Boomer lessons

Casey watches the house across the street in her upscale neighbourhood populated with Land Rover-driving moms in designer shades. The neighbours bought the lot for $1 million, then built a McMansion. It hit the market last September at $3.8 million. These days it’s priced at half a million less, the cheapest house in the hood. But after three reductions, it’s still for sale. And so are the other 25.

“There is no way I’m buying again until houses come down 40%,” she says (Casey pocketed $1.2 million by selling a year ago, and rents). “I see friends moving further out so they can have bigger places. The people I know aren’t rich, but they certainly aren’t poor.  Household incomes around $200k or more.  If these people are struggling to buy, it doesn’t make any sense.”

What does, Casey?

Yesterday’s blog post about looming changes to bank mortgage lending practices brought a howl of denial (you should have seen the posts I didn’t publish) from realtors, mortgage floggers and people with mortgages the size of regret. Cheap, ever-available money has created a weird moment in social history. A house is now a right. So’s a mortgage. Someone actually posted that if a home loan were refused renewal under the new rules, forcing someone to sell, “they would then be homeless.” Coffee came out my nose.

Real estate is a mania. Exactly why it’s so dangerous. People do crazy things when smitten, like assuming the world today (rising prices, cheap money, easy bankers) will last without end. Because housing is so emotionally-driven, the volatility ahead will likely be intense – just as it’s proven to be in the US – making stock markets look prudish. As the market turns, we know from experience that listings swell, then prices crumble. It’s already happening in many cities. None will be spared.

Capital Economics has it right. In a note to clients this week the Toronto-based company warned that housing-fueled growth can’t last. “Interestingly, the shape of the rapid rise in Canadian house prices looks fairly similar to what happened to US house prices before the bubble burst there. From 1995 to its respective peak, US house prices increased by just over 140 per cent. Since that same time Canada’s house prices have risen by 130 per cent.”

In doing so, Canadians have also managed to accumulate more debt than did Americans. And you wonder why F and the federal peckerettes are so keen to jack mortgage regs and turn off the borrowing. Not doing so will lead to an obvious result. Which is coming anyway.

BTW, Capital Economics is on record as forecasting a 25% decline in national housing prices over the next three years. You can assume that means 15% or so in the GTA and a hulking hole in the Lower Mainland.

But this is not the big news today.

It’s time to crack another myth held closely by legions of deluded people who come here for god-only-knows-what reason. As shown, the myth that Ottawa would never do nothing to prick the bubble is kaput. OSFI and the overhaul of CMHC murdered that one. Also paws-up is the argument that high-ratio, high-risk borrowers form too small a group to shiv the market. Did you see that Kelowna graph yesterday? Yikes.

The third big lie au courant among greater fools is that Boomers would rather gum drywall in abject retirement poverty than give up their homes. You’ve seen it said often on this pathetic blog by the house pumpers that the threat posed to real estate by nine million members of the Depends cult is minimal. No big flood of listings in the years to come, they say. The wrinklies will not sell.

Of course, it’s bunk. The single most troubling aspect of real estate’s future (and the most inescapable) is demographics.

Need proof? Here’s a new survey by RBC, asking people about their retirement plan. The results are brutal. Forty per cent say they’re worried about not having enough money to finance a retirement, and another 30% say they’ll have to work past 65 to make ends meets. How could we get to a point where three-quarters of people have no money? RBC also learned six in ten of us don’t save for retirement, while four in ten expect they’ll do worse than their parents.

So what? Are we supposed to feel sorry for Boomers who rotated for five decades, doing little more than producing mean little offspring who now own minivans, attitudes and hate their parents?

That’s your choice. But at least understand where this is going. The survey found almost half – about 45% – of people said they plan on financing their retirements (as meagre as they may be) by selling their homes.

Hmm. Nine million boomers owning about three million houses, so half of that is 1,500,000 units, or a four-year supply if nobody else in the whole country moved. But it’s safe to say this deluge will largely be in addition to the normal listings, since people in retirement have typically stayed in their homes for significant periods of time.

Now, imagine a few years hence. Rates higher. Mortgages dearer. Bankers tougher. And a million desperate Boomers trying to turn their illiquid suburban barns into cash flow. Supply washes over demand already weakened by new lending standards, chasing valuations lower in a vicious circle. Is this really where you want to have the bulk of your net worth?

Maybe it’s time more people learned a few lessons from the Boomer experience instead of just being prickish and resentful. (Of what?)

There’s never one safe place to put your money. Having wealth beats owning a house ten out of ten. If you don’t save and invest, you fail. Nobody who matters, cares where you live. Diversify. Don’t be a financial illiterate.

Or, just get a reverse mortgage and prove to your kids you actually have a sense of humour.

177 comments ↓

#1 Derek R on 05.14.12 at 8:31 pm

That’s one fat cat!

It’s metaphoric fat. — Garth

#2 Maxingandrelaxing on 05.14.12 at 8:32 pm

I’ll second the notion.

#3 Derek R on 05.14.12 at 8:36 pm

It’s metaphoric fat. — Garth

Of course. The hardest kind to shift.

#4 Unreal Estate in T-O on 05.14.12 at 8:43 pm

Couldn’t resist this ad I came across on Craigslist … at least he is a “carbon-neutral agent”. That’s good to know …in that case, I think I’ll take two of them!

$604800 / 2br – STUNNING 2 BED CONDO IN ICE ON THE 50TH FLOOR!!! ASSIGNMENT (York St)

Ryan Coyle
Broker, Real Estate Advisor & Carbon-Neutral Agent
http://www.ryancoyle.com
Pre-Construction | Investments | Assignments | Resale

#5 Tim on 05.14.12 at 8:46 pm

“Of course, it’s bunk. The single most troubling aspect of real estate’s future (and the most inescapable) is demographics.”

They said that ten years ago, so I invested instead and have made far less that if I’d bought then and sold now.

Diversity. Did you miss that one? — Garth

#6 Aussie Roy on 05.14.12 at 8:49 pm

It might help to look at whether most sales are based on NEED vs WANT. I think you would probably find that most are based on NEED:

•moved interstate for work, so NEED to sell
•moving to retirement village, so NEED to sell
•died, so NEED to sell
•lost my job, so NEED to sell
•had a child and require a larger house/upgrade from apartment, so NEED to sell
•divorced my wife/husband, so NEED to sell
•this house is my superannuation and i’m about to retire, so NEED to sell
•paid 8x my wage for a house because the bank said i could afford it, but i can’t, so NEED to sell

versus WANT:

•WANT to move to a different location
•WANT to upgrade to a nicer/bigger home
•WANT to move to another home because I just feel like a change

(feel free to add to these lists)

Death and divorce would have to be the biggest contributors in the NEED category with retirement soon to run a close 3rd. The WANT factors are flexible, but the NEED factors will remain regardless of economic climates.

#7 East Van on 05.14.12 at 8:49 pm

How to survive the Toronto RE market – Very funny:

http://www.cbc.ca/day6/contributors/scott-faulconbridge/2012/05/14/commentary-the-housing-hunt/

#8 Can it be? on 05.14.12 at 8:55 pm

Was talking to someone I know. Lives in a hot area north of Toronto. Stated that not too many people have seen her house which isn’t taking offers until the weekend. They want to downsize. Tells me both se and her neighbors are cash strapped. Lots of ladies at home convincing their hubby’s to keep the 4000+ square foot McMansions. I predict it gets ugly in the next year. Town homes are $700000 in the area and not glamorous.
Since I enjoy open house shopping and do leave a legit email address I am amused by the numerous price drop emails I have received. Realtors are workin hard to try to find buyers. I’m looking for a 40-50 percent price reduction before I buy! Although I’m in the minority, I believe there will be a correction before we know it.
Another friend on the weekend tells me that he and a bunch of friends are low bidding properties that they want to develop together. Interesting times indeed.

#9 brainsail on 05.14.12 at 9:05 pm

Where are the boomers going to live after they decide to downsize? My 90 some year old mother with failing health has decided to to throw the towel in and sell her her bung in Edmonton. Her only choice is an assisted living place with a minimum two year wait list. There is a crisis coming on the horizon.

#10 Steve Thompson on 05.14.12 at 9:11 pm

This is the ultimate real estate bubble. It seems so obvious that senior baby boomers will sell; those that are on the leading edge of the boom will be the luckier ones. Those on the tail end will find the value of their “investment” worth a fraction of what they expect. Like your mother used to say, “Someone is going to get hurt and end up crying”.

As it is said, common sense is not all that common.

#11 Jim Lahey, Sunnyvale Trailer Park Supervisor on 05.14.12 at 9:17 pm

“And you wonder why F and the federal peckerettes are so keen to jack mortgage regs and turn off the borrowing.”

Come on Captain Garth, tell us what you really think of F and his entourage…

#12 Smoking Man on 05.14.12 at 9:19 pm

The safe factor.

The Spartans are going to take down the euro zone. Zillionars in Europe are looking for safe places to stash some loot. IMF reports the price of OIL to double.

What are a Zillionars options.

A bit gold ok,
Stocks, to volatile.
Bonds risky no return with good potential to drop in price.
Preferds, Out of towners, no tax benefit.

Ah then there is single family homes in the GTA where every one in the world has a relative living here. They know Canada is a Perto currency.

Real Estate in Canada to overseas Zillionars looks like a safe bet.

………………………………………….

Read some of my zany post form yesterday. O my god, I don’t know if it was me or fake Smoking Man. But think it was me.

Bubble heads try it once, Get completely licked let the brain roll and post.

#13 Canadian Watchdog on 05.14.12 at 9:24 pm

#4 Unreal Estate in T-O

You should see his other listings: http://toronto.craigslist.ca/search/rea?query=%22ryan+coyle%22&srchType=A&minAsk=&maxAsk=&bedrooms=

http://toronto.kijiji.ca/f-ryan-coyle-real-estate-condos-for-sale-W0QQCatIdZ643QQKeywordZQ22ryanQ20coyleQ22QQisSearchFormZtrue

So the exit plan to get out of an assignment is to post listings every two or four hours on Craigslist and Kijiji everyday and pray.

What a great investment.

#14 Just Park it! on 05.14.12 at 9:25 pm

G, I gotta disagree with you on the mass exodus of boomers that will throw the housing market into the abyss..

North end of Etobicoke – (or what once was called Etobicoke)… grew up there in the mid-70’s. We were the kid’s who were the last of the family’s flock. All my buddies has older sisters and brothers. Parents even back then were nearing or at 40..fast forward 40 years…the kids are gone, off having their own families. Driving by today – besides massive oak trees lining the streets – my buddies parents – nearing 80’s still live in the community. Very little has changed.

I see it first hand – people become comfortable with their lifestyle … you had your kids grow up in the area and you probably feel its where you’ll die. Why move on into a tiny rental where you know no one and somehow your life has just shortened that much quicker.

On a side note – someone was blogging yesterday about Kleinburg – let me share a little fact. I lived a few years there before it became the “trendy”spot today. People back then were neighbourly – now, on each street they tear down a 50’s style bungalow and erect a disheartened, cold million dollar souless home. Kleinburg has sold its soul to the highest bidder.

I can pass 7 BMW’s, 3 Ranger Rovers and 1 Jag within 2 minutes along the one road wonder that cuts through Kleinburg – if this town had any character, that has long been gone –

#15 Fisc on 05.14.12 at 9:33 pm

“Yesterday’s blog post about looming changes to bank mortgage lending practices brought a howl of denial (you should have seen the posts I didn’t publish) from realtors, mortgage floggers and people with mortgages the size of regret.”

