The precipice

Days ago we all had fun ripping Luke. You remember him. The 29-year-old software consultant guy renting with his house-horny GF/fiancée, in serious jeopardy of buckling under pressure from her and those meddling inlaws. Not only were they needling him to buy their daughter a home before wedding and baby arrived (apparently simultaneously), but they pulled out the heavy artillery and offered a bribe.

Luke wavered. He made the Big Mistake of taking her to open houses. It was all over. They saw a mini-McMansion in the distant GTA burbs for $539,000. “We both love this house, area and finished basement suite,” he told me. “The down payment will involve draining almost all our savings 60K and 48K no interest cash loan from her parents (hopefully part on this loan becomes a gift when we are married).”

But fuzzy financial thinking was only one of Luke’s failings. “I wish we had the luxury to wait until this bubble pops, however our wedding is next year and we want to start a family soon.” Good strategy. Combine a marriage, a mortgage, a move, a baby, a debt and all that commitment stress. Why wouldn’t things work out?

And on top of that, risk. As this pathetic blog counseled: “If you buy you’ll have (a) no liquid assets, (b) a mortgage of $440,000, (c) double the monthly costs, (d) market risk from buying at the top, (e) rate risk with a mortgage that will renew much higher, (f) conjugal risk since you’re buying before marriage and the worst, (g) indebtedness to your inlaws.”

Being the sensitive, empathetic and nurturing person my dog knows me to be, I also questioned his manhood.

Anyway, it’s over. We have a GreaterFool success story, proving once again the immense healing power of ridicule and public shame.

“Hi Garth, thank you for your feedback and from everyone that commented from personal experiences.  It saved us from financial suicide for the next 25 years,” he says, adding testosterone with each syllable. “We found out Sunday there were 3 existing bids for the Monday deadline.  I absolutely knew we had no chance in hell of getting this from the listing/sold history on the street.  However I hoped by submitting an offer at the full asking price and getting beat out, it will teach my fiancée how crazy this market is and cool off her house horniness. When the deadline on Monday passed, our real estate agent told us the competition blew our offer out of the water.

‘This was our first bidding war and I hated every minute of it.  Thankfully we were outbid (it sold for 570K) by a higher offer that had no conditions. I’m glad we both went through this experience because now my fiancée has cold feet and wants to slow down a bit.

“PS: From the comments I read, I accepted that it is a bad idea to borrow the 48 K from the inlaws.  I convinced my fiancée that we should wait and that we can rent/save 4K a month for a year instead. Thank you. Thank you. Luke.”

One horny young couple snatched back from the precipice. But so many others continue to go over the edge and into the gorge. They’re egged on not only by time-warp parents, plus mainstream pumpers of the real estate cult, who refuse to see any risk on the horizon. Like Toronto Life. Says the current edition on why the housing bubble won’t pop:

“Everyone is eager to buy here, and that demand is what’s driving prices up and up. Sure, the Garth Turners still warn of a bubble and moan about household debt. Yet all the evidence is of a city that’s stable and prosperous. The kind of place where a million-dollar bungalow sounds like a bargain.”

Of course, crack journalism like that helped persuade the bank cop, OSFI, to propose a raft of new regs in March aimed at saving us from ourselves. I’ve referenced them a few times, spelling out exactly how the regulator wanted to pop the credit balloon by forcing banks to behave themselves. Last week I waxed poetic on the impact of dropping HELOC loan levels (one major recommendation), and prior to that referenced the most controversial change, which provoked howls of lender outrage.

OSFI wanted mortgage borrowers to requalify for their loans every time they renewed. That sounds simple, but in a falling housing market (the one we’re headed for) it could mean folks with homes worth less than they paid might have to cough up money to hang on to their mortgages. The intent was to ensure that banks’ risk did not jump higher as real estate values headed lower. Those people with little, if any, equity – and therefore more likely to default in a bust – would be forced to sell or find other financing. If this were Wild Kingdom, that would be called natural selection.

But, it’s Canada.

So this week OSFI let the howling banks know this rule will not be implemented (although most others will). People who bought real estate with no money down, taking 95% or 100% financing, will be allowed to sink without supervision when prices correct. Since we’ve never before had so many homeowners with no skin in the game, such low rates, such easy credit, such speculation, such debt and such inflated prices, we’ve no idea how this ends.

Oh wait. We do. It’s called America.

Thank god it’s different here.

210 comments ↓

#1 TurnerNation on 06.06.12 at 8:53 pm

Doghouse! I get it.

#2 CrowdedElevatorfartz on 06.06.12 at 8:57 pm

how long will Luke’s fiancee last before reverting back to “norm” with her parents whispering in the background……. 4 months….6 ? No way she’s gonna last 12 months

#3 T.O. Bubble Boy on 06.06.12 at 9:01 pm

By the time OSFI gets anything implemented, the downward spiral will already be in full swing. Maybe that was Flaherty’s goal all along? (putting more “oversight” to give the illusion of proper management, but without any actual change)

#4 Grooby. on 06.06.12 at 9:08 pm

… So prices are going to be even stickier on the way down? This is going to be a 5-8 year melt, isn’t it, unless the Big Boomer Sell-Off pushes supply off the charts any sooner.

Garth, when are you going to have a mobile-optimized version of your site??

#5 lilyflor on 06.06.12 at 9:08 pm

Luke might live happily ever after, after all! Nothing like a bidding war to knock some sense into people. I’m glad it worked out for him. He will remember this blog for a long time to come.

#6 coastal on 06.06.12 at 9:10 pm

OSFI is a bunch of wussies who want to see the masses melt down on their own doing which looks like it won’t be much longer. Typical Canadian pansy organization, where it must be against the Charter of Rights to help people from financial suicide. As Harper said yesterday
“we’re now running out of runway”. Splat !

#7 T.O. Bubble Boy on 06.06.12 at 9:11 pm

$720k, “mostly land value”:
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=12015513&PidKey=1361927255

If HELOCs get cut, how is someone going to find the $500k to tear this down and rebuild?

If HELOCs are to be capped at 65% of the house price, that’s a max $468k HELOC (assuming that someone had $720k in cash to buy it in the first place)

None of this makes any sense.
It’s almost over folks, and this will not end well.

#8 Foggy on 06.06.12 at 9:11 pm

Nice looking house actually. I saw that sub-division being built and there was quite a lot of visible chipboard (sheathing, roof, sub-floors) you could see from the street.
He won’t be sorry he waited. Give it a year or two and he will have greater selection and reduced prices.

#9 sam on 06.06.12 at 9:14 pm

The actions of the conservatives and the OSFI guarantees a tax payer bailout of the banks and CHMS.

The bursting of the bubble will be more catastrophic, if debt continues to be leveraged up.

#10 Frank le skank on 06.06.12 at 9:18 pm

OSFI chickened out because no one wants to pull the trigger… would you?

#11 Dan in Victoria on 06.06.12 at 9:19 pm

Hey Luke check out Vancouver, Whistler, Vancouver Island ( Up Island especially)
A’int pretty.
You’re ahead of the curve, stay ahead.
These things always correct, takes time, but they correct.
I’m glad that you realized that it was financial suicide.
Pretty much what I thought.
As soon as you see the crowd rushing to do something always, always, always look the other way.
Learn human nature, people are so predictable.

Google the seven stages of a bubble by Hyman Minski
Get your date to read it with you.
I guarantee you, YOU WILL understand what is going on.
Good Luck.

#12 dutch4505 on 06.06.12 at 9:21 pm

I live just south of vancouver on the USA side. My real estate holdings have decreased in value each month for the past six months. Assuming that Garth posts 360 times a year he will have an other 2,160 posts (over 6 years) to describe how real estate bubbles burst. One good thing about corrections is that it gives young families a chance to obtain affordable housing. So its not all bad. Welcome Canada to the new world order.

#13 dutch4505 on 06.06.12 at 9:22 pm

I meant decreases for the past six years, not months

#14 JSS on 06.06.12 at 9:23 pm

“Let’s kick the can down the road.”

– OSFI

#15 2centsCdn on 06.06.12 at 9:29 pm

Yes …. This is Canada.
Social gentleness must be maintained …. even at our peril. Kind of reminds me of an old story ……

The Ant and the Grasshopper

CLASSIC VERSION:

The ant works hard in the withering heat all summer long, building his
house and laying up supplies for the winter. The grasshopper thinks
he’s a fool, and laughs and dances and plays the summer away. Come
winter, the ant is warm and well fed. The shivering grasshopper has no
food or shelter, so he dies out in the cold.

THE END

THE CANADIAN VERSION:

The ant works hard in the withering heat all summer long, building his
house and laying up supplies for the winter. The grasshopper thinks
he’s a fool, and laughs and dances and plays the summer away. Come
winter, the ant is warm and well fed. So far, so good, eh?

The shivering grasshopper calls a press conference and demands to know
why the ant should be allowed to be warm and well fed while others less
fortunate, like him, are cold and starving.

The CBC shows up to provide live coverage of the shivering grasshopper,
with cuts to a video of the ant in his comfortable warm home with a
table laden with food. Canadians are stunned that in a country of such
wealth, this poor grasshopper is allowed to suffer so while others have
plenty. The NDP, the CAW and the Coalition Against Poverty demonstrate
in front of the ant’s house. The CBC, interrupting an Inuit cultural
festival special from Nunavut with breaking news, broadcasts them
singing “We Shall Overcome.” Sven Robinson rants in an interview with
Pamela Wallin that the ant has gotten rich off the backs of
grasshoppers, and calls for an immediate tax hike on the ant to make him
pay his “fair share”.

In response to polls, the Liberal Government drafts the Economic Equity
and Grasshopper Anti-Discrimination Act, retroactive to the beginning of
the summer. The ant’s taxes are reassessed, and he is also fined for
failing to hire grasshoppers as helpers. Without enough money to pay
both the fine and his newly imposed retroactive taxes, his home is
confiscated by the government.

The ant moves to the US, and starts a successful agribiz company.
The CBC later shows the now fat grasshopper finishing up the last of the
ant’s food, though Spring is still months away, while the government
house he is in, which just happens to be the ant’s old house, crumbles
around him because he hasn’t bothered to maintain it.

Inadequate government funding is blamed, Roy Romanow is appointed to
head a commission of enquiry that will cost $10,000,000.

The grasshopper is soon dead of a drug overdose, the Toronto Star blames
it on the obvious failure of government to address the root causes of
despair arising from social inequity.

The abandoned house is taken over by a gang of immigrant spiders,
praised by the government for enriching Canada’s multicultural
diversity, who promptly set up a marijuana grow op and terrorize the
community.

THE END

#16 Mean Gene on 06.06.12 at 9:31 pm

Luke rocks, now he needs to invest his down payment for a year and earn more than inflation.

#17 Montrealer on 06.06.12 at 9:31 pm

that mini mcmansion has 4 bathrooms… who the heck needs 4 bathrooms? my girlfriend would absolutely never want to clean our place if it had that many bathrooms.

#18 Frank on 06.06.12 at 9:35 pm

Grooby. on 06.06.12 at 9:08 pm … So prices are going to be even stickier on the way down? This is going to be a 5-8 year melt, isn’t it, unless the Big Boomer Sell-Off pushes supply off the charts any sooner.

Garth, when are you going to have a mobile-optimized version of your site??
——————————————————————–

No prices will crash FAST when the downturn takes hold. Look at Vancouver which just started to crash about four months ago and is now down 13% or $150,000. It’s going to be 2008 all over again only this time the slide can not be stopped. Prices will not melt….they will crash and crash hard!

#19 timbo on 06.06.12 at 9:42 pm

Great post tonight Garth..

“http://www.nbcsandiego.com/news/local/Albertsons-Announces-Layoffs-in-California-Nevada-Stores-157622165.html”

“”It’s the largest single layoff we have had that I can ever remember,” said Greg Conger, president of United Food Commercial Workers, Local 324 in Orange County. “It’s pretty devastating.”

Damn unions, we need cheaper labor to compete…..

http://www.sacbee.com/2012/06/06/4541976/2-california-cities-voters-embrace.html

“Decisive victories for ballot proposals cutting retirement benefits for government workers in two of the largest cities in the U.S. emboldened advocates seeking to curb pensions in state capitols and city halls across the nation.”

Pensions under attack, who would of thought of that?….

#20 Axehead on 06.06.12 at 9:43 pm

Ugly cupboards, 1 car garage, skinny basement; it’s not all that great Luke…good decision.

#21 X on 06.06.12 at 9:43 pm

I do hope that all of this OFSI talk really becomes more than talk. There are so many uninformed people out there that have no clue they have gotten in over their heads.

Also if C makes even 2 quarter point interest rate increases later in the year would help to settle household debt levels, yet still leaving rates at historically low levels.

#22 Jay Currie on 06.06.12 at 9:55 pm

Good for Luke!

I would not be surprised if, at the margins, the banks themselves took the hint and made the re-up on mortgages a bit tougher. Or not.

Bubbles, viz Spain, tend to correct like a balloon whizzing around your living room; lots of initial random energy followed by a plop. Bidding wars are done in Vancouver and Victoria and the outer burbs of the Sour Apple. Listings are surging. Vacation property is over.

But we are some distance from the real terror ride of the early 80’s because right now money is free. As Garth ceasely points out, that will not last much longer. However, it will take a few points in interest to produce the full scale panic.

I think Garth has it about right, a 10-15 point drop followed by a few years melt and then? Well then the boomers will be unloading in earnest and rates will be going up. I can’t imagine that an increase in supply and an increase in the cost of money will be triggering any sort of rebound. Quite the opposite.

And that is largely ignoring the implosion in Europe, the collapse of Spain, the death of the Euro, and the quaint idea that America can print its way to prosperity.

A good time to be liquid.

#23 abraxas on 06.06.12 at 9:59 pm

What’s up with the CPD ETF? It’s been dropping like a stone over the last couple of weeks (at least by preferred’s etf standards).

