Eh?

Louise and her squeeze bought their Florida home in 1980. “We just shook our heads at the absurd run-up in prices from 1997 to 2006,” she says. “Now we’re surprised to see the same thing happen in Ontario.”

She’s been reading this oversexed site since last fall. (“Try to remember that there are many intelligent females that enjoy reading your blog but view some of your sexiest comments as those worthy of a ‘troglodyte donkey’…  however, I must confess that more than once I have found myself laughing at your ‘base’ humor!”) Besides this needed daily arousal, it also gives her a window on real estate in Canada. Good, since Louise is moving to Kingston.

But they’ve decided to rent here and hang on to the Florida home. Less danger.

“I wonder how many Canadian mortgage home owners realize how ‘stacked the deck’ is against them in an economic down turn?” she asks.  “So, we have decided to rent for a year, as risk for us is two fold – real-estate and currency exchange.  The rent on a large well maintained house, short walking distance from Queens is $2,800 per month. I estimate the current market cost of this house to be in excess of $650,000.

“Do you think it is going to take more than a year for this market to crash? In Florida the bottom has not been hit yet, and we are 5 years and counting. Do you think that because of the mortgage default clauses it will “unravel” very quickly?

“In the US the banks have held properties off the market to keep the property values from tanking and also because from an accounting point they do not have to “mark to market” the true asset value. Furthermore, the “non paying” interest payments that are accruing are still being counted as “profit”… The loss is only realized at the “actual” sale of the asset….  no sir, no conflict of interest there.. hence the term “shadow inventory”…..  but that could NEVER happen in Canada….  just like you could never get a ZERO down mortgage in Canada….no, that only happens in the States… <snark>

“So Garth..  look into your crystal ball and tell me how you see this unfolding!”

Well, Louise, people in Canada like to believe it’s different here, which is why so many of them are doomed. They think we have prudent banks, a better economy, no crime or fat-people reality TV shows, responsible lenders and stable prices. House values here only rise, because everybody on the planet wants to live in Red Deer, Regina or Burlington. Only Americans, you see, borrowed money they couldn’t repay, moved into houses they hadn’t earned, borrowed against their home equity, bought without savings, took mortgages with teaser variable rates or diverted all their cash into real estate when prices could only fall and rates only rise.

We would never do those things. We’re special. You will so like it.

Let me give you a sample of clear-eyed Canadian thinking when it comes to real estate.

Almost half the new condos in downtown Montreal are unsold. That amounts to about 2,081 units scattered across 38 projects. These are built units, not pre-sales. Every day they sit empty, people lose money. This, despite local realtors’ numbers showing a 14% jump in condo sales over last year.

That may be a big enough deal to earn headlines in La Presse, but it’s pocket change in Toronto, where 15,500 condos are now new and vacant, while another 55,000 clog the pipeline to market. While new builds are a tougher sell, used condos abound. As detailed here last week, listings have just jumped 20%, which means the worst of both worlds – dozens of new projects flooding the GTA, while resales pop.

In Vancouver they passed another record on Friday, with over 19,000 properties available. Sales and prices there have been falling, as you know. At this pace, 2008-level inventories will be reached by the end of the month, and that’s not the news you want to hear if you bought 14 months ago.

Meanwhile in Alberta, sales and prices have been going up on oil fever. Yes, apparently they don’t get CNN there yet, Louise, and didn’t hear about $84 crude Sunday night (even after a surge) – down 26% over the past year. In fact, Calgary and Edmonton are just steroidal versions of Skatch and Winnipeg, where cheap credit combined with a shallow gene pool have been a stunning combo. What comes next for commodity values will make life interesting.

In few Canadian cities can average families afford average homes, even with sub-average, emergency rates. Despite that, every real estate board claims markets are stable or balanced. The big banks hand out free downpayments to young couples taking fat mortgages. The government lets buyers empty their retirement accounts, tax-free, to buy houses they can’t afford. And the share of GDP that real estate now occupies is the same as it was in 2006 in California. Or Florida.

So, Louise, come on up. We’re cool and fun, like Iceland. It’s different here.

Just don’t bring your donkey.

185 comments ↓

#1 the word of reason on 06.10.12 at 9:28 pm

primo !!!!!!!!!!!!

Stop that. — Garth

#2 T.J. BONES on 06.10.12 at 9:30 pm

To Sir Garth: Why Me??

#3 Louse on 06.10.12 at 9:34 pm

Shouldn’t call the nice lady Louse, Garth.

;)

#4 $B$P$O$E$ on 06.10.12 at 9:37 pm

What your snarky smug post fail to understand Garth, is that IT IS DIFFERENT here.

We are smarter, wiser, more cultured and generally just nicer than anywhere else in the world. That is an undeniable fact.

That means we not only are different we deserve and are morally entitled to a an endless uptick in real estate. So it shall be. Forever.

This is the fundamental truth you lack when you throw about your pithy “facts”, “logic” and “statistics”

What I and the multitudes of RIGHT THINKING CANADIANS believes supersedes by a barrel of oil and bucket of water any of the natterings you and your group of loser rental trolls “believe” as the cheerleaders of the nabobs of negativity.

#5 Cory on 06.10.12 at 9:38 pm

There are layoffs occurring in Calgary, have been all year. But it is also busy…depends on the company for the most part, but of course everyone knows oil prices are soft at least likely until after the US election.

Yet condos being built everywhere while condos from the last round still have not been sold. I continue to be baffled by it all.

However, I have said several times that OSFI would cave long before they brought in these new reg’s and it has already started. At the end of the year, no effective new reg’s will be implemented and the party will continue until the BOC man’s up and raises rates…but don’t bet on it happening for a long time.

#6 Expat on 06.10.12 at 9:41 pm

Hey, rentals are good! I don’t know about Kingston, but we have been happily renting near Victoria for peanuts compared to buying.

Louise has it nailed, rental income from her pad in FL will probably make a bit dent in the cost of renting in CA.

Look around, I have a Credit Union USD account in Canada that will exchange money for about 1% (not located in BC, inconveniently).

#7 northerner on 06.10.12 at 9:42 pm

“So Garth.. look into your crystal ball and tell me how you see this unfolding!” You’ve been reading this blog for how long Lou?

#8 Joanne on 06.10.12 at 9:43 pm

Love the post Garth, especially as an intelligent female!

Could you possibly post on the RE in Ottawa? we, the squeeze and I, feel it is just sitting tight and moving either way.

#9 Joanne on 06.10.12 at 9:45 pm

#4 $B$P$O$E$ on 06.10.12 at 9:37 pm

Why are you reading this blog then…….trolling much?

And as for nicer…..hmmm. Depends in which city you live…..Ottawa anyone?

#10 CrowdedElevatorfartz on 06.10.12 at 9:46 pm

Just finished a round of golf ( between rain squalls ).

Got partnered up with a “retired” Real Estate developer. He sold his company last year. Got out at almost top dollar…
I asked him if he was still buying property. He smiled and said, “Yes! In Uruguay……..”

Keep Buying property BPOE!
Yer gonna be RICH !
Bwahahahahahahahahahahahahahahahaha

#11 Nostradamus Le Mad Vlad on 06.10.12 at 9:50 pm


“Eh? A ‘troglodyte donkey’ ” — Good epitaph for a headstone! Pic kinda goes with first link.

“Furthermore, the “non paying” interest payments that are accruing are still being counted as “profit”… The loss is only realized at the “actual” sale of the asset…. no sir, no conflict of interest there.. hence the term “shadow inventory”….. but that could NEVER happen in Canada. Just don’t bring your donkey. We’re special. You will so like it. We would never do those things.”

Isn’t it trooly wunnerfool to be a special Kanayjun? odG, we’re so damn sexy here! We don’t have a problem with egos, no sirree!
*
Meanwhile, during Euro 2012 and I’ll Have Another’s disappointment (major distractions), Bank Holiday Time “BNI depositors unable to make withdrawals / payments, payments of utility bills, mortgage payments, taxes.”; Spain and Greece Coke and Pepsi. What’s the diff? FB Scam artists; Compassion Fatigue Cities cracking down on homeless; 452% See headline; 2:55 clip Some Irish people are dumping the Euro and going back; Divide, Conquer and Rule Greece; Spain Canada’s problem will be China, not Europe — “What comes next for commodity values will make life interesting.”; The US Fed Born 1913, died 2013; Osborne Passing the buck again; Iran Sanctions Hurting more than helping the EU and US; Coca-Cola “It took me 10 years to figure out that I have a large karmic debt to pay for the number of Cokes I sold across this country,” he said. On Thursday, he came to settle it.”
*
Paper Ballots returning? US moving into Latin and South America. The whole thing is about to implode; FF in the offing? The usual suspects — NATO, US (CIA – Mossad), UN etc and Sovereignty in Syria The west doesn’t like it; Boffins Baffled 110-yr.old light bulb still works, and 52:53 clip The Lightbulb Conspiracy. A little Spanish to start, most English thereafter; Egypt – Tahrir III “Same thing that happened to Ron Paul.” wrh.com; 1:43 clip Weird computers and Wikipedia; 4:31 clip Strange security for the Olympics; Gibson Guitars Curious that the WH has such an aversion to them; CPC MP Larry Miller Should Canada leave the UN? After all, they’re the ones bringing in Agenda 21, a one-world govt.

#12 Vanverage on 06.10.12 at 9:50 pm

As vancourite, i forgot im supposed to be able to afford a house as a working class. While many colleagues managed to borrow the money from bank and live in their own house. And they have been successful up to now.

If those without a house are waiting for a price drop to enter into market, and those with small properties
Waiting a correction for exchanging to bigger ones, there are still times needing to wait, but soon… Btw, a told 12% price drop of the most expensive houses didn’t help me yet, which are not what im looking for. Only middle to low range houses matter for the majority like myself.

#13 Hicksville Alberta on 06.10.12 at 9:51 pm

Garth. you said “what comes next for commodity values will make life interesting” and i totally agree.

I think this is one of the rails of the Canadian and Alberta and many other Provincial economies that is about to get blown out and do serious damage to a whole lot of things in this country.

Alberta alone has used $100 oil pricing in their current budget income as well as higher than current natural gas prices so they are very likely not to receive anything like the income they have budgeted for in their blow out spending plans and commitments.

Everywhere you go around here there is a burgeoning bureaucracy at every level pissing away money like there is no tomorrow and for what is left over there are charities begging for more and more to meet the “needs” of so many great causes at such inflated and unaccountable costs that reality may soon turn into a nightmare.

Are you ready for a 70 or 80 cent dollar as that will likely be the next relief valve that will have to be used to try to maintain the good old Canadian Way.

#14 Mark W on 06.10.12 at 9:51 pm

http://www.realtor.ca/propertyDetails.aspx?propertyId=11747510&PidKey=2003554251

These are really nice townhouses in Maple Ridge, BC.
A suburb of Vancouver about 30 miles out so not influenced by HAM.
Now this place new was $80,000 more than the current asking price.
Original price was $439,900 in 2008.
Now asking price is $359,900.
Looking at this another way 80k over 48 months is a LOSS of $1667.00 monthly (and this is assuming they sell it for the asking price).
Add in taxes + maintenance fees and you are easily over $2000.00 a month LOSS.
Then add in interest on the mortgage, which I can only guess at the size of, and the price gets worse.

#15 James on 06.10.12 at 9:54 pm

Does anyone know some good websites to track info for myself? I would like to track number of active listings in Calgary.

#16 LuckyRenter on 06.10.12 at 9:59 pm

No end to housing bubble chatter

It’s the question on almost everybody’s mind: is Canada in the grips of a housing bubble that is about to burst.

For David LePoidevin, vice president and portfolio manager at LePoidevin Group, National Bank Financial, the answer to that question is a resounding yes and he predicts the fallout will have a dramatic impact on the Canadian economy.

“If you look at median house price in the United States, at the peak it hit $265,000 US and today in Canada it’s at $375,000,” he tells BNN. “We are 42 percent higher today in Canada than the U.S. was at the peak and we are 93 percent higher than the median price in the U.S. today, which is $195,000.”

More here:

http://www.bnn.ca/News/2012/6/8/No-end-to-housing-bubble-chatter.aspx

An impact, but not dramatic. — Garth

#17 T.O. Bubble Boy on 06.10.12 at 10:00 pm

“The rent on a large well maintained house, short walking distance from Queens is $2,800 per month. I estimate the current market cost of this house to be in excess of $650,000.”

This is far less out-of-whack than Toronto or Vancity.

