Sit

“I’m a realtor in Toronto,” he says, “and I’ve been telling my clients since the beginning of the year to expect a big crash. No, I’m not telling them what to do, but I feel it’s my duty to inform them. Interestingly, 100% of the first-time buyers that I was in touch with (all with a small down payment) have decided not to buy.”

But, Uri Kogan says, homeowners are a tougher sell. “Most of them – some who have minimal equity as well – are either completely oblivious or just hope for the best. Even though a price adjustment of just 15% will probably force them to sell. How can they not listen?”

Easy, Uri. Most people who own houses would rather eat roofing nails than contemplate a market correction. Reading this blog alone causes cardiac arrest. So just imagine if they heard about Vlasios Melessanakis.

That dude’s just made some news after words he wrote for his employer – OSFI, the bank regulator cop – fell into the hands of a reporter. The number Vlas is throwing around as a possible correction? A withering 40%.

As you may know (because I keep telling you), the bank cop is about to do F’s dirty work through regulation instead of legislation. 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.

To some this is draconian stuff. Like Robert McLister, a mortgage broker and editor of Canadian Mortgage Trends, who whined about OSFI when the draft guidelines were published in March. In response, Vlas (the agency’s manager of policy development) wrote some stuff for internal consumption you might want to know about:

  • “Canada is not immune. Just because nothing happened in Canada in 2008 does not mean that Canada is not vulnerable to a housing correction now.”
  • “The market may break because the fundamentals are not sound (ie. overvaluation of homes), not because of OSFI guidance.”
  • Mortgage arrears, “can change fast. 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.”
  • HELOCS “have contributed significantly to growing overall household debt. This is not sustainable. If (or when) housing prices drop, households will be vulnerable.”

What this means, simply, is the banks’ regulator is serious. As McLister says, the changes coming down the pipe could have a dramatic impact on the market, slowing lending, restricting credit, eliminating many horny yet cashless newbie buyers and setting the stage for how the banks deal with the day prices plop.

Like now.

The latest numbers show what this miserable blog has been bleating about for months. Vancouver – the most oversexed market on the planet a year ago – is out of juice. The average selling price has plopped just a shade under 10% in the past year, down to $735,315. Sales have plunged in many hoods – and this is even before lending regs tighten, rates rise or Global TV leaves the Ladies Room  and discovers it.

Face it, the inevitable has commenced. Governments will not support a further bloating of the credit bubble. People without a load of equity in their homes are materially at risk. And, as I discussed yesterday, Boomers will soon be delivering their final, hideous, wrinkly revenge.

This will not be evident to your brother-in-law until he hears on TV the market’s tanked, tries to sell, and can’t. The condo collapse in Toronto will go unknown until no recovery’s possible. People will still be strutting around Calgary talking about the next housing boom, when it’s already over. And poor Saskatoon might get it by the time pelicans return to the weir.

People are so hard to train.

228 comments ↓

#1 East Van on 05.15.12 at 8:37 pm

http://www.theglobeandmail.com/report-on-business/economy/housing/vancouvers-real-estate-swoon-deepens/article2433053/

#2 Dylan on 05.15.12 at 8:38 pm

Doesn’t look good

#3 ShowbiZZa on 05.15.12 at 8:48 pm

FIRST signs of market sentiment turning with the MSM jumping on board. There is no turning back now.

#4 Jonny on 05.15.12 at 8:51 pm

THE UPPER UNIONVILLE RELEASE JUST STARTED AND THEY ARE DOING WEIRD CANDIDATE SELECTION PROCESS. THEY WANT PEOPLE TO FILL OUT THE APPOINTMENT REGISTRATION FORM ONLINE. BUT THEN THEY WILL DO A DRAW TO SELECT A CERTAIN AMOUNT (NOT EVERYONE) TO COME INTO THE OFFICE TO WRITE THE OFFER AND BUY. SO THERE IS NO GUARANTEE THAT I WILL BE CHOSEN EVEN THOUGH WE REGISTERED RIGHT AT 8:00PM YESTEDAY.

CHECK OUT THE CRAZINESS AT THE OPEN HOUSE LAST WEEK HERE
http://liveatupperunionville.com/emailer/z735-2012-05-11/index_04.jpg

THEY HAD THE OPEN HOUSE FOR A WEEK BUT NO ONE COULD BUY ANYTHING. THEY WILL DO A DRAW FROM THE BALLOT BOX TO SELECT THE FEW HUNDREDS OF LUCKY WINNERS. I HOPE THEY SELECT ME. I AM CHINESE AND I LOVE THAT CHINESE NEIGHBORHOOD!

#5 2deep on 05.15.12 at 8:55 pm

Garth, sometimes you claim Saskatoon will be hit hard and then other times you’ve said the topic is a snoozer because the average price is still around $300k (affordable compared to Toronto and Van).

Yes, the usual arguments of: it’s cold and no one wants to live here are correct but don’t deflect, what do you really feel is going to happen here?

Really want to know? — Garth

#6 J.I.M. on 05.15.12 at 8:57 pm

Calgary poised to become Canada’s hottest housing market – sez the CREA

I live in Calgary. Don’t you believe it. There is a whole lot of shadow inventory out here. Homes that are vacant, homes that are in default the bank or CMHC are not foreclosing on at present.

CREA did not say that. — Garth

#7 Maxamillion on 05.15.12 at 9:00 pm

I just purchased the refrigerator size nuclear reactor from Kodak for my bunker. I’m also installing high definition heating not that regular heating all you sheeple have in your press cornflake homes. I’m ready, are you?

http://www.ibtimes.com/articles/340825/20120514/kodak-nuclear-reactor-uranium-facility-bankruptcy-newyork.htm

#8 Steve Thompson on 05.15.12 at 9:00 pm

Here is an interesting article about Canada’s banking system and the housing market from Bloomberg:

http://www.bloomberg.com/news/2012-05-15/banks-not-immune-to-housing-related-failures-corporate-canada.html

Having been a customer of both the Northland Bank and the Canadian Commercial Bank and experiencing first-hand their implosion largely because of their concentration in Western Canada’s real estate market, the reality of a collapse of a large Canadian bank is frightening. While CDIC is there to protect depositors, should one of the Big Five collapse, CDIC would be powerless to protect all deposits.

No bank will collapse. — Garth

#9 Ferrari321 on 05.15.12 at 9:02 pm

More fuel for the fire in case you guys missed …
http://business.financialpost.com/2012/05/14/luxury-condo-glut-about-to-flood-toronto-housing-market/

#10 Scalgary on 05.15.12 at 9:03 pm

I already feel like a smartass…thanks for enlightening Garth….

Warm Regards…

#11 wes coast on 05.15.12 at 9:12 pm

Garth, what the hell are you going to write about once the crash happens? The MSM will be crowding you out will their ‘revelations’ that indeed there was a bubble. You will seem almost ‘main stream’. I dread the thought.

Then I have fun. — Garth

#12 Smoking Man on 05.15.12 at 9:13 pm

Garth t

hat house you had on here a month ago the shack that got bid up to 570K is back on the market.

Went to LCBO to stock up and did a drive by the lake

Remember the Realtor was bragging and betting about how many offers. Well guess the guy who bought it found away to walk.

Mind you 50% of the homes in Mimico and long branch by the lake are not even on mls. ALL SOLD with in days.

LOL

#13 gladiator on 05.15.12 at 9:14 pm

I got my popcorn ready.
Now, Garth’s blog posts will be even juicier: the wind is finally blowing into his sails. The only worry is that there’ll be too much such wind and it’ll sweep a good part of Canadians into profound misery which will affect all of us…

#14 Smoking Man on 05.15.12 at 9:17 pm

People are so hard to train.-Garth

They are even worse on trains

Just go to union station at 12:30 go to track 5 and watch all the track 6ers. The Dumb Herd.

#15 Smoking Man on 05.15.12 at 9:20 pm

#13 gladiator on 05.15.12 at 9:14 pm
I got my popcorn ready.
Now, Garth’s blog posts will be even juicier: the wind is finally blowing into his sails. The only worry is that there’ll be too much such wind and it’ll sweep a good part of Canadians into profound misery which will affect all of us…
……………………………………………

I wouldn’t worry about that to much, Track 6ers in this city are stubborn. Most will just de-list and make the inventory vanish like they did in the gloom and doom days of 2009, Keeping price steady

#16 Canadian Watchdog on 05.15.12 at 9:22 pm

“No bank will collapse. — Garth”

You’re right, because as of April 30th, a few Canadian banks just joined New York Fed repo window to tap more quick cash. Yet again proving who is really buying their mortgages backed securities.

http://www.newyorkfed.org/markets/expanded_counterparties.html

Bloomberg: http://i41.tinypic.com/2dbv6gg.png

All lies Garth.

No bank will collapse. What part of that do you not understand? — Garth

#17 East Van on 05.15.12 at 9:22 pm

Obama got a Nobel Peace Prize for doing – well nothing, so Garth should get at least an Order of Canada award for educating the public and posting funny pictures. Hell, even Conrad Black has one.

#18 Raj on 05.15.12 at 9:23 pm

“It happened twice in the last month. One [deposit] was $75,000 and one was a $20,000 deposit, the guys just walked away from it,” said Mr. Arora, who runs Oneflatfee.ca in Surrey, B.C. “They are going to wait it out. So they lost $75,000 and $20,000, but if the market comes down $150,000 on a $1.5-million house, that’s not uncommon.”

Interesting !

http://www.theglobeandmail.com/report-on-business/economy/housing/vancouvers-real-estate-swoon-deepens/article2433053/

#19 Smoking Man on 05.15.12 at 9:33 pm

Wana know why the USA is so broke.

2 Taliban fighters out in a field.

They shoot 20 Hell fire missiles at em. 20 x 68k that is 680K per Taliban head.

Not making it up count them

http://www.liveleak.com/view?i=28e_1337103425

Cost of Hell Fire
http://en.wikipedia.org/wiki/AGM-114_Hellfire

Unreal

#20 Inglorious Investor on 05.15.12 at 9:34 pm

Will Toronto be the ultimo hombre in a nation-wide RE collapse? Or will prices in the 416 keep rising faster than inflation and faster than the economy forever because people with money from all over the world are just aching to live here? I don’t know; we’ll see.

In the meantime the mania continues. Especially in multi-family.

Two recent listings from my agent: Both multi-unit blocks. Both sporting serious negative cashflow and cap rates not even scraping the underside of 4%, when the mortgage rate is around 5.5% and inflation is, well, who the hell knows what inflation really is. I do know that these types of units have increased by 30 to 50% over just the last few years.

The talk around town is, you better put your money into real estate because there’s nothing else good to invest in anymore. Is it wise to chase the same assets everyone else is chasing? I dunno. Ask the Japanese who were plotzing over plots circa 1990.

#21 blase on 05.15.12 at 9:41 pm

The Greek guy said, “Canada is not immune. Just because nothing happened in Canada in 2008 does not mean that Canada is not vulnerable to a housing correction now.”

My mother’s condo dropped $60,000 from October 2008 to Feb. 2009 when the Bank of Canada set emergency rates. The banks also got a 100+Billion bailout, bigger than the U.S. one.

Something did happen in 2008, it’s called moral hazard. Thanks Canadian Taxpayers for the bailout!

#22 Johnny5 on 05.15.12 at 9:41 pm

Yes Garth!!!
Me and “2Deep” wanna know your opinion on Saskatchewan house prices and where they may be headed. Here in Regina and in Saskatoon the RE hype is unbelievable… All the rockstar realtors and aggressive billboards a guy can handle… Billboards that don’t ask for my business but tell me that I “MUST BUY REAL ESTATE NOW!!!!!!!” Your opinion will be much appreciated. Thanks.

#23 Steve on 05.15.12 at 9:43 pm

1) people are hard to train.

2) no major Canadian bank will collapse

Wait… what was 1)? umm, should we worry about banks? Wait, which day and time and by how much will RE drop? … Are the banks ok?

Ok, enough of that silliness. Please make like an old school IBMer, and Think!

If 4 of our banks are in the top 6 in the world, it seems pretty clear we should be more worried about the boomers than the banks failing … at least when it comes to impact on RE.

#24 thinker on 05.15.12 at 9:47 pm

Uri and others are simply wrong – NO CAN BE FORCED TO SELL A HOUSE, THESE ARE NOT STOCKS ON MARGIN. THE HOUSE IS THE BEST DEAL, 20X LEVERAGE AND NO MARGIN CALL. AS LONG AS YOU MAKE THE PAYMENTS, YOU CAN LIVE IN IT AND BE FINE.

This point must be made across to the housing bears. FOCUS ON IF PEOPLE CANNOT MAKE THOSE PAYMENTS, JOB LOSS, ETC. CANADA JUST PRINTED THE BEST JOB DATA IN 30 YEARS, PEOPLE ARE WORKING AND PAYING BILLS.

YOU ARE ALLOWED TO HAVE DEBT, AS MUCH AS YOU WANT. AS LONG AS YOU CAN SERVICE IT, NO ONE CARES. ITS ABOUT JOBS PEOPLE.

Secure people don’t yell. — Garth

#25 X on 05.15.12 at 9:48 pm

I thought it was funny how the article mentioned F had made 3 mortgage tightening measures to make things better. Too bad they didn’t mention that F was the one who loosened them in the first place.

Even if the RE market does begin to correct this year. I do hope that OSFI puts proper regulations in place that protect both lenders and the unknowing public, regardless of pressures from the market, lenders and builders.

#26 Aussie Roy on 05.15.12 at 9:48 pm

Aussie Headlines

Emotion, it helps drive house prices and it’s fickle.

The Reserve Bank has flagged concerns about falling house prices as one of the chief reasons Australians have gone cool on the real estate market.

http://www.smh.com.au/business/job-security-falling-prices-dent-housing-demand-rba-20120515-1yod2.html

Not hard to understand why Aussies are concerned, we are, a very over leveraged, de-industrialised service economy, totally dependant on mining (read China) and of course, selling our RE to greater fools.

Further proof of the nervous and skittish nature of local consumers has been laid bare with a new survey from The Boston Consulting Group showing Australian shoppers are among the most worried and financially insecure in the developed world, and plan further cutbacks in their discretionary spending.

http://www.theage.com.au/business/local-shoppers-in-crisis-mode-20120515-1ynz9.html

#27 Mark on 05.15.12 at 9:51 pm

Yes, the usual arguments of: it’s cold and no one wants to live here are correct but don’t deflect, what do you really feel is going to happen here?

For starters, BHP is likely to pull the plug on their Jansen potash mine project. At current prices it is uneconomic. Many potash mines in Saskatchewan are shut down and a very low cost solution mining project is being built near Moose Jaw to drive even more supply into the oversupplied market.

Other prominent Saskatoon firms that were one high-flying are going belly up. Eric Cline recently left Shore Gold and has joined K+S….look at Shore Golds’ stock price.

#28 blase on 05.15.12 at 9:52 pm

Garth,

How about a post explaining how Canadian banks are different than Irish, Icelandic, Spanish, Greek, Korean, Thai, banks.

Here’s my take on it. You have Canadian banks that had to be bailed out in 2009. You have Canadians that will experience what Americans have experienced for the last 6 years. Spending and lending will crash, foreclosures and people going into arrears will skyrocket. How will this not seriously affect the bottom-lines of the banks?

I get that the government is backing the banks through CMHC, which will likely go the way of Fannie and Freddie; but do the banks really have no skin in the game? Is it really that rigged, that banks can make a trillion dollars worth of bad loans (also HELOCs) and just walk away?

#29 FTP - First Time Poster on 05.15.12 at 9:56 pm

I would like to stand and do the slow starting movie clap for you Garth. It’s tough being right…..eventually. A 40% haircut would put us back to square one minus CMHC the wifey paid before hitchen her wagon to this A&F beefcake. We want to move, but i’ll wait for the dust to either settle or for a sucker.

