Shock & awe

It’s taken less than a day for everything to change. Are you ready?

As this blog told you would happen, the feds have decided to shiv the housing bubble with a regulatory blade because they couldn’t prick it with higher mortgage rates. Given that we’re closer to deflation than inflation tonight, jumping the Bank of Canada rate to stop the mindless borrowing was not an option. It would hammer businesses now coping with lower commodity values, falling confidence, slowing global markets and a collapse in gold and oil.

The past 24 hours may have brought the end of real estate as you know it.

The changes are as I forecast over the past months. The 30-year mortgage is dead, which has the same impact on borrowers as a rate increase of almost a full 1%. Home equity loans are curtailed again. CMHC reforms – no insurance for mortgages on houses selling for more than $1 million – massively impacting Vancouver (2,500 listings are over that limit).

You were also told that OSFI, the bank regulator, would enact new guidelines. That happened as part of a 1-2-3 series of punches yesterday. Home equity lines are tightened even further – right down to 65% of a home’s value (from 80%). If you want to go higher, then banks will be forced to give you an amortized mortgage on top of the line. Cash-back mortgages are kaput. So property virgins can no longer get 100% financing for that new condo, and the banks who gave out these bribes are forced into responsibility.

No more stated-income mortgages (called ‘liar loans’ in the States) because now entrepreneurs and commissioned salespeople will have to haul in their tax returns to verify earnings. And tougher hurdles for first-time borrowers looking for a cheap VRM, who now have to qualify for the Bank of Canada benchmark 5-year rate (currently 5.44%).

F’s mortgage changes come into effect in two weeks (July 9th). The OSFI rules become law for the banks at the end of October, but expect them to be adopted almost immediately.

So, see why F and Carney have been amping their way across the country telling people in Toronto and Vancouver they’d better be careful? It’s a likely disaster for big-city condo markets, where most sales have been either to idiot amateur speculators or moist young couples too horny for a unit to think straight. In one day condos have been rendered less affordable (and valuable) as amortizations shrink (remember 40% of mortgages now have 30-year ams, and nine of ten originations in the last two years went this route). Buyers have been denied free down payments, and many will no longer qualify for loans.

We knew condos in the GTA and Van would melt anyway. But this turns up the heat and rips months from the calendar. With 53,000 new units coming to market in Toronto alone, speckers and flippers will be desperate to assign their deals. But good luck finding greater fools.

In Vancouver there’s also the smell of napalm over places like Richmond and North Van, where thousands of properties now languish north of the million-dollar mark. Without the possibility of CMHC insurance, buyers will have to cough up a minimum 20% plus closing costs – at least $250,000 – narrowing the universe of potential purchasers. In a market grotesquely over-valued and already skidding into sales and price decline, this is realtor Rocky Horror.

Meanwhile the world slows. More layoffs. Oil at $78. Volatility on Bay Street. Not the news they want in Sherwood Park or Lawrence Park. Despite that, Mark Carney made it clear in a speech on Thursday interest rates in Canada will not be going down, or the war on debt abandoned. Suddenly all that yapping about ‘get ready for an economic shock’ has a context and a timetable.

I hope some of the many people who come here prepared as I suggested you do. This is not the time to own a piece of real estate with big debt and little equity. It’s not when the bulk of your net worth should be in any one asset, especially one with an address. Smart Boomers will have cashed out at epic highs. Shrewd kids will have stayed renters. The best possible defence? No debt, lots of liquidity.

Of course, this is the start. Not the end.

So I may be back.

(Unretouched photo above: Courtesy Canadian Watchdog)


#1 maven on 06.21.12 at 9:51 pm

the collapse

#2 Bo Xilai on 06.21.12 at 9:53 pm

I’ve been smiling like a Cheshire cat all day…

#3 Ron on 06.21.12 at 9:53 pm

Just as I was forcasting to the girlfriend. Thanks for the sage advise while I don’t agree with everything (a little more pesimestic than you) it’s good to see the predictions coming true.

Oh, and first! (Couldn’t help it)

#4 Inglorious Investor on 06.21.12 at 9:55 pm

The new mortgage rules are exactly what we need. Ten years ago.

#5 Don't read his post on 06.21.12 at 9:57 pm

I feel like my property just lost 5%

#6 Olivee on 06.21.12 at 9:58 pm

Hi Garth,

You were right!

This will end in tears.

Question: For those who were able to get in on a 35 year amortization before it dropped to 30, does this mean they will have to renew at the end of their first term on a 25 year ammortization?

Will they need to requalify?

Glad I’m renting!

#7 Displaced Canadian in Texas on 06.21.12 at 9:58 pm

So you are saying now is not the time for wifey and I to move back to Ottawa and buy. I read ya, loud and clear.

P.S. Looking forward to a note on the Ottawa market.

#8 Toronto condo sales falling, prices falling and glass falling on 06.21.12 at 9:59 pm

With these new rules Toronto condos are set to crash upto 70%. Useless mortgage brokers and realtors will be looking for a new job. It’s going to be funny to sit back and watch the crash.

#9 Smoking Man (fraud) on 06.21.12 at 9:59 pm


Lower oil prices will help the global economy grow. Watch for it while the track sixes are panicking in there pantees.

Vancouver is toast, prices will crash 20% over the next 6-10 months as the machine drives the message relentless lie home.

Smoking Man said its so. So it is.

#10 realestaterules on 06.21.12 at 10:00 pm

So garth, what do you see as a bigger deal: the latest changes on insured mortgages (about half the market), or the OSFI rules on conventional (non insured) mortgages (about half the market). its a good day to be an unregulated lender, no?

#11 Inglorious Investor on 06.21.12 at 10:03 pm

Another excellent piece by Matt Taibbi in his on-going single scribe crusade against the vampire squid that is Wall Street. Anyone who thinks that banks ripping off people is somehow wrong for some reason should read it.

Also, everything Gerald Celente has ever wailed about Wall Street has been confirmed. Again.

#12 A in Vancouver on 06.21.12 at 10:04 pm

Chinese say that the tighten mortgage rules will have no effect on market because most people pay more than 20% down payment.

I can not wait a crash happen.

#13 Realtors in a panic on 06.21.12 at 10:04 pm

Where is your HAM now? Most of you realtors are lying scum who ruined tens of thousands of lives. Mortgage brokers many of you will be out of work within the next couple of months. This house of cards is going to have a nasty crash. They finally got their orders to crash Canadas housing market. You understand this smokingman.

#14 Shock & awe | The Retiring Boomer™ on 06.21.12 at 10:05 pm

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

#15 vatoDETH on 06.21.12 at 10:05 pm

The FUNNIEST PART is, I read broker and realtor blogs and they say, this is a way to engineer a soft landing. There has never ever been a boom with a soft landing! This a way to prematurely pop a growing bubble!

It’s chemotherapy on a cancer… and we’re gonna get sicker, before we get better.

#16 syd on 06.21.12 at 10:09 pm

>>The OSFI rules become law for the banks at the end of October, but expect them to be adopted almost immediately.<<

And why would banks do that ? instead they will max out on their practices until the rules become the law.

#17 TurnerNation on 06.21.12 at 10:10 pm

This pathetic weblog may have actually proved its mettle.

Realtors and Metalheads in a PANIC!

Blog dog Carney remains mum.

#18 Dom on 06.21.12 at 10:10 pm

Smokingman #12

Someone hit a nerve with you? The GTA market has slowed down and this will totally drop the condo/housing market hard. Smokingman don’t let the news get you down. You can always drink your sadness away.

#19 Suede on 06.21.12 at 10:10 pm

Wonder why papers never mention that this same gov’t released the hounds with 30/35/40yr amorts and then backpeddled. Then again, you gotta educated yourself.

#20 Bo Xilai on 06.21.12 at 10:14 pm

Did a quick search on MLS… There are almost 5,200 properties listed in the Lower Mainland which are listed at 1M+

Crickets will be chirping after July 9th during the open houses…

#21 Will on 06.21.12 at 10:14 pm

@#2 Bo Xilai There’s not much joy in vindication in the case of a housing crash. Expect higher unemployment and misery for a few years.

#22 Party On Garth on 06.21.12 at 10:17 pm


#23 Fleabitten Monkey on 06.21.12 at 10:19 pm

Holy snykies, this is about to get scary.

#24 B P O E $$ on 06.21.12 at 10:21 pm

Wake me up BPOE is having a bad dream :-[ Someone please buy all these homes and condos in Vancouver!

#25 Marnic on 06.21.12 at 10:22 pm


#26 dd on 06.21.12 at 10:23 pm

Given that we’re closer to deflation than inflation tonight…

But you will be wrong on the monetary side. Central banks will massively ease the months to come. But of course you will say you saw that coming.

Does your mom dislike you? — Garth

#27 Party On Garth on 06.21.12 at 10:24 pm

nothing in the MSM about the OSFI changes yet? It seems they are only fixated on the 25 year CMHC ammortization.

…of course, I am only reading the headlines, they may have updated their articles.

#28 unbelievable on 06.21.12 at 10:28 pm

It is about time with these new rules and needless to say the 40 year and 0 percent down should of never occured. We created a nation of buying on credit with no savings. I don’t really feel sorry for the people who bought over the last 10 years as we all make decisions in our lives. Just have to look at short history in Canada and the average prices of houses i.e. 1990 (80 to 120K), 2000 (100-150), 2012 (350-400). I don’t think Canada is not running out of land, nor has the average income tripled over the last decade. Also, building supplies contrary to public believe has not swelled exponentially. All one has to look at is the forest industry in Canada i.e. Oriented Strand Board Mills were approx 40 mills in operation across the nation in 2005 down to less than 10 presently. The economy will suffer short term but it will lead to long term rewards overall going forward in Canada economy. Sad to say your house will be dead money for the next 10 years if you are speculator or investor. It is sad to say but we created a false economy based on greed in houses where it should be a roof over ones head for the average person. Basically it is a greed game supply and demand similar to the stock market. Some win and lots will loose if had not sold yet if they are spec homes.

#29 gokou3 on 06.21.12 at 10:30 pm

30 –> 25 years, payment goes up 12% for otherwise identical mortgage. Instant 12% price drop?

#30 mid-Ontario on 06.21.12 at 10:31 pm

This is reallt bad Garth.
I am so upset.
I thought even Amanda Lang who broke the story on CBC last night looked a lot older tonight.
Blood in the streets may be putting it mildly.
Not even you Garth said it would end so suddenly!

#31 Mean Gene on 06.21.12 at 10:32 pm

Note to all the real estate agents… Boo frickety hoo to you!!!!!!

#32 Thinker on 06.21.12 at 10:32 pm

All this means is toronto prices will go 1m easily for sfh. Anything below still gets 20x leverage and your ATM has a lower cap. Still based on ltv ratios. This is very bullish condos and lower priced housing. Most folks roll into higher homes and the new upcoming boom will feed that higher downpayment

We have seen this before. Only job losses will impact this bubble. Rates are goin lower and volatility is good for bay street. Bad read Garth. Bad read.

#33 citizen of convenience on 06.21.12 at 10:33 pm

Carney said more important things.

“Canada’s relatively healthy economy has been largely based on borrowed money, but the situation cannot go on indefinitely”, Bank of Canada governor Mark Carney warned Thursday.

#34 joe on 06.21.12 at 10:33 pm

Wow Mark Carney and F must have got a shot of Testostrone, I cant believe this day has come (ear to ear smile on my face). There is hope afterall. Wonder how this is going to affect the Alberta housing market which has the highest income but also the highest debt levels, even more then BC. Great blog Garth.

#35 Chaddywack on 06.21.12 at 10:35 pm

Global News in Vancouver says this will have a minimal impact on prices as it only affects about 5-6% of buyers and there is so much foreign money coming in that is really driving the prices that all it will do is hurt Canadians to the benefit of offshore investors.

You expected what? News? — Garth

#36 Can it be? on 06.21.12 at 10:36 pm

Crazy times I say…. Happy to sit tight and be liquid. Another co worker cannot make his mortgage payments, exhausted the heloc on vacations and lifestyle… Too bad so sad… I’ll be watching the luxury market for some deals. Let’s see how many homes come on the market now. The next five years will be a downward spiral in my mind.

#37 Smoking Man on 06.21.12 at 10:37 pm

The future

The future is not what the 99% are thinking after todays news. I will share my blue print later this week need a day of big waves keep me off the lake.

And it’s bullish for those that have lots of debt in assets like real estate.

How can that be, you will see.

Like I have been repeating here for 6 months the GTA market is on fire, it’s crazy and the machine will do anything in it’s power to cool it without spiking rates, I was right yet again.

Just for fun I own this guy from yesterday
#260 Realtors and mortgage brokers in a panic! on

His real name is LaughingCDN
You’re hilarious, you stocking me?
You have been copy and pasting the exact same words since 2008, mostly in the globe and mail. Absolutely no creativity in your fingers, too bad for the females in your life.

Do you not realize I’m a big part of the show here, why?
My crystal ball rocks, I can BS, spell badly, bash teachers and get away with it.

You for years took great pleasure making fun of, and wishing your sister misfortune who bought in Milton 2009

well my unipolar always on the wrong side of the bet, you lost, you’re sister won.

Had you listened to me before in the globe when I told you to buy in Long branch south of lake shore you would have made an easy 150K to 200k in two years For a 350k investment. And SFH in that hood they aint going down for along time, it’s becoming the new beaches fool.

Again for the 100th time being a Realtor requires too much sweat for me,

I make a lavish living betting on batman.

I do respect realtors and mortgage brokers and hookers, they are all in sales and are revenue generating entrepreneurs, what I have no respect for are basement dwelling clock punching cowards who are afraid of risk and can only keep up with their peers if the peers fall.
You are one bad dude, hide behind a fake name will you, LaughingCDN you will never have prosperity in your life, You will marry a fat ugly woman that doesn’t use deodorant or shave that soft area, and who bosses you around, and will leave you after the second child.
Everybody that reads me knows my crystal ball is second to none, in fact give me a moment need to tap the universe, got it !!

You’re brides name will be Gonnacleanyaout.

You should thank me,for my rebuttal elevated your status here my favourite basement dweller.

#38 surgical cuts on 06.21.12 at 10:39 pm

Who is left to buy?

With 70% of Canadians now homewowners, developers were left reaching to the least credit-worthy borrowers making big real estate bets to drive the housing market. This caused prices to rise and attract speculators to further perpetuate the meteoric price rise. At least five of my friends have taken 100k paper equity out of their home to sign up for another few hundred thousand in debt to buy an investment condo. More debt, more house leverage, more exposure to even the smallest changes in house prices. But prices only go up, right? We are also different here, right?

Now the legislation has arrived and targeted at the four riskiest types of borrowers (1) First time buyers taking on too much debt (2) house horny professionals buying over-sexed homes with too much debt (3) the self employed that have too much debt for an inconsistent income stream (4) the virgin speculators cashing out home equity to buy additional properties

Given who the groups this legislation is targeting it is disproportionately going to impact:
Property types: condo market, $1 million dollar+ SFH, vacation properties, rental/investment holding properties
Regions: Vancouver and Toronto + expensive vacation areas (e.g., Muskokas)

I know of many people in Vancouver and Toronto that took out huge mortgages with little down in order to “buy into the market” before they were “priced out forever.” People always take on too much condo/house given their economic situation, whether it is the house they live in or an additional speculative property.

The landing will be hard. But it will be softer than what a self-correcting market would have done on its own.

#39 Jay Currie on 06.21.12 at 10:40 pm

“Tapping the brakes” as one BOM analyst put it.

Even with ABS, tapping the brakes five feet from a brick wall doing sixty may not quite do the trick.

Assuming that there are any property virgins left in this great real estate Sodom, they probably will keep chaste for a few more months.

But the resale market, the 1m+ world of Westside Vancouver and my own Dog Walk Index in Victoria, will be clobbered as people actually have to pony up money and prove income.

Now, will prices drop? Condos – yes. SFDs in the burbs – yes. Rec property – forget about it. Good neighbourhoods 500-1m, not so much.

There will be a crunch, it will hurt, but it will hurt some places more than others. Some streets more than others, some construction more than other construction.

This is the attempt at the soft landing.

But the wall is still there and now it is five feet in front of the car.

#40 Bo Xilai on 06.21.12 at 10:40 pm

#21 Will, what will transpire in the next couple of years will be a pale imitation of a real estate crash which would have happened if nothing had been done.

I’m merely happy we’ve taken the first steps to return to sanity…

#41 groovin_123 on 06.21.12 at 10:43 pm

Talked to a young realtor friend who works in the North Vancouver/Deep Cove area. Most houses hanging around the $1 MIL mark, the odd waterfront property much higher.

And I quote, (to the best of my bong-hazed memory)

“It’s insane. Everything is for sale, and nobody is buying. People are down my throat and are panicing their houses aren’t selling, yet, they won’t budge on price so what do they expect me to do?”

So who blinks first?… Que the landslide….

Smoke my meat you smug boomer bastids. I will be paying cash for my kozy house in the hills in 5+ years time.

Enjoying my paid-for bung-hole while counterparts my age now worry about servicing their $500K+ mortages…. I told you so.