Realtors and junky debtors have a lot to learn on this blog… Especially to improve their poor economic knowledges…

#16 john m on 05.14.12 at 9:44 pm

Great post Garth…i think there is a whole lot going on behind the scenes at CMHC and Federal finances than the public is aware of..A couple of weeks ago it was announced on the news that the bank bailout here in Canada was $157 billion when we the public were told there was none………..about 69 billion of that was the toxic mortgages the feds bought from the banks to free up cash to create a false economy…….but what really concerns me is Flaherty bragged about how by “2015” a period of (over 7 years) taxpayers will see a return of 2.5 billion from those mortgages..(great investment huh :-) which makes me think a whole lot of those mortgages are in default?…( something is certainly seriously wrong…..i think?

#17 Stinky the Fish on 05.14.12 at 9:54 pm

You posted early to watch the Batchelorette, didn’t you Garth?

Boomers will start dropping like flies. We will look back and laugh why did anyone pay $1.2 million for a crackshack in Vancouver.

#18 Kip on 05.14.12 at 9:56 pm

” If you don’t save and invest, you fail. Nobody who matters, cares where you live. Diversify. Don’t be a financial illiterate.”

Stock markets are dropping like a stone as people pull billions out of what they view as a corrupt system.

Germany is now backtracking on the austerity measures now that the economy of Greece is in tatters. It appears the German/French tagteam will make an example of Greece for all to see as they likely exit the Euro.

JP Morgan Chase? More of the same from the criminals on Wall St.

I could go on but is it any wonder people are pouring money into real estate in Canada which is seen as safe in spite of what you may say.

Because they are as myopic as you. I get it. — Garth

#19 ANONYMOUS on 05.14.12 at 9:58 pm

Garth, I think that you have passed by an EVEN BIGGER THREAT : The boomers dying.

So many of them are not planning to sell, but at the same time they are staying in their over-stressed jobs just to pay the mortgages.

As a result, they are dropping dead like Flies!
– Apple’s Steve Jobs,
– Now the CEO of Yahoo has Thyroid Cancer.
Heck, so many boomers in their late 50’s / early 60’s are just croaking!
Even if they don’t want to sell, their kids will inherit the places and their is no way they can pay the mortgage, so they will sell for whatever they can get, and THAT is the really huge threat to the future Canadian housing market.

#20 Nostradamus Le Mad Vlad on 05.14.12 at 9:59 pm


“And so are the other 25. None will be spared. Canadians have also managed to accumulate more debt than did Americans. Coffee came out my nose. A house is now a right. So’s a mortgage. Which is coming anyway.” — So is xmas and my birthday. Not sure which is more enjoyable, as they are both week-long shindigs!
*
Is JPM a front? Possibly. Seems the whole yarn of wool is being shredded to pieces, and Lebanon Keeping the many sides (economics and war are two of them) in the forefront; 1:19 clip “Off-duty cops side with the protesters!” wrh.com; Oz “The biggest bubble in recent history is heading for the mother of all hard landings.”; Scared Corporate elite of OWS and others; California Things just got a whole lot worse; Harrisburg, PA Former mayor left city almost bankrupt; AMC “AMC Entertainment is owned in part by Bain Capital & the Carlyle Group.” Ain’t dubya part of the Carlyle Group? Cdn. Carbon Tax courtesy of the CPC; World in Upheaval over a cup of tea and a Euro split.
*
Monsanto’s GM birth defects; SWITCH Lighting Half the Phillips cost, and this — not a great recommendation for choosing one over the other; Fukushima #4 may go bye bye soon (check with Mikey the Realtor for deals); America Takes Sides; Put these two together, and the question is easy to answer; Buddhism and Catholicism; Ron Paul Oooh aaahh, game changer? Cholesterol Guidelines They’re wrong; American Insurrection or Civil War #2; Iranian mosquitoes; Big Pharma We’re addicted to Garth’s blog.

#21 renters rule on 05.14.12 at 9:59 pm

Peckerettes

Best. Word. Ever.

Seriously, right up there with Hemingway’s short story in 6 words…

Nice.

#22 Furst on 05.14.12 at 10:00 pm

Twenty…..FURRRRRSSSTTTTTTT!

#23 Karl Williamson on 05.14.12 at 10:01 pm

“a new survey by RBC, asking people about their retirement plan. The results are brutal. Forty per cent say they’re worried about not having enough money to finance a retirement, and another 30% say they’ll have to work past 65 to make ends meet.”

People need to wake-up to Gold & Silver. Mutual funds, Govt. Bonds and TFSA are worthless, as are the daily tanking Stock Market Equities, Bank Stocks & ETF’s. The looming Euro-zone collapse is coming and things will get WORSE! These are all sure signs of a soon to be break-out in the metals. Let’s not also forget the newest JP Morgan $2 Billion loss (and I’m sure that will soon be shown to be what it really is… more like $18 Billion). Very likely this summer we will see Gold above $2,111. The chart below say’s a lot…

– Average wages in 1959 were $5,016 or 143oz of Gold
– Average wages in 1977 were $15,000 or 120oz of Gold
– Average wages in 1999 were $28,970 or 104oz of Gold
– Average wages in 2008 were $41,335 or 53oz of Gold

It’s all pretty obvious! Q.E. to infinity is all the Govt. has, and NOTHING more!

Even a 12 year girl old gets it Garth… our current system is a total sick disgusting joke! And, people are waking up to it all.

WATCH: http://vimeo.com/41954094

Are you 12? — Garth

#24 Gord on 05.14.12 at 10:02 pm

Solid overview, Garth. Precisely the type of thing I can send to friends of mine who are obsessed with selling their lower mainland condo right now (great move) and immediately buying back in (horrific move). They do not listen to me (and I can be pretty convincing), but perhaps this’ll hit ’em where it counts.

Thanks again from a long-time reader who first saw the light right here in your blog.

#25 Devore on 05.14.12 at 10:04 pm

A house is now a right. So’s a mortgage. Someone actually posted that if a home loan were refused renewal under the new rules, forcing someone to sell, “they would then be homeless.” Coffee came out my nose.

Gosh, they might have to move into a house they can actually afford, ugh, or even… :shudder: rent. I’m sure some eager lawyers would be assaulting the Canadian Human Rights Commission headquarters over this social injustice.

#26 Waterloo Resident on 05.14.12 at 10:13 pm

Want to earn $1,143% per year on your investment?

Say-What ?

Just take a look at the yield on the 1-year Greek Bonds here at this site:

http://www.bloomberg.com/quote/GGGB1YR:IND/chart

(click on ‘Chart’, and then click on the ‘1-year’ chart button. )

I remember checking it out a few months ago and back then the return was 400%, and I thought that was nuts.

Imagine what the Canadian housing market would be like if mortgage rates were 1000% ?

#27 Hoof-Hearted on 05.14.12 at 10:14 pm

So Garth…

OK….reducto ad absurdum..worst case scenario.

Via new OSFI rules …….People default, property virgins need va$eline ….foreclosed on.

THEN WHAT?

Scenarios:

………Banks take over the houses?
………or the banks get a US style bailout ?

PS can someone repost the Kelowna Graph which Garth mentioned?

Thanks

#28 Boomer lessons | The Retiring Boomer™ on 05.14.12 at 10:14 pm

[…] As published in The Greater Fool […]

#29 Can it be? on 05.14.12 at 10:16 pm

I love how people call themselves home owners when they are maximally mortgaged

#30 Market Bull on 05.14.12 at 10:18 pm

Oh no, the boomer myth again. Time to recall that the boomer cohort spans 20 years.

They aren’t all going to sell at the same time Sherlock. Basic arithmetic slices the number of listings per year to 1/20 of the number projected, and that’s only if the boomer myth is true – which it’s not.

P.S. Capital Economics has been singing the same tune for 2 years solid now. Tiresome.

#31 XKR on 05.14.12 at 10:25 pm

One very telling sign of a top – a lack of quality properties for sale in the “affordable” category. There’s a ton of garbage on the market right now, I mean some real dives for half a mil. Eerily reminiscent of 1989 before the last crash.

#32 John on 05.14.12 at 10:26 pm

You know…looking at things…how is it possible in both Toronto and Vancouver that prices ( in 2012 dollars) could only come down 15-30%?

With the world economy the way it is, and the potential impact of derivatives, let’s say Vancouver dropped 50%. Houses are still way too high at half today’s prices.

Let’s say…a few years from now…things had settled and lending came back in a new scenario at 8%. It’s not historically high at any means. Would a regional economy be able to cycle, support and maintain that?

Would it be more accurate to predict a 70% drop? Do the numbers on a crack shack on the west side for 1.3 million ( yesterday’s photo).

What would be the monthly on 650,000 dollar house at 8% interest? Assuming you’d put a 150,000 downpayment.

Assuming the housing is going to normal Canadians, how low would the crack shack price need to go? Say it was 220,000 at 8% interest.

Doing the math..I mean think about it. Knocking over a million dollars off the shack, at 8%, it’s kinda doable. Sort of. I mean, who’d want to live there unless it was a last resort..or really cheap?

#33 Wolfenstein on 05.14.12 at 10:30 pm

One aspect this pathetic blog doesn’t touch on is local government finances. What will municipalities do when their tax base shrinks by 15-?% They’re already having trouble making ends meet… Although, transit should do better when people need the gas money for the mortgage.

#34 northerner on 05.14.12 at 10:33 pm

Garth, are Canadian banks’ reserves funded by interbank loans with European banks? With the Greek/
Spannish debt problem rearing it’s ugly head again are the euro banks calling in loans to Canadian banks? How or will this effect Canada?

#35 Canadian Watchdog on 05.14.12 at 10:42 pm

The Red Pin weekly MLS listings update http://www.theredpin.com/blog/canada/toronto-real-estate-may14-2012

Reported MLS listings was 29,937, up 5.3% w/w, 28.2% m/m. https://p.twimg.com/As4CGygCMAEbJpw.png:large

This should be fun to watch after spring sales. Get your popcorn ready.

#36 Happy life and wife on 05.14.12 at 10:49 pm

Hey gold bugs , you’ll probably be able to buy an ounce of gold at the dollar store by summer – fools and their money are soon departed as you all clearly prove. Agree with you Garth that it nothing but an overpriced rock collection.

As for stocks, lots of good buys right now – loading up TFSA and rrsp with etfs and equities – buy when others fear is the only way to go. Load up!

Sorry, Garth and all bloggy doggies, but disagree with you on housing – its never gone done in Canada and is the best investment out there – time proves you wrong. Wifey and I are looking at buying two rentals – if you live in fear you will miss out.

So fellow bloggers, as a seasoned investor I offer you my 2 pennies, diversify with housing and equities and you’re guaranteed a happy life and a happy wife.

#37 Mark W on 05.14.12 at 10:53 pm

Now take a city like Winnipeg with zero to negative real demographic growth, and a 200% to 250% increase in housing prices over the last decade or so.

Throw in high city taxes and big heating bills on big baby boomer houses as an added bonus.

Raise the interest rates a few points, plus massive wave of boomer retirees, …. mix … stir … forward to 2025 … and :-(

#38 Canadian Watchdog on 05.14.12 at 11:07 pm

#36 Happy life and wife

Your two pennies’ intrinsic value returned 139.4% from 2002 to date. GTA average house price returned 80.3% over the same period.

Better keep those pennies.

#39 MC on 05.14.12 at 11:18 pm

Garth, it has often been reported that over time stock indicies return, on average, appreciate anywhere between 5-7% per year. How does a retail investor best capture this return. Is buy hold and reinvest in broad based sector, low fee etf’s the best way?

#40 Toronto_CA on 05.14.12 at 11:19 pm

Uh oh! The Globe and Mail is saying it’s a good time to sell your home.

Hmm that’s surely a sign it’s time to buy.

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/home-buying/why-now-might-be-a-good-time-to-sell-your-home/article2432176/

“Home prices to income, housing price to rent, all the indicators are setting off warning signals,” said Derek Burleton, a senior economist with TD Bank. “If you are purely in it for reaping profits, now is not a bad time to sell” before prices drop.