#24 Bobby on 06.06.12 at 9:59 pm

Maybe they should move here to Victoria. Prices are dropping faster than a whore’s drawers. Very little moving, with lots of price reductions.
Looked at condos online today and spoke to a few realtors. Lots empty with all in need of major reno. Even the realtor said it is a different market now, but quickly said it will come back. Tried to put a little lipstick on a 6 month old listing. Spoke of many people having difficulty getting financing.
I said oh, and she quickly responded that was just her opinion.
It is getting really ugly out there.

#25 timbo on 06.06.12 at 10:03 pm

http://shameproject.com/report/malcolm-gladwell-unmasked-life-work-of-americas-most-successful-propagandist/

“Yep, Gladwell has come a long way from his youthful days at the National Journalism Center, but, on the other hand, he hasn’t really moved at all. As Philip Morris put it, the National Journalism Center “was developed to train budding journalists in free market political and economic principles . . . to get across our side of the story.” Their investment in Malcolm Gladwell has paid off beyond their wildest dreams.”

Paid to lie. That does not happen here does it?…….

#26 Smoking Man on 06.06.12 at 10:04 pm

Luke is a fail, he should have bought.

Will the price of the place drop? probably but maybe not.

And if it did he would find out what he’s made of.

As a guy went bust a few times each time came back with a vengeance. Hard times when the world is sitting on you and you cant breath is when the brain kicks in, nothing to lose anymore is when you take risks.

Being liquid is being frightened. best to have nothing and nothing to lose so you can get in the zone and crush it.

From yesterday

John G
they are not cyclist, they are phycolists.
Anyway on day 5. this is easy when you put your mind to it.

#27 Jon B on 06.06.12 at 10:18 pm

Anybody see a trend here in the rhetoric? Carney warns of higher interest rates, yet they have barely nudged in the past few years. The OSFI regulator warns of making home owners re-qualify prior to renewal, yet it won’t get implemented. There’s plenty of bark but not much bite to all of these warnings of change that are supposed to crack down on the excesses of borrowing and living beyond one’s means lifestyles. I believe the low rent on money, party like it’s 2006 consumer mentality still has enough steam in it to delay the inevitable correction for quite a while. Wow is it ever going to be spectacular whenever it happens.

#28 farmboybc on 06.06.12 at 10:21 pm

2centcdn,you are my hero.You will most likely be charged with a hate speach offence though.

#29 Not 1st on 06.06.12 at 10:24 pm

OFSI defanged by the banks. Time to go back to sleep little toothless regulator. Bubble continues.

#30 Mr. Anderson on 06.06.12 at 10:29 pm

“we’ve no idea how this ends”…….yes we do, not well.

#31 John G. Young on 06.06.12 at 10:31 pm

#26 Smoking Man on 06.06.12 at 10:04 pm

“From yesterday

John G
they are not cyclist, they are phycolists.”

Do you mean “psychlists”? That’s a good one.

“Anyway on day 5. this is easy when you put your mind to it”

Excellent! Please keep it up and give us daily updates.
If it ever starts to feel overwhelming, just remember what Bill Gable said — one day (or one hour, or one minute) at a time.
And never forget — you’ve got people rooting (and praying) for you.

John

#32 Limerick Lou on 06.06.12 at 10:37 pm

“Last week I waxed poetic on the impact of dropping HELOC loan levels (one major recommendation)”

Captain Garth waxes poetic, Furst waxes poetic and I know you said this was not a poetry blog but…:

There once was a blogger named Furst,
Who wrote the bubble has burst,
Behold here comes the crash,
All hold on to your cash,
For soon you will quench your real estate thirst.

#33 Derek R on 06.06.12 at 10:39 pm

Luke, dunno if your fiancee is a reader but if she is buy a copy of Money Road from our worthy host. If you can get her to read it, it might well bring her round. Even if it doesn’t you’ll find it a useful read yourself.

I’m speaking from experience here. Two years ago I was having difficulty persuading my wife that we should sell up because there might be trouble ahead but a combination of bringing her along to one of the public talks that Garth used to give, followed by leaving Money Road where she could see it, and she saw the light. Now we’re both on the same page.

Anyway, good luck to both of you now and in the future!

#34 Mr. Lahey on 06.06.12 at 10:45 pm

#240 furst on 06.06.12 at 8:30 pm

Thanks for your gracious acceptance of opening the SASTGFBDCParty with your trademark FUUURRRSST and for your newly added talent of poem writing. Ricky, Randy, Bubbles, Barb and the rest of the Sunnyvale gang look forward to it!

#35 John on 06.06.12 at 10:52 pm

Garth wrote:

” Since we’ve never before had so many homeowners with no skin in the game, such low rates, such easy credit, such speculation, such debt and such inflated prices, we’ve no idea how this ends.So this week OSFI let the howling banks know this rule will not be implemented (although most others will). People who bought real estate with no money down, taking 95% or 100% financing, will be allowed to sink without supervision when prices correct. Since we’ve never before had so many homeowners with no skin in the game, such low rates, such easy credit, such speculation, such debt and such inflated prices, we’ve no idea how this ends.

Oh wait. We do. It’s called America.

Thank god it’s different here.

Oh wait. We do. It’s called America.

Thank god it’s different here.”
—————–
There’s a problem here. It hasn’t ended in “America”. And “America” is no more America than “Canada” is Canada. The source of all the housing booms going on has been the world derivatives scheme. Canada was targeted because it was possible. That’s it. It’s no different than leaving your new high-end bike unlocked outside Union Station. It’ll get stolen. Thieves exist.

If “how it ends” is supposed to be in place south of the border, that means the “ending” includes an economy soaked in printed cash and a continuing derivatives ponzi. That’s one hell of a lot of cocaine keeping the fantasy alive. Not sure how anyone can assert that how it is now is “how it turned out”.

There is no Canada or America in this deal. Global derivatives are global…it’s not rocket science.

Luke’s issues will not be solved buying or not buying a house. This fact is what allows a consumption-based GDP to operate and dig in. Dramatic life-damaging moves not made now will be made later. It’s just a delay of game.

#36 Smoking Man on 06.06.12 at 10:57 pm

Garth, I bought some gold and silver bars today.

On has to diversifie at some point.

#37 martin on 06.06.12 at 10:58 pm

#15 2centsCdn – That is classic!

#38 Aussie Roy on 06.06.12 at 10:58 pm

Aussie Headlines

New statistics from RP Data show capital city home values are down 5.3 per cent on a year ago, led lower by heavy falls in Melbourne and Brisbane, which have dropped 8.4 per cent and 6 per cent respectively.

The big challenge faced by many homeowners is falling equity. Some people who took out mortgages in recent years with relatively small deposits may find their loans are higher than their property values.

http://www.couriermail.com.au/life/homesproperty/home-price-falls-hamper-investment/story-e6frequ6-1226382972984

Falling interest rates don’t support house prices when the positive emotion towards debt is gone.

As the Reserve Bank this week took action to insulate Australians from the potential danger posed by the fallout from the European debt crisis, it would have been mindful of recent declines in the Australian housing market and the possible damage this could do to bank balance sheets.

http://www.smh.com.au/business/holding-back-cuts-will-only-hurt-big-four-20120606-1zwpz.html

Growing population supports house prices, right?.

With the release of the latest building approvals data from the Australian Bureau of Statistics this week for April 2012 we are seeing no signs of improvement for the home building sector. The lack of activity has a significant multiplier effect across the economy; not only is it those linked directly to the construction sector which suffer due to lower levels of construction but also retailers and service providers. The slowdown isn’t only being felt in new housing, the number of established houses and units being sold are also tracking below average.

Although new construction and sales of existing properties has been trending lower for many years now, Australia’s population has continued to grow.

http://blog.rpdata.com/2012/06/why-havent-the-number-of-home-sales-and-dwelling-approvals-moved-in-line-with-population-growth/

#39 Mr. Lahey, Sunnyvale Trailer Park Supervisor on 06.06.12 at 11:00 pm

#242 John G. Young on 06.06.12 at 8:53 pm

“Any other suggestions? I’m open to anything that’s legal…Cheers, John”

Why the answer is simple Mr. Young. A contest of sorts between you and Westernman at the SASTGFBDCParty much in the same manner as the ploughing match that was held between Westernman and Form Man at the FASTGFBDCParty. Our fearless leader Captain Garth even started the contest by belting out a mighty, “gentlemen start your engines!”

#40 Jim on 06.06.12 at 11:01 pm

#152centsCdn

Good lord that was funny! Sadly, somewhat true.

I was given a flyer today by some group sympathetic to those ‘striking’ quebec students. The leaflet complained that illegals (e.g., people who aren’t allowed to be here) do not get access to subsidized education.

Apparently it is now a requirement of a liberal democracy that citizens should (through non-voluntary confiscation of their wealth) subsidize illegal immigrants. At least your gang of spiders came into the country through proper means.

#41 Dan in Victoria on 06.06.12 at 11:05 pm

2centsCdn @ 15
Ah yes, the guide lines for The Canadian ministry of ” Hugs and Kisses”

#42 furst on 06.06.12 at 11:10 pm

Mirror image – a poem by Furst

It was 2006, in a land south of the border
Houses were like gold to the treasure hoarder
Prices went up, as interest rates fell
Buy a house today and tomorrow, sell
Guaranteed gains was the masses mantra
Buy a Mercedes or Beamer, forget that Elantra
Everyone and their mother was a Trump in the making
Fancy house, hot cars, life was worth faking
It finally came crashing down quicker than fast
Empty lots, for sale signs, the party didn’t last
Mortgages under water and no one to buy
Paper riches built on the back of the biggest lie
That houses would go up forever and more
Property is smart, savings are for the poor

2012, Canada stands stable and hither
On top of the world, while other countries wither
Buy high and sell higher is the way to go
We’re not the US, this bubble won’t blow
Upgrade the lighting, repaint the walls
Renovate the entire house on margin calls

Keep playing the music and no one will hear
When the bubble pops, it’ll be too late, time to cue fear

#43 Observor on 06.06.12 at 11:13 pm

There was NEVER ANY chance that buyers were going to have their renewals refused just because the equity fell on a house price decline. That would be ludicrous.

From my reading of the proposal that was never intended, instead the banks were going to just have to take that potential loss into account in their capital ratios.

The proposal was:

The LTV ratio should be re-calculated at renewal, each refinancing, and whenever deemed
prudent, given changes to a borrower’s risk profile or delinquency status, using an appropriate
valuation/appraisal methodology.

I just did not see anything that said the renewal must be refused if the LTV is inadequate. Any suggestion to do so despite a good payment history would be completely ludicrous.

#44 Observor on 06.06.12 at 11:14 pm

Hey doomers, how ’bout dat market rally today?

#45 Bottoms_Up on 06.06.12 at 11:18 pm

Luke, thank you for getting back to us, and thank goodness you lost the bidding war. You are liquid, and a year from now you’ll be sitting on $60,000+ plus $48,000 extra savings and you’ll be looking at that suburban house (soon to be worth $470,000) and really trying to figure out what it is worth and if you’d like to sink your hard earned dough into it…you just made a life changing decision for the better….and you’ll be able to vultch when no one else is buying….

#46 Devore on 06.06.12 at 11:20 pm

#23 abraxas

What’s up with the CPD ETF? It’s been dropping like a stone over the last couple of weeks (at least by preferred’s etf standards).

It’s down 2% from the peak, 1% in the last 2 weeks, and still well above the 12 month low. What are you talking about?

#47 From Mississauga with Love on 06.06.12 at 11:22 pm

so now all the OSFI rules that were supposed to pop this won’t happen. It’s not just the requalification but rather the non-amortization of HELOCs now. This government doesn’t want to do anything about it and we are the bigger losers waiting on this blog I tell you. If I had listened to my in-laws 3 years ago and not read this blog, I would have been better off than I am now 100% sure.
But now, because I listened, it’s damned if I do and damned if I don’t.
Yes, what you say is logical, but what has been happening is not, and is continuing to not be the case.
This bubble won’t pop in the GTA like you are portraying it to be.
I give up on you and this blog. I have made up my mind to buy this year.
As for the guy you just saved, he might or might not live to regret it. I am not sure which one it is now..
This sucks…

#48 JimmyAAA on 06.06.12 at 11:32 pm

Yeah 2centsCdn, thats what happens in Canada ALL THE TIME.

I am so sick of you Cons thinking you do all the F***IN work and everybody else just takes. LEAVE, you do not provide nearly as much value as you think.

BTW – I am 42 years old, I have been unemployed for a grand total of less than 1 year since I was 16. I pay taxes (alot) all the time because that’s part of the deal for living here.

#49 patsan on 06.06.12 at 11:33 pm

#15
Fantastic…you just forgot unions…

#50 MJG on 06.06.12 at 11:33 pm

Re #15. “Lies to children”.

#51 Mr Buyer on 06.06.12 at 11:37 pm

I have been through a few iterations now of changes are coming watch out here we go, race to the bottom because of pending changes only to see the pending changes not materialize or materialize in a more or less inconsiquential form. What the scare tactics served to do was to further activate the “buy now before” button and successive rounds of scare tactics served to raise tolerance and disreguard of the scare tactics. Government measures served to start this horrific bubble for certain and inflated it but they will not be able to sustain the bubble indefinitely. We have turned a corner with the huge drops in sales we are seeing and the bubble has thus topped. There now persists the idea that there will be a few up and down movements in what minimizers are describing as a stabilizing period. Once prices drop and do not bounce back so to speak that will be the effective end of real estate as money making investment for at least a generation or two (maybe longer with the level of penetration of the internet). I can safely assert that America’s real estate sector has likely not hit the bottom and will not only bounce along the bottom for a long time but will likely drop further still but not at the massive rates it has been dropping. We will endure a terrible crash in real estate as this bubble continues to collapse and it is not going to be over in 6 or 7 years. That notion is being floated by vested interests that do not want to see a stampede for the door for what ever reason. The process is easy to outline and we are well on our way and the government can only impact the time line at huge expense. BUYER BEWARE. NOW IS NOT THE TIME TO BUY A HOUSE. SALES ARE FALLING ACROSS CANADA. THE BUBBLE HAS TOPPED.