Stay liquid. Liquid liquid liquid!!!!!…

Oil producers with LOW COSTS of production paying dividends looking tasty to me…

#42 Smartalox on 06.21.12 at 10:43 pm

In the cold light of day, it looks more and more like yesterday’s announcement was all about saving CMHC’s spending limit: forcing CMHC’S users to pay a greater share of principal, and capping the amount that can be insured at less than a million won’t do much more than reduce CMHC’S exposure.

The real hit will come from the OSFI regs in October. That’s when this thing will start snowballing out of control. If you’re thinking of selling, don’t be fooled by those that claim yesterday changed nothing, this is the beginning of the end.

Sell now, or sell never!

#43 the word of reason on 06.21.12 at 10:43 pm

oh please all these rules are gonna do is get rid of some the rif raf that shouldn,t of been in the re anyways and speculators things will still keep chugging along especially in TO … sorry to rain on your parade @!

#44 Boomer on 06.21.12 at 10:44 pm

Ok, is Smoking Man really Brad Lamb:) Condo King, Bat Man, ruler of the universe, track fiver or is that six, can’t keep track. Oh well, carry on folks.

#45 Market Bull on 06.21.12 at 10:47 pm

Haven’t we seen this movie before? This is the third sequel after all. Each new film promised housing Armageddon to the faithful bubbleheads, and yet what did we get….yawn.

The changes don’t amount to much , affecting marginal buyers and reiterating existing lending practices. It’s called tweaking.

Much ado about very little, I’m afraid.

You hope. Unemployment’s a bitch. — Garth

#46 zeeman on 06.21.12 at 10:49 pm

hi garth

dont you think that increasing the debt/income ratio to 39% from 35% will take away from reducing the amortazation to 25 years. the net impact is that these two changes cancel each other out and so the 25 year amortazation schedule will do nothing to cool the housing market.

i noticed that you did not mention anything about the debt/income ratio in your post.

I do not think it is a significant change, but if some people want to pig out more when the market is turning, good luck to them. — Garth

#47 Kim on 06.21.12 at 10:51 pm

Watching the news and reading other media outlets and observing the reaction from mortgage brokers it would seem the mortgage industry is looking very scared for their future. It’s also obvious these are selfish self centered people who do not care about the lives they have put on a path which will lead to bankruptcy. These mortgage people only seem concerned that the cash cow is ending. The housing market will be taking a nose dive back down to reality.

#48 Herb on 06.21.12 at 10:51 pm

I hope that voters remember that the guy on the right is the face that launched the RE bubble and sank 100,000 homeowners.

#49 DDCorkum on 06.21.12 at 10:52 pm

I really like that CMHC will not be available for very large homes ( >1 million), but I think the rule should have been implemented slightly differently.

The minimum down-payment on a $999K home is only about $50K, while the minimum down-payment on a $1M home will now be $200K. I think this is going to cause an unusual distortion in the market at homes priced near the 1M mark. To resolve this, while still accomplishing the intent, I would suggest two alternatives:

Alternative #1 – Make it like tax brackets. Require 5% for the first 500K, then require 20% on the amount above 500K. So for example, an $800K home would require $85K ($25K on the first $500K and $60K on the next $300K).

Alternative #2 – Base the absolute maximum ($1M) on the amount being mortaged, not on the total home value. As such, a home between $1M and $1.2M could still be eligible for CMHC, but only if the downpayment is proportionaly larger. Homes valued above $1.2M would obviously never be eligible since the downpayment would exceed 20% by this rule.

#50 Tre on 06.21.12 at 10:53 pm

The moment of reckoning is shortly upon us.

#51 Average Joe on 06.21.12 at 10:54 pm

Others here asked the same question and me too :

Will those who signed a 35 or 40 years mortgage have to apply (and qualitfy) to a 25 years loan upon renewal ?

I cant find any answers to that and I googled extensively.

(nb : I read satisfaction and revenge on blogs. Im kind of happy too. But Im afraid this is a very dark day, in fact. But it had to happen. Good luck all).

(Im a renter. I resist for the last 5 years to peer/family pressure to buy. Glad I did)

#52 Don on 06.21.12 at 10:56 pm

Wow it’s here, there pricked it as silently as they could but no mention in the news about this blog. What about two months ago, a year ago, could no intelligent news agency see this coming, the revenue from realtors was bound to run out. They look rather foolish having a epiphany in light of what happened in the US, Ireland, Spain, China, Australia etc. Mainstream can now be called Stupidstream, or morally bankrupt at any cost stream.

Garth exits stage left…With a big grin
Returns moments later wearing the “I told you so…little F’er!

#53 Mel on 06.21.12 at 10:58 pm

It is about time! Finally, we have some truths coming out of the mouths of our beloved politicians.

It should have been done long long….ago. We would not have housing debt problem to deal with today.

In the coming years, we all shall find out how this housing bubble will unfold. Are we going to follow Ireland? Time will tell.

#54 Joseph on 06.21.12 at 10:59 pm

what kind of real estate would anyone buy if you had about 130,000 cash sitting in the bank?
I live in London, Ontario

Garth your opinion?

The phantom kind. — Garth

#55 wes coast on 06.21.12 at 11:01 pm

Not 2 seconds after this news broke did global TV have a mortgage ‘specialist’ advising people to hurry and sign a purchase and sale before July 9 so they still get the 30 year amort. Weasel.

#56 Unobtainium on 06.21.12 at 11:04 pm

Well Garth, it looks like the time has come. It is good to know there is some semblance of technical competence in the government when it comes to financial matters. It is good to see them at least try to put a stop to the madness. It certainly is too little, too late, but it’s nice to see F try. Too bad a man as educated and capable as him has for so long dealt with one crisis at a time, trading one problem today for a bigger problem tomorrow.

#57 Inglorious Investor on 06.21.12 at 11:05 pm

#46 Kim on 06.21.12 at 10:51 pm

Yes, mortgage brokers are selfish, greedy individuals who care mainly about lining their own pockets, with little, if any, concern about how what they do affects others. So true.

Now, substitute “mortgage brokers” with another profession of your choice, then read that phrase again.

#58 sam on 06.21.12 at 11:06 pm


Can you do a post on the OSFI regulations, what got implemented today, I’m still unsure. Did everything besides the re-qualification get the go ahead?


#59 Party On Garth on 06.21.12 at 11:07 pm

So the question now Garth, is what will this do to GTA and Hongcouver rents?

There will be many speculators trying to rent out their underwater condo’s, but there will also be much more demand for rental accommodations as fewer virgins will be buying.

#60 colleen on 06.21.12 at 11:08 pm

Sorry …but…I just wish the photoshop wasn’t so badly done….

#61 TRT on 06.21.12 at 11:08 pm

Can anyone answer this:

Will banks charge a premium interest rate for $1 million+ dollar homes after the rule changes?

Owners have skin in the game with the $250,000 Garth mentions. This changes nothing as most already probably do this nowadays anyhow.

But what about the interest rate charged in this case. 20% down, 80% financing. Hmmm? What premium over a CMHC insured mortgage. Bank will have skin in the game. The spread will determine how worried the banks are about a ‘bubble’.


#62 ANONYMOUS on 06.21.12 at 11:09 pm

‘ I’M HAPPY !!! ‘

#63 Seven Stars and Orion on 06.21.12 at 11:09 pm

“Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

#64 Debtfree on 06.21.12 at 11:10 pm

Brad lamb today on bnn . His lips were saying it’s not going to change the market much but his eyes looked similar to those of a deer in the headlights . In the house harpo couldn’t admit that the 40,35, 30s were a bad idea that had to be changed . I guess we’ll have to remind them who owns their folly of bringing them in. H F C you own the mess. You guys are a national disgrace and an international imbaracement . Even the yanks can’t trust your word.

#65 NAM not HAM on 06.21.12 at 11:12 pm

Looks like rates will stay low now for sometime. Something needed to be done and they chose to tighten the rules. This gives time for these sucker 5% downers to get their act together to pay down debt. And also, keep the horniness away for now. Bonds and preferred will be safe for the time being.


Congratulations. Right about now, you are likely partying it up, sipping cristal and smokin a big fat Cuban. You fuckin rock dude!!!

#66 Astroboy on 06.21.12 at 11:14 pm

#37: Agreed.

Your condo developers are getting pretty desperate. Pinnacle International held an event in Singapore last weekend at Swissotel, trying to get Singaporeans to buy 600 sqft 1 BR condos for CAD 370k.

It looks cheap compared to prices here, but be warned that the sentiment has turned in Asia, led by China. There are plenty of empty condo units not just in China, but also in Singapore.

The largest Chinese developer, Evergrande, saw its stock rocked 10% yesterday by a damning report by Citron Research on its questionable accounting policies. It claims to be liquid and solvent, yet had to borrow money at 25% through ‘trust funds’ in 2011.

I work in a commodity business, and have seen numerous chinese importers of commodities in this financing game, where they have been importing commodities (metals, oil, grains) via a bank LC and selling them at a loss locally, in order to get cash and subsequently lend that cash in the black market at 20-30%. That volume accelerated in 4Q and 1Q and has been eerily quiet in 2Q, as prices started their collapse, with overstock of inventories in China.

#67 Peter on 06.21.12 at 11:14 pm

Look boomer doomer one of your prophecies has come true, you are sooooo smart. Even a clock is right twice a day!!!!!!

Sorry about your Porsche lease. Seriously. — Garth

#68 EX-edmonton mortgage broker on 06.21.12 at 11:15 pm

meanwhile, over at CAAMP head office

#69 Smoking Mans smarter cousin on 06.21.12 at 11:16 pm

Two Irishmen..and with green ties too?

WTF?….. and OMG !

#70 Uh Oh Canada on 06.21.12 at 11:18 pm

Thanks for keeping us up to date, Garth. Wow! This is history in the making.

#71 Devore on 06.21.12 at 11:19 pm

#34 Chaddywack

Global News in Vancouver says this will have a minimal impact on prices as it only affects about 5-6% of buyers and there is so much foreign money coming in that is really driving the prices that all it will do is hurt Canadians to the benefit of offshore investors.

If it’s only 5-6% of buyers, sounds like they shouldn’t be buying houses anyways, since they’re so on the edge now. Which means there isn’t going to be much of an effect. And how do “offshore investors” benefit from all this?

Logic. Please apply it.

#72 TRT on 06.21.12 at 11:19 pm


In reality, buyers of $1 million+ homes will have to put about 35-40% (min $350,000) down in order to get a decent interest rate. Banks have to price in a 35-40% correction in the near term…

There go the buy, remodel, and sell businesses in Shaugnessy

#73 Casual Observer on 06.21.12 at 11:22 pm

It’s good that CMHC mortgage insurance is going back to 25 years (never should have been changed to begin with).

What I’d like to see is for Canadians to have the ability to “lock in” their mortgage at today’s low interest rates for the full 25 years. They can effectively only go out as far as ten years. If they want to lock in for the full 25 years, the interest rate is almost double the ten year.

I’ve only ever seen a 25 year interest rate term offered through the Royal Bank at 8.75%. This compares to sub 4% for a ten year. Comparatively, American 30 year rates are around 4%.

My understanding is that this is due to the way that CMHC and the banks structure their mortgage bonds/securities and the fact that those bond maturities typically don’t go past ten years.

This means that if the bank wants to let you lock in your rate for 25 years, they are not able to securitize that mortgage and consequently must “carry” that mortgage on their books (along with the interest rate risk) until that mortgage is retired.

Another factor may be due to limits for the penalty they can charge if you want to break the mortgage early (I think it’s limited to 3 months interest).

I’ve always wondered why Americans are easily able to lock in their mortgage interest at low rates for 30 years and never face renewal risk, while Canadian borrowers face the risk of higher rates several times during their mortgage a each term renewal.

If I’m wrong and someone out there knows the true reasons why, I’m hoping you’ll correct me.

#74 T.O. Bubble Boy on 06.21.12 at 11:27 pm

What kind of sheeple read this news (that 30-yr mortgages are gone because they are too risky) and think “now is the time to get a 30-yr mortgage!” before the July 9th change?

Were these same people out buying Pontiac Fieros when it was announced that they catch on fire? Are they rushing out to buy toys with lead paint? Removing asbestos on their own when reno-ing their house?

#75 zeeman on 06.21.12 at 11:30 pm


I am not understanding why you think increasing the debt/income ratio is insignificant..I mean on one hand you are getting less due to the shorter amortization but on the other hand you can still borrow more due to the higher debt/income ratio criteria……i think all this celebration again is premature……..folks there will be no impact and stop the celebration..

#76 mark on 06.21.12 at 11:31 pm

How is Global taking the bad news?

#77 TRT on 06.21.12 at 11:31 pm

Someone is messing with the blog…my comments dissapeared??

#78 Average Joe on 06.21.12 at 11:32 pm

I have 2 questions :

1- (previously posted) Will owners with 35 or 40 years loans have to re qualify for 25 years loan upon renewal ?

2- 39% is the max portion of income that can be affected to mortgage debt, but are house insurance and RE taxes included in that 30% ?

Those two questions seems very important to me.

No. Yes. — Garth

#79 Scalgary on 06.21.12 at 11:34 pm

Thanks a lot for your honest & unselfish comments Garth..! I did follow your advice and i can sleep as peaceful as yesterday!

Thanks again..!

#80 T.O. Bubble Boy on 06.21.12 at 11:35 pm

@ #44 Market Bull
Haven’t we seen this movie before? This is the third sequel after all. Each new film promised housing Armageddon to the faithful bubbleheads, and yet what did we get….yawn.

The changes don’t amount to much , affecting marginal buyers and reiterating existing lending practices. It’s called tweaking.

Much ado about very little, I’m afraid.

Isn’t the whole market driven by marginal buyers at this point? 70% already own, and many of those would never qualify to buy their current home – either because the price is now so far above what their income could cover or because lending rules are tighter than when the purchase was made.

As Garth has noted – the average down payment is 7% in today’s market. That is the AVERAGE (including those that put 20%, 50%, or 100% down) — i.e. the vast majority are qualifying at the edges of current lending rules.

Rising prices have hidden the reality — it’s easy to pretend buyers were qualified when they gain 5%-10% buffer each year in “home equity”… flat or declining house prices will turn the tides and show who has been swimming naked in a sea of debt.

#81 Smoking Man on 06.21.12 at 11:40 pm

#18 Dom on 06.21.12 at 10:10 pm

I’m a zillionair, nothing would give me more pleasure than a real estate melt down, for my kids. I have faked poverty so my kids would grow up, I don’t help em anymore, if you cant climb a mountain and fall, where is the fun of of life.

But on here I just call it like I see it, my real agenda, I know the universe is shrinking I want to be known as the dude who first figured it out.

This site archives stuff. I might not be around when the discovery is proven. but when you Google shrinkage It will be me.

The machine is in trouble, those in power (in the shadows) will wana keep it. The only way is too do it is a coordinated world wide money printing adventure to inflate the debt away. Otherwise people are coming for heads. and our elite are no Marie Antoinette. They have polls.

So when that happens , you have debt on re, your going to do good.

Once they figure

hence I say shit.

#82 apocalypse now on 06.21.12 at 11:41 pm

Canada’s DEBT FUELED Economy running out of fumes – Mark Carney
This has to be the most hypocritical comment that I’ve heard in my 50 plus years in this sorry world! But it’s refreshing for soneone in authority to finally fess up and admit that Booms are akways a product of Easy money, lots of Debt! There was nothing fundamentally right with Canada or the world’s Economy. The whole world is running on fumes – when the gas runs out is anyone’s guess but it can’t be long now!

#83 coastal on 06.21.12 at 11:42 pm

OK, as I posted on the previous thread, the Victoria rag called the TC still has not posted one single article on the mortgage rule changes ! Can you believe this ? Is this newspaper have some sort of brain hemorrhage or is it’s head so far up it’s ass it can’t see nothing but the sunshine it’s blown to the public the past decade. No worries suckers, the world is different in Victoria, no need for reporting on the biggest change to real estate in a decade. This is a disgrace to journalism in all of Canada !

Just reading the Global’s Facebook page is enough to add more insult. Reading the reader responses show how many fricking idiots are about to have their ass handed to them. Meanwhile Cam “the Scam” Muir is outraged at the changes, cause the market was already cooling and there never has been a bubble right Cam ? Talk about an insane asylum in living color.

#84 Harold Svenson on 06.21.12 at 11:43 pm

Why are people from what was formerly known as the Orient called ‘Asian’, as in Hot Asian Money. Last I checked Asia stretched from Turkey north to include Russia, Siberia, south to Iran, India etc. So is the ‘HAM’ coming from Russia? Or Iran? Or Turkey?

#85 guy from Vancouver on 06.21.12 at 11:45 pm

Hey, before we all overreact to the news, can someone tell me what percentage of sales will be affected? i.e. how many people bought with less than 20% down? How many bought with 30 year amortization?

I thought a recurring (blaming) theme was that all the expensive housing sales were being snatched up by horny asians who pay far more than 20% down? And the rest of the people had already been priced out of the market, so they’re just paying the same amount of money for a crappier place. non?

#86 50% correction predictor on 06.21.12 at 11:45 pm

Next on the deck: rising mortgage rates. (please don’t believe even for one minute that Ben Benarke can control long term rates).

And the end result:

A thorough and thorough cleansing of stupdity, arrogance, decadance and greed!

