say that after almost being destroyed trying. — Garth

#81 Market Bull on 05.04.12 at 8:41 am

98.5% financing is irresponsible. — Garth
_____________________________________________

Successful and profitable lending is dependant mainly on the “responsibility” of the borrower. Anybody can default on a loan, regardless of how much skin is in the game.

It’s the quality of the mortgagor that matters most, not the structure of the loan.

Canadian banks have a long-standing and undeniably strong underwriting record, underscored by a stunningly low 0.38% default rate.

When we start lending to people without jobs and lousy credit, then we will as vulnerable as the U.S. was and just as careless.

But we don’t.

#82 Gordeaux on 05.04.12 at 8:51 am

Actually NEO # 76, you can make those amortizations work for you if you’re shopping for the right kind of vehicle — and by that I mean something modest and economical to operate. Every car manufacturer has one ‘loss leader’ that they apply all the stuff in the headline to, so they can say it in the ad, then take it back on the higher end models. Think Nissan Versa, Ford Fiesta, etc. If you carefully select the model you’ll find there are almost zero dealer incentives, as they call the kickback for a cash purchase — $500 on the Fiesta SE right now, for example, which you can finance at “zero” for up to 72 months. It’s not exactly zero, obviously, but since it’s a flat rate, there’s no incentive to pay it more quickly if you’re the sort to be the last person on earth to drive your vehicles.
You’ve gotta read the fine print, and resist the upsell to the slightly more luxurious model, which will have greater incentives and therefore a higher actual interest rate, but if you do that I’m convinced the longer amortization can actually work for you — but again you’ve gotta be content keeping the car for the full useful life of it, rather than going new every two.

#83 TurnerNation on 05.04.12 at 8:51 am

#23Smoking Man on 05.03.12 at 9:27 pm

Sure, Dark Side was an epic album.

But if I was stuck on a desert island, with only one album, it would have be Led Zep II. Before my time by a few years, but…
I have it on vinyl. But no record player. You can buy a USB record player from radio shack for about $120, plug it into PC but it’s not the same sound. Ramble On heard on vinyl will still rumble and shake your teeth out. JPJ’s bass is thunderous.
http://en.wikipedia.org/wiki/Led_Zeppelin_II

Must move on, this is not a Gen X music blog, it’s a Boomber weblog. :)

#84 Ann "Pom Pom" Rohmer on 05.04.12 at 8:51 am

Funny that a self professed superstar ‘trader’ can’t see a blowoff top when they see one…..the numbers you reference display all the hallmarks of a classic top as both volume & price reach their crescendo. Classic herd mentality…..sure smokingman, its different this time

Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds, 1841
“Men, it has been well said, think in herds. It will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.”

Friedrich Nietzsche, Beyond Good and Evil, 1886
“Insanity in individuals is something rare – but in groups, parties, nations, and epochs it is the rule.”

#21 Smoking Man on 05.03.12 at 9:09 pm

WOW 9% year over year in price
The Great Smoking Man nails another one out of the park. I’m better at calling markets than god. Read my posts from the fall.

GTA sales up Over 18 % 22% in single detached homes like mine.

Oh bubble heads where is your fat lady, she’s not singing anytime soon.

#85 Jim Lahey, Sunnyvale Trailer Park Supervisor on 05.04.12 at 9:02 am

“Thank you for the encouragement. But apparently I am not enough of a sycophant or blind partisan to succeed at that game. There’s no room for independent thought in our political system, and I say that after almost being destroyed trying.” — Garth

That sums it all up. That is why we blog dogs recognize and thank the bearded mystic oracle who writes this blog for bringing financial literacy to Canada. I propose that since the powers to be will never give Captain Garth the Governor General’s Award, at the SASTPGFBDCParty the bearded oracle, all knowing, all wise, mystic reader of financial tea leaves, lone voice of reason crying out in the financial wasteland of Canada and all round jolly good fellow be given the blog dog equivalent of the Governor General’s Award. Any suggestions on the title of the award from fellow blog dogs would be appreciated. Ricky said we should call it Independent Thought Straight Shooter Award but I am open to suggestions from fellow blog dogs.

#86 Realitybytes` on 05.04.12 at 9:02 am

98.5% financing????

Why are you being so conservative?

The 1.5% was for closing costs, that means borrowing 100% of the value of the homer.

Also, most people are also pading in the CMHC fee. And if they had to turn around and sell for the same price and pay even a minimal commission….

these people are under water the second they sign the paperwork!

Crazy!

#87 Form Man on 05.04.12 at 9:20 am

#59 DA

You really are pathetic. Kelowna housing prices are down 20% from the peak 4 years ago. Factor in inflation and it becomes obvious that real estate in Kelowna in the last 6 years has been a disastrous investment. As for volumes, they are the same as the average 12 years ago. Given that the population has grown by some 20% since then, this is terrible. Given that prices are still declining, the disaster continues unabated. The Albertans are going to Phoenix, DA……..you are going to have to face up to reality some day…….

#88 refinow on 05.04.12 at 9:29 am

Cash Back Mortgages should be the least of everybodies worries.

First of all they have the hardest qualification criteria of any mortgage out there, with a zreo tollerance to any exceptions. The Lending Box is very well defind.

First Hurdle……Minimum Credit score 680. This usually weads out more than 90% of applicants applying for no money down financing. Clients needing no money down, are not savers, hence the requirement for no money down. They are usually spenders, with high blanaces on their credit cards. So right out of the gate if your Credit score is not 680……The mortgage agent shouts out a resounding “NEXT”, like a scene from Sinfield’s Soup Natzi.

Stage 2, Income confirmation: No stated income here, plain and simple you need the income to maintain a 32% GDS and 40% TDS.

No creative acconting for the self employed, or new commisioned real estate agents with the ink still dripping on their new RE licenses need apply.

Now one positive aspect is their payments are reflective of the 5.40% and must prove they have the income to carry such a mortgage… So really these clients are actually prepared for future rate increase.

Now want me to really blow the minds of BLog Dogs everywhere???

No Money Down can also be incorporated with “PURCHASE PLUS IMPROVEMENTS”. So not only will CMHC enable you to walk in with no skin in the Game, they will give you upto 10% more money for future renovations, and the 5% cash back on the rnovation proceeds as well!!!!!! With no further requirement then a written estimate for the work that is intended to be completed.

Now our govenment is not completely stupid….(Ok yes the are!!!) but they will not releasse the renovation proceeeds until completion of the renos…

10% will need an appraiser to verify completion of the work

#89 refinow on 05.04.12 at 9:39 am

OFSI changes are approaching like a run away freight train….

But watch for the bait and switch technique. They know exactly what changes are coming. Hell they even sent out the Draft copy of these changes 2 weeks ago.

But now they will make up some rediculous changes that they never in a million years are considering, like the one leaked this week that they are going to use a new age + amortization equation to establish maximum amortizations… Ironically, 20 years ago there actually was a policy like that, however this only penalizes the aging boomers, and there is not a hope in hell this one will get through.

So when they announce the final new OSFI rules they are now great upstanding citizens for “ammending” many of the policies, so these new changes are not so bad.

Like putting jam on the teaspoon when you have to give you kid some bad tasting medicine.

But just remember…the Bad tasting OSFI medicine is still on the spoon and we all have to take a dose.

#90 Steevo on 05.04.12 at 9:40 am

For Smoking Man…

Welcome my son, welcome to the machine.
Where have you been? It’s alright we know where you’ve been.
You’ve been in the pipeline, filling in time,
provided with toys and Scouting for Boys.
You bought a guitar to punish your ma,
And you didn’t like school, and you know you’re nobody’s fool,
So welcome to the machine.
Welcome my son, welcome to the machine.
What did you dream? It’s alright we told you what to dream.
You dreamed of a big star, he played a mean guitar,
He always ate in the Steak Bar. He loved to drive in his Jaguar.
So welcome to the machine.

#91 robert james on 05.04.12 at 9:56 am

Apparently this agent does not like “bubble talk”.. I wonder why.. LOL http://www.bcbusinessonline.ca/homes-and-real-estate/vancouver’s-red-hot-real-estate-loses-its-heat?utm_source=MagMail&utm_medium=BCBusiness%20Newsletter&utm_campaign

#92 jess on 05.04.12 at 10:02 am

79 Ric in gta
business credit availability program

Participants
Financial Institutions
Business Credit Availability Program (BCAP)
What is it?
In an effort to help Canadian businesses manage during these uncertain economic times, as part of Budget 2009, the federal government introduced the Business Credit Availability Program (BCAP).
This program provides $5 billion in additional lending (loans and other forms of credit support and enhancements) to viable businesses through the Export Development Corporation (EDC) and the Business Development Bank of Canada (BDC), in cooperation with private sector financial institutions.

Any creditworthy Canadian business seeking financing to support its operations may apply for credit under the Program. Bank customers were encouraged to speak to their local representative to discuss how this program may apply to them. In some instances clients may be referred directly to the EDC or the BDC.