$650k w/ 10% down ($65k) = $585k mortgage
5-yr Fixed is about 3% right now
with a 25-yr amortization, that is $2768/month for the mortgage

So, yes – she’d be paying more per month once you add on property taxes, maintenance, insurance, lost gains on the $65k down payment, etc.

However, compare that to Toronto where $900k houses rent for $3000/month, or Vancouver where $1.5M houses rent for $3500/month.

#18 TurnerNation on 06.10.12 at 10:03 pm

Nice girls do not read this weblog!! ;-)

The kids are alright.

#19 DailyReaderFromWinnipeg on 06.10.12 at 10:07 pm

Hey Garth,
I hope you haven’t given up on the Winnipeg RE tear down just yet. Looking forward to it!

#20 cramar on 06.10.12 at 10:08 pm

Hey Garth, we have stable banks here— the PM and his Finance Minister have said so! It really IS different here in the Great White North! The PM and his Finance ministers have said so. Sheesh! When the PM and his Finance Minister tell us something, it is obviously true.

#21 An Cat Dubh on 06.10.12 at 10:11 pm

When real estate values drop, I don’t see many cities cutting back services. Prince George, B.C. has some of the worst roads in the country, yet they have a very bloated bueracracy and the mayor hired an assistant. Isn’t the city staff supposed to be the “assistant”. They seem to have money to pump toxic fluoride into every home but not to fix the roads. I lived there many years ago and even when the economy was bad in the 80s, the roads were at least repaired.

#22 T.O. Bubble Boy on 06.10.12 at 10:12 pm

The ultimate “lot value only” listing:
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=12000402&PidKey=-1800131520

“Must Book All Appointments To Walk To The Lot!”

I guess they are expected hoards of potential buyers for this $1.2M dump, all falling over each other to see the dirt and grass before they bulldoze it?

#23 CrowdedElevatorfartz on 06.10.12 at 10:12 pm

BPOE
“Best Place On Earth”.

The logo on BC auto “vanity” license plates just before the Olympics. (you had to pay an extra 75$ for the “privilege”)

Possibly the most pompous, nauseatingly arrogant statement ever to originate from this pathetic embarrassment of a provincial government.
( I can only imagine how many meetings it took for a team of “experts” to finally come up with THAT logo!)

The BEST PLACE ON EARTH !
So if your not from here………. you live in a sh#thole. Right?

…..and BPOE$$$$ bought right in to the propaganda.

Sad isnt it?

#24 Lexie on 06.10.12 at 10:14 pm

#15 James

Here is a site to track Calgary’s stats:

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

#25 Gunboat Denier on 06.10.12 at 10:20 pm

13 Hicksville

“Are you ready for a 70 or 80 cent dollar as that will
likely be the next relief valve that will have to be used to
try to maintain the good old Canadian Way.”

That will give “Blog dog Carney” some room to raise
interest rates!

#26 coastal on 06.10.12 at 10:26 pm

#16 Lucky Renter

As the National Bank guy asks, please show me anywhere in all of history where a “soft landing” has ever happened. It hasn’t, ever. Every boom ALWAYS ends with a bust and the sheep and arrogant agents from the west coast to the Big Smoke will soon learn this painful lesson.

#27 Observor on 06.10.12 at 10:28 pm

SHOULD BANKS MARK TO MARKET?

Louise laments that bank’s don’t have to amrk to market.

That is true of their loan assets for sure. But they do take provisions for bad debt.

ENRON however marked everything to market. When they made a 20-year contract they marked all the profit to market on day 1. How’d that work out?

The American banking crisis is probably over. It is probably a good time to be buying shares of some of the better American banks. The main one Warren Buffett owns is Wells Fargo. Nuff said? Also he owns some U.S. Bankcor. While he owns Bank of America, it is pref shares and tons of options, not common shares.

#28 Herb on 06.10.12 at 10:28 pm

Nice picture, “Going forward …”

#29 Sargon on 06.10.12 at 10:31 pm

Garth, (or erudite blog canines)

When one decides to purchase a pre-build condo, are they out simply the deposit, or are these condo ‘owners’ paying a mortgage before the hole is even dug?

#30 Toronto_CA on 06.10.12 at 10:31 pm

Truly awesome post today Garth. This bit:

“. House values here only rise, because everybody on the planet wants to live in Red Deer, Regina or Burlington. Only Americans, you see, borrowed money they couldn’t repay, moved into houses they hadn’t earned, borrowed against their home equity, bought without savings, took mortgages with teaser variable rates or diverted all their cash into real estate when prices could only fall and rates only rise.

We would never do those things. We’re special. You will so like it.”

Pretty much sums up your entire blog, and I love you for it. I was in Burlington today, very hot. My family is all developers …and it’s not good. There are TONS of homes for sale on Lakeshore in Burlington right now and I haven’t seen that happen since the 90s. My dad said today he hasn’t sold anything in a few months. Listings are up, sales are down – even in the rich pastures of Burloak (Burlington/Oakville).

This won’t end well.

#31 Observor on 06.10.12 at 10:33 pm

MARKETS MAY RISE ON MONDAY

Things are so bad in Europe that there is a bailout of Spanish banks announced over the weekend and there is talk of Euro bonds.

Seeing the potential positive moves the DOW futures were up 140 points on Sunday night. But it’s anyone’s guess if that will hold on Monday.

Markets (like certain appendages) lurch up and down with each morsel of good or bad news. Unlike those appendages they tend to go ever higher in the long term (but the road to the mountain top has its deep and unpredictable valleys as well)

#32 Debt's Dark Embrace on 06.10.12 at 10:37 pm

I just returned to Kelowna after more than a year in Asia. The units in my daughter’s complex were selling in the 250’s at the peak of the Kelowna bubble in about 2009. There are 4 units for sale there now under 205 and the last unit that sold here was 195k. I don’t think the bottom has been reached here yet. Gonna be fugly.

#33 XKR on 06.10.12 at 10:40 pm

@ #4. Surely you jest.

#34 oslec on 06.10.12 at 10:42 pm

#4 $B$P$O$E$ on 06.10.12 at 9:37 pm

What your snarky smug post fail to understand Garth, is that IT IS DIFFERENT here.

We are smarter, wiser, more cultured and generally just nicer than anywhere else in the world. That is an undeniable fact.

That means we not only are different we deserve and are morally entitled to a an endless uptick in real estate. So it shall be. Forever.

This is the fundamental truth you lack when you throw about your pithy “facts”, “logic” and “statistics”

What I and the multitudes of RIGHT THINKING CANADIANS believes supersedes by a barrel of oil and bucket of water any of the natterings you and your group of loser rental trolls “believe” as the cheerleaders of the nabobs of negativity.
—————————————————–
DABDA= 1)Denial, 2)Anger, 3)Bargaining, 4)Depression, 5)Acceptance.
WOW, you went through stages 1 and 2 in one quick post. Soon you will be in the Bargaining stage, I hope you can get through that.
I just HOPE you have enough cash left over in your gold or platinum credit card to buy an 8 foot long rope from Wal-Mart, just in case you do not make it to the Acceptance stage.
Remember, for any trouble in life there is always a hotline!!!

#35 Toronto_CA on 06.10.12 at 10:43 pm

Sorry to post twice Garth (and fellow blogdogs), but wanted to ask, do you have a linkable source for the # of vacant condos in Toronto? A friend of mine who won’t listen to any bubble talk (we all have friends like that, right?) is insisting that the condos in Toronto are not vacant and people are living in them. I think so many are bought by speccers and flippers that there must be a huge number sitting vacant, especially of new builds. Would love to see some sources.

#36 bubble head on 06.10.12 at 10:45 pm

Don’t forget (in toronto )the first half of this year sales were down in comparison to the previous year only till June did sales start to increase and listing start to decrease.

My predication is around August/September the mass media will pick up the story that the bubble is bursting.

#37 Guy in the orange shorts on 06.10.12 at 10:45 pm

Hey..Garcon Turner…

Moi reserved Phyyyrrrruu!!!!!!111111zst in last post

Wish to speak to Martyre’d duh…Sea Voo Play doh

#38 James on 06.10.12 at 10:50 pm

Thanks Lexie! While I don’t question the shared stats I’d like to educate myself and know where to research.

#39 James on 06.10.12 at 10:50 pm

One more question Lexie, any idea where to find acreage stats for the Cochrane / Bearspaw world?

#40 Toronto mine sweeper on 06.10.12 at 10:51 pm

Hi Garth, first time writing on your blog.
Been reading for quite some time now.
As far as commoditys are concerned.
I would love to know what you think about all this hype on silver and gold. And if you believe silver is going to sky rocket to triple digits. Or is it just another case of market manipulation?

Another case of delusion. It’s a rock. Get a grip. — Garth

#41 Endless.Waiting on 06.10.12 at 10:59 pm

I have been reading this blog for more than 4 years, the houses I wanted to buy were 500K, now they are 700K…

So why didn’t you buy one? — Garth

#42 thinker on 06.10.12 at 11:10 pm

I don’t believe any views about being “different” matter – CANADA HAS PLENTY OF JOBS

translation, people have the means to pay the bills, no matter how much they have borrowed. It does’t matter if home prices fall, banks are not going to have a margin calls and panic selling will not happen.

WATCH THE JOBS, not empty flats, etc. It don’t matter.

#43 DondWest on 06.10.12 at 11:10 pm

Garth is correct when it comes to Alberta and the tar sands. This is the big news that will spell the end of the Harper Conservatives. I remember when I first visited this site. I pointed out that the tar sands are unprofitable in an environment where crude is priced under $100 USD a barrel, and that’s being conservative. Truth of the matter is the tar sands are a very dirty and expensive method of oil extraction. Considered both economically and environmentally unviable until the recent surge in oil prices. The long term economic success of the tar sands depends completely on oil escalating to over $150 USD a barrel and staying there.

Fact of the matter is folks the government has blown a lot of money on the tar sands and we stand to lose more as oil continues to decline in an environment with a collapsing Euro zone and China slowing down.

The tar sands are Harper’s gimmick like the Appollo Program was for Kennedy. When people find out the tar sands are not this great beacon of technological innovation that will bring us to the golden age, when people find out the emperor has no clothes – watch out!

Then we can top it all off with a real estate collapse! Sounds exciting!

#44 Freedom First on 06.10.12 at 11:11 pm

Great pic Garth! Most unfortunate that many Canadians are not yet aware they are going to have that same feeling of those people on the edge in the photo. They too, never saw it coming…….

#45 cramar on 06.10.12 at 11:13 pm

#22 T.O. Bubble Boy on 06.10.12 at 10:12 pm
The ultimate “lot value only” listing:

————————-

I can listen to GT over and over, but nothing really hits home like this listing. I showed my wife and she thought the house was pretty bad (worth maybe $60k in Windsor—okay, $80k because of the large lot). I then said did you notice the price. It took about 5 seconds for it to sink in and she said that “anybody stupid enough to pay that much deserves to loose ever single dollar!”

#46 Not 1st on 06.10.12 at 11:16 pm

Garth, the powers that be are going to be re-inflating the eurozone and the U.S.A. shortly. That means QE or something like it. Canada will be swept up in that wave, so likely oil and other commodities won’t soft for long.

#47 Montreal Person on 06.10.12 at 11:17 pm

Garth,

I have a small nit to pick. It is “La Presse” not “La Presses”.

Thank you for including Montreal though. During the Grand Prix they had mobile ads on trucks touting local developments. Hilarious.

Cheers.

Le typo. Excusez-moi. — Garth

#48 Croesus on 06.10.12 at 11:17 pm

Another case of delusion. It’s a rock. Get a grip. — Garth

I beg to differ. They are called precious metals for a reason.

Not that I am a metalhead, federal reserve or gold bug conspiracy theorist by any stretch .

But one would wonder when our everday language is littered with “golden” metaphors where ones 10% at least, of a portfolio is pointed.

As good as gold
The golden rule
He who has all the gold makes the rules
Silence is golden
A heart of gold.
Every cloud has a silver lining

my favorites:
All that glitters is not gold
A fool and his gold are soon parted

That’s compelling. — Garth

#49 Mr Buyer on 06.10.12 at 11:17 pm

#4$B$P$O$E$ on 06.10.12 at 9:37 pm
What your snarky smug post fail to understand Garth, is that IT IS DIFFERENT here.

We are smarter, wiser, more cultured and generally just nicer than anywhere else in the world.
………………………………………………
Now you are becoming a characature of your characature. There is endless baiting going on that may detract from the message which is BUYER BEWARE. NOW IS NOT THE TIME TO BUY A HOUSE. THE BUBBLE HAS TOPPED. SALES ARE FALLING ACROSS CANADA AND PRICES HAVE BEGUN THEIR FALL.