#30 Mark on 05.15.12 at 10:04 pm

but do the banks really have no skin in the game? Is it really that rigged, that banks can make a trillion dollars worth of bad loans (also HELOCs) and just walk away?

Yes, its that bad. Actually it is worse because the government probably will ask the banks to lend them the money to bail the CMHC out.

#31 Strataman on 05.15.12 at 10:04 pm

#9 No bank will collapse. — Garth

I agree but what about a credit union like VanCity? Heloc capital of Canada?

#32 TaxHaven on 05.15.12 at 10:08 pm

“Governments will not support a further bloating of the credit bubble.”

“…the bank cop is about to do F’s dirty work through regulation instead of legislation. 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.”

Austerity through the back door! How like a politician.

So can we take it you have recanted your prediction of an imminent rate rise…?

Where did I say imminent? A quarter point in Q4 is still reasonable. More in 13. — Garth

#33 PoorgEoisie on 05.15.12 at 10:10 pm

Smoking man, for the love of Pete the train arrives on one track, it cannot arrive on tracks 5 and 6 at the same time unless it has derailed. At any rate, I’ll let security know not to bother the old guy giggling to himself..

#34 Aussie Roy on 05.15.12 at 10:15 pm

thinker on 05.15.12 at 9:47 pm

This point must be made across to the housing bears.

YOU ARE ALLOWED TO HAVE DEBT, AS MUCH AS YOU WANT. AS LONG AS YOU CAN SERVICE IT, NO ONE CARES. ITS ABOUT JOBS PEOPLE.

…………………………………………………………………………..

Are you trying to help prove, that it’s manly debt that has driven house prices?, if so, Great job.

I would just remind you of some recent US history, that house prices starting falling before unemployment started to rise.

Bursting house bubbles cause rising unemployment, don’t take my word for it, check out the employment and house price data from, Spain, Ireland, Australia and other failed or failing RE bubbled markets.

On behalf of all us bubble heads, thanks for sharing your thoughts (beliefs), as usual your theory is easily disproved with a little data.

Is a debt bubble fully expanded when people try to tell you, “debt doesn’t matter?”.

Might see if I can find some data – lol.

#35 FI Guy on 05.15.12 at 10:19 pm

” “No bank will collapse. — Garth”

You’re right, because as of April 30th, a few Canadian banks just joined New York Fed repo window to tap more quick cash. Yet again proving who is really buying their mortgages backed securities.

http://www.newyorkfed.org/markets/expanded_counterparties.html

Bloomberg: http://i41.tinypic.com/2dbv6gg.png

All lies Garth.

No bank will collapse. What part of that do you not understand? — Garth”

****

I agree, the banks are so well capitalized and such a large portion of the higher-risk res mtg book is insured (guaranteed by gov), they will not “collapse”. I think what will likely occur is less income (perhaps even 1 year of losses), issuance of capital, cutbacks, etc, but not a collapse of a sch I bank.

Ironically, I don’t think that credit will be the main issue for the banks. Liquidity will be. If the res mtg market falters, nobody will want our AAA rated MBS, CMB or even uninsured covered bond issuances. This alone will drive up res mtg interest rates as funding costs rise. Liquidity.

I think that it is obvious that the insurers (Genworth, CMHC) are likely to be the ones that will completely collapse. They only hold 1-2% of equity relative to the notional value of their mortgages, and they will likely need to record significant accounting losses in excess of originally recorded policy liabilities as a result of a “fat tail” event like delinquencies doubling to > 1%. Obviously, since the insurance is 100% (CMHC) or 90% (genworth) guaranteed by the Cda Gov, limited risk to the banks for those insured mortgages.

#36 jess on 05.15.12 at 10:25 pm

egregious mistakes on credit reports

…”investigated 30,000 consumer complaints filed with the Federal Trade Commission and attorneys general in 24 states that alleged violations of the Fair Credit Reporting Act by the three largest credit-reporting agencies in the United States — Equifax, Experian and TransUnion.

Nearly a quarter of the complaints to the FTC and more than half of the complaints to the attorneys general involved mistakes in consumers’ financial accounts for credit cards, mortgages or car loans. Houses sold in bank-approved “short sales,” at less than the value of the mortgage, were listed as foreclosures. Car loans that had been paid off were reported as repossessions. Credit cards that had been paid off and closed years earlier showed as delinquent…

…More than 5 percent complained to the FTC and more than 40 percent to the attorneys general that their reports had basic personal information listed incorrectly: names, Social Security numbers, addresses and birth dates. An Ohio man said his report identified him as having been a police officer since 1923. He was born in 1968. A woman in her 60s said that her credit report listed her as 12 years old.” read more

http://www.dispatch.com/content/stories/local/2012/05/06/credit-scars.html

#37 harden on 05.15.12 at 10:29 pm

“This will not be evident to your brother-in-law until he hears on TV the market’s tanked, tries to sell, and can’t.”

LOL!

Had a peek at a few Van West open houses over the weekend, figuring some of the new listings under appraised value might hold interest. Crickets.

#38 Karie on 05.15.12 at 10:29 pm

I always find myself compelled to read this blog which I find so interesting. The comment section is getting so annoying. I can’t stand how smug and self-righteous many of these renters are. Giving friends who are home owners advice like they have some kind of super power knowledge. I can just picture them shrugging their shoulders and smirking at dinner parties when the conversation is about real estate. They come across as very jealous of home owners and seem to be excited to see people’s wealth drop. How sad. I hope to never be a renter. You are always at someone else’s mercy. You can’t have the house the way you want it, have to get permission to change anything or add to it and why would you – it’s not yours. The owners can sell whenever they want to and leave you struggling to find something else in the neighbourhood. I will never ever believe in renting. I believe in diversifying, living below your means and having at least a 25% downpayment for a home. Our mortgage is due to be paid off in 8 years, so glad I haven’t rented since my mid twenties. Best financial decision we ever made!

Tell us again how you hate smug and self-righteous people. — Garth

#39 coastal on 05.15.12 at 10:31 pm

Sounds like F has been smoking the high grade. He’s got OSFI doing his dirty work unwinding his previous 40 year dirty work, then wants EI claimants to drive taxi with a degree or suck it. When this house of cards collapses soon those low level jobs will be all gone, taken by the young and dumb who bought into the Cons fairy tale of everyone’s right to max the crap out of ones financial future. Sounds like future anarchy setting up, not a brilliant political strategy there F, he should be made to pee into the bottle.

Meanwhile the west coast is still awash in agents stroking the condo developers as some sort of financial gods to the masses and Asian imports.

#40 Canadian Watchdog on 05.15.12 at 10:31 pm

“No bank will collapse. What part of that do you not understand? — Garth”

What part don’t you get? Household debt and mortgages (MBSs) are banks’ assets, therefore, if prices decline and consumers fail to make debt payments, bank assets decline.

Go down the list below and see which banks have the lowest capital to assets ratio (leverage). http://data.worldbank.org/indicator/FB.BNK.CAPA.ZS

If one or two banks don’t go broke, the government will. Take a lesson from Europe and understand that leverage applies to consumers, businesses and yes Garth, the banks too.

Your flummoxing changes nothing. None of the big Canadian banks will fail. Stop scaring the other squirrels. — Garth

#41 Dontcallmeshirley on 05.15.12 at 10:32 pm

@FI Guy,

I agree, the banks are so well capitalized and such a large portion of the higher-risk res mtg book is insured (guaranteed by gov), they will not “collapse”. I think what will likely occur is less income (perhaps even 1 year of losses), issuance of capital, cutbacks, etc, but not a collapse of a sch I bank.

—-

As things get a little tighter, marginal non-bank lenders will consolidate, pull back, outright leave the market. Their market share flows back to sch I banks.

Those banks are in a great position.

#42 Not 1st on 05.15.12 at 10:33 pm

I don’t think anything can stop the strutting around cowtown, even a RE correction.

#43 XKR on 05.15.12 at 10:46 pm

at #26 thinker. “20X…and no margin call”. That is about to change if new proposed OSFI rules requiring requalification on renewal are enacted. Those rules will be a defacto margin call. ie. In the event of your home’s price decline if you can’t post additional funds to bring your new LTV onside you will be required to sell.

#44 45north on 05.15.12 at 10:54 pm

East Van: from your link: Mr. Hasman said money flowing out of China has slowed considerably and Canadian banks have also tightened their mortgage lending rules, especially on larger loans commonly associated with high-priced real estate.

BPOE where are you? I thought that an endless stream of wealthy Chinese were lined up to pay cash?

Raj: East Van posted the link first.

Timing is Everything: The condo collapse in Toronto will

go down in history.

pretty funny

#45 Canadian Watchdog on 05.15.12 at 10:54 pm

“Your flummoxing changes nothing. None of the big Canadian banks will fail. Stop scaring the other squirrels. — Garth”

That’s right Garth, you saw it. 4.6% of capital backing $3,635,260,543,000 as of one hour ago by OSFI’s latest data. http://i48.tinypic.com/auf679.png

I think you’re too smart to believe some of the things you refute. I’ll leave it at that.

And you are too smart to suggest a Schedule 1 bank would be taken out. For a guy who posts very useful links here most of the time, this surprises me. — Garth

#46 Robo Monkey on 05.15.12 at 10:58 pm

Last week I spoke with a new home developer’s representative. Their current phase of homes will start to close starting in April or May of 2013 although they haven’t started building the subdivision yet. When I asked for a potential worst-case date, she couldn’t answer but she said that they will raise the prices between now and then and that I can sell my current home later for a higher price than today. Buy low now, sell high next year. This is on a ~$450000 house in SW Cambridge with a lot size of 40′ x 104.9′. I didn’t ask if the price increases were guaranteed in writing. She also said that the builder would not do any negotiating due to market conditions. This trend has got to end soon.

#47 jess on 05.15.12 at 11:02 pm

May 15 (Bloomberg) — A video of 12-year-old Victoria Grant giving a lecture at a recent Public Banking Institute conference has spread via the Internet. In it, Grant talks about the history of the Canadian banking system and the effects of ‘collusion’ between governments and financial institutions. Video courtesy of Public Banking Institute. (Source: Bloomberg

This will not be posted here again. — Garth

#48 Smoking Man on 05.15.12 at 11:04 pm

#35 PoorgEoisie on 05.15.12 at 10:10 pm
Smoking man, for the love of Pete the train arrives on one track, it cannot arrive on tracks 5 and 6 at the same time unless it has derailed. At any rate, I’ll let security know not to bother the old guy giggling to himself..

Look PoorgEoisie I just refuse to use the word Platform, it congers up images of dwarfs in big shoes. Plus Track 6er sounds way collier than Platform 6er.

Picked up on the cryptology in your post. When we going for a beer across the street?

#49 Furst on 05.15.12 at 11:05 pm

Garth and I are BFF’s or best friends forever…..FURRSSSTT!!!

#50 BC Bring Cash on 05.15.12 at 11:12 pm

Lets say for example you suffer the death of a spouse who is listed in your mortgage contract as co debtor. The Bank can call in the mortgage regardless of your ability to keep making the payments. The Banks have always had the option of demanding a cash settlement. Try and find a lender upon these circumstances. When the rules change it will affect a lot borrowers even more. Been there and done that. Upon the death of the spouse the contract is null and void. Just one example of a disaster in the making.

#51 hehe on 05.15.12 at 11:12 pm

a shout out to PoorgEoisie, nice post :)

Smoking Man reminds me of my younger brother, who was always going on about how smart he was. He got the nickname “Mr. Smat”.

Because of what he wrote one day; “I know more than anybody, I am Mr. Smat”.

I still think Smoking Man is a pimply-faced teenager in his mom’s basement, with a hankering for bad old classic rock.

#35 PoorgEoisie on 05.15.12 at 10:10 pm
Smoking man, for the love of Pete the train arrives on one track, it cannot arrive on tracks 5 and 6 at the same time unless it has derailed. At any rate, I’ll let security know not to bother the old guy giggling to himself..

#52 Canadian Watchdog on 05.15.12 at 11:13 pm

“And you are too smart to suggest a Schedule 1 bank would be taken out. For a guy who posts very useful links here most of the time, this surprises me. — Garth”

I’m having great difficulty understanding how you see a way around the debt solution. If you’re assuming the government will bailout the banks (which is likely), then outstanding debt will be booked on the government’s balance sheet—increasing debt-to-GDP which is nearing the 90% Rogoff and Reinhart point of no return.

They can shift debt around all they want, but it will always remain in the system on someone’s balance sheet—growing exponentially as rates rise. I’ve explained my point with some facts and figures. Please explain yours if you care to.

#53 george on 05.15.12 at 11:19 pm

No bank will collapse. — Garth

Garth. Your aforementioned comment reminds me of some of the famous quotes made during the last great depression.

1927-1933 Chart of Pompous Prognosticators

#54 David Oliver-Godric on 05.15.12 at 11:22 pm

No bank will collapse. What part of that do you not understand? — Garth
Head shaking. While our banks are much better regulated than the US banks, the collapse of the quadrillion dollar derivative house of cards will be a world changer. The unimaginable amounts of money involved in these complex, international funds of funds of funds will shake the world economy. The average exposure of a major US bank is around 50 TRILLION dollars. JP Morgue has cracked the smoked glass over this issue. Don’t tell me that Canadian banks haven’t been playing. The real estate bubble is peanuts compared to derivatives.

#55 daystar on 05.15.12 at 11:28 pm

#37 FI Guy on 05.15.12 at 10:19 pm

Couldn’t have said it better myself. (not sure I could have said it as well either :)

#56 Smoking Man on 05.15.12 at 11:31 pm

DELETED

#57 ANONYMOUS on 05.15.12 at 11:33 pm

Take a look at this 3-year chart:

http://stockcharts.com/h-sc/ui?s=$CDNX&p=D&yr=3&mn=0&dy=0&id=p48973995572

Its a chart of the TSX-Venture index, something that usually contains lots of resource stocks. Usually when the world economy is heading into the toilet, this stock usually shows it by falling the way that it has been lately.

So from this one chart, I would safely say that Canada’s next recession will begin some time within the next 12 to 18 months, almost guaranteed.

As for the OSFI regulations:
Look at it this way, most people sell their houses and move every 4 to 6 years, that’s about 4 in 5 move often like that. So if these OSFI regulations are correct, then about 80% of all home owners will be under the gun in the next 6 years, 100% guaranteed !
And for many of these people, it will be painful indeed.

I don’t think that home prices will fall, instead I think that people will stop spending on food and clothes just so that they can pay their extra mortgage costs when it comes due, and THAT is another thing that is going to help bring about this new recession in the next 12 to 18 months.

The other thing that will bring about the recession is the all but complete evaporation for our commodities and exports to foreign markets, that will in turn cost us lots of jobs, something that usually leads to recessions.

#58 Smoking Man on 05.15.12 at 11:35 pm

#52 hehe on 05.15.12 at 11:12 pm

You missed it completely

#59 McExpat on 05.15.12 at 11:37 pm

@#40 Karie
Garth, you took the words right out of my mouth. Karie darling why does it bother you so? If you have put 25% down, have a diversified portfolio and due to have the mortgage gone in 8 years what does it matter what any renter says? Sorry but the sentiment is, and has been, much worse in the other direction. We rent, not because we don’t want to buy a house some day but because, for us, it was the smart financial decision and it made sense from an employment perspective as well not tying ourselves to one place. We could buy a house outright in most major centres in Canada right now but we don’t because why would we place the bulk of our wealth in an asset that is just teetering on the fence. Trouble is, everyone thinks we are either poor or stupid or both. The granite/ stainless steel cult is MUCH bigger than the renter cult (for now) and we have had buying crammed down our throats. I can’t be bothered to explain or do the math for anyone else at this point.

#60 Mister Obvious on 05.15.12 at 11:38 pm

#40 Karie

Owners have been treating renters like lepers for many years. Especially in here in Vancouver. There’s no need to get huffy just because the worm is finally turning.

Get over it. Your day might come again. Maybe.