Indeed, as of the end of March 2011, EDC and BDC reported total activity under BCAP of over $11 billion, helping more than 10,000 businesses across the country and in all sectors of the economy, with a particular focus on small businesses. The amount of financing provided to Canadian businesses through the program easily surpassed the target of at least $5 billion that was set out in Budget 2009.

BCAP, as a temporary initiative, has wound down as a formal program – consistent with other temporary elements of the first phase of Canada’s Economic Action Plan.

#93 Timbo on 05.04.12 at 10:05 am

http://www.reuters.com/article/2012/05/04/us-uk-property-idUSBRE8430G720120504

Investment Property Databank (IPD) said the value of shops, offices and warehouses fell 0.7 percent during the first quarter of 2012, following a 0.1 percent decline in the previous period and were 31 percent below the last peak in September 2007.

“The slump is twice as severe as during the previous recession of the late 1980s when values recovered to 15 percent below their pre-crash levels within five years and is the worst downturn since the UK’s benchmark index began in 1971.”

Austerity alive and well and obviously working as intended.

http://www.latimes.com/business/money/la-fi-mo-economy-jobs-20120504,0,4574906.story

“Wages overall were subdued; average earnings for all private-sector employees went up by a mere penny from March, to $23.38 an hour. That was up 1.8% from a year ago, below the rate of inflation. The average workweek, a leading indicator, was unchanged in April at 34.5 hours.”

342,000 workers drop out of the workforce, very sad job creation and wages are not keeping up with inflation. Sputter…cough…choke…

We just need $120 oil and $8 bread prices to fuel spending…

#94 Daisy Mae on 05.04.12 at 10:06 am

#56 Daystar: “Why F doesn’t lower amortizations and/or hike downpayments is beyond me other than deluded thinking combined with a large want to cover his own ass.”

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

Because he’d have to admit Garth was right. And he’ll never, ever do that. It’s an ‘ego’ thing….

#95 daystar on 05.04.12 at 10:10 am

#60 alkali on 05.03.12 at 11:53 pm
I think the economy has given Mark enough breathing room to hike rates as it is? I wouldn’t have done it last time around with natural gas where it was but a quarter point hike at this point is doable. I’m thinking a half point because of the nutty consumer patterns I’m seeing but maybe your right. Perhaps the media has done its job with all the bubble talk. The role media can play in this cannot be understated. We shall see. I’m not a central banker, just a humble (self professed) dog here like the rest but if I was a central banker but I’m not but if I was, the way F has handled CMHC would have driven me nuts! At any time, F could have ended this RE/credit bubble through CMHC by either reducing the length of amortizations, hiking down payments or both. The way F has chosen to slow things down is just too slow!

If you want to get things done as a finance minister, you simply do it. You don’t out of one side of your mouth say “valuations are high in Vancouver and Toronto and I’ve been concerned with CMHC for quite some time” and then hum and haw and scheme ways trying to keep your hands clean the way F has done through the very creation of a housing bubble with fiscal policy and upon publically identifying the problem slow any meaningful response by 6 to 9 months or more, you simply lower amortizations and jack down payments through CMHC which you should have done all along! Why, F can do this today!! What’s stopping him?

Who does F take his orders from? There’s our answer as to why and logic since the beginning has told me Harper serves different masters than Canada. What fools people were and still are to trust him.

#96 AACI Okanagan on 05.04.12 at 10:13 am

#59 };-) aka DA on 05.03.12 at 11:49 pm

DA, seriously, put the pipe down and join us in reality because you are really looking foolish here. You said:

“But more to my point as I’ve said before “you earn your money where you have to and you spend it where you want to”. There are a swack of people here in British Columbia, and especially in Kelowna, who earned their money elsewhere and are spending it here and they are a very real and present moderating force in the otherwise wild swings other parts of the country which don’t have that are forced to endure while the pipeline slows to a trickle.”

So I ask, where are these people spending their money? Tourism has taken a big hit, we see income statements for hotels, motels and restaurants all the time and I can tell you they are all down since 2008. Here is another kicker, the wine industry and the golf courses are all down, so tell me where are they spending that money?

Now let’s get back to my original question to you that you did not answer. Again here is your quote:

“Indeed I have been in the business a long time – maybe too long, been through a few market shifts and I do emphatically maintain; British Columbia is the last to feel depressed international economic conditions and the first to feel the good ones. Only Kelowna is more resilient, by a long shot, based on my observation over the past 35 years in which I paid any attention. I am surprised by your implication that you have not observed the same.
It is true; Kelowna, despite it’s flaws of which admittedly it has it’s fair share I’ll not go into at this time, does have a most resilient economy which is relatively well insulated from national and international economic falters and most quick to benefit from national and international economic gains. I’ve seen it time and time again and expect this time will be no different.”

Now please explain this? Give us some facts or just admit that your full of bs. A reminder DA, our lumber industry took a big hit during the boom years, over 11,000 workers were laid off and many mills were shut down.

Former NDP premier Mike Harcourt said it best “Kelowna is guilty of being unsustainable and adds unsustainable cities result in low quality of life for their residents and are not competitive with other communities in attracting jobs and talented workers.”

I love BC also DA, I am originally from the east coast and have lived in Toronto, Vancouver before settling here. Just because I love it here does not mean I shall live with blinders on. The whole Okanagan is based on tourism and that is always influenced by economic trends.

#97 Doug in London on 05.04.12 at 10:20 am

In response to Garth’s comments to post #80 by Cowboy:

Once upon a time, back in the days when Sir John A. MacDonald was Prime Minister, didn’t Conservatives believe in and practice fiscal responsibility? What went wrong? This present Conservative government could be setting us up for BIG bailouts, at taxpayers expense, to CMHC. No wonder we see radical new political parties like the Wild Rose Party emerging.

Mr. Harper is Reform. Look where that got us. — Garth

#98 John G. Young on 05.04.12 at 10:28 am

#78 PoorgEoisie on 05.04.12 at 7:45 am

A real estate haiku!

#99 John G. Young on 05.04.12 at 10:29 am

#270 };-) aka DA on 05.04.12 at 12:24 am

“It’s the overt gay pride attitude.”

Once again, your projection. If you were to bother to actually follow the discourse — as I’m sure our host has — it would be very clear to you that my comments regarding being gay having nothing at all to do with “pride”, and everything to do with being recognized and accepted as an equal — nothing more, nothing less. As with so many others on this blog, you conveniently forget, or choose to ignore, the fact that I only mention the issue of my sexuality when people post hateful comments about homosexuality, either in general or directed towards me.

“care to enlighten us why you would have me banned?”

No. Try to figure it out.

#100 John G. Young on 05.04.12 at 10:30 am

#272 disciple on 05.04.12 at 9:19 am

“you bragged in your previous post, “I am a physician, I will not regret…etc..”

I didn’t think of it as bragging, but I can see how it could come across that way. My comment was probably in reaction to all the comments I read on this blog from people who seem to think that the highest value in life is material wealth.

“And many of your more recent statements you’ve made are self-contradictory, but perhaps you don’t see it yet.”

I don’t. And although I don’t agree with some of the material you post, I respect you as well, and would appreciate it if you would bring past or future self-contradictory comments to my attention.

“Stop with the labels, people…”

I totally understand — it’s what I’m fighting for here as well (although perhaps in a different way).

Cheers,

John

#101 $$$BPOE#1 on 05.04.12 at 10:32 am

Sold signs everywhere with few for Sale Signs. Bob Rennie got it right “Everything will be Alright”. Meanwhile Ronnie on Real Housewives of Vancouver bought 4 ocean lots down at Lions Bay. Lookin Great. Real Housewives confirms that BPOE truly is the Best and most Beautiful Place on Earth. Check out the sunshine in the show, the back drop, the stunning wealth and beauty is overwhelming.

#102 Dave on 05.04.12 at 10:33 am

I’ve got $30,000 in a savings account. Tiny RRSP’s but teacher Pension in 20 years (fingers crossed). Making $85000. Wife is the same but on mat leave right now. Owe $27,000 on our tiny but comfy house.

The question is, what do I do with my $30,000? (I add about $1000-2000/month)

ETF it in a TFSA. — Garth

#103 Renter on 05.04.12 at 10:36 am

Isn’t lack of sales in newly launched precon condos a good thing? And wouldn’t it be a good thing if these condos don’t get built due to lack of sales?
Condos not being built = no over supply issues = no bubble = no bubble bursting

#104 $$$BPOE#1 on 05.04.12 at 10:37 am

98.5% is great. When you have the cash and then some sitting in the bank to pay for your house in total why would anyone not take advantage. This is lost on people. BPOE investors HAVE THE CASH, they choose to take advantage of low interest rates and DIVERSIFY into other assets. A small handful of Canadians don’t have the CASH in the bank so of course this carries more risk but less so in BPOE where long term prices are going to go much much higher. Remember in the 1940’s a house cost $3000. In 2060 people will remember how a house only cost 1.5 mill in vancouver vs 10 million

#105 Smoking Man on 05.04.12 at 10:42 am

DELETED

#106 Keith on 05.04.12 at 10:47 am

Garth,

You keep recommending bank preferreds. How does that recommendation jive with news like this? Surely, when the housing market does crash, those bank shares are going to take a dive too. Isn’t it better to short them?