#50 Mr. Reality on 06.10.12 at 11:21 pm

And there it is folks…..Deflation.

Welcome to the new normal. And there is nothing worse for real estate or stock markets then that.

Mr. R.

#51 neta on 06.10.12 at 11:23 pm

The most recent run-up in Canadian home prices has coincided with huge Chinese stimulus of about $750 bn, followed by restrictions that Chinese gov-t imposed on domestic real estate buying. Sensing inflationary build-up, Chinese start piling their savings, as well as borrowed money, into “safe” Canadian RE.
As it appears now, Chinese gov-t rules-out any significant stimulus injections (at least for foreseeable future), and their economy and RE are slowing down marcably.
Result – less and less yellow choppers are circling around Vancouver. For so many years Vancouver’s legend was propped by believe that every rich Chinese wants to buy a home there. Now, at current prices, no domestic buyer could approach Vancouver, and if for whatever reason HAM inflow dries-out, the closing act will be swift and brutal.
Toronto is not far behind. Toronto has broader base then Vancouver. On top of Chinese and Indian money, there are huge Persian, Russian, even Greek investments. However, if something spooks these investments, they could disappear in a hart beat. If Vancouver falters, it could change the foreigner’s perception of Canadian RE as a safe heaven. And then we will see how it is different in here Canada, how prudent our lending practices were, how strong our banks are, how wise our regulation framework is…
So far, as I can see, the average Vancouver’s SFH gobbles 113% of net average family income.
Yes, it is indeed different here…

#52 Montreal Person on 06.10.12 at 11:32 pm

Damn that auto-correct. Eh?

Keep on bloggin’ Garth.

#53 Bandiguile on 06.10.12 at 11:33 pm

An impact, but not dramatic. — Garth

Why, because it’s different here? One just have to look at the US to see what the effects of a RE collapse are on the rest of the economy. When looking at the numbers, Canada is actually more vulnerable than the US…

Here is an interesting article:

This time it is not different – Canadian housing prices reach apex and set for deep fall. Foreign money speculation and crowding out local Canadian families. Canadian household debt at record levels.

The bubble will pop, and it will be painful for everybody.

Nothing new there. No Canadian bank will fail because of real estate. — Garth

#54 daystar on 06.10.12 at 11:34 pm

Since you mentioned commodities Garth, I thought last week would be a rough one and wasn’t but it was still, I think, a good time to get in. Don’t know if you caught the latest news (likely did with Spain) but Spanish banks are about to get 100 Billion Euro’s worth of bailouts (so much for the magic of “recourse loans”, the one and same every province has outside of Alta, our great hailmary to save the system) coupled with double digit import/export numbers out of China.

http://www.theglobeandmail.com/news/politics/billions-pledged-to-save-spains-banks/article4246399/

Like as not, yields on up and coming Spanish bond sales should drop as a result of this bailout. (I believe they were trading as high as 7’s, they should be down to 5’s within 2 weeks) The Euro should strengthen, the U.S. dollar weaken and commodities strengthen moderately. Overnight markets are up and markets should bounce up tomarrow and this week with a healthy gain from what I can see. The oversold commodity sector in Canada is about to get a bump and if Greece can elect something stable… maybe momentum forming two weeks from now.

#55 45north on 06.10.12 at 11:42 pm

James: One more question Lexie, any idea where to find acreage stats for the Cochrane / Bearspaw world?

Cochrane is a town and also a district , the rain that falls on it flows into Hudson’s Bay. On strictly an acreage point-of-view, sales in the District of Cochrane could surpass sales in the GTA. For example if one mining company bought another. It’s a long way from the Centre of the Universe

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

#56 george on 06.10.12 at 11:48 pm

Spain reaction: ‘This is a rescue for the rich. The poor will only get poorer’

#57 DDCorkum on 06.10.12 at 11:49 pm

13 Hicksville, #25 Gunboat Denier

———–

If the US keep their interest rates at zero for as long as they promise to, it is very unlikely that our dollar will drop below 90 cents. Starting in a couple years though, it might be possible then as the US stimulus hopefully comes to an end.

#58 earlymidlifecrisis on 06.10.12 at 11:58 pm

http://freebeerhouse.com/Home.htmlDisappointingng response to endless waiting. People value your input, that deserves more respect than that.

#59 earlymidlifecrisis on 06.11.12 at 12:00 am

Oops here’s proper link

http://freebeerhouse.com/Home.html

#60 martin on 06.11.12 at 12:03 am

Hei garth where can i buy some nice cowboy boots?

#61 Rosebery on 06.11.12 at 12:07 am

#43 DondWest
you’re on the right track. It was a good decision to cautiously open the tar sands. It was a terrible decision to expand them as massively as has occurred over the last five years. We’re at break even right now and the trend is down. The Petro friends of government need it fixed NOW. Otherwise they’ll just walk away like they did in the Beaufort 20 years ago. Go to East Texas and see what the downside looks like.

#62 [email protected] on 06.11.12 at 12:12 am

Re: #5 Cory on 06.10.12 at 9:38 pm

Everything will implode about one month before the U.S. election. After the U.S. election oil will head back to the 25 to 30 dollar U.S. a barrel mark. All the storytelling will be over once the U.S. election is out of the way.

#63 Lorne on 06.11.12 at 12:20 am

#23 CrowdedElevatorfartz on 06.10.12 at 10:12 pm
BPOE
“Best Place On Earth”…..
……………………….
You people do realize that “B$P$O$E” is the Stephen Colbert of Garth’s blog??

#64 Scott in Gibsons on 06.11.12 at 12:24 am

Sorry if this has already been posted………..

http://www.zerohedge.com/news/guest-post-mark-carney-kicks-can

#65 $$$BPOE#1 on 06.11.12 at 12:25 am

Folks, lets get down to the facts.
1. The negative posters here want to buy. They just want prices to drop. None of these posters truly love renting.
2. Ignore the loudmouth down South and his cult following who say Seattle is so great. Folks you get sick down in the US and need hospital care you will find out quick it ain’t great at all. Plus it rains all the time.
3. Vancouver has low taxes and needs to keep the taxes rolling in. What this means is the City is pro density and in bed with the developers to keep the money flowing.
4. The populaiton is poised to double in 30 years. Do the math folks, limited land and a 50% population increase. Simple stuff folks.
5. The world views Vancouver as BPOE as its safe and the gateway to Asia. The location and scenery truly is the Best in the World
6. Interest rates are going down folks not up.
7. The OSFI has no jam. You think Harper would give these jokers the time of day. Not happening
8. All Canadians are looking for security. The renters want Garth to be correct. They pray for the day Garth says pull the trigger and buy. Don’t follow gurus folks, they’re just as confused as the renters.
I hope I have cleared up any confusion. The bull market in BPOE is fully intact. Limited land, 50% population increase, everyone wants to live here and interest rates don’t mean a darn thing at the end of the day. This ain’t America folks its called BPOE for a reason

#66 John on 06.11.12 at 12:25 am

I really hope you’re right that the impact won’t be immediately and devastatingly dramatic. Maintaining that it won’t be as a statement…has a ring of conjecture to it. The “dramatic” call doesn’t. Still…lets hope it plays out moderately.

Regarding this statement:

“In Florida the bottom has not been hit yet, and we are 5 years and counting. ”

The exact amount of time that aggressive money printing has been going on.

#67 Saskatoon-Living on 06.11.12 at 12:28 am

Another great post Garth. Looking forward to your post on the Saskatoon market!

#68 John on 06.11.12 at 12:32 am

Daystar…what is the relevance of following market dynamics that have no future? Why do you avoid the much more real systemic analysis? The stuff that indicates a paradigm shift. As time marches forward, and these indicators are ignored, your analysis becomes less and less relevant. It seems that you put a lot of smarts and effort into a dead horse.

#69 Bandiguile on 06.11.12 at 12:33 am

Nothing new there. No Canadian bank will fail because of real estate. — Garth

If banks don’t take the loss, who will? All the destroyed wealth will have to be taken out of somebody. In the Canadian case, that is the taxpayer.

Now, when the government has to bailout CMHC, what will the effect be on Canada’s balance sheet? And what will it have to do to get its finances back in order?

Banks do represent an important part of the economy, but not all of it. Good for them that they’ll be able to weather the coming storm relatively unscathed at the expenses of the taxpayers, but that will not be the case for the rest of the economy. All those billions that will disappear will have a real and profound impact on the economy. I don’t believe you don’t understand that.

#70 wes coast on 06.11.12 at 12:35 am

Looks like CIBC has a game plan when you finally can’t cover your bills from being overextended by the very credit they haphazardly dolled ou to consumers. Unbeleivable.

http://cibclawsuit.com/

Time for a class action lawsuit? Any lawyers reading this that want to take on a good fight? Isn’t this a product liability issue? Is their no obligation for them to work with people in trouble when its their product that got them into trouble? Surely they will want such good will from us when they need a bail out? I’m full of questions because I just don’t get how banks share no risk or responsability for their actions.

#71 Tim on 06.11.12 at 12:35 am

“Well, Louise, people in Canada like to believe it’s different here, which is why so many of them are doomed. They think we have prudent banks, a better economy, no crime or ”

Harper bailed out the banks by letting them transfer all those loans to CMHC. The media has barely mentioned this

#72 Tim on 06.11.12 at 12:39 am

“In fact, Calgary and Edmonton are just steroidal versions of Skatch and Winnipeg, where cheap credit combined with a shallow gene pool have been a stunning combo.”

—————–

you must be referring to those eastern creeps and bums

#73 Nostradamus Le Mad Vlad on 06.11.12 at 12:52 am


Italy – Argentina So Italy has one (possible) bank run, and Argentina is losing about US$100 mln (withdrawn) every day. Something appears to be out of whack; Freak Out China; Bank Failures in Europe. There’s always a first time; Michigan, Chicago, the USS Enterprise and a rumor, ‘tho keep in mind that Chinese and Russian soldiers were on American soil not too long ago, and probably still are; 70% Unemployment for high school grads.; Bleak Future Austerity in Spain; Confuse-A-Cat UK mtgs. on a teeter totter; The Chinese Kleptocracy; Financial Freedom What it really means; French Socialists and looneytunes; Fast Times aat Pensionville High.Ego Paella Spain; The 1990s Are we nearly there yet? Evolution Dylan Ratigan is moving on; Myth of the American dream; Globalization TPTB want and like it.
*
onemorething — Is this in your neck of the woods? Mt. St. Helens Remember? Zombie Hoax Agenda Wouldn’t put it past TPTB, as they control the m$m; The Rockefellers anti-fertility vaccines; Goji Berries Good or bad? Nice (?) welcoming home present; Kill billions Billions served? TEPCO Water dumped daily into the ocean; Ten Failed Attempts by govts. to control ;net (the UN will fail, too); Lost Horizon found in Honduras? Insurance Policy Canada – US Relations; Shape Shifting; Cameron, Osborne and the Murdoch empire.

#74 Gunboat Denier on 06.11.12 at 1:09 am

57 DD – maybe, but like the movie, “It’s complicated”. Many factors could affect it. Any crisis in Europe can
keep USD high as perceived safe haven, but if PRC slows,
and commodities drop, it could drag down CDN$.

#75 Aussie Roy on 06.11.12 at 1:38 am

thinker on 06.10.12 at 11:10 pm

I don’t believe any views about being “different” matter – CANADA HAS PLENTY OF JOBS

translation, people have the means to pay the bills, no matter how much they have borrowed. It does’t matter if home prices fall, banks are not going to have a margin calls and panic selling will not happen.

WATCH THE JOBS, not empty flats, etc. It don’t matter.

……………………………………………………………………………

Not the experience in Australia.

Around 5 % unemployment
Growing wages
Net migration still strong
Interest rates at 30 year lows
Govt $$ incentives for new buyers
Tight rental market

None of these has made any difference, prices are now down on a national median basis, 10% over the past 2 years.

So what changed, what influenced the market causing stock on market to surge, sales slow and prices to fall?.

The demand for DEBT, the realisation that leveraging up into housing isn’t a risk free way to get rich. The sobering reality that debt has to be paid for out of future wages.

What will prick the bubble is the same thing that pricks all bubbles, a change in the underlying emotions (delusion) of market participants. Asset bubbles burst when the pool of greaterfools runs out, not before. Stock on market, sales numbers and mortgage applications are the key numbers to watch, these reflect the emotion of the herd.

It’s different everywhere, until it isn’t.