#52 Mr Buyer on 06.06.12 at 11:42 pm

#29Not 1st on 06.06.12 at 10:24 pm
OFSI defanged by the banks. Time to go back to sleep little toothless regulator. Bubble continues.
……………………………………………………………
Yes the bubble continues along it’s simple and natural life cycle which presently happens to be at the topping of the bubble with falling sales and now falling prices which will continue to outright collapse of the bubble and a crash in real estate. It does not matter what the government does in the end.

#53 NorthOf49 on 06.06.12 at 11:59 pm

Luke should count his lucky stars he lost out on that beaut. As for the “lucky” winner, I hope you’re going to like:

– Proximity to one of the nastiest stretches of Hwy 400. Packed weekdays with commuters, packed on weekends with northbound cottagers.

– Clogged off ramps at Rutherford from Wonderlanders and Vaughn Mills shopaholics

– The delicious waft of Diesel from the McMillan CN switching yard, the largest rail classification yard in Canada, directly south. From the wiki, “It is a constant source of noise pollution exceeding acceptable decibel levels! High pitch squeeling and a helicoptor motor sound dominate the noise floor. It is most noticable at night when the rest of the area is quiet.”

I can picture it now, the new homeowner sitting on the deck in his 35 foot wide backyard, enjoying his first beer, and suddenly realizing he just paid almost $600,000 for this!! Its just SO wrong.

#54 West coast on 06.07.12 at 12:03 am

OSFI shouldn’t have tossed out the baby with the bath water. They should have grandfathered old mortgages and make the requalify rules a part of all new mortgages. That would have killed off the desire to take on more risk while not being the pin that pricked the bubble. Yet another example of good governance. How of you unscrew 2 decades of housing market manipulation?

#55 immigrant with pizza delivery skills on 06.07.12 at 12:09 am

I would be happy to see this guy screwed, he deserved that by still making an offer after contacting Garth.
After his inability to control his emo woman with some logical expressions, I highly doubt his software skills.

#56 TRT on 06.07.12 at 12:10 am

Several months ago I told you that OSFI would not implement that regulation. ZERO chance.

Now I’m telling you that if they limit HELOC’s to 65%, they will GRANDFATHER all existing clients. So homeowners win!

But continue with the wishful (emotionally altered) thinking.

And oh yeah, ZERO chance of Interest Rates going up this year. Yeah, not even 0.25%!!

#57 $$$BPOE#1 on 06.07.12 at 12:10 am

OF course they weren’t going to make such drastic rules. Any changes will be minimal and have NO to little affect. Lower rates coming soon Stay tuned!
***************************************
So this week OSFI let the howling banks know this rule will not be implemented (although most others will).

#58 $$$BPOE#1 on 06.07.12 at 12:12 am

OSFI is bluffing. They have nothing and will do nothing. Mark thse words

#59 bubu on 06.07.12 at 12:12 am

hahaha… did I tell you guys yesterday that hose prices are not going to crash because the government will do whatever is possible to keep it alive? Yes, maybe is not going forever but we live in a corrupt society…. Not good for future but at this point nothing major is going to change… I lived in a very corrupt society years ago and Canada is starting to look like that … I’m wondering how long the Canadians will still trust their government. Do what you think it is good for you and don’t relay on the government to save your a$$ …. Think also in future about pensions guys…. Same scam.. save your money and invest them wise because CPP and AOS will not be there in 20-30 years for you…

#60 TRT on 06.07.12 at 12:17 am

Furthermore, those that need a 80% HELOC have been given time to get it as the 65% won’t be implemented until a later date.

Got to love this gov, they will always favour homeowners. Renters will be forced to pay higher rates if they want to borrow money for …..

#61 Nostradamus Le Mad Vlad on 06.07.12 at 12:18 am


“It saved us from financial suicide for the next 25 years,” he says, adding testosterone with each syllable.” — Thank oDg she capitulated and avoided the in-laws. Financial suicide with the in-laws — eating dirt is a more palatable thought.

“But, it’s Canada. It’s called America. Since we’ve never before had so many homeowners with no skin in the game, such low rates, such easy credit, such speculation, such debt and such inflated prices, we’ve no idea how this ends.” — Try Europe.

“Yet all the evidence is of a city that’s stable and prosperous. The kind of place where a million-dollar bungalow sounds like a bargain. If this were Wild Kingdom, that would be called natural selection.” — The blind leading the blind off the proverbial cliff?
*
The UK and US gang up on Germany to help the Euro, Germany called to order (for more money), and Small bailout for Spain? 20K Job Cuts in UK army; The Falling Knife; Dominant Dominoes Debt and Deleveraging; Greece A first-person perspective; Estonia “Estonia has followed (as Krugman grudgingly admits) a roughly similar path: . . .”; Doomed to Debt? Deflation greater threat than inflation; Silver vs. Gold A little of each doesn’t hurt; Weyerhauser The last lumber REIT; Delinquency Rates; Bond ETPs and Long Bonds; Soros says Paraphrased ideas; Italian Debt or let’s have a jubilee instead; 11:33 clip Is the US following in the USSR’s footsteps? Six Months or to protect ourselves.

TESCO cancels meat contract after learning which animals it comes from; Lawyers What the hell do lawyers know about the economy? Dick all, that’s what; Oz economy improves on mining; Soros (and China) keep buying gold; Hollande lowers pension age to 60; Banking Crisis Not quite. The cycle change also plays a role; Rising Markets, but Collapsing Planet; Pensions / Socialism Privatize the profits, socialize the losses; The Small Stuff Don’t sweat it; Alisher Usmanov Russia’s richest oligarch and his toys; IKEA Invasion; Bernanke Terrified of headline? Supreme Court of Canada checking / ruling on pensions.
*
Furst — Competition? White House Falling apart? Strange Many wacky things are happening; Assassination Czar NAmerica is a police state, plain and simple, and Obomba’s (read: Soros) total war doctrine; Kaspersky vs. Flame; Feeding the World With or without Monsanto? 12:06 clip Atlantis found?

#62 TRT on 06.07.12 at 12:18 am

Give me a damn prize Garth, I’ve been right on these past few years!!

#63 Chaddywack on 06.07.12 at 12:20 am

I notice a lot of places in Vancouver are dropping 8’s from their prices….

What gives?

#64 John Ratadlin on 06.07.12 at 12:27 am

The economist David Rosenberg said on June-5-2012 the U.S. 30 year treasury bond yield will decline to 2.00%. It is currently 2.74%. Bond yields have increased the last 3 days but the 31 year B.C. bond is still low at 3.26% today. It was 3.15%on june-1-2012. It looks like deflation and a Global recession is coming and the Japanese economic tsunami is just in time for the baby boomers. Japan’s 30 year bond is currently yielding 1.88%. The real estate market and stock market will be a negative investment vehicle for at least 10-15 years.

#65 Davey Boy on 06.07.12 at 12:33 am

Garth, you may have saved Luke’s behind when it comes to RE, but who’s going to save him from the other pitfall, MARRIAGE!

#66 JustTryingToProtectEquity on 06.07.12 at 12:40 am

I have my answer. Perfection.

#67 Bug Zapper on 06.07.12 at 12:49 am

Spiders have Charter Rights also.

I wouldn’t be surprised if you get hauled before a Human Rights Tribunal for representing Spiders as terrorists.

But you’ll probably get taken out in a drive by Webbing before that happens.

#68 canus on 06.07.12 at 12:51 am

I’ve waited as long as I could. With 4 kids cramped into a tiny 100-year old bungalow, it is time to BUY. Thankfully I’m in the USA where I can build a new house on 1/3 acre lot for under $150 sq/ft, under 4X income and lock in for 30 years. Yes I’m bragging, but I’ve watched the market for the last 8 years, every year getting out of reach. The bad news for Canada is that the decline is just getting started and it might take 5-10 years to reach affordable levels, then slowly drift downward or sideways for the rest of your life. Avoid the temptation and wait it out, or move where the market has corrected. Think of a house like buying a new car – it loses value the minute you drive it off the lot and it depreciates every year. You know the market is right for you when you can afford the assumed losses (and are okay with it).

#69 Patz on 06.07.12 at 12:59 am

Well well, 2cntsCdn you’re a creative writer, hmm, ‘course I wouldn’t go without while waiting for your Giller prize.

Let’s see if we can tease out what you’re saying in your nice little homilitic story.

The poor are poor because they’re lazy.
Unions, progressive parties and anti-poverty groups side with laziness against the industrious.
The CBC broadcasts irrelevancies such as Inuit cultural festivals.
The government confiscates the property of the industrious well-to-do to give it to the lazy poor.
The government shows a serious interest in the housing quality of the poor.
Finally, the government appears to be encouraging immigration of the types who will turn quickly to grow ops to support themselves.
Oh yeah, and Pamela Wallin (who is now a Conservative senator) is still doing interviews.

Quite an imagination you’ve got there 2cnts. Not much writing skill–but a definite flair for fiction.

#70 Dave on 06.07.12 at 1:05 am

$570k for that house??? It’s not even that nice. You dodged a bullet Luke.

#71 Keith in Calgary on 06.07.12 at 1:10 am

DELETED

#72 DML on 06.07.12 at 1:18 am

2012 CBO report is out.It is a sobering read.

On rising interest rates:

“Such a decline could precipitate a
broader financial crisis by causing losses for mutual
funds, pension funds, insurance companies, banks, and
other holders of federal debt—losses that might be large enough to cause some financial institutions to fail.”

“Thus, such a crisis would confront policymakers
with extremely difficult choices and probably
have a very significant negative impact on the country.”

http://www.cbo.gov/sites/default/files/cbofiles/attachments/06-05-Long-Term_Budget_Outlook.pdf

#73 yogi on 06.07.12 at 1:29 am

#15 I can’t wait for the CBC to use your story as a screenplay, casting Rick Mercer as the Ant and Russel Peters as the grasshopper. Of course it is a comedy… of errors. ;)

#74 Hoof-Hearted on 06.07.12 at 1:48 am

OMG..don’t ya gets it?

Even Smoking MaN DUZ RE: THE PHOTO’s cymbaliszm

The DOG is looking EAST…

The Gap = the void between Portage & Main and the uncharturd land over the felines back shoulder.

aka everything ahead of the dog is the land of P*ssies.

#75 Industrrial Guy on 06.07.12 at 1:49 am

2centsCdn
Oh, it’s a classic alright. A true parable of ignorance. The Canadian Federation of Independent Business published something similar s few years ago. It was just as wrong.

#76 BPOE - I'll do anything for a listing on 06.07.12 at 2:02 am

HOW REALTORS HELP…
Good for a laugh tonite…
it states that Realtors are professional, and “Agents” aren’t!!!!
“REALTOR®” and “real estate agent” are not interchangeable, although some real estate agents might like them to be.
To be one of the Mafia, you must be part of the CREA.
Read here:
http://www.howrealtorshelp.ca/faq.php#agent-vs-realtor

Anyway, here is a foreclosure in Vancouver!!!! Alright.
But there’s more, the Listing “realtor”, lists it’s close to a mall that doesn’t even exist in Vancouver. It’s called Oakridge Mall, like the sign sir. I guess you can’t expect much for $15,000 in commission…..

http://www.realtor.ca/propertyDetails.aspx?propertyId=12012987&PidKey=-2059429815

Have a great week….

#77 Insanity on 06.07.12 at 2:10 am

A friend of mine bought a home in north-east brampton (torbram and bovaird area) 9 months ago for $500,000. He just put it on the market for $570,000 but is hoping to get $600,000 as his realtor has told him such a low price will incite a bidding war. This is INSANE. I thought the craziness was isolated to T.O. and immediately surrounding areas but how is this even possible in north Brampton???

#78 George on 06.07.12 at 2:15 am

Hi Garth,
I put a question on the board a couple of days ago. I wonder if you could let me know what you think. I re produce it below

Hi Garth,
You say that 70% of retirees today have no corporate pension, and foolishly stuck the bulk of their net worth in a house.

These folks are trapped, victims of their own bad choices. Without liquid assets (only one in four Boomers even has an RSP) So how does this dire situation square with
Stats Canada figures which say that the average income of
Elderly families in 2009 was 55200 dollars AFTER TAX
Could you explain

Sure. You’re wrong. The after-tax income was $45,500, of which $24,200 came from the government. Hardly enough for a memorable retirement. — Garth

#79 99% on 06.07.12 at 2:46 am

I heard that BOC announced they will not be raising interest rates now or for the foreseeable future due to our economy. OFSI will not implement the proposed regulations for tightening mortgage renewals. HELOCs will not be amortized. Yep, looks like business as usual. The house of cards are just getting bigger and higher. I wonder what strong wind will bring it down?

#80 Aaron - Melbourne on 06.07.12 at 4:04 am

FROM OZ

Already a third of over 50s say they can’t afford their home repair bills, according to a national survey, and with every dent to their savings, things get worse.

Australia’s over 50s are facing a combined repair bill of $5.57 billion to fix more than 17 million defects in their homes.

http://theage.domain.com.au/blogs/talking-property/seniors-struggling-to-maintain-homes-20120605-1ztik.html

Yeah these are the same poorly maintained homes we younger folk would be expected to get into a bidding war over….

…the same houses the boomers will inherit and dump into a market already bloated with stock….

…hehehe can’t wait to vultch…

#81 aggie on 06.07.12 at 4:22 am

@ smoking man: Hugs, rooting for you, in all regards :))

@ Luke: Hang tough and keep smiling and hugging your woman. I applaud you both.

@ to all of the poets lately: Keep them coming!

@ Bill Gable, lookoutbelow, Beach Girl, kid, 2centsCdn, First Time Poster, Toon Town Boomer, Regan, earlymidlifecrisis, crammer, Arshes, I’m stupid, Just Park It, Daisy Mae, Derek R, TurnerNation, and Dan in Victoria… and all the others to whom I already replied, and of course, Mr GT! re aggie’s idiotic situation: A big big thanks for your sagacity and kindness. I had written replies to each of you, but missed the cutoff for my second batch of replies. It’s just as well, probably tmi, so here’s an update for those of you who asked.