#61 Mr Buyer on 05.15.12 at 11:41 pm

I am more than a little stunned by the assertions that home sales have edged higher….

http://www.crea.ca/content/canadian-home-sales-edge-higher-april

At the risk of sounding like a sour puss I am highly suspicious of these assertions as I have been getting a highly informal and far less than random sampling from boots on the ground across Canada indicating a fall in sales. Data prevails over theory in my mind but I am left wondering about the data. This point is important for calling the top of the bubble and sales drops traditionally come before the crash following bubbles. In any event the end is upon local markets for sure but I was under the impression it was more or less nationwide with the exception of 416. I do not have the time to hunt down data and analyse the stats. So I will leave this to anybody else that has time and ready access to data. Stunning, absolutely stunning. I will go lower case until I acquire new data…Buyer beware. Now is not the time to buy a house. The market has topped.

#62 hehe on 05.15.12 at 11:45 pm

Hey Smoking Man, I am not sure what I missed completely?

Is it the part where you talk down to everyone about how dumb they are?

Or is it the Track 5 vs Track 6 thing?

Or is it how good you are at gambling?

Sorry dude, you just sound like a windbag, or a parody.

#63 Joseph [Original] on 05.15.12 at 11:54 pm

Here is a summary article of a NY Times piece:

Investors are shunning the stock market because of distrust as well as fear.

Investors aren’t keeping their money out of stocks just because of recent asset bubbles and stock market crashes. Scandals and the slow, uncertain pace of financial reform, as shown by the recent $2 billion trading loss at JPMorgan Chase, have destroyed their trust in stocks, the NY Times asserts in an editorial.

Stock prices have largely recovered from their lows three years ago, but trading volumes haven’t, the Times points out. Average daily trades in April were 6.6 billion — about half the volume four years ago. In previous cycles, trading usually recovered much faster.

Although investors put $52 billion into stock mutual funds from 2004 to 2007, they reversed course and have withdrawn more than $400 billion since 2008, the editorial notes.

Investors feel the stock market is unfair to them, according to the Times.

For instance, brokers are supposed to find the best price for them. Yet with stock exchanges giving brokers rebates in return for their business, brokers may be more motivated by rebates than the best price.

Former SEC economists, the Times says, have stated that “in other contexts, these payments would be recognized as illegal kickbacks.”

For complete article, please read:

http://www.newsmax.com/StreetTalk/Fear-Distrust-Investors-Stocks/2012/05/15/id/439143

#64 wes coast on 05.15.12 at 11:55 pm

All this talk of bank failure… In a free market economy where there was no fed pulling the levers maybe a Canadian bank would fail (not a bad things as a free market would allow for many banks). Not with the current system. CMHC will fail and when they can’t cover their obligations to the bank the government will step in with a bailout to cover the obligation. The banks in Canada are systemically important to our fractional reserve system – they are an extension of the BoC. (This is how I understand it at any rate – I am open to being corrected)

Upon the bailout I’d like to see current shareholders and bondholders take the hair cut and the banks that get bailed out with taxpayer dollars issue new shares that the tax payer owns and can later sell off when the situation stabilizes. Considering how many pension plans have investments in these banks – this is also unlikely.

Ambiguously yours,
W.C.

#65 TRT on 05.15.12 at 11:56 pm

If you are in the Working class, please read the link.

If you are in the Non-working class, don’t because apparently “I’ll be a chip in my forehead.”

If you are an Immigration lawyer (Junius), please don’t comment on my comments.

http://www.thestar.com/news/canada/politics/article/1178645–conservatives-wage-model-will-hurt-all-workers-unions-say

#66 truth hammer on 05.15.12 at 11:59 pm

Commercial Property taxes so high that even the rich are moving rag stores into Richmond condo’s.

http://www.vancouversun.com/news/Vancouver+private+couture+showroom+aims+very+rich/6627278/story.html

I hope the security is exceptional for these people that are bosting $60,000 watches. During the Olympics the Province ‘relocated’ a great many ‘problem people’ out to the metro communities to get them out of the public eye of the world press. The downtowm core of Richmond has gone urban…….junkies and staggering crime increase overall.

If the junkies get into the parking lot…..they’re in the building……if they’re in your building they are coming up the elevator and putting a knife to your throat…..without the notice the public would have if it happened on a ground level retail store. I hope no rich HAM housewives or store clerks….male or female get raped…..crack addicts aren’t that particular when they tweaking and highly sexed.

#67 Carpe Diem on 05.16.12 at 12:01 am

This blog is fun to read. Best enterainment around. I love all you dogs and the big dog.

On that note,

#7J.I.M. on 05.15.12 at 8:57 pm
Calgary poised to become Canada’s hottest housing market – sez the CREA

CREA did not say that. — Garth

———————————–
I imagine JIM got the info from:

http://www.theglobeandmail.com/report-on-business/top-business-stories/why-calgary-could-become-hottest-housing-market-again/article2433285/

Since he’s unable to read I’ll translate Garth’s comment.

The person in the article that did state this is Robert Kavcic.

http://www.bmonesbittburns.com/economics/profiles/rkavcic/

Who is the source of this comment … Looking at the writeup from BMO that is extremely boring + graduated from minor canadian universities and no real achievements as an Economist … wow!

#68 TRT on 05.16.12 at 12:06 am

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

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

Tell Kenney that…cause i don’t think he knows it.

http://www.theglobeandmail.com/news/national/time-to-lead/canada-ready-to-open-its-doors-to-more-immigrants-kenney-says/article2433975/

#69 LS in Arbutus on 05.16.12 at 12:17 am

#40 Karie

Tell us again how you hate smug and self-righteous people. — Garth

———————
OMG – too funny! Yeah tell us!

#70 Aussie Roy on 05.16.12 at 12:20 am

Aussie Headlines

Banks and the ongoing Aussie “Minsky moment”.

Sydney-based St Hilliers said it had called in administrators after a dispute over the funding for the project dragged on.

“We have over a number of months explored and exhausted all possible avenues to recapitalise the construction business and find a solution to the significant cost and time overruns”.

http://www.theage.com.au/business/st-hilliers-placed-in-voluntary-administration-after-jail-break-20120516-1yprv.html?rand=1337125243223

Building products group CSR fears Australia’s housing construction industry will remain in the doldrums in the year ahead.

The company made the comments this morning as it announced its net profit fell to $76.3 million in the year to March 31 from $503.4 million the previous year.

http://www.theage.com.au/business/csr-sees-weak-housing-market-ahead-20120516-1ypv1.html?rand=1337125552337

Sorry Ken, Australia is no safe haven

FORMER Treasury secretary Ken Henry says the eurozone is highly unlikely to survive, and he never believed the troubled currency union would work.

The top economic adviser to successive governments also said it had become far more difficult for politicians to make people ”feel good” by raising benefits, in contrast to the Howard government’s challenge of how to spend the ”huge amount” of mining boom revenue.

http://www.theage.com.au/business/eurozone-unlikely-to-survive-says-henry-20120515-1ypdl.html#ixzz1uzwhxTAn

#71 VancouverJoe on 05.16.12 at 12:24 am

#To Smoking Man

“2 Taliban fighters out in a field.
They shoot 20 Hell fire missiles at em. 20 x 68k that is 680K per Taliban head.”

Huge underestimation.

Just 10 bearded highlanders with Ak-47 can keep the whole US army busy 24/7 for years, including aircraft, space communications, CIA, government, tons of bosses of all kinds, in short many many highly paid folks.

#72 Aussie Roy on 05.16.12 at 12:25 am

China

China’s slowdown may deepen as policy makers unwind the excesses of a record credit boom while only gradually increasing stimulus, leaving 2012 growth at the weakest in 13 years, Pacific Investment Management Co. says.

“The economy is unlikely to bottom until the third quarter,” Ramin Toloui, Pimco’s global co-head of emerging markets portfolio management in Singapore, said in e-mailed comments May 13. “Policy makers will progressively turn the dial toward more stimulus, but not in the aggressive manner of 2009,” restrained by the goal of tempering the credit-fueled property market, he said.

Even the communists know “a credit-fueled property market”, when they see one.

Wonder how you say bubble in Mandarin.

http://www.businessweek.com/news/2012-05-14/china-growth-seen-at-13-year-low-by-pimco

#73 Mixed Bag on 05.16.12 at 12:41 am

Hm … would the Canadian banks & politicos really repeat what happened in the U.S., after witnessing the after-effects first hand? Are they really that dumb? I can’t believe that…

If there is some behind the scenes maneuvring to move onto the next crop of plebes (Canada) to hoodwink after going through the American banking system, well, as conspiracy-theory sounding as it is, I wouldn’t dismiss it outright anymore.

#74 Investx on 05.16.12 at 12:43 am

No bank will collapse. — Garth

————————————

It’s different here.

#75 Winterpeg on 05.16.12 at 1:02 am

People will still be strutting around Calgary talking about the next housing boom, when it’s already over. And poor Saskatoon might get it by the time pelicans return to the weir. ….

Any thoughts on Winnipeg? I think we are way over priced here. No potash boom or oil here.
Not a huge condo surge that I can see, but lots of apartment conversions to condos. (Keeping the vacancy rates at < 1%., and hence, rents high) Successful immigration programs, for now, also a factor in low home availability.

Having said that, I don't think we're immune from real estate craziness.

#76 Soylent Green is People on 05.16.12 at 1:07 am

OTTAWA—A study released today by the Canadian Centre for Policy Alternatives (CCPA) estimates the previously secret extent of extraordinary support required by Canada’s banks during the financial crisis.

According to the study, by CCPA Senior Economist David Macdonald, support for Canadian banks reached $114 billion at its peak—that’s $3,400 for every man, woman, and child in Canada.

“At some point during the crisis, three of Canada’s banks—CIBC, BMO, and Scotiabank—were completely under water, with government support exceeding the market value of the company,” says Macdonald. “Without government supports to fall back on, Canadian banks would have been in serious trouble.”

Between October 2008 and July 2010, Canada’s largest banks relied heavily on financial aid programs provided by the Bank of Canada, the Canada Mortgage and Housing Corporation (CMHC), and the U.S. Federal Reserve—all at the same time.

Over the entire aid period, Canada’s banks reported $27 billion in total profits between them and the CEOs of each of the big banks were among the highest paid Canadian CEOs. Between 2008 and 2009, each bank CEO received an average raise in total compensation of 19%.

“The federal government claims it was offering the banks ‘liquidity support’ but it looks an awful lot like a bailout to me,” says Macdonald. “Whatever you call it, Canadian government aid for the country’s biggest banks was far more indispensable than the official line would suggest.”

http://www.policyalternatives.ca/newsroom/news-releases/canada’s-secret-bank-bailout-revealed

.
.
.

#77 Van grrl on 05.16.12 at 1:10 am

I love those doggies in the pic!! Nice one :)

#40 Karie:

“You can’t have the house the way you want it, have to get permission to change anything or add to it and why would you – it’s not yours. ”

Omg, some people couldn’t care less about shuffling around in four walls ‘getting it how they want it’- we’re busy having an interesting life.

ps. Your house isn’t fully yours either… not for another eight yrs anyway.

#78 earlymidlifecrisis on 05.16.12 at 1:16 am

I have my eye on the mother of all rentals in my hometown- fingers x’d. The scary thing is if i get it I’ll be closer to devils advocate. One day I’d love to see a blog party at a book signing or financial talk where everyone here attends as their blog persona. That would be something to bring popcorn to.

#79 immigrant with pizza delivery skills on 05.16.12 at 1:20 am

#20 Smoking Man
I don’t know what you smoke but it makes you smart.
These look antitank missiles and do not fit into killing 2 civilians here.
US is not in a war at any terms. It’s money-grabbing by a group by selling and promoting security, same time taking public attention and oppressing them. Related to US oil interests, taxpayer money is used to protect a few US company interests and profit is shared among few.

#80 Derek R on 05.16.12 at 1:21 am

#36 Aussie Roy on 05.15.12 at 10:15 pm wrote:
Bursting house bubbles cause rising unemployment, don’t take my word for it, check out the employment and house price data from, Spain, Ireland, Australia and other failed or failing RE bubbled markets.

Absolutely agree with you, Roy. Your esteemed fellow countryman, Prof Steve Keen, has made this absolutely plain both with his modelling and by graphing what actually happened in a few of those countries. His conclusion is that first credit rules get tightened, then house prices start to fall, then unemployment starts to rise.

OSFI rule changes in the summer will lead to increased unemployment unless the government takes other measures to reduce it.

#81 John Ratadlin on 05.16.12 at 1:22 am

Garth, government bond yields are falling again. If a big correction of say 25% happens in Canada’s real estate market government bond yields will plummet. The U.S. Federal Reserve pushed down 30 Year fixed mortgage rates to 3.84%. In the U.S a 31% average decline in real estate prices since end of 2011. Japan went into a modern depression and still is there so look at their 1.83% 30 year Japanese government bond yield. Interest rates will stay low and fall. I am not the greater fool to believe interest rates are going up, Hogwash.

#82 Nostradamus Le Mad Vlad on 05.16.12 at 1:26 am


Are the mutts relatives of Dusty Hill and Billy Gibbons (ZZ Top)? Cool shades!
*
#154 VICTORIA TEA PARTY — “You forgot to mention China and its imploding economy.” — Yes, but one of the known unknowns (thank you Donald Rumsfeld) — what if China is paid back all the money the US owes, then ends one of the currencies?

Evidently, Iran and China now use the Yuan for oil, not the Petrodollar. What if other countries follow suit, and ditch the PD altogether? Meanwhile, China keeps buying American companies, courtesy of Obomba.

Ties in with #24 Timing is Everything — “Some big players moving in to BC…?”. The situation is as clear as mud!

#169 jess on 05.15.12 at 7:54 pm — Great link. The charts are as scary as Garth sans beard!

#20 Smoking Man — Once a country becomes dependent on its military for their main source of income (other than illegal invasions and looting other countries’ wealth), one realizes the end is near.

#35 PoorgEoisie — You may have been unaware, but Smoking Man is really the ProAntiChristAlmighty, organizing Armageddon while contemplating which train track to launch it from. Give him time and he’ll be okay!
*
Bank run hits Greece, French unemployment rising; Nickelback was right with their line “. . . we could feed a starving world with what we throw away / But all we serve are empty words which always taste the same”; Hideous Retirement? You bet; Sick Days One of the perks of being a civil servant; 3:24 clip Time lapse doohinky of EZone and beyond; Rothschilds tell UK to sell banks at a loss (gotta be something in it for them); IMF buying US$2.3 bln. in tungsten bars (no gold attached), and Whyy Gold is good for money; NDakota Oil boom and fracking to collide? Average I.Q.’s for countries; Cdn. Diversified Portfolio and sector breakdowns; Smart Grid Greed Paying for something so people can snoop on us; Retirement Income Gap From 65 to 71, where’s the beef coming from? Confiscation “Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency.” Isn’t that what Obomba and the US Fed are doing in collusion? Bilderberg and the Euro.

Cina’s Screeching Halt; Potpourri of Paella; BoA Ties in with the May 20 stuff, give or take a month or so; Gulf of Aden Shipping insurance; Getting rich is easy. Staying rich is quite different; TPTB moving to London? United Gotta complaint? Who cares! College Bankruptcies; Shilling Buying house is a losing bet.
*
2:44 clip Stomach this — high roller coaster trip. Don’t barf on the monitor! Shine On, You Crazy Diamond Pic is better than a Floyd gig; Three New E.Orders, bypassing Congress completely for the Soviets to further their hold (links in); Mark Zuckerberg A small bio; Plants Creating music; Letting Go of foods that aren’t good for us; Occupations Did anyone know the US has illegally occupied Haiti and the Dominican Republic? Into The Sun Blows the xpurts to kingdom come; 20 May 2012 Quetzalcoatl rebirthed? 15 min. clip; Beware global strategies of tension.