Within three to five years, 50% paper wealth will disappear!

Read it and Weep!

#87 Rich Renter on 06.21.12 at 11:45 pm

Some posters are wondering what happens to those who are currently in 30, 35 or god forbid 40 year terms.
Well the answer is that refinancing loans will only be insured for 80% of the value of a home down from the current 85%.
Since most mortages in Canada are on a 5 year term, the 2007 crowd will be losing lots of sleep.
I expect to see banks going the European and American way with mortages being offered over 25 year term and the govt even considering interest payment tax deductions for a principle home.
Either way it was the Harper govt that brought 40 yr term and now have come full circle back to 25 yr, i wonder sometimes if it’s not all a scam.

#88 Fleabitten Monkey on 06.21.12 at 11:48 pm

Nice photo of F and C. Somehow I thought Carney was taller. Is this photo correct on relative scale between them?

#89 Y is HWY 2 two lanes ??? on 06.21.12 at 11:51 pm

Here are some gems from Brad Lamb (his website) under the link for first time home buyers.

3. Get educated. This is difficult and time consuming. Either spend the time it takes to be an expert or hire one. Real Estate agents can offer you a certain crash course in your preferred real estate in a few hours. The best part is that it is free. Buyers don’t have to pay an agent a fee, the seller does.

4. Hire a Real Estate agent who is an experienced, qualified, educated sales expert. Since you’ve already found our website you don’t need to look any further.

Equally foolhardy is wasting everyone’s time by dilly dallying when the right property comes your way. Be decisive and make your move. My observations have shown that indecision usually costs a buyer more than making an educated decision.

8. Make an offer – just do it!

9. Cold feet. Every one except for sociopaths gets cold feet. It’s expected and it’s ok. If you’ve followed steps 1-7 you’ll be ok. Proceed with confidence.

10. Do not chicken out! I could tell you of hundreds of stories of first time buyers that lost their nerve. Every single one of them was worse off for it, and most of them ended up realizing this fast and deeply regretted their decision to bail.

#90 Phil on 06.21.12 at 11:51 pm

Does anyone really believe anyone is buying million dollar houses with CMHC insurance?? In Vancouver it is HAM or the children of HAM, and they use cash. Anyone else is upsizing their house. Zero impact from the change in Vancouver.

#91 Fleabitten Monkey on 06.21.12 at 11:53 pm

#34 Chaddywack
Right, of course, different in Vancouver. When will they stop trying to pretend….
Wonder what Bob Rennie is going to come back with on the impact on the condo market there.
Can’t wait to see the creativity. Could rival his art collection.

#92 MC on 06.21.12 at 11:59 pm

Weird how the world works….all within a few weeks

1. Goldman Sach’s calls short on S&P, bringing down prices so they can bargain hunt for the fall rally.

2. Goldman Sachs former Carney smiles with Flarety as they snap the biggest Government run bull trap on real estate to keep canadians in debt to ensure tax revenue from an aging demographic & stimulate economy through construction jobs

3. Finally the Gold question – will it crack support?? The nail in the coffin if it does for those who fled stocks to see their bricks and bars fall in value. Another Goldman bull trap.

I’m with Smoking Man – boom to bust to broke to steady earning. No matter what you do how much you make – just don’t be a closed minded single directional knobhead – rattle some cages raise some hell get under people’s skin – If nothing else matters, Sex with a crazy chick can be soo much fun too just dont marry them…

#93 Boomer2 on 06.22.12 at 12:00 am

In other news.. just across the border, the average rate on 30yr fixed mortgages fell to an all-time low today in the US. 3.66% on 30 yr.. and 2.95 on 15 yr mortgages. And folks.. they are 5 years down the road on their real-estate bubble bursting. Demand is still slack, and property values only continue to soften in most of the country. Perhaps this is proof that low interest rates cannot save a badly over-inflated housing market.

#94 Jonno on 06.22.12 at 12:00 am

This is good news for me my wife to be has been pressuring me to buy in the main st area of van we were looking at 200k down and as the bread winner I have been pushing back. All homes in this area are 1mill plus so it looks like we don’ t qualify now :) thanks F! I am not planning on selling the condo since we paid 280 and it sits at 460 but that may need to change too to preserve some equity.

#95 Bogdan on 06.22.12 at 12:02 am

Garth, it’s your time to shine now, enjoy!

You’ll have to find something else to write about, as less and less people will write you to ask: “My in-laws are telling me to man up and buy a house for my pregnant wife as prices can only go up, what should I do?”

A new type of question can be: As RIMM goes bust within a year, do you think it will have any serious impact on Fergus-Elora, other than the usual 15% drop? :-)

#96 NotAGreaterFool on 06.22.12 at 12:04 am

The OSFI also said: The loan to value “should” be re-calculated upon any refinancing and whenever the lender “deems” prudent.

What exactly does this mean?

#97 T.O. Bubble Boy on 06.22.12 at 12:09 am

It will be interesting to see if there is a new boom in $999k houses (just under the $1M cap to qualify for CMHC insurance on the mortgage). $999k could be the new “888”!

#98 TNT on 06.22.12 at 12:12 am

Question re new regime.
Can you pre approve on July 9th and it is good for 6mths?

#99 grantmi on 06.22.12 at 12:13 am

Garth… you truly are MEGAMIND!!

#100 Blue Monster Lover of Meats and Vegetables on 06.22.12 at 12:14 am

when the gas runs out is anyone’s guess but it can’t be long now!
To be prudent, we should all lace up our shoes now and put on our helmets, snorkels, safety glasses, scuba masks, flippers, parachutes, fire jackets, ski masks, life jackets and prophylactics.

Like Garth says, this won’t end well but at least we’re prepared!

#101 Debtfree on 06.22.12 at 12:14 am

@ 87 fbm f is sitting on Hs shoulders. Notice the big smile?

#102 ex bc boy on 06.22.12 at 12:17 am


#103 Observor on 06.22.12 at 12:18 am


81 Apocalypse Now is right. He says:

There was nothing fundamentally right with Canada or the world’s Economy. The whole world is running on fumes – when the gas runs out is anyone’s guess but it can’t be long now!


That’s right and when the Martian’s stop lending to the world we will be in big trouble.


Peopell can’t seem to accept that the wonderful bounty and abundance in this world including food, clothing and shelter for most of the 6 billion inhabitants and the roads and cars and buildings and reality TV shows. All of these things are real and actually none were borrowed from another generation or from martians. The net debt of the world is clearly zero. The net worth of the world is clearly well into in the trillions.

Stop glooming!

#104 Mr Buyer on 06.22.12 at 12:19 am

#36 Smoking Man on 06.21.12 at 10:37 pm

I do respect realtors and mortgage brokers and hookers, they are all in sales and are revenue generating entrepreneurs, what I have no respect for are basement dwelling clock punching cowards who are afraid of risk and can only keep up with their peers if the peers fall.
Spin it all you want Smoking man the writing is on the wall. This bubble is heading for the toilet even in smoking hot (not really) TO. Even if the government does nothing or everything the crash is on it is just a question of when. How do you sell to people that are less than flat broke? Good luck with that. A nation has to produce a hell of a lot more than revenue to be healthy. Can’t flip it and can’t afford it, its over. Sounds to me like you know the jig is up.

#105 First to last on 06.22.12 at 12:21 am

finally………………………………………………………………………………………………………Is everybody in? Is everybody in? The ceremony is about to begin…………….WAKE UP! you can’t remember where it was had this dream stopped……………………………………………..the snake was pale gold glazed and shrunken we were afraid to touch it…………………………………………………………..The sheets were hot dead prisons………………………………….

#106 Ryan Perich on 06.22.12 at 12:24 am

to #72 Casual Observer

3 months interest or 3 months mortgage penalty used to be the standard over 10 years ago. before even 2007, it is now

the interest rate you had – the interest rate (hence the interest rate differential or IRD) you’d get now x # months left before your first term runs out (in months), whichever is larger for the lender / bank.

go here :

so, if you had a $200,000 mortgage , 5 year term, and want to cancel after 1 year, for a 3 % mortgage instead of 4 %, you’d pay $200,000 * 1 % difference * 48 months = $16,000 just to sell the property or re-mortgage for a better rate. + land transfer tax. + HST. + moving costs. + lawyer costs. + possibly real estate agent fees. + eating out for 2 weeks while you move. + gas to travel back and forth between old & new home.

however, this is loosely applied
The Interest Act prohibits IRD penalties on terms over 5 years, after five years has elapsed. In such cases, a maximum 3-month interest penalty may apply. For example, someone who has been in a 6-year mortgage for 60 months or more would pay a 3-month interest penalty (maximum) to break it before maturity.

some edmonton jackass just stated because we have the 2nd highest pay in the country next to Calgary, the 25 year mortgage won’t affect many people, we have SOOO much money in our pockets…when a house is 7 x our annual salary… ??

ask any boomer if they’d pay 7x their annual salary for a 40 year old house , under 1200 sq feet with no garage and call it a good deal. the answer is hell no.

#107 grantmi on 06.22.12 at 12:29 am

The only thing left to happen to the Canadian real estate market is the fourth horseman!!


#108 John on 06.22.12 at 12:31 am

And now from the “keep sayin’ it ’till it’s true file”:

“The best possible defence? No debt, lots of liquidity.”

What a shame. Sort of. The fact that this kind of promotion could exist is nothing more than a seamlessness of causes and effects. It fits well. It will be thought to be true until it is accepted that it isn’t, simply because it’s no longer remotely possible to continue believing it.

Once people get that the problem was never about “local” real estate, and the cheap money bribes were as global as the ponzi they originated from, it’ll be over. Not before. It’ll be evident that “no debt” is a defence, just as not walking blindfold into oncoming traffic on a freeway is a “best defence”.

The “liquid” part? How this could possibly be painted as a “defence” in the scenario that is unfolding is so far beyond logic and common sense, that any argument to the contrary is normally not even offered ( or shouldn’t be). Deaf ears are a prerequisite for presenting the supposed defense “strategy” offered. By definiton, discussion of the potentially real dynamics are not allowed ( how could they be).

#109 ozy - a good move - late on 06.22.12 at 12:32 am

Finally, someone grew balls? what happened? new womana sexy?
Screamingly right, beautiful, I will see property assessment decline a lot over next 5 years and Ford cutting city hall employees\unnecessary services (cutting short grass) in half.

Unbelivable! you made my day, don’t loose your new set F!

#110 The R on 06.22.12 at 12:33 am

hi Garth,

Most of the usable advice (tips) I learned from your site came, not from some cocky-doddle point you or some mutt was trying to prove, but in the words leading up to
the message.

Thats cool – thanks abunch,

Now, I don’t know if theses new mortgage rules were really needed- I mean What % actually buy a million dollar house with less than 20% equity – me thinks thats just a show -to keep the mutts even happier this week-end.
All there donig is increasing monthy payments for a benifit later. For those who can afford it no big deal-just less left over for beer & popcorn. And for the marginal buyers -there gonna be pushed into the lesser priced condos market. (fingers crossed)- I think this is excalty what will keep the condo market going.

hey what’d you got agaist idiot amateur speculators ?gotta start somewhere

#111 ozy - I love the coming-up SOON reduced property taxes on 06.22.12 at 12:34 am

I love the coming-up SOON reduced property taxes!!!! Horrray!

Love you F!

#112 skyfalling on 06.22.12 at 12:35 am

at this right moment I am watching Al Sinclair in hot property. He is saying everything is ok, specially condo market. He is saying the so called “experts” are not experts!…..oh God, all the BS we have to hear from this people.

#113 $$$BPOE#1 on 06.22.12 at 12:35 am

Bottom line like I’ve been saying all along interest rates are NOT going up. Amortization has NO EFFECT on the emergence of BPOE as thee predominant City of the World. It’s not about Ham folks. That biew is for the narrow minded. It’s about the Best Place on Earth with money pouring in around the world. Finally the weak bid Canadians are going to be cleaned up and the World Investors the Creme de la Creme are going to buy with CASH. Finally piece in the puzzle is HST debacle and then watch us soar. TOday represents the greatest new possible for all longs for BPOE. God smiled on BPOE today.

#114 $$$BPOE#1 on 06.22.12 at 12:39 am

Lovin It
Chaddywack on 06.21.12 at 10:35 pm
Global News in Vancouver says this will have a minimal impact on prices as it only affects about 5-6% of buyers and there is so much foreign money coming in that is really driving the prices that all it will do is hurt Canadians to the benefit of offshore investors.

You expected what? News? — Garth

#115 Nostradamus Le Mad Vlad on 06.22.12 at 12:41 am

So it’s almost midnight and Cinderella doesn’t have her tinfoil baseball cap on, but has one patent-black stiletto to cover two feet. Hmmm. Shock and awe? No, more like yawning and thumbing a lift home, except she has no home now.

“It would hammer businesses now coping with lower commodity values. Are you ready?” — A link from a few days ago said Canada’s interests were not in Europe, the CPC was scared shitless that when China falls (possibly nosedives), their crash would have major implications for us. Because everything is happening so quickly now, chances are we won’t have to wait long to find out.

“So I may be back.” — Politics? Mais non! Let the crooks have their fun, as their time is at hand. The populace needs you here, not in the HoC.
#314 Timing is Everything on 06.21.12 at 9:16 pm — Hi TiE, and thanks for the links.

I’m too busy watching soccer until Euro 2012 is over but then, I shall have a panic attack of gargantuan proportions, just to keep the m$m occupied.

Oooohhh I think I wet ’em!

#86 Rich Renter — “. . . i wonder sometimes if it’s not all a scam.” — Umm, that’s a fairly accurate statement!
Obomba – Romney Suits them to a T; UUS in recovery? Umm, not so much; Arrests in Asia? Wonder if they’re picking up banxters; Stuart Varney Eating out of trash cans is good; Ending Extend and pretend; Next Gen. Electronics from a mineral? Ten Brands Going the way of Enron next year; Chinese Developer(s) imploding? Morgan Stanley’s downgrade; 2:13 clip Foodstamps have been stopped in California; Germany and IMF The Fourth Reich (nearly) always wins; Derivative Banks downgraded.
2:16 clip Syria — The Full Monty, and Iran Increasing naval defenses; Syrian Pilot Bribed? Coerced? Threatened? Egypt and Billary “Israel never approves of a people breaking free from control, so Israel ordered the United States to intervene and Hillary Clinton just handed Egypt’s ruling generals $1.3 billion is what amounts to a bribe to steal the Presidency for Mubarak’s ex-PM and return Egypt to its place of subservience to the US and Israel.”; Into The Sun Dare it be said? The sun (gasp) is good for one; Plunging Plenty of kayakers have done this, but this is the way RE is headed; Survival Turning a truck into a generator; Some of you may have seen this on TV. A Toronto man raised a pile of cash for her; Hay Fever Home made remedies.

#116 $$$BPOE#1 on 06.22.12 at 12:44 am

Flaherty was concerned about Toronto not BPOE. Love it*******Note the concern for Canadians********************
On Thursday, Mr. Flaherty announced a tightening of mortgage rules that he hopes will discourage Canadians from taking on too much debt and prevent a real-estate-driven hit to the broader Canadian economy.
Although Vancouver’s housing market has also been strong in recent years, his comments made clear that the GTA’s many new glass condo towers were on his mind.

#117 First to last on 06.22.12 at 12:47 am

#97 TNT on 06.22.12 at 12:12 am

Offer has to be signed before the 9th of July to qualify might get a week of greater fools rushing in then the pigs get slaughtered

#118 Mr Buyer on 06.22.12 at 12:51 am

#44 Market Bull on 06.21.12 at 10:47 pm
Haven’t we seen this movie before? This is the third sequel after all. Each new film promised housing Armageddon to the faithful bubbleheads, and yet what did we get….yawn.

The changes don’t amount to much , affecting marginal buyers and reiterating existing lending practices. It’s called tweaking.

Much ado about very little, I’m afraid.
Power yawn. The Market BULL channel is still playing the BUY RE theme song. Not a surprise. I saw episode 1, 2, 3…7998 of Market BULLS call to buy. Can’t flip it and can’t afford it. It is done.

#119 Bottoms_Up on 06.22.12 at 12:51 am

Congratulations Garth, this is the start of your predictions coming true. You have no doubt helped many avoid catastrophe.

#120 Hoof - Hearted on 06.22.12 at 12:54 am


#121 T.O. Bubble Boy on 06.22.12 at 12:56 am

That $1M cap on CMHC-backed mortgages will make it very difficult for me to purchase the near-complete Versailles Palace clone in Toronto’s Bridle Path:

I was looking forward to putting down the 5% minimum ($800k) via a cashback mortgage and having enough flexibility to stick with the minimum $63,000/month payment for my 3%/30-yr mortgage.

Damn you Flaherty! I’ll have to buy an actual French Palace now.

#122 Bottoms_Up on 06.22.12 at 12:57 am

#66 Peter on 06.21.12 at 11:14 pm
actually “a clock” is right all the time. a broken clock is right twice a day.

#123 Davey Boy on 06.22.12 at 12:58 am

#66 Peter

It’s even a broken clock is right twice a day

#124 Bottoms_Up on 06.22.12 at 1:01 am

#53 Joseph on 06.21.12 at 10:59 pm
You could buy an income property near Western, have a 50% mortgage on it, and definitely be cash flow positive.