#76 truth hammer on 06.11.12 at 1:45 am

If all it takes for prices to go parabolic is oil money….then why can you buy a really nice house in San Antonio Texas for under $150,000?

http://realestate.yahoo.com/search/Texas/San_Antonio/homes-for-sale

Give your heads a shake Calgary…..the reason prices are still high is because of all the hype and there are still more suckers in Canada than the US. The mortgage rates are even better in the US because you can get a thirty year fixed and never get an increase on rising rates.

#77 Hugo on 06.11.12 at 1:47 am

Given the US housing market correction and the aging demographices, is it time to get in on Florida property yet?

#78 JC on 06.11.12 at 1:50 am

Where is the proctological deconstruction of Winnerpeg you threatened the other day? :-)

Coming this week. — Garth

#79 Winterpeg on 06.11.12 at 1:52 am

Just got back from the “lake”. (another Winnipeg thing) and saw that yesterdays’ blog was dedicated in part to the “Peg”
Most comments were fair, though you’d think we are “Gang Central”. Just the north end is gang central, The east, west and south areas are almost tickety boo.
Yes lots of bugs, but we just fog the be-jesus out of them.
Yes cold winters, but thanks to global warming, its been tolerable here last 2 winters.
Yes, flooding, but inside the floodway you’re fine. Outside city limits, all bets are off.
Yes, high tax rates.
Yes, lots of government jobs.
Yes, a reputation as an unexciting city, but not true. Lots going on if you’re a culture vulture. Oh ya, got the Jets now too. (Not a Jet-setter myself, but others are all excited about them)
Regarding Real Estate, condo conversion is big here, I think because there’s no city policy limiting condo conversion based on the vacancy rate. I know folks kicked out of their apartments so that blocks can be spruced up and sold as condos. Swanky new countertops try to disguise the fact that these are 1950 or earlier style apartments with dinky closets.
Apartment vacancy rates are also low here because rent controls discouraged the building of new apartments. So much for selling your house to cash in on the market in this town. Very little to rent.
Re: House prices: like all other Canadian cities, prices have risen ridiculously. There are still bidding wars here in some areas, but there are signs thngs might be cooling a bit. I noticed in my area, some drops in prices of some of the condo conversions. I think there are a fair number of new condos being built, but not sure how frothy that market is.
In summary, real estate craziness is alive and well in Winnipeg. Price is relative, but people are basically the same anywhere.

#80 ChickenOnTheWay on 06.11.12 at 2:10 am

#15 James
If you want raw data for Calgary(not a contrived index), try http://www.bobtruman.com/SFH_DailyMonthly_Summaries/page_1869385.html

#81 Aaron - Melbourne on 06.11.12 at 2:55 am

Australian GREATER FOOLS and the GIANT CARROT.

http://www.theage.com.au/business/property/first-home-bonus-boosts-market–somewhat-20120610-204fc.html

My local area…the inner North of Melbourne…is seeing many apartment towers built of late. I’m all for the development of the old factory sites with a few caveats: Provide sufficient off-street parking, keep the development to High street not the back streets where the period homes on larger blocks tend to be.

Its interesting to see so many towers go up so late into the “boom” (as you know its a bust already). Most of these would have sold “off the plan” y’know for the tax savings . I fully expect to see these same apartments up for sale the second the place is finished.

Preston has been popular with foreign students as the #86 tram runs north to two universities and into the city to reach the others. But with the international student market dead in the water (how many cooks and hair dressers did we ever really need?) the impact on rents in the area will be flat to falling as these are finished and let to market.

http://www.theage.com.au/business/property/housing-in-preston-on-up-and-up-20120610-2047h.html

“Gentrification” is a laugh. Most of my neighbours are elderly Greeks. The newcomers wouldn’t be out of place as characters in “Portlandia”.

The #86 tram continues to be a freakshow. Enjoy this for a laugh.

http://haughtfeelings.wordpress.com/2012/04/17/my-email-to-yarra-trams/

http://haughtfeelings.wordpress.com/2012/04/30/the-response-my-email-to-yarra-trams/

#82 dadandson on 06.11.12 at 3:20 am

There has been some discussion of what to do with money from selling one’s home, while waiting out the popping of the RE bubble. My question is, who should I speak to for investment advice? I don’t tend to trust financial planners who sell funds, as they gain richly from their commissions and are biased. I have someone at the bank who I like, but…he works for a bank. Can his advice be trusted? I can hire a fee-only financial advisor, but he can only help with planning – he can’t sell me any actual investment products. Do I go directly to a broker? Aren’t they just going to sell me as much as possible, for the maximum commission? As you can see, I have a deep distrust of pretty much everyone involved in investing. Who would be the best to speak to? Thx.

#83 First to last on 06.11.12 at 4:56 am

#29 Sargon on 06.10.12 at 10:31 pm

Most banks in Canada require a 60% occupancy rate before financing is approved and you can break ground. The deposit is held in trust you don’t start paying the mortgage until the closing date when you take possession of the condominium

#84 Gtaprick on 06.11.12 at 5:16 am

Driving around toronto this past couple of weekends, I have noticed a great increase in the amount of open houses.
My concern is that the poor realtors are now having to work weekends. What ever happened to their “Wednesday 6pm offer deadlines”. That couldn’t have stopped working….

#85 Devore on 06.11.12 at 5:45 am

#29 Sargon

When one decides to purchase a pre-build condo, are they out simply the deposit, or are these condo ‘owners’ paying a mortgage before the hole is even dug?

Can’t take a mortgage on something that does not exist. Pre-builds are contracts to purchase, with, usually, timed deposits, 3-4 until the project is completed, up to 20-30% of the purchase price. Once the building is finished, and registered with the city, it can be assigned title, and you get a mortgage for the remainder on the contracted price. If you do not complete, you lose your deposit, and the developer can sue you for breaking the contract. If the project does not complete, you get your deposit back (which is held in escrow) plus some interest.

#86 Devore on 06.11.12 at 5:53 am

#29 Sargon

An interesting concept that I think only exists in Toronto, is called the “occupancy period”. This is the time between when your unit is “finished” and ready for you to move in, but before the building registers. This can range from a few weeks to as long as two years in some extreme cases. During this period the unit is yours, and you are expected to live there (amidst the construction on remaining units and no amenities), but because there is no title, you don’t actually own it yet, and you get to pay… rent.

It’s kinda bizarre to say the least, perhaps someone more familiar with it can explain how this works.

#87 Piccaso on 06.11.12 at 6:34 am

What your snarky smug post fail to understand Garth, is that IT IS DIFFERENT here.

———————————————————

Yes it is different up there… you have 3 months of summer, you pay more for everything and you make less money.

#88 timbo on 06.11.12 at 6:58 am

http://www.bloomberg.com/news/2012-06-11/goldman-sees-a-29-return-from-commodities-over-12-months.html

“Returns may be 41 percent in a year for energy investments, compared with 23 percent for industrial metals and 18 percent for precious metals, while agriculture is forecast to lose 14 percent, the report showed. ”

Everybody is covering bad debts , rally!!!……..

http://www.latimes.com/business/realestate/la-fi-umberger-20120610,0,7996666.story

“If we’ve learned one thing from the housing downturn, it’s that making the monthly mortgage payment is no longer a sacred concept in many American households. In recent years, when facing financial pressure, homeowners have been more likely to let the mortgage slide before they would fall behind on their credit card bills, researchers have found.”

Always keep focused on what is important……..

#89 Dom_Now_in_Zürich on 06.11.12 at 7:11 am

http://www.theglobeandmail.com/globe-investor/great-debate/the-housing-bubble-welcome-to-the-great-debate/article4238267/

Are you taking part? A view from the Dog’s?

#90 Leon Lens on 06.11.12 at 7:18 am

Nice Mr. T, but still you dance around the question of when which has really been your achilles heel.

The question was: “So Garth.. look into your crystal ball and tell me how you see this unfolding!” The answer is: this blog. All 1,086 posts. — Garth

#91 Ret on 06.11.12 at 7:41 am

Heading west from Spadina, out of downtown T.O. on the Lakeshore, there are hundreds of new condos units in large projects that look vacant, almost like one of those Chinese ghost cities. Anyone with boots on the ground there?

#92 T.O. Bubble Boy on 06.11.12 at 7:55 am

Canadian CEO compensation:
http://www.theglobeandmail.com/report-on-business/careers/management/executive-compensation/executive-compensation-rankings-for-canadas-top-earners/article4243534/

Someone needs to explain something to me:
Why do you need millions of dollars in pension benefits if you are already paid millions of dollars?

Will these CEOs be poor if they don’t have their former company paying them millions of dollars in retirement?

Remember these numbers the next time one of these companies misses earnings by a couple of pennies per share and the stock falls.

#93 TurnerNation on 06.11.12 at 8:15 am

#35Toronto_CA on 06.10.12 at 10:43 pm

Here’s a Toronto-only Kijiji search for “never lived in”:

148 results

http://toronto.kijiji.ca/f-never-lived-in-real-estate-apartments-condos-City-of-Toronto-W0QQCatIdZ37QQKeywordZneverQ20livedQ20inQQLocationZ1700273QQisSearchFormZtrue

‘Brand new’ yields 805 results:

http://toronto.kijiji.ca/f-brand-new-real-estate-apartments-condos-City-of-Toronto-W0QQCatIdZ37QQKeywordZbrandQ20newQQLocationZ1700273QQisSearchFormZtrue

#94 Steven Rowlandson on 06.11.12 at 8:20 am

Yes it is different here. In Canada we have the privilege of having an ice age that can last up to 105 ,000 years after an interglacial period lasting an average of 11,500 years. Guess what folks it is almost time to go back into the deep freeze. Why waste time and money on houses that cost too much? We also have the privilege of having the pacific ocean enriched by nuclear contamination from Fukushima and there is no danger that this will end in the forseeable future. By the way this country also has the privilege of being enriched by nuclear fall out and gases that will contaminate Canada for a very long time. If you get cancer or suffer radiation related illnesses you now know why. What is radioactive real estate worth?
You have the privilege of being ruled by people who support wars in order to provoke a nuclear and biological world war three in service of some satanic religious, economic and political agenda. Being a certifiable lunatic is not a qualification to govern and that raises the question. Why are so many political leaders insane? What is the value of your money and real estate when you are ruled by people who are not right in the head and are likely to get a nuke fight going?
You have the privilege of living for a little while in a country and world ruled by people who would like to find the nations not ruled by rothschild bankers and who would like to use precious metals as money and don’t approve of abortion and homosexuality and they want to destroy those nations under the guise of liberating them.
All it takes for evil to triumph is for people to just go along and don’t rock the boat .

#95 House Horny Housewife on 06.11.12 at 8:37 am

Garth,

I am not really sure that you answered this lady’s question. Info on markets in Toronto, Vancouver, Montréal etc.. is all fine but she is moving to Kingston which is not quite the same market as the big cities, I’m sure.

I don’t know anything about the Kingston market but I do know that real estate markets in Canada are quite localized and are indeed quite different, depending upon where you live. Here in the townships of Quebec, for example, you can still buy a nice bungalow in an attractive part of town for around $200,000.00 so no, not all markets are ridiculous like Vancouver and T.O.

I would very much welcome your reviewing a variety of areas in Canada, Garth, since Toronto, Vancouver and Montreal are not the only cities that Canada has. Even within a small area such as the Eastern Townships, you have a huge variety of real estate markets. For example, a lakefront home on Lake Brompton at the moment is super trendy and in this incredibly fast market, people are paying what I would consider to be ridiculous prices to live in an area that was previously cottage country (ie. no services whatsoever). In contrast, Lake Massawippi is stagnant and no one is buying at all, BUT people are still asking ridiculous prices despite the fact that no one is buying. This village does have all of the services one would require to live there full time but it has traditionally been a haven for rich Americans coming up for their summer vacation. This means that its reputation is keeping prices high but no one is buying until a home’s price has come down … sometimes by half (this takes a few years !). Little Lake Magog is cheaper and an average lakefront will run you around $500,000.00 .. it has recently become a goulag for young families. Lake Memphremagog caters to the embarrasingly rich (most are from Montreal’s rich areas such as Westmount and Outremont) and is repleat with large multi million dollar domains. Closer to the city of Sherbrooke, a mansion type brick home in the beautiful old north (old trees lining the streets and heritage homes all over the place .. close to all services etc..) will run you around $400,000.00. In contrast, the so called “New North” is currently abounding with new buildings of huge mausoleums in beautiful brick facings, new huge kitchens and bathrooms with nary any grass on either side of the house and Audis, BMW’s and Mercedes parked in every driveway (truly makes me want to barf actually). Here you will pay close to a million for the same size lot and building as the old north (but it is in a new and trendy neighbourhood).