#83 [email protected] on 05.16.12 at 1:35 am

“No bank will collapse. What part of that do you not understand? — Garth

Hello Garth, I agree no Canadian bank will collapse, but would it be prudent to reduce exposure to bank stocks before MSM really dig into OSFI’s implementation?

#84 Derek R on 05.16.12 at 1:37 am

#56 David Oliver-Godric on 05.15.12 at 11:22 pm wrote:
While our banks are much better regulated than the US banks, the collapse of the quadrillion dollar derivative house of cards will be a world changer. The unimaginable amounts of money involved in these complex, international funds of funds of funds will shake the world economy.

Take a look at these great graphics showing just how enormous the derivative problem actually is. So that’s what a trillion dollars looks like!

#85 skywalker on 05.16.12 at 1:50 am

Do your part. Short RBC stock, bankrupt them, unless you want your taxes to cover there careless gov’t insured lending.

#86 patsan on 05.16.12 at 1:54 am

#40 Karie
Your annoyance does not come from the comments on this blog. It perhaps grows from the declining value of your home that combines all payments, all renovations, and, most importantly, recent years of appreciation that many home owners take for granted. Well, easy comes, easy goes.

It could be an eye opener for you, but your house is not yours for another 8 long years. It belongs to your lender and he has probably more rights to kick you out than a landlord.

Do I want revenge as a renter? Hardly. Perhaps I just pity you and others of that ilk who has no courage to accept the truth and act appropriately and who considers rent tantamount to blasphemy.

Few years ago we sold and have rented since. My significant other was freaking at the beginning and wanted to get back as soon as possible, kids – they did not care. We were inexperienced renters and had few issues with area/landlord/house at the beginning, but we learned and covered ourselves for future. Now we rent a large house in one of the most prestigious areas. Price-to-rent ratio is 65. We have a 5-year lease agreement, we decorated the house to our taste, we never hear neighbours (lot size 120×60), we commute 15 min (no highway) to work. Still, we have been treated as lepers by all our friends and co-workers and it was so annoying to hear every year their Christmas wishes that we buy a place to live.

What do I know for sure is that I have no intent to own property in the nearest future. There are too many exciting things to do on weekends rather than HD trips, cleaning toilets and gutters, mowing grass, fighting weeds, raking leafs, and painting fence and balcony. Oh, and paying property tax twice a year.

Now, it seems the tide is turning. The other day I heard a comment from one of my colleague that we might be ahead with renting. Time will tell.

#87 NoName on 05.16.12 at 2:29 am

#52 BC Bring Cash on 05.15.12 at 11:12 pm

Lets say for example you suffer the death of a spouse who is listed in your mortgage contract as co debtor. The Bank can call in the mortgage regardless of your ability to keep making the payments. The Banks have always had the option of demanding a cash settlement. Try and find a lender upon these circumstances. When the rules change it will affect a lot borrowers even more. Been there and done that. Upon the death of the spouse the contract is null and void. Just one example of a disaster in the making.

Banks require you to have loss of life insurance on mrtg, or that your life insurance covers full mrtg, at that point HELOC is bigger problem, but again banks charges few dollars per thousand as insurance on HELOC if you go under.
In case of death there is good chance that paid house should be worth more that outstanding balance on HELOC…

#88 Don on 05.16.12 at 2:44 am

Karie.

It sounds like you didn’t think that it would be possible to be trapped in a house. When the buyers stop coming around your perceived options are much fewer. Be happy with your decisions but unless you have land your house is worth nothing to me in terms of real value.

That is not to say it isn’t perfect for your needs, enjoy cause soon your house will become a home and not a retirement strategy.

And Hey moving is not hard for those that enjoy a certain level of change. Now it appears that landlords are getting desperate for renters, check out the explosion of rental listings in Victoria. Everyone has a basement suite to rent out. You will have to be nicer to your renters in the future. I’m glad I bought some time ago.

#89 ktom on 05.16.12 at 3:07 am

awesome sauce. what do you think about proactive investors? http://www.facebook.com/l.php?u=http%3A%2F%2Fwww.proactiveinvestors.com%2F&h=KAQGW2thA

#90 betamax on 05.16.12 at 4:00 am

Tell us again how you hate smug and self-righteous people. — Garth

PWNED. If there was a Pulitzer for put-downs, that’d win it.

#91 Ricky Bobby on 05.16.12 at 4:22 am

Just in case you start telling yourself that boomers aren’t going to sell, just remember what Ricky Bobby says:

Ninety eight percent of us will die at some point in our lives.

#92 P & T S on 05.16.12 at 4:23 am

>Most people who own houses would rather eat >roofing nails than contemplate a market correction.

Roofing nails are a very good source of iron . . . . . . . (though maybe not in the most ideal dosage form ! ! !)

#93 The real Kip on 05.16.12 at 5:42 am

#4 Jonny on 05.15.12 at 8:51 pm

“THE UPPER UNIONVILLE RELEASE JUST STARTED AND THEY ARE DOING WEIRD CANDIDATE SELECTION PROCESS. THEY WANT PEOPLE TO FILL OUT THE APPOINTMENT REGISTRATION FORM ONLINE. BUT THEN THEY WILL DO A DRAW TO SELECT A CERTAIN AMOUNT (NOT EVERYONE) TO COME INTO THE OFFICE TO WRITE
THE OFFER AND BUY.”

I’d say they are doing preliminary credit checks. By filling out the forms they will be able to identify people they don’t even want to talk to, like the ones with no money.

#94 Deb on 05.16.12 at 5:51 am

“And poor Saskatoon might get it by the time pelicans return to the weir.”

—————————————————————-

The pelicans. I am amazed that you actually know about this.

#95 Peter Goesinya on 05.16.12 at 5:53 am

Looks like theres more work to be redone again @ the co-op refinery in Regina. Just got back from a 4 hour E-vac on the night shift.

I wouldn’t be surprised if people are dead in their homes west of the refinery. About 30 mins of huge black smoke clouds blowing fast and low straight west into the subdivision. What stupid ass city builds around a refinery and also has train tracks on the ring road?

Gas prices will be going up a little more now ;-)

#96 Bottoms_Up on 05.16.12 at 6:44 am

#40 Karie on 05.15.12 at 10:29 pm

Tell us again how you hate smug and self-righteous people. — Garth
———————————————–
ZING!! LOL

Nice one Garth

#97 David B on 05.16.12 at 6:57 am

Garth:

CNN is reporting interest rates could rise to 16 or 17% within the next 2 years!

So just what effect would that have in Canada? I lived through such rates and even bought a house on a work transfer and had to pay 16% …. so I believe it can happen! (BTW, in retrospect I should have rented and banked my 25% + deposit) but I was young and of course there was no internet then.

What say you?

It was on TV. Must be true. What can I say? — Garth

#98 House on 05.16.12 at 7:06 am

Per CTV, Saskatoon and Hamilton are the hottest markets for houses over $500,000.

CMHC should be the one getting the Stress Test as it insured all the sub-prime Mortgages.

#99 Timbo on 05.16.12 at 7:16 am

http://www.bbc.co.uk/news/business-18084700

“Our biggest trading partner is tearing itself apart without any obvious sign of solution,” he said. It would be foolish to think that the UK could navigate these problems “unscathed”.

http://www.reuters.com/article/2012/05/16/china-loans-idUSL4E8GG0JJ20120516

“As of May 13, two of the big lenders posted higher loans, while another two saw their loans fall from a month ago, the paper said, citing an unidentified authoritative source.

Falling deposits were also squeezing the amount of credit that banks were able to lend, with one of the four banks suffering a 90 billion yuan drop in deposits.”

The hope that China is going to lead the way out of the recession is fading…..

#100 Aussie Roy on 05.16.12 at 7:19 am

Derek R

on 05.16.12 at 1:21 am

Absolutely agree with you, Roy. Your esteemed fellow countryman, Prof Steve Keen, has made this absolutely plain both with his modelling and by graphing what actually happened in a few of those countries. His conclusion is that first credit rules get tightened, then house prices start to fall, then unemployment starts to rise.

OSFI rule changes in the summer will lead to increased unemployment unless the government takes other measures to reduce it.

……………………………………………………………………………

Hi Derek, the great pity is, Steve is all but ignored here in Australia. I like Steve, he is the only economist whos theories make sense to me.

As a retired risk manager I just shudder when I hear the neoclassical economists trot out their easily disproved so called theories. My hope is, Steves work will some day form a much more common sense, robust approach to economics.

Pity we don’t have more economists like him and of course it’s such a shame he doesn’t get the attention he deserves.

#101 Anon on 05.16.12 at 7:48 am

Re: Derivatives: 19 Trillions.
Do your own math.
http://www.greatponzi.com/reports/cdn-credit/health-2012-Q1.html

The fact you read a site called the “Great Ponzi” speaks volumes. — Garth

#102 Onemorething on 05.16.12 at 7:52 am

People are so predictable these days Garth. Markets run on Greed and Emotion which makes the sidelines so attractive.

Why get caught up in it when you can simply take the weight off by stepping aside and doing nothing by staying liquid and prepare for the powerplay.

Canadians are about to get an education the hard way. Its about time!

Boomers who set thier children on the path to floating them 5% – 20% downs are going to see them back at the McMansion for scraps. Daddy Its Not Fair!!!!

Boomers are gonna get smoked! Welcome to the Age of the Waltons!

#103 Stevenson on 05.16.12 at 7:56 am

No immigration you say? Here’s where the demand comes in.

http://www.theglobeandmail.com/news/national/time-to-lead/canada-ready-to-open-its-doors-to-more-immigrants-kenney-says/article2433975/

“But before Mr. Kenney will comply, he says he wants to see more immigrants working and earning at rates close to those of Canadian-born people.” Translation – not in the lifetime of this government. — Garth

#104 Linda Pearson on 05.16.12 at 8:02 am

#92betamax on 05.16.12 at 4:00 am

PWNED. If there was a Pulitzer for put-downs, that’d win it.

Cheesh – just when I think I’ve got a fair bit of the English language mastered, along comes “newspeak” like PWNED. I guess this old dog will just have to keep on learning. Now I know not only what it means but also how it is pronounced.

#105 Steven Rowlandson on 05.16.12 at 8:31 am

May be it is wishfull thinking but I don’t think a drop will be limited to a measely 15%. I think the drop will be so big as to threaten the financial survival of institutions that underwrite and or insure mortgages. I am expecting a hard landing for real estate just like the one silver experienced between 1980 and 1993.
That one was $50 + an ounce to $3.56 an ounce.
Because of the excesses in the real estate market a crash could be far worse than the crash in silver prices.
Silver could have been purchased on a cash and carry basis because even at $50 an ounce you could still pay cash for an ounce without having to go into debt.
Paying cash for real estate without contracting debt is possible but rare. What we have is not just a price bubble but also a debt bubble at rock bottom interest rates in a economy where 6 digit annual pay is rare and is what is required to safely buy real estate.
When you are relying on underpaid real estate have nots to support the market you are not going to get enough of them to buy without a giant price crash and that is if the underpaid buyers have any common sense at all. Real estate is an extravagant luxery that costs too much!

#106 TurnerNation on 05.16.12 at 8:35 am

Metalheads: I hoped you heeded my call for Silver 25-26 level. Yes, it’s wise to take advice from racous, anonymous message board posters ;-)

Anyway, metals are highly volitile commodotities most often traded by large professional firm using extreme leverage (futures). It is not an “investment” or “store of value”. You are tryig to pick up nickels in the shadow of a steamroller, to borrow a phrase.

http://finviz.com/futures_charts.ashx?t=SI&p=w1

#107 TurnerNation on 05.16.12 at 8:38 am

Dictionary.com’s word of the day! Aussi Roy we are rooting for you. No not really. :)

http://dictionary.reference.com/wordoftheday

spruik
\ sprook \ , verb;
1.

To make or give a speech, especially extensively; spiel.

Origin:

Spruik is Australian slang that arose in the early 1900s. It is of unknown origin.

#108 Realtors and mortgage brokers and greaterfools in a P{ANIC! on 05.16.12 at 8:49 am

Look at the blog and the countless posts from your worried realtors , mortgage broker and maybe even greaterfools who post all day everyday on garths blog.Why? The housing market in Canada is starting to crash and that crash is now rolling down the hill. We are still at the top of the hill so it starts slowly but when it picks up speed 2008 will look like a good time. It’s going to be a nasty crash.

#109 JohnC on 05.16.12 at 8:52 am

@Canadian Watchdog – The banks are sound. For the past 4 years or so they have been pushing people to buy with much less that 20% down so that they could insure the loan through CMHC (they would tell you to use the extra money to get some upgrades like granite, or 700 potlights). They’ll get back the entire mortgage amount in the event that they foreclose on a home and sell at a loss. Sure, there will be some losses from HELOCs, a loss of interest revenue, and maybe some of those who had more equity in their homes will fall as well, but we’re talking about banks under-performing, not failing.

#110 The Original Dave on 05.16.12 at 9:06 am

#54 Canadian Watchdog

Where in their book did rogoff and reinhart state that 90% debt to gdp is the point of no return? I don’t recall reading that. For countries that continually default, that is true. Please offer info. Maybe I missed something

#111 Canadian Watchdog on 05.16.12 at 9:16 am

#107 Steven Rowlandson

“I am expecting a hard landing for real estate just like the one silver experienced between 1980 and 1993.”

Silver’s crash in 1980 was due to the Hunt Brothers cornering the market and interest rates rising to double digits. Meanwhile today, we can’t even lift rates 1% without the entire economy crashing, or lower rates to boost us out of a recession. http://i48.tinypic.com/6ezzp5.png

#112 Inglorious Investor on 05.16.12 at 9:21 am

Speaking of banks…

Yesterday, during an interview on BNN, Dick Bove insisted tax payers must always be ready to bail out the banks.

(BTW, if you ever need to contact Mr. Bove, you’ll find him nestled comfortably inside Jamie Dimon’s back pocket.)

#113 Toronto_CA on 05.16.12 at 9:22 am

An article that claims the Eurozone stuff is making the slump in demand for Ontario cottages?

Well played realt-whores!

“At the end of the day, it just wasn’t a great year. But I’m liking what I’m seeing so far. There seems to be more confidence among buyers.” – Ellen Wiley, a Coldwell Banker agent in the Haliburton County and East Muskoka

http://www.thestar.com/business/article/1178946–ontario-cottage-country-feels-drag-of-eurozone-crisis?bn=1

#114 Not 1st on 05.16.12 at 9:33 am

People are hard to train…look at the mania surrounding facebook, a company that makes nothing, does nothing and its entire business is around advertising and data mining the morons that use it. This thing portends the next tech bubble for sure.

#115 Regan on 05.16.12 at 9:37 am

I totally agree that new regulations will be a coup de grace for the market. It takes the dumb money out of the market, i.e. if you’re not willing to look at a $1 mil fully attached condo and say “this is nuts” then a regulator will do that for you. But I think the market’s first blood has come from self-regulating people who have declined the bidding wars and price inflation. This is happening now and it’s caused by nothing more than the extreme prices.
I’ve debated moving (to be closer to my oldest daughter’s school) and it just doesn’t make sense, even though I’d be willing to make financial sacrifices for the larger goal of keeping my family closer together. There’s nowhere decent to rent in the area (like seriously, $5000 a month for a mid-size house) and the thought of the $500K mortgage I’d need to buy isn’t worth it. Family closer together, check – mother going crazy with worry, also check. It’s just not worth it to me, and I’m pretty motivated. I look ahead and figure that more money for family vacations and education savings will make up for some driving around.
I’m not emotionally committed to either homeowning or renting, I just want an affordable home I can enjoy. I will do whatever makes sense to me and my life. So pricing is where it begins, regulation is perhaps where it will end.

#116 Inglorious Investor on 05.16.12 at 9:38 am

I don’t place silver in the same category as gold.