#125 Really on 06.22.12 at 1:02 am

Lets get real. Yes prices will fall. Yes maybe even 40% in Vancouver. SO WHAT! I missed the market. I should have bought in 1999 when we moved to Vancouver. We didn’t – as a result we LOST. Garth can say what he wants. He is doing a good job and I agree with 95% of what he writes BUT real estate has been a FANTASTIC investment for the last 10 years and those of us that missed it are losers (in real estate).

On top of that when real estate falls in Vancouver it will effect EVERYONE. Our business whether they are in real estate or not will be affected because so much of our local economy is driven directly or indirectly by real estate and the corresponding wealth effect.

In addition. Those that sit on the sidelines and rent and wait for the right time to buy a house at 40-50% off are NOT going to be able to qualify for a mortgage to buy anything because if we face a decline of that magnitude the banks will severly tighten their lending policies whether or not they are told to by the government.

Its one big SHIT, whether you are a home owner or not, but you are better off being one IF you can afford the payments than not as I think that becoming a new owner in the lending environment we are about to enter into is a pipe dream.


#126 Chaser on 06.22.12 at 1:05 am

Good prediction of what has already happened.

#127 neo on 06.22.12 at 1:06 am

What’s this now? Our largest bank, RBC, just got downgraded. Hmmmm. May be no big deal right now. But the optics are bad.

#128 Dr. Nick Riviera on 06.22.12 at 1:14 am

According to the Globe and Mail this is no big deal. They are saying F is “gently tapping the brakes” and…

“the cumulative impact of both of today’s moves by Mr. Flaherty and OSFI should be to reduce house prices by five percentage points from where they otherwise would have been, and sales by 10 percentage points”

Link to the article:

Garth, what do you make of this? TD Bank economist playing spin doctor? Or are we all over reacting?

#129 lookoutbelow on 06.22.12 at 1:37 am

A 1-2-3 punch to slow household (mortgage) debt growth, the monster created, fed and nurtured by the very 2 individuals (Flaherty and Carney) who are now finally starting to figure out they better kill the beast before it takes down the Canadian Economy.

My biggest fear is the same as theirs, “It may be that these are the right changes BUT it’s way too late”. The monster will win, prepare for hard times ahead, Garth told us as much.

Listen to the Bearded Oracle from 416.

#130 CalgaryBoy on 06.22.12 at 1:45 am

I think listings will explode 2.5 weeks. :D

#131 Aussie Roy on 06.22.12 at 2:10 am

Aussie Headlines

Oops there goes the supposed housing shortage

Australia has almost 1 million fewer households than assumed in government forecasts of a housing shortage, raising doubts about a supply shortfall cited as the main reason the nation will avoid a U.S.-style crash.

The Pacific nation had 7.8 million households, data released yesterday from the 2011 Census showed. That compared with estimates of 8.7 million as of June 2010, according to the latest figures used by the National Housing Supply Council, a group created by the government in May 2008 to monitor housing demand, supply and affordability. Australia’s population also grew by 300,000 less than previously estimated, to 21.5 million.

“On the face of it, 900,000 is a gigantic difference,” he said. “We need to get to the bottom of what’s in the statistics bureau numbers.”

When wages don’t support prices, house price increases are unsustainable.

SYDNEY families have enjoyed a surge in income over the past five years but rents and mortgage payments are putting a squeeze on household budgets.

The city’s median family income reached $87,516 a year, the 2011 census figures released yesterday show. That’s an increase of more than $17,000 compared with the previous census in 2006.

But Sydney’s median weekly rent rose more than 40 per cent in five years to $351, way above the national average of $285. Sydney households also continue to shoulder the biggest mortgages in the country, with median monthly household mortgage repayments of $2167 compared to the national average of $1800

Million dollar houses listed for sale keeps growing

THE top end of the Tasmanian property market is swelling, with a staggering number of dream homes priced at more than $1 million for sale.

In Hobart alone, there are now more than 60 properties in the seven-figure bracket, and scores more across Tasmania offering everything from private lakes and beach frontages to historic mansions on park-like estates.

Real estate agents say the number of prestige homes, ranging in price between $1 million and $3 million, has grown steadily in recent years.

RE Industry pleads for assistance.

THE State Government has prevented any chance of a property market recovery by increasing fees and offering no incentives to first home buyers, the Real Estate Institute of Tasmania says.

#132 BPOE - I'll do anything for a listing on 06.22.12 at 2:17 am

Awesome day today, thanks F….
Ok, so he asks the banks to self regulate, doesn’t happen.
Then the Bank of Scumtreal gets a credit downgrade cause they are subprime lenders….
Anyway, glad someone did something….
meanwhile here in Vancouver, the place where French realtors learn Mandarin….this good realtor is using her Asianomics tactic of pricing at $888,000. Give me a break, that is so 2011.
Thing is for her $30k commission, she doesn’t even provide pictures.
No room details.
Just give me my money for nothing….

Now do you see why every working person in Vancouver dispises realtors?????

#133 Crash Callaway on 06.22.12 at 2:28 am

Damn… more subliminal stuff in unretouched pic over usual suspect #2’s shoulder.
Concord banner on building… The cons are cutting the cord?
You’re going down property owners!

#134 truth hammer on 06.22.12 at 2:32 am

HAM remains unaffected by the CMHC rules……they’ve paid cash all along… least ‘cash’ from outside the pervue of Canadian regulations.

HAM however is also spelled LEMMING in real-estate-ese and perception will drive a hard bargian while news around the dim sum lazy susan is negative on social content. HAM is easily embarrassed and hates to be seen as the odd man out. I’ll bet HAM is going to sit on their hands for a spell now that RE is socially unpopular.

While HAM is resting however…bills are a- mounting on spec props over the million mark……woe to any builders who hold the de riguer quiver of three to four properties on the go. Course of construction loans add up quick at any interest rate as it is usually the final builders spec prop that holds 100% of the ‘cash out’ value. COC loans are also ‘demand loans’ and lenders have a right to start ‘demanding’ things like 10% reductions each and every month until sold….all losses attributed to the borrower ‘Moral Suasion’ not rates affecting the upper end of the market is a quantity yet to be seen.

High end condo’s however…..’TOAST’. The monthly nut has hit the magic number banks have long bally hooed would affect 85% of all buyers…… a 1% effective increase equivelant…….or seen from the buyers eyes..a 25% jump in holding costs…..around $700 p/m on a $600 K mort……ouch….

Trickle down effect is what will happen to the low end flippers who will now find zero buyers for falling properties……..wait for stories in the news about ‘falling knives’ and such to further exacerbate the slide.

Remember what Jesse Livermore said…”The market can stay irrational much longer than you can stay liquid”.

If you’ve got zero down, negative cash flow, and sinking values…….you’ve got yourself a pond of crap on your hands.

Good luck Trump wannabe’s . BTW don’t forget that Trump inherited his first $700 million from his DAD.

#135 Nubbers on 06.22.12 at 2:34 am

Very wise to prick the bubble now rather than let it burst of its own accord nearer to the next election.

#136 jshum on 06.22.12 at 2:36 am

The people I think if I heard right on amada lang who are at 30 or 40 year mortgages still get to keep those on renewal, so they are still laughing to the bank despite spending too much money and I still won’t be able to afford a house

#137 Scott in Gibsons on 06.22.12 at 2:53 am

The banks get downgraded, throw a hissy-fit, and crash the markets.

#138 Don on 06.22.12 at 3:04 am

#36 Smoking Man on 06.21.12 at 10:37 pm

I do respect realtors and mortgage brokers and hookers, they are all in sales and are revenue generating entrepreneurs, what I have no respect for are basement dwelling clock punching cowards who are afraid of risk and can only keep up with their peers if the peers fall.

Wow…a crying baby has nothing on you. Those non risk taking basement dwellers will be soon be elevated to god status as they could see the writing on the wall long ago. Common sense has been compromised by everlasting human greed, and sense of entitlement. Whaaaa! Whaaaa

#139 Aussie Roy on 06.22.12 at 3:17 am

Aussie Update

I’m not a fan of Max Kieser but its worth gritting your teeth as the second half of the show he interviews Satyajit Das, author of Extreme Money, about the European debt crisis, how much longer Germany can stay solvent and whether German banks would have survived if the Irish taxpayer had not bailed them out in the first place.!

#140 Buy? Curious? on 06.22.12 at 3:28 am

I just want to thank Garth for this blog. He writes informative, funny, interesting posts, 6 days a week (the same amount of time it took god to “create everything”). He has the good nature to post comments that sometimes are negative and doesn’t take things personally. I know I’ve made silly remarks, even been deleted a few times, but at least there’s a fun forum to express our views that is mostly ignored by the media, our education system, and financial system.

I also want to give honourable mention to Aussie Roy, Horney House Wife (call me, maybe?) and of course, Smoking Man.

#141 VIVA FORT Mac on 06.22.12 at 3:48 am

What a fantastic Day… It’s finally going to happen. While all the people in Vancouver mocked me for leaving sometime ago, I became liquid and actually made money in fort Mac. Can’t wait to vulge on these greater fools with all this money.

Those million dollar homes that are currently for sale, can’t wait to be offering them 45% of there previous value in cash (while staying diverse in ETF, bonds, REIT’s etc). I’ve even created a scrap book of the future homes I wanted to buy (but held off) with their associated 2011 prices. To rub it, I should attach a photocopy of it with the offer. ok that’s pretty cruel oh so sweet.

Its going to be BIBLICAL. Sure tons of people will probably going to be on the streets but oh well. Shoulda got a REAL industry job in FORT MAC or someother remote location such as Fort St. John or better yet Uranaium City, Rainbow Lake, or Diavik. “but those places don’t have a Holton Renfrews, I can’t live there”, would’ve been the common response. Anyways sit back and enjoy the carnage… its almost like watching Death Race.

#142 Humpty Dumpty on 06.22.12 at 4:50 am

At times like the present, when the evils of unsound finance threaten us, the speculator may anticipate a harvest gathered from the misfortune of others, the capitalist may protect himself by hoarding or may even find profit in the fluctuations of values; but the wage earner – the first to be injured by a depreciated currency – is practically defenseless.

He relies for work upon the ventures of confident and contented capital. This failing him, his condition is without alleviation, for he can neither prey on the misfortunes of others nor hoard his labour.”

Grover Clevland 1837

Welcome to Suburbium……

#143 Rob now in Nova Scotia on 06.22.12 at 5:00 am

Relax, everything is fine.

#144 Keeping the Faith on 06.22.12 at 6:08 am

Hey Tim, Stevenson, BPO….BLAAHHHHHHH PUKE!!!

I’m so happy I lost my cornflakes this morning …

it’s better to have a parachute than not, what are your parachutes?
That’s what I thought, road kill :-)

#145 Keeping the Faith on 06.22.12 at 6:12 am

Stevenson … Daddy’s Home!
And i’m going to tell him what you were doing over the last decade …

#146 Sebee on 06.22.12 at 6:21 am

If they tighten rules again, let’s remember what further fine tuning to mortgage rules will look like: higher down payment, lower insured amount limit of 750k for example.

#147 timbo on 06.22.12 at 6:43 am

A sign for the r/e industry…….

“the broker would tell the pre­arranged “winner” what the other two bids were, allowing the bank to lower its offer and come in with an interest rate just high enough to “beat” its supposed competitors. This simple but effective cheat – telling the winner what its rivals had bid – was called giving them a “last look.” The winning bank would then reward the broker by providing it with kickbacks disguised as “fees” for swap deals that the brokers weren’t even involved in.”

Markets that whisper corrupt thoughts in the shadows…………………….

#148 Market Bull on 06.22.12 at 6:43 am

TREB weekly sales report;

2,335 Sales. Average price = $505,136.

Typical spring market.

Number of sales and average sale price will moderate slightly until the fall (as it has ad infinitum), when both stats will start to climb again.

Except the price for the first two weeks of the month was $516,834. Ten grand in a week. — Garth

#149 Deb on 06.22.12 at 6:46 am

In life we will encounter a number of people who are, for lack of a better word, dense. Yesterday, at the grocery store, I ran into a realtor who lives down the block from me. She had the same expression on her face that most six-year-olds have when sitting down to a plate of steaming brussels sprouts. She began to complain about how everyone in her office had been caught off guard by all of these changes to mortgage rules and that everything was happening so fast. It was all doom and gloom from a lady who for the last five years could have been mistaken for someone from a toothpaste commercial. I was just amazed that someone who works in real estate for a living could not see any of this coming.

#150 Keeping the Faith on 06.22.12 at 6:49 am

I’m going to make a ‘Garth Shrine’ in my rented condo and pray to him every night for the good he has brought to so many lives.

All Praise Garth!

#151 Keeping the Faith on 06.22.12 at 6:58 am

oh yeah,
Tonight I’m dancing on the pink slips and EI claims of real estate brokers and mortgage brokers for the virus’s that they are … and I will downing it with a good dose of Canadian Club, made in Canada too.

#152 Keeping the Faith on 06.22.12 at 7:02 am

#25 dd ….. hAAAHHHAHAAAA, sorry much? scared much?

This bubble is going to the “Pop Heard Around the World!”

#153 Keeping the Faith on 06.22.12 at 7:05 am

#31 Thinker (poorly chosen name by the way)

You’re right, there will be job losses with this pop, and it will be construction, real estate and mortgage broker jobs at the leading edge.

Spin all you want, there is still going to be “SPLAT” at the end of this story when you and the other little bugs hit my windshield!

#154 Keeping the Faith on 06.22.12 at 7:14 am

#42 the word of reason, should actually be called “the word of delusion”

nuff said ….. IDIOT!

#155 Keeping the Faith on 06.22.12 at 7:16 am

#44 Market Bull … FYI, the name “Market Bitch” is still available if you want to take it?

Because that’s what you are about to become … My Market Bitch!

#156 Keeping the Faith on 06.22.12 at 7:22 am

#45 zeeman

You’re so cute, such an eternal optimist.

It’s almost as though you believe these emotional people will be ‘rationale’ in their decisions as the market is popping … how touching.

Here’s an anology for you, you’re rationale approach is similar to people leaving the opera at the Sony Centre, calm, orderly rationale … some hailing cabs, some walking.

The reality is this decision is similar to people leaving a UFC match at the ACC and someone pulled the fire alarm with only the revolving doors open. There is going to a crazy, alcohol induced, irrational rush to the exits. Some will get trampled, some will get severely injured and even once they get out they will punch each other to get a cab with a guillotine choke thrown in every so often by those deft enough to pull it off.

It’s going to get ugly and there will be blood on the streets. Don’t kid yourself.

… you’re still cute though. :-)

#157 TurnerNation on 06.22.12 at 7:22 am

Garth has become a metahpor. Beats an idiom.
Over on the twerpy realtor weblog:

“Geoff says:
June 14, 2012 at 9:18 am
Hey Matt, your garth turner is showing!”

#158 TimV on 06.22.12 at 7:26 am

Price to rent ratios and Leaside…

Starting with my area in Toronto (East York), I managed to find a couple houses for rent that had recently been listed for sale (using to find the recent list price). The two that I found had a price:rent of 21.8 and 20. Another rundown bungalow I estimated to be comfortably 30, but price:rent may not be a valid metric for properties where the best use of the land is really to tear-down and rebuild.

I am assuming prices are within reason of the final sale prices. For homes sold by builders, this is typically accurate.

So from the very few places I compared (“affordable” East York ($500k to $750k) versus expensive Leaside, Mount Pleasant ($1m+)), it is not obvious that price:rent ratios are more supportive in Leaside. Indeed, they may be slightly less supportive.

So desirable Leaside has less price:rent support than undesireable (east-end) East York.

In Garth’s defense: Supposedly the average price:rent for Toronto is in the range of 35 to 40 (based on numbers stolen from Ben Rabideaux’s website). So comparing desirable Leaside to somewhat less desirable East York may be ignoring an elephant … where the real elephant that pushes up the price:rent is presumably the mass number of newish high rises (all of which, both new and old, currently sell for below list price, according to

Couldn’t help but notice that another popular “World Housing Bubble” blog posted a retrospective comparison of desirable and undesirable areas in the US just after Garth’s Leaside commentary. Hm.

#159 bigrider on 06.22.12 at 7:33 am

Financial market investors who think we are anywhere near the end of the secular bear market that began in year 2000, think again.

Great, easy to read charts and easy to follow logic.

#160 House Horny Housewife on 06.22.12 at 7:45 am


Seeing some of the replies to your post today made me feel very uneasy. Is everyone in this country so vengeful and full of hatred ? I noted a large number of posts by many who are waiting with baited breath to see others destroyed in flames. Simply because they don’t want to see anyone else get what they themselves feel they “deserve”.

I would be the first to denounce irresponsible borrowing by self entitled youths who feel they deserve to enjoy expensive things that it took their parents a lifetime to afford. However, I am also aware that should these people now happen to declare bankruptcy or find themselves in financial difficulty, it is still the “system” (ie. our tax dollars) that will bail them out. Be it in the form of welfare, unemployment, transfer payments or whatever.

I therefore do not share this “us against them” attitude because I am fully cognisant of the fact that we are all in this together, whether we like it or not.