#41 Smoking Man Fraud on 05.14.12 at 11:20 pm

Happy Life, I’ll be glad to meet your wife. An hour with me and she’ll be ecstatic, that should warm your cockles my friend.

In the meantime, have a boilermaker or two and have a look, my plebes tell me Victoria will lead the declines which will role east from their. We will have a national decline once the Toronto condo market implodes.

Don’t worry, be happy.

#42 freddy the freshman on 05.14.12 at 11:29 pm

oh there will be no burst as long as immigrants keep coming to buy homes .. where else would a immigrant go but to canada they only still really booming country!

#43 cramar on 05.14.12 at 11:32 pm

#36 Happy life and wife on 05.14.12 at 10:49 pm

Hey, be sure to give us a yearly update for the next 5 years will you. We will all love to hear how it is working out for you.

#44 Mr Buyer on 05.14.12 at 11:47 pm

#31 XKR on 05.14.12 at 10:25 pm
One very telling sign of a top – a lack of quality properties for sale in the “affordable” category. There’s a ton of garbage on the market right now, I mean some real dives for half a mil. Eerily reminiscent of 1989 before the last crash.
………………………………………………………………….
Not that I was paying attention in 1989 but compared to what is coming I believe 1989 will be the good old days

#45 Smoking Man Fraud on 05.14.12 at 11:47 pm

Respectfully … Rosenberg is only half correct. The same inflationary forces that drive gold to $3,000/oz will drive world equity markets higher. The DOW and S&P will make new highs by December 31, 2012.
The great inflation is about to be unleashed … all asset classes are about to go on a significant rally.
Bernanke has to create the illusion of growth … this will be done by propping up equities … which will increase corporate and personal spending. Equity markets will not be allowed to crash!!! If they do, we are all friggin’ doomed as corporations and consumers go into a shell and hunker down with their spending.
The DOW, worst case, will fall to 12,000MT this summer. This will allow the fast moving averages (50/100 days) a chance to roll over and converge with the 200/300 day moving averages. When the 50/100 day moving averages touch the slow moving averages … it will form the launch pad for equities … new highs by the end of the year.
Commodities will also lift off after a brief round of consolidation.
Just my humble opinion, and I know what I’m talking about, I listen closely to the machine and so should yew. We are close to a bottom here. And me thinks we are finally going to enjoy the junior resource bull market of all time.
Take that to the bank and smoke it.

#46 50% correction predictor on 05.14.12 at 11:48 pm

#35Canadian Watchdog on 05.14.12 at 10:42 pm

This should be fun to watch after spring sales. Get your popcorn ready.

______________________

Hear, hear

#47 Mr Buyer on 05.14.12 at 11:53 pm

Happy life and wife on 05.14.12 at 10:49 pm

Sorry, Garth and all bloggy doggies, but disagree with you on housing – its never gone done in Canada and is the best investment out there – time proves you wrong. Wifey and I are looking at buying two rentals – if you live in fear you will miss out.
…………………………………………………………………….
I like the bit of social inoculation you threw in with the agreement with and advice about investing so some readers will see that you are balanced and diversified and then slipped in buying Real Estate as the top of the bubble just passed. Psyops 101. NOW IS NOT THE TIME TO BUY A HOUSE. THE BUBBLE HAS TOPPED. SALES ARE FALLING ACROSS CANADA.

#48 Inglorious Investor on 05.15.12 at 12:05 am

Save for the S&P TSX Venture index, the drop in stocks is nothing to worry about yet. (Although, the risk sure seems to the downside right now.)

As for the Venture, while the major indices have been meandering up since March ’09, it has been quietly crashing. From a peak of around 3300 back in 2007, it closed today at around 1300. Yikes.

However, what really concerns me right now is the housing mania we are surely in. Just yesterday I saw two modest, nothing-to-look-at homes in the Coke a stone’s throw from each other. Both had For Sale signs with appendages that hollered: “Coming Soon!”

Coming soon!? Sorry, but when average, working-class homes are advertised like upcoming Hollywood summer blockbusters, the end cannot be far off. Tread carefully. This is not normal.

#49 U-The Man on 05.15.12 at 12:07 am

The “peckerettes” have formed their majority government by creating the housing false economic miracle called Canada. Now it is time to pass the blame to guess who ?…Trudeau a la Pierre. Trudeau policies and the Liberals will be blamed for the housing collapse in Cananda. Oh the CONS forgot what year it is. Should we remind them?

#50 Al on 05.15.12 at 12:08 am

I noticed today all the expensive fancy cars in Calgary where out and about. Without fail, they are driven by men at least 60 years old. Could it be that they are rich or just enjoying every last dime?
Who wants retirement, sitting at home watching tv is not that great. Better to be engaged with life at work, making a few dollars. If you become too sick or old to work, then are you really going to need much spending money?
Not everyone needs to retire rich. It just might be bad for you in the end.

#51 $$$BPOE#1 on 05.15.12 at 12:09 am

Fact of the matter is that baby boomers, the vast majority are not going to be retiring. They love the work, the title, the status. Stay tuned for more news headlines regarding baby boomers working til 85

#52 Mackie on 05.15.12 at 12:13 am

hey Happy life and wife: you and your wife are going to be singing the blues when gold skyrockets, equities plummet along with real estate. But you go ahead and keep giving out your priceless information. lol I’ll remember to continue ignoring it.

#53 erik on 05.15.12 at 12:23 am

The price will not fall because it did not fall during last 5 (already 5!) years. The economy takes an unpredictable and irrational way, otherwise it would be easy to make money in every market. You said it – it’s too emotional and too wrong to predict and to believe ( in price fall. )

#54 Retired Boomer - WI on 05.15.12 at 12:26 am

Peckerettes….? Noun, of or relating to, elected . or non-elected representative, or working minions in a Federal, State, or Provincial setting. See similar: Boss, Peckerhead

Yes, I come to this pathetic blog to humor my warped sense of reality. Kind of like a therapy for the wrinkly, boomer set of which I are a specimen.

#55 erik on 05.15.12 at 12:36 am

In Bucharest the ratio of median house price to median income is above 30. In GTA it is only around 7. Way to go up for prices, because the big share of population in GTA came from countries with extremely unaffordable housing, those people will bet it up to the sky.

#56 AprilNewwest on 05.15.12 at 12:40 am

#36 Happy life and wife.
Are you an idiot or a child? Of course housing has gone down in Canada. We’re no different from the rest of the world.

#57 Nostradamus Le Mad Vlad on 05.15.12 at 12:41 am


Chart of the Day — Greece’s stock market collapse vs. 1929; Sex, Drugs and Rock ‘n’ Roll depression; Natural Gas Prices are already up 15% or more in UK; Ugly Patterns in the markets; Whopper from Bruger King? No; Centrists? No. The entire demagogue has shifted left; Slave Labor from F.

Workers Cheap Power Not consumers, but here is the other side of the story; 50% gas hike? Looking at the future; EZone turmoil good for London; Jaamie Dimon Scary; Feeding Frenzy Not sharks, CDS; New Crisis Like an assembly line, they keep rolling along; ich Poor Gap messes economists up, ‘coz we’re always getting poorer; Best Buy CEO steps down. Wonder if BB is not doing well?
*
7:13 clip The Elephant Whisperer. Yes, there was one and the elephants he turned from rogue into normal elephants mourned him; Dreams They can be controlled and changed; Antarctica and HAARP Getting crowded down there; Tokyo ‘Quake? All possibilities exist; Bug Fight Pix No love lost here; US Plans “. . . the US plan to invade and take over 7 countries, Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and Iran.” They started on Lebanon yesterday; Brookings A NWO tool; Obummer Enjoys the wild chaos of life. During this time, he is offloading oil / gas / other plants to the Chinese, and no one is paying attention; Probiotics Destroys nasty lil’ critters in stomax; Fatty Continent (us); New French socialist prez. has a number of luxury homes.

#58 Freedom First on 05.15.12 at 12:49 am

Speaking of “Fat Cats”:)……not too long ago, there I was, sitting in my car waiting for someone in a fairly upscale neighborhood. Up pulls this new BMW, and this man, weighing about 300 lbs. and about 5’5″ tall gets out of his car, in an expensive suit, cigarette in his mouth, and waddles up to the house across the street from me, opens the front door with his keys, and enters. He looked to be about 55-60 years old. I looked at his house, lawn, landscaping…….everything immaculate.

Now, I don’t know if it is just me or not, but it appears that far too many Canadians have their priorities out of whack. Now, some of the horny young house virgins/owners/debtors:) may not physically look like that man, but their financial affairs do:)……just saying….

#59 wangchungtonight on 05.15.12 at 12:50 am

Sure Garth: Capital Economics; the source of all truth. Hmmm. Lets see: the US financial crisis can be explained through some simple aggregrate statistics which can then be applied to any other country. Hmmm, and what about those trillion dollars of worthless credit default swaps that were the real reason for the crisis. I guess those are just assumed to exist because we have a high debt to income ratio. And high LTV loans have the same level of credit risk as say inner city loans to a homeless person in Atlanta. Yup. we are all doomed cause certain ratios, which likely don’t have any real predictive power at all, have all lined up here in Canada. at what exact point did you lose any and all objectivity.

#60 TRT on 05.15.12 at 1:40 am

So a drop of 15% over three year for the GTA??

What happens if housing goes up 5-10% over the summer?? A 5% drop over the three years then is the prediction?

Based on that, people should buy in the GTA ASAP!! You will be ahead than if you don’t. If that is all the correction that’s gonna happen, then it makes sense to buy.

#61 Islander on 05.15.12 at 2:51 am

Hi Garth,

Really enjoying the blog. Thought you might enjoy this listing:

http://www.realtor.ca/propertyDetails.aspx?propertyId=11914372&PidKey=-1416416771

“SELLER TRASFERRED- SOMEONES’ GOOD LUCK THIS HOME IS $ 87,200 BELOW CURRENT BC ASSESSEMENT. OUR AGGRESSIVE PRICE IS VALID ONLY IN EXCHANGE FOR A FULL PRICE OR HIGHER FIRM ACCEPTABLE OFFER TO SELLERS BY MAY 31/2012”

What happens after May 31???

#62 P & T S on 05.15.12 at 3:09 am

A house is now a right. So’s a mortgage. Someone actually posted that if a home loan were refused renewal under the new rules, forcing someone to sell, “they would then be homeless.” Coffee came out my nose.

Gosh, they might have to move into a house they can actually afford, ugh, or even… :shudder: rent. I’m sure some eager lawyers would be assaulting the Canadian Human Rights Commission headquarters over this social injustice.

Oh the ignominy of it all – they would be in the same
“inferior social stratum” as we are – and have been for a comfortable while!!

This is another of the insidious strategies used to coerce those who must be “in with the In-Crowd” to buy – the “Oh, your a RENTER” attitude – as if we had some form of affliction or visible defect (e.g. bits missing / supernumary bits perhaps)??

The sad thing is whilst the “House Owners” (in reality Mortgage slaves) feel sort of superior, we KNOW we’re well ahead of them in terms of realisable self worth (real, tradeable assets – NOT PM’s!!). This will apply to the many other renters who frequent this happy pasture too – and their time will come!!

(We COULD buy, but we WILL buy only at the price point of OUR choice!)

#63 Poorboy on 05.15.12 at 3:26 am

As for stocks, lots of good buys right now – loading up TFSA and rrsp with etfs and equities – buy when others fear is the only way to go. Load up!

Or you could wait to see what happens in the next couple of days seeing as Thursday is the “last day” for Greece’s politicians to get their shite together as it were and you’re basically advising people to try and catch a falling knife, which might turn into something rather more deadly come Thursday/Friday.

Sorry, Garth and all bloggy doggies, but disagree with you on housing – its never gone done in Canada and is the best investment out there – time proves you wrong. Wifey and I are looking at buying two rentals – if you live in fear you will miss out.