While silver does have a history of being used as specie, and the Brits did at one point base their currency on it (hence, the pound STERLING) only gold has been universally used as money for thousands of years. There are very good reasons for this.

However, based on my research, one should NOT buy gold as either an investment or as an inflation hedge.

(That said, over the past decade it’s been one of the best performing assets, but buying any asset purely on hopes of capital appreciation is more speculating than investing.)

#117 disciple on 05.16.12 at 9:40 am

#40 Karie…. **YAWN**. I haven’t heard that drivel before… I’m so blessed my wife is the anti-Karie… she’s getting some flowers tonight just for not being like Karie…

In other news: There was a grenade thrown in a nightclub in Kenya. No, seriously, this is what passes for journalism in Toronto. This explains the Karie syndrome, non?

#118 Bottoms_Up on 05.16.12 at 9:47 am

#106 Linda Pearson on 05.16.12 at 8:02 am
—————————————–
i think ‘pwned’ is a company slogan…and it’s quite funny because it marries ‘pawn’ with ‘owned’….I pronounce it like ‘owned’ but with a ‘p’ in front: ‘powned’.

#119 Marcus on 05.16.12 at 9:53 am

No bank will collapse. What part of that do you not understand? — Garth
Is a zombie bank a collapsed bank? I think so.

#120 CP on 05.16.12 at 10:02 am

#4

Wow, a bunch of Asian buyers frothing at the mouth for homes in Unionville. Consider me “shocked”

#121 unbalanced on 05.16.12 at 10:03 am

Why everybody picking on Katie? She’s telling it like SHE sees it. Don’t judge a person till you`ve walked a mile in their shoes. I don’t recall her asking any of us for help in paying her mortgage. Geez people get a life. Bring it on.

#122 DUI on Money Road on 05.16.12 at 10:06 am

Update on Arizona:

‘rents purchased 4 bed bung in the burbs in 2010…low to mid $80k…added pool, furniture, expensive window dressings…fast forward to today…it sold in 2 days for over asking…(they got back all the money they put into it).

Good news for snowboids, the market down there appears to be robust.

#123 Dan in Victoria on 05.16.12 at 10:16 am

Karie @ 40
Very true Karie.
But read your last sentence, you’re just the same.
We’re all the same.

#124 Daisy Mae on 05.16.12 at 10:17 am

#42 Canadian Watchdog: “Household debt and mortgages (MBSs) are banks’ assets, therefore, if prices decline and consumers fail to make debt payments, bank assets decline.”

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

The banks won’t fail because CMHC (Canadian taxpayers) will bail them out.

#125 Dontcallmeshirley on 05.16.12 at 10:26 am

Stay tuned fellow miscreants.

Bill C38 passed second reading this Monday and is now in finance committee review. Once that rubber stamp is applied C38 goes to third and final reading (2nd wk of June?). Then the Senate gets to whip out their rubber stamp.

http://www.canada.com/Opposition+promises+more+roadblocks+budget+bill/6619185/story.html

#126 Canadian Watchdog on 05.16.12 at 10:28 am

TREB Mid-Month Resale Housing Market Figures http://www.torontorealestateboard.com/market_news/release_market_updates/news2012/nr_mid_month_0512.htm

Everything is booming according to the headline, but please, whatever you do, don’t look at how we revised last year’s sales down to boost mid-month figures higher. http://i46.tinypic.com/2565xfa.png

“The number of new listings continued to grow at a slower pace than sales – up 13 per cent year-over-year to 8,749.”

Except they don’t report new condo listings like Red Pin. https://p.twimg.com/As4CGygCMAEbJpw.png:large

No manipulation here, nope, not at all. Just keep buying and believing the banana stats you headline monkeys.

#127 helga weber on 05.16.12 at 10:33 am

Garth, I just like the calculation on this one….

http://westborocondo.weebly.com/special-assessment.html

#128 Buy Curious on 05.16.12 at 10:37 am

Garth, if and/or when a Canadian bank fails, deposits are insured up to point but how long is it before you can get access to our cash? And if a bank does go tits up, do people still have to pay the mortgage? Should I start taking out my money from my accounts? Thanks for your help.

Do you like Elvis Presley’s song “In The Ghetto”?

Relax. It won’t happen. If it did, get drunk. — Garth

#129 greed on 05.16.12 at 10:53 am

Tell us again how you hate smug and self-righteous people. — Garth

Love it Garth!
smug = I am so good

By the way the Vancouver market is gasping for buyers as the listings from what I have read are near 19,000.

#130 truth hammer on 05.16.12 at 10:54 am

The hypocrites are lining up…….Not long ago many of the biggest mouths in the real estate debacle were denying that HAM money had anything to do with the parabolic rise in prices. Now it seems we read more statements …from the same people…who tacitly admit that HAM WAS a factor……So where are the ‘sorry’s?…where are the apologies”……Why haven’t we heard from some of the deniers who called us HAM pointer – outers ‘rascist’…..’stupid’ ‘xenophobes’ etc etc ad nauseaum . There is a certain left leaning liberal politically correct blog writer who owes us truth sayers an apology me thinks. If he could take his head out from between the Amazons bouyant breasts long enough to suck the cool air of freedom of speech from stinking liberal indoctrination/ersatz leftist ideological bent. I can’t wait to hear the truth.

http://www.theglobeandmail.com/report-on-business/economy/housing/vancouvers-real-estate-swoon-deepens/article2433053/

#131 mousey on 05.16.12 at 11:09 am

There are no less than 7 properties for sale on Van Westside between Oak and 33rd and Granville and 33rd. One of these houses has actually been on the market for 1.5 years plus. At least 3 of these places were lovely heritage type houses and now sport huge mega mansions. We’ll see how long these sit on the market.

#132 Jim on 05.16.12 at 11:17 am

#40 Karie,

You’ll appreciate renting if you lose your job and have to move on short notice to take a new one. You’ll find that many sectors these days involve 1-2 year assignments.

Unless one is fortunate enough to be a government parasite (e.g., civil servant, MP, policeman) with a guaranteed job and pension for life, mobility is actually quite important.

Renting is compatible with mobility. Home ownership carries high transaction costs (both in terms of money and time). Independently of any other calculations, mobility is paramount to many of us.

#133 Mike on 05.16.12 at 11:26 am

Just because Saskatoon’s Average price is ~$300k, doesn’t make it cheap or affordable. Remember, compare it to the average wage, and it’s still WAY higher than the “normal” 3x or 3.5x ratio.

Here’s my take on Saskatoon lately: RE prices have been basically flat for about 18months. The only reason you hear that prices are going up is b/c of the increase in $500k mcmansions. 5yrs ago, none of those mcmansions (in stonebridge, willowgrove, evergreen, rosewood) did not exist!

Shoregold is nearly belly-up, BHP’s Janzen mine was and always will be a bluff, potash prices are way down, and Cameco has been sloooooooooooow for over a year now. There hasn’t been any new big players moving here in well over a year, no new buildings / expansions anywhere (except across from the University, which still has “For lease” signs ALL over it. And I don’t know any other young people buying anymore. They’ve all bought their $300k glued-together condo’s and now sit at home on weekends b/c they can’t afford to have fun anymore. The city is running out of buyers! How long have those 2 houses in Spadina (by Garth’s pelican’s) sat with “reduced” signs on their lines? From my account, over 6months, and that is one of our finest locations.

There’s nothing to keep driving this “up, up, up” direction anymore. We’ve ran out of gas / lines of credit. Like always, Sask is always way late to the party, so my prediction is that RE prices will remain flat for at least another year (while people hold there noses way up in the air stating “we’re a HAVE province now”), and then when they open their eyes and realize that RE prices compared to the rest of the country are disgustingly high, they’ll slowly accept the fact that prices are going to drop, and drop, and drop. Saskatoon is 30-40% overpriced and more and more ppl are finally starting to realize it.

#134 Grantmi on 05.16.12 at 11:26 am

Pop goes the Greek weasel!!!!

http://www.montrealgazette.com/business/Greeks+pull+funds+from+banks+euro+concerns+grow/6629888/story.html

#135 maxx on 05.16.12 at 11:28 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!

#136 Mama Bear on 05.16.12 at 11:30 am

Global Finance: Ranking of the World’s 50 Safest Banks 2012

http://www.gfmag.com/tools/best-banks/11661-worlds-50-safest-banks-april-2012.html#axzz1v2rr4Xgf

#137 Derek R on 05.16.12 at 11:32 am

#102 Aussie Roy on 05.16.12 at 7:19 am wrote:
the great pity is, Steve is all but ignored here in Australia. I like Steve, he is the only economist whos theories make sense to me.

Understood and agreed. That’s something that Garth and Steve K have in common. They have both had the effrontery to claim that housing prices cannot and will not rise for ever and they are both good speakers who make their points in an entirely reasonable, credible manner. As a result they both get ridiculed by the realtors, the mortgage brokers and the banks and pushed to put ridiculously accurate timings on their predictions.

However their time is coming. As the downturn in Australia and Canada starts, it becomes more and more obvious that they were and are right.

#138 FDIC Failed Bank List on 05.16.12 at 11:37 am

Just a note on “no bank will fail”…here is the link for the FDIC Failed Bank List. http://www.fdic.gov/bank/individual/failed/banklist.html

But heaven forbid we bet against the USA.

Now granted we haven’t had a failed bank in Canada since 1996. No one can say it will not happen again.

http://www.cdic.ca/e/insuredWhere/history_failures.html

There are about 8,000 US commercial banks, and only six major ones in Canada. There is no appropriate direct comparison. — Garth

#139 Canadian Watchdog on 05.16.12 at 11:40 am

About those TREB mid-month sales: How does 713 (2011) sales to 691 (2012) equal 6% y/y growth? http://i45.tinypic.com/hsuqgi.png

416 detached sales are down 3% if you compare it to figures reported in 2011.

#140 greed on 05.16.12 at 11:40 am

#113 Jim

Bang on Jim I agree with your post. Mobility is key these days in a global economy.

#141 anon on 05.16.12 at 11:43 am

#40

Tell us again how you hate smug and self-righteous people. — Garth

^^ bahahaha I had to laugh at this response, I mean Karie, you do sound pretty self-righteous and smug in your post.

That said, I agree about the downsides of renting. How much renting sucks really depends on inventory in your area. I don’t think it’s bad everywhere, but where we are (esp for SFH it is terrible). Despite this, we are still choosing to rent. Am I hoping for the market to tank? ABSOLUTELY! By doing that, I am not rooting for friends and family to lose their homes. I hope they were smart enough to not completely stretch themselves so that would happen. The thing is, the market (at least in my area) has completely and utterly priced out families in entire cities. I am rooting for the RE market to return to normal so that the average hard-working family can reasonably afford a place to live. As it stands right now, many of our very high income earning friends (and dual-income at that) can’t even afford a place to live. This cannot be sustainable. If it is, then this is not a place I want to call home.

#142 pop on 05.16.12 at 11:43 am

TREB numbers in..

The average selling price for transactions in the first 14 days of May was $517,242 – up by six per cent compared to the same period in 2011.

Sales are up as well.

Still going….

#143 Suede on 05.16.12 at 11:45 am

#110 Greed

Not sure the accuracy of the numbers on the following site, but it’s what I use to follow the Vancouver listing inventory.

http://whispersfromtheedgeoftherainforest.blogspot.ca/

#144 Snowboid on 05.16.12 at 11:56 am

#40 Karie on 05.15.12 at 10:29 pm…

I’m glad to hear you don’t think home-ownership is a financial burden.

But I do see a bit of irony in the number of ‘home-owning’ relatives and friends that are in financial trouble.

Especially the ones that are hinting they may need a loan – from us, the renters!

Renting has provided a sense of freedom not experienced before and the simplified lifestyle makes for an enjoyable retirement.

When the time is right, buying may be an option (cash), but in the meantime sitting on the investments appears to be prudent.

#145 DM in C on 05.16.12 at 12:15 pm

PWNED is an online gaming term — better half has a shirt that says ‘NOOBS get PWNED’

Learn something new every day.

#146 DM in C on 05.16.12 at 12:17 pm

Further, for those who require source material

urbandictionary.com

1. pwned

A corruption of the word “Owned.” This originated in an online game called Warcraft, where a map designer misspelled “owned.” When the computer beat a player, it was supposed to say, so-and-so “has been owned.”

Instead, it said, so-and-so “has been pwned.”

It basically means “to own” or to be dominated by an opponent or situation, especially by some god-like or computer-like force.
“Man, I rock at my job, but I still got a bad evaluation. I was pwned.”

OR

“That team totally pwned us.”

#147 Balmuto on 05.16.12 at 12:18 pm

#47 Canadian Watchdog – I went to your OSFI link – am I reading this right – Canadian banks own $355 BILLION of UNINSURED residential mortgages (Section 1.3.b.i.C)?!?

http://i48.tinypic.com/auf679.png

Uninsured does not mean unsecured. These are actually the good loans, to people with sufficient equity. The high-risk stuff (CMHC) is the insured portfolio. — Garth

#148 Canadian Watchdog on 05.16.12 at 12:30 pm

#144 pop

Wondering why 416 condo sales are up 18%? It’s because developers are starting to sell inventory on MLS, therefore what use to be “offline” sales are now being booked on MLS.

One pre-con MLS example here http://i48.tinypic.com/2eb4eh3.png Only this condo will be ready in 2015. http://blog.buzzbuzzhome.com/2012/01/210-simcoe-seals-the-deal-with-special-deposit-structure-no-wonder-its-already-over-80-per-cent-sold.html

But who will notice right? For sure not Susan PIgg, who’s about to write up an article pumping condos for all her Twitter developer buddies, in T-minus…

#149 Daisy Mae on 05.16.12 at 12:32 pm

CBC: “The ReMax real-estate sales organization says demand for high-priced housing was strong in most Canadian markets in the first months of this year, with records set in 10 of the 16 markets it tracks.”

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

The media and CREA just never let up…..

#150 MoneyMyHoney on 05.16.12 at 12:44 pm

“No bank will collapse. — Garth”

May or may not be.
But some of them, for sure, will be on crutches.

There are only six major Canadian banks. None will be remotely damaged by a housing correction. CMHC is another story. — Garth

#151 Devore on 05.16.12 at 12:59 pm

#123 unbalanced

Ah, the white knight has arrived!

Katie is the perfect exemplar of the smug and righteous home owner. Most are just idiots who have bought recently and are too busy spending their imaginary wealth through the HELOC facility. Others, like Katie, bought when prices were at the bottom, but most, unlike Katie, realize their situation is entirely due to luck and not their money management prowess.

I happen to know a few home owners who bought 12-15 years ago, and they all recognize they were just lucky to be at the right place at the right time looking for a house for their family. They all recognize they could not afford to buy their own houses today, nor would they want to.

Just wait another 10 years for prices to cycle again, and in 20 years we’ll have another generation of smug pricks telling everyone within earshot what a great investment real estate is.

#152 AprilNewwest on 05.16.12 at 12:59 pm

Daisy Mae #151
The report also said that demand for homes over 2m is now down 31%.

#153 2centsCanadian on 05.16.12 at 12:59 pm

Just curious. Are future contracts (money put down) on condo’s to be built 3,4,5 years in the future considered “a sale” today by the real estate board in their reporting?

#154 Balmuto on 05.16.12 at 1:04 pm

#47 Canadian Watchdog – I went to your OSFI link – am I reading this right – Canadian banks own $355 BILLION of UNINSURED residential mortgages (Section 1.3.b.i.C)?!?

http://i48.tinypic.com/auf679.png

Uninsured does not mean unsecured. These are actually the good loans, to people with sufficient equity. The high-risk stuff (CMHC) is the insured portfolio. — Garth
———————————————————-
OK, good point, I forgot you still have some 20% down folks out there, lol. Still, it seems to me that’s an awful lot of uninsured exposure that would be vulnerable in the event of a serious correction. And unless I’m mistaken, this also includes HELOCs, does it not? I’d love to see some hard numbers on the banks’ HELOC exposure. This article has it at $115 billion, though it doesn’t cite its source:
http://www.investopedia.com/stock-analysis/moneyshow/5CanadianBanksWorthaLook.aspx#axzz1v3CUnnnE

Does not include HELOCs, and these assets are among the most secure a bank can own. We sure jump to scary conclusions around this place. — Garth

#155 VICTORIA TEA PARTY on 05.16.12 at 1:05 pm

#84 Nostradamus, etc.