Besides …

Reducing 30 year mortgages to 25 years is no big deal. Having people put down 20% for a property is no big deal. Actually having to dish out that 20% out of your own pocket instead of being loaned the money is no big deal. These have been the terms for us personally all of our lives. Our first mortgage was not insured by the CMHC and neither is the purchase of our recent property. The bank took time before approving our mortgage and did not take any unnecessary risks, that’s for sure. This is no big deal and the way it should have been all along for EVERYONE.

The CMHC is the big mistake here. This organization should never have been formed and in order to instigate real solid changes, this organization will have to be dismantled. Our government should not be in the business of underwriting high risk mortgages. It could have made housing more affordable in other ways besides this one (such as tax deductible mortgage interest and attractive incentives for responsible debt management). Once the banks begin to take on ALL of the risk, we will see a truly stringent and responsible system of handling debt in this country. THAT will be a big deal.

As long as the CMHC exists, banks will find a way to get around the rules. Only once you take that safety net out from under them will they truly be forced to behave like serious financial institutions. If a child knows they cannot run to their parents when they run out of cash, they are more likely to take money more seriously.

And for heaven’s sake, people. Take it easy with the vengeful armageddon scenarios eh ? You’re scaring the living daylights out of me !


#161 Keeping the Faith on 06.22.12 at 7:49 am

#84 guy from Vancouver

I will say it again.
Since buyers were irrationally emotional on the way up, they will be irrationally emotional on the way down.
Cue bubble video of the history of bubbles. Recent history, US housing bubble, DotCom bubble … people were too emotional on the way up.

Why will they be less emotional on the way down?
It doesn’t matter what “part of the market segments” will be directly affected, everyone will know someone that lost $ in real estate and got burned and that will leave an emotional scar in the psyche.

It’s just the way it is. Deal with it.

#162 Keeping the Faith on 06.22.12 at 7:53 am

#89 Phil, you’re right.

Vancouver is on a tangent to be another 12% down year over year next quarter too and at this rate by the end of the year Vancouver will be down 36% YOY.

I’m not good with math but I think that’s right.
Maybe you can check it for me since YOU KNOW IT ALL!!!


#163 GTA Girl on 06.22.12 at 7:56 am

Over the last month in northern GTA, listings have exploded. McMansions on 40ft lots are asking an average of $1mill, for a house that really should be priced at $500k max. The newer the house, the more the price.

Red dots everywhere.

Also has anyone else up in Vaughan and Richmond Hill noticed the amount of Maseratis/Bentley’s? Used to be a rarity to see just 1. Now I can see them as often as Volvos.

Next year many will be downsizing to Toyotas.

Debt is high. And not many of the old time developer’s ‘Idiot Sons’ have saved one penny. The condo game was fountains of money. And they’d pour more into future projects for bigger payouts. The remainder of money they would pull out and spend foolishly.

It’s all the trades people/suppliers who will suffer the most.

#164 Keeping the Faith on 06.22.12 at 8:14 am

To Van realtors, mortgage brokers and construction peeps,

BCIT is still accepting applications for the next semester.

#165 Aussie Roy on 06.22.12 at 8:21 am

#113$$$BPOE#1 on 06.22.12 at 12:39 am
Lovin It
Chaddywack on 06.21.12 at 10:35 pm
Global News in Vancouver says this will have a minimal impact on prices as it only affects about 5-6% of buyers and there is so much foreign money coming in that is really driving the prices that all it will do is hurt Canadians to the benefit of offshore investors.

BPOE, how about a little less delusional dribble and a just a little data that supports your position. Before you get mopped up.

Perhaps you can start with a break down of cash purchases versus mortgaged purchases?. Don’t worry I won’t hold my breath. I’m sure all us poor data driven folks are happy to wait for some actual rational data driven theories that support your misguided confidence.

Or have I just asked for the impossible?, and all we will continue to read from you is mindless ramblings.

#166 GTA REALTORS IN A PANIC. on 06.22.12 at 8:28 am

LOL look at realtor smokingman throw a hissy fit. Wow it would seem the truth hurts. Realtors and mortgage brokers are in an all out panic. Spread the truth Garth and blog dogs do the same. It’s so easy to see through these low life scumbags who will be fearing for their safety when the crash hits. I’ve heard stories of people in the US getting a little mad at their realtor and mortgage broker. These two uneducated two week trained “professionals” are a joke and no more useful then a paperboy. These are hard facts for smokingman to handle. We all see your realtor colours showing.

#167 Yuus bin Haad on 06.22.12 at 8:31 am

Central planning at its finest.

#168 KIM on 06.22.12 at 8:40 am

The economy is running on debt fumes as easy credit gets harder. You can see businesses are taking a hit and for lease signs increasing as they go bust. Looking like 2008 again in Toronto only this time no more credit. The stockmarket will do fine but the real economy will not. Many maxed out people will try to sell their home before they go bust . Business has slowed for GTA realtors/mortgage brokers but I’m sure no ones cares for these low life parasites who lie and manipulate for a living. What an economic mess We have on our hands.

#169 Dupcheck on 06.22.12 at 8:47 am

This is how Canada avoided a bad recession by allowing these mad real estate continue for the last 10 years. Corporations got rich and stupid people became burdened and poor. Now is time to face the reality, they warned us, if these cuts do not work more are to come.

#170 Gypsy Kid on 06.22.12 at 8:48 am

Not a fan of mortgage brokers, real estate agents. BUT they are not always to blame for everything; people need to take ownership of their own financial mistakes and successes. Do your own homework. Why would you trust ANYONE’s words blindly when you’re about to fork over hundreds of thousands of dollars??? or millions???
Same for when you have to consult doctors, lawyers, dentists, financial advisors, teachers, etc…
We’ve been duped many times by various “professional” individuals. Learned the hard way that we have to do our research properly and listen to our gut instincts as well.
I dont especially like real estate agents because I think they’re mostly useless and overly costly, BUT they are NOT to be blamed for this nasty bubble in Canada!

#171 John on 06.22.12 at 8:49 am

This is by far one of the best articles I’ve seen on Canada’s real estate bubble. Anything you’d ever need to know.

Oh how little F was little indeed.

Yet, the same spin of “be out of debt” and “get liquid” goes on and on…and on. Of course it does. Because it avoids the context. Thus it is not a defence or a strategy or anything of substance-value. The below article spells out who the little F is working for.

Anyone care to look at this? What a goddamn scandal. Maybe we can get a little lesson on the “role of the Bank of Canada” or something. That was the pie in the sky offering of the year.

#172 Aussie Roy on 06.22.12 at 8:59 am

Aussie Headlines

So should anyone believe there is a shortage?. Here in Australia it is what has driven confidence (emotion) for the last 10 years.

Never was it considered that the supposed “on market shortage” was actually just increased demand from those buying multiple properties in the belief it was a sure way to riches.

The so-called housing shortage, which has been used by the property industry as an excuse for Australia’s overpriced housing, has been exposed by the 2011 Census figures.

There is certainly a shortage of affordable homes in Australia, but no housing shortage per se.

So a good old fashioned price melt should cure that.

Well the good news is we are on the way and there seems no stopping house prices returning to a wages driven sustainable level. Regardless of HAM, falling interest rates, falling prices, increased migration or rising wages.

#173 fancy_pants on 06.22.12 at 9:02 am

for some odd reason I momentarily feel proud of those guys. Maybe it’s b/c I watched my daughter graduate last night (off to high school) and I see those two in the picture holding there own diplomas.

It’s a shame this wasn’t etched in stone a few years ago, it would have saved more than a few people from themselves.

#174 TimV on 06.22.12 at 9:03 am

Wow, I really mangled my posted on rent ratios and Leaside.

I meant to say the rundown bungalow in east-end East York was comfortably under 20 price:rent after adding a couple hundred for the basement.

Going to Leaside, 86 Parklea came in at an estimated 23 or so (old guava listing). West a bit, 204 Dawlish was more recent at $8750/month gave price:rent of 22. The rundown bungalow at 30+ price:rent was in this Leaside area.

So that’s where I get desirable Leaside as having less price:rent than undesireable East York.

#175 Rusty1 on 06.22.12 at 9:11 am

#102 Observor

There’s a nugget of wisdom there – even burst bubbles can have a positive effect.

#176 CrowdedElevatorfartz on 06.22.12 at 9:18 am

@#112 & 113 BPOE

Well then put your money where your mouth is and buy, buy, buy those Olympic village suites… Yes folks, 2 years after the 2010 Winter Owe-Limp-icks in carless Vancouver there are still places for “flippers and Spec’ers” to jump in with both feet !
Hurry BPOE you only have till July 9th for a chance to put minimal down on a leaky, expensive rodent infested bung on the water in ‘Crack-ville” also known as the downtown core.
Transportation? Not to worry.
The “green” city clowncil is currently ripping up all the streets in order to make way for the “free”bicycles that they are installing everywhere( junkies take note) . I mean, with a million $ leaky condo who needs a car to go to Home Depot when you can use a shopping cart….


#177 45north on 06.22.12 at 9:30 am

Randall Denley: Buying less house than you can afford and keeping your debt under control are prudent choices, but they should be our choices. It’s our money and our risk.

Read more:

well if Randall Denley wants to lend me $ 1 million to buy a house in Leaside he’s perfectly free to do so. So is the Royal Bank of Canada. The new rules only apply to mortgages that CMHC insures.

#178 fancy_pants on 06.22.12 at 9:31 am

this could also affect those who do not have a portable mortgage. I would assume for those, even a sidestep move would require them to re-qualify for a new mortgage under the new rules for which some would not.

if so, this may chain more sheeple to their current pen than the crystal ball is willing to share. A whole new meaning for ball and chain. stay indoors, the shears have been sharpened

who’s your neighbour?

#179 zeeman on 06.22.12 at 9:32 am

to: keeping the faith

i disagree with you. realtors and mortgage brokers will be out to explain that these changes have done nothing to the real estate industry and this will calm any panic that has started and in a short while it be business as usual….just watch and see..

as long as there is cheap money, people will spend and cheap money has not stopped yet….

#180 a prairie dawg on 06.22.12 at 9:33 am

#86 Rich Renter
i wonder sometimes if it’s not all a scam.

– — –

Stop wondering. Banks can only fleece the sheep once per generation. This is one of those instances.

They get away with it because people have short memories. It will happen again 25-30 years from now.

PS, I wish someone would post that 100 year chart again.

PPS, “Those who fail to learn from history are doomed to repeat it”

#181 Ed from TO on 06.22.12 at 9:39 am

Garth-(remember 40% of mortgages now have 30-year ams, and nine of ten originations in the last two years went this route).

Garth, it is 40% of NEW mortgages, not 40% of all mortgages.

Actually all evidence indicates nine of ten new originations are 30-years ams, as I wrote. — Garth

#182 PTDBD on 06.22.12 at 9:46 am

My apologies if someone has mentioned this before….

According to CBC, F’s new rules apply primarily to CMHC insured mortgages. These are only 11% of the market.

Cherry-picked statistics are misleading 74% of the time. — Garth

#183 Ret on 06.22.12 at 9:47 am

“Certainly we will be glad to renew your 35 year mortgage for another 5 years. All we need to do is to verify your current income (and rental income) information. Did you bring your Notice of Assessment from 2011?”

This will be a huge problem for liar loan slumlords with multiple and/or student rental properties who don’t declare income to the CRA. This will get interesting.

Forget about beating the July 9th deadline. The banks know what is coming and aren’t interested in filling up their books with last minute loser loans.

#184 Farfetched on 06.22.12 at 9:57 am


#185 Steven Rowlandson on 06.22.12 at 9:59 am

Jacking up interest rates would play hell with not only mortgage rates but would have an effect on government bond prices which could further drive up interest rates. I doubt the government would want to allow that because it would drive up the deficit or force extraordinary spending cuts. Not exactly something politicians would want to do. There is only one justification for low rates at the BOC and that is to reduce the cost of interest on existing government debt to enable the government to stop borrowing and slash spending to free up funds in order to pay down debt. Any other way is an abuse of privilege to support prolifigacy or out of control spending.

#186 Blacksheep on 06.22.12 at 10:08 am

Keeping the Faith # 162,

“To Van realtors, mortgage brokers and construction peeps,

BCIT is still accepting applications for the next semester.”
Your very kind, but I think you may be a tad optimistic, these over paid, hammer swing’in, document fudging, used car salesmen might have more luck at Timmy’s or Mickey D’s.

take care,

#187 CJOttawa on 06.22.12 at 10:11 am

@Rusty1 post 173: I would counter the post-bubble benefit argument by paraphrasing the book “Economics in One Lesson” by Hazlitt.

While massive disruptions such as world wars may boost economic production and leave *some* positive effects in their wake (post WWII US production capability, for example), on balance, the negatives of the disruptive event overshadow the positives. (lost lives, destroyed infrastructure requiring capital to rebuild)

In context of the housing bubble, there’ll be a lot of cheap real-estate in its wake, completely overshadowed by harm to those who bought in and the economy at large. Those who rent and hold liquid assets may come out ahead but they’re likely in the minority.

#188 Jo Ralston on 06.22.12 at 10:14 am

Mark Carney:

“Cranky Ream”
“Creamy Nark”?

You pick ’em! ;)

#189 The American on 06.22.12 at 10:15 am

God damn. It must physically hurt to be as stupid as BPOE. For the way you put down not only Americans, but Canadians too, I am quite sure that BPOE is not originally from Canada. Couple that with the fact he is obsessed with and jerks off multiple times a day to a nasty place like Richmond, and well, you do the math. Additionally, the poor sentence structuring, constant and continued grammatical errors, poor punctuation, spelling errors, general elementary tonal quality, and it is clear he wasn’t educated in Canada. BPOE, mind sharing why you’re so stupid and so obsessed with Richmond, B.C.? Mind sharing why you’ve never visited any place in the U.S. even though you live in Canada? I know the answer, but do you want to share with the rest of the group?

I’ll let you chew on that while you watch an episode of something I’m sure you’ll find great inspiration. It is right up your alley.

#190 Peter Goesinya on 06.22.12 at 10:15 am

“#66 Peter on 06.21.12 at 11:14 pm
actually “a clock” is right all the time. a broken clock is right twice a day.”

Not a 24 hour clock. Bazinga!!!

#191 Frank le Skank on 06.22.12 at 10:16 am

Al Sinclair and Dave Currie were on hot property last night. Hot property is 1 hour show on a 24 hour news channel in Toronto. Al Sinclair is regularly on this show and is a Remax real estate agent and David Currie is a monster mortgage agent. Dave Sinclair wants all of you guys to stop the doomer talk, its really making him upset and he says if we keep saying it, it might come true. His face was actually getting red as it made him so angry.

These 2 idiots are comical. Dave Currie is a slimebag, pushing 0 down mortgages and trying to tell the host Anne Rohmer they are the best thing since sliced bread. It was funny because Monster Mortgage is a huge sponsor, and Anne Rohmer still disagreed with that comment.

Anyways, stop the doomer talk cause you might cause a crash.

#192 HC on 06.22.12 at 10:26 am

This Changes Nothing In Toronto Demand Areas.
Those posters here that think their 5 years of waiting to get into the GTA market will now be worth the wait are kidding themselves. Garth posted about demand areas a few days ago…those areas will see a 2-3% decrease at most because of the change in AM. Most of those demand areas are up 5-7% in 2012. I would bet the Toronto market will finish the year up another 5-10% year over year. Just like it did in 2011/10/9/8/7/6…Renting for those 5 years was worth it? Pre-Mature Vindication around here!

#193 skyfalling on 06.22.12 at 10:37 am

A intelligent man told me once: if you are going to buy your house, ask for a 15 year amortization, make sure you dont use more than 33% of family income, that way you do not rent too much money (interest paid on mort.)….so if people get affected because mortgage go from 30 years to 25, there is something very wrong. I am expecting the greatest fools of fools jump in before july 9.

#194 Grantmi on 06.22.12 at 10:39 am

Next from F will be an increase in the minimal down payment fom 5% to 10% ….. that will be the real icing on the cake.

Then interest rates rising…. cue Mr. Carney

#195 penpal on 06.22.12 at 10:43 am

@ # 193 HC

and your opinion of this great performance in Toront RE is based on what facts?

yeah, another RE genius speaks – why do you even bother posting without at least attempting to prove or back-up your opinion?

#196 penpal on 06.22.12 at 10:50 am

@ # 190 The American

I really don’t understand why a person as obviously intelligent as yourself bothers with an obvious troll like BPOE.

Your smart postings and good insights would better serve this forum by ignoring BPOE would they not?

I mean, clearly BPOE is an agitator and seeking attention and will post whatever he can to that effect and not for purposes of furthering this blog’s content.

#197 Jackson on 06.22.12 at 10:53 am

What a bunch of A-holes in here that write that they can’t wait for the market to kick the [email protected] out of homeowners.

Big Flipping deal the market drops, its just part of the normal process, it should have happened years ago (besides the brief 2008 situation) … what are people here think will happen,

For starters, everyone and their grandmother is gonna cut all discretionary expenses, restaurants, movies, outings…that will be the first to suffer, then as the slide continues…”We All” will get the bug…

And a final note, those who cheer that they have thousands upon thousands of dollars, wait until our Canadian dollar is a fiat currency and worth nothing… at least those who have a hard asset can show something…the World itself is going down – read Garth’s book in 2008(?) on building your bunker and cementing in your generator..he was onto something then…

If Canadians had the attitude in this blog – we have reached a new low… pathetic

#198 HHR on 06.22.12 at 10:56 am

Kill CHMC now before it kills us in the future!
CHMC = Waste = Evil = Unresponsible

#199 Keeping the Faith on 06.22.12 at 11:01 am

#177 zeeman …

Sorry buddy.