From bad to worse advice.

So fellow bloggers, as a seasoned investor I offer you my 2 pennies, diversify with housing and equities and you’re guaranteed a happy life and a happy wife.

There are good times and bad times to be in equities. There are good times and bad times to be in bonds. There are good times and bad times to be in real estate.

Diversifying into real estate right now for the sake of diversity, balance or any other lowest common denominator investment dogma is pretty farking dumb.

#64 KL on 05.15.12 at 3:28 am

Garth,
Why do you filter comments? Let the reader decide for themselves. This blog is beginning to look like the epitome of group think.
You either don’t post comments that don’t agree with your perspective, or you completely ridicule the ones that seem to make it through. Why are you overcompensating so much?

Only comments which are ad hominem, in bad taste (worse than me), or rife with expletives get the axe. This blog will not degenerate. — Garth

#65 jay on 05.15.12 at 4:54 am

So the sixty something boomers on the DWI (Dog Walk Index, leafy Victoria burb) pulled their house when the listing agreement ended. (1.68m, 2400 square feet, Aga, 2 bedrooms.)

The “For Sale” sign has been replaced with a “design construction” sign. Oh joy, they are going to pop up a second storey for 150k.

Yup, that will do it.

Two new listings on the DWI. On the full walk there are 9 houses officially listed and 9 that have been for sale but are now signless or withdrawn.

I like renting…a lot.

#66 Canuck Abroad on 05.15.12 at 4:58 am

Recently had dinner with boomer friends of mine (55-ish) who a few years ago bought the house next door to their own, and combined them into one large house. So they own a double wide row-house in a neighbourhood that could charitably called “less than prime”. It’s a bit tatty and run down, let’s call it “shabby chic”.

Anyway, turns out that the husband’s retirement plan (wife has never worked) is the house. He does contract work and has no company pension. They have no SIPP (like an RRSP). They have no savings accounts. Every penny goes into paying off the two mortgages.

When i pointed out as politely as possible that you can’t eat a house, he informed me that they would just get their children to take over the mortgages. I was too horrified to ask them to elaborate, but seems the doomed kiddies are going to be expected to finance mom and pops retirement in exchange for their shabby house. The children are teenagers.

Has anyone else heard of such an outrageous plan?

#67 Mark on 05.15.12 at 6:04 am

“What will municipalities do when their tax base shrinks by 15-?% ”

Tax bases do not grow or shrink based on real estate values. Real estate values are only used to determine the “pro rata” share of the taxes that are distributed amongst the taxpayers.

So if Vancouver prices crash 50%, everyone’s assessment goes down 50%, but the same billion dollars (or whatever) that Vancouver needs to pay its garbagemen gets collected from the same base of properties.

#68 Mark on 05.15.12 at 6:06 am

“Imagine what the Canadian housing market would be like if mortgage rates were 1000% ?”

Housing would become an all cash (or all-gold) item in such a circumstance. Like in Weimar Germany where entire appartment blocks could be purchased for a mere ounce of the yellow metal.

#69 unbalanced on 05.15.12 at 6:14 am

To Mark W # 37 Please inform me how Winnipeg has increased 200 to 250 %. Where did you get your stats from. Just wondering.

#70 The real Kip on 05.15.12 at 7:04 am

“Yesterday’s blog post about looming changes to bank mortgage lending practices brought a howl of denial (you should have seen the posts I didn’t publish) from realtors, mortgage floggers and people with mortgages the size of regret.”

You deleted two of my posts yesterday and they were simply spot on comments deleted it seems because they did not agree with you.

I will check my spam pit. You may have understandably migrated there. — Garth

#71 Einzatgruppen kanada on 05.15.12 at 7:08 am

Garth do you think this city [GTA] and this province have peaked? Do you forecast a looming eclipse to the west?

No. — Garth

#72 Rudolf on 05.15.12 at 7:13 am

During a Sunday drive along the lake shore between Oakville and Burlington I was surprised to see for sale signs at countless lakefront residences. I am wondering why these rich and famous are trying to get rid of their wrought iron gated brick and mortar investments all of a sudden?

#73 bigrider on 05.15.12 at 7:40 am

#45 Smoking man Fraud.

Loved your post, hope you are right, I concur although with some doubt (my nature) and would love to see you post more often.

A fan.

#74 Diana on 05.15.12 at 8:10 am

@ #69 unbalanced

as per your question to Mark W

http://www.realestatemanitoba.com/statistics.htm

if you compare 2002 with 2012 average prices you get approximately the numbers he quoted. They also match up with the CMHC reports.

#75 down and out on 05.15.12 at 8:12 am

Poor southwestern Ontario can’t seem to catch a break ,3 solar manufacturers have closed up shops the latest being giant Silikens.I feel we sorry for the newly unemployed tied down with a mortgage and no prospect of work in the area.I know many are waiting for just such a scenario to take place elsewhere but believe me it sickens the stomach to watch the desperation in home sales . Yet a builder want to put 250 luxury estates on Boblo island a former amusement park near Windsor making my head spin.What is up with that .No marketing in the world can save this development .

#76 Diana on 05.15.12 at 8:15 am

@ #70, #69 & #37

Apologies, hit enter too soon. I was going to say I disagree with Marks comment on demographics, according to census the Winnipeg population has increased by 44,000 people between 2001 and 2011. I would like to see a source for “zero to negative real demographic growth”, and a definition.

#77 In Garth Not God We Trust on 05.15.12 at 8:21 am

David Madani of Capital Economics: “We’re dealing with irrational exuberance. We’ve been treating housing like some magical financial asset that is going to solve all our problems because prices are always going up…of course, when the turn comes, the over-confidence that drove the market up can turn to fear. You are dealing with emotion … so I don’t believe in a soft landing.”

Sounds like the words of the bearded mystic oracle, former guardian of national finances, adviser to the head honchos of this land, the lone voice of reason crying out in the financial wasteland of Canada, reader of financial tea leaves, crystal ball gazing financial prognosticator without equal, our fearless and intrepid “I dance to my own drums you peckerheads” leader , Garth Turner!

You still cannot borrow the Amazons. — Garth

#78 disciple on 05.15.12 at 8:50 am

#58 Freedom First… Maybe sitting in your car that day, there was a temporal distortion and a looking-glass portal opened up in your mind and that man you were seeing was actually you in another dimension and another re-incarnation. Didn’t consider that possibility, did you? On a related note:

Steve Jobs was first ATF agent since Waco to expire…
http://wirenetology.blogspot.ca/2012/03/steve-jobs-is-john-capano-atf-agent.html

#79 helpful on 05.15.12 at 8:56 am

The real Kip on 05.15.12 at 7:04 am
“Yesterday’s blog post about looming changes to bank mortgage lending practices brought a howl of denial (you should have seen the posts I didn’t publish) from realtors, mortgage floggers and people with mortgages the size of regret.”

You deleted two of my posts yesterday and they were simply spot on comments deleted it seems because they did not agree with you.

I will check my spam pit. You may have understandably migrated there. — Garth

Very tipical of G. Any one who think wont be a significant correction is red flag in this blog….There is not correction in GTA, 15% off over a 140% gain is not a correction.

It sure is if you bought in the last year or two with little down. Regardless, learn to read a bit better. A 15% correction is the start of a process, not the end. I think I need to bring back the crayons. — Garth

#80 angela on 05.15.12 at 9:07 am

@ #29 If only everyone understood that!

My Dad always said two things (well he said much more – that man can talk!):
1) If you have to ask how much it is you probably can’t afford it; and,
2) Be awfully sure you need something before you buy it on credit.

#81 disciple on 05.15.12 at 9:24 am

“At the heart of Britain’s wealth – piracy

The explicit use of pirates in the Caribbean brought great riches to the Britain. For a good part of 300 years (1550-1850), the English crown gave permits for pirates to operate on high seas. The rise of European powers coincided closely to piracy. In a modern context, imagine the Italian government giving legal sanction to the Mafia, or Colombians to the Cali cartel.

Keynes famously linked all British foreign investment to the single act of looting of the Spanish Armada. John Maynard Keynes, famously and honestly, tracked the source of British capital – and computed the compounded value of this loot”

Keynes wrote: “I trace the beginnings of British foreign investment to the treasure which Drake stole from Spain in 1580. In that year he returned to England bringing with him the prodigious spoils of the Golden Hind. Queen Elizabeth was a considerable shareholder in the syndicate which had financed the expedition. Out of her share she paid off the whole of England’s foreign debt, balanced her Budget, and found herself with about £40,000 in hand. This she invested in the Levant Company –which prospered. Out of the profits of the Levant Company, the East India Company was founded; and the profits of this great enterprise were the foundation of England’s subsequent foreign investment. Now it happens that £40,ooo accumulating at 3f per cent compound interest approximately corresponds to the actual volume of England’s foreign investments at various dates, and would actually amount to-day to the total of £4,000,000,000 which I have already quoted as being what our foreign investments now are. Thus, every £1 which Drake brought home in 1580 has now become £100,000. Such is the power of compound interest!”

https://2ndlook.wordpress.com/tag/slavery/

#82 45north on 05.15.12 at 9:29 am

jay: Oh joy, they are going to pop up a second storey for 150k.

what a bad idea, a man (pretty sure it’s a man) a block over from me in Ottawa put a second storey on a decent split-level. Well the house works well as a split-level but it wasn’t designed to have a second story – I hear the staircase was a bit of a problem. Another person (or persons) tore down a functional garage to put up a chalet-style addition. Not my money.

#83 rosie on 05.15.12 at 9:39 am

Beware makers of predictions. There have been many predictions made by many bloggers and by the host. I have yet to see any come to full fruition. Some have come close but other forces come to play, rendering the prediction facile and pointless. Last fall, for instance, on being asked the possible outcome of of a Greek debt default or downgrade a response was that Europe and Greece are so yesterday. Fast forward to now and you might see a different scenario playing out regarding Greece and it’s impact on world markets. I no longer pay any attention to predictors because they can’t know what their talking about.

Greece is still yesterday. Its default and exit from the Eurozone will be interesting but ultimately inconsequential. Nothing much has changed, unless you refer to a 4% stock market decline. Worrying about such noise is, as you put it, facile and pointless. — Garth

#84 earlybird on 05.15.12 at 9:45 am

Love the introduction pictures, and your writing wit…coffee has come out of my nose a few time here….too funny! My clients are all over 50, and the majority plan on selling the home for retirement, and are looking forward to the change. Demographics dictate alot in the economy, and our “boomer” cohort is like a pig through a python, even if half sell, slowly over the next decade, its alot of downward pressure on housing. I just sold the money pit, ahead of the demographic time bomb and expect the Mania to continue for a couple more years….Once sentiment changes housing will overshoot to the downside…..fear and greed, especially with real estate. I would love to buy this sweet little rental Im in now, but for the extra 1050$ a month to own it, not so sweet! Liquid and loving it…..I really feel for the younger cohorts that think half a million is the bar for home prices, its seems normal to them. I know of folks in the trades moving to TO from Cowtown for construction work….uh oh!

#85 Doug in London on 05.15.12 at 9:47 am

Why would you want to buy overpriced houses when stocks, especially resource stocks including energy stocks, are on sale now? Some of you like happy life and wife, post #36, have the right idea.
@ Einzatgruppen kanada, post #71: You’re right, there IS an eclipse coming to the west on May 20. It’s a partial eclipse in Western Canada, but annular in parts of California, Nevada, Utah, Arizona, New Mexico, and Texas.

#86 John Jacob Jingleheimer Schmidt on 05.15.12 at 9:50 am

We just completed our extended road trip from Portland to Vancouver BC and back. While in Vancouver we toured several of the condo towers for sale in downtown. I could smell the desperation coming from each of the sales people standing across from us. Because I am in the development business here in Portland, I knew the right questions to ask. The bottom line is that Vancouver is completely screwed as shadow or ghost inventory is insanely high in Vancouver.