So just to say, even within a reasonably small region, markets can be quite different and you really have to know your market well before you buy.

I think Louise is smart not to buy anything right away for another reason besides those that she outlined. It takes time to know your market and decide exactly where the best place is to buy a home so that the property that you purchase holds its value and does not loose value due to market fluctuations. Any area that is hot, trendy and going up in value simply because it is the flavour of the month (ie. the Lake Brompton and “New North” areas in my region) is sure to loose value quickly (I am POSITIVE this will be the case over the next few years in these areas). People are essentially paying a premium for what’s in fashion (never a good idea). In this area, the older areas are less likely to loose value if they are properly priced to begin with (ie. they did not go through ridiculous price spurts over the past years) .. unless they themselves don’t become the flavour of the month at some point .. this is because new building is limited in this area (especially in a heritage area) and your surroundings are likely to remain the same. In a newer area, goodness knows what can happen and how things will develop.

Obviously in Toronto and Vancouver the older heritage areas are out of reach for most mortals so you can see what a difference different regions in Canada make.

Garth, if I may say so, I think you are too entrenched in the big cities to see what is going on in the rest of Canada. Granted that due to the larger populations, the big cities are what most people are interested in but there is more to Canada than that. Besides, anyone stupid enough to buy a condo, unless they are planning to keep it forever as a “pied à terre”, deserves what they get and doesn’t deserve any more attention. Condos were the flavour of the month for a long time and they are on the verge of finally coming down … in any city. There’s a great subject for a book .. “The Fall of the Condo in the Twenty First Century”.

HHHW

#96 arctodus on 06.11.12 at 8:41 am

There are a few comments daily on here that sorta get it..or at least skirt around the main issue…..looking at symptoms not the primary disease….

How many took note that real estate values in Florida have not yet hit bottom?…know why?

Real estate values across the western world will not hit bottom until they are priced in gold, alligator hides or blood.

The bursting of the housing market coincided almost exactly with the documented peak in global oil production and the flatline that has occurred in production since.

Money printing has been rampant since as efforts by western governments to hide the reality of the situation has enused.

The fact that we have not seen massive inflation stateside is an indication of just how bad the deflationary forces smashing into the economy have been….and they continue.

Prices of oil are now in decline..not because production has ramped up but because all western economies and now China and India are entering the void.

Tar sands in Canada simply cannot function (without massive temporary government injections of funny money) at oil prices below 80.00 per barrel…..and that will come now as the world economy tanks.

I am not in the least concerned about real estate values…I am much more concerned about how fast the totalitarian state will rise to control the massive unrest that is coming (and is occurring in europe already)
as people lose everything that they value.

The millstones of peak energy grind fine and they grind forever.

Look around you folks, you have the honor of witnessing first hand the collapse of western civilization (and all civilization)…even if Garth will not admit it is occurring.

Civilization is collapsing? What would you have said in 1941? — Garth

#97 fancy_pants on 06.11.12 at 8:43 am

As long as the music plays the people will party. Until rates change or more stringent lending restrictions/requalifications etc. are put in place, greed will carry on as the emotion of choice that people will follow.

Too many behind the eight ball for the peckerettes not to keep this bubble from popping by any means possible.

Live within your means and you, like me, will be more or less indifferent to the outcome.

#98 jess on 06.11.12 at 8:49 am

What about the fraud that led to the lack of confidence …of course it’s different in canada we don’t have fraudsters.

It seems all those forced mergers bought some time to cover up all the fraud which then drips out very very slowly.

#99 GTA set to crash hard! realtors in a Panic! on 06.11.12 at 8:52 am

GTA condo’s are set to crash 50-70%. THOUSANDS and THOUSANDS of empty condo’s with THOUSANDS for rent at NEGATIVE cash flow. Realtors in an all out panic as flippers and greatefoold rush to list this crashing asset to the market before they lose 50-70% in the next few years. Foreclosure have EXPLODED in the GTA and from Market Watcher guy who posted million dollar houses from all over the GTA have been foreclosed in this housing crash.

#100 CrowdedElevatorfartz on 06.11.12 at 9:07 am

@#65 BPOE$

your statement:
“….The population is poised to double in 30 years. Do the math folks, limited land and a 50% population increase. Simple stuff folks……”

Ummmmm.
Hate to break it to you my mathmatically challenged braggart.
A doubling of the population would be a 100% increase.
“simple” and “folks” is an apt description……of you.

The Steven Colbert of the Blog site: perhaps, but then again. He’s a self assured, obnoxious prick as well…….

#101 Karie on 06.11.12 at 9:18 am

To the 24 y o from yesterday with 7k. I was a saver and had 12k when I was 27. (I used it as a down payment for a $130k house. Those were different times. I kept adding to my networth by living below my means.)

I have always been a saver. I buy my kids designer clothes and most sports equipment used. If I have a special event or gala – I buy myself vintage items on consignment and sometimes sell it back to the store.
I use credit cards with frequent flyer points for everything from groceries to my home and auto insurance. I pay my credit card on line twice a week so the balance doesn`t get away from me. Over the years I have used the points for travel, car rental, hotel, admission to amusement parks or movies or theatre, teacher`s gifts, etc.

I read financial books, blogs, magazines etc frequently about everything – real estate, strip bonds, index funds, mortgages, etc.

If you want to live a little as you said go to the AGO or ROM or similar in your community at times of the week when it`s free. Go to a dance club or a pub with live band – order one drink at about 10 pm then go to a coffee shop and order one coffee for another hour until midnight. You don`t have to go out all night just for a couple hours.

Have friends over and buy inexpensive wine and some cheese and crackers- they can bring something too. Instead of a week long vacation, go for 2 nights. Camp near a beach. Be creative and you will find tons of things to do for not a lot of money.

Keep adding onto that 7k while you`re young and can. Even if you don`t know what to do with that money – one day you will and because of it some of your goals and dreams will become a reality!

#102 The American on 06.11.12 at 9:38 am

At #42: Thinker, you really aren’t thinking at all, are you? In case you missed the memo, Canada is losing jobs each and everyday back to the U.S. Canada’s job situation is worsening as the U.S. is showing signs of slow improvement.

#103 The American on 06.11.12 at 9:52 am

At #71: Tim, you’re absolutely right. 1) Canada, much to Canadians’ surprise and denial, has already endured a massive bank bailout. 2) Canada’s bank bailout was significatnly GREATER than the bank bailout in the U.S., per capita.

http://www.huffingtonpost.ca/2012/04/30/canada-bank-bailout-cost-ccpa_n_1464398.html

I mean, really, what the f*ck did Canadians think the CMHC was? It wasn’t formed as an amusement park, people. LOL

#104 Sebee on 06.11.12 at 9:56 am

Will there be a point in this crazy everlasting cycle where the damand is finally satisfied? Houses aren’t PS3s or iPads – they have a longer life cycle. Seems like we’re consuming them at pace of iPads – doesn’t make sense.

#105 eaglebay - Parksville on 06.11.12 at 10:07 am

#43 DondWest on 06.10.12 at 11:10 pm

There’s no cheap oil anymore. We’ll see oil at over $100 for a long time.
Now, why do Easterners call the oilsands, tarsands?
There’s no tar in the sand, only oil.
All of this has nothing to do with Harper.

#106 daystar on 06.11.12 at 10:07 am

#68 John on 06.11.12 at 12:32 am

Why bother? Money can still buy stuff.

#107 arctodus on 06.11.12 at 10:08 am

Civilization is collapsing? What would you have said in 1941? — Garth

If I had understood the role of energy in our civilization at the time I would have said that the war will be one by whom ever controls the oil supply……

and that is exactly what happened….western allies (and russian forces) destroyed the germans access to the caspian oil fields and thus forced them to use such low EROEI technologies such as coal to oil….and it destroyed them.

You have to do a lot better than that if you are going to refute the argument…..(which unless we magically discover zero point energy or enslave a race of tinkerbells for pixie dust production)…….cannot be refuted……thermodynamics is funny that way ;)

#108 The American on 06.11.12 at 10:12 am

I received a call from a Canadian “investor” in the Florida area. I own properties in Florida, as indicated in posts in the past. Two properties he is interested in are a couple of 2 bedroom/2bathroom condos, not very big at about 1,000 sq. ft. each, in Orlando. For those who haven’t been, Orlando isn’t the greatest place in Florida. Anyway, these were good investments, nonetheless. Bought one 2 1/2 years ago for a measly $38,000 and the other for $45,000. Cheap, right? I put about $27,000 combined into fixing each one of them up as these were bank-owned properties.

I rent each one out for $1,100/month. After HOAs and property taxes, and ancillary items, I am clearing about $450/month on each. Not a bad ROI at all.

Anyway, the Canadian investor who is interested in purchasing my properties (he came to me unsolicited, mind you, and my properties are not on the market), has now offered me $70,000 for each of the properties for a combined total of $140,000 in the offer.

It isn’t enough money. The Floridian market over corrected, and I know where prices are going. Recent assessed value on the property is sitting at $85,000 and $88,000, respectively. This from $210,000 and $227,000, respectively. Prices are indeed climbing again slowly throughout Florida.

This is what happens when a real estate market corrects and melts. Florida has been melting for well over five years. Prices overcorrect in these hot markets, making it even more painful for existing owners. Prices really don’t correct that much at all in markets that aren’t “hot.” Time and time again, the hottest markets over correct a helluva lot more than in those areas where people aren’t moving.

I explained to him the newly-assessed values are still reflecting prices in a market that has clearly overcorrected, so his offer will not suffice at this time. Why would I sell my investment properties that return an great ROI to me when they weren’t even for sale in the first place? I now have an asset that is appreciating in value while at the same time it is providing me a healthy ROI.

Boy, was he ever pissed off as he started ranting and raving on the phone to me how “sound and fair” his offer was to me. Like I give a damn. I responded by asking him, “If you truly believe your offer is sound and fair, why are you spending so much time trying to convince me? Shouldn’t your offer speak for itself? And, why then would you want these properties to yourself? You sound desperate.” He hung up on me LOL

#109 disciple on 06.11.12 at 10:13 am

Is this how some people feel about renting? World’s tallest waterslide: http://tinyurl.com/7c54rj4

Drew Barrymore knows that Winston Churchill was a fictitious character: http://tinyurl.com/6snfo59

#110 eaglebay - Parksville on 06.11.12 at 10:37 am

#102 Karie on 06.11.12 at 9:18 am

What a boring life.
No spontaneity. No excitement.
Saving is great but increasing your income could also inject a bit of fun and adventure to your lifestyle.
In the end you will not take it with you.

#111 T.O. Bubble Boy on 06.11.12 at 10:51 am

@ #90 Dom_Now_in_Zürich

http://www.theglobeandmail.com/globe-investor/great-debate/the-housing-bubble-welcome-to-the-great-debate/article4238267/

Are you taking part? A view from the Dog’s?

Check out the comments on the G&M site — I think the “debate” is over.

#112 truth hammer on 06.11.12 at 11:04 am

RE conferance re condo market -GTA -spun off some interesting idea’s …… that the Laurentian Bank is over exposed to the developers side and could be left holding the bag with the downturn . Last reported earning were built of RE revenues..( but so is the entire budget of TO) but investors are even more fickle than buyers….looking for a way to short RE? Laurentian Bank may be having it’s arse handed to them after a quarter of soft sales.

http://in.reuters.com/article/2012/06/11/canada-condos-bubble-idINL1E8H8FN720120611

#113 Ralph Cramdown on 06.11.12 at 11:06 am

#22 T.O. Bubble Boy on 06.10.12 at 10:12 pm
The ultimate “lot value only” listing:

Also it’s a classic Toronto Spring 2012 failed bidding war. Listed at $998,800 at the beginning of the month, repriced to $1,198,800 eight days later. Maybe not enough eights? Does a job of telegraphing that the seller’s agent isn’t in touch with the market, though.

#114 youngduck on 06.11.12 at 11:11 am

Karie two thumbs up!

#115 From Mississauga With Love on 06.11.12 at 11:14 am

#41 Endless.Waiting
“I have been reading this blog for more than 4 years, the houses I wanted to buy were 500K, now they are 700K…

So why didn’t you buy one? — Garth”

Because he, like myself, listened to you then.
Taunt those that don’t listen to you, and then taunt those that do.