Hope is not the reality in this market.
Your hope that this titanic is making it back to port is just that, hope. There is no hope in hope.

From a humanistic point of view, if you are exposed to the housing downturn this is going to be painful. As many Canadians will be hurt tremendously by this. If you are exposed to it, you made a poor decision somewhere along the way and did not read the tea leaves. It’s time to backtrack and reduce your risk. Escalation of commitment in real estate has been a terrible strategy in recent housing downturns… Japan, US, Ireland, Greece, UK, you name it.

And that is another reason why this will not turn around on hope, the rest of the world is already there regarding the new norm for housing psyche and aren’t we just a country of immigrants?

Yes, housing correction is here to stay and many years away from changing.

Good luck.

#200 Investx on 06.22.12 at 11:04 am

“Debt growth in Canada has slowed, but is still eclipsing income growth, a threat to the economy should it continue. The ratio of debt to personal disposable income among Canadian households has climbed to a startling 152 per cent. Had steps not already been taken, TD believes, that would have climbed already to 160 per cent, the level that sparked troubles in the United States and Britain.”

Interesting… I don’t remember seeing this debt level comparison in regards to the real estate crashes. The home price to income ratio, yes.

#201 Keeping the Faith on 06.22.12 at 11:08 am

#192 Frank le Skank

That’s AWESOME!!!
LOL Thanks!

#202 Keeping the Faith on 06.22.12 at 11:14 am

#193 HC

Getting worried are you about your RE?
How much can you afford your property value to go down before you start losing sleep at night?
What is your HELOC % running at these days?
Are you getting uncomfortable with all this “RE doom” talk in the MSM?

… by the way, these are the 4 questions I plan to use as screeners for the “Real Estate Help-Line” I’m petitioning my member of parliament to setup in my district.
It will help reduce the RE loony-tune factor in the community, i.e. thefts, break-ins, not picking up after their dogs.
My hope is it will make my community a better place to rent and deal with all these owners.

… IDIOT!!!

#203 Keeping the Faith on 06.22.12 at 11:16 am

oh and by the way #193 HC … this is no ordinary Housing Bubble, so history cannot predict what this will do to any specific area.

All bets are off, our best comparator right now is the US, and that’s not a good sign.

… I will post the RE Help-line phone number once we get it passed through parliament, so you will have somewhere to vent.

#204 SaggyBottomBoomer on 06.22.12 at 11:18 am

#83 Harold Svenson on 06.21.12 at 11:43 pm

Why are people from what was formerly known as the Orient called ‘Asian’,

For the same reason people from the USA are called Americans.

#205 Dontcallmeshirley on 06.22.12 at 11:19 am

I kinda miss the Devil’s Advocate sign-off:

“Timing has a lot to do with the outcome of a good rain-dance”

Anyone else feel likewise?

#206 Keeping the Faith on 06.22.12 at 11:23 am

#198 Jackson … sit on the sidelines buddy.

It’s our Time to Shine!
and to crow about it, so take it easy.

Let me guess, you’re the guy that shows up at Thanksgiving, Canada Day parties and has forced everyone to listen to you subtly brag about how rich you’ve gotten on real estate on paper over the last 10 years.

Now that things are turning around you just want to warn us how terrible it will be for everyone.
WOW, hypocrisy at it’s finest, with some narcism mixed in, quite the picture.

Don’t worry, … I will post the RE Help-line phone number once we get it passed through parliament, so you will have somewhere to vent.

#207 woper_holic on 06.22.12 at 11:25 am

HC #193

Please pass along whatever you’re smoking…might get me over this sinus headache I woke up with this morning.

#208 45north on 06.22.12 at 11:30 am

HC: I would bet the Toronto market will finish the year up another 5-10% year over year.

which is pretty much the bet the Flaherty is making

Viva Fort Mac: Its going to be BIBLICAL. no it’s not – by biblical you mean a sudden catastrophic crash, sales will slow, prices will decline maybe 10%. Except for condos, Toronto prices I’m guessing will be flat July 2012 to July 2013. Fort Mac I’m guessing will be up.

#209 rosie on 06.22.12 at 11:33 am

HHHW #159

I was avery avid follower of the Housing Bubble Blog in the U.S. Around the time of the collapse in the U.S. the bloggers on that site were equally rabid in their comments. After a while the vitriol subsided into low grumblings as the enormity of the collapse settled into the American peoples psyche, including the bloggers who were formerly marinating in their “told you so’s”. That blog has moved on to a boring discussion of rules and regs’ and law suites and finger pointing. However, the tone has certainly changed. No more bravado. Only hand ringing and sorrow. It’s probably going to replay here in the same manner.

#210 MoneyMyHoney on 06.22.12 at 11:35 am

I made the following comment on May 15, 2012

“No bank will collapse. — Garth”

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

“There are only six major Canadian banks. None will be remotely damaged by a housing correction. CMHC is another story.” — Garth
Today in the news:

I am not picking on Royal Bank here. They just happened to be in the news. Well, they do have a decent buffer/cushion to fall into (not ‘onto’).

Keep a closer eye on the sources of revenue of the major banks. If a decent portion of the revenue is from mortgage interest and housing related L of C, it points to something. Again there are banks that have sensed this ‘expected downturn in housing’ and trying to expand to other areas/countries.

No doubt, Banks will get their money back from CHMC for their returned Cows. But, once returned, they won’t be allowed to touch the udder or milk out the returned Cows.

If CHMC has an exchange policy, then the milk keeps flowing. Do they have a policy like Walmart where you can take your ‘defective’ Cow and get a ‘good working’ Cow?

Let us not get too glued to one source of revenue that is mortgage related. There are entrenched market sicknesses that are going to show their ugly faces. When they all come in unison to take a jab that is when we will see some (yes, some) of our six major looters on crutches.

I hope and pray that it doesn’t happen.

Numbers don’t lie. We can hide the numbers, fudge the numbers, read it backwards, negate it, add it, multiply, rationalize it, randomize it…. People who sodomize with it (I don’t know how they do this) and lie about it are called Bank Economist.

It is going to be 11:40 A.M. Is the Church open? I need to pray, I need to wash away some of my sins.

(a) We knew about the rating agency’s potential bank downgrades in February. (b) It does not impact the bank in any meaningful way. (c) Markets now believe the move was bone-headed. (d) Non-event. — Garth

#211 john on 06.22.12 at 11:38 am

There’s a lot of counting chickens before they hatch going on. Remember, in the grand scheme of things, this is just a synthetic <1% interest rate increase (which the real version will clearly not be coming for another of years). No doubt there will be an impact, but I don't think this will necessarily be the straw that broke the camel's back. Still not 10+% dp required and nothing to stringent for requalification at renewal

#212 Stoopid on 06.22.12 at 11:47 am

#13 Realtors in a panic

Where is your HAM now? Most of you realtors are lying scum who ruined tens of thousands of lives. Mortgage brokers many of you will be out of work within the next couple of months. This house of cards is going to have a nasty crash. They finally got their orders to crash Canadas housing market. You understand this smokingman.
I don’t get this… Truly I share with you your estimate of Realtors as nothing more than pimps for houses but you contempt for mortgage brokers is a little lost on me. Truth is they just fill in the blanks but approvals are out of Toronto or Vancouver (depending on time zones) You either qualify or you don’t. But the real question here is…. Who held you by gun point? On the other side of the desk…. Man up girlie boy… at the time you got what you wanted…. So what’s changed and why is it their fault because you harken on to the spouses voice… Or was this you idea?

#213 actually.... on 06.22.12 at 11:57 am

#191 Peter Goesinya re

“#66 Peter on 06.21.12 at 11:14 pm
actually “a clock” is right all the time. a broken clock is right twice a day.”

Not a 24 hour clock. Bazinga!!!

actually, being “a clock” has no impact on being right. Also, a broken clock might not be right twice a day (i.e. if it is simply running slow). Only a stopped clock is right twice a day.

If you are going to correct….well correct.

#214 Silver on 06.22.12 at 12:07 pm

Its gonna be a riot to see the effect of this,
… on the juiced-up City Property Tax Assessment base….Hehehehehee in “were special”… vancouver…
will they have to give up their big juicy raises’…

and what was the Big O village bail out backed by “massaged assessments”… by the city per unit?
This is going to be so much fun to watch now…

I’m patient… said zero down 40’s would blow us to shit when they did it… now it’s time to pay.
…. north of $1 mil I believe… what are this pieces of substandard shit worth now…$ 4hundred ish…bottom? could be $Zero… if based on quality…

The Roses’ in the Garden Smell great to day… helps cover the scent of small fires’ every where…
Lots of people we know are into multiples of property’s
with homes and HELOCs run to the max on 5% down $4,000.00 a month mortgages on million dollar homes, floating point interest rates… tried to warn them…
They kept flashing their Assessment paper as proof of value… don’t prove nothing… their toast. and now they know it.
smug smile


#215 KingBubbles on 06.22.12 at 12:12 pm

Looks like the real estate market is F’d.

Here in Winnipeg there seems to be a bubble brewing with rental accomodations. I have heard (and experienced) real estate owners arranging viewings with multiple applicants at the same time so they can outbid each other. On a couple occassions the rent ended up going more than $200 per month over asking due to a bidding war between applicants. Seems like the same tactics used in real estate.

I wonder if the rental market will become the next bubble.

#216 truth hammer on 06.22.12 at 12:23 pm

Looking behind the headlines we can see how deeply ingrained the socialist attitudes of the now defunct Liberal Party had on the mind set of the people.

Everyone from bankers, mortgage brokers and developers seem to think it’s their god given right to ride the backs of the taxpayer on CMHC subsidized mortgages. As if zero down was created so that taxpayers would take all the risk and profits can be guaranteed by government programs as long as no one counts the direct and astronomical losses to the citizen.

What crap….what a delusion… if money comes from a great big hole behind the Parliament Buildings and there is a Genie to refill the hole.

Debt is debt… the PIIGS are finding out…as the US and UK are finding out…..all the bailouts in the world at rates less than 1% are still not enough if you owe more than you earn in GDP to repay.

To have kids borrowing to buy $500,000 condo’s at ’emergency rates’ is insane…to condone such action is irresponsible….to support the program as Minister of Finance is criminal.

Conservatives, not Liberals, expanded CMHC’s mandate, coverage and debt ceiling. Amazing. — Garth

#217 Investx on 06.22.12 at 12:28 pm

Can someone explain how this will have a significant impact (correction or bust) if it only affects 5% of home buyers as Flaherty has stated?

#218 In GARTH Almighty not God we Trust on 06.22.12 at 12:34 pm


“I just want to thank Garth for this blog. He writes informative, funny, interesting posts, 6 days a week (the same amount of time it took god to “create everything”)

Finally another poster has made the connection between the bearded mystic oracle, all knowing, all wise, all seeing prognosticator who writes this blog and god…

#219 Inglorious Investor on 06.22.12 at 12:40 pm

Is Debt Really The Way To Go?

So despite the constant advice from on-high (read Mr. Carney) that Canadians should shed debt in preparation for a new age of austerity, there are those who claim having a large debt in RE will be the smart thing.

The basis for this opinion is that the central money masters will print, print, print until currencies are worth far less, if not worthless outright. Governments love monetary inflation because it makes their debts easier to service. This, and other reasons make the printing option the most likely option to be employed. (Whether it will work as intended is another matter. And no, the goal is to not save your job.)

OK, they are already doing it, but there is a growing consensus that something really big is coming, something that will make the Fed’s response to 2008 look like a pimple on their balance sheet.

In order to “work” it will have to be coordinated globally. So, all major currencies will drop in value, while real assets will necessarily have to rise proportionally (ignoring other factors, of course).

Therefore, if the game plan is to inflate away the debt via a shock and awe currency debasement, you’d want to be on the side of the central money masters, which means having your own massive debts that will also get inflated away. So, if you have a large mortgage on, say, an investment property, your debt will quickly get wiped out but your income-producing property will remain. The real value of the property will not increase, necessarily, but compared to paper assets, it’s value will soar.

This is all well and good, but it relies on one key assumption. Namely, that the globally coordinated monetary expansion will proceed more or less smoothly.

However, one could argue we are coming to the end of an era: The end of cheap energy; the end of the current fiat currencies; the end of Western dominance; the end of US dollar dominance, the end of a decades-long credit boom, etc. Take your pick. Or pick several. They are all linked.

When history reaches major inflection points, things rarely happen smoothly. Volatility and instability become the norm. And the closer we get to the end, the greater the volatility and instability will be. It is possible that 2000 to 2008 was merely a taste of a much greater roller coaster ride that could include massive inflations and deflations the likes of which we’ve never seen. Then there is war. And all bets are off if that happens.

This means planning for inflation (getting into debt and buying real assets) or deflation (raising cash and staying liquid) may not be enough. In the same way that stock market volatility can wipe you out just before your mining stock jumps 1000% on a newly-discovered mine, economic, political, social, and monetary volatility could make the best laid plans for inflation and deflation utterly futile and very dangerous if you are heavily skewed to one side or the other.

In short, your timing will have to be perfect. What’s the likelihood of that?

No matter what happens, one thing is certain: if the economy does not get back on a huge growth track asap so that our money will become better collateralized by real wealth, most of us are going be much poorer once debt and real wealth get back into balance.

But after that, maybe the real party can begin.

#220 truth hammer on 06.22.12 at 12:43 pm

Now that the Liberal gag laws and peoples fear of opression is being relaxed we are seeing for the first time some honest commentary from Canadian journalists…

“Liberals who have bewailed Conservative policies had ample opportunity to deal with the issues when in power but preferred pandering to ethnic groups in search of votes. ”

And this from The Edmonton Journal…..not the Nat Post!!

Really? Pandering to ethnic voters? No kidding !! Isn’t the Charter of Tears one big pander to Liberal ideology in the 1970’s? Mr Rae…….your course to renewed respect is to speak out on the abuses your party has done to Canadians in the past.

Ever wonder why the National Post is facing insolvency? — Garth

#221 waiting on 06.22.12 at 12:49 pm

#219 Investx
“Can someone explain how this will have a significant impact (correction or bust) if it only affects 5% of home buyers as Flaherty has stated?”
Set up 100 dominos, knock down the first five …

#222 Kevin on 06.22.12 at 12:57 pm

Mr Carney and Flaherty have access to forward looking economic data we only wished we had that is telling them the end of the credit bubble is near. This is just political cover for when the market tanks which was going to occur regardless of these small changes. Now they can say we told you so and we tried to fix it so don’t blame us. I still think realtors have lots of games left to play, selling each others properties for inflated values, pending offers which never close, paying paper boys to stick multiple sold sings on old ladies lawns, its all about greed and fear, their trickery knows no end.

#223 Keeping the Faith on 06.22.12 at 12:59 pm

#211 Rosie

Good perspective and thanks for sharing.
I can see your description of emotions in the US blog you followed playing out here as well.

I for one definitely have the spunk in my veins but I’m sure it will subside when I hear my colleagues stories change from bragging about their RE to crying about it.

For now it’s a wave of irrational exuberance that has been building for many years and it’s our time but you are correct, soon it will be a hurt on everyone.

How long does the dog celebrate after the owner that kicked him for so many years gets sick? until he realizes he’s not getting fed.

#224 The American on 06.22.12 at 1:04 pm

At #197: Penpal, you’re absolutely correct. I should have restrained from making that posting :-) Your comments are noted and appreciated. I’ll refrain from further posts directed at the unnamed individual :-)

#225 Keeping the Faith on 06.22.12 at 1:04 pm

#219 Investx

Don’t you have a ‘manufactured’ bidding war to go plan?
… oh wait a minute, the bidders have gone into hiding :-)

#226 Herb on 06.22.12 at 1:06 pm

#218 Truth Hammerer,

I am so glad that you have taken up residence here as a neandercon blog roach. The ignorance you display several times a day debunks your wingnut ideology beautifully without anyone having to waste effort in rebuttal.

#227 new_era on 06.22.12 at 1:06 pm

159 House Horny Housewife —

I don’t think people are in for it because of the hate.
To me I would like to see thing go back to normal without these snake oil (uneducated) real estate / used cars salesman running the show.

They been feeding you lies and the idiots believed!!!!
– People need to be educated, and if making them poor asses for the rest of their eternal life is the “life lesson” then let it be.

Just note they all been warned by the government, by the USA Real estate crash, by the europe crash/crashing. But they choose to live in their little bubble and see through their kaleiscope eyes.

Learn from Brock

#228 Aussie Roy on 06.22.12 at 1:10 pm

rosie on 06.22.12 at 11:33 am
HHHW #159

I was avery avid follower of the Housing Bubble Blog in the U.S. Around the time of the collapse in the U.S. the bloggers on that site were equally rabid in their comments. After a while the vitriol subsided into low grumblings as the enormity of the collapse settled into the American peoples psyche, including the bloggers who were formerly marinating in their “told you so’s”. That blog has moved on to a boring discussion of rules and regs’ and law suites and finger pointing. However, the tone has certainly changed. No more bravado. Only hand ringing and sorrow. It’s probably going to replay here in the same manner.