My place is in an attractive 3-storey, 20-year-old building, very well maintained and beautifully landscaped, great reputation. Another unit, exactly the same as mine except with smaller deck, vaulted ceilings, and new SS appliances, just listed at lower than the best price I thought I could hope for. It’s an estate sale, sadly the second of this past year — single older women living alone, passed away. The first unit sold for even less a couple of months ago, and it’s the mirror image of my place, right next door to me. Those two units are reinforcing the ‘correction’ of condo prices around here. Higher priced units are not budging.

My 2-BR, 2-bath, 2-u/g-parking stall, i/s laundry, 1100 sq ft unit is quiet, clean, and reasonably attractive (despite old second-hand furniture covered with blankets and cushions). It has lovely neutral wall colours painted this past year, new kitchen floor, and a ss fridge and dw, but still the original stove.

I’ve cleaned and greatly decluttered, had help from a family member who checked and attended to things like plumbing, had another family member offer to stage but had to postpone. (Maybe i should talk to earlymidlifecrisis?) Biggest issue is a paint spill that I’ve tried in vain for almost a year to suck out of the carpet, right at the junction of front halls and living space.

It’s not yet listed, although my realtor has shown it once, in the hopes of not needing MLS. His client liked it very much, but he then had misgivings about presenting an offer from her, for whatever reasons, so it looks as though that’s not happening.

This weekend, I’ll be listing officially with him, and we’ll put up an MLS ad. He’s offering a fixed commission of only 5K and is still hoping to also bring in the purchaser, to avoid a second commission. If anyone can do it, he can. I have full faith in his ability and integrity. And I will pray (without desperation) for a buyer.

Someone suggested I post my own ads as well. I tried on CL, but after 5 or 6 replies from only mortgage brokers and other get-richers, I pulled it. Might repost, with pictures.

My mortgage broker is getting a little more persistent as she realizes that I’ve pretty well decided against renewing. She wants to meet before Saturday to lock me into a 5-year closed. I told her I’d call her in two weeks and that I’m willing to risk losing whatever she’s offering. She reminded me it can take another two weeks to pin down another suitable mortgage after we talk. So be it. (Reminder to self: Read what it is that I had signed with her!)

Tomorrow I’m going to visit both of my banks to discuss options for covering a predicted shortfall of possibly up to $10,000, depending on how quickly we sell vs how quickly prices tumble. I had a free consultation with a bankruptcy advisor, but that wasn’t terribly helpful, other than confirming that I should avoid foreclosure by being proactive, which is my intention.

I am determined to sell. I’m also grateful that two friends offered me very cheap rental space (one has a spare room in her house, the other has an unused basement suite in their townhouse). That will help me pay off the shortfall debt pdq.

Work has a glimmer of possibly lasting a bit longer that seemed likely for quite some time now, in terms of both the longevity of the project and company and of my ability to cope with the work, once this mortgage sword ceases to hang over my head.

However, I would like to consult a bankruptcy lawyer, if only to discuss strategies for avoiding the big B, and especially to help me communicate with the bank (the mortgage holder), which is not returning my email or phone messages (2 of each, with specific questions).

I just don’t know who I’d feel safe with! I’m waiting to hear back from one person’s friend who went into the B not too long ago. (Recommendations for humane Van area lawyers very welcome.)

There, sorry I wrote so much. Takes much longer to write short! I’m hoping that putting these thoughts and acknowledgements on ‘paper’ will have effectively cleared my mind, so tonight I can do what was impossible last night: sleep!

#82 Onemorething on 06.07.12 at 5:11 am

another statistic. LUKE RIP

#83 Buy? Curious? on 06.07.12 at 5:14 am

“The Garth Turners…”? Wait, there’s MORE of Garth Turner? Gawd, I love the investigative journalism of Toronto Life almost as much as the photos of hipsters hanging around Trinity Bell Park on a Tuesday afternoon just before their 4pm shift starts at the local coffee shop. Garth, quick question, do you mind if I do a puppet show based on this blog and the comments and post it on YouTube?

Let’s be clear, you’ll know when the market is going to tank, they’ll be signs. As soon as people begin cannibalizing one another, the market is going down!

On a side note, I’ve changed my opinion on Smoking Man, I likey! He’s got the combination of Real World experience wrapped up in the lifestyle of a rockstar (if he has an overflow of groupies, let me know). Live fast, Smoking Man, and leave behind a good looking corpse!

#84 House Horny Housewife on 06.07.12 at 6:02 am

Garth,

You should know better than to think that this is the end of Luke’s story ! The good thing about this couple is that at least they know when they are being pulled into something that is unsustainable (for now, that is).

It is extremely difficult to stave off that desire to own your own kingdom and one way or another, they will find a way to get into the real estate market .. either by buying a duplex or triplex and using the rent money to finance the purchase … or by, heaven forbid, borrowing even more money from the in-laws.

If Luke’s wife wasn’t pregnant and they weren’t planning on starting a family, I would have suggested they buy a nice cottage on a lake somewhere and rent in the city where there work. That way they can have their equity at a more reasonable price and get to play house on the weekends at least.

However, I think they had better start to think about life with a child rather than about going into debt. In the immediate future, pregnancy leave will be reducing their family income, at least for a while, and let’s face it, as cute as they are, one needs money to raise children.

In addition, they have another large expense coming up. Weddings (and honeymoons) aren’t cheap so unless the in-laws are planning to foot the bill for the whole “shindig” (sp?), money is going to be required for that as well.

Adding a house to all of that up and coming expense is … well … it’s suicide !

One thing at a time Luke. Don’t worry, you and your new spouse will get to where you want to go but if you go slower (more like the tortoise than the hare), you are more likely to get there in one piece and with all of fingers and toes.

All the best.

HHHW

P.S. Take it easy on the advice to the young’uns, Garth, I’m trying to sell my house and I have noticed that more than three quarters of them are under the age of 35 … don’t ruin my gig !

#85 Dave on 06.07.12 at 6:37 am

George was the BEST

http://www.youtube.com/watch?feature=player_embedded&v=acLW1vFO-2Q#!

#86 ts harpoon on 06.07.12 at 6:49 am

Garth.

You referenced America – and you prefer data and research. Warning: The data is disturbing.

http://www.businessinsider.com/dear-america-you-should-be-mad-as-hell-about-this-charts-2012-6?op=1

Investors buy companies, not countries. And the US, in time, will be fine. — Garth

#87 eaglebay - Parksville on 06.07.12 at 7:05 am

#4 Grooby. on 06.06.12 at 9:08 pm
“Garth, when are you going to have a mobile-optimized version of your site??”

Get an iPad…

#88 Bond junkie on 06.07.12 at 7:23 am

Ummmmm, Garth… in case you didn’t get the memo.
June 7 (Bloomberg) — China cuts one-year deposit rate by 0.25 percentage points.
• China cuts one-year lending rate by 0.25 percentage points
• Statement on PBOC website

Yes, 8% annual GDP growth is not enough. They want 10%. — Garth

#89 Gypsy Kid on 06.07.12 at 7:40 am

2Cents Cdn is a simpleton…i hope there arent too many.

#90 T.O. Bubble Boy on 06.07.12 at 7:44 am

#48 From Mississauga with Love

Say hi to Mayor Hazel, and compliment her on the suburban sprawl nightmare that she’s created!

If you think that $700k+ burbs homes that are falling apart and/or are former grow-ops is the new normal, and you’re ok with that, you probably should be a homeowner. You are uniquely qualified to tolerate your surroundings.

#91 Does it seem strange to you? on 06.07.12 at 8:02 am

Toronto has almost 5 BILLION dollars in debt.

The police department costs us a BILLION dollars per YEAR.

The third largest expense of Toronto is INTEREST on DEBT–more than we spend on Fire Departments.

But don’t worry!

Our politicians “finally” got rid of those darn plastic bags.

We’re gonna be okay.

#92 Kevin on 06.07.12 at 8:06 am

“So this week OSFI let the howling banks know this rule will not be implemented”

What the what!?!

Garth, I called shenanigans on the OSFI’s “requalification” recommendation way back in March, and you assured me that the “OFSI does not float trial balloons.”

(“The ‘free fall'”, March 21, 2012, comment #150)

It’s a good thing this site is too high-brow for “I-told-you-so’s”. ;)

Now I’m responsible for OFSI? You realtors need to chill. — Garth

#93 down and out on 06.07.12 at 8:09 am

Luke and bride , remember to look beyond your backyard for the big picture .Yes local realtor’s mantra is location,location,location , but in today’s global world the security of jobs ,family roots can be torn free in a hurry.Our local paper (the Windsor star) had an article stating our area has the most youth, 18 to 35 years of age in Canada that have left the area for greener pastures.Spent a little time a weekend getaway so to speak and check out certain areas like Windsor ,rust belt USA etc. observe and note what can happen to home prices after a correction. This blog is showing people whats over the fence beyond your hood ,do not think the government can or will stop to help those caught in the fray of money tightening seeing they are such good stewards themselves . Then ask and weigh advise of others not related to real estate or family .Good Luck

#94 Jamaican_Gal on 06.07.12 at 8:12 am

#43 @furst

Furst, bard, another gem. Great poetry, and the theme of the blog has not been compromised. Love it!

#95 TurnerNation on 06.07.12 at 8:14 am

I hope everybody realizes this whole engineered “GFC” is a brilliant plan to strip away our rights, turning us into even greater slaves. And I’m not even pro union, but I thought we fought for our right to organize? Have you seen Apple’s overseas slave factories? That’s where we’re headed. There’s an app for that.

http://www.thestar.com/news/world/article/1207190–wisconsin-recall-results-show-power-of-big-money-in-u-s-politics

Anti-consumer bills, union-busting legislation, voter ID restrictions, and tax cuts for corporations and the wealthy were “fast tracked” through the legislature.

Walker said it was necessary because Wisconsin was “broke” and his sweeping Budget Repair Bill would save it by attracting new business and jobs to the state.

But after Wisconsin came last in U.S. job creation, and more than 4,000 business disappeared, protesters mustered nearly one million signatures to hold a recall election that was a referendum on his leadership — and, some believed, on the influence of big corporations that planned to undermine working people.

Explain how a democratic election in a US state had an outcome engineered by ‘big corporations undermining working people?’ I think you’ve lost it. — Garth

#96 Sebee on 06.07.12 at 8:19 am

Now we know, nobody has the balls to take this mess on. Their only game is to stretch out the cycle.

#97 Jamaican_Gal on 06.07.12 at 8:36 am

The once hale and hearty real estate market in Vancouver is now sloughing off around the edges and OFSI had nothing to do with it.

The red-dot-listing mange is spreading to Toronto and reality will soon be setting in – hard. OFSI can sit on its hands all it likes. What is to be will be.

#98 furst on 06.07.12 at 8:38 am

#43 Jamaican_gal
Thank you. Will keep writing until the market collapses then a new tune must be sung.

#99 Steve on 06.07.12 at 8:51 am

Seems like an inciteful bunch making comments today.

On May 11, Garth’s blog photo was of a road sign showing a group of people holding various farm implements with the signage reading: Angry Mob 4km.

Today we have the modified story of the Ant and the Grasshopper, providing a plethora of stereotype infused complaints, I thought tongue in cheek, about the Canadian experience. Then the following comments from others were all trending in enthusiastic agreement, and it occurred to me that we had quickly turned ourselves into an angry mob, with just the slightest provocation. [Good to see a few level heads finally spoke up.]

We even picked up a side bar today of ‘get the cyclists’ – and I was surprised that Garth published the recommendation to vandalize parked bikes.

Sure hope all this pent up anger doesn’t get directed at Real Estate.

Let’s continue the insightful commentary rather than the inciteful. There is a lot of value here, why else would we keep coming back?

#100 2centsCdn on 06.07.12 at 8:54 am

That story was sent to me by a friend a few years ago and I love it and still read it every week or so. It is dated but still bang-on as to help describe “the Canadian way”. Garth’s site offers great information and through some responses great entertainment (and a surprising amount of anger : ) You can take that story any way you want. But back to this blog ….. congrats to Luke for resisting outside pressure (but more to come in his married future I’m sure) ……. and booo to the OSFI for chickening out. Some of you may roast the Canadian version of the ant and the grass hopper article for being ridiculous …… but when Canadian RE does “correct” ….. I guarantee you there WILL be inquiries, magazine and news paper articles, TV news segments, politicians and the general public demanding answers as to how could we let this happen in Canada? If you see something bad happening and you do nothing to stop it, are you responsible for the outcome? Garth must feel like he’s on the front of the Titanic screaming ICEBERG! …. while people dressed to the nine’s feast on champagne and hors d’eurves … and the band plays on.

#101 Dean on 06.07.12 at 8:56 am

Wow. Clearly things are much worse than anyone will admit. Otherwise why would you need to back down on such a reasonable piece of regulation.

#102 Ret on 06.07.12 at 8:56 am

OSFI is just another overpaid useless government department created to give the illusion of oversight.

Money talks so the OSFI took a walk. Lots of luck with implementing any of the other OSFI proposals.

#103 Ret on 06.07.12 at 9:02 am

Looks like Torontonians will be picking up doggie do in reusable cloth bags. 24/44 of these clowns on Council saw this as the way forward for T.O.

#104 fancy_pants on 06.07.12 at 9:03 am

As I expected, the OFSI has/will join the gallery of spectators. No one is falling off their chair in surprise here.

#105 CrowdedElevatorfartz on 06.07.12 at 9:10 am

#82 aggie

Your condo sale is a harbinger of the silver tsunami to come.
One can only hope others are are smart as you to get out now while there is still time to “break even” or take a small hit. However unpleasant that “hit” may be.

the BPOE’s of the world are too young to remember the brutal times of the early 80’s……….

#106 Linda Pearson on 06.07.12 at 9:12 am

#82aggie on 06.07.12 at 4:22 am

Aggie, you rock! Good for you and all your proactive efforts to get on track. It would be interesting, after all this is behind you, to know which bank it is that refuses to respond to your calls and E-mails. I’ll bet there are more than just me who would enjoy a mini-campaign of E-mails castigating them for being so unhelpful to a client. Banks are just businesses, after all, and need to keep customers as much as any other business. They should be reminded periodically that they need us as much as we need them.