Financial illiteracy, run amok. Preferreds are not equities. They do not reflect profits. They’re bought for yield. You can’t short them. — Garth

#107 disciple on 05.04.12 at 10:55 am

The very word mortgage is repugnant in a free and open society and we are as a people inherently and
historically opposed to mortgages, to secret bankster oaths, and to secret bankster proceedings.

For we are opposed around the world by a monolithic and ruthless conspiracy that relies primarily on covet means for expanding its sphere of influence; on infiltration instead of invasion; on subversion instead of elections; on REALTOR manipulation instead of free choice. It is a system, which has conscripted vast human and material resources into the building of a tightly knit, highly efficient machine that combines media manipulation, false advertising, false intelligence, bad economic, pseudo-scientific and political operations. Its preparations are concealed not published; its stats are massaged not reported; its dissenters are silenced not praised; no expenditure
is questioned; no secret is revealed.

That is why the Athenian lawmaker Solon decreed it a crime for any citizen to shrink from controversy. I am asking your help in the tremendous task of informing and alerting the Canadian people, confident that with your help working families in Canada will be what they were meant to be to be, free and independent of bank slavery. – disciple (with inspiration from Kennedy who is the modern day Jimmy Carter with prosthetics)

Here’s a spoiler: JFK is still alive! http://xdisciple.blogspot.ca/2012/05/elvis-may-be-dead-but-jfk-is-still.html

#108 Market Bull on 05.04.12 at 11:01 am

#88 refinow Very well put sir / madam.

One other delightful surprise for cash back mortgagors is that there are clawbacks of the amount advanced if you break the loan early.

In reality cash back mortgages are cash cows for the banks.

Not only do cash back mortgages earn the highest interest, but lenders also realize a substantial return of the cash back portion, due to early breakage on many / most of the loans.

#109 daystar on 05.04.12 at 11:11 am

#81 Market Bull on 05.04.12 at 8:41 am

At some point this RE party will end. Rates will rise as governments continue to run up more debt and when it does payments will go up, it’ll get priced in and valuations will come down and when that happens any overdevelopment issues will rear their ugly heads.

The question we should all be asking ourselves is… do we have any major overdevelopment issues in Canada? If there is overdevelopment its guaranteed that unemployment will be high from layoffs in construction and the RE industry. Some of those quality mortgage holders you refer to won’t be able to make payments. Equity will shrink, consumer spending will fall and recessions will come. How resilient… how “quality” persay are the mortages in Canada? Not so good if you can’t hold your job. The feds for example are laying off 100,000 federal empoyee’s. Some will be hired back as consultants but the rest… how good will they be as mortgage holders now?

People holding mortgages 5 years old or more, they’ll be fine (I think) unless they lose their jobs. Its the one’s who’ve bought in since early 09′ on that worry me.

http://www.tradingeconomics.com/canada/interest-rate

Its the new homebuyers that are taking on huge mortgages with teaser rates that won’t last and the longer rates stay at emergency levels, the greater the risk of implosion and what worries me is what gross public debt could do to interest rates (may have to tweak the timelines somewhat on this chart):

http://www.tradingeconomics.com/canada/government-debt-to-gdp

It is well known what challenges governments face as they near 100% intergovernmental or gross public debt to GDP. Debt service becomes highly rate sensitive and can bite dramatically into government services. BoC rates at 5 to 6% are not unfathomable at these levels as bond investors price in risk and what has literally saved our Canadian bacon is the fact that our currency has risen diluting gross public debt far more than we think. Check out our currency charts:

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

Notice the correlation between our loonie chart and gross public debt to nominal GDP chart. We won’t have a loonie rising to dilute governmental debt going forward. 1.05 is the best we can hope for. If anything, a loonie at par is more realistic. The good ol’ days of hiding gross public (intergovernmental) debt are gone. The U.S. dollar won’t see weakness for a good 6 or 7 years due to what the central bank in the U.S. has done with extending the length of bond maturities regardless of their debt issues. What I’m saying is a great deal can happen between now and then for Canada. Our currency won’t hide our debt issues going forward and as governments continue to rack up more debt… greater risk enters the bond markets all under a housing bubble climate and that spells high rates.

One final thought. We are by no means as bad off as Spain (although our gross public debt is roughly 10% higher, our RE bubble is by no means as extreme as theirs was) but Spain should teach us a lesson concerning how expensive credit can be under post bubble conditions. Any future macro economic models done by people like:

http://clients.njoyn.com/CL2/XWEB/Xweb.asp?tbtoken=YltaShNdR1U4ZHdzTVRQZ1VUeWdfB0xYe1ckTlF5CmZFK0MeUEQaBmB8c0FVGVtUSXJtXzpQ&chk=dFlbQBJQ&CLID=60296&PAGE=JOBDETAILS&JOBID=J0412-0945&BRID=30051&UTM_SOURCE=NJOYN&UTM_MEDIUM=RSS&UTM_CAMPAIGN=PCANDIDATES&LANG=1

… these folks need to make macro economic projections of where Canada is headed with a post bubble environment factored in. The only question really that remains is the severity of Canada’s post bubble environment and thats up to the policy makers of today, particularly fiscal policy. Again… F could at any time reduce amortizations and raise down payments through CMHC if F or H was at all serious about ending our RE/credit bubble. They… uh… um… continue to stall.

Why?

Readers have my full permission to think the worst.

#110 Jennifer on 05.04.12 at 11:19 am

The only thing more entertaining than watching prices get slashed by 100k, 300k in Kelowna is reading posts like #17. You can’t stop Boomers from aging, getting sick, downsizing or dying and in a population of 19.5% over 65 your theories about “industry” mean nothing. This is still a newlywed and nearly dead town, and even the people who live here are making their money elsewhere not just outside investment. Seriously considering starting my seminars on how to negotiate way under fake lists prices of delusional realtors. Step 1 pull a roll assessment on your desired properties. Step 2 take a drive over to the desired property and talk to the retired owner and see what he needs to move on. Step 3 Tell them to call when they are sick of: a. keeping their house clean for months on end with no showings b. their greedy kids thinking they are going to cash in on their parents hard work in a falsely inflated market that is crashing or c.realtor who has no idea how to sell a property in a real market while they have aging crisis on their hands and their all inclusive retirement village of their dreams starts @ $2300. + a month. Any other seminar tips for me Garth? :)

#111 Do Do Bird on 05.04.12 at 11:26 am

Any of you young kids out there trying to rent one of those 500 sq. ft. closets in the sky….do not fall over when they try to assure you that “yes, we know they are going for $1,100 per month….be polite and courteous and respond in kind (as confident as the prospective landlord) and offer these good folks $900 per month all in. Dear younger version of myself…do not fear as you are not the owner of this overpriced cubbyhole. Be fearless and assertive. They will be on their knees thanking you for the 900 monthly rent you fork over.

#112 Keith on 05.04.12 at 11:35 am

I don’t get the digs at Carney on this blog. The hate for keeping interest rates low? What was the man supposed to do as he saw manufacturing in Ontario get decimated, while inflation hasn’t been climbing up? Should he have raised interest rates then.

He too has been warning about Canadians taking on too much debt for a while. It’s just that he uses polite central banker words, not the harsh ones used on here.

I wouldn’t blame Carney much. He did what any central banker would do. The blame for this bubble should go to the Finance Minister. He’s the one who loosened lending policies that brought us this asset inflation. Low interest rates would not have been a problem, had lending rules continued to be strict.

#113 Oceanside on 05.04.12 at 11:50 am

Parksville, Qualicum Beach and surrounding areas.

1,242 active listings.

Last 7 days, 16 completed sales.

2 over $500K and 11 under 400K.

#114 McLean on 05.04.12 at 11:53 am

“It’s different here”

#115 Canadian Watchdog on 05.04.12 at 12:07 pm

The MLS sale I posted yesterday http://i48.tinypic.com/2eb4eh3.png came from a development project with the following offering.

http://blog.buzzbuzzhome.com/2012/01/210-simcoe-seals-the-deal-with-special-deposit-structure-no-wonder-its-already-over-80-per-cent-sold.html

“When purchasing a suite at the 25 storey development, you pay $5,000 on signing and the balance to 5 per cent in 30 days. You’ll pay another 5 per cent within 365 days, 5 per cent on January 31, 2015 and then 5 per cent on occupancy.”

This project is scheduled to be completed in 2015, but it was booked as a sale on MLS, therefore adding $502,900 (not even a mortgage or complete down payment yet) to TREB’s total volume. How does TREB calculate average price? Simple, total volume divided by sales. http://i45.tinypic.com/rivqpu.png

So in effect, pre-con sales (phantom credit) are contributing to the current month average price (and sales), which explains why total volume in April was up 62% y/y.