I could not agree more, I retired, cashed our my IP’s and concentrated on my expanding the production of my family vineyard in 2007. With a finance risk management background and time on my hands, it’s been great to be involved in blogs all over the world.

Also reporting on the Australian experience since 2008.

All countries have a little different spin (or flavour if you like) but they all follow the same script.

Denial Nearly always “It’s different here”
Realisation it’s true
and finally, complete surrender by the delusional.

Both our countries have a long way to go yet. I guess we are 2 ish years ahead of Canada and denial is still wide spread, but realisation has been growing and is far more common now that prices have fallen, sales are slowing and stock on market is growing. My guess is when those who realise there is a bubble get to a critical mass then the brain washed just look silly if they maintain “there is no bubble” attitude. An interesting gauge of this is not just stories about the RE market but the comments for your average Joe, there does seem to come a time when the bulls only tool is a big lashing of emotion to support their stance.

If I had to guess, I think another 12 to 18 months here in Australia will be crunch time, for the “no bubble here” heads. But we Australians can be a stubborn bunch so I would not be surprised if the delusion lasts a bit longer, gee we might even bribe a few more greaterfools into the “falling knife” market if FED govt gets it’s way.

#229 Fabrega on 06.22.12 at 1:11 pm

“Somebody is going to get really hurt”

Russel Peters

#230 Dontcallmeshirley on 06.22.12 at 1:25 pm

#72 Casual Observer,

I’ve always wondered why Americans are easily able to lock in their mortgage interest at low rates for 30 years and never face renewal risk, while Canadian borrowers face the risk of higher rates several times during their mortgage a each term renewal.


It’s because Canadian banks cannot get stable financing >10 yrs. In other words, not many buyers for Canadian bank debt > 5 yrs.

Google it. Price Waterhouse did a study for the gov’t on this topic. It’s the reason CMHC insures, why Cdn Mortgage Bonds and NHA MBS exist. All to provide stable funding for residential mortgages in Canada.

It’s actually quite interesting but maybe a bit beyond the scope of this blog.

#231 bill on 06.22.12 at 1:27 pm

Garth has recently warned us about location. with that in mind I was reminded of some little time ago ,garth wrote a blog about one of the many condo pre-sales in vancouver ,damning it ,root and branch
this particular project [marine gateway] touted its closeness to the millennium line and the airport etc etc.
however , several of the blog dogs commented on its closeness to the ‘sanitation facility’…..
I was down at a car dealer slightly south of this rennie project and can safely say the area stinks in the most literal fashion.
the reek of garbage is extremely obvious. I had no idea it was as bad as that.
I think those that prepaid for this project are in for a very smelly surprise.

#232 Junius on 06.22.12 at 1:30 pm

#222 truth hammer,

You said, “Isn’t the Charter of Tears one big pander to Liberal ideology in the 1970′s?”

No. The rights and freedoms in the Charter represent a long tradition of political thought that stretches back through the great theorists of the 17th, 18th and 19th centuries from John Locke to John Stuart Mill to the Magna Carta in in many ways to the origins of political thought in Greece more than 2500 years ago.

You make some ignorant posts but this one is just plain brain dead.

#233 $$$BPOE#1 on 06.22.12 at 1:43 pm

Remember when this site and other posters he kept talking about rising rates? Not Happening. Does anyone understand that the changes being implemented are the equivalent of a 1% increase in mortgage rate? Does anyone understand that BPOE buys in Cash? I rest my case.

#234 SoggyBottomBoomer on 06.22.12 at 1:44 pm

“#66 Peter on 06.21.12 at 11:14 pm
actually “a clock” is right all the time. a broken clock is right twice a day.”

This of course assume a mechanical clock with hands. Now if we assume the clock is digital and the display in not functioning then we have more of a “Schrödinger’s Cat” situation, where we don’t really know if the time is ever right or not.

#235 Metro Van Observer on 06.22.12 at 1:54 pm

Congrats Garth. This is the capstone on all the great housing market commentary you’ve been providing (warning about) over the past few years.

This marks the official start of you being vindicated.

Your sage advice should have helped people avoid the coming collapse. However, I think few heeded the warnings.

Nonetheless, you’ve done a terrific job in analyzing the trends and exposing the market long ago for being unsustainable.

Thank you.

#236 Aussie Roy on 06.22.12 at 1:58 pm

#235$$$BPOE#1 on 06.22.12 at 1:43 pm

Does anyone understand that BPOE buys in Cash? I rest my case.


How about some data to back up this claim, or is this just more emotional banter?.

#237 Adam on 06.22.12 at 1:59 pm

The “realtor defense” to this is that it’s not as bad as it seems and this only has a small affect on maybe 5% of people (laughable). The word “soft landing” is being used a lot, and one realtor even said, “This is just like tapping the brakes ever so slightly”. There was also a news cast on Global about this last night and realtors were claiming that this is only going to hurt hard working Canadians and first time buyers, while helping the evil “HAM” (Hot Asian Money) to rape our lands with their massive down payments. In other words, the rich get richer and the poor get poorer. But, then again, when did being able to buy a huge house become an entitlement in Canada? It seems like the realtors are trying to make the argument that every single Canadian has a god given right to home ownership or something. Maybe in some little upper class circles that happens, or where Cam Good lives in his upper west side home, but, my last girlfriend told me her goal was to be the first person in her family to ever own a home. None of her sibilings owned a home, and her mother/father never owned a home, nor did her grandparents. And she’s not alone. So when did owning a home become a right, an entitlement?

#238 Toon Town Boomer on 06.22.12 at 2:02 pm

#86 Rich Renter said
Either way it was the Harper govt that brought 40 yr term and now have come full circle back to 25 yr, i wonder sometimes if it’s not all a scam.

I too, wonder about this.

#239 Toronto_CA on 06.22.12 at 2:02 pm

“I wonder if the rental market will become the next bubble.”

The rental market is limited in its ability to “bubble” because you’re not leveraging your rent with cheap easy money from the bank. You actually need to have cash on hand to pay the rent. There’s a limit to how fast rents can uniformly rise (although as in everything else this could create local bubbles)

#240 Bill Gable on 06.22.12 at 2:24 pm

Because of Mr. Turner’s sage advice – our Family sold at the top – are totally liquid and have no debt. (*Full disclosure – Mr. Turner and his partner Scott T. are our money managers).

This is the main reason I can sleep at night – while many of my friends, and Family, are in a tizzy.

My siblings would NOT listen, as I begged them to consider what Mr. Turner had been warning about and they called me ‘paranoid’.

So – one bought a second home, in Victoria, before selling their principal residence (ooops) and worse, they bought a townhouse in California.
A unit, just like theirs, on the cul de sac in the desert is listed at $100,000 LESS than they paid for theirs, one year ago.
No pension, wee RRSP pile and debt up to the sky….they will be living on KD for the rest of their days.

Oh, and they used the HELOC route to BOTH buy new snazzy German convertibles.

The other sibling bought a “getaway”, at the top of the market and remortgaged their house to the moon. At least the husband has a pension. BUT – he has two adult kids (in their twenties) living at home. Trips to Europe, and new sled, too.

Oy, gevalt.

Well, I tried.

#241 Herb on 06.22.12 at 2:31 pm

Ever wonder why the National Post is facing insolvency? — Garth

Because it relied on brain-dead readers for revenue.

#242 Century Park Renter on 06.22.12 at 2:33 pm

Thank you Garth! Personally, I think people get too wrapped up in the details. Your message was always apparent, stay liquid, overvalued realestate is abundant so stay clear, diversify your portfolio and become more financially savy. How hard is this to understand…

It’s kind of amazing how stupid people become with the most important financial decision in their life…but then again never underestimate the power of stupid people in large groups!

#243 Market Bull on 06.22.12 at 2:35 pm

Home Prices up Year over Year. Analysts believe recent rule changes are no biggie (maybe 4% price drop nationally). Not enough to wipe out even one year’s worth of recent gains. ……….YAAAAAWN.

#244 BCObserver on 06.22.12 at 2:37 pm

#235 Does anyone understand that the changes being implemented are the equivalent of a 1% increase in mortgage rate?

equivalent – for those having the amortization longer than 25 years . Also, even for them it is not equivalent to 1% increase per se, since the extra cash would go to the principal directly. In fact, over the term they will pay less interest (cheaper mortgage). But yes – the monthly payment will go up.

#245 Rook on 06.22.12 at 2:43 pm

#45 zeeman

Thanks for pointing out the important increase to the maximum debt/income ratio. This change was mentioned in a few articles I read, but none of them actually stated that this was an increase. From the context of the articles I first assumed this was a reduction. I agree with you that this somewhat nullifies the change to the amortization period.

Garth: Even if you don’t see the significance of this change, I feel you should have mentioned it in your blog. One should look at all the facts before making a conclusion, not start from a conclusion and pick some facts that support it.

#246 John on 06.22.12 at 2:52 pm

Inglorious investor wrote:

“However, one could argue we are coming to the end of an era: The end of cheap energy; the end of the current fiat currencies; the end of Western dominance; the end of US dollar dominance, the end of a decades-long credit boom, etc. Take your pick. Or pick several. They are all linked.

When history reaches major inflection points, things rarely happen smoothly. Volatility and instability become the norm. And the closer we get to the end, the greater the volatility and instability will be. It is possible that 2000 to 2008 was merely a taste of a much greater roller coaster ride that could include massive inflations and deflations the likes of which we’ve never seen. Then there is war. And all bets are off if that happens.”

Going from bog to blog finally.

#247 Junius on 06.22.12 at 2:53 pm

#235 BPOE,

You said, “Does anyone understand that BPOE buys in Cash?”

Sure they do. Good luck pal.

#248 Herb on 06.22.12 at 2:57 pm

#216 Silver,

property tax revenue = (assessment) x (tax rate)

Therefore, municipalities will simply raise the tax rate by which assessments are multiplied to yield the revenue they need.

#249 futureexpatriate on 06.22.12 at 3:15 pm

Well it’s about time!!

#250 maxx on 06.22.12 at 3:25 pm

Congratulations are in order.
First to Garth, for attempting to save so many souls….and succeeding very well. People get medals for that. To those fiscal geniuses who bought at the top and continue to buy, well Bon Voyage and happy landings. Perhaps someday they’ll realize that debt is inversely proportional to quality of life and that you can’t prop up an ego with bricks and mortar.
Next, to F and C, for actually following through on their repeated warnings. They are both crystal clear that a debt-ridden country is neither fiscally healthy nor globally competitive. Having said that, had none of this BS zirp ever been started, Canada would be far better off than it is today.
Some of us have reached our 6th decade rolling in assets and some, in debt. Cheap money always results in over-expression of ego. Some borrow mightily to service their egos and some are wise and prefer a seriously impressive bank balance. We make our choices and the consequences become the difference between those who will never want in their later years and those who will juggle pennies daily for the rest of their days….
……still want that millstone?

#251 Bond junkie on 06.22.12 at 3:27 pm

#232 dontcallmeshirley.

Please don’t make ignorant comments like that again without conducting the appropriate level of diligence beforehand. Google isnt the answer to everything. Truth be told CAD banks can very easily access term funds beyond 10yrs they’re just not willing to pay the premium for it when they can issue 5yrs and convert that liability into a very cheap floating rate instrument via asset swap. Do some research. BOTH bmo and royal bank each have senior notes that mature in 2025. That’s > 12yrs and both are very large size and tightly held by institutional investors, most of them large domestic pension funds that most could easily identify. The only reason these two issues exist is because there was a dislocation in the 15yr point on the CAD swap curve when these bonds were issued back in 2010 whereby a creditworthy borrower could convert a 15y term liability into a floating rate instrument that paid the same level of interest as a 7y liability (in theory this should never exist and neither should -ve swap spreads that have plagued the U.S long end since 2008 but I digress). Bmo and royal were both savy enough to identify this anomaly and issued the bonds on the sole basis of getting 7 additional years of term premium for zero cost. Investors have begged them to reissue these notes but they will never do this again until this anomaly reappears on the swap curve. The most simple reason that banks prefer to stick to the 5y term in Canada is that regulators force them to maintain very tight bands on their asset and liability durations. Ie. no mismatches. In laymans terms, issue mortgage = 5y asset paying x, borrow senior note = 5y liability costs y. Collect x-y for 5yrs and take no rate risk, rinse, repeat. It’s of course not quite that easy in practice but you get my point.

#252 Steven Rowlandson on 06.22.12 at 3:31 pm

Of course, this is the start. Not the end.

Darn right its not the end! When things bottom out the words real estate, bond and stock market will be deemed an obscenity and people will cringe at the rememberance of all that money they paid and lost on real estate and any kind of paper or electronic asset. Only the financially fittest will survive.
It will take decades before people forget about this unfolding disaster or recover from it and that is if a nuclear war, fukushima or an ice age doesn’t make us extinct first.

#253 Don't scare the herd on 06.22.12 at 3:35 pm

Just maneuver to the “real estate soft landing”.
Masters of manipulation. Because of people like them the world is going for s…!

#254 futureexpatriate on 06.22.12 at 3:51 pm

Just checked the MLS. Panic in Victoria’s Broadmead. June is bustin’ out all over, indeed. Can’t wait to see prices, oh, say the middle of 2015 when none of those houses have moved. And the majority with useless suites (you can lose your house for renting out).

#255 No, Noooooooooooo!!! on 06.22.12 at 3:53 pm

They can’t do it! Many people will get scared and will not play again soon. They should think about it:)

#256 Investx on 06.22.12 at 3:54 pm

#223 waiting
#219 Investx
“Can someone explain how this will have a significant impact (correction or bust) if it only affects 5% of home buyers as Flaherty has stated?”
Set up 100 dominos, knock down the first five …

Pretty simplistic thinking. How do we know the degree to which the market will fall? Even Garth has expected a slow melt.

It took 7% of US buyers to be locked out to precipitate a 35% decline. — Garth

#257 truth hammer on 06.22.12 at 3:54 pm

Junius…please….The Trudeau Charter of Tears strips all rights and freedoms from the Canadian citizenry and gives all power directly to an appointed judiciary…..who draw from the laws designed by the Liberal Party during their time in office…..a time when they represented no one except the muddle of newly created constituencies in southern Ontario. Doesn’t the cynicism and hypocrisy at least irk your quality of thought? I mean Dude……isn’t all that a bit too cozy?

And who appointed the judiciary for life to reflect the Liberal ideology of the 1970’s….the Liberal Party that rammed the document down the throats of Canadians in the first place. If we’re going to get all existential on the history of western democracy lets at least establish a baseline of fact as to the origins of the argument.

It’s like saying that Germany would have had to keep adjudicating under the laws of the Nazi Party after the demise of those demons because…….they made the law and as such it can never change…..we have been living under such a regime in Canada for thirty years. ….and things are only slowly turning the corner.

The only reason we do not see faster change is the level of brainwashing runs so deep that the average Canadian doesn’t know what to think……the liberal strategy reached into the education system and terrorized any who did not conform and into the streets with gag laws and threats of legal action for speaking out.

Sir….the era of gag laws are over….don’t be afraid of a tax audit or a bus load of leftists decamping their harrassment on you for speaking out as was the case under the ex-regime of ideological fascists. In this case…the liberals can’t enforce in law that history be written by the defeated.

And Herb……you’re right……there is a groundswell of opinion that has been formed by me…who ARE in fact out to retrain all you barking liberal seals towards something resembling a democracy…’re not just right to be paranoid….you are justified in your paranoia……”Just because you’re not paranoid…doesn’t mean they’re not after you”.

“The times they are ‘a changin”…Robert Zimmerman.

We won’t stop until we roll back every legacy perk and contract leading to a full equalization of benefits in this country…..thats Conservatism in a nutshell…….

Let the barking begin.

#258 Derek R on 06.22.12 at 3:58 pm

#236 SoggyBottomBoomer on 06.22.12 at 1:44 pm wrote:

…then we have more of a “Schrödinger’s Cat” situation…

Schrödinger’s Clock, surely. Nut wire it up to a detonator and a stick of dynamite and we’ll know whether it’s working or not, even without opening the box.

#259 Mister Obvious on 06.22.12 at 3:59 pm

#254 Steve Rowlandson

“It will take decades before people forget about this unfolding disaster or recover from it and that is if a nuclear war, fukushima or an ice age doesn’t make us extinct first.”

Sure Steve… but what about the upside?

#260 Lilyflor on 06.22.12 at 4:01 pm

Garth, can you write a post about Montreal? According to the mls HPI tool it is just as bubbly as Toronto.

#261 Canadian Watchdog on 06.22.12 at 4:14 pm

Check out Buzz Buzz Home’s event calendar explode with home developer sales events. Don’t forget to click more +.

This is an ad.