#107 Linda Pearson on 06.07.12 at 9:19 am

#39Mr. Lahey, Sunnyvale Trailer Park Supervisor on 06.06.12 at 11:00 pm
#242 John G. Young on 06.06.12 at 8:53 pm

“Any other suggestions? I’m open to anything that’s legal…Cheers, John”

Why the answer is simple Mr. Young. A contest of sorts between you and Westernman at the SASTGFBDCParty much in the same manner as the ploughing match that was held between Westernman and Form Man at the FASTGFBDCParty. Our fearless leader Captain Garth even started the contest by belting out a mighty, “gentlemen start your engines!”
………………………………………………………………………..

Don’t do it John. You seem like an honourable man, one who would fight fair. Westernman, on the other hand, already a proven coward (hiding under a pseudonym), has shown himself to be without honour and would fight dirty.

On the other hand, in a debate between the two of you, you’d win hands down. I’d pay to see that match.

#108 dd on 06.07.12 at 9:23 am

China cuts rates

Central banks around the world will make money even cheaper.

Carney will not increase rates anytime soon.

And, as far as housing goes, it is irrelevant. — Garth

#109 45north on 06.07.12 at 9:26 am

Steve: Today we have the modified story of the Ant and the Grasshopper, then the comments from others in agreement

that would be me

#110 pbrasseur on 06.07.12 at 9:28 am

Despite what Garth said (and it made perfect sense) I always had a hard time believing that government would kill a bubble they had themselves created.

Sorry Garth but it still holds, government would act ONLY if they feel other parts of the economy are growing enough to pickup the slack, and that’s very unlikely, pretty much impossible in fact.

Our politicians are the same as everywhere else, same as in Europe, they don’t take tough responsible decisions until they have their back against the wall.

Thought you’d know that by now…

Have you ever found the courage to stand for office — Garth

#111 Chris on 06.07.12 at 9:33 am

Rate raises; tighter rules by F; OSFI regulations.. Just carrots on a stick. The carrot always seems to find a way to move out of reach, juuuuust when we think it’s finally in the bag.

#112 ozy - unrealistic on 06.07.12 at 9:42 am

RE: Mississauga with Lobe, Frank le skank , etc

No one can predict mass of people (buyers)’ stupidity when enticed by govt and their masters. We all form the people. But is crystal clear houses are not affordable in GTA (even for those who do not work hard for the $, and just show to work to talk and talk and talk). So, being unaffordable like ever, those prices started to give in, a lot of listings lately, and some unsold after attempted biddings where no one shows.
My point is let’s not accuse others for buyers’ stupidity and lack of information. Refer to my early posts, 30-70% downpayment and a keen EYE at selection properties if you must must buy (e.g. you do not own a house already and you like the 1-2 h commutes around GTA).
When my wife said years ago: the next best home improvement would be to change the house by adding stucco on the outside (solid brick house, not brick veneer), I replied: I think an even better, less expensive improvement would be exchange the wife.
Young fellas, move to Kalifornia or anythere else on the continent (smaller kanatian cities or US), don’t be doomed in the fake, financially perverse GTA game. Don’t waste your life, let the suckers work 2 jobs for a house they never see it (since they are at work). Don’t let a girl stand in front of your dreams (unless you know she is a rare smart yet modest, happy super-model)

#113 Karie on 06.07.12 at 9:44 am

@2CntsCanadian and Furst – awesome, interesting, great posts. Maybe they will be the foreward in Garth’s next book!

@Mississauga with Love – I lost out on making some big real estate money too. I have been building up slowly like the tortoise but it looks so much more fun to be the hare. The tortoise is usually the winner though. I wanted to buy a house backing onto a golf course with pool for $769,000 about 5 or 6 years ago because I was positive it would go up. If I had, I could sell that house today, without changing much of anything for $500,000 more. I am so upset about not buying it but I was too fearful of buying such a $$$ house. I wish I could be like some of my friends those care free hares!

I just checked realtor.ca and there are affordable homes where I started out in Calgary (residential, walking distance to work if downtown) and Mississauga. Some are not more than 2-2.5x the price I bought at 15 and 12 years ago. People have to be willing to start out in a smaller older home and upgrade as they go if they think it’s necessary. Expectations of first time buyers starting out SO high. If you want everything shiny and new, more than 1.5 bathrooms, you are going to pay big time for that. Just think about living life when you’re young – make sure you have money for travel and fun too!

Luke, take 1 of the 12 months that you save 4k and spend that money on a great trip! I hope you find a great house some time in the near or distant future!

#114 Steve on 06.07.12 at 9:48 am

No need to worry about the icebergs, it is different here on the Titanic…

#115 disciple on 06.07.12 at 9:56 am

2cents… It’s a good story, but you and your readers are misinterpreting who the ants and grasshoppers are. It’s the opposite of Patz’ interpretation. And then to somehow confuse the impending RE correction with your ignorant stereotypes and mash it up all together and call it the “Canadian” experience proves you are a schmuck Canuck.

The sad thing is that there are plenty more of you out there, a complete waste of my tax dollars on the attempt on your education. Please note that virtually all businesses in Canada are subsidized through tax breaks; in fact, were it not for these tax breaks and loop holes that make it easier for entrepreneurs to make their fortunes, many big businesses would not exist. So guess what? You and your right-wing extremist readers and most of your leftist interpreters have it all backwards…

#116 condopoor on 06.07.12 at 10:00 am

#69The bad news for Canada is that the decline is just getting started and it might take 5-10 years to reach affordable levels, then slowly drift downward or sideways for the rest of your life.

This would be the worst case for all of us waiting. I really hope you’re wrong, but the way they delay policy here might allow it to happen. :(

#117 Wasting away in Cookiecutterville on 06.07.12 at 10:14 am

I’ve noticed that the number of listings have dropped since the weekend in here in Cookiecutterville, but the sales haven’t been posted on Toronto solds. On the other hand, several houses have been relisted at lower prices at all price ranges.

Something is going on.

#118 The American on 06.07.12 at 10:18 am

Hmmmm. This certainly brings up many questions. When a person finds it time to renew his/her loan, he/she goes to the bank to conduct the renewal. Any renewal for a loan must be re-underwritten just as if it were a new loan. So, here is my question… How can a bank re-underwrite a loan for a property if that property’s value is now worth less than the principle loan amount? This doesn’t make any sense. It does, however, demonstrate the banks in Canada are well aware a crash/melt is upon them because no bank in its right mind would take on such a ludicrous notion to renew a loan on an asset that is worth less than the principle loan amount. There’s zero protection to the bank should the home owner default. Oh wait… I REMEMBER NOW!!! The Canadian-tax payer-backed CMHC assumes the risk, hence the bank gets off the hook! Yeah, no moral hazard there whatsoever.

Whoever thinks the Canadian banking system is “conservative” really need to get his/head examined. You all are on the hook for a crash unlike any other, and those who aren’t even leveraged in the housing market are going to be paying for one another’s gross mistakes as your taxes WILL RISE (no doubt about it) to cover losses coming from the CMHC.

This was a tremendous problem in the U.S. when it came to renewing loans. Sure, it would have been great if the banks would have renewed the ARMs that brought so much of the housing market down (for those of you who do not know, ARMs are effectively identical to the Canadian lending system, yet ARMs are not the “norm” in the U.S. They are referred to as adjustable rate mortgages that are fixed typically from 3, 5, or 7 years but amortized over 30 years. At the end of the term, the person renews the loan or pays off the principle amount in full).

I’m sure many of your think this is good policy to allow people to renew loan amounts that cannot be covered by the asset’s value, but trust me when I say this is disastrous, and the long-term consequences will be extremely painful.

#119 Kaganovich on 06.07.12 at 10:41 am

I find it sad that much of the money that gets herded from risk-on to risk-off positions and back again is simply looking for returns based on the efforts of central banks to defer the pending widespread deflationary episode. While some may still argue that the financial sectors are the most expedient mechanisms for connecting savings with entrepreneurial ventures, it seems more like a casino nowadays. The global economy is going stagnant, corporate profits, while high, do not reflect a healthy and sustainable economic situation; rather, they reflect general government policies formulated by a corporate class. For if the profits many speak of were a reflection of a resilient economic climate, why the rush to safe havens at the drop of a hat (since many argue that the Greece situation is trivial)? Furthermore, the rush into risk-on positions when the Fed, for instance, starts dropping hints at further easing operations is simply a wager on how bad the situation has become. These wild swings have little to do with textbook definitions of investment and the equities markets’ role in getting cash into the most promising entrepreneur’s hands. Or is it?

Here is a compilation of fifty or so charts to give the reader an idea of the situation at hand:

http://www.businessinsider.com/dear-america-you-should-be-mad-as-hell-about-this-charts-2012-6#lets-start-with-the-obvious-unemployment-three-years-after-the-financial-crisis-the-unemployment-rate-is-still-at-one-of-the-highest-levels-since-the-great-depression-1

#120 Fail on 06.07.12 at 10:43 am

Fail! That’s what this is Garth. Not on the part of OSFI, but on the part of yourself and all the fear mongers who ride your coat tails.

OSFI isn’t going to do nothing with LTV. You told us all it was in the bag though. The banks would be forced to follow the big powerful regulator.

Now Garth ducks the issue with a “do I control OSFI?” comment as he always does.

No Garth. You don’t. You would like to think that you do, and you make prophet like statements to that effect, and then just when people believe your emphatic prognosticating – wham! Right between the eyes. OSFI does something entirely different. And rather than admit that you were wrong, you reply with, “Do I control OSFI?”

OSFI is not finished with you (Calgary) realtors yet. I’d be a little more circumspect. BTW, how was I ‘wrong’ in educating you on what the regulator proposed? Just askin’. — Garth

#121 Big Mike on 06.07.12 at 10:46 am

Just in, OFSI backs off new regulations

http://ca.reuters.com/article/businessNews/idCABRE8551BS20120606

Posted. — Garth

#122 Doug in London on 06.07.12 at 10:47 am

@George, post #79
Garth said 45 grand is hardly enough for a memorable retirement. Really? I could retire quite comfortably on 45 grand a year, but then again I’m not lugging around 300 grand or more of mortgage debt from buying an outrageously overpriced house. One potential problem is having to pay higher taxes from, as The American said, having to bail out the CMHC. Maybe I’ll move to The States if it gets that bad. What’s housing, to rent or buy, cost in Port Huron, Michigan?

#123 pbrasseur on 06.07.12 at 10:48 am

Have you ever found the courage to stand for office — Garth

(I aggree there must be exception, maybe you’re one)

But MPs have the best, bulletproof, most generous to the point of ridiculous pension plan.

(in the middle of the crisis, while we were all loosing money like crazy their fund made 10%, because garantied by the taxpayers)

No wonder they don’t dare touch public servant pensions despite the fact they are bankrupting the nation.

And you call that courage!!!!!!

The answer is ‘no’ then. — Garth

#124 Bottoms_Up on 06.07.12 at 10:49 am

#79 George on 06.07.12 at 2:15 am
—————————————-
And get a gander from this George (from the vanier institute report):

“The highest insolvency and bankruptcy rate increase is among Canadians 65+
The insolvency rate for those aged 55–64 and 65+ has been on a consistent upward trend over the
last two decades. The rate of insolvencies among 55–64 year olds jumped by almost 600% over
the period while the rate for those aged 65+ soared by 1747%. Seniors were 17 times more likely to
become insolvent in 2010 than they were in 1990.”

#125 MarcFromOttawa on 06.07.12 at 10:52 am

Have you ever found the courage to stand for office — Garth

I agree that it takes a certain dedication and thick skin to be a politician.

But there are some sociopaths out there who will do whatever it takes to be in a position of authority. They will never admit that they are ignorant about a topic whereas most people are humble enough not to attempt to micro-manage a national economy.

I have no idea what that means. — Garth

#126 John saccy on 06.07.12 at 10:52 am

Bernanke does not see the possibility of QE for now.. Stocks selling after ripping in the morning anticipating some QE talk..what happened to P/E, earnings, estimates and valuations? I see something changed from yesterday to today.

Calling out on crooks in RE is commendable, but turning a blind eye to manipulated stock/PM markets is laughable.

There is no systemic manipulation. — Garth

#127 Bottoms_Up on 06.07.12 at 10:54 am

#15 2centsCdn on 06.06.12 at 9:29 pm
——————————————
Huh? Go back to Texas.

#128 Bottoms_Up on 06.07.12 at 10:56 am

#123 Doug in London on 06.07.12 at 10:47 am
———————————————–
Please read what I posted in response to George. Our seniors are in trouble.

#129 pbrasseur on 06.07.12 at 10:59 am

The answer is ‘no’ then. — Garth

The view that politicians are experts at the exercise of kicking the can down the road is nothing new to say the least.

Sorry that you see this as a personal attack…

Then why did you? — Garth

#130 Can it be? on 06.07.12 at 11:11 am

Seems to me that many people are threatened by the topics Garth writes about. Must be flattering to see how much fear you instill in people… Garth you have more influence then you even know! Keep up the good work :) its not different in Canada

#131 In GARTH not God we Trust on 06.07.12 at 11:14 am

“Have you ever found the courage to stand for office — Garth”

I think one of the reasons I love this blog is the author of it, our fearless leader, is a maverick who tells it like it is. He is a denouncer of parliamentarian peckerheads and peckerettes, unflinching opponent of the real estate pumpers, clarion caller for fiscal responsibility, donates his MP pension, has attained success in the real world of business/investments and is a very entertaining writer and the master of the Churchillian retort. He is the bearded mystic prophetic oracle crying out in the heloc infested financial wasteland of Canada and as someone in history once said, “a prophet is without honour in his own family”. Well that may be true about his former colleagues and their opinions about him, the parliamentarian peckheads and peckerettes and the real estate pumpers but among the Greater Fool blog dog family he is the one and only CAPTAIN GARTH!