#116 jess on 05.04.12 at 12:09 pm

facebook going public will rise prices? why does this guy scare me?

http://www.businessweek.com/videos/2012-05-03/silicon-valley-housing-in-frenzy-redfin-ceo-says

#117 cramar on 05.04.12 at 12:16 pm

Garth, your commentary today reminded me of something.

Ancient Wisdom (circa 1000 BC):

“The rich rule over the poor, and the borrower is servant to the lender.” – The Bible, Prov. 22:7

Over three thousand years nothing has changed! People come and go, turning to dust. New generations come and go, turning to dust. Cities, nations, empires come and go. Yet the only thing constant is human nature—it never changes! With 100% borrowing people are choosing to be 100% the servant.

#118 };-) aka DA on 05.04.12 at 12:19 pm

#87Form Man on 05.04.12 at 9:20 am
#59 DA

You really are pathetic. Kelowna housing prices are down 20% from the peak 4 years ago. Factor in inflation and it becomes obvious that real estate in Kelowna in the last 6 years has been a disastrous investment. As for volumes, they are the same as the average 12 years ago. Given that the population has grown by some 20% since then, this is terrible. Given that prices are still declining, the disaster continues unabated. The Albertans are going to Phoenix, DA……..you are going to have to face up to reality someday…….

Really? Are you quite sure? Or are you merely regurgitating hearsay you want to hear and not that which you refuse to believe. I would have to spend a little time, which I don’t have right now, to research the facts to provide a more compelling argument against your claims – claims not without some merit unto themselves but exaggerated and spun to tell a whole story quite contrary to the truth.

Suffice it to say Form Man my information compels me to have sympathy for you as I suspect you must be in a dark place right now with business not meeting your projected expectations and consequently you might have grave concern for your personal livelihood for any other worthy builder/developer is not nearly so pessimistic on the real estate outlook for Kelowna.

Case in point; the Stober family of Kelowna who have and continue to build some of Kelowna’s most prominent buildings (Landmark Centre). Or the Callahan family who continue to acquire and develop commercial properties in upcoming residential areas on the outskirts of the city as has proven successful for them in the past (The New Ponds residential neighbourhood in Upper Mission). These are well healed, experienced developer families who have been through it all before and learned when to take advantage of economic opportunity when others fail to recognize those opportunities. You need to realize this that you too might see such opportunities we all have equal access and opportunity to share in if only we will open our eyes and see them.

On the matter of Albertans turning to Phoenix instead of the Okanagan Valley, based on our (OMREB) most recent buyer surveys, Albertans have remained a consistent component of the buyers who buy here and, in fact, they have increased their market share most recently just as have the buyers of investment properties in the Central Okanagan. You might want to ask your REALTOR® for a copy of this survey as it does provide some interesting data that will, I am sure, be of interest and encouraging to you.

I am very pleased with the way our real estate market is unfolding. I suspected in 2007 that we were headed for a market meltdown. Of course that is easy to say in retrospect but the fact is, I have archival record to prove it in, if not this blog then, that blog I participated in on the local http://www.castanet.net forums. Back then I was almost as much a bear as you. I also have proof source of this claim in the records of personal property I sold in anticipation of that meltdown – although as I have stated here before, in retrospect, it was an unwise move to sell as the market never did what we most feared.

The real estate market as it stands right now is sustainable. We are working our way through that excess inventory of condos quite nicely. Yes that condo market is still dramatically in the buyers favour but I am seeing movement toward a more balanced supply and demand, slowly but surely. City council’s opposition to and declining approval of the Monaco project was a good move although done for reasons other than concern over the state of the real estate market. We certainly did not need that proposed huge inventory added to our current supply of available condos for sale.

If I have any problem with the real estate market it is not the mechanics of it but the obscure confidence game that goes on within it. But that is a complicated, controversial and lengthy discussion I have no time for right now. Suffice it to say I am growing weary of people being told and believing that which they want to hear rather than that which they NEED to hear. That holds for both sides of the fence: On this blog where Garth’s Blog Dawgs tell a fear mongering story of gloom and doom that they “believe” lies in wait but have no evidence of. And In the markets where agents, who have a fiduciary duty to their clients to tell them what they NEED to hear not what they WANT to hear, are prostituting themselves in order to get the business. There are simply too many agents (in the Central Okanagan approx. 1 agent for every 200 people – man, woman and child) competing against one another that they tend to “buy listings” by agreeing to prostitute themselves to the whim and fancy of a misinformed public. That tends to perpetuate and result in the client getting exactly what they asked for… a good screwing.

Where is the truth? The truth is here and now not what “may” or “should” be but what is. No one knows what the future holds in store. The market is simply that which is here and now, not necessarily what you want and probably not what you fear. Sitting around pontificating will get you nowhere. Figure out what you want and take action to get it – everyone else is. If you’re not losing now and then you are simply not trying hard enough. “You miss 100% of the shots you do not take” There are always challenges to overcome – wouldn’t life be boring if there were not? Would there be any pride in a job well done if everything came so easily?

Happy the man, and happy he alone,
He, who can call to-day his own:
He who, secure within, can say:
“To-morrow, do thy worst, for I have liv’d to-day”

‘Nough said.

#119 daystar on 05.04.12 at 12:32 pm

#102 Keith on 05.04.12 at 11:35 am

Right you are, bud. Our housing bubble was created by fiscal, not monetary policy and our solution to fix the problem should be fiscal going forward as well. To rely on monetary policy to fix this RE/credit bubble is to reveal just how weak fiscal policy has been the whole time the Harper government has been in power. Lest we forget, F is the father of 40 year nothing down CMHC regs in Canada for over 2 years before the crash of 08′ at a time when housing didn’t need to be stimulated.

Harper & F has wanted this housing bubble all along and now they’ve got it. We’ve got to begin to collectively accept this reality and start asking why regardless of political leanings and the darker answers we find.

#120 new_era on 05.04.12 at 12:36 pm

You know, comparing this last month figures doesn’t mean a thing.

Because the game was changed just a week ago so!

I hear people saying CMHC still has a bit to go before it hits 600 billion. But in reality we really don’t have sold figures from CMHC, everything they did was half ass so I really don’t have any confidence in any of the reports they put out.

Also if there’s a 15% correction, forget about the 600 billion limit. CMHC is basically done.

And you can hear the little boy starting to come out and sing (in the movie…. the cook the thief, his wife and her lover)

Oh and guess what we will be eating today (in reference to the movie)

#121 Kim on 05.04.12 at 12:48 pm

Why are realtors posting all day and night on this blog if the housing market was doing well? We all know the answer is simple. The housing market is falling.

#122 Bill Gable on 05.04.12 at 12:49 pm

Smoking man is off his meds. Come here for more than endless nonsensical gibberish. Give it a rest, please?

#123 disciple on 05.04.12 at 12:49 pm

#118 jess… That’s crazy. FYI, more spoilers: Facebook “founder” Zuckerberg’s real identity is Jacob Michael Greenberg.

http://wirenetology.blogspot.ca/2012/05/jacob-michael-greenberg-jail-mug-shot.html

Also breaking… Leon Panetta = Bernie Madoff. Same actor playing both roles. Get it? Make panetta (bread/dough) and then make off with it… google images on the net here http://tinyurl.com/88n5duf

#124 mel in victoria on 05.04.12 at 12:56 pm

Mark # 55…….

I agree. One should have at least a bit of their assets in the precious metals.
These 2 charts tell the story:

gold
http://stockcharts.com/h-sc/ui?s=$GOLD&p=M&yr=12&mn=0&dy=0&id=p81109446073&a=266312605

silver

http://stockcharts.com/h-sc/ui?s=$SILVER&p=M&yr=12&mn=0&dy=0&id=p79432920637&a=266313459

#125 maxx on 05.04.12 at 12:57 pm

#21 Jsan on 05.02.12 at 9:43 pm

Astute..the tone has definitely become increasingly shrill and the libretto contents manically desperate over the past few months….
Perhaps a giant unrecoverable financial error has been committed by the soprano and the singing has begun in earnest…..
ACTs II and more to follow……

#126 realtors and mortgage brokers =baghdad bob on 05.04.12 at 1:02 pm

Look at all the realtors and mortgage brokers on here spinning their lies that would make baghdad bob blush. They sound beyond ridiculous and so one wonders how could anyone believe a single word they say? The market in vancouver is crashing and Toronto just had their blow off top. Toronto is all down hill with the rest of the country.

#127 AACI Okanagan on 05.04.12 at 1:07 pm

#120 };-) aka DA on 05.04.12 at 12:19 pm

Actually form man is right, overall the market is down 15% to 25% since the crash of 2008. The 15% is a smaller percentage than the norm which is about 21% . Again I invite you to come to my office and I will prove it to you.

#128 Gord In Vancouver on 05.04.12 at 1:13 pm

Don’t Sell Now !!!!!