No taunt. If you want a house, buy one. Don’t blame others for your decision. So when the $700K home is $500K again, you know exactly how to deal with it. — Garth

#116 T.O. Bubble Boy on 06.11.12 at 11:28 am

“Toronto braces for a deflating condo bubble”

http://ca.finance.yahoo.com/news/toronto-braces-deflating-condo-bubble-050611209–finance.html

Industry stakeholders stress that the potential for a crash is slight, and most of the talk at the Queen’s University seminar was about the strengths of the market.

Sounds like a reasonable assessment: condo developers say chance of condo crash is small.

Maybe I can rent a VHS tape about this informative seminar from Blockbuster Video?

#117 Snowboid on 06.11.12 at 11:30 am

#74 Timing is Everything on 06.11.12 at 1:03 am…

After our back and forth about health care in BC, you post a note saying Garth said it all, then post a link to the definition of delirium.

Am I missing something? What exactly are you trying to say?

#118 Pr on 06.11.12 at 11:40 am

CANADIAN REAL ESTATE BUYER you should start to look past the tip of your noze!
Here we go:

EU SOURCES HAVE DISCUSSED IMPOSING CAPITAL CONTROLS AS WORST CASE SCENARIO IF GREECE LEAVES EUROZONE – RTRS
IMPOSING BORDER CHECKS, LIMITING ATM WITHDRAWALS ALSO PART OF WORST-CASE SCENARIO PLANNING – EU SOURCES – RTRS
SUSPENSION OF SCHENGEN ALSO DISCUSSED

In other words, that money you thought you had… You don’t really have it. We can only hope this message was not meant to restore confidence and prevent future bank runs. Because if Europe wanted a continental bank run, it may have just gotten one.

This is getting scary very fast.

#119 Toronto mine sweeper on 06.11.12 at 11:47 am

#97 arctodus on 06.11.12 at 8:41 am

I have to agree with most of your comments.
I believe the majority of people don’t have a clue or pay any attention to the the world affairs that affect what is to come in the future.
People would much rather drown in their own ignorance while watching (the real Vancouver house wives) than learn some facts about what affects their standard of living.
I hope western civilization is not doomed for ever but it dose not look promising for the better.
You have to wonder why people in “the know” or big corporations, banks and countries like Venezuela, India, china, even the American government are buying and sitting on very very large amounts of gold…….

#120 Steve Thompson on 06.11.12 at 11:51 am

Not to mention that Calgary’s economy is facing headwinds because natural gas prices are at decade-long lows and that stock options, the bastion of Calgary’s wannabe millionaire set, are well out of the money for most option holders.

#121 joe larue on 06.11.12 at 11:55 am

BBC, now CNBC….no bubble here kids…

http://www.cnbc.com/id/47762460

#122 BUBBLES ALL END BADLY on 06.11.12 at 12:19 pm

@22 TO Bubble Boy

Your MLS listing is a testament to the fact we are in the last days of this insane bubble. This is going to be the mother of all bubbles bursting…

#123 Toronto_CA on 06.11.12 at 12:27 pm

TD now calling for a 15% correction in Toronto and Vancouver…except Vancouver has already dropped 12% year over year…is this like predicting yesterday’s weather?

http://www.theglobeandmail.com/globe-investor/markets/market-blog/housing-markets-set-for-a-correction/article4247042/

If so I want a job as a bank economist.

#124 VICTORIA TEA PARTY on 06.11.12 at 12:28 pm

SO, HOW MUCH MORE “NOTICE” DO WE REALLY NEED BEFORE WE FINALLY “GET IT?”

None, judging by the now obvious imploding catastrophe that ALL OF EUROPE finds itself working through in today.

After the Eurocratic ‘brainstrust” cobbled together a weekend 100 billion euro “bailout” for Spanish banks (it was actually for Spain’s government!) Asian and European markets rose big time. So did the big European banks.

Then, after the Asian markets had closed and the European markets were half-way through THEIR trading day, it dawned: Holy Crap! We’re done!

And down they came; the bank shares and most of the key markets, except for a near unchanged close for Germany’s DAX index.

AND MORE BAD NEWS, EUROPEAN BOND YIELDS WHICH ARE

proof positive of how long you’re gonna live on this planet, and a few other “hints” of troubles to come: sovereign bust-ups, hyperinflation and the next Great Depression.

Yields were UP in places where we don’t want that to happen!

–Greek government 2-year bond’s rate of return is 225.2 per cent; the 10-year bond offers 28 per cent (!);

–Italy 10-year bond yields more than 5.8 per cent;

–Spain, that beacon of fiscal and monetary rectitude, will give you about 6.2 per cent for their 10-year paper.

THE MARKET TICKER’S

Karl Denninger has been following Europe really closely:

“I thought it might take at least 24 hours…. I was wrong.

Spanish bondholders woke up rather quickly to the fact that they were just forcibly demoted down the seniority chain (which is blatantly illegal, incidentally, but who cares when you’re the government — right?) just as happened with GM.

Italian yields moved higher, as everyone now expects them to be next, and to wind up with the same “deal”.

Meanwhile Greece joined the party in demanding the same terms as Spain got…That ought to be fun too.

There is a certain logic to such a demand, incidentally. If everyone is the same in the EU (remember, no border controls, no tariffs, etc) then why should one “nation” that gets a bailout get it under worse — or better — terms than any other?…Why do I get the suspicion that this isn’t exactly a stable state of affairs?”

FAMOUS COMMODITIES TRADER

Jim Rogers spent an hour on Bloomberg TV today reading the riot act.

He said you can’t borrow your way back to prosperity. Speaking specifically of Greece and the other recalcitrants out there, his cure is to let them go broke and start all over.

PROBLEM IS

they’re already broke! And they REFUSE to start over!

That’s why Europe’s voters are re-electing the socialist hordes. They believe in MAGIC and bailouts; lots of bailouts!

FOR EXAMPLE

Upcoming Sunday Greek elections should see voters going for that left-wing nut-job who’ll turn his back on the Rest of Europe and renege on debt repayments.

So, the biblical quote: “and the meek shall inherit the earth” will come to pass. and the Europe you know now will become one that you wish you never had to get to know.

Think some degree of Flanders’ Fields, of an economic persuasion more than a shoot-em-dead suggestion. The results will be much the same: hyperinflation and massive civil unrest.

This is not a good economic day AT ALL.

PS: Good luck all of you condo buyers out there. What are you thinking?

#125 Sid on 06.11.12 at 12:31 pm

RPT-Toronto braces for a deflating condo bubble

http://in.reuters.com/article/2012/06/11/canada-condos-bubble-idINL1E8H8FN720120611

#126 truth hammer on 06.11.12 at 12:47 pm

#118 …the differance is that Europeans can drive to Switzerland to take their money out of effected countries..Canadians can not. Swiss banks reported 69 billion dollars flew in the door last month alone.

#127 Market Bull on 06.11.12 at 1:08 pm

“There are some interesting phenomena emerging. There is evidence of homophily – the grouping together of individuals who share a common perspective, which is not too surprising. More interesting is evidence of polarization.”

“Rather than opening up and exposing us to different perspectives, social networking on the Internet can foster more radicalization as we seek out others who share our positions. The more others validate our opinions, the more extreme we become.”

Author Bruce Hood, Director of the Bristol Cognitive Development Centre at the University of Bristol, commenting on some of the consequences of social networking, ie. blogging.

#128 truth hammer on 06.11.12 at 1:10 pm

Bring on the class wars. We have Mullah Mulcair on the war path against western resource development…OK everyone knows the NDP are loons…..which is why they find a hand to hold in Quebec. Now we have Scott Brison trying to out left the NDP by suggesting ‘redistribution’ as the answer to Canada’s economic future…..oh boy?

Scotty …the communists have already kicked that horse to death. Reforms such as ‘redistribution’ did not work in Cuba, Russia , China, North Korea, Bolivia, Zimbabwe or any where else.

Are the Liberals attempting to buy the youth vote with tax dollars…..again?

http://fullcomment.nationalpost.com/2012/06/11/scott-brison-if-canada-doesnt-tackle-income-disparity-the-economy-will-suffer/

Look…I’ll go one better. Lets have all the elitist wankers who want free everything be given 5 acres a piece north of 60 degrees latitude…….with the proviso that they must work the land…..that’s redistribution in action. This would be a godsend to the poor Bolivian farmers who have waited since Bolivar for land redistribution…..ditto with Chinese peasents.

I doubt if any of these elitist wankers, dilletante femmes or entitled blue sky socialists would take up the offer. They want free, easy, coaster lifestyles, where no one works and somehow the money just rolls in from some big hole in the ground behind the parliament buildings.

I say ‘confiscate all the vacant and specualtor condo’s in Toronto’ and redistribute them to the poor and disenfranchised instead….with the proviso that they pay the taxes and maintenance fee’s and can never sell them…..lets see how dedicated these wankers are to their own cause.

And Scott…how about redistributing your outrageous pension to the local food bank? Lets see what happens when the rubber hits the raod at Scott’s house.

#129 Ralph Cramdown on 06.11.12 at 1:18 pm

Now, why do Easterners call the oilsands, tarsands?

Maybe because we went to interpretive centres in Alberta, on a stop on a long cross-country family vacation about three decades ago, and were given the pitch (no pun intended) that, though more economical method of extraction were still being perfected, Alberta’s TAR SANDS resources were vast. We were sent home with literature and even a little glass vial containing a sample of said TAR SANDS.

This whole renaming exercise reminds me of the generals of Burma insisting that everyone refer to it as Myanmar.

#130 Intuitive Missus on 06.11.12 at 1:23 pm

According to an article in MoneySense magazine.

Where in Canada to Buy Now.

Now that we’ve pumped up the “big city markets”, let’s head to the smaller centres and do the same thing.

http://ca.finance.yahoo.com/news/where-buy-now-140017287.html

#131 Devore on 06.11.12 at 1:31 pm

#70 wes coast

That’s an interesting case, but lets not get our panties in a bunch reflexively here. You don’t know the details of the case, or the actual credit card contract that was agreed to and signed. The devil is in the details.

I think CIBC’s linchpin is:

“(c) [blank] has failed to properly mitigate.”

The CC agreement is a promise to pay (unsecured) and the user is supposed to make every good faith effort to repay his debts. Otherwise people will run up their cards, then just walk away from them. Hey, it’s unsecured, right? The guy has a house, presumably with equity in it. He has chosen not to use a HELOC, or to refinance to obtain funds. He has not tapped his equity to repay his high interest debts. If he has no equity, he continues to live in a house he cannot afford, instead of selling it and buying one that is within his means. So in CIBC’s view has has not taken prudent steps to mitigate his risks and to hold up his end of the deal, to repay his credit card debt, that he promised to do when he signed up for the credit card.

People continue to sign multipage dense legal documents without a care in the world, then crying foul when the other party wants them to live up to the contract. Like the guy who was trying to start a class-action lawsuit against CMHC because he defaulted on his mortgage and was surprised, shocked! the insurance was for the benefit of the bank, and CMHC went after him to recover their costs. If you don’t want to spend the $100 upfront to have a lawyer review and explain it to you, then you risk much larger costs down the road. Like with other precautionary steps, if do not take them, you’re saving lots of money and look like a genius, until something goes wrong, then you’re looking for someone to point fingers at.

We live in a complex world. Perhaps intentionally so, but it seems to be in no one’s interest to simplify it. To deal with it, we delegate. Delegation costs money, but frees us up to do other things that we are good at. If you are not good at understanding complex legal documents, delegate to a lawyer, don’t just assume everything will work out in your favour.

#132 Canadian Watchdog on 06.11.12 at 1:37 pm

#128 Market Bull

Here’s some social networking behavior 101 for you: Hundredth Monkey Effect http://en.wikipedia.org/wiki/Hundredth_monkey_effect

In other news…

The Red Pin Weekly MLS Listings http://www.theredpin.com/blog/canada/toronto-real-estate-%E2%80%93-your-weekly-mls%C2%AE-update-%E2%80%93-june-11-2012

Red Pin MLS listings up 4.7% w/w, 18.5% m/m. http://postimage.org/image/khzlwhu63/ (35,463)

But Market Bull will tell you the number of these listings is not true, and that TREB’s honest-to-god stats is what we should rely on. So if the market crashes, it’s all the bloggers’ fault for spreading lies and fabricated statistics.

Stick a fork in it already. This market is over.

#133 Guy Smiley on 06.11.12 at 1:42 pm

Wow . Toronto is world class.

“Toronto braces for deflating condo bubble” is on the CNBC home page as a headline right now. It is a re-hash of the Reuters story going around but still. I guess it isn’t the safe haven for investors that some thought it was.