#132 truth hammer on 06.07.12 at 11:15 am

hang on..isn’t it full steam ahead with zero down loans? OSFI yesterday announced that the HELOC repayment rules would not be touched. ……because it’s a right to own a $500,000 ++ mortgage in Canada right…with zero down…at historically ‘stimulative rates”

Or is entitlement just part of this generations mindset because we old farts have told them thats the way of the world with our generations focus on ‘particapation ribbons on sports days’ instead of winners and losers ( like in the free world)

I know Garth hates anything written that doesn’t support his particular ideological bent…but…..hasn’t entitlement gone a bit too far…..or is it so engrained now that its too late to stop the liberal brainwashed lemmings from running off the cliff.

http://fullcomment.nationalpost.com/2012/06/06/george-jonas-quebec-students-dont-want-free-tuition-just-someone-else-to-pay-it/

this is exactly why I think there will be no raise in rates..only increased taxation to cover the increased debt of supprting entitlements…..I fear that given the current state of stupid there will be a mass bailout of the CMHC mortgages when they have all sank into the fiscal deep. Is liberal entitlement the leviathan that rises from the depths and sinks us all despite any attempts to stop it?

The national debt can only be paid by one person…..the taxpayer…..without saying ‘no’ at some point…to sone one….we will all sink under the morass of ‘scaredy cat’ politics by waiting to realize that Greece is just the tip of a very swollen public debt boil…..if liberalized spending doesn’t get lanced then we all get scepticemia.

students, wankers, public workers……cut it all out…..and inject some fiscal penicillin into the body of the lumpen proletariat before we all die of the ‘entiltement disease’.

#133 Tony on 06.07.12 at 11:16 am

If you’re ever traveling down Yonge Street in the near future you may see Luke with a tin can begging for change and a cardboard sign reading “I lost my house because i didn’t take Garth Turner’s advice. Any spare change will help my family to eat. I also lost my job as a software consultant. My friends told me it wasn’t a secure job but i didn’t listen to them either”.

#134 John G. Young on 06.07.12 at 11:19 am

#39 Mr. Lahey, Sunnyvale Trailer Park Supervisor on 06.06.12 at 11:00 pm

Thank you for your suggestion Mr. Lahey, but I respectfully decline. As for my reasons, please see

#108 Linda Pearson on 06.07.12 at 9:19 am

Thank you Linda!

Having said that, I would be delighted to receive an invitation to SASTGFBDCParty, and I would gladly accept said invitation, under one condition: Westernman is not invited.

Cheers,

John

#135 pbrasseur on 06.07.12 at 11:23 am

Fact is, OFSI is backing off, the BoC is holding steady and Flaherty is even talking stimulus. I’m sure you can detect a pattern here…

Not that it matters in the end but there is no “bubblicide” .

Unless I run for office?

Why not, my province elected a whole bunch of orange telephone posts last time, I could do that… :(

#136 Not 1st on 06.07.12 at 11:24 am

Explain how a democratic election in a US state had an outcome engineered by ‘big corporations undermining working people?’ I think you’ve lost it. — Garth

I am not union supporter and there should have been a different way to deal with their entitlement attitude, but I think its well known the Koch brothers funneled enough money into this thing to steal it. In the U.S., its always the guy who spends the most wins. Thats why Romney, a guy who shouldn’t even get single digit support, is neck and neck with Obama.

More significantly, many struggling Americans are fed up with the entitled arrogance of union members who refuse to share in their community’s economic malaise. That could have been the Wisconsin message. — Garth

#137 John G. Young on 06.07.12 at 11:26 am

#92 Does it seem strange to you? on 06.07.12 at 8:02 am

Brilliant!

Cheers,

John

#138 Can it be? on 06.07.12 at 11:30 am

Crazy times. One friend mentioned a family friend is moving in because she is getting divorced because hubby wasn’t paying bills and they lost the house. Live large… Crash and burn. My neighbors all bought new homes before they sold theirs. Many many nervous people right now. They got offers within $10000 and rejected. Don’t they say your first offer is the best offer? I was just speaking to someone on the cusp of retirement… Business is slow for these entrepreneurs and she mentioned to me that they are shopping for a 2mill home. Everyone is house horny… Lol. I must say agents are very convincing even when things seems blatantly wrong… I guess if people used common sense the market wouldn’t be in this situation. North Toronto 25*125 new build listed at 1.8million. People have really lost their minds. I look forward to some normally returning. Agent tells me it’s normal for things to slow down at this time of year. Everything is peachy normal according To your friendly realtors who are spending a lot of time on this blog btw.

#139 zeeman1 on 06.07.12 at 11:31 am

Garth,

My neighbor just sold his downtown Toronto condo yesterday for over 20K under asking.

I asked him why he got under asking, and the reason was:

“my agent said take it because there’s a huge amount of condo’s for sale and buyers have plenty of choice, better now than maybe less later.”

Funny how graphs like the one you posted yesterday can actually mirror real life sometimes

Look out below!

#140 Can it be? on 06.07.12 at 11:33 am

@mississauga. Go buy that house… Stop whining. Just don’t say you were not warned. When the tide turns I think it will be quick and unexpected…let the last fools buy in now.

#141 Mike Hawk on 06.07.12 at 11:40 am

#15 2centsCdn

Brilliant. Great comment sir. Unfortunately… spot on.

#142 zeeman1 on 06.07.12 at 11:47 am

Turner Nation.

The Wisconsin election was ALL ABOUT democracy and consumer choice, you dummy. The guy was recalled by monopoly government unions and then re-elected. You want more democratic than that?

Garth, I have no idea how you continue to provide this blog’s services with such a lack of common sense on display by many of the posters and maintain any kind of faith in humanity, but thanks again.

#143 MarcFromOttawa on 06.07.12 at 11:50 am

I have no idea what that means. — Garth

That’s ok I still love your blog.

#144 jess on 06.07.12 at 11:58 am

And who wrote this gem?

http://www.financialpost.com/magazine/ceo/ceoscorecard/story.html?id=9c7e2011-9d07-417e-8790-fef8a76b44bf

“in a complex fraudulent scheme to inflate the assets and revenue of Sino-Forest” and making misleading statements, the statement says.”

#145 Dave on 06.07.12 at 12:00 pm

It’s interesting how the “its different here” phrase gets uttered by some people based on neighborhood.

A couple I know who are hardly living the good life.. he works in an industry notorious for layoffs, she doesn’t work – are hell-bent on selling their poorly-kept home in a “hot” area of Toronto and buying up – so they’ll have a garage and “more room for the kids”. (16 and 14 respectively).

No matter how much you tell them they’d be crazy to buy now (heck I sold and am renting) their response is: “it’s different in our neighborhood”. I’ve decided that from now on, all discussion of real estate is a no-go area with them.

Two greater fools in the making – and it couldn’t happen to two nicer people.

#146 timbo on 06.07.12 at 12:01 pm

http://www.uncommonwisdomdaily.com/14398-14398

“Now for the bad news: This chart is a little behind the times. The Port of Qingdao, through which one-seventh of all iron ore imports to China pass, has actually run out of space to take in more goods.

What’s more, a senior China steel executive recently told reporters that most of the steel mills are only maintaining a minimum level of production. In other words, the slowdown in China may be worse than many people think.”

no slowdown folks. It’s a full speed commodity bull market ahead…….

http://www.cnbc.com/id/47719664

“The timing of tonight’s rate cut suggests two things. Either inflation has eased to less than 3 percent already, or, growth is slowing sharply faster than policymakers’ previous expectations,” Donna Kwok, economist for Greater China told CNBC.

Not good. Ben better print to keep the party going……

#147 NAM not HAM on 06.07.12 at 12:28 pm

“So this week OSFI let the howling banks know this rule will not be implemented”

I’ve been saying this for weeks now. It’s an instant crash if this was implemented. And Garth, you said the bank cops don’t F around. Well well, they just did. It was just a threat. The bank cops will do nothing. They will continue to eat their donuts.

A short-sighted view. — Garth

#148 T.O. Bubble Boy on 06.07.12 at 12:38 pm

@ #104 Ret

Looks like Torontonians will be picking up doggie do in reusable cloth bags. 24/44 of these clowns on Council saw this as the way forward for T.O.

Because the aisle that sells garbage bags of all sizes will now be banned too?

Will there be a billion-dollar ziploc bag registry to track these purchases?

Think a bit about what you’re implying, and you’ll see there is no issue/scandal here — the only change will be what type of bag you get at the checkout counter.

#149 disciple on 06.07.12 at 12:55 pm

While we are on the precipice, let’s look back and see the bigger perspective:

http://www.washingtonsblog.com/2012/06/the-tianamen-square-tank-guy-was-even-braver-than-you-knew.html

#150 cramar on 06.07.12 at 1:00 pm

One of our favourite programs is the “Property Brothers” on W Network (and HGTV). We were watching a new episode last night and some really awesome reno homes were in the sub $200k range. I said to my wife, “Where are THESE houses!? I know of no place in Canada that you can buy a place like that for that money—not even Windsor!”

I did some checking and found that the Bros had produced programs in Austin, TX. Aha! Bingo! I found an Austin web article written back in Feb. that included this:

“American viewers can identify with prices in Austin, where the Property Brothers can find homes in need of renovation for $200,000 to $300,000. The same type of home would be about $800,000 in Toronto, where they shot the first season.”

Yup! It’s different here! For now. Does give an indication how far prices can drop. BTW the Bros live in Las Vegas, not Toronto where I thought! Wonder why?

#151 highway61 on 06.07.12 at 1:20 pm

luke,

a friend of mine was in a similar situation (here in calgary) some three years ago. he stumbled upon this blog (not on my advice!) and decided that mr. turner’s opinion makes more sense than reality. homes he was interested in are now selling for 25 percent more. meanwhile, i made some good profit buying (and selling) Calgary’s condos and houses. in canada “reality” and “facts” do not mean much – it is “opinion” that matters and opinion on real estate is – well – religious and nothing will change that. so mr. luke, either be smart and wait for realistic pricing or jump on the train and make yourself some money. greetings!

#152 pbrasseur on 06.07.12 at 1:24 pm

Just want to let you know Garth

Sometimes you’re wrong, but who wouldn’t be, especially with the pace you keep…

But I still think you do a great job and this blog is absolutely terrific!!!

#153 Bill Gable on 06.07.12 at 1:26 pm

Thorsten Polleit, chief economist at Degussa Goldhandel, told CNBC, “We live in a paper money system and paper money has been expanded for decades and a whole pyramid of debt has been heaped up and this is now coming crashing down and I would say a depression is inevitable.”

http://tinyurl.com/7nh4ns8

Lovely.

#154 sam on 06.07.12 at 1:27 pm

Garth,

What rules did OSFI implement?

So far it seems like they backed down from re-qualification?

Did they also relent from 0 down?

The guidelines have not been announced. — Garth

#155 timbo on 06.07.12 at 1:28 pm

http://www.independent.ie/business/personal-finance/property-mortgages/debt-crisis-stricter-mortgage-rules-under-eus-plan-backed-by-parliament-3131911.html

“It amounts to an effective ban on self-certified or liar loans, whereby a mortgage is given without independent verification of the customer’s income.

Lenders will have to check the creditworthiness of customers and the prospect of them meeting repayments. Britain is finalising rules that go further and require rigorous checking of actual income.”

Years of liar loans and now you decide to fix things…..

#156 truth hammer on 06.07.12 at 1:29 pm

DELETED

#157 zeeman on 06.07.12 at 1:44 pm

Garth

So now what…..No change to amortization, no rate cut, no tight OSFI rules….is there still anything left to burst this bubble…

#158 Arthur on 06.07.12 at 1:52 pm

#69 I am afraid you might be correct. Look at the population numbers in Canada. There are 25% more people in the 45-65 age group compared to 0-20. The difference is 30% if you include mortality. As Garth always says, most of these boomers have no assets other than housing. They will be selling for the next 30 years with less young people around available to buy. Typically people sell the family home 5-10 years after retirement but it seems like many will be forced to sell sooner. I think real estate prices will fall and then remain static for a long time. Possibly an entire generation where real estate prices increase at a rate well below inflation.

#159 A. Camus on 06.07.12 at 1:59 pm

#15 2centsCdn on 06.06.12 at 9:29 pm

Geez you (not suprisingly) really touched a nerve with that one! I found it funny because, like a lot of humour, there is some truth mixed in with the absurd. Just like the absurd knee-jerk reaction you’re getting from the “enlightened” on this blog. Everyone else is blind but them.

#160 jess on 06.07.12 at 1:59 pm

Jun 7, 2012 – 14:07 Irish unemployment rate hits crisis-high 14.8 percent
By Padraic Halpin

DUBLIN (Reuters) – Ireland’s unemployment rate has hit its highest level since the country’s financial crisis began, denting hopes aroused by stronger economic data that more jobs might be created.
Ireland

4.6 per cent in 2007 to 6.3 per cent in 2008 by December 2008, the Irish unemployment rate was 8.7 per cent, the highest rate of the 17 comparator countries.

http://www.conferenceboard.ca/hcp/details/economy/unemployement-rate.aspx#Unemployment_context

#161 From Mississauga With Love on 06.07.12 at 2:00 pm

“#48 From Mississauga with Love

Say hi to Mayor Hazel, and compliment her on the suburban sprawl nightmare that she’s created!

If you think that $700k+ burbs homes that are falling apart and/or are former grow-ops is the new normal, and you’re ok with that, you probably should be a homeowner. You are uniquely qualified to tolerate your surroundings.”

I actually (yes there are people like that) prefer Mississauga to Toronto. Toronto is very crowded, too much car traffic (takes forever to get from anywhere to anywhere) and the public transportation system sucks, smaller houses, older, delapidated, and much more expensive in the suburbs.
And keep in mind not everyone works in downtown Toronto, right?
Yes, i agree with you it’s crazy, but we’ve been saying the same thing for a long time and the exact opposite’s been happening.
I am sure, though, that the crash will start exactly when I buy, so I will keep you posted so you know the exact date of the crash start in the GTA.
p.s. there are former grow-ops in the Toronto detached house pockets as well, FYI, and no, the houses in the suburbs (or at least Mississauga) are not falling apart. That is categorically untrue. In fact, Toronto’s core housing is (condos with falling glass) and even semi-detached houses. Just walk up and down around U of T areas and other older streets, and tell me if you’d ever want to live in one of those.