House prices: 9 reasons not to panic

So relax, homeowners. There are many reasons not to put the ‘For Sale’ sign up.

http://www.canadianbusiness.com/blog/investing/82720–house-prices-9-reasons-not-to-panic

#129 ThiNg on 05.04.12 at 1:18 pm

For the car loans, I helped a friend run the numbers and I couldn’t talk them out of it because the numbers were in their favour!

Take this example. You have no money saved, and you need a new car. You can purchase a 2-3 year old care (depreciation eaten already) with a loan from the bank at 7% let’s say $20,000. OR, you go to the dealer and they give you a brand new car at 0% for 8 years and the car costs $32,000. Even though you are paying $12,000 for the those 2-3 extra years of life on the car, it is still WAY less than the financing costs on the loan over 5 years.

I ran the numbers a bunch of times, and she still saved $400.00 by buying new OVER buying used with financing (it’s a different matter if you have $20,000 in cash though).

#130 disciple on 05.04.12 at 1:26 pm

#78 Faux haiku, 5-8-4, not 5-7-5, but it’s all good.
# 100 John GY **(hug)** First rule in soccer and best of all: when you’re tripped, get right back up. Those are the type of players I want on my team…

#131 Yagginht on 05.04.12 at 1:37 pm

Home   Business   Real estate numbers up in the GTA

The latest real estate numbers for the GTA show a stark increase from last year.

More than 10,000 transactions occurred through the multiple listing service that was up nearly 20 per cent year-over-year.

Prices rose nearly 10 per cent as well, with very little inventory out there.

Richard Silver, president of the Toronto Real Estate Board, said this could be because of the shortage of listings.

“We still have a shortage of listings in the marketplace and that causes the prices to go up,” Silver explained.

The average price in the GTA in April rose to almost $518,000, up 8.5 per cent from the same period last year.

In the 416 area, the average price is approaching $570,000.

#132 neo on 05.04.12 at 1:51 pm

#82Gordeaux

Sorry, taking out a 8 year loan on a rapidly depreciating asset with zero down is just a plain stupid idea. I don’t care what your circumstances are. At least with a home you have an opportunity for appreciation of value. If it takes you 8 years to pay of the cheapest new car in the lot. You really can’t afford a car. Like I said, the more people that do this actually end up causing the sticker price to ultimately rise. That is exactly was leasing has done to automotive prices over the years.

PS – It wasn’t for a compact bottom feeder car. It was an SUV.

#133 John G. Young on 05.04.12 at 2:19 pm

#270 };-) aka DA on 05.04.12 at 12:24 am

“I have gay friends…”

You have friends?

Oh, right, I forgot: Facebook.

#134 Canadian Watchdog on 05.04.12 at 2:23 pm

Our safe Canadian banks are using more BOC repos for quick cash again. http://i45.tinypic.com/jpwojk.png

That’s nearly $6.5 billion tapped in April alone. Problems, problems, problems.

#135 Coraline on 05.04.12 at 2:45 pm

Canadian Watchdog: *Excellent* work catching the new builds on the MLS. I had no idea, but I suppose I shouldn’t be surprised. What a sham.

#136 bmac on 05.04.12 at 3:02 pm

I’ve got $30,000 in a savings account. Tiny RRSP’s but teacher Pension in 20 years (fingers crossed). Making $85000. Wife is the same but on mat leave right now. Owe $27,000 on our tiny but comfy house.

the fact that teachers get paid 85,000 is one of the many things wrong with this country….

#137 Blacksheep on 05.04.12 at 3:03 pm

DA,

“Figure out what you want and take action to get
it – everyone else is.”

Wise words indeed.

Blacksheep Action Plan:

1] Sell ridiculously inflated house that doubled in
value in 4 years, circa 2008.

2] Invest in Precious Metals 2008 to 2012.

3] Sell all metals Feb 2012. Go to cash anticipating, index/metals pullback.

4] Have my realtor minions (they work for free you know) continue to pepper, desperate to sell home owners, with insulting low offers, thus “making”
my own market.

5] Take a summer tour on the Harley as the B.C. RE market, comes unglued.

Like one vulture said to the other, ” Patience my ass, I’m going to kill something!”

take care
Blacksheep

#138 stefano on 05.04.12 at 3:06 pm

I can’t believe my eyes here in London. With no known idea as to why all these new houses are going up? Now the large field behind my store where I work is all bulldozed and full of construction getting ready for new subdivisions. And all up and down the north area of the city land has all been cleared away for new homes. My question is, with the Ontario economy stagnating, with manufacteuring jobs leaving by the bucketful (ie. Cat shutting down Rail plant here) where is all the demand coming for all the new housing? London is a nice little city, but with its high unemployment rate and low influx of immigrants I do not see where the demand is dicated to put these houses up. Do developers just clear the land and fire houses up with the hope that people come? What if no one shows up to by their homes, won’t they be sitting on huge investments that will have to written off? And what about all the red dots on mls for all the new houses 2-5yrs old for sale now in the same area? This construction and lack of demographic demand boggles my mind.

#139 Daniel on 05.04.12 at 3:09 pm

Haha #131 – they “need” a new car!

They can buy a $5000 great Honda, or Toyota that will run for 10+ years … they just don’t want to drive a 10 year old car. … drive the car, save some cash and in 10 years you can buy a new car outright.

#140 jess on 05.04.12 at 3:21 pm

negative gearing
-meaning that holding costs (eg, interest payments, maintenance, and other costs) outweighed income from rents.”

… negative gearing is only attractive as a tax minimisation strategy when there is labour income to offset rental losses against. However, once an investor enters retirement and ceases working, they lose the ability to offset losses for taxation purposes, and negatively geared property investment loses its attractiveness.

Nation of loss-making landlords Leith Van Onselen
April 30, 2012
http://www.businessday.com.au/business/property/nation-of-lossmaking-landlords-20120430-1xuh4.html

#141 Coraline on 05.04.12 at 3:23 pm

Hey Watchdog: FYI, I’m just hunting around realtor.ca to see how common this practice is. It looks like Milbourne Real Estate is listing some of its new builds on the site; see 508 Wellington and 105 George, both in TO.

#142 };-) aka DA on 05.04.12 at 3:28 pm

#135John G. Young on 05.04.12 at 2:19 pm
#270 };-) aka DA on 05.04.12 at 12:24 am

“I have gay friends…”

You have friends?

Oh, right, I forgot: Facebook.

What a pathetic effeminate retort.

A physician? I hardly think so as your demonstrated immaturity defies even the remotest plausibility of it.

#143 };-) aka DA on 05.04.12 at 3:32 pm

#129AACI Okanagan on 05.04.12 at 1:07 pm
#120 };-) aka DA on 05.04.12 at 12:19 pm

Actually form man is right, overall the market is down 15% to 25% since the crash of 2008. The 15% is a smaller percentage than the norm which is about 21% . Again I invite you to come to my office and I will prove it to you.

Ok, which office is it and which appraiser should I ask for?

#144 disciple on 05.04.12 at 3:36 pm

Canadian financial stocks falling due to US jobs report? Curious. Fascinating. What does it all mean?

#145 Daniel on 05.04.12 at 3:36 pm

Conservatives need to make a housing collapse happen now, as opposed to 2 years from now.

If it happens in the next year they still have time to rebuild themselves as the saviors of the economy.

We all know NDP will kill everything, we just need to be able to show it.

#146 John G. Young on 05.04.12 at 3:42 pm

#132 disciple on 05.04.12 at 1:26 pm

# 100 John GY **(hug)**

Thank you — and I’m sure you’re aware of the risk you’re taking by posting that — Westernman will be here any minute to post some disgusting innuendo.

And I meant what I said: if you find me posting comments that you feel are self-contradictory or otherwise “off”, please don’t hesitate to call me on them — for me, humility is the core of my recovery.

Cheers!

#147 jess on 05.04.12 at 3:44 pm

Keith
The Confidence builders

EASY MONEY: A special report.; For Russia and Its U.S. Bankers, Match Wasn’t Made in Heaven
By JOSEPH KAHN and TIMOTHY L. O’BRIEN
Published: October 18, 1998

”What the Russian problem reflects is that today’s bankers often don’t have long-lasting concerns about customer-client relations,” said Paul A. Volcker, the former chairman of the Federal Reserve and an occasional adviser to Russian government officials. ”You just do the deal and get out.”

Mr. Volcker noted that Russia was part of a broader problem in many emerging markets, where local companies and governments have tried to raise money quickly by issuing securities even before they are ready to handle the demands of shareholders and debt payments. ”Greed prevails over prudence,” he said.

#148 AprilNewwest on 05.04.12 at 3:46 pm

#133 – If you believe them/that you’ll believe anything.

#149 };-) aka DA on 05.04.12 at 3:50 pm

#130Gord In Vancouver on 05.04.12 at 1:13 pm

Don’t Sell Now !!!!!

House prices: 9 reasons not to panic

So relax, homeowners. There are many reasons not to put the ‘For Sale’ sign up.

http://www.canadianbusiness.com/blog/investing/82720–house-prices-9-reasons-not-to-panic

Good information, worthy of reiteration.