This may be actually finally happening…

#134 zeeman1 on 06.11.12 at 1:48 pm

#43 DonWest.

You do realize that the Alberta Tar Sands have been under development since before Bush invaded Iraq after 9/11 when oil was $27 dollars a barrel, right?

#135 CP on 06.11.12 at 1:59 pm

*cue the Price is Right theme when they lose*

http://www.theglobeandmail.com/report-on-business/top-business-stories/toronto-vancouver-house-prices-to-sink-15-over-2-3-years-td-warns/article4246895/

#136 Karie on 06.11.12 at 2:05 pm

To 111: There is nothing boring about watching live bands, going to dance clubs, live theatre, art museums or camping near the beach for free or a small cost. You don`t need to spend tons of money for adventure! Sure, you can increase your income if that`s what you prefer – go for it. With a saving lifestyle you are not a slave to money – you are buying freedom!

I have been to Europe twice with nothing but a Eurail pass and no plans. I used frequent flyer points to fly there. I saw the Harlem Globetrotters there, drank pints of beer at the Heineken Museum, watched a soccer match in Germany, attended an opera in Austria with rush tickets, skiied the Alps and so much more- and I did not spend a ton of money doing this because we lodged and ate frugally. (This is two separate trips 9 years apart and yes I`ve been other places in between). Similar things can be done locally as well!

Save your money and look for deals and you can live large on a not large budget! Only thing killing me these days is my kids`sports and activities costs!

#137 Devore on 06.11.12 at 2:24 pm

#91 Leon Lens

The “when” is what people pay 1000s of dollars to find out, and even the experts get it wrong most of the time. If it was so easy, we’d all be millionaires. The answer to your question is “it depends”, like where you live, down to the street. In some places it’s already happening, in others still full steam ahead, and others are doing the Wiley Coyote thing.

#138 Canadian Watchdog on 06.11.12 at 2:26 pm

#128 Market Bull

How suitable for your comment as of 10min ago:

The Twitter Vigilantes
http://www.businessweek.com/articles/2012-06-11/the-twitter-vigilantes

“The Rules of Engagement are being rewritten.”— Tom Keen

So you see, it doesn’t matter who is right or wrong. What’s at play here is the birth of a new free market, where social media, driven by the public, overpowers mainstream media.

Governments will never restore confidence and only make it worse if they choose to keep intervening.

#139 Trebeck on 06.11.12 at 2:28 pm

Having been house hunting for about a year in Winnipeg (and just bought one a few weeks ago), here’s my comments regarding Winnipeg RE. It’s simple really…

1) Yes, there are some bad neighborhoods, don’t buy there.

2) If you’re looking at houses at or below 300,000, you’re not getting good bang for your buck. There’s some crazy over bidding where you have 1000sqft bungalows (which are dated and some don’t have garages) selling for over 300k (which are over-bid by 30 to 60k).

3) If you can afford a house that’s 350k or higher, you actually get a lot more house compared to those smaller houses which get over bid to 300k.

4) Some of those houses that are 350k or higher don’t sell right away so you aren’t stuck over-biding, and yes, you can get a home inspection!

#140 TNT on 06.11.12 at 2:28 pm

Inflation to hyper inflation with deflationary under currents are our friends. Don’t worry about a 15$ loaf of bread, 25$ burger or 40$ steaks. Just look at it as a reset, its all good, we’re off to see the wizard..

#141 Devore on 06.11.12 at 2:34 pm

#111 eaglebay – Parksville

What a boring life.
No spontaneity. No excitement.

How would you know? Do you live with Karie?

The point is that even people with very modest incomes can, and should, save money. It’s not just for the wealthy. You have to find ways to live below your means, whatever your means are, and if you want more, then you can look for ways to increase your income, which not everyone can readily do.

You seem to live a life of plenty, be thankful for it.

#142 Serbia-Vancouver Lady on 06.11.12 at 2:44 pm

http://www.youtube.com/watch?v=Gn8LvJ2zTkE

What the hell is that? — Garth

#143 Market Bull on 06.11.12 at 2:50 pm

#133 Canadian Watchdog:

You continuously flog misleading statistics. Your graph is an amalgamation of re-sales plus new homes for sale.

What’s the matter, isn’t the truth compelling enough? You have to make stuff up?

The truth is that there are currently less than 2 months supply of MLS listings on the market in the GTA, even with the recent increase in listings.

P.S What’s with the monkey fetish?

#144 Bottoms_Up on 06.11.12 at 2:53 pm

#130 Ralph Cramdown on 06.11.12 at 1:18 pm
————————————————
Well, we actually get oil from the ‘tar sands’, so I feel it is aptly named when referred to as the ‘oil sands’. ‘Tar’ distinguishes it based on look/feel/texture, ‘oil’ as per the usefulness of the substance.

#145 NOBODY on 06.11.12 at 3:05 pm

#116 From Mississauga With Love on 06.11.12 at 11:14 am
#41 Endless.Waiting
“I have been reading this blog for more than 4 years, the houses I wanted to buy were 500K, now they are 700K…

So why didn’t you buy one? — Garth”

Because he, like myself, listened to you then.
Taunt those that don’t listen to you, and then taunt those that do.

No taunt. If you want a house, buy one. Don’t blame others for your decision. So when the $700K home is $500K again, you know exactly how to deal with it. — Garth

Proof that Garth is wrong. Again. Irresponsible suggestions.

Garth: if there are no bubble bursts, no major corrections in resale pricing by 2015, will you abandon?
You know being regularly wrong since January 2008, you are a pesky doomer…

The only suggestion on this blog is not to overleverage or to overweight residential real estate. That is wrong, how? — Garth

#146 Nick on 06.11.12 at 3:17 pm

Garth,
I sold my house in TO last month. Did well. Took the proceeds and bought four gold bars. What do you think of that?

Next stop, Casino Rama. — Garth

#147 John saccy on 06.11.12 at 3:49 pm

I did not see one coming.. seriously..

http://www.cbc.ca/news/canada/story/2012/06/11/toronto-vancouver-housing-td.html

#148 Canadian Watchdog on 06.11.12 at 3:50 pm

First Alberta’s UBG Builders Inc., now The Harvest Group goes bankrupt. (Commercial Real Estate)

http://strategis.ic.gc.ca/eic/site/bsf-osb.nsf/eng/br02869.html
http://www.theharvestgroup.ca/about-us-2/

#149 Timing is Everything on 06.11.12 at 3:57 pm

#118 Snowboid

Post #173 from the weekend.

You get deleted for being deliriously off topic and terminally boring. It will continue. — Garth

#150 Daniel on 06.11.12 at 4:08 pm

#136 – I was just about to post that link!! >:/

Haha – sounds like this guy has been to the blog.

#151 timbo on 06.11.12 at 4:10 pm

http://www.nytimes.com/2012/06/12/business/economy/family-net-worth-drops-to-level-of-early-90s-fed-says.html?_r=2&hp

“The median family, richer than half of the nation’s families and poorer than the other half, had a net worth of $77,300 in 2010, down from $126,400 in 2007, the Fed said. The crash of housing prices explained three-quarters of the loss.

This vast loss of wealth was compounded by a loss of income, as the earnings of the median family fell by 7.7 percent over the same period. ”

This is not going to end well……..

http://www.economonitor.com/rebeccawilder/2012/06/11/the-italian-economy-is-sliding/?utm_source=rss&utm_medium=rss&utm_campaign=the-italian-economy-is-sliding

“Don’t pin your hopes on exports. The contribution of exports to real GDP growth has dropped for two consecutive quarters, bucking a trend of positive contribution since the middle of 2009. The only reason that the net export contribution was positive in Q1 was due to the +1% contribution coming from a sharp decline in imports. This cannot be sustained, as the crisis of confidence has begun.”

Deep recession here we come, ready or not…….

#152 DonDWest on 06.11.12 at 4:20 pm

#135 zeeman1

If you want to get technical on me, the tar sands have been under development (research) since the 1970’s. We only recently threw so much infrastructure into the project. The tar sands were considered unprofitable for the longest time but we recently threw a pile of money at it based on projections. It’s the biggest corporate welfare project of the nation.

#153 Victoria on 06.11.12 at 4:20 pm

I know I have said this again …

At least 3/4 times a day I get a new listing for Victoria – PCS (Private Client Listing Service). Gorgeous homes, new, only lived in for a few years all well over 1 million. I ask myself – Why do these people seem to be selling “en masse”. There was a sudden explosion in the last 10 years of building and renovating in Victoria. The thought on the street was all the “rich” people want to live here. They were from Europe, Alberta, Ontario. They all seem to be selling now. These beautiful, gorgeous homes. Are they not as rich as everyone thought they were? Maybe I am exaggerating.

I must ask – Why now?

#154 Victoria on 06.11.12 at 4:21 pm

Just as I wrote that comment 3 more homes came on the market. This is little Victoria.

#155 First to last on 06.11.12 at 4:27 pm

#204 LSC on 06.10.12 at 9:50 am

http://www.cbc.ca/news/canada/newfoundland-labrador/story/2012/06/11/nl-housing-market-stjohns-611.html

#156 jess on 06.11.12 at 4:50 pm

..”The Swiss franc has lost close on 9% in the past 15 minutes.

Switzerland moves to contain franc appreciation’The Swiss National Bank (SNB) considers the Swiss franc to be massively overvalued at present,’ says central bank

guardian.co.uk, Wednesday 3 August 2011 09.28 BST

==========

The United Nations is increasingly concerned at the spread in Europe of “baby boxes” where infants can be secretly abandoned by parents,
http://www.guardian.co.uk/world/2012/jun/10/unitednations-europe-news

==========

Family Net Worth Drops to Level of Early ’90s, Fed Says
By BINYAMIN APPELBAUM
Published: June 11, 2012 176 Comments
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WASHINGTON — The recent financial crisis left the median American family in 2010 with no more wealth than in the early 1990s, erasing almost two decades of accumulated prosperity, the Federal Reserve said on Monday
http://www.nytimes.com/2012/06/12/business/economy/family-net-worth-drops-to-level-of-early-90s-fed-says.html?_r=1&hp

#157 AprilNewwest on 06.11.12 at 4:53 pm

#136
#148
I suspect these articles are playing it down. 2 to 3 yes to drop 15%???

#158 Boomer on 06.11.12 at 5:00 pm

#143, Garths comment “what the hell is that”

I don’t know Garth, it’s all Greek to me!

#159 Observor on 06.11.12 at 5:03 pm

STIMULATION ONLY LASTS SO LONG

Last night at number 31, I posted:

MARKETS MAY RISE ON MONDAY

Things are so bad in Europe that there is a bailout of Spanish banks announced over the weekend and there is talk of Euro bonds.

Seeing the potential positive moves the DOW futures were up 140 points on Sunday night. But it’s anyone’s guess if that will hold on Monday.

Markets (like certain appendages) lurch up and down with each morsel of good or bad news. Unlike those appendages they tend to go ever higher in the long term (but the road to the mountain top has its deep and unpredictable valleys as well)

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

It turns out that while the market initially rose overnight on this stimulation, it was just not long-lasting enough. Without enough stimulation the market drooped. The Dow ended the day down 1.14% and Toronto was down 0.9%.

Anyone brave enough to bargain hunt?

#160 Canadian Watchdog on 06.11.12 at 5:17 pm

#144 Market Bull

Your bullishness is withering away. Try debating facts with facts, otherwise go fetch another headline for the blog.

#161 Mr Buyer on 06.11.12 at 5:17 pm

#146 NOBODY on 06.11.12 at 3:05 pm
if there are no bubble bursts, no major corrections in resale pricing by 2015, will you abandon?
You know being regularly wrong since January 2008, you are a pesky doomer…
………………………………………………………………
There is a bubble, there has been a bubble for many years and it is collapsing now. If you are trying to tempt people to buy now then it is clear to me you have a vested interest, if you buy now well buying as a bubble tops is a huge boo boo. BUYER BEWARE, NOW IS NOT THE TIME TO BUY A HOUSE. THE BUBBLE HAS TOPPED. SALES ARE FALLING ACROSS CANADA. PRICES ARE DECLINING IN VARIOUS MARKETS ACROSS CANADA AS WELL AND WILL SOON DO SO NATIONWIDE.

#162 truth hammer on 06.11.12 at 5:20 pm

Instead of ‘EH?” the line should be ‘HUH?’

TD Bank warns that prices in Vanc-bunghole and Tor-oilet will fall 15% over 2-3 years….sounds good…right? Not if you bought in the past 3 years or plan to buy in the next 3.

I’m lazy so lets just ‘back of the napkin’ this statement.