#162 down and out on 06.07.12 at 2:04 pm

Remember the old army adage do not volunteer for anything ,and everyone in line steps back one step but the new recruit.Now we know how Mark Carney feels when at the G7 we will hold rates steady and warn people soon that rates will raise .This week China, Aussies and maybe more will lower theirs .Here we thought BOC had no nerve to raise rates ,we just did not know how is was to be done.

#163 EdmontonJim on 06.07.12 at 2:11 pm

Have you ever found the courage to stand for office — Garth

I tried in the last provincial election, though I had no chance of actually being elected, so I’m not sure it required much courage.

But I learned something interesting. Politicians are people too (At least on the provincial and municipal levels). As a candidate during the election I had the chance to actually sit down and talk with MLAs, City Councilors, Candidates from other Parties, and even an MP. I do not doubt that they all have good intentions. I also saw that they had various levels of competence, irrespective of ideology and political party.

I’ve learned to not criticize politicians for the decisions they make, unless there is some obvious self-serving or childish spite going on. The truth is, every individual politician is a reasonable adult. But you could take the most honest, inteligent person in the world, and put them in any position of power and you’ll have mobs calling for their head.

The system itself is broken, and until we (All of us) decide to fix it we will be plagued with the same old BS. The only way we will fix the system though is if we listen to each other – especially those we disagree with, and speak up with our own ideas and demand respect in the conversation.

#164 Bailing in BC on 06.07.12 at 2:21 pm

#85 House Horny Housewife

“P.S. Take it easy on the advice to the young’uns, Garth, I’m trying to sell my house and I have noticed that more than three quarters of them are under the age of 35 … don’t ruin my gig !”

Still looking for a greater fool to unload your old house after buying the new one? How longs it been now?

#165 new_era on 06.07.12 at 2:24 pm

household debt rises in Canada.

http://www.timescolonist.com/business/Household+debt+rises+Canada/6744099/story.html

Didn’t I read an article a week ago about how Canadian are getting their debt in control and how most think they can get out of debt by 2017. (bullshit!!!)

Just like any Heroin addict, they always think they can kick the habit.

#166 Al on 06.07.12 at 2:25 pm

All three toronto newspapers have headlines stating that “boom in toronto home prices continues”

Then it must be true. — Garth

#167 Hurrah for Hazel on 06.07.12 at 2:34 pm

#155 From Mississauga With Love

Hear, hear, I second your opinions of Mississauga from my park lined area of this fair city. To boot I can get downtown Toronto in 20 minutes if I so choose.

#168 Balmuto on 06.07.12 at 2:39 pm

The forced re-qualification at renewal was the most draconian and ultimately counter-productive of the OSFI measures. Kicking people out their homes that are making timely payment on their mortgages just because you realize that you shouldn’t have lent them money in the first place is like shooting the horse after it’s left the barn. You don’t want to add to the pile of foreclosures in a falling market, it will accelerate the downward spiral, the banks were right about that. Tighten up on new credit origination, great, but don’t make performing loans go into default unnecessarily, that’s not going to help anyone.

#169 Mr. Lahey on 06.07.12 at 2:43 pm

#42 Furst

Bravo Furst! Another gem from the real estate bubble bursting poet. Keep up the great work. Bubbles has your poems posted in his shed! Even Ricky (since he learned how to read) is revelling in them.

#170 Devore on 06.07.12 at 2:44 pm

#154 EdmontonJim

The system itself is broken, and until we (All of us) decide to fix it we will be plagued with the same old BS. The only way we will fix the system though is if we listen to each other – especially those we disagree with, and speak up with our own ideas and demand respect in the conversation.

Those are lofty goals. But from the way elections are run, winners decided (first past the post), ridings carved out, parties run (party whips), and legislative procedures and processes set up, an independent or a small party is automatically at a severe disadvantage (and Garth knows something about sitting as an independent), and group think and political expediency is the order of the day. This system will not be fixed with talk and fuzzy feelings.

#171 Hell in a Handbasket on 06.07.12 at 2:49 pm

@ #15 2centscdn

Oh how clever, painting the rich as the ants and the poor as the grasshoppers, and not-so-subtly blaming the poverty on the grasshoppers. Oh you poor persecuted Ants! How could we?

Ayn Rand would be proud.

#172 patiently waiting on 06.07.12 at 2:58 pm

I heard that BOC announced they will not be raising interest rates now or for the foreseeable future due to our economy. OFSI will not implement the proposed regulations for tightening mortgage renewals. HELOCs will not be amortized. Yep, looks like business as usual. The house of cards are just getting bigger and higher. I wonder what strong wind will bring it down?
—————————————————————–
Wow, status quo . . . again . . . WTF . . . how long can this go on for? It seems every time there is a glimmer of hope that the debt F___tards will get there due, it get’s dashed, delayed, or not implemented at all. I really don’t think there will be any policy decisions that will be the catalyst to cause the housing bubble to pop . . . no one wants to have the blood on their hands. So the bubble goes on and on and on . . . The bubble will eventually die a natural death on it’s own without any policy intervention from the psuedo politicians . . . this just means that it will on longer than it should . . .

#173 Hell in a Handbasket on 06.07.12 at 3:01 pm

@ #101 2centscdn let me guess you share a similar opinion as some fox news pundits did back in the day that the subprime crisis was the borrowers fault. That banks and brokers had no responsibility what-so-ever. Well they should, as an “expert” they have a fidicuary duty to their clients in the short term and their shareholders in the long term.

#174 Harlee on 06.07.12 at 3:04 pm

#112 Chris
“…it’s finally in the bag.”
Plastic or cloth ?

#175 jess on 06.07.12 at 3:19 pm

at 1:27 it gets even uglier

http://www.guardian.co.uk/business/2012/jun/07/eurozone-crisis-spain-auction-bailout-rescue#block-8

#176 Dontcallmeshirley on 06.07.12 at 3:21 pm

Humble pie has a rotten, unforgiving taste but we still have OSFI guidelines for:

1. proof of income
2. 65% LTV on HELOCs
3. no longer sole reliance on automated appraisal
4. cash back amount not qualified for downpayment

and non OSFI:

1. insured mortgages not eligible for covered bonds
2. CMHC insurance in force cap stays at $600 billion

#177 DON on 06.07.12 at 3:30 pm

All three toronto newspapers have headlines stating that “boom in toronto home prices continues”

Then it must be true. — Garth

Perfect
The papers never get it wrong
.

#178 disciple on 06.07.12 at 3:30 pm

#154 Bill Gable… We don’t exactly live in a paper money system versus a non-paper system. At the moment, it’s more bits and bytes on silicon wafer than paper. You see, it doesn’t matter what form money takes. It is still a promise to pay. And a promise does not exist except between minds. I know it’s hard to grasp for many, but if one lets go of greed, they will see it.

#179 daystar on 06.07.12 at 3:35 pm

#73 DML on 06.07.12 at 1:18 am

Excellent link, glad you shared it with us.

http://www.cbo.gov/sites/default/files/cbofiles/attachments/06-05-Long-Term_Budget_Outlook.pdf

Figure 1.1 on page 10 clearly illustrates U.S. undertaxation and the need for further spending cuts. Assuming the graph numbers are good, (current taxation numbers are correct) it doesn’t get any planer than this. The U.S. debt situation is still within control but not for much longer. Taxes have go up there, and substantially so (at least, with what they are used to). I don’t see any other way out for them. Its time to pay the piper.

#102 Dean on 06.07.12 at 8:56 am Wow. Clearly things are much worse than anyone will admit. Otherwise why would you need to back down on such a reasonable piece of regulation – Dean

I don’t believe it was a reasonable piece of regulation the way it was drafted. It doesn’t surprise me that the need for term loans to be reassessed with LTV’s in mind were axed. There is no regulation that I know of that can save people who are already in over their heads from bankrupcy. Whats left is needed. HELOC regs and eliminated cash back downpayments are the first to come to mind but I think readers need to pay way more attention as to just how loose current CMHC regs are (30 year amortizations with 5% down) combined with a near record low interest rate environment. Housing/RE bubbles need alot more than hot air (media buzz) to grow.

As I’ve stated before, F is doing nothing other than encourage our housing/credit bubble to grow by leaving amortization/downpayment regs alone. I don’t see OSFI regs doing it now so what will? Media? Valuations? Somewhat…. but its the end of easy credit that pricks this bubble.

Try CMHC hits 600 billion cap early next year of which 2 scenarios develop. The Conservatives raise the cap in a bid to keep the housing bubble going for another 2 years to win the election in 2015 and Canada goes by way of Spain…. or they let it die and spin the nation into recession. The question we should all be asking ourselves is “why not let it die now, when the wounds left behind won’t be as deep?”

I myself don’t believe the Harper government wants to end their own self created housing bubble. If they were at all serious, they would have done it by now. F would have tightened amortization and downpayment regs through CMHC. All they have done since late 08′ is moderately slow growth from a runaway Spainish train wreck since 2011 but the danger here readers is that even if housing takes a 10 to 15% correction, valuations at that point will still be too high.

I believe the Harperites will keep it going as long as they can but 5 things stand in their way:

1) Interest rates. Gross public debt to GDP continues to escalate. At some point, the chickens come home to roost. It was the end of GWB’s era and so it will be the end of the mini Bush we have here in Canada.

2) Household debt hits the max. Mark Carney has (I think) accurately stated the max at 160 – 162%. We aren’t far off at 153%.

3) Housing valuations are extremely high in some regions as it is. Its not sustainable at present and Canadians are catching on.

4) If Flarhety and Harper truly try to loosen regulations at this point, Canada heads towards a housing bubble similar to that of Spain’s peak. Considering the consequences of such government policy, Canadians left right and center should conclude that the Harper government isn’t acting in the best interest of, well, anyone (save bond investors, mostly foreign, shorting our currency and debt, taking profit and reinvesting at higher yields, not to mention foreign corporations largely increasing market share of all of Canada’s economic sectors as is Harper’s goal) and should be replaced.

#147 timbo on 06.07.12 at 12:01 pm

China’s move could be more pre-emptive but I think the timing is good. Your finger is on the pulse. Like your comments btw.

Oh yeah, and for readers paying attention to gold buggery comments, its like crickets today with gold giving up Friday’s gains and not overly surprising. Newbie investors who like to a) invest all their money into one asset: gold b) don’t know their peer’s within their group never mind sectors outside and c) don’t understand what drives up gold (U.S. dollar, debt and bond maturities) should stick around and learn something from this site, dedicated towards saving people from themselves.

#180 Bottoms_Up on 06.07.12 at 4:02 pm

Some cool census stats…Elliot lake makes the list! lol

http://www12.statcan.gc.ca/census-recensement/2011/as-sa/fogs-spg/Facts-cma-eng.cfm?Lang=Eng&TAB=1&GK=CMA&GC=535

#181 jerry on 06.07.12 at 4:07 pm

Garth, please see house prices in Sacramento …beautiful 3-4 bedroom houses on big lots for $250 thousand ..I believe California has as good an economy as Ontario so we are in a situation which is unexplainable ..the house prices in Toronto are way too high and not supported by fundamentals, i.e. the wages are not anywhere as high as they need to be or the demand i.e. there are far too many condos/houses being built which will fir the demand and exceed the demand. I see a 20% drop in prices WOW

#182 Bottoms_Up on 06.07.12 at 4:12 pm

An old house recently sold in west Toronto for $500,000 (land value only). The lot was 1/4 acre.

Assuming the land size of Toronto proper to be 630 kmsq (155673 acres), that values the land for Toronto proper at roughly $311 billion.

#183 Nostradamus Le Mad Vlad on 06.07.12 at 4:24 pm


#84 Buy? Curious? — “Live fast, Smoking Man, and leave behind a good looking corpse!” — Party on, dudes!

Break on through to the other side, or as Ian Gillan (Deep Purple) used to sing in Speed King, “Die young and live much longer!”

#96 TurnerNation — “. . . everybody realizes this whole engineered “GFC” is a brilliant plan to strip away our rights, turning us into even greater slaves.” — Correct. Socialism in action — privatize the profits, socialize the losses.

#147 timbo — “Ben better print to keep the party going……” — What else can he do?

Housing is a small part of America’s GDP, it’s the other stuff — mfg. being outsourced, cheap telemarketing operations being imported to replace the outgoing ones — Benny, try as he might, will only be able to keep this going for a short while longer.

#154 Bill Gable — Good link.

#167 Al — Also, Bre-X’s stock price is over $500 / share. Great time to cash in!

#184 ydnew on 06.07.12 at 4:34 pm

Proof that you can afford property in Toronto?

http://www.torontomls.net/PublicWeb/CL_CF.asp?link_no=43794265.175000&t=l&fm=FGood idea.

Pay $57.4K plus closing costs for an old apartment with $900 condo fees and $200 taxes that you can rent for $1,100. Good idea. — Garth

#185 Bill Gable on 06.07.12 at 4:41 pm

“There’s a deep, gaping hole in downtown Vancouver and it’s getting bigger. After nearly four years’ hiatus, work crews have resumed digging. The on-again, off-again 63-storey building on busy West Georgia Street is on, again. Almost 300 condominiums, starting at $1-million each. A luxury hotel. Amenities galore. Another indication of the froth that has returned to this city’s real estate scene.

Number crunchers report that housing prices are down slightly in Vancouver this year; in Toronto, the country’s second most expensive real estate market, prices continue to rise. But economic conditions and logic don’t apply in all corners of this city.

It still beckons wealthy and foreign investors, people besotted by glass condominium towers. People with cash to burn on a “safe haven” second home with sweeping ocean and mountain views.”

>> The puffery continues, apace. Pick a side.

http://tinyurl.com/7jun55d

#186 Can it be? on 06.07.12 at 5:04 pm

Checked out some more houses I follow in Mississauga and I would like to report more drops in prices, from asking 2 mill to asking 1.8 mill. Maybe when they hit 1.2 I’ll consider buying… Maybe :) waiting has it’s benefits!

#187 new_era on 06.07.12 at 5:09 pm

how Fast can things change?