Although… my listing inventory is a little shy right now so maybe now is a good time to sell after all…

};-)

#150 PoorgEoisie on 05.04.12 at 3:53 pm

Come on disciple, you of all people know that kaiser Willhelm II in conjunction with the RAND corporation under the oversight of the knights Templar changed the rules of Haiku back when Jules Verne was still Karl Marx

#151 John G. Young on 05.04.12 at 3:57 pm

#138 bmac on 05.04.12 at 3:02 pm

“the fact that teachers get paid 85,000 is one of the many things wrong with this country….”

You’re absolutely right, they should get more.

You ever tried teaching? There’s not enough money on the planet to make me want to do that job.

#152 Sebee on 05.04.12 at 4:00 pm

I guess we’re about to see a return of those 80s rich/poor story lines in every movie. Breakfast Club, Some kind of wonderful, Flashdance, All the right moves? Do you think Andie’s dad from Pretty in Pink will ever find work?

>
At 63.6%, the portion of the working-age population participating in the U.S. job market is now at its lowest level since 1981.

#153 Timbo on 05.04.12 at 4:03 pm

http://www.bloomberg.com/news/2012-05-01/madness-in-spain-lingers-as-ireland-chases-recovery-mortgages.html

“It was a mania,” said Parlon, the former Irish government minister who now heads the Construction Industry Federation. “You could say the government was drunk on the revenue that was coming from all the construction taxes.”

great piece on what to expect as we deflate downward..

http://online.wsj.com/article/SB10001424052702303877604577383831309732816.html

The recent pace of job growth simply isn’t enough to climb quickly out of a hole that big. Even if the U.S. adds 200,000 jobs a month going forward—a pace it hasn’t maintained for more than three months at a stretch during the recovery—it would take two more years for employment to get back to its peak.

#154 bill on 05.04.12 at 4:17 pm

DA has friends??
I hardly think so as his demonstrated immaturity defies even the remotest plausibility of it.

#155 Steven Rowlandson on 05.04.12 at 4:24 pm

The real trick is to get paid enough to pay the mortgage, taxes, save and live at the same time and that means a damned good 6 figure income which employers don’t want to pay. You would find that out if if you were to apply for a stair assembly job at royal oak stairs in newmarket. After 3 months of slavery you would be back to being a investment advisor/ real estate critic in a flash. There is no money in wood working as an employee and may be not even as a employer. Either way it’s damned slim pickings.

#156 VICTORIA TEA PARTY on 05.04.12 at 4:32 pm

GREATER DEPRESSION, CORRECTION. YOU MUST NOW BELIEVE!

The key stock markets in Canada and the US closed at or near their trading lows of the day. It was awful; and more’s to come!

Sellers bailed on continuing TERRIBLE US economic news and the possibility of resurgent left-wing/right-wing election outcomes in France and Greece on Sunday.

ALSO, in local municipal elections in Europe and the UK, the left has made strong returns to local councils during the week.

IT’S AUSTERITY YOU GOOF

Leaving aside the lying machinations of the chief economic Sick Person of the World (USA), a cautionary missive follows about downtown Europe, specifically Paris, France, and its non-future prospects.

One thing the French do pretty much better than anything else, aside from their legendary competencies in bitching, complaining, strutting and the practice of high arrogance at supreme levels, is creating…MOBS!

The French do MOB better than anyone else (to wit the Rein of Terror in the 1790s).

And the mob WILL take control Sunday in a perfectly legal way: through national presidential elections that will see their leftie rescue and hero guy M. Hollande defeat the conservative incumbent Sarkozy laddie.

It’s what follows AFTER this election that really counts; such as, when will the mob start to rule the streets when M. Hollande doesn’t quickly start dispensing the free strawberries and cream promises to the addled, spoiled entitlement bunny brat masses.

Meanwhile, in the far southeast of Europe the Greeks are ALSO getting their mob-thang rolling through national elections, also on Sunday.

Polls indicate that 10 political parties could gain (the 300) seats, few of which will be going to middle-of-the-road parties. This could turn into a fascist/communist rout!

So mobs will be doing their street dances there, too.

The latest edition of Zero Hedge has this take on WHY THIS IS HAPPENING NOW:

“For over a year we have been cautioning that even more than a “liquidity versus solvency” debate, the biggest unspoken factor (though slowly gaining prominence) not only for Europe, although manifesting itself there most prominently, but all across the developed world is the quality of the (deteriorating) asset base, thanks mostly due to the Fed’s influence over corporate cash misallocation, and courtesy of the fact that the bulk of credit money creation in the past decade has come via the shadow banking system, broad asset collateral. ..”

IN OTHER WORDS

All that “stimulus cash” still being pumped out by advanced countries’ central banks (since 2008), to protect us from recession, has collaborated to stimulate the continuing of the greatest economic downturn in the history of money. And there is NO END IN SIGHT.

Watching the market-closing show on Bloomberg today, the normally full-of-BS commentators were for once honest. THEY HAD NO GOOD NEWS. PERIOD.

Meanwhile, too many voters in Europe continue to believe in the Socialist nonsense of a chicken in every pot, pie in the sky, and the aforementioned strawberries and cream.

Snake oil, I say! Bon appetit.

#157 Westernman on 05.04.12 at 4:35 pm

aka D.A. @ # 144,
Oh, I think John G. is “some” kind of physician alright, but not the kind you are thinking of. Probably some kind of 2-bit community ( read – taxpayer supported ) half-a$$ed social worker or some other kind of useless feel-good new age horeshite.
Nothing self-sufficient or useful I assure you.

#158 Harlee on 05.04.12 at 4:44 pm

And thank you Garth for your straight forward answer to “Cowboy” @#80. Sad but true…
Regarding your answer to Doug @#97.I am a conservative in some ways,but Preston Manning’s fast-talking bleating for his Reeeform Par-ty was too much. Of course they morphed into…you-know-what and this country has been poorer for it. IMHO.

#159 Smoking Man on 05.04.12 at 4:48 pm

Bill Gabel I thought you loved me

TurnerNation use to love zep. But the stole a lot of matreial from lead belly. The god of blues. They never game him credit so it pissed me off

If you realy wana know who started rock google lead belly

#160 brainsail on 05.04.12 at 4:50 pm

#146 disciple

“Canadian financial stocks falling due to US jobs report? Curious. Fascinating. What does it all mean?”

My take is oil prices. Now at US$98.49. Lower oil price means lower Canadian dollar.

#161 Nostradamus Le Mad Vlad on 05.04.12 at 4:52 pm


One more time . . .

There I was sitting at the bar staring at my drink when a large, trouble-making biker steps up next to me, grabs my drink and gulps it down in one swig.

“Well, whatcha’ gonna do about it?” he says, menacingly, as I burst into tears.

“Come on, man,” the biker says, “I didn’t think you’d CRY. I can`t stand to see a man crying.”

“This is the worst day of my life,” I say.

“I’m a complete failure. I was late to a meeting and my boss fired me. When I went to the parking lot, I found my car had been stolen and I don’t have any insurance. I left my wallet in the cab I took home. I found my wife with another man and then my dog bit me.”

“So I came to this bar to work up the courage to put an end to it all, I buy a drink, I drop a capsule in and sit here watching the poison dissolve; then you show up and drink the whole thing!

“But enough about me, how’s your day going?”
*
#65 Carpe Diem — Nicely pointed out!

#71 ANONYMOUS — “Get off the drugs. — Garth” — Actually, drugs are quite good. If I don’t take my 20 or so blood pressure pills daily, I will explode and cease to function, at least down here. If I do take them, I extend my life expectancy by a few dozen years or so. Drugs rock!

#78 PoorgEoisie — Prose of the highest order!

#93 Timbo — “Austerity alive and well and obviously working as intended.” — ‘Sright. See next response to daystar.

#95 daystar — “Who does F take his orders from? There’s our answer as to why and logic since the beginning has told me Harper serves different masters than Canada. What fools people were and still are to trust him.”

More to the point, who do Harper, Rae and Mulcair (all self-professed zionists) take their orders from? The answer lies in the US.

#99 John G. Young — “. . . everything to do with being recognized and accepted as an equal — nothing more, nothing less.” — That’s correct — to each their own.

#109 Timing is Everything — Great album! Yep, Garth is all frazzled by what’s happening, so we should all take a time out at his bunker!

A question from #145 disciple — “What does it all mean?” can be answered in one sentence from #138 Blacksheep — “Like one vulture said to the other, ” Patience my ass, I’m going to kill something!”

#136 Canadian Watchdog — “That’s nearly $6.5 billion tapped in April alone. Problems, problems, problems.” — Another reason why Credit Unions stand alone from the banks. See the US debacle for further info.