IT’S A TOUGH JOB, BUT…

China is gradually getting its pound of American flesh as the world’s chief Petrodollar (USD) continues to be “underpinned” by the machinations of its American Empire.

The Chinese are not only hedging their bets against an untimately failed currency (the euro is also heading in that direction), they are trying to protect themselves by finding willing partners in direct currency trades amongst their various trading partners, thus specifically by-passing the USD.

That is one reason why gold holds such lustre. It is the ultimate medium of exchange in such troubling economic times as these.

Part of China’s problem in “buying American”, whether it be goods, services or bonds, is that the economic diseases, mainly debt and lavish spending, plaguing the US right now, come riding on the backsides of the USD in the forms or either inflation or deflation.

The Chinese are quietly trying to rid themselves of this burden as quickly as they can. But its tough when your largest trading partner, Europe, looks like it’s going to be busted back into its Primary Colors: individual countries and their respective currencies.

So: the USD and euro are in huge trouble. That leaves the yen, also in terrible straits. The yuan? Too small and not enough credibility in markets.

This is not good at all.

#156 Canadian Watchdog on 05.16.12 at 1:05 pm

For anyone who doubts that TREB would manipulate statistics, look no further then what happened to our friends in the south.

Bloomberg: December 14, 2011: Home-Sale Data Will Be Revised Back to 2007, Realtor Group Says http://www.businessweek.com/news/2011-12-14/home-sale-data-will-be-revised-back-to-2007-realtor-group-says.html

In other news, CMHC insuring REIT’s properties too. http://www.newswire.ca/fr/story/975247/boardwalk-reit-announces-solid-first-quarter-financial-results-ffo-up-21-8-and-ffo-per-unit-up-22-2-year-over-year-and-confirms-per-unit-distribution-

Who doesn’t CMHC insure these days?

#149 Balmuto

Section 3.(a)(vii) is their toxic warehouse.

#157 Harlee on 05.16.12 at 1:06 pm

The news in S’toon today is the building of the 250 million hotel/office building at River Landing,next to another luxary condo building and Remai’s art centre. Considered a “prime bit of real estate” in the province ,right now it’s just lump of dirt. There’s been a proposed hotel for this spot for the last 15 years ,but is now a “sure bet” as long as city hall approves it (and it will,as Mayor Atch is looking for another monument to his “legacy”…
There is also the posssibility of the Third Avenue United Church,built in 1912,being demolished. No doubt when it is, Remai will be swooping in to build another condo complex on this lot.It’s right down from city hall. I’ll actually be sorry to see this one hundred year old church gone as my grandfather was one of the workers who helped build it when he immigrated to the city in 1911. I have a photo postcard of the church with the men posing with it and they all look proud at having built such a fine-looking building. But the new religion in Toontown is now Real Estate. No place for any spirituality or heritage…Sad.

#158 Inglorious Investor on 05.16.12 at 1:09 pm

To Aussie and Derek,

Steve Keen makes a lot of sense. The problem is: he’s insane.

His version of a modern “debt jubilee” (give everyone money to pay their debts) is the stupidest idea I’ve ever heard. He should stick to academic ruminations on Schumpeter and Minsky, and never be allowed to set foot in the actual economy.

#159 Ann "Pom Pom" Rohmer on 05.16.12 at 1:12 pm

#112 The Original Dave on 05.16.12 at 9:06 am

Where in their book did rogoff and reinhart state that 90% debt to gdp is the point of no return? I don’t recall reading that. For countries that continually default, that is true. Please offer info. Maybe I missed something

Here you go….

“Those who remain unconvinced that rising debt levels pose a risk to growth should ask themselves why, historically, levels of debt of more than 90 percent of GDP are relatively rare and those exceeding 120 percent are extremely rare. Is it because generations of politicians failed to realize that they could have kept spending without risk? Or, more likely, is it because at some point, even advanced economies hit a ceiling where the pressure of rising borrowing costs forces policy makers to increase tax rates and cut government spending, sometimes precipitously, and sometimes in conjunction with inflation and financial repression (which is also a tax)?” – Rogoff & Reinhart

Here’s a link

http://www.voxeu.org/index.php?q=node/5395

BTW, what you cite was NOT published in ‘This Time is Different’ it came from a research report they published after the book came out

#160 Bolo2k12 on 05.16.12 at 1:31 pm

@ # 40 Karie

“Our mortgage is due to be paid off in 8 years, so glad I haven’t rented since my mid twenties.”

A lot of the focus is about property virgins who bought houses over the last few years with little or no money.
People most susceptible to a housing market decline.

Don’t hate on current renters because they’re doing what they believe is right for them.

You sound like you’re in a good position since you haven’t rented since your mid 20’s and your house will be paid off 8 years from now.
That is… unless you’re a wrinkly boomer.

#161 debtified on 05.16.12 at 1:35 pm

Fort McMurray RE Average Prices:

Date Single Family Multi Family Duplex
Dec-10 $685,970 $419,422 $443,786
Jan-11 $719,305 $395,488 $489,233
Mar-11 $705,835 $430,461 $503,400
Apr-11 $729,048 $441,075 $534,230

Nov-11 $755,181 $408,005 $512,235
Dec-11 $729,092 $387,244 $550,983
Jan-12 $724,209 $392,261 $618,700
Feb-12 $755,756 $458,089 $543,000
Mar-12 $774,538 $403,590 $543,545
Apr-12 $737,412 $388,512 $526,030

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

#162 Balmuto on 05.16.12 at 1:41 pm

#158 Canadian Watchdog
I see a number under Section 3(a)(vi)(A) – $206 billion of loans secured by residential property – would this be the HELOC number?

I have no faith in HELOC underwriting standards. Banks will give you generous appraisals on your property to get you under the 80% LTV cap for HELOCs. The real LTVs on these second mortgages is much higher.

#163 Karie on 05.16.12 at 1:58 pm

Thanks to everyone who responded to my comments! I read all of them. I am embarrassed that I came across as smug as that was not my intention! I did not know if I should laugh or cry when I read Garth’s response! :) / :(
My point was this shouldn’t be a war of renters vs home owners. Do whatever works for you!

It certainly comes across as though many people on this site want to get some kind of revenge against home owners and have them lose their homes so they can gloat for some reason and say I told you so!
One guy #119 said he was going to buy his wife flowers for not being like me! Then went on to talk about the Karie syndrome and Kenya… sorry, I didn’t really get that part!

I would have to say I did not enjoy renting in the past at all. It’s just not for me. Vangrrl at #79 and #134 Jim, I can see your point and that might be where you are in your life. I don’t really want to be mobile right now but I wouldn’t mind moving to US or internationally for a year if a contract position was offered but I would definitely want to come back to our house. If there was a job loss, I think our mortgage payments are reasonably low and it would be best for us to stay here I am positive that we could rent our house out and cover all of our expenses. I would not want my kids to change schools so if we were renting I would be worried that we may not be able to stay in the same area. We are very happy and life is good right now. I feel like we are not stretched.

We bought our house 8 years ago and started off with a 25 year amortization. We now have just 8 years remaining. We have chosen variable rate mortgages due to Garth’s past advice and reduced our mortgage significantly. Our housing costs are low so that we do have the freedom to go out and do interesting things! If renters feel the same way – then that’s great for them! Maybe owning a home isn’t for everyone but I am still a huge fan of it!

#164 Pr on 05.16.12 at 2:18 pm

The cat is getting out of the bag!

http://www.youtube.com/watch?feature=player_embedded&v=JFkQYeFj5Bg#!

#165 penpal on 05.16.12 at 2:21 pm

@ # 160 Inglorius
Re: Steve Keene’s solution.

Perhaps you are insane, or unable to read and comprehend or just can’t think “out of the box”.

Go back and read his suggestions again.

It makes more sense perhaps in Australia than elsewhere due to the absolute levels of debt and ‘peak credit’, but it has the merit of allowing the economy to be less “debt service constrained”.

Compared to Paul Krugman and some of these other communists, Steve Keene represents HONEST and NEW WAYS to attempt to correct the economy’s distortions.

#166 Canucklhead on 05.16.12 at 2:26 pm

Has anyone driven along Lakeshore between Oakville/Burlington area recently? I swear EVERY OTHER house is for sale. I’m not even exaggerating either! Maybe the higher end homes in the area is where this correction is going to start.

#167 betamax on 05.16.12 at 2:27 pm

#79 Van grrl: “Omg, some people couldn’t care less about shuffling around in four walls ‘getting it how they want it’- we’re busy having an interesting life.”

You go, grrl! Well said!

#168 betamax on 05.16.12 at 2:30 pm

#123 unbalanced: “Why everybody picking on Katie?”

Who the heck is is Katie?

“Don’t judge a person till you`ve walked a mile in their shoes.”

Yes, because then you’ll be a mile away from them, and you’ll have their shoes.

#169 broadway skytrain on 05.16.12 at 2:53 pm

Minutes from the Fed’s last meeting in April showed that the central bank’s top officials discussed how fiscal policy could weigh on the recovery, and debated the possibility of more asset purchases.

ben is at it again – rates going where???

#170 Dontcallmeshirley on 05.16.12 at 3:02 pm

Now that Vancouver RE is unwinding is there anyone on the ground who can give us restless folks a current assessment of mortgage app rejection rate and lender appetite?

Perhaps an intrepid mortgage broker, FI Guy???

#171 Canadian Watchdog on 05.16.12 at 3:03 pm

#164 Balmuto

Yes those are total HELOCs disclosed in Q4 as part of IFRS accounting changes.

There’s a reason why OSFI is tightening HELOC rules. The last thing banks want are more appraisals (on record) while home prices are falling.

#172 Derek R on 05.16.12 at 3:09 pm

#160 Inglorious Investor on 05.16.12 at 1:09 pm wrote:

Steve Keen makes a lot of sense. The problem is: he’s insane.

His version of a modern “debt jubilee” (give everyone money to pay their debts) is the stupidest idea I’ve ever heard.

But that’s the definition of a contrarian isn’t it? Someone so insane that they do completely stupid things: like renting when everyone else thinks you should own. Or selling Nortel when everyone else thinks it’s a great idea to buy more. Or giving everyone money so they can pay back the banks when all the “sane” people think you should just give the money directly to the banks.

Steve Keen may appear crazy at first sight. But you have to remember it was the sensible, sober sided, sane economists and politicians that got us into the current mess. Maybe a bit of insanity is what we need.

#173 Derek R on 05.16.12 at 3:11 pm

#169 betamax on 05.16.12 at 2:30 pm wrote:

Yes, because then you’ll be a mile away from them, and you’ll have their shoes.

I love it! Very funny.

#174 Tiny Bottoms on 05.16.12 at 3:12 pm

Canada says government mortgage insurance not essential

Canadian Finance Minister Jim Flaherty said on Wednesday it was possible the government could one day privatize the mortgage insurance business of the state-run federal housing agency, Canada Mortgage and Housing Corp (CMHC).
http://ca.finance.yahoo.com/news/canada-says-government-mortgage-insurance-174748907.html

#175 Mister Obvious on 05.16.12 at 3:40 pm

#155 2centsCanadian

“Just curious. Are future contracts (money put down) on condo’s to be built 3,4,5 years in the future considered “a sale” today by the real estate board in their reporting?”
————————————

Why wouldn’t they? A sale is a sale.

For example, if I buy a car, put money down and sign an agreement to pay the balance, I think that would be called “a sale today” by any dealer even if the car has not yet been delivered from the manufacturer.

Why would the real estate board be any different?

#176 AG Sage on 05.16.12 at 3:42 pm

If your housing market is overpriced by 30-35% your regulator better be stress testing for a 40% drop. Overshoot is really common. Especially given the surge in housing starts creating an oversupply just at the wrong moment.

If McLister is a mortgage broker then he can’t be expected to break out of his worldview. If he is panicking about perfectly reasonable new regulations toppling the market, that is more symptomatic than anything else he said.

#177 greed on 05.16.12 at 3:45 pm

http://www.google.ca/finance?q=TSE:OSPTX&client=news#

Seems like the market can’t find the upside.

#178 Devore on 05.16.12 at 3:51 pm

#162 Bolo2k12

Precisely. A lot of young families have come to the conclusion, either by looking at the market fundamentals, or by doing the math on what they can afford, that buying today makes no sense. In the major Canadian cities, virtually no one buying a family house today (I don’t mean a closet-sized 1 bedroom condo or a studio) will be able to pay off their mortgage on an accelerated schedule like someone who bought 10-15 years ago is able to, because they are already struggling to make 30 year payments with dual incomes at 80-90% of their lifetime earning potential. There’s just no room. When prices are low, you can downsize your life for a while and pay off the mortgage in 10-15 years. I know many of the people who bought then are well past the amortization hump, and are nearing the end of their mortgage. Not so in today’s environment. God forbid rates rise. Or a job is lost. Or someone gets pregnant. And forget those 0/40ers. Poor things. They’ll be on their deathbeds, still making payments. The ultimate perma-renters, but at least the walls are their shade of purple, right?

#179 Fabrega on 05.16.12 at 3:53 pm

DELETED

#180 joe on 05.16.12 at 4:03 pm

According to CREB, sales of SFD are up 30%. Wonder if prices will follow with one last blow of the gas bag?

#181 unbalanced on 05.16.12 at 4:03 pm

To # 123 Devore. Thanks for the compliment. I’ve been called alot of things in my life, but never a white knight. Everyone has their own opinion. Thats what makes us unique. To # 169 Betamax. Sounds to me you are the type of person who would write their own mother a ticket or cut someone’s throat just to get ahead. Just saying.

#182 Westernman on 05.16.12 at 4:11 pm

Mike @ # 135,
Yeah, it’s going to be good one when the Sask. hillbilly’s get bounced back to their reality of being nobody’s in a nothing/nowhere province.
All they will have left is sitting at bush league football games ( Roughriders ) with hollowed out watermellons on their heads.
Won’t be long now…

#183 PoorgEoisie on 05.16.12 at 4:30 pm

I’m not sure if I’m ready to have reality distort my vision of the enigma that is smoking man…

#184 bigrider on 05.16.12 at 4:41 pm

Marc Faber. A destruction of wealth over the next ten years.
Its all about relative wealth over next decade. Where can you hide where you lose the least.

Think realistically. Government debt needs to be dealt with he says.

http://www.youtube.com/watch?v=iaJg2Ixz7Y8&feature=relmfu

#185 Nostradamus Le Mad Vlad on 05.16.12 at 4:45 pm

#93 Ricky Bobby — “Ninety eight percent of us will die at some point in our lives.” — Curious: Are the rest sent to a taxidermist and stuffed full of cream puff cakes?!

#104 Onemorething — “Boomers are gonna get smoked! Welcome to the Age of the Waltons!” — Yep, that’s us, driving old hick trucks all over town! Ain’t it fun being in a worldwide depression!

#157 VICTORIA TEA PARTY — “So: the USD and euro are in huge trouble. That leaves the yen, also in terrible straits. The yuan? Too small and not enough credibility in markets. This is not good at all.”

Which gives TPTB (Soros, who likes Chinese monetary policy and their govts., Rothschilds, Rockefellers etc.) enough room to continue causing chaos thruout the world, debasing currencies and ultimately, having a one-world currency / govt., with sheeple following Marx and Lenin’s path, not thinking critically for themselves.

The link about the IMF spending US$2.3 trillion to buy gold I added may also be part of their long term goal. Give us the basics, but deprive us of the goodies which is how the USSR was run. No guns, no gold, no revolutions anywhere.