15% of the average home price in Van-holio is around $130 grand. Lets say you get todays teaser rate of 3% and pay $3800 a month….that’s $138,000 towards interest you pay over 3 years. How we doing? You’ve go in understanding you will lose/have lost $268 thousand according to TD.

But wait..theres more. What about those nasty taxes at $5 grand p/a…another $15 grand down the hoop.

Maintenance….at least 9 thousand in gardens and cuttings and fence paint etc.

Furnish the barn……at least 30 grand for a four bedroom house at the discount stores.

Insurance …goodbye to another $3000 over 3 years.

I may be off a smidge here and there…but what I get from the TD report is that anyone who is in now or wants to buy over the next 3 years is looking at losing $325,000 dollars over three years….roughly 40% of the average price of $800,000……or look at it another way lose over 200% more than your 15% downpayment….or….$10,000 a month for every month you’re in the barn……nice!

Hope you like walking and eating KD everynight…..now thats a ‘homoaner’.

I can’t see this ending well. Or….is the TD just doing the BOC’s job and ‘scaring the straight’s’ so they stop borrowing so much?

#163 in_calgary on 06.11.12 at 5:21 pm

Four months ago I bought 850 sqft loft for 310K. It took me another 15K+2weeks of work to renovate. I sold it last week for 415K and would now love to hear about invesments strategies that compare to this one.

After closing costs, reno costs, transaction cost and cap gains tax, the return on $310,000 is 16%. Congratulations on a successful flip. You have just helped ensure housing becomes a little more unaffordable. — Garth

#164 Mr Buyer on 06.11.12 at 5:23 pm

#144 Market Bull on 06.11.12 at 2:50 pm
The truth is that there are currently less than 2 months supply of MLS listings on the market in the GTA, even with the recent increase in listings.
………………………………………………………..
The truth is that the bubble has topped, sales are falling, now prices are falling and this is on its way to Toronto. It is last call and you are making like the party is just getting started. You are a confidence man, purely and simply.

#165 Mr Buyer on 06.11.12 at 5:31 pm

#117 T.O. Bubble Boy on 06.11.12 at 11:28 am
Industry stakeholders stress that the potential for a crash is slight, and most of the talk at the Queen’s University seminar was about the strengths of the market.
…………………………………………………………
I myself will be sending a raft of emails to concerned parties at Queens. While I am sure the meeting was nothing more than an event that took place at Queens, the Queens name is now being used by bubble propagators to legitimize their assertions. I thought Queens was much better than this. The Queens University seminar…amazing, utterly amazing…

#166 jrochest on 06.11.12 at 5:33 pm

“Oil Sands” vz “Tar Sands” — the deposits are made up of bitumen mixed with earth. Bitumen is asphalt. Asphalt was colloquially known as tar. Hence, ‘Tar Sands’.

The original name, which was used by the industry itself until the 80s, is therefore accurate.

#167 Mr Buyer on 06.11.12 at 5:35 pm

#128 Market Bull on 06.11.12 at 1:08 pm
“There are some interesting phenomena emerging. There is evidence of homophily
………………………………………………………………….
So I am guessing the bubble propagators would be one such group then…

#168 jess on 06.11.12 at 5:39 pm

Missing: $496.5 Billion in Corporate Cash
http://www.ritholtz.com/blog/2012/06/missing-halftrillion-corporate-cash/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29

Source:
Number of the Week: Corporations Not Hoarding Cash
Ben Casselman
Real Time Economics, June 9, 2012
http://blogs.wsj.com/economics/2012/06/09/number-of-the-week-corporations-not-hoarding-cash/

#169 Mr Buyer on 06.11.12 at 5:51 pm

#65 $$$BPOE#1 on 06.11.12 at 12:25 am
Folks, lets get down to the facts.
……………………………………………..
1.BUY
2.BUY
3.BUY
4.BUY
5.BUY
6………
I wonder if there is any situation in which a client of yours should not buy, other than to buy another place of course. Good luck. THE BUBBLE HAS TOPPED. BUYER BEWARE

#170 Observor on 06.11.12 at 5:56 pm

To In_Calgary at 164

…Who made a good a return by buying and renovating a condo.

Congratulations. This is pure entrpreneurism and hard work.

And I don’t think any ony person has to take responsibility for house inflation. What’s next shall we all ask for smaller raises to tame inflation?

Adam Smith, writing in 1776, taught that the economy functions best when we all attempt to maximise our own situation.

In_Calgary improved this one condo. Multiply that thousands of times and our national housing stock is improved.

In-Calgary risked and worked hard and reaped the reward. What could be more fair? Bravo.

#171 Sebee on 06.11.12 at 6:06 pm

Did real estate do this to American’s savings?

http://money.cnn.com/2012/06/11/news/economy/fed-family-net-worth/index.htm?iid=Lead

#172 Harlee on 06.11.12 at 6:07 pm

# 137 Karie
There are some good blog posts today but your posts are the ones that I am in total agreement with. I had a chance to go to the Gold Medal Plates event here a few months ago. Fancy food, fine wine,rub shoulders with the elite,and maybe get to meet Ron James who was the entertainer (He ran around downtown Saskatoon the day before asking people :”Are there any socialists in Saskatoon? Where can I find one?” LOL). Ticket :$300. Probably worth it but out of my budget. Three months later I had a chance to go to another cuisine event. A smaller local event at $75. Had a seven-course meal (Dore Lake Whitefish as the main course!),fine wine,a craft-brewed beer or two,got to meet some nice people,got to meet the chefs and talk food with them. Not as fancy or important as the other event but it was still a great evening and one I’ll probably remember as much as if I had attended the more national and expensive event. Sometimes there’s as much hapiness found in the less pretentious entertainment that’s available out there. Museums,art galleries,fringe festivals,food fairs,book readings ( I can’t wait for furst’s first!),whatever the interest it’s there somewhere.
I’ve only been to Europe once – 5 years ago to Oslo and Trondheim,Norway.Restaurant food was expensive ($35 C for a pizza! $15 for a Big Mac !) but travel was very reasonable,especially the train trip to Bergen.Air flight cost with-in the country was decent.For inexpensive entertainment we attended the May 17th celebration at the king’s palace. It was just amazing. Didn’t cost us a kroner and we had fun watching the parade with the other tourists and locals. I hope to travel again,either another country in Europe or maybe Japan. Look after your finances and it’s a greeaat world!

#173 NoName on 06.11.12 at 6:28 pm

Interesting…

http://youtu.be/UvMGHzB37lo?t=11m16s

#174 Market Bull on 06.11.12 at 6:39 pm

#161 Canadian Watchdog:

How many times can you “put a fork in it,” before you run out of cutlery?

P.S. Your mom called and she wants you to start looking for a job. She also wants her laptop back.

#175 jess on 06.11.12 at 7:20 pm

nondoms

http://www.reuters.com/article/2012/06/11/liechtenstein-prince-idUSL6E8EL93120120611

,,,But the industry has been in crisis since 2008 when bank data leaked by a former LGT employee revealed hundreds of rich Germans had hidden assets in the country, forcing Liechtenstein to promise to clamp down on tax dodgers from abroad.

The U.S. Department of Justice is also investigating the second biggest bank LLB

#176 Nostradamus Le Mad Vlad on 06.11.12 at 7:21 pm


Garth and bloggers —Not A Chick Magnet (previous thread), ‘tho I must say that I was laughing hysterically at #65 $$$BPOE#1’s post. It was akin to Samson and Hercules pulling BPOE’s off, and his guts sliding down the drain. Ogd you’re funny!
*
Iran – Iraq Exporting electricity. “Didn’t we taxpayers fork over a trillion to build Iraq a power infrastructure after the US government bombed the last one?” wrh.com; Family Net Worth down by approx. 40%; Gold Central banks are buying gold like there’s no tomorrow; Wall St. Shruggathon over JPM, and GS “Scared of the cross-examination, eh?” wrh.com (Something to hide); Gobal Depression dropped gas prices by 40 cents; The Trials and Tribulations of being in the EZone; Spain’s Bailout = No austerity measures, Greece has plenty; S&P’s warns India of downgrading to junk; FB and UBS Not a healthy partnership.
*
Doctors warn: Avoid GMO feeds, because Fertility Rates; 14:25 clip Nuke explosions since 1945; USA (Decaying) arm of the NWO, and Putin — the NWO’s nemesis; Vatican Banker could turn whistle blower, and Mafia connection? Hollywood, China Another American icon heading east (go east, young man?); BdB’s Black Tie do; Flame and Stuxnet Same makers (US and Israel); Venus and Hubble Crossing the sun; Colin Powell Along with Rice, dubya, Cheney, Obomba, Rumsfeld and more, another war criminal; Russia West doing its best to screw the MEast up.

#177 Westernman on 06.11.12 at 8:04 pm

Harlee @ # 173,
Hey buddy, when you visit Japan be sure to spend LOTS of quality time lounging about on the beaches at Fukushima…
You’ll have that “rosy glow” you can show off to your liberal friends back in Saskatoon…

#178 Canadian Watchdog on 06.11.12 at 8:19 pm

#175 Market Bull

The term was addressed to you so I suggest you eat it before it gets cold.

#179 AG Sage on 06.11.12 at 8:19 pm

Louise, Will Canada fall faster? There are competing forces relative to the U.S. experience. More mortgages are full recourse, so if there is going to be mass walk-aways in Canada more pressure will have to build up in the system before that happens. When the walk-aways become a big enough constituency, things will tweak in their favor, no matter how unfair it is to the rest. Who knows at what stage that will happen.

That was something that made the U.S. crash so unpredictable, you never knew what contortions the system (finance, gov, metro area, consumers) were going to make to try and adapt to an environment outside all previous experience. I’m assuming the same will happen again.

In Canada recourse is killer. CMHC doesn’t mess around when they go after recovery. People will be taking on renters, growing pot, leasing spare rooms for office space, before they mail in the keys.

Based on Australia’s experience right now, it takes 12-18 months before a belief about the decline takes hold in the general consciousness. That delay will also forestall declines because people will simply change their plans rather than sell into a loss. But after the realization sets in, then the market will swing in a rush to the exits.

Based on all of the above, I don’t think the decline will significantly vary from the U.S. one. Except in Vancouver, where I suspect there are a lot more foreign investors there with Canadian mortgages they can very easily walk away from.

A year will zoom by anyway, so I don’t think you will notice the wait. Interesting times. Interesting times.

#180 Norrin Radd on 06.11.12 at 8:21 pm

Hi Garth,
Looong time reader…0 debts, renting, young family, stable income in the 70’s, thinking of buying a house in Guelph in the 300’s. Am I crazy or is it a great time to jump in?
Please help backwoods oracle… :-)

#181 frank le skank on 06.11.12 at 8:36 pm

#179 greed on 06.11.12 at 8:10 pm

I will take a guess at this one and say that Garth may not appreciate someone bragging about one of the things that will cause RE to implode on itself.

#182 disciple on 06.11.12 at 8:54 pm

4 more houses for sale on my street. And there are only about a dozen or so on my street… Was traveling outside the GTA over the weekend…I just don’t understand the attraction to Milton, middle of nothing nowhere and half a mil for a one garage SFH? Pity is all I can muster for these poor families… I must have seen two or three families in each subdivision spending their Saturday afternoon shoveling mud off their driveways…how can the builder or the town for that matter allow humans to live in this type of squalor before the construction is even completed? Madness.

My latest offering: You would never guess who is running for a Virginia Senate seat…http://tinyurl.com/7s2wyeq

#183 DM in C on 06.11.12 at 9:14 pm

Karie & Harlee;

OR you can find a job that pays you to travel for them. I’ve been to every major US city, plus London, Berlin, Paris, Bogota, Kuala Lumpur, Egypt and Spain etc a few times, all on the company dime. It’s easy to tack on a couple days at the end of a trip for sightseeing.

#184 B P O E ?? on 06.11.12 at 10:03 pm

Garth,

Just curious, this BPOE clown posting drivel is dissing you and not once have your ever commented on such drivel. Is it because its pure Drivel?

#185 Average Joe on 06.12.12 at 5:15 pm

Hi Garth …

Thx for your blog, sincerely.

I just read this

http://www.truecondos.com/mythbusters-foreign-investor-edition/

Its a recent (very plausible) post about the true amount of alleged “foreign money” in the condo market in Toronto and it seems that the answer is somewhere between 2 and 90 % … ( !! ) … Wow … Worst journalists ever or best propaganda program ever ?

You are the only person I would believe on that subject, should you write about it.

Thx Sir.