I really think you will see a huge correction in Vancouver. We are thinking over %50 because the prices make no sense and people simply are not buying. Your CREA is doing a fantastic job keeping you in the dark. Listings have sky rocketed, days on market are accelerating, and prices are lowering. You are in the very beginning of a mass correction. Besides understanding basic economics in that supply and demand factor into price, there really isn’t much at all that Vancouver has going for it economically to keep prices high. The city itself looks somewhat pretty from a distance. But Vancouver is really not all that attractive once you’re actually standing in the middle of it. Stanley Park is nice, but the city is one ugly place itself. Kinda like a Monet. It is pretty from a distance but up close it is just a very big mess. Vancouver felt like it was just missing something but I cannot quite pinpoint what it is. We noticed there were only two-way stop lights at over %50 of the intersections, which is creepy and telling of a lack of sufficient funds for good infrastructure. We also noticed the number of heroin users shooting up everywhere we went. There is no doubt about it that Canadians are more proud than Americans by the number of flags i saw your cars, businesses, clothing (I’m not American officially yet, but I am in process of obtaining my citizenship). And we noticed that people must not have got the memo that smoking is no longer cool. Groups of people who were over 40 years old were screaming immaturely in the streets while inebriated in the night, every night. That is behavior reserved for kids in their teens and early 20s. It felt like a land frozen in time, and not in a good way. So, we were left trying to understand what really makes Vancouver all that livable? We think Vancouver has done a better job of actively and ruthlessly campaigning for itself rather than it having actually made a nice city where people can live well and have an excellent quality of life.

Portland is the opposite where it doesn’t look that impressive from a far but it is beautiful once you’re in it, very much like my birth place, Amsterdam. Ultra progressive (definitely more so than Vancouver), ultra clean, and everything that makes a city truly livable. Oh, and Portland is half the cost of living.

#87 Buy? Curious? on 05.15.12 at 9:51 am

Garth, don’t change a thing. There’s no way you can predict an exact date when home prices start dropping like panties when you walking into a room.

By the way, speaking of panties, what do you think of Britney Spears doing American Idol?

#88 Daisy Mae on 05.15.12 at 10:01 am

#33 Wolfenstein on 05.14.12 at 10:30 pm
“One aspect this pathetic blog doesn’t touch on is local government finances. What will municipalities do when their tax base shrinks by 15-?%”

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

They may cut services…but all they really need to do is raise the mill rate to cover their costs.

#89 lawboy on 05.15.12 at 10:02 am

@66: I was too horrified to ask them to elaborate, but seems the doomed kiddies are going to be expected to finance mom and pops retirement in exchange for their shabby house. The children are teenagers.

Has anyone else heard of such an outrageous plan?
……

Yes, I have heard of this before. Apparently the theory of the boomers is that since housing prices ‘always go up’, the kids would get the benefit of the house under mom and dad’s will, so it would be in the kids interest to help teh ‘rents keep the house.

#90 Alberta Ed on 05.15.12 at 10:04 am

#81 disciple: ‘at the heart of Britain’s wealth – piracy’

You forgot to mention sugar, slavery and the opium trade. Interestingly, William Snelgrove’s 1534 journal of a slave trading trip to Guinea is on display at the National Maritime Museum at Greenwich.

#91 Houman on 05.15.12 at 10:10 am

Hi
Garth what do you think of FaceBook IPO?
What about price of Gold and Silver? Is it a good time to buy?

Thanks

Sure, go for it. We’re bored. — Garth

#92 dad on 05.15.12 at 10:11 am

200K income “not rich”

Delusional Indeed.

#93 Daniel on 05.15.12 at 10:14 am

Did you see that Kelowna graph yesterday? Yikes.

Repost?

Scroll down. In yesterday’s post. — Garth

#94 Inglorious Investor on 05.15.12 at 10:19 am

rosie, predictions are interesting and fun to debate. But your decision to buy or invest should be based on management of risks as you perceive and understand them, and how they apply to you.

For example, I would say now is a risky time to be investing in real estate in many Canadian cities, like TO. This is based on price trends, interest rates, cap rates, the rental market, and other factors. (Others might strongly disagree.)

That was also my opinion before the crash of ’08. Around that time, real estate in Canada took a pretty hard hit. But then the government reflated the system and prices shot to new highs into the next phase of the boom, which IMO became a full-blown mania.

Now, if you are buying a principle residence, your risks are very different from that of the RE investor. And your decision will be based on a host of other factors (some very personal), which may have nothing to do with the economy, prices, etc.

So, just know the risks as they apply to you. And let others play with predictions. Just for fun, make a few divinations of your own and later on see how prescient you were. Just don’t base your decisions on them.

#95 Canadian Watchdog on 05.15.12 at 10:28 am

CREA National Home Statistics Released http://creastats.crea.ca/natl/

BC down 12% y/y. http://i50.tinypic.com/5dorir.png

You’re next Toronto.

#96 disciple on 05.15.12 at 10:47 am

#90 Alberta Ed… All of that came after the piracy. Check out the link, genius writer with lots of hidden info…

People often complain that they don’t know where to put their money, but then don’t actually do the one thing that would help them, which is to READ. You know, that skill we are supposed to spend years perfecting in school? Our schools are a joke, or perhaps a weapon of mass retardation? No, that’s TV. Someone here actually asked G-man what he thinks of American Idol? I rest my case.

#97 GTA Girl on 05.15.12 at 10:48 am

To the above;

All villages changed…Kleinburg, The Beach, Unionville Niagara ON THe Lake, Yorkville. I’m sure people complained when the Ford Model T replaced the horse and carriage. Heritage builds are important and should be maintained. But Kleinburg was falling apart, with a decaying core street and needed a overhaul. If you only lived here a few years, you would know that.

Because in the end, the best design for families to live near is a walk able town with garden homes, schools, well apointed mixed apartment /residential, parks, trails…a neighborhood.

It’s the base core ideal that the suburban developers have been cheapening out on, and municipalities are allowing crap to be built.

Toronto’s core neighborhoods such as Queen Street, Danforth, Parkdale, College are the back bone in the same manner.

And if people want to drive Jags/Maseratis it’s ok by me.

#98 truth hammer on 05.15.12 at 10:49 am

Ah yes…..” if you fail to plan..you plan to fail…..so true.

The pimps are driving on fumes as they quote that ‘average prices are up again’ …….doesn’t this really that that people have borrowed more to buy into hyperinflated property and have brought the national debt collapse even closer to a strangulation orgasm?

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/average-canadian-home-price-edges-higher/article2433122/

#99 truth hammer on 05.15.12 at 10:55 am

btw…for the gold kickers out there……in the past 12 years bullion has appreciated 14% p/a……more to come……..don’t worry…..fundamentals haven’t changed a bit. If you can’t handle a voiltile market and do not diversify and hedge…you deserve lower returns. Consider that gold at 1550 is a lot higher then when the run started in 2000 and gold was 265…….don’t be so impatient…..sellers are suckers.

This is not a gold blog. — Garth

#100 daystar on 05.15.12 at 11:03 am

#45Smoking Man Fraud on 05.14.12 at 11:47 pm

I concur. I believe the markets are bottoming now as well. (mining stocks could unwind a little longer, we shall see) Look for a lift in the markets on Friday and next week to recover. There will be no 2008, too much profit on corporate hands for one and while the world fixates on Europe & China, the U.S. and emerging markets should keep things rolling along. This next month faces better news and obviously valuations are attractive now so its a great time to get in if you aren’t already invested from what I can see.

Whatever the case, even if commodity equity valuations drop another 10 to 20% over the next month, I can’t see this selloff trend lasting past early June. Its an oversold market now as it is and things will turn around with some drama, I believe, in June on through towards the rest of the year.

Garth (or anyone else who knows), don’t mean to sound like a slow learner but I’m still hazy on the timelines of LTV assessment’s on VRM’s. Am I to assume correctly that, assuming current OSFI draft proposals become regulation… that VRM LTV’s are assessed with the same 5 year timeline that 5 year term renewals are?

#101 Questioning RE in Calgary on 05.15.12 at 11:05 am

Alright, pretty well anyone who comes here can agree that the Vancouver and Toronto markets are extremely overvalued and will likely see a large correction-pretty much a given. Manufacturing activity out east is dropping and so are the jobs. Garth, do you think all the workers are just going to sit in Ontario collecting pogey watching theyre housing values deteriorate? Most likely not, they are going to sell and move to greener pastures. Areas like Saskatchewan and Alberta that are crying for workers (even the most unskilled, simpleton positions). I am not a homeowner, I have been following this blog for years and have heeded its warning. I love the freedom of renting and all the perks that come with it. However, as much as I would like to see it, I dont believe that the hub of Canada’s oil and gas business will see much, if any of a decline from todays values. Alright Garth, poke holes in my logic.

#102 Steve on 05.15.12 at 11:06 am

Like Hari Seldon, Garth is predicting the behaviour of the general population – many of us think he is doing so correctly. Most of the naysayers are using arguments that single points of contrary data ‘prove’ Garth is wrong. Proving something requires more that single bits of data.

It seems more probable that the behaviour of the masses will lead to the outcomes predicted by our host. This is supported here daily with many trends being cited in support. Mobs do not behave logically (e.g. The Greeks, who seem determined to cut of their noses to spite their faces), but they may well behave predictably, and if one is able to objectively assess the direction of the mob, that may lead to more informed decisions on one’s part. Isn’t that a big part of what draws us here regularly?

It would be great to see robust and well thought out counter arguments to Garth’s position, but while some ahve been interesting, they have all been lacking robustness so far…

Thanks for the continuing insight and for hosting it on this forum Garth!

#103 rosie on 05.15.12 at 11:06 am

Beware makers of predictions. The point is, no one knows the future. Anyone who makes predictions and bases their investments on these predictions, like buying a house or gold is investing based past performance being telegraphed into an unknown future.

#104 Questioning RE in Calgary on 05.15.12 at 11:06 am

and before you or some smartass corrects me
theyre = their

#105 Intuitive Missus on 05.15.12 at 11:15 am

Some think this can’t happen but here is a warning from OSFI. Can’t say we weren’t warned. Better late than never.

CANADIAN BANKS NOT IMMUNE TO HOUSING BUBBLE: OSFI OFFICIAL.

http://business.financialpost.com/2012/05/15/canadian-banks-not-immune-to-housing-bubble-osfi-official/

#106 earlymidlifecrisis on 05.15.12 at 11:47 am

Thanks garth! I sold in may 2011. I will do my best to rent until the changes take effect. But i must say, after 3 moves this year and working on a 4th i am itching for a home.
http://www.cbc.ca/news/business/story/2012/05/15/crea-home-sales-april.html

#107 greed on 05.15.12 at 11:50 am

“This blog will not degenerate. — Garth”

Funny, like the Facebook IPO.

#108 Arshes on 05.15.12 at 12:01 pm

#101 Questioning RE in Calgary on 05.15.12 at 11:05 am Alright, pretty well anyone who comes here can agree that the Vancouver and Toronto markets are extremely overvalued and will likely see a large correction-pretty much a given. Manufacturing activity out east is dropping and so are the jobs. Garth, do you think all the workers are just going to sit in Ontario collecting pogey watching theyre housing values deteriorate? Most likely not, they are going to sell and move to greener pastures. Areas like Saskatchewan and Alberta that are crying for workers (even the most unskilled, simpleton positions). I am not a homeowner, I have been following this blog for years and have heeded its warning. I love the freedom of renting and all the perks that come with it. However, as much as I would like to see it, I dont believe that the hub of Canada’s oil and gas business will see much, if any of a decline from todays values. Alright Garth, poke holes in my logic.
———————————————————-
Haven’t the RE prices in Calgary already fallen? I’m from Edmonton and prices here have been dropping since 2008. No doubt in my mind they will continue to drop in coming years same with Calgary. People keep thinking because this is gas and oil country somehow were are immune, but with the new mortgage rules to come, oil or no oil its going to be harder for new buyers to get in. No more 5% down mortgages, most are going to need 20% down. For a $300,000 house thats $60,000 for a $400,000 house thats $ 80,000. Not many people out there with that kind of downpayment. And the number of people selling thier homes hasnt gone down. So demand low, supply high. Which will push prices down.