But stranger things have happened!

#173 Derek R — “Maybe a bit of insanity is what we need.”

Agreed. Life on The Far Side is way funnier than here!

#186 Market Bull on 05.16.12 at 5:06 pm

TREB reported 5,142 transactions through the Toronto MLS System during the first 14 days of May 2012. This result was up by more than 14.5 per cent in comparison to the first 14 days of May 2011.

“Annual growth in sales was experienced across the GTA for all major home types in the first half of May. Sales growth was strongest for the condominium apartment segment.

#187 Inglorious Investor on 05.16.12 at 5:06 pm

#167 penpal on 05.16.12 at 2:21 pm

Keen’s hyperinflationary monetary conflagration would apply to the entire world, not just Australia. But if they wanted to experiment on the Aussies, go ahead. Once they see what a disaster it would be, they would never dare try it anywhere else.

Sure, you can wipe out everyone’s debt overnight by simply dropping money from helicopters, so to speak. But it would do nothing for the economy except ruin EVERYONE and save no one because all savings would be wiped out along with the debt. A fact Keen likes to ignore.

Krugman thinks that currency = wealth. He is not insane, perhaps, but his is certainly misguided, and very dangerous to the economy. Printing more money does not expand the economy. All it does is reduce the denominator used to price goods.

Currency does not create wealth. Productive activities create wealth. The way to get back to productive activities is to write down unpayable debts via structured defaults. Let those who issued the credit pay the price for the bad debt, as it should be. They assumed the risk. They should take the loss. Debtors should bear their share of the consequences too for the role they played. The money that survives will have value and can be used for productive investments, allowing savers to reap their just benefits for being prudent and responsible, while having actual capital with which to seed future production.

I know Keen says the system is too complex to do this, but his solution is nothing short of an economic tsunami. Just wash everything away, the good and the bad, indiscriminately.

#174 Derek R on 05.16.12 at 3:09 pm

Being insane or doing stupid things does not make you a good contrarian. It makes you dangerous to yourself and those around you.

The core of this problem is that everyone wants a pain-free solution. It’s fantasy to think that one exists. You don’t correct a wrong with another wrong. You don’t fix irresponsible actions with different irresponsible actions. This problem cannot be washed away overnight. It will take time and lots of hurt. But we can make it through without taking everything to zero.

What we need to do, while we write down our debts, is get back to sound economic fundamentals. Work. Save. Invest. Invent. Borrow to create, not to consume. etc. Reform banking. Take political power back from finance and put it in the hands of the people, not wipe the people out.

Look at Iceland, they told the bankers to stuff it and they then took their collective economic knocks. Debt was repudiated, but the currency did not have to be destroyed for them to get back on track.

#188 Arshes on 05.16.12 at 5:32 pm

To # 169 Betamax. Sounds to me you are the type of person who would write their own mother a ticket or cut someone’s throat just to get ahead. Just saying.
——————————————————-
? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?

Because she happens to agree with someones comments about renting and home ownership?

Slit someones throat to get ahead????????????

Some people really really really do not think that much of renters do they?????

That comment was reall by far the most shocking comment i have seen on this board. Totally and utterly.

Just saying.

#189 Paul on 05.16.12 at 5:41 pm

#135 Mike on 05.16.12 at 11:26 am

Hey Mike….comments?

Re: Shore Gold appoints former Anglovaal, De Beers man Mennell chair
Potash prices are not down, see http://prosperitysaskatchewan.wordpress.com/2012/05/16/potash-prices-as-of-april/

Cameco is spending $3-billion in Saskatchewan on expansions to double capacity, they just bought Nukem, and the Japanese reactors should re-open soon, see

http://prosperitysaskatchewan.wordpress.com/2012/05/16/cameco-driven-by-supply-and-demand/

http://prosperitysaskatchewan.wordpress.com/2012/05/14/japan-to-restart-reactors/

http://prosperitysaskatchewan.wordpress.com/2012/05/14/cameco-buys-uranium-trader-nukem-for-136m/

There are no new big players, since they are all already here.

BHP Janzen project may be delayed until February or so for final approval, but not a bluff. See

http://www.bhpbilliton.com/home/investors/reports/Pages/Roll up Pages/Bank-of-America-Merrill-Lynch-2012-Global-Metals,-Mining-and-Steel-Conference.aspx

Shore belly-up? – No. They have money for 2-years, are completing EIS, are in a sector with increasing prices and a looming supply/demand crunch, have a new Chairman that is also directing KKR’s bid to take-over RIO’s and BHP’s diamond assets. See

http://prosperitysaskatchewan.wordpress.com/2012/05/15/shores-new-chairman-also-doing-kkrs-plan-to-combine-bhp-and-rio-diamond-assets/

http://prosperitysaskatchewan.wordpress.com/2012/05/15/diamond-prices-seen-up-in-2012-on-sparkling-demand/

http://prosperitysaskatchewan.wordpress.com/2012/05/03/global-miner-sees-no-shortage-of-suitors-for-diamond-business/

http://prosperitysaskatchewan.wordpress.com/2012/05/01/looks-like-the-timing-for-a-diamond-mine-in-saskatchewan-couldnt-be-better/

Other than that – you’re bang-on.

#190 truth hammer on 05.16.12 at 6:02 pm

#136 GM……it won’t help greek citizens to take their savings out of the banks and hide Euro’s under the bed for fear of a devaluation in the event of an exit from the Eurozone and and the emergence of a ‘New Drachma’.

If you remember the same thing happened in Argentina when that country defaulted…the Argentines were using USD at the time.

The Argentine used a stategy called a ‘corralito’ , they banned all transfers of USD out of the counrty…..and confisactated the records of all institutions. All savings and assets were revalued at the new exchange rate of the New Pseo to USD……a 70% loss. The people with USD under the mattress couldn’t export it ( all except the most sophisticated…….as a Canadian have you tried to cross th eborder and open up a US account?) The money was repatriated at a loss and people lost thier shirts……except the rich and most sophisticated of course. Expect the same in Greece.

In Greece, the system is so interwoven to the Euro zone that accounts will be easily turned back…..that the ‘corarlito’ of Greek citizens foriegn exchange will stick unless they personally leave the country and get through customs undetected……and stay out as refugee’s……because if they returned they would be assesed for the money missing from their accounts as was the case in Argentina. They could come to Canada of course ….we accept all money laundering here…despite the laws of the country criminals originate.

However……for Greeks…..the conversion to Drachma will be a disaster….but good for us tourists….so thats a good balance……eh?

#191 Vancouver_Bear on 05.16.12 at 6:06 pm

It’s time to wake up Canada:

DELETED.

No it’s not. — Garth

#192 live within your means on 05.16.12 at 6:17 pm

I’ve got to share this – it’s hilarious.

Cheap Flights with subtitles

Travel plans this summer?
Good British humor….

http://www.youtube.com/watch?v=HPyl2tOaKxM&feature=youtube_gdata_player

#193 truth hammer on 05.16.12 at 6:26 pm

UN FOOD watchdog ‘insults’ Canadian bureaucrats who don’t want the truth getting out that in fact THERE IS widespread hunger in the KINGDOM OF DENIAL. I’m here to say that the waatchdog hasn’t even scratched the surface.

http://www.vancouversun.com/news/Harper+ministers+blast+patronizing+envoy+ridiculous+right+food+visit/6631748/story.html

I’ve posted here the same facts many times and have been deleted and censored for my efforts. It’s a fact that there are millions of starving kids and seniors in this country that are slipping under the media radar becasue the subject is not politically correct. How can the public servants justify their fat cat ways if papers start asking the right questions and then printing some very uncomfortable answers for all to see?

I suggest that the WatchDog was correct in his findings Mr Kenney but that he hasn’t addressed the real poverty bubble that is growing in the so called ‘middle classes’…..seniors who once had savings but have been raped by the trust rip and the following ZIRP attack and the tax ghouls…….and the millions of new homeowners who are so far in debt that the daily soup pot is past refreshing.

Maybe you can say that feeding kids KD everyday is cruel in Canada….but we all know many working families that are grinding out their time between visits to the Food Banks. If you read you’ll have noted the many reports of ‘upper priced home’ suburban kids who are being dropped off to school by expensive cars have no lunch and when asked many have not been fed supper the night before either! Doe’s it taka rocket scientist to figure out that parents who can’t afford after school sports any longer because of the hyper inflated costs of mortgage , transportation, indirect fees and taxes etc……can not afford to feed their kids either.

I haven’t even touched on the very pronounced spike in elder abuse as ‘kids’ have been dropping their aged parents off on the doorsteps of social agencies in record numbers in the last few years because they can’t afford the ‘upkeep’.

Yes of course the native issue is abysmal…..most of this can be explained by native leaders stuffing their own matrresses but ot say that the UN WatchDog has no place to critizise Canada….Mr Kenney….bite your tongue. The truth is going to bite you in the arse if your not careful. Your lies on the issue simply give fodder to your enemies.

#194 Tony on 05.16.12 at 6:30 pm

#23 Johnny5 on 05.15.12 at 9:41 pm

What do you think? Vancouver, Victoria and the Okanagan Valley 70 decline. Saskatchewan 40 percent. Alberta 10 percent Fort McMurray 50 percent. Manitoba 40 percent. Ontario (southern) 40 percent. Toronto 50 percent. East coast 15 percent. Rest of the country 10 percent. In about 30 years’ time prices will start to rise again.

#195 Benson on 05.16.12 at 6:34 pm

sales for May 2011 was down 10% from previous year

GTA sales
May y/y/y
2010 – 1984
2011 – 1867
2012 – 1959
However
June 2011 GTA sales was – 4133

I think thats when it starts to turn.

#196 unbalanced on 05.16.12 at 6:34 pm

To # 190 Arshes. Did you want some whine with your cheese!! Just saying. Read deeper into beta’s statement.

#197 Tony on 05.16.12 at 6:34 pm

Re: #26 thinker on 05.15.12 at 9:47 pm

Sure will seem strange to you when Canada is officially back in recession this fall huh?

#198 Mike on 05.16.12 at 6:51 pm

#191 Paul – Shore gold’s diamond mine East of P.A. is and always will be a pipe dream. I’ve talked with several geological engineers about the project and it’s just not feasible. The pit requires a 3:1 ratio, meaning that frickin’ open pit will be astronomically HUGE. It’s not economically feasible. End of story. End of pit. I don’t care who they appoint to their board. Their share price is at $0.26, down from $8 a few years ago for a reason.

Watch where potash prices go in the next year. Down down down. The Chinese did their hoarding for a few years already + with a massive global slowdown, that’s not going to help matters out. Some bigwig at BHP today was warning of further dwindling demand for resources.

Cameco… I work for Cameco! It’s slow right now. Yes, they are ramping up to double production by 2018, and yes it’s a great game plan. The Nukem aquisition is part of that strategy. It still doesn’t change the fact that it’s slow up north right now, and guess what? When Cigar Lake comes online, what do you think is going to happen to all those contracts and internal employeers who were working on all these major projects for the last 5 years? I can tell you – They’ll be laid off because there’s no longer any work for them. It takes a lot more people to build a mine then it does to run a mine!

And you’re saying all the big players are already here??? LOL Seriously? Who? PotashCorp, a few hundred BHP employees, and Cameco (who is a pin prick in the grand scheme of things even though every grasshopper thinks they are a giant $1billion company)… Who else? GM? Ford? Barrick? Transcanada?Enbridge? Husky? Rogers? Telus? Bombardier? Suncor? Rio Tinto? Alcoa? Didn’t think so.

So other than that, despite your completely unbiased references (HAHAHA what is that, you’re personal blog??), you’re bang on too pal!

Note to all others reading that aren’t from Sask: Paul is a perfect example of a typical watermelon wearing, die-hard roughrider fan “Have Province” cheerleader that is too blinded by the pride we were finally able to have over the last 5 yrs of our 100yr history to see the real picture.

#199 2centsCdn on 05.16.12 at 6:55 pm

Look at the pickle we’re in. Hundreds of thousands (millions?) of Canadians and our government are totally stuck. So many people max-ed out on the cheapest money in history …. and (with brick, stone and granite lust) gambled it on the most sacred thing to a Canadian ….. his home. So how does the government calm things down without pain coming to those who painted themselves into a corner. There are no more patches. We’ve found and used them all. Adjustment and pain has to come. But voters don’t vote for governments who cause them pain (heck …. it’s the 2000’s … you can’t hit kids with wooden spoons any more and you can’t hold adults accountable for anything ….. it MUST be someone else’s fault! ….. someone HAS to get us out of this : ) But there’s only one thing governments love more than doing the best thing for their country and voters …… and that’s a paycheck. How does the government slowly turn the screws tighter to steer this ship back on course (as we all agree HAS to happen one way or another) ….. and still keep their job? This will be interesting.

#200 Dave Delve on 05.16.12 at 6:59 pm

It will all be over soon:

http://www.youtube.com/watch?feature=player_embedded&v=LKsZ1hqHBHU#!

That was exciting. — Garth

#201 John on 05.16.12 at 7:06 pm

Regarding the comments and arguments about bank collapse. I’d have to agree with those that say “no bank will collapse.”

Put it another way. Have you ever heard of a casino collapsing? Never. That’s the situation we have today. The casino owners ran this up with derivatives and are interested in wealth transfer. Sovereign governments? You can’t have banks in this situation AND sovereign governments. You can however have casinos, and whatever manipulations needed to keep it open.

The thing is, these are not nice people, and they aren’t in control. Absolute “power” does corrupt absolutely. So they’ll need a “backstory”, a spin if you will. Probabaly many, and they’ll be cooked up as the chapters unwind.

The drama will depend on how much disorder there is among the complicit customers ( and the customers won’t take responsibility for entering and building on the casino). They know that. Check NDAA.

Are there bad guys here? I don’t believe that. I think it’s just opportunity and human nature working together. It’s in everyone. If it wasn’t, there would be talk of community and real human needs, the arts…life. There ain’t. Thus the complicity. It’s all forgiveable, top to bottom.

The SUV’s in Chile…all 2010-11-12. Parades of them. The casino dumped a lot of glucose into the game. Once that ability is done, they could look to stirring up fights. That’s a glucose generator like no other.

#202 Nostradamus Le Mad Vlad on 05.16.12 at 7:14 pm


#194 truth hammer — Re: hunger. See links on NYC and Dutch Food Aid.
*
NYC and most States A friend who frequently travels to the US on business said there is way more poverty and homelessness than the m$m lets on, and Dutch Food Aid The reality of life; US$1 billion is what the US has spent every day since 2001. Is it any clearer why they’re running on fumes? EZone Banks Another reason why the IMF is loading up on gold; 3:17 clip Now it’s time for Mary Poppins to give everyone a brief update on where we are, followed by Greece; JC Penney Akin to the Cdn. penny, it may go the way of the dodo bird; India’s rupee has collapsed; Greece has nothing on Japan; Canada – China Seems Harper is trying to placate the Chinese (because they buy our oil?); NBC Going broke? Hostess may close all plants; Stocks BS “BULL BISCUITS! This is classic PPT market rigging in an election year. After the whopper the US Government has been telling about the jobless rate (8% official versus 40% real-world), who would bet their investment money on a report of good housing data!” wrh.com; 6:15 clip Go to college, get bankrupt and be a debt slave all your life.
*
Coconut Oil helps lose weight; F-22 Not worth scrap metal, and we’re buying them; Pic of where ObL was buried (NOT!) “This is the ship that dropped the dead body of some old guy Obama wants you to think was Bin Laden into the ocean.

“Shot from my back yard using a Canon Digital Rebel T3i, through a Celestron C-90. Four frames merged using Realviz Stitcher, and color corrections using Photoshop CS3.” wrh.com; Smoking Man Education 4 U; 3:08 clip Cop chop in UK; For Profit Prisons Or gulags / stalags; Fukushima Where are TPTB in time of opportunity? Gllogggle Avoid it. See disciple’s link re: alternatives to G; Stop Reproducing! We’re ruining the elite’s planet! China – US – Oz Mixed bag.