#162 G-Unit on 05.04.12 at 4:56 pm

“The second factor is what economists call the “ownership premium.” When people look favourably upon real estate as an investment, the price of houses can increase faster than rents for a time. Said another way, when there is a cultural shift towards owning a home, and an associated stigma towards renting, it can cause people to make irrational financial decisions such as purchasing a home when an equivalent home can be rented for substantially less than ownership costs. This is particularly the case in Canada’s larger cities.”

Interesting article on Renting vs Owning in Canada:
http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/home-buying/does-it-make-more-sense-to-rent-or-buy/article2417996/

#163 Van grrl on 05.04.12 at 5:00 pm

“Vancouver real estate cools- Could Toronto be next?”

http://www.cbc.ca/news/business/story/2012/05/04/toronto-vancouver-housing.html

#101 BPOE (yeah right)
Please tell me you don’t really watch that show? And if there is sun, it’s been airbrushed in. I live here too… you’re not fooling anyone. May 3rd, currently about 9 degrees, feels like mid-Feb…

#164 Onthesidelines on 05.04.12 at 5:18 pm

64 Nostradamus Le Mad Vlad on 05.04.12 at 12:22 am

Thanks for flashback. We did that train trip in Ecuador a decade ago and would recommend it only to those who enjoy the occassional game of Russian roulette.

#165 brainsail on 05.04.12 at 5:23 pm

Why do the Edmonton real estate numbers always shine?

http://edmontonrealestateblog.com/2012/05/edmonton-real-estate-market-weekly-update-star-wars-day.html

#166 John G. Young on 05.04.12 at 5:24 pm

#144 };-) aka DA on 05.04.12 at 3:28 pm

“What a pathetic effeminate retort.”

If you want to provoke my anger you’re going to have to do much better than that, Mr. Personality Disorder.

“A physician? I hardly think so as your demonstrated immaturity defies even the remotest plausibility of it.”

Immaturity? Pot, meet kettle.

Feel free to search for my registration information on the College of Physicians and Surgeons of Ontario (CPSO) — the website is http://www.cpso.on.ca, and you can search for me either by my name (John Gordon Young) or by my registration number, 51972.

Then, when you’re done, you can come back here and tell us who YOU really are.

Hiding behind that stupid emoticon and handle — how “effeminate” can you get?

OK. That’s it. — Garth

#167 Macrath on 05.04.12 at 5:39 pm

Diane Francis explains tax free Canadian condo flipping for foreigners , courtesy of Steve, F and the CMHC.

http://opinion.financialpost.com/2012/05/04/taxpayers-also-victims-of-hot-money-behind-canadas-condo-bubbles/

#168 Canadian Watchdog on 05.04.12 at 6:02 pm

#143 Coraline

Condos that have a selling or occupancy status could also be assignments sold. However, condos that are in pre-construction with a completion date of 2013 and beyond are most likely developer listings (inventory) because buyers who purchased on assignment can not sell before occupancy or a given date close to completion.

Example: http://www.realtor.ca/propertyDetails.aspx?propertyId=11331189&PidKey=1945359780

http://www.buzzbuzzhome.com/montage-condos
Completion: Winter/Spring 2013

BTW, TREB already removed 201 sales from last month. http://i48.tinypic.com/21bq79.png

Everyone is getting duped on the headline figures.

#169 Al on 05.04.12 at 6:15 pm

Its all the inheritance money that is being pumped into real estate in the GTA

#170 P & T S on 05.04.12 at 6:28 pm

Haha #131 – they “need” a new car!

For a ten-year-old vehicle, they “might be lucky” – or again they might not. Also they are buying ten year old technology (and economy) in an area where the last five years have seen major advances in both.

The wealthy and sensible buy new because buying new actually costs less, especially if you plan to hold the vehicle for any length of time (10 years / 200,000km).

Many Manufacturers now offer very extended warranty periods (8 years for Hyundai), and this translates to a predictable cost of ownership for a large portion of the car / truck’s economic lifespan. Add in the preferential finance rates for “buying new”, and past owner history problems for buying second-hand, then the false economy of buying used becomes increasingly evident.

At least one “invisible” added benefit is the maintenance of your credit score – paying off a modest capital investment in a timely fashion will always put you in a better “Credit-Worthiness” position for the big purchases in life, such as a future home in the coming years of falling prices!!

#171 John G. Young on 05.04.12 at 6:38 pm

#159 Westernman on 05.04.12 at 4:35 pm

See my post #168.

#172 Ret on 05.04.12 at 6:40 pm

#140 Stefano Re: London ON

London is well laid out, has 2 major hospitals, a university, a college and is one hour from Port Huron shopping malls. Lots of snow but really fine newer homes for $350-400,000, all on full sized lots.

Lots of very livable homes, say 50-60 year old brick bungalows on 50×100 ft lots, for around the $200,000 mark. I saw a kick ass bungalow, 1000 sf with a number of updates listed for $169,000 in the Manitoba St.- Whitney area. Ideal smaller homes with real driveways and backyards, perfect for modest income retirees not dependent on employment income.

Retirees in London have big city conveniences, medical care etc. at a rural price point. There are lots of decent affordable apartment rentals too. (Daughter rented 3 years on Proudfoot.)

No, I don’t live there, but the people that do have a good thing going IMHO.

#173 Patsan on 05.04.12 at 7:11 pm

#153 John G. Young

One has to have a vocation to become a teacher. Unfortunately, too many individuals became teachers for mercenary reasons – money, pension, and relative safety. As a result, children in BC are now hostages to the atavistic union and the grey herd behind.

#174 Oceanside on 05.04.12 at 7:12 pm

Just got the May 14th copy of “Canadian Business”in the mail. Front page is…

“Exclusive Report”
“Ottawa’s secret plan to drive down house prices.”

MSM is full of this stuff now and they are always the last to the party.

#175 Mark W on 05.04.12 at 7:17 pm

http://www.realtor.ca/propertyDetails.aspx?propertyId=11447778&PidKey=-1373240662

Here is a a former Grow-Op in a ghetto neighborhood in central Winnipeg.

Only $154,900.

Within a ten minute walk radius of this house ten people have been murdered in the last year or so.

Great area to raise your kids in … this is assuming they actually live long enough to become adults.

Now when houses like this are in bubble territory you know something is really wrong.

This is in a city that is not growing in population and where there is no shortage of land.

However, you may want to invest in a bullet proof vest if you choose to live in this area, and don’t go out after dark.

But hey the neighborhood has got “character” since Point Douglas used to be Winnipeg’s Red Light District back in it’s evil wild west days … hey maybe the house used to be a brothel … a lot of the streets in this area are actually named after former madams.

I am not making that up!

#176 torontorocks on 05.04.12 at 7:25 pm

#12, I have never laughed so hard on this blog. ‘cept that time Smoking Man was too smashed to type.

the little wee wee Canada has when the tide goes out is klassik.

#177 };-) aka DA on 05.04.12 at 7:47 pm

#168John G. Young on 05.04.12 at 5:24 pm

Hiding behind that handle allows me to comment matters of real estate matters others might take issue with for one reason or another. Believe it or not I do not always march to the tune of the CREA drummers. Just as you would have me banned from this blog so too might my colleagues wish to put a muzzle on me from time to time although clearly not nearly so often as the Blog Dawgs would.

I think it best that I remain anonymous. Garth knows what and who I am and while he, you, the Blog Dawgs and CREA may not like what I have to say at any given time I frequent this blog to be able to exercise free speech without concern of reprisal.

I commend you on your bravery to conduct yourself otherwise and hope for your sake it does not so negatively affect your personal life as the risk you take gives potential to. “Balls” or “stupidity” I don’t know which – although I’m sure Smoking Man might have something other to say about that.

Maybe one of these day’s I too will (figuratively) come out of the closet and disclose my true identity. Until then I remain…

};-) aka DA

http://youtu.be/5KIDVA6ESjw

#178 John on 05.04.12 at 8:02 pm

Daystar wrote:

“We’ve got to begin to collectively accept this reality and start asking why regardless of political leanings and the darker answers we find.”

Daystar, you have an excellent understanding of “national” dynamics from a lot of angles. You’ve done your homework.

The question I have for you is…are you actually prepared to look at that darker side? It doesn’t sound like it. You still refer to Harper, F and Carney as actors in the Canadian real estate bubble. Where’s your research? These people are barely involved.

Carney is even someone you mention as giving good advice ( re: commodities). Carney doesn’t give advice. It’s not relevant. He’s just implementing the bigger picture. Are you prepared to ask the tougher questions about that?

Carney is a good place to start. Follow the trail. There is some really bad stuff out there from “classic doomers” like Alex Jones, Celente, Schiff and his “Europacific Capital” sales pitch, gold pumpers, anarchists, fear-mongers and all the rest. But they can lead to some data for one to make their owm decisions. Never before in history has such amazing information been available. Ever.

And you’re talking about….Mark Carney? Who is he? He does not represent Canadians anymore than Goldman Sachs represents investors. Once the derivatives fraud opened up on the back of the “war on terror”, that was it. And Mark works for this network…as he always has. He’s pragmatic, and in a way he’s right. This situation is mighty tenous right now. Keeping people cool is almost a moral obligation in his role right now. He’s assisting in a huge theft at the moment…knowingly…but surely he has rationalized that long long ago, and does not see it as such.