#109 Still Renting on 05.15.12 at 12:03 pm

If residential real estate prices fall by about 15% in the GTA, that still gets us nowhere close to what many financially prudent individuals would consider affordability. The average detached house would still be over $700,000 (based on the current average being around $831,000). Presuming rates rise even moderately, the carrying cost of the house will be little changed. Will the GTA ever return to affordability?

#110 mel in victoria on 05.15.12 at 12:14 pm

This might be turn around Tuesday….all markets….

#111 Gordeaux on 05.15.12 at 12:40 pm

#69 unbalanced

Can’t speak to where the poster is getting his numbers but I can tell you my own story.

I bought a 1350 sq foot house, built in 1913, in the fall of 2003 for $75K. I sold it this spring for just a hair over $200K. I think that makes the increase 166 per cent. And I should note this isn’t the best house, and it certainly isn’t in the best neighbourhood. Oh, and I’m only earning about 12 per cent more for the same job than I did in 2003.

#112 steev on 05.15.12 at 12:43 pm

#100 daystar on 05.15.12 at 11:03 am

Daystar,

I’m not aware of any variable rate mortgages that are set up without terms on them. I imagine the majority that have been issued have five year terms similar to fixed rate mortgages. In that case OSFI regs wouldn’t effect a variable rate mortgage rolling over differently from a fixed one.

I don’t think anyone is putting forth the idea that someone who is making payments would have their mortgage called in arbitrarily, but rather at the time of renewal they’d be required to shore up the LTV if it was below the requirement.

Cheers

#113 Canadian Watchdog on 05.15.12 at 12:49 pm

This home building company in Alberta just went bankrupt

http://www.unitybuilders.com/Default.aspx

“Unity Builders Group (UBG) is a real estate management company overseeing various homebuilder companies with a construction volume of approximately $400 Million CDN (slightly over 1000 houses annually). Founded in 1998, the group’s original mandate was to build quality homes in the North American marketplace, with the care and attention of a local builder. ”

OSB filing: http://strategis.ic.gc.ca/eic/site/bsf-osb.nsf/eng/br02850.html

Gonzo. Next…

#114 Daisy Mae on 05.15.12 at 1:04 pm

“Finance Minister Jim Flaherty has tightened mortgage rules three times and put the federal housing agency’s books under regulator oversight, while Bank of Canada Governor Mark Carney has repeatedly warned household debt is the economy’s biggest domestic risk.”

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

Why does everyone try to put a positive spin on Flahertys recent actions? As if he’s done a good thing. The jackass raised the amortization rates to unrealistic highs…and then he gets credit for lowering them again?

And we don’t need Carney telling us we’re in financial trouble. We know this. It’s not news. And he’s not doing anything about it, anyway. Just lip service. What a (bad) joke.

#115 99% on 05.15.12 at 1:06 pm

Bob Rennie – aka condo king launched another project in Richmond BC called the Mandarin. Again, like Marine Gateway, he provided “Rules of the Game”. To sum that up, you kind of have to agree to be blindfolded in a dark room with duct tape on your mouth holding out a blank signed cheque. But this time, it didn’t go as planned for poor old Bob. The launch on April 28th came and went, and there are still more units. Free realtor lunches, Louis Vuitton Handbag giveaways every 15 mins, realtor bonus extended, free Richmond Center gift cards, and still not yet sold out. WHY? Didn’t Bob tell us that instead of LOCATION, LOCATION, LOCATION…..IT’S NOW TRANSPORTATION, TRANSPORTATION, TRANSPORTATION??? Well, this development is directly on top of the Canada Line….so what’s different? Maybe this time Bob should offer one of his testicles as a bonus. Who knows, I wouldn’t put it past him. Anything to hawk a condo. BPOE, anything?

#116 highway61 on 05.15.12 at 1:12 pm

#101 Questioning RE in Calgary on 05.15.12 at 11:05 am

i agree. choose carefully (downtown properties are almost sure to either appreciate or to bring a healthy rental income) and you can stil make some good money in calgary’s RE.

#117 John saccy on 05.15.12 at 1:28 pm

Bite and digest this:

http://www.cbc.ca/news/business/story/2012/05/15/crea-home-sales-april.html

#118 Paul on 05.15.12 at 1:31 pm

Really want to know what you think of this:

http://www.theglobeandmail.com/report-on-business/video/video-12-year-old-delivers-scathing-critique-of-canadian-banks/article2433138/

Does this 12 year old know more about debt than your average adult?

No. This is old. And useless. — Garth

#119 new_era on 05.15.12 at 1:58 pm

#105
Some think this can’t happen but here is a warning from OSFI. Can’t say we weren’t warned. Better late than never.

CANADIAN BANKS NOT IMMUNE TO HOUSING BUBBLE: OSFI OFFICIAL.

http://business.financialpost.com/2012/05/15/canadian-banks-not-immune-to-housing-bubble-osfi-official/
=======================

“This can change fast,” he wrote in his notes. “Are the banks equipped to handle a 40% drop (what occurred in Toronto market in early 1990’s)? Need to stress test to find out.”

Interesting that they mentioned 40% stress test. I know they must be playing the situation down right now, but for them to come out with and talk about a housing bubble says it all!!!

The situation must be way worst.

#120 Daisy Mae on 05.15.12 at 2:04 pm

“….instead of just being prickish and resentful. (Of what?)”

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

Exactly what I’d like to know. The ‘Boomers’ aren’t responsible for their numbers. Every generation has their own set of challenges. So why are Gen X and Ys blaming the ‘Boomers’? For what?

#121 PoorgEoisie on 05.15.12 at 2:09 pm

Anybody find evidence of a soft landing prediction that came true?
All I found were these:
http://www.khaleejtimes.com/DisplayArticleNew.asp?xfile=data/business/2007/January/business_January685.xml&section=business&col=

http://www.centralbanking.com/central-banking/news/1408916/central-bank-soft-landing-irish-housing

http://www.forbes.com/2006/08/23/home-prices-sales-cx_jh_0823homes.html

#122 Canuck Abroad on 05.15.12 at 2:14 pm

111 Gordeux – Your return was probably good but nowhere near 166%. Like most owners, you have ignore the costs to buy (legal and transfer fees etc), the costs to sell (real estate agent and legal etc), property taxes and insurance over the period you held the house, any repairs made, renovations, and most importantly mortgage interest (your cost to rent the money to buy).

Then once you have recalculated, determine what that is on an annualised basis. Less hot. But hey, at least you probably beat the stock market.

#123 maxx on 05.15.12 at 2:36 pm

“Now, imagine a few years hence. Rates higher. Mortgages dearer. Bankers tougher. And a million desperate Boomers trying to turn their illiquid suburban barns into cash flow. Supply washes over demand already weakened by new lending standards, chasing valuations lower in a vicious circle.”

Bang on…..add to that, deep, generalized fatigue from the entire decades-old, house-arama psychosis. I for one am beginning to feel the effects of the innoculation from excessive exposure to anything house-related. I can’t even watch HGTV, it’s so boring.

#124 Inglorious Investor on 05.15.12 at 2:39 pm

Rather than fixating on price, people should focus on value.

There is no question that RE in places like TO and Van are overvalued. There is also no question that housing in such places will, at some point, revert back to fair value.

The only question is, what form will the reversion take? Will it be quick and violent? Or slow and steady, with nominal prices being generally stagnant?

An economic shock or deep recession could cause a collapse, like the US. A strong economy with high employment likely means a slow burn to fair value with dips and spikes along the way for good measure.

Housing has gotten ahead of the economy. That’s what monetary inflation does to assets. So, will the economy catch up to housing, or will housing have to catch a falling economy?

Either way, the bottom line is this: once the market turns you won’t be able to count on real capital appreciation in RE for a while, if ever. It took several years after the ’80’s boom for housing to bottom, and several more years to catchup––in nominal terms.

In real terms, house prices in TO did not reach their previous 1989 peak until 2007, according to this: http://canadabubble.com/charts/canadian-major-city-housing-price-chart-.html What that means is that anyone who bought a home in 1989 had to wait until 2007 to fully regain the value lost after the last boom went bust.

But this time, the credit bubble that engendered this manis much, much worse.

So go ahead and buy that home that you love. Just make sure you won’t be forced to leave it if it doesn’t love you back.

#125 Toronto_CA on 05.15.12 at 2:48 pm

@109 Still Renting – I think Garth has stated in the comments of this very post that 15% is the start, and then it will sink lower from there (while salaries rise 1-3% a year). The USA housing market has been declining since 2008 and keeps going lower and lower; it’s not going to be a fast time drop followed by rises like we saw here in 2008.

Condos in the GTA are completely ridiculously priced by any standard, and the “condo fees” are completely out of wack with Vancouver and Montreal for the same maintenance inexplicably (3 to 5 times as much). I would love Garth to do some research on condo fees in the GTA and what is going on with those. My friend’s condo corp in the new Streetcar buildings King street just raised his condo fee by 15%. Pitchforks from the owners. Something’s gotta give.

#126 Alex N Calgary on 05.15.12 at 2:52 pm

http://business.financialpost.com/2012/05/15/canadian-banks-not-immune-to-housing-bubble-osfi-official/

Whoa! there you go, no surprise to anyone who reads this blog though. sigh and Alas, as my friends continue to pound money into Reno’s, take out another heloc, pay for new facuets, they are amazingly expensive btw.

Its always a joy people looking at you like you’re poor, and or scum when you tell them you rent, all of that judgement energy is going to topple the market and bankrupt all these people on its own.

My dear friend the part time legal secretary, 27, 2 kids, husband is tradesman in commercial flooring, on their 3rd property, the 800k acreage (which they deserve of course) was telling me of course they have a RV to go camping in…as if everyone has one….not good, not good at all

#127 Joe Q on 05.15.12 at 3:08 pm

Garth. You need to make sure everyone understands this. The Vancouver RE bubble has officially popped.

“Average selling price in Vancouver down 9.8 per cent compared with a year ago at $735,315”

http://www.vancouversun.com/business/Vancouver+home+sales+down+April+while+rest+Canada+soars/6624414/story.html

#128 disciple on 05.15.12 at 3:12 pm

Markets are created artificially in someone’s mind. They then project that market onto your mind. Facebook is a perfect example. A David Rockefeller creation. His grandson is the FACE and you are the Zuckers.

The movie you saw is total baloney, yet here we are with a $100B valuation. Ludicrous. Here are some FB alternatives:
http://web.appstorm.net/roundups/communication-roundups/6-alternatives-to-facebook/

And some alternatives to Google:
http://www.webpronews.com/google-apps-alternatives-how-to-pull-yourself-out-of-that-g-hole-2012-03

#129 Cato on 05.15.12 at 3:14 pm

Random chance or luck, however you define it most are destined to succeed or fail not on ability but rather the birth lottery of when, where and to whom they were born.

The early boomers won the lottery. For the most part they were the greatest beneficiaries of the economic expansion that occurred over the last 30 years. They will also benefit from a relatively intact social safety net when they require it most.

The late boomers had a winning ticket but through series of poor choices I believe is the generation that is truly screwed. Thanks to their older peers they will enter a crumbling social system already buckling under the strain demographics. Most are ill-prepared for retirement and will be expecting to lean heavily on a safety net that simply won’t exist.

X, Y and the Millennial generation have youth on their side. Witnessing the utter failure of the boomers should serve as a wake up call that the state cannot be relied upon. Most will still have the time to prepare and avoid the mistakes of their parents.