After selling 2 billion Euros in treasuries, finch downgrades Spain 3 notches. Just a bit over JUNK.

Since the politician didn’t have the stomach to take their medicine. I’m Glad Finch had the BALLS to properly access SPAIN’s credit rating.

So Ask yourselves how fast can things change.

http://www.telegraph.co.uk/finance/9317866/Debt-crisis-Fitch-downgrades-Spain-by-three-notches-and-blames-European-leaders-for-absence-of-a-credible-vision-for-euro.html

#188 888realtor on 06.07.12 at 5:15 pm

Will economy be better? No. Adam Smith (not the last one in the economic theory) said: capitalism needs expanding markets to survive. All markets have been divided and captured, nothing is left. There was some kind of a short renaissance when USSR collapsed and let its markers be taken. After that, economy became dependant purely on credit money. Such monetarist approach creates “bubbles”. Those “bubbles” are the organic part of the economy existing only on credit emission; they are not a result of any “emergency” measures. The elite will be promoting the RE bubble as long as they can. The problem is that there is no too much time left: the prime rate is almost zero.

#189 KingBubbles on 06.07.12 at 5:20 pm

Good post Garth,

Looks like it is the most different in Winnipeg.

The Terranet Housing Price Index for April shows Winnipeg (183.26) having the largest increase of all cities since June 2005 (100.0)!

Nothing against Winnipeg but an 83% price increase since 2005 there makes no sense at all.

#190 ydnew on 06.07.12 at 5:56 pm

Proof that you can afford property in Toronto?

http://www.torontomls.net/PublicWeb/CL_CF.asp?link_no=43794265.175000&t=l&fm=FGood idea.

Pay $57.4K plus closing costs for an old apartment with $900 condo fees and $200 taxes that you can rent for $1,100. Good idea. — Garth

The building is a mere 40 years old and on the flight path to Pearson airport. What could possibbly go wrong? ;-)

#191 VICTORIA TEA PARTY on 06.07.12 at 5:58 pm

ONWARD AND EVER DOWNWARD…EURO NIRVANA AND LADIES TRAVELLING BY BUS

#62 Nostradamus, etc.

If we all want to know what’s wrong with the eurozone, your paragraph highlighting the daily fiscal and monetary horrors over in Europe, that Godforsaken land of zombies, graveyards full of OUR war dead (and others), and 60 year old French retirees (!?) I say the heck with them all.

Yesterday, as a CBC-TV reporter so elegantly intoned, in his story covering the careering Euro-slide into economic oblivion, it’s a two year old problem and NOTHING has been resolved, he concluded. Of course not, Neil, it’s Europe! They’re waiting for the Yanks.

BUT THEY’RE AWOL BECAUSE THEY CAN’T HELP

As Helicopter Ben, the US central bank boss, pointed out before a Congressional finance committee today there will be more QE IF necessary but NOT necessarily MORE Q!

Ben’s main statement, that he wanted to regale the pols and their political hacks but would not because it would have destroyed the markets, is that he’s out of printers ink and 1s and 0s on his computer. No more QE. Period. No bullets. Outta ammo.

WHERE TO FROM HERE?

I know, Hell freezes over first, because that will occur before the Euro whackjobs can decide what to do.
That’s what happens when one indulges in too many sidewalk cafes and nooners in the Alps! It dulls one.

Classic European thinking is that indecision is better than a decision because the Euro-folks generally follow decisions with a war! Read their bloody history!

DOWNSIDE RISK

Meanwhile, in Canada, we watch our trading bloc friends, one after another, going down big time.

As a consequence, whatever will happen to our vaunted real estate industry and its myriad bottom-feeders and well-dressed scallawags and nice people?

Fewer trips to the tropics? And what’ll that do to our airline industry? And ALL other service industries?

And the Housewives of Vancouver TV show? What about THEM?

Will they have to take the bus to Reno from now on? Can they apply makeup on a rolling bus? Will they have to learn how to boil water? Are they having fun yet, or still? These are important ISSUES! Where are their life counsellors? Crying at their stock brokers’ offices?

THINGS ARE GOING TO BE UPSIDE DOWN SOON!

You’ll notice that I’m not passing judgment on these fine folks because they DO PAY considerable income tax.

In fact, the CURRENT top one percent pays the largest share of all personal income tax collected in this country, a huge amount, and I’m not kidding.

We need THEM to scare up more tax contributions for REST OF US! So, back to work at the salt mines; there’s a good girl!

What we DON’T want them to become is more of the new legions of the zombie poor!

Why? Because WE are about to become the NEW one per cent!

Upside down, right side up. Whatever.

#192 Enoughisenough on 06.07.12 at 6:01 pm

OK enough is enough . i am buying house even if i have to commute 2 hours to work. whats the worst going to happen? i will loose and declare bankruptcy ? will move somewhere else and start a new

#193 Westernman on 06.07.12 at 6:08 pm

2CentsCdn @ # 15,
You nailed it right on the head… you can tell you spoke truthfully by all the high – pitched whining from the wealth re-distributing, politically correct Socialists on this blog…
Of course these parasites are most certainly on the government handout wagon so they see nothing at all immoral having the government stealing from the productive and handing it out to their lazy asses…
Of course this eventually comes to an end as the society either runs out of producers to carry these anchors or the productive simply leave or find ways to hide their money…

#194 Westernman on 06.07.12 at 6:17 pm

Mr. Lahey, Sunneyvale trailer park Supervisor @ # 39,
Be careful when mentioning ” ploughing match” to John G. Young…
I have a sneaking suspision he’s going to interpret that a little differently than you or I…

#195 EdmontonJim on 06.07.12 at 6:33 pm

#171 Devore

If I believed that then all hope is lost. Is there an alternative to talk? Violence is worse than pointless. Activism is ignored and marginallized. Talking is the last hope for change. Garth is very good at it, and I hope he keeps at it. He pulled one person back from the brink. That is the power of talking.

We live in a world of instant gratification. Talking doesn’t acheive that. But it does do something. When you sit down with someone with an oposing viewpoint, and can repectfully articulate your view, it might not change their mind about your viewpoint, but it might change their mind about you, and your mind of them.

Try it sometime. Call up your city councillor, or MLA, or MP, and instead of leaving an irate message, ask if you could get an appointment to meet with them. You might be surprised to learn that politicians have to listen to their constituents too. Not just lobbyists and whips. It surprised the heck out of me.

#196 TurnerNation on 06.07.12 at 6:35 pm

How about an update from frugal Chad in Vancouver?

#197 John G. Young on 06.07.12 at 6:54 pm

#101 2centsCdn on 06.07.12 at 8:54 am

“You can take that story any way you want…”

Oh, there’s more than one way to take it? Please enlighten us.

And BTW it appears that your efforts have won you the admiration of Westernman.

That’ll teach you.

#198 Snowboid on 06.07.12 at 7:27 pm

#193 Enoughisenough on 06.07.12 at 6:01 pm…

Why is it that most RE agents/pumpers spell ‘lose’ as ‘loose’?

Or is it all the same person posting?

#199 Nostradamus Le Mad Vlad on 06.07.12 at 7:27 pm


#188 new_era — “how Fast can things change?”
— and —
#192 VICTORIA TEA PARTY — “THINGS ARE GOING TO BE UPSIDE DOWN SOON!”

Couldn’t have said it better myself!
*
Bieber Feber? Actually, it’s PMs mania time; GS ‘Steep Market Drop’ Sell now then buy back in! Life Is Over for many NAmericans, as they can’t find work; Study on Bubbles BPOE, Mikey the Reator and Alan, this one is for you; A Good Example to learn from; 4:45 clip Nigel Farage is dead on with this — the Euro didn’t create jobs and prosperity, it destroyed them; How to Die and get a bonus for helping the process along.
*
6:11 clip Ted Turner says the world should be depopulated by 2/3. He can start with himself and his family; Pakistan – US The US has a bloody nerve. They keep bombing Pakistan. What’s the problem? Spot the Difference Check the two pix further on down; Proxy War with Russia and Iran. Syria is in the way, and Tit-for-tat US warns Russia about Syria, Russia warns US over Georgia and Russia – Pakistan; Farmers “This is what Monsanto wanted; natural varieties gone so you have no choice but to buy their GMO seeds and pay royalties on them forever.” wrh.com; NDAA Unconstiitutional Judge raps Obomba over the knuckles; Seven min. clip US admits to cyber wars (what else is new); Prisoners of War were treated better than this; FB’s US$74K / yr. interns; Carbon Tax US and EU disagree; Romney It is highly doubtful whether ogD gives a hoot about crooked politicians. They are Lucifer’s tools; Obomba That’s chicken-feed to Soros; eHarmony and LinkedIn Passwords hacked. Wasn’t Junius’ twin with eH?

#200 pablo on 06.07.12 at 7:56 pm

what mcmansion, that place is just your typical working middle class hovel???

#201 patiently Waiting on 06.07.12 at 8:07 pm

I’m curious if other markets are experiencing similar price reductions to my hood. 50% of the active listings in South Surrey priced between $900,000 and $2,000,000 have had price reductions or have been terminated and re-listed at a lower price to hide the price reduction. Seems the general public is quite unaware of this . . . I guess the realtor cartel is keeping this info close to the chest . . .

http://mlslink.mlxchange.com/DotNet/Pub/EmailView.aspx?r=1973443969&s=BRC&t=BRC

#202 FI Guy on 06.07.12 at 8:20 pm

Interesting, Genworth in the news. The accounting is part of the reason why Genworth and CMHC will likely go under – their policy liabilities just will not be enough to handle the risks they are insuring.

I found the suggestion that 80% of premium revenue is recognized in the first 5 years interesting. If this is true, a 98% leveraged borrower that is Genworth insured (2.75% premium I believe) will, after 5 years of mortgage, have a policy liability according to Genworth of around 0.60% or so of the balance against a 90-95% insured mortgage – unless housing prices go up.

Scary, eh?

http://www.theglobeandmail.com/globe-investor/investment-ideas/streetwise/genworth-rises-but-keep-your-eye-on-its-premiums/article4240124/

#203 T.O. Bubble Boy on 06.07.12 at 8:50 pm

@ #162

Funny, Hazel even suggested today that the sprawl is falling apart – and needs a new tax to re-build it:

http://toronto.ctv.ca/servlet/an/local/CTVNews/20120607/Mayor-mccallion-wants-regional-sales-tax-for-roads-120607/20120607/?hub=TorontoNewHome

#204 TRT on 06.07.12 at 8:56 pm

IN New Delhi, one of the largest cities in the world, RE prices went up 33% in one year!!!

and, No mortgages and also interest rates well over 6% !!!

http://www.huffingtonpost.ca/2012/06/07/worlds-hottest-housing-markets_n_1578493.html?ref=canada#s=1068008

Population 12,259,230. World-class. Like Saskatoon! — Garth

#205 Hoof-Hearted on 06.07.12 at 9:24 pm

Explain how a democratic election in a US state had an outcome engineered by ‘big corporations undermining working people?’ I think you’ve lost it. — Garth
=================================

GOOGLE “DIEBOLD”

Joe Stalin once stated

” It is enough that the people know there was an election. The people who cast the votes decide nothing. The people who count the votes decide everything.”

#206 TurnerNation on 06.07.12 at 10:57 pm

Well, Garth, I appreciate you taking time in response to my comments.

Here’s why I no longer believe (robo-calls aside) in the façade of elections:

….
http://www.greaterfool.ca/2012/02/03/wrinklenomics/#comment-149380

We are the enemy this time – Toronto’s CON Mayor Ford’s (aka Boss Hog) henchman’s words:

-A lot of people have the impression you ran a dirty campaign. What’s your reaction to that?
” The fact of the matter is, all your downtown champagne-sipping socialists can’t understand how some kid from Windsor came in and kicked the shit out of them. It happened. They should get over it.”

http://www.torontolife.com/daily/informer/from-print-edition-informer/2011/11/16/the-qa-nick-kouvalis/
…..

And what has this loud-talking mayor done? Allowed budget increases and raises for the fattest, most indulgent Toronto unions: police and TTC (transit), while decimating OUR established, hard-won and solidly built cultural artifacts, such as the proposed closing of Toronto’s first post office, kids’ wading pools, libraries, and so on. The Livable City?

I am reminded of the first task while in Iraq: loot and decimate their cultural museum. Well publicized event. Why. That was no mistake. Yes I’m comparing the crackdown on Toronto’s culture to Iraq.
The war is coming home. G20 was a test.

#207 Patz--aka "socialist whiner" on 06.08.12 at 1:34 am

@ 194 Westernman

What exactly is your point dude? Since even some of the super-rich, such as Warren Buffet are embarrassed about the size of their slice of the pie, how is it that the “lazy ass poor” are dragging them down? Seems like a pretty good time to be a “producer” aka financial elite.

I’m going out on a limb and guess you’re not rich but are more like those John Steinbeck was referring to when he said that vast majority of working Americans never bought into socialism because they thought of themselves as “temporarily embarrassed millionaires.” Are you embarrassed?

#208 TurnerNation on 06.08.12 at 8:00 am

For Torontoites: city allowed generous COLA increases for TTC (transit) union, yet we have yearly fare increases and the Mayor is slashing some TTC routes and hours! Transit is an essential service, used especially by lower income people.

Today’s weblog picture is telling. Look at the weapons and armourments on these government army/policemen in the picture:

http://www.greaterfool.ca/wp-content/uploads/2012/06/copkid.jpg

For who are these weapons reserved? Overseas hardened militias and rebels? Nope. They are to be used against unarmed protestors and working people in our cities. The war has come home.

#209 BP #19 – Sons of Anarchy on 06.08.12 at 8:04 am

[…] Garth Turner, a prolific Canadian and writer about our country’s housing bubble, seems to be calling a peak to the housing market. As readers of this blog will know, rational economic analysis clearly indicates that Canadian […]

#210 tnt on 06.08.12 at 9:49 pm

Patz….

Are you saying that Warren Buffet is feeling guilty for his size of the pie. Like by some sheer fluke it fell on his lap. Buffet would kick your mother off the toilet if he thought she was sitting on oil.
Pour out the koolaid mannn…