But why would anyone care what Mark Carney “sees” or “advises”. Would this change the derivatives fraud? Do you still think he has some say in this? Do you think Mark is going to RAISE rates while his other Goldman boys only YESTERDAY chose not to?

If you are treating these things as national, why? It makes no sense. Do you think there is representation in Canada? Where? Who? How? These are the darker questions.

What about Canadians trying to “keep going” with the clearly global ponzi? Emerging markets? I live in one. Commodities?

Let’s talk commodities…maybe a super cycle or two? Mark loves that talk. Him, Draghi and Mario “three card” Monte.

How about rinse cycle. Maybe even spin cycle. I mean it’s pretty much all a crap shoot anyway…don’t you think?

Still…when things are edgy like this…who needs “doom”. Maybe the technocrats can smooth out this global speculation somewhat. Even though they work for some very unscrupulous power groups.

Maybe this is the way it has always been…

#179 Daisy Mae on 05.04.12 at 8:04 pm

#71ANONYMOUS on 05.04.12 at 1:44 am

“Garth; do you think that the Canadian government will simply ‘FORGIVE’ all of the debts of homeowners?”

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

In a pigs eye.

#180 Form Man on 05.04.12 at 8:08 pm

#120 DA

Wrong again DA. I am actually very busy ( you have obviously forgotten most of what I have posted in the last few months), and I agree there are developers who are still building in Kelowna, and hopefully they will profit from their gamble ( although there are better profits to be made elsewhere right now ). No market ever grinds to a complete halt. That is hardly the point. This blog is a commentary on the Canadian housing market generally and specifically, the housing bubble in Toronto and Vancouver. You need to get out of Kelowna more often, and you won’t appear so clueless with your assertions. Try five word answers intead of 200 word answers, and people won’t think you are trying to baffle them with B.S. What happened in Kelowna in the last few years is a harbinger of what is to come for other bubble markets, thus the reason for using it as an example
My facts are dead right. Sorry.

#181 Nostradamus Le Mad Vlad on 05.04.12 at 8:20 pm


#161 Smoking Man — “If you realy wana know who started rock google lead belly”

Correct. “You Need Love” morphed into Whole Lotta Love, Gallows Pole etc. — taken and a new twist put on them. Leadbelly’s son sued and won in the ’80’s, I think.
*
Economic Deluge or TSHTF; Civil War #2 “Folks, we’re getting ready for one massive economic collapse,” Hagmann told TruNews host Rick Wiles. “; Spain Food handouts, not fiestas; Brussels straitjacket keeps the EZone in check; Deteriorating “When the Euro goes, it will take the US banks right down with it.” wrh.com; Wall St. fears someone; US unemployment rate drops It’s also an election year, and most of those jobs were created overseas; New Gold Rush? Eurocrats a.k.a. a Totalitarian State; Mitt’s business Not as fair as regular business.
*
CC “Romm was a U.S. Department of Energy Assistant Secretary under President Clinton and is currently the “climate expert” for the George-Soros-funded ThinkProgress.org…”; Rothschild “They say very little about his banking activities in Latin America and his funding deep involvement in the CO2 caused Global Warming scam.”; Rice Krispies takes on a whole new meaning; Depop. again More wars; US Citizens Your future, and 2:03 clip Seig Heil repeated? Iran Nothing like ruffling the feathers of the ‘establishment’, and Russia; SKorea Building two new nuke reactors. What’s the difference between Iran and SKorea? Hypocrisy; Ancient Map and lost colony; 2:17 clip Death by investigation; Fukushima #4 reactor and Six days of ‘quakes; 4:59 clip Volkswagen which gets 80 m.p.g., but can’t buy one in NAmerica; 97 Yrs. Old Never too late to learn; Nude Body Scanners at UK airports.

#182 a fan on 05.04.12 at 8:29 pm

Hey Steven Rowlandson, we get it – you really really hated making stairs at Royal Oak Stairs.

#183 John G. Young on 05.04.12 at 8:57 pm

#179 };-) aka DA on 05.04.12 at 7:47 pm

Thank you for your post — for the civil discourse, and especially for your concern for my safety.

“Believe it or not I do not always march to the tune of the CREA drummers.”

Yes, I have seen that in your posts.

“Garth knows what and who I am and while he, you, the Blog Dawgs and CREA may not like what I have to say at any given time I frequent this blog to be able to exercise free speech without concern of reprisal.”

I can’t speak for anyone else, but I want to be clear that the issues that I have had with your posts in the past have always been related to the tone of those comments, and never to their content. I always value a spirited, respectful dialogue, and realize that this requires a contrarian viewpoint. I do appreciate that you provide that viewpoint here.

Please believe me when I say that being argumentative and confrontational is not in my nature; the antagonistic energy on this (and I presume other) blogs is truly distressing to me. I think that my decision to provide personal information was in part an attempt to dissipate that energy. I am aware that doing so carries risks, and therefore respect the decisions of others such as yourself to not do the same; but even if my doing so accomplishes nothing more than allowing you and I to have a more civil discourse in the future, I think it will have been worth it.

Cheers,

John

#184 totalinvestor.com on 05.04.12 at 9:49 pm

Is that Octomom with her kids?

#185 Van grrl on 05.04.12 at 9:56 pm

aka DA:

Do not use the term “effeminate” (acting like a woman) to try and insult a man… thank you. Or I’ll start getting annoyed and have to kick your ass.
Women rock.
John G Young rocks.
Deal with it.

#186 John G. Young on 05.04.12 at 10:55 pm

#187 Van grrl on 05.04.12 at 9:56 pm

Hey Van grrl, thanks!

Women do indeed rock — much more than I do.

I’ve had the occasion on this blog to try to explain — to some less-than-sterling specimens of my gender — that when you try to insult a man by comparing him to a woman, all you succeed in doing is revealing your contempt for women.

I don’t think they get it — in which case a good ass-kicking may be in order.

In the future can I enlist your ass-kicking services if needed? For a doctor it would be “conduct unbecoming” — but I could cheer you on :-).

Cheers,

John

#187 Doug in London on 05.04.12 at 11:14 pm

@Ret, post #174:
I am just as puzzled as Stefano about the London housing market. You make a good point about London being a good retirement city, but all these new houses going up are big places, bigger than what the average retiree would want. I don’t know who’s buying all these houses, whether there is real demand or over building.

#188 bill on 05.04.12 at 11:23 pm

#152 PoorgEoisie on 05.04.12 at 3:53 pm

” Come on disciple, you of all people know that kaiser Willhelm II in conjunction with the RAND corporation under the oversight of the knights Templar changed the rules of Haiku back when Jules Verne was still Karl Marx..”

Didnt they get bought out by the Portmeirion Orchid society?

#189 frozen trumpet on 05.05.12 at 12:20 am

On my ride home through Shaughnessy this evening, I passed a home for sale that I’ve long admired and decided to check it out on MLS. I still haven’t found the listing, because I can’t get past the incredibly awful home renos and furnishings in the homes I saw for sale in Shaughnessy (3million range). Obviously money and taste have no correlation, but I’m surprised (or maybe not if I really think about it) that none of these homes look lived in. I recall playing in many of these Kerrisdale/Shaughnessey houses as a kid…I don’t recall people doing large-scale renos. Maybe a room got painted, a fence fixed, or a couch recovered but not the “move out of the house for 6 months” to make room for the granite and stainless, heated floors, etc. I don’t know what it all means and I’ll go back to searching for that house now, but just wanted to comment. Love the blog and learn so much – thanks Garth!

#190 Mister Obvious on 05.05.12 at 1:19 pm

#140 stefano

“Do developers just clear the land and fire houses up with the hope that people come? “
——————–

The answer is YES. At least, according to our finance minister a few days ago.

#191 Westernman on 05.05.12 at 3:20 pm

DELETED

#192 Steven Rowlandson on 05.05.12 at 11:23 pm

A Fan I never worked at Royal Oak Stairs. When I suggested that Garth try working there for 3 months it is for the purpose of revealing the real world to him.

Any way canada has bigger problems than various forms of economic death. Try Fukushima, 86 times worse than Chernobyl. There is 460 tons of fissile material in the fuel storage pool at reactor 4. If that ever burns that would be a radiological release that would be like more than 93,000 nuclear bombs going off doing a slow burn. If that happens crappy pay and expensive real estate will be the least of the worlds problems.
The moral of this story is you should not bomb nuclear reactors or use HAARP to trigger earth quakes and tidal waves to wreck nuclear reactors for any reason. That is precisely what did happen and if things keep going like they have been Argentina is going to start to look like a great place to live.

http://www.youtube.com/user/connectingdots1

#193 Tony on 05.06.12 at 1:05 am

Almost like the NINJA loans in America or the one dollar homestead. I hope they also make filing for personal bankruptcy as easy if they’re buying in any of the major cities in Canada.