As much as I despise the consumer centric lifestyle espoused by many boomers I pity them for the misery most are about endure. It’ll be cold comfort but they will likely serve as an example for future generations. Their mistakes will hopefully never again be repeated.

#130 Market Bull on 05.15.12 at 3:25 pm

CREA stats, released today, for April, 2012.

“A total of 157,804 homes have traded hands so far this year, up 6.4 per cent from levels reported in the first four months of 2011 and about four per cent above both the five- and 10-year averages for sales during the first third of the year.” ~CREA.

Yeah, it’s all tumbling down somwhere, just not in Canada.

Where is this ever-so-elusive crash anyway?

#131 TRT on 05.15.12 at 3:29 pm

So the fate of RE is sealed!

Our Leader H said today in Ottawa that “the labour shortage that exists today will get much more severe in the coming years.”

Translation: expect immigration numbers to increase PLUS expect a greater proportion of high net worth immigrants.

Cue the Globe and Mail….

Expect to see increases in property prices in Vancouver and Toronto. Expect rents to increase. Expect smaller houses…. For example, North Surrey has barely any building lots left. New 30 foot wide lots being introduced.

Good Luck.

There will be no increase in immigration numbers under this government. — Garth

#132 Aussie Roy on 05.15.12 at 3:34 pm

Wow reading comments here today is facsinating.

Yes we all should be careful about predictions.

The most delusional prediction is of course “It’s different here, there or anywhere”.

It’s been a global debt binge. Beware of the reflux.

#133 truth hammer on 05.15.12 at 3:38 pm

#126 AiC ….this article is a fluff piece obviously written by the banks themselves. In fact banks have zero skin in the real estate game…….this have proven time and time again by hundreds of pieces posted by hundreds of posted on this site and by the thousands on others. The banks haven’t issued a non CMHC real estate loan in years….the risk has all been absorbed by the taxpayer. The fact that HELOCS are mentioned is misdirection…look at the rules and rates regarding HELOCS…..zero risk to the bank as well….short term loans all at much higher rates…..collectible by garnishment and direct dissolution of non reg savings accounts…..further indemnified by a monthly insurance amount you pay as it has been underwritten by a secondary institution.

The banks are saying ‘us too’ because they’re trying to get ahead of the bad publicity curve that they foresee as immanent. No one should be naive in this regard the banks are laughing.

#134 Questioning RE in Calgary on 05.15.12 at 3:40 pm

#108 -Haven’t the RE prices in Calgary already fallen? I’m from Edmonton and prices here have been dropping since 2008. No doubt in my mind they will continue to drop in coming years same with Calgary. People keep thinking because this is gas and oil country somehow were are immune, but with the new mortgage rules to come, oil or no oil its going to be harder for new buyers to get in. No more 5% down mortgages, most are going to need 20% down. For a $300,000 house thats $60,000 for a $400,000 house thats $ 80,000. Not many people out there with that kind of downpayment. And the number of people selling thier homes hasnt gone down. So demand low, supply high. Which will push prices down.

Yes, Calgary is down from the peak. However the RE market has been more or less holding steady since ’09. Edmonton dropped and is still dropping because, lets be honest-who wants to live there? High crime rates and giant smoke stacks just to the east of the city dont appeal to many. One of the reasons that I dont think there will be much of a drop here is because while prices have appreciated greatly in the Toronto and Vancouver markets since ’09, Calgary has been relatively stable. You did not even address the migration of people from the economically depressed areas of the country to the provinces that are in desperate need of workers. There is so much work out here they are bringing in tens of thousands of Mexican workers on a temporary basis just to keep up. There isnt a great supply of houses in Calgary, and the demand is there. Ive been waiting for years hoping real estate would drop, but its time to face the facts. Places like Vancouver and the GTA are screwed, but Calgary might see a 10% haircut, but I cant see the average price dropping much below 400k.

Garth, what do you think of people getting the hell out of ground zero of the Canadian housing crash and moving to places like Saskatchewan and Alberta where there is work, better wages and houses are half the cost of ones in Vancouver or the GTA?

#135 greed on 05.15.12 at 3:45 pm

#120 Daisy Mae
Because we can.

Also Facebook will be another post dotcom disaster.
Wait until they start having to provide forecasts on revenue and profit and price earning ratios are calculated as it will all be public. And then the mobile community finally moves the finishing line a few 100M up the grid. People’s attention span is short and likes new. This so called product is doomed. 5 to 10 years and we will will be talking about something called YouDontNeedFacebook(YDNF) and you dont have to give them all your personal info and have them mine data so they can plague you with marketing.
The next generation(s) after X and Y….
Then the X and the Y can be the target for ruined dreams of the Utopia. Right now it is yours Boomers, suck it up it will be our turn next.
Yahoo!

#136 Soggy Dreams on 05.15.12 at 3:47 pm

“X, Y and the Millennial generation have youth on their side.”

Generation X no longer has youth on its side. Most are 40-45 now, with massive debts and little savings.

I suggest that the screwed cohort crosses between late boomers and GenX. Roughly between 40ish and 50ish. This is the first group of retirees for whom employment-related pensions are the exception, not the rule.

The 40ish and 50ish crowd will also hold onto their real estate as it crashes, unlike some of the lucky early boomers.

#137 TRT on 05.15.12 at 3:47 pm

Social Insurance Cards will be no more! Gov’t getting rid of them. Why Garth? Coincidence?

So someone undocumented from Mexico will be competing for jobs with someone born and raised in Moose Jaw.

To apply: No SIN needed. Just a name and willingness to work for less.

You will be a chip in your forehead. — Garth

#138 TRT on 05.15.12 at 3:48 pm

Link

http://www.theglobeandmail.com/news/politics/ottawa-notebook/your-wallet-just-got-a-bit-lighter-ottawa-nixes-sin-cards/article2433258/

#139 Steve on 05.15.12 at 3:53 pm

#129 Cato on 05.15.12 at 3:14 pm

Learn from History?

Good One!

#140 Stevenson on 05.15.12 at 3:57 pm

Immigration will increase according the policies in the works. We need them to fill jobs and Canada is not going to turn away money. There isn’t enough skilled workers here because an Union worker can make the same amount as a skilled tradesmen or engineer. Canadians are spoiled and think their overpaid jobs are staying.

Btw I don’t know what you guys have been smoking but Canadian housing is still becoming more expensive day by day, year by year. You missed out.

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/average-canadian-home-price-edges-higher/article2433122/

#141 BPOE's BrainFart on 05.15.12 at 4:03 pm

Folks Folks Folks, You’re all looooooosers! If you dont earn 10 million cash a year like me then I dont even want you licking my dogs feet.

All Canadians must leave immediately, Vancouver is for HAM. Goodbye, Good riddance.

Hahhahahahah , I’m so funny even when I’m not!

I took Viagra instead of my anti Delusion pills……. Now I have big Ivory “staff” AND delusions!

Im sooooo happy!

Folks folks folks, just remember.
I’m brilliant, You’re all dumb.

BPOE is BPOE because “BPOE” lives here

#142 Dave From Calgary on 05.15.12 at 4:25 pm

TSX should be raising huge flags about the economic future of Canada. Massive head and shoulders pattern playing out.

#143 Renting in the GTA on 05.15.12 at 4:27 pm

Rent and Invest, that’s all I can say.

#144 jess on 05.15.12 at 4:39 pm

brainsail

Free rent in exchange for help around the house.
This service exists in the UK. The tenants are screened and matched through a social agency.

#145 MD on 05.15.12 at 4:41 pm

300000$ to 600000$ that’s 100% gain, but reverse it and it’s only 50% correction. Simple math.

#146 Tony on 05.15.12 at 4:47 pm

Re: #9 brainsail on 05.14.12 at 9:05 pm

The number one reason Canadians will die broke is the saying “well where are you going to live”. Remember that saying because everyone will be saying it as the reason Canadians will work until the day they die. There’s dumb, dumber and dumbest and then the line “well where are you going to live”. All the Canadians who dreamt of retiring rich will all remember someone telling them that line “well where are you going to “live” and thank them for talking them out of selling when they’re in their nineties and are still working.

#147 Dave on 05.15.12 at 5:13 pm

RE 131

Translation: expect immigration numbers to increase PLUS expect a greater proportion of high net worth immigrants.

Expect to see increases in property prices in Vancouver and Toronto. Expect rents to increase. Expect smaller houses…. For example, North Surrey has barely any building lots left. New 30 foot wide lots being introduced.

Good Luck.
…………………………………………………………………

There will be no increase in immigration numbers under this government. — Garth

************************************
Hmmm are you sure

http://www.thestar.com/news/article/777547–visible-minority-will-mean-white-by-2031

Yes, I’m sure. — Garth

.

#148 daystar on 05.15.12 at 5:14 pm

#112steev on 05.15.12 at 12:43 pm

Thanks!

#149 Junius on 05.15.12 at 5:18 pm

#131 TRT and #140 Stevenson,

This entire “we need immigrants for the coming job wave” rant has now been going on for years. It is pure bunk. There will be plenty of Canadians who will have to fill these jobs going forward. Expectations will adjust to the new normal which is that wages will be flat and jobs hard to find at a decent wage.

It is amazing how the Realtors are so easily persuaded by BS.

#150 Onthesidelines on 05.15.12 at 5:43 pm

#129 Cato said ” The late boomers had a winning ticket but through series of poor choices I believe is the generation that is truly screwed. ”

Being a somewhat late boomer ( 56) it seems to me that my generation has been screwed all along by the early boomers. Going as far back as elementary school, I distinctly remember having to study in temporary overflow shacks because all the classes were already taken. The same happened when we entered the job market: the early boomers had already taken the easy pickings and were going to remain there till death. What was left over for the rest of us was piddly in comparison, and we all had to fight for these crumbs among ourselves. No wonder this slice of the boomer demographic is so vulnerable … they’ve been holding the short end of the stick for most of their lives.

In my case, I left for overseas instead of staying in Canada to fight over the leftovers.

#151 Snowboid on 05.15.12 at 5:58 pm

#134 Questioning RE in Calgary on 05.15.12 at 3:40 pm…

“…tens of thousands of Mexican workers on a temporary basis…”

I don’t think that foreign workers, who send most of their earnings home, will help the Alberta housing market.

Since we already got out of the way of ‘ground zero’ we are okay – but AB and SK would be at the bottom of our move-to list (with apologies to all our friends and relatives who still live there)!

#152 NoName on 05.15.12 at 6:03 pm

#147 Dave on 05.15.12 at 5:13 pm

http://www.statcan.gc.ca/pub/12-581-x/2012000/pop-eng.htm#t03

Dave, star somewhat correct maybe Toronto region, but in Canada as whole visible minority will never surpass white. if all this visible minority bothers you, ma make pamphlets and start handing them around stating that white people should procreate more…

http://i45.tinypic.com/24bn2w0.jpg

#153 jess on 05.15.12 at 6:25 pm

138 TRT
re: s i n card fingerprinting /iris scanning e.g.India.

Fingerprinting or iris scan during 2011 census for UID scheme …articles.timesofindia.indiatimes.com › Collections › Nandan NilekaniCached
You +1’d this publicly. Undo
16 Oct 2009 – NEW DELHI: The upcoming 2011 census will see the government … or do an iris scan for the National Population Register that will come in handy for the ambitious. … including citizenship, Unique Identification Authority of India (UIDAI) … “I told you as part of NPR, they are going to collect data in our format

#154 VICTORIA TEA PARTY on 05.15.12 at 6:26 pm

#45 Smoking Man…

You forgot to mention China and its imploding economy.

Canada’s newest non-renewables customer is the scene of various popping bubbles of which some have been discussed on this blog lately.