#203 Devore on 05.16.12 at 7:21 pm

#174 Derek R

A debt jubilee makes a lot of sense, because it is a check to counterbalance runaway debt. Lenders know they cannot overlever someone, because every 50 years all debts are forgiven. It’s like leased land vs freehold. The closer the date gets, the more carefully people spend their money.

Two problems with this today.

First, it’s not part of the system. You can’t just arbitrarily decide to give people money to pay off their debts. (Most importantly, before you do this you gotta let me know, so I can join the ranks of the financially irresponsible and take that $800k the bank is throwing at me to buy a house with zero down.)

Second, the economic system du jour is debt driven. Everything is backed by debt, including the money in your wallet. If you erase debt, the system would be in chaos.

Now, you can argue the system sucks, and I would heartily agree, but if you want to dismantle it just say so, don’t try to wave your hands and do an end run around it.

#204 Devore on 05.16.12 at 7:27 pm

#176 Tiny Bottoms

Canadian Finance Minister Jim Flaherty said on Wednesday it was possible the government could one day privatize the mortgage insurance business

CMHC’s existing obligations cannot be privatized, and will always be government backed. If they could be, there would be a buyer for CMHC today, and the market would be teeming with private mortgage insurers. But no one can compete with CMHC on price, meaning cost of risk is being subsidized by taxpayers (ie moral hazard).

#205 Devore on 05.16.12 at 7:31 pm

#174 Derek R

Oh, and thirdly, it wouldn’t do any good anyways. Like Albertans who lived through the last real estate bust, praying for God to give them another bubble which they promised not to squander, and look at them today.

#206 TurnerNation on 05.16.12 at 7:34 pm

The 99%-ers new rally cry!!

“No bank will collapse. What part of that do you not understand? — Garth”

Can burning effigies be far behind? :-)

#207 Aussie Roy on 05.16.12 at 7:41 pm

#189Inglorious Investor

on 05.16.12 at 5:06 pm

…………………………………………………………………………..

There are only a few ways to deal with a debt crisis.

Pay down the debt.
Forgive part or all of the debt.
Inflate the debt away.
Go bankrupt and reboot.
Attempt to solve the existing debt crisis with more debt.

Have I missed any?. Which do you advocate?.

#208 VICTORIA TEA PARTY on 05.16.12 at 7:45 pm

#187 Nostradamus, etc.

Good ol’ George Soros. Does the economic wasteland occur BEFORE or AFTER he shows up at the scene, during which the crime always seems to take place?!

He’s one heck of a hedge funder, in the event.

Maybe he’ll show up in Athens shortly.

This date saw the European Central Bank cut off short-term funding to key Greek banks, saying, “you’re on your own until you get it all together.”

That’s like saying to a group of shipwrecked floaters, “You get the lifeboat, folks, after you first dry off your duds.”

It seems the Powers-That-Be have figured out how to pound Greece out of the Eurozone, and “stay whole” afterwards.

The result for Greece would likely be economic chaos followed by a military coup (remember 1967-74?).

But the Eurocrats, led by Germany, will care less.

My opinion is that a single world currency, a la Soros and his band of gaily-decked out downtown Euro-suits, won’t happen.

They completely screwed up in 2008, have been total screw-ups since, and we await the other shoe, er shoes, to drop: Portugal, Spain, Italy and the biggie, France.

Done like dinner, the bloody lot. And soon. Couldn’t happen to a finer group.

#209 Crash Callaway on 05.16.12 at 7:56 pm

F’s Dirty Work…

By eliminating the penny he’s making sure the “Fools” really will be pennyless.
Won’t even be able to buy penny stocks!

Oh… and if there’s no penny to drop, there can be no ramifications for his ineptness.

#210 Spiltbongwater on 05.16.12 at 8:30 pm

That was exciting. — Garth

Did you watch the hole 35 mins? Could you give us an cliff notes?

I was too busy cleaning myself off. — Garth

#211 Smoking Man on 05.16.12 at 8:51 pm

Hum
12 year old V.G. not allowed?

I understand.

But I want to scuttlebutt the logic in the clip, but I can’t Not allowed here.

Just don’t click on my name.

#212 Pat on 05.16.12 at 8:53 pm

Worked at a dealer for 10 years and the manufacture just did an audit and we got hit 100,000 grand for lax paperwork and not following all the rules on some work orders during that previous 10 years.
.
Never claimed health expenses since working 1988 but in 2006 had some hefty bills that allowed a $2500 tax refund. 2 years later CCRA said I owed then $2500 on a re-assessment audit. Then it took another year for them to review my receipts and give the $2500 back to me a 2nd time.
.
So anyone who thinks the banks will get away with what they have been doing over the past 10 years inflating this bubble is out of their mind. My guess the banks are going to get their asses handed to them when push comes to shove with the Gov’t of Canada.
The bank better have every scrap of paper in order and ready for inspection when the call comes.

#213 Onemorething on 05.16.12 at 8:58 pm

as Garth says the banks will be fine. Only 6 majors to sit in room and shackle. CHMC will be the scapegoat and funds will be directed or written off there all the taxpayers expense. I would expect the smaller loan and trust companies to fold and/or consolidate depending on how much RE exposure they have.

When you can pay your mortgage, and it’s recourse, how do you pay for the CC, Auto and Student Loan?

How about that LOC you used to make min payments and the compounded renovations on your new jail cell that’s balooned to 20K.

Everyone is being taken down slowly and fairly silently to avoid a massive rush to the door. When is the Greece situation gonna rub off on us and we pull our funds.

Agree with NOS LMV – How does it feel living in a global depression.

China news is a mess, Aussies downward spiral underway, no demand, debt deflation underway once again (or did it ever leave) and who’s left on this planet stating they are different – CANADA! Haha!

#214 Vancouver_Bear on 05.16.12 at 9:30 pm

#193Vancouver_Bear on 05.16.12 at 6:06 pm
It’s time to wake up Canada:

DELETED.

No it’s not. — Garth

So why a link to youtube video can’t be posted here?

It’s been posted ten times. Enough puerile economic drivel already. — Garth

#215 Snowboid on 05.16.12 at 10:18 pm

#124 DUI on Money Road on 05.16.12 at 10:06 am…

Our experience as well (but no pool)!

#216 Karie on 05.16.12 at 10:46 pm

Unbalanced – I think Betamax comes on here just to insult people. What I like about Garth is that he tries to help people but I don’t always agree with him or anyone because we all have our own unique situations and motivations. I do think we are headed for some interesting times unlike any other time in history but I think things look positive for Canada. Life is full of ups and downs but I hope people will find ways to find joy and prosper. I think much of housing in Canada is affordable but perhaps people’s expectations are different from what they used to be.

Has anyone seen the latest issue of Toronto Life? Garth Turners are mentioned under #19 – why the bubble won’t pop.

#217 Paul on 05.16.12 at 10:52 pm

Mike,
I wouldn’t live in Sask for all the money in China and I hate football.

An invitation to a very special luncheon

with

Mr. Tom Albanese

Chief Executive

Rio Tinto

Friday, May 25th, 2012

12:00 noon – 1:30 p.m.

Delta Regina Hotel, Novara Room

1919 Saskatchewan Drive, Regina

Mr. Albanese has a long and very positive history in the global mining sector, and has been Chief Executive of Rio Tinto since 2007.

Rio Tinto is a leading international mining group headquartered in Melbourne. They operate in North America, South America, Europe, Asia and Africa

Mr. Albanese is in Saskatchewan to visit the uranium and potash interests Rio Tinto currently holds in the province, as well as to meet with provincial officials. The luncheon is co-hosted by the Saskatchewan Chamber of Commerce and the Saskatchewan Mining Association, as part of Saskatchewan Mining Week.

#218 Fabrega on 05.16.12 at 11:15 pm

#9 No bank will collapse. — Garth

Of course not. The regular guys are the ones that will be screwed and collapse.

#219 pablo on 05.17.12 at 12:09 am

We’re about to see the banks feed on on the souls of sheeple, while H, F and the conservative Caucus blithely standby and observe the bloody debauchery with contempt and disdain. This is all nothing more than an engineered transfer of wealth from the masses to the elite.

#220 Derek R on 05.17.12 at 12:15 am

#205 Devore on 05.16.12 at 7:21 pm wrote:
before you do this you gotta let me know, so I can join the ranks of the financially irresponsible and take that $800k the bank is throwing at me to buy a house with zero down.

Fair enough but Keen’s idea was to give everyone the $50 per week whether they had an $800K debt or $800K savings, so I would hold off if I were you. People with debt have to use their $50 per week to pay it down but people without debt get to spend it or save it any way they want.

Since paying down debts is deflationary all we’re doing here is reducing the amount of deflation. We don’t hand out so much cash that it’s going to be inflationary. Just enough to stop the majority of people from defaulting.

And once the debt is paid down to a sensible percentage of GDP, the scheme stops. No one is talking about wiping out all debt. As you say that would cause real problems too.

#221 Stoopid on 05.17.12 at 5:48 am

Who’s going to buy these houses?

50% of Canadians expect to carry mortgage in retirement
Michael Babad
Globe and Mail Update
Many see carrying mortgage
Ever wonder whether your retirement years will be mortgage-free?
Fifty-one per cent of Canadian homeowners believe they’ll still be paying, according to a survey released today by Bank of Montreal.

Fifty-two per cent say their debt burden or mortgage is causing them trouble in saving for their retirement years, the survey by Leger Marketing showed.

On a regional basis, those feeling the heat most are in British Columbia, where 59 per cent think they’ll still be paying, followed by 58 per cent in Quebec, 48 per cent in Manitoba and Saskatchewan, 47 per cent in Ontario, 46 per cent in Alberta, and 43 per cent in the eastern provinces.

#222 betamax on 05.17.12 at 6:06 am

#183 unbalanced: “To # 169 Betamax. Sounds to me you are the type of person who would write their own mother a ticket or cut someone’s throat just to get ahead. Just saying.”

That’s a very bizarre interpretation. I agreed with another comment about being too busy having an interesting life to obsess about home decor, which is true. I’ve both owned and rented, and in both instances I was too busy with work, family and friends to care vary much what colour the walls were painted.

“Read deeper into beta’s statement.”

Hmmm. My statement was “You go, grrl. Well said!”

Apparently, you found a treatise by Machiavelli in there. Wow. That’s some deep reading.

#223 betamax on 05.17.12 at 6:21 am

#218 Karie: “I think Betamax comes on here just to insult people.”

Today I was going to be really insulting and refer to a bunch of people I don’t know as smug and self-righteous, smirking and jealous, but someone already had it covered.

#224 Karie on 05.17.12 at 9:34 am

Betamax – I’m guessing that Vangrrl is a single woman that lives in Vancouver. By her nickname and use of omg, I’m guessing she’s in her twenties. She can’t fathom the idea of going to home depot or thinking about interior decor, etc. because she wants to spend her time doing interesting things she says. That sounds like a fun way to live at that time.

I have a husband and 3 school aged kids. My life and goals are not the same. I think of bedroom sizes and built ins, school boundary lines and extra curricular activities and things that are just not on a young person’s radar.

People are coming on here bashing home owners. I really don’t like that. I have a home owner success story. We bought a house below our means and have stable low mortgage payments so we have some financial freedom and are able to go out and do interesting things.

I would love to hear success stories from renters and home owners, not gloating about being a renter and that home owners are suckers. I want to hear why people rent – is it for mobility like Jim, is it to save to eventually buy a house or are some people renting low to save money to buy stock and mutual funds and how is it working out for them? I have been reading Garth’s stuff since the 90’s. There was a time when he was heavy into real estate and later owned an acreage in the country.

I will continue reading the blog to find little gems of good info.

#225 jrochest on 05.17.12 at 10:49 am

Paul @ #219:

“I wouldn’t live in Sask for all the money in China and I hate football.”

And that’s why all your pumping isn’t going to convince anyone that Saskatchewan is going to be the next economic leader of Canada. It’s hard to build an empire in a place that people actively flee from.

#226 allan on 05.17.12 at 12:09 pm

All the governmental changes, from increasing downpayments, to shorterning maximum term are all too late. The horse has left barn, all the government is trying to do to make sure they aren’t seen as the reason for the bubble.

#227 betamax on 05.17.12 at 3:50 pm

#226 Karie: “I have a husband and 3 school aged kids. My life and goals are not the same.”

Fair enough, though I am not in my twenties but still agreed with Vangrrl’s suggestion that there are more interesting things to do with one’s life than home improvement — even if you own.

“People are coming on here bashing home owners. I really don’t like that.”

People are generally not criticizing home owners per se; they are criticizing those who bought beyond their means at bubble prices and historically low rates, largely on credit, and who are blithely unaware of the risk.

“I have a home owner success story. We bought a house below our means and have stable low mortgage payments”

That means you have little in common with the type of owner being criticized here. The coming crisis is because too many over-bought with cheap credit and little thought. You are nothing like that, so you really shouldn’t take comments here about ‘owners’ to heart. Though you may feel tarred by the same brush, they are not referring to people in your situation. You bought at the right time; others have not.

#228 Arshes on 05.17.12 at 4:19 pm

#226 Karie on 05.17.12 at 9:34 am Betamax – I’m guessing that Vangrrl is a single woman that lives in Vancouver. By her nickname and use of omg, I’m guessing she’s in her twenties. She can’t fathom the idea of going to home depot or thinking about interior decor, etc. because she wants to spend her time doing interesting things she says. That sounds like a fun way to live at that time.

I have a husband and 3 school aged kids. My life and goals are not the same. I think of bedroom sizes and built ins, school boundary lines and extra curricular activities and things that are just not on a young person’s radar.

People are coming on here bashing home owners. I really don’t like that. I have a home owner success story. We bought a house below our means and have stable low mortgage payments so we have some financial freedom and are able to go out and do interesting things.

I would love to hear success stories from renters and home owners, not gloating about being a renter and that home owners are suckers. I want to hear why people rent – is it for mobility like Jim, is it to save to eventually buy a house or are some people renting low to save money to buy stock and mutual funds and how is it working out for them? I have been reading Garth’s stuff since the 90′s. There was a time when he was heavy into real estate and later owned an acreage in the country.

I will continue reading the blog to find little gems of good info.
———————————————————-
I think the whole point of this blog is that home ownership isnt an automatic win just because you managed to purchase a home or even to get it paid off. No one here is to bash home owner as much as it to let people know maybe your not in a great position as you think you are. People think that home ownship means your on the way to wealth or early retirement or will be financially secure. Your “grown-up” and “responsible” if you purchase a home. Only young people or people who need the mobility rent.

My parents have a paid off home, they purchased in the late 70’s and paid it off approx. late early 90’s. But now my dad is 67 and still working. Having a paid off home for almost 2 decades hasnt help my father retire. He thought a paid off home was the best thing someone could do, now he realizes he should have saved more. Somehting he didnt realize until he asked his advisor about retiring. My parents lived below thier means, no vacations every year or even every other year, cars paid with cash, dont eat out, diffenately frugal people. Yet he cant retire. He recently had heart surgery and suffered a stroke from a blood clot, now i worry about the cost of long term care and retirement funds running out. They have approx $300,000 and CPP and OAS. Yet may not have enough for the next 20 + years. Did thier paid off home equal a “success” story? If you have a paid off home yet, not enough saved for the future???? Why is that considered a “success”?

I dont rent now, i live with my parents right now, but i did before. Do i see myself ever owning a home, probably not. Why ? I think in the long run its the best way to secure my financial future, a house or retirement?

Every month my parents pay money into thier “free” home, had they saved more they probably could afford to live their as long as they want. But when my father finally gets out of the hospital i’m gonna beg them to sell and rent. They’ll be better for it. Money to travel, money to relax, money for now and the future. No burden of the home, and not enough for retirement.