Then there’s China’s chief trading partner, downtown Europe which, from an economic standpoint, has the hallmarks of April 30 1945 Berlin; to wit, a wreck.

Perhaps Big Ben can pull something out of his bag of tricks, because tricks is what it will take to keep the Dow from making a Titanic move south.

We sincerely hope for YOUR outcome, not mine!

#155 new-era on 05.15.12 at 6:28 pm

Note to China and everyone who buys debt. Don’t lend to people who can’t pay back otherwise you can lose it all!!!!

http://www.telegraph.co.uk/finance/financialcrisis/9268573/Global-lenders-face-killer-losses-on-Greek-debt.html

#156 new-era on 05.15.12 at 6:35 pm

Just watch greece and the herd mentality and you will see how fast things can happen. And how fast money can move. Greece is done!!

So for those cocky Canadians when the $$$hit hits fan bam!!!!

http://www.cbc.ca/news/business/story/2012/05/15/greece-europe-debt-crisis.html

#157 new-era on 05.15.12 at 6:43 pm

To apply: No SIN needed. Just a name and willingness to work for less.

You will be a chip in your forehead. — Garth
===================================

I hope the chip in my head will monitor my bowel movements!!!

#158 Arshes on 05.15.12 at 6:57 pm

Yes, Calgary is down from the peak. However the RE market has been more or less holding steady since ’09. Edmonton dropped and is still dropping because, lets be honest-who wants to live there? High crime rates and giant smoke stacks just to the east of the city dont appeal to many. One of the reasons that I dont think there will be much of a drop here is because while prices have appreciated greatly in the Toronto and Vancouver markets since ’09, Calgary has been relatively stable. You did not even address the migration of people from the economically depressed areas of the country to the provinces that are in desperate need of workers. There is so much work out here they are bringing in tens of thousands of Mexican workers on a temporary basis just to keep up. There isnt a great supply of houses in Calgary, and the demand is there. Ive been waiting for years hoping real estate would drop, but its time to face the facts. Places like Vancouver and the GTA are screwed, but Calgary might see a 10% haircut, but I cant see the average price dropping much below 400k.
———————————————————-
Arent Edmonton and Calgary linked? Edmonton is closer to the oil sands. I work for a company where 90% of our work is in Ft Mac. all the workers are here or Ft Mac, and all the Exec’s and suits are in Calgary. If Edmonton home prices are dropping in comparison to Calgary, maybe its a sign of things to come, not because Calgary is different.

#159 Devore on 05.15.12 at 7:11 pm

#125 Toronto_CA

Condos in the GTA are completely ridiculously priced by any standard, and the “condo fees” are completely out of wack with Vancouver and Montreal for the same maintenance inexplicably (3 to 5 times as much). I would love Garth to do some research on condo fees in the GTA and what is going on with those.

What is going on with those is that they are still too low. All those condo owners will be hit with special assessments in the future. Which tells you something about the condo fees in Montreal or Vancouver, as well as how massively overpriced condos are when you factor in maintenance.

#160 CalgaryBoy on 05.15.12 at 7:18 pm

I think Calgary will reach a new high this May! Average price for a house is at $507,213. $505,920 was reached in July of 2007! 2 more weeks and we’ll find out!

CREB says the average price in May is $447,891. — Garth

#161 Mr Buyer on 05.15.12 at 7:23 pm

#140 Stevenson on 05.15.12 at 3:57 pm
Immigration will increase according the policies in the works.
……………………………………………………………………….
This was part of the hype leading to inflation of prices during the expansion of the bubble without a doubt but little more than that. The actual dollars spent by so called immigrants is nowhere near a sizable enough proportion of the total dollars spent during the expansion of the bubble to sustain the bubble on their own and now are in fact irrelevant. While spending on real estate by immigrants likely did have a consequence in that it was used as part of the rationale behind brutally inflating prices during the expansion of the BUBBLE, the actual dollars spent are a very small proportion of total dollars spent (yet another smoke and mirrors aspect of this horrendous bubble). BUYER BEWARE. NOW IS NOT THE TIME TO BUY A HOUSE. SALES ARE FALLING ACROSS CANADA.

#162 J in Calgary on 05.15.12 at 7:27 pm

I am pushing my retired parents to sell now and come and live with me and my wife. I keep telling them, “imagine what you could do with that money”. They already have house in Arizona, paid cash, new SUV, paid cash, and all that money would make for an even better retirement. They already have more than enough for retirement but a few health problems could change all of this. I think that staying in their home too long, a few more years will greatly reduce the chance to sell high. I’m more than happy to have them at the house for six months a year and have them lock in the value of their house that they paid $26,000 for in 1971.

#163 Trailer Park Boys on 05.15.12 at 7:31 pm

Re BPOE and his Dope -legangers

Lets pass the beret and get Crowded ElevatorFartz a coupon for an “all you can eat” Mexican Restaurant.

Let er rip, light a match .and close the doors ASAP.

Like dis…..at 2:56 mark

http://www.youtube.com/watch?v=7Y2ZJY3hj7I

THX

#164 jess on 05.15.12 at 7:31 pm

Tuesday, 15 May 2012 10:06 By Nomi Prins, Nomi Prins’ Blog | News Analysis

CDX.NA.IG.9.

JPMorgan Chase Chairman Jamie Dimon, the Whale Man and Glass-Steagall

http://www.policyshop.net/home/2012/5/14/jpm-chase-chairman-jamie-dimon-the-whale-man-and-glass-steag.html

#165 Nostradamus Le Mad Vlad on 05.15.12 at 7:35 pm


“This is old. And useless. — Garth” — Great description of me!

#123 maxx — “Bang on…..add to that, deep, generalized fatigue from the entire decades-old, house-arama psychosis.” — Agreed. Tired, boring old nonsense. The Maple Laughs playing in summer is more exciting!

#141 BPOE’s BrainFart — Hmmm. The moniker’s a giveaway but, psychologically and psychobabbly, is BPOEBF correct?

After the monster 9.7 megaquake in a few weeks, when the Okanagan will be beachfront property while the wet coast sits with the sharks, that will be a much better time to ask!
*
Calculus of Unemployment Math will never be my strong subject; BDI Still in existence? 4:48 clip CNN wants this video removed, so here it is! Blind Faith 58%; French Triangle Menage a trois takes on a new meaning; Globalist Control No one controls us unless we let them; Ripley’s Believe It Or Not could run this headline; Venezuela “Wall Street seems to have forgotten that before you can take wealth from the people, you first have to make sure they have the means to create it! But when you gin up a huge debt through fraud, then send the jobs overseas to save a few pennies, the system is going to lock up, indeed already has locked up, and is inevitably on the path to total collapse. wrh.com; For Profit Prisons set to expand (where’s Harper?); Spaniards are as mad as hell; Greece, Spain and Italy Don’t cry for me, Argentina; Unsustainable Pensions.
*
6:42 clip Very interesting clip about 9-11. Pilots are not needed to fly planes, radio- or remote control can suffice. The truth shall set us free; Canada is still good for something, other than hockey and hooky; Lebanon “US, Israeli, and Saudi-funded terrorists destabilizing Syria now under fire in Lebanon.” Another country is swarmed; Astronomical WhiskerBe interesting if the asteroid crashed into Dimona at high speed; 3:17 clip Ron Paul has won eleven states now; India Superbugs mutate; The Real Iran; ‘Net Freedom and secret agenda being discussed this week; Vaccination Myths; Implementing beyond the border between Canada – US.

#166 Mr Buyer on 05.15.12 at 7:36 pm

Did I read this right? CREA has published data that sales are increasing relative to last year? Is this entirely true?

#167 Mr Buyer on 05.15.12 at 7:38 pm

#130 Market Bull on 05.15.12 at 3:25 pm
CREA stats, released today, for April, 2012.

“A total of 157,804 homes have traded hands so far this year, up 6.4 per cent from levels reported in the first four months of 2011 and about four per cent above both the five- and 10-year averages for sales during the first third of the year.” ~CREA.

Yeah, it’s all tumbling down somwhere, just not in Canada.

Where is this ever-so-elusive crash anyway?
………………………………………………………………….
Here is the post by this poster. Is this true? Did CREA release this data and is the data true?

#168 TurnerNation on 05.15.12 at 7:40 pm

RIM is the new Nortel! It’ll likely fall to a few bucks, before bouncing back to $10. Stay away. Choose from thousands of real, investment grade stocks. Some even pay a dividend. Div-i-dend.

#169 jess on 05.15.12 at 7:54 pm

see graphs
surplus vs deficit – 2007 plunge!
federal debt vs defense budget
top tax tate vs federal debt

http://truth-out.org/opinion/item/9141-why-we-have-a-deficit

#170 Onemorething on 05.15.12 at 8:08 pm

and that’s exactly why 15% off National Avg is a safe prediction and Garth can have a good chuckle and silent the nobs who come to this blog even deeper when it succeeds that and goes 25%.

This Supercycle is done, RE ownership will be a jail cell with a sentence many will never recover from. You have to walk the streets of Yanky Town to see what is really going on and these poor people were able to walk away.

As the boomers rush to the door for liquidity to stay alive, work until 80, debt outliving them, looking for handouts from children who were slaughtered in the first and second rounds of the downturn, there will be no relief.

We need that ugliness to happen so we find reality once again. It’s happened for 1000’s of years. Some are ready, most are not!

Good Luck!

#171 Ronaldo on 05.15.12 at 8:21 pm

#120 Daisy Mae – ”So why are Gen X and Ys blaming the ‘Boomers’? For what?”

For being born I guess.

#172 Ret on 05.15.12 at 8:25 pm

Re: #72 Rudolph

Along Lakeshore in Oakville /Burlington there has always been lots of RE signs out since Moses was in daycare, well at least since the mid-seventies.

Me thinks that a lot of these “owners” are professional flippers pretending to live like they really have money. If some sucker pays the outrageous price, they are up $3-400,000 for a relatively small interest cost at dirt cheap mortgage rates and they have had a place to flop for cheap.

Most are probably RE connected somehow so no or minimal commish. I notice that one or two firms control 90% of the high end listings. Price fixing? The same mansions are perpetually for sale for months on end.

#173 CalgaryBoy on 05.15.12 at 10:24 pm

CREB says the average price in May is $447,891. — Garth

That’s probably including the condo market.

http://www.findcalgary.ca/page_content-19.html

For single family homes, the average is ahead of the one Calgary set in 2007.

#174 Tony on 05.16.12 at 2:47 am

Re: #167 Mr Buyer on 05.15.12 at 7:38 pm

Very soon you’ll see every second or third house on every street in the major cities in Canada “under the power of sale” just like in America where you see the sign “bank owned”. The taxpayers will be on the hook for anywhere from 500 billion to one trillion dollars.

#175 Bob on 05.16.12 at 9:04 am

Meh…..the population in Canada will double in the next 20 years. Where are all the new immigrants going to live?

#176 maxx on 05.16.12 at 11:24 am

“Come the end of this year there’ll be new rules trashing HELOCs, killing cash-backs, forcing banks into more careful screening of borrowers and mortgaged properties and closely tying the size of a mortgage to the equity people have and their ability to pay. Imagine. The nerve.”

How times have changed. Back in 1992, after paying off our house in 4 years, we bought a cottage with a 32% downpayment. The balance was mortgage, with a lien to the paid-off house. The bank’s in-house mortgage “consultant” behaved as though she didn’t know us and that the bank was doing us an enormous favour. This is no word of exageration. Today, big finance can’t wait to get you indentured.
Debt is where the real economy money is now- but wait until rates rise with the relentless melt in jobs. Debt-stress levels will explode and stress is the largest (85 percent, per the CDC) contributor to human illness.

Real-people money is difficult to make and even more difficult to hang on to. Avoid and/or get out of debt now!

#177 maxx on 05.16.12 at 11:31 am

Sorry Garth, finger trouble on the last post. Re-posted to “Sit”.