#262 Lilyflor on 06.22.12 at 4:23 pm

For May 2012 they both stand at 151, but Montreal is not currently rising at the rate Toronto is

#263 Can it be? on 06.22.12 at 4:31 pm

My two cents. There’s no catastrophe happening. Sitting in square one people watching, seeig lots of people but very few purchasers. Everything is on sale. Analogy… Houses that are listed high or sitting for a long time will have to go on sale… Lower prices. That’s where we are headed. Yes… People will either lose money… Break even or the odd person will profit depending when they got in. The advice should be… If you are over leveraged… Over your head with heloc… Cannot afford rising property taxes, maintanence etc… Get out before its too late. The alternative… Get another job, get rid of your luxuries, rent out a room or your basement… Tougher times are ahead. I see so many nervous speculators… Over leveraged, no buyers even in “hot” neighborhoods. I see so many families over leveraged… Most of you don’t even realize how over leveraged even those closest to you are. I hear the stories more and more.. And everyone is still so house horney. I saw a person who built the dream house but can’t afford to finish it. I’m thinking what are people thinking… Seriously. My spouse has been my voice of reason, saying exactly what Garth has been saying and we are in the top 1% of income earners. It’s much less stressful being diversified. Believe me. Good luck people.

#264 Canadian Watchdog on 06.22.12 at 4:58 pm

CREA’s HPI is on auto-inflate mode:

February +5.1%
March +5.1%
April +5.2%
May +5.2%

#265 Herb on 06.22.12 at 5:10 pm

#259 Truth Hammerer,

Have you considered just shutting up instead of digging yourself in deeper?

#266 HD on 06.22.12 at 5:13 pm

Stay liquid my friends.

#267 daystar on 06.22.12 at 5:45 pm

#253 Bond junkie on 06.22.12 at 3:27 pm

Manners! I can infamously lecture you on it if you like.

There’s a bit more to this conversation (I think, a worthy one of this site. Anything that influences interest rates effect affordability, RE values and systemic stability, all of which are at the heart of the reason to this blog’s existence) that I would like to note. Firstly, longer terms have not been advantageous to the borrower since the 80’s as rates trended their way down from record highs to record lows. Banks make money on renewals and consumers have saved money going with shorter terms as interest rates trend lower as evidenced with this chart (please reset to 1990 on chart):

As one can tell by the chart there has been no real advantage for the consumer to go with longer terms in a future rate falling environment and as bond junkie has accurately stated, longer terms carry a premium so it just hasn’t been advantageous to either the borrower or lender (think systemic stability) of mortgages… until now. A quick look at the chart indicates that rates have nowhere to go but up and in such circumstances I believe the premium to go long term is well worth it for the borrower.

It would seem that the lender would be better off to go with shorter terms in that there is money to be made with renewal fees in the near future but since inevidably higher rates generate systemic risk, near term profits are negated by long term customer stability. Our feds made a wise (however late, but wise) move to tighten regulations. Lets hope that the same wisdom prevails with policy in relation to the encouragement of longer term mortgage loans in Canada.

#268 BPOE's BrainFart on 06.22.12 at 5:48 pm

@#235 BPOE
After reading your post I have a sudden urge to stock up on toilet paper before the pending deluge of verbal diarrhea that is gauranteed to be emanating from your oral orofice……
Of course, I will pay cash for the TP

#269 avenirv on 06.22.12 at 5:57 pm

@Harold Svenson
sorry HS, just read again. russia is not in asia, siberia yes.

#270 raider on 06.22.12 at 6:09 pm

Thanks Garth for keeping me entertained and safe from real-estate, and this very Minsky Moment :)

#271 Mark W on 06.22.12 at 6:34 pm

In both Vancouver and the suburb of Richmond the average price of a single detached house is over one million dollars.

So over 50% of the market for houses.

As you say over 2500 listings.

Lots of HAM in Vancouver and Richmond.

Now we are really going to see how loud that HAM really is in the market when the carpet is pulled out from this dynamic.

It will be interesting to watch for sure if only for the entertainment value of it all.

Like this palace in Richmond below:

The Chinese buyer with CASH who will only tear down the house and build a McMansion might not care but are guys like him enough to support this Zeppelin?

#272 CrowdedElevatorfartz on 06.22.12 at 6:38 pm

Yo ! #270 Brain Fart
The only orofice doin any “emanating” in BPOE’s vicinity will be yours truly! Whilst I’m in an elevator with the little Richmond cucaracha.

#273 Not 1st on 06.22.12 at 6:40 pm

#262 Lilyflor on 06.22.12 at 4:01 pm

Garth, can you write a post about Montreal? According to the mls HPI tool it is just as bubbly as Toronto.


Lilflor, don’t you get it? Garth doesn’t have to write anything anymore. This thing is done. Vancouver, Montreal, GTO, Calgary, Silly Saskatchewan, flipping, renovating, spekking, etc…..its all over.

Here is how it works;

1. 30% of the potential new buyers just got removed from the buyers market until they are credit worthy either via a larger downpayment of higher monthly payments. They are, so they are now renters.

2. That means the new housing market is oversupplied by at least 30%, probably more. Too much supply moderate prices.

3. Current qualified buyers who have the downpayment and the income to qualify will now know this and will hold off purchasing anything until the dust settles. Remove another 25% of the buyers from the market.

4. People who just bought at the peak in the last few years and anyone with an insurable mortgage due will fall underwater. Some will default, some will sell and eat a loss which cues up more supply. Qualified buyers will wait for these opportunities to get something half price. People who have to sell for a loss or go bankrupt do not buy again. This removes more people from the buyers market.

And the cycle reinforces itself until the market capitulates. DONE LIKE DINNER.

#274 Keeping the Faith on 06.22.12 at 6:42 pm

#245 Market Bull ….

Sorry buddy, try US circa 2007.
No one thought there was risk.

Let’s re-address this topic in 3 months after the worst summer housing sales season since 1993, and see who’s laughing and crying then. LOL

#275 Nostradamus Le Mad Vlad on 06.22.12 at 6:50 pm

#128 lookoutbelow — “A 1-2-3 punch to slow household (mortgage) debt growth . . .”
— and —
#134 Nubbers — “Very wise to prick the bubble now rather than let it burst of its own accord nearer to the next election.” — Good point. It is well known that after a party wins, the first thing they do is work on planning to get re-elected again, and even though the CPC created this mess, by taking these steps, they are now now in the process of ending it, and will take all the credit for it.

Life, however, has a different take on things. It will do what it wants, when it wants to.

#162 GTA Girl — “It’s all the trades people/suppliers who will suffer the most.” — I used to be a typographer, a trade which served me well for three and a half decades. but the trade is history now. I’m really enjoying retirement!
It appears the world is becoming more and more enmeshed in Duck Soup everyday. Nothing anyone can do about it, except to sit back and enjoy the show! The world is a stage, we are merely the players.

#276 daystar on 06.22.12 at 6:54 pm

#267 Herb on 06.22.12 at 5:10 pm

I’m not sure that TH can stop.

We normally associate such behaviors with “hoarder” personalities but this is only one of many OCPD’s. The chronic non-adaptive pattern of extreme perfectionism trademarked by inflexible and controlling traits reinforce the OCPD’s belief that their thoughts are correct. The outcome is a reality construct they very much so believe is correct.

Its much like the hoarder who believes everything they “collect” has a use and is therefore too valuable to throw away when the true reality is that most of it is a collection of junk. In the case with TH, its manifested in the construct of a political party that is perfect and flawless. To defend such an entity entitles the OCPD to share in the perfection and be as flawless as the ideal they’ve contructed (inflates their self esteem). Outside influences such as poverty reinforcing value of collected things to the hoarder are in this case of OCPD by example, associated with attention supply derived from defending the “perfect” political ideology, again linked to self esteem. I find this example interesting at times but to try to engage in an actual debate of some meaning is akin to expecting a hoarder to keep a clean house.

#277 Junius on 06.22.12 at 6:54 pm

#259 Truth Hammer,

You said,”It’s like saying that Germany would have had to keep adjudicating under the laws of the Nazi Party after the demise of those demons because…….they made the law and as such it can never change…..we have been living under such a regime in Canada for thirty years. ….and things are only slowly turning the corner.”

Quite a remarkable statement. Comparing a Charter of Rights and Freedoms that protect individual rights to the Nazi Party who is driven to trample over them.

If you weren’t so clearly a nut job it would be offensive. No point in arguing with someone who clearly knows it all.

#278 Silver on 06.22.12 at 7:00 pm

#250 Herb

The real question is how high will they raise the Mill Rate and how high will they “massage” the assessment base.

#279 Peter Goesinya on 06.22.12 at 7:18 pm

“#215 actually…. on 06.22.12 at 11:57 am

#191 Peter Goesinya re

“#66 Peter on 06.21.12 at 11:14 pm
actually “a clock” is right all the time. a broken clock is right twice a day.”

Not a 24 hour clock. Bazinga!!!

actually, being “a clock” has no impact on being right. Also, a broken clock might not be right twice a day (i.e. if it is simply running slow). Only a stopped clock is right twice a day.

If you are going to correct….well correct.

Not a “24 hour” clock that is broken and has completely stop.

“pa-pow” (Step Brothers)

#280 Tony on 06.22.12 at 7:41 pm

Re: #7 Displaced Canadian in Texas on 06.21.12 at 9:58 pm

Ottawa will be one of the cities that drops well over 50 percent. Government cutbacks will spell doom. That city could rival the drops of both Vancouver and Victoria.

#281 TRT on 06.22.12 at 7:50 pm


breaking news: Genworth is supposedly going to get to insure mortgages on all the $1 million+ houses. So 20% down will get you a great interest rate!! Can anyone verfy.

If true, this rule doesn’t change anything.

#282 Nostradamus Le Mad Vlad on 06.22.12 at 7:57 pm

Toboganning down a slippery hilll; Humiliated from being downgraded? 9:47 clip Student debt loan rates to double in July? Curious. That’s when the CPC implements their new (old) changes; 6:27 clip Iceland arrests all the banxters; Romney’s Bain Capital outsourced jobs. This guy wants to be prez? Greek healthcare system collapses (no pay); One Week By then, the Italy – England soccer game will be over; Greedy Inc. Apple’s rip-off plan for the iPhone; NatWest and RBS Computer glitches into third day.
Canada – Israel “Threat to Israel is threat to Canada, MacKay tells Israeli military commander.” Just like the US military personnel was sent to an early grave by dubya and Obomba in the ME, and Is Harper a madman or a lunatic? “Sometimes, it’s as if Stephen Harper’s Conservatives suffer from delusions of grandeur.”; 3:49 clip “$500 million spent to lie to you about the wars, but they cut the food stamps for children.”; Toxic Liquid 30 trillion tons of it; Fukushima’s duct tape and pic. 3:41 clip The Drone biz, and Drones = Police State; Confirmed The US is arming terrorists in Syria; Red Wine and health benefits derived from it, plus Nine Healing Herbs anyone can grow; Dystopia revisited “When asked ‘What is the most effective military weapon the Israelis have?” The answer has to be “The control of the Western media’.”

#283 P & T S on 06.22.12 at 8:00 pm

If this is the demise of the “Wealth Effect” then it will be interesting to see the propagation of “unintended consequences” thoroughout the greater economy.

Hopefully the effects on the Canadian economy will be less severe than the ongoing effects on your Southern neighbours, especially for the millions of “Have Nots” arising from the demolition of a formerly “prosperous” Middle Class.

#284 Devore on 06.22.12 at 8:01 pm

Isn’t the debt/income ratio today, for borrowers with great credit rating, effectively unlimited? If you have good credit, you can borrow up to 35%, and then keep borrowing. The 39% is a “global” limit. I don’t presume to know what banks will do with this new limit, as they have been schizophrenic of late, sometimes cracking down on credit, abandoning their higher risk lines of business, and on the other they’ll still lend to anyone with a pulse.

#285 steve p on 06.22.12 at 8:20 pm

the way a pyramid scheme or ponzi scheme collapses is due to the lack of new entrants that can enter into the pyramid. this may have been the blow that finally signals the end of this well disguised pyramid scheme

#286 Daisy Mae on 06.22.12 at 8:21 pm

55Unobtainium on 06.21.12 at 11:04 pm

“Well Garth, it looks like the time has come. It is good to know there is some semblance of technical competence in the government when it comes to financial matters…”


These incompetents have no choice. Their back is against the wall. They screwed up. Now they have to try to clean up the mess they alone created. They deserve no credit whatsoever. Period.

#287 Daisy Mae on 06.22.12 at 8:38 pm

#66 Peter:

“Sorry about your Porsche lease. Seriously. — Garth”


Good comeback. LOL
And again — congratulations!

#288 Market Bull on 06.22.12 at 8:59 pm

Through the darkness of future past,
the magician longs to see,
one chants out between two worlds,
fire walk with me.

#289 Gunboat Denier on 06.22.12 at 9:49 pm

280 Silver – the answer is still the same. R U not getting this?

#290 Sockeyemoon on 06.23.12 at 1:22 am

OK, there’s Vancouver, Victoria and then Nanaimo. What do you make of this? Is it built on a cemetery?

#291 lookoutbelow on 06.23.12 at 2:07 am

#159 House Horny Housewife on 06.22.12 at 7:45 am

Oh, how I enjoy reading your posts. Idealism vs Reality. Nirvana, we had it once but we lost it.

I think we know how it SHOULD be, but you know HHHW, it isn’t and it may never be, unless we, the people, take action.

You would rather live in a world of “all of us in it together” whereas the world is at war. Buyers VS Sellers. Miami Heat vs Oklahoma Thunder. LA Kings vs New Jersey Devils, EURO Cup shootouts to determine a winner.

And, there can only be ONE winner. The guy/girl in second place, is the first loser, so our society tells us. I know, I know it shouldn’t be that way but it is. Let me ask you:

Do you pay the posted interest rate on a 5 Year Mortgage. NO you negotiate.

Do you pay an NHL hockey player what he wants, NO you negotiate.

Do you pay a house seller his asking price. NO, you try to knock him down.

In other words, this IS CAPITALISM. Someone must win and someone must lose. That’s price discovery, the holy grail for that one specific transaction, whether it’s a stock or a real estate transaction.

For those of us that see our neighbourhoods destroyed and our main thoroughfares populated with store front signs written in a language foreign to us, we are angry. The alternative is to start learning another language and at my retirement age, that’s not really an option.

So, until the situation balances out, I am afraid it’s war as far as real estate is concerned. Those that are interested in making a quick few hundred thousand dollars on a flip transaction MUST BE PUNISHED because by their actions, they are putting our country’s economy at risk and that cannot be allowed to happen.

I believe that’s what the mortgage announcements this week were all about. We are not about to let a handful of speculators, domestic or foreign, threaten our economic well being.

Good luck, HHHW!

#292 Daisy Mae on 06.23.12 at 9:51 am

209woper_holic on 06.22.12 at 11:25 am
HC #193

“Please pass along whatever you’re smoking…might get me over this sinus headache I woke up with this morning.”


Ever tried a Neti Pot? They’ve been around for a 1000 years and really work.

#293 Q on 06.23.12 at 11:41 am

just wondering what miniF is standing on in the picture… I mean other than the bones of middle class home owners.

#294 SRV on 06.23.12 at 2:24 pm

Garth, Garth, Garth… “lower commodity values, falling confidence, slowing global markets and a collapse in gold and oil”… CNBC talking points are not great for your rebel image my friend.

You forgot to mention the economic indicators you list were created by The Fed (a.k.a. the banking cartel) to lay the groundwork for QE3… yet you present them as “free” market driven.

And… raising rates was not an option because for Mr. Carney (the Harper sock puppet of Goldman Sachs lineage), Chairman of The (G20) Financial Stability Board (yet another cartel entity), it would be heresy to abandon the ZIRP forever policy… unless of course the sheeple should awaken one day soon to “Storm the Bastille”… sadly a doubful scenario.

You growin’ some of the good stuff up there in bunker land?

#295 Silver on 06.23.12 at 8:30 pm


yah…I do get it…

Each and Every property that has sold in my class has been used to increased my Property Tax’s $450- $500.00 in direct costs to me… on the assumption these sales somehow made me have more cash value.

Perhaps you do not pay assessments double + what you bought your property for
…and have one of those averaged estates that do not pay their bill of sale value for a mil rate.

In my case 1 sale in every 22.5 properties affected everyones tax base. 8 properties sold 174 did not.

Do you work for BC ASS..sessment, or perhaps you are one of our local welfare cases down at City hall grinding everyone who actually pays taxes to pay your over ranked wages.
…and recycling my taxes to pay taxes Theirs is just that. recycling.
oh… and then they get a raise each year to cover the increase tax costs at my expense.
its called cost shifting.
The assessment process is a complete fraud used to steal “Real Equity” value and replace it with “Dept Equity”.
it only requires altering a “registered bill of sale” in order to tax you more on “fake money”.

See your richer than you think…
no mill rate increase vote needed.
… hence no politician run out of town on a rail for their careless spending…

A ball and bat cost $1.10,
the bat costs $1.00 more than the ball.
what are they each worth…
50% of MIT Economic graduates failed this question.

#296 disciple on 06.23.12 at 10:44 pm

Because it’s not an economic question, it’s trick math.
What did they get right? You have no faith in humanity because you have no faith in yourself.

#297 last mohican on 06.24.12 at 2:21 am

wow is this a new comment record am i the 300th ?

#298 woper_holic on 06.24.12 at 1:44 pm

@#294Daisy Mae

Ever tried a Neti Pot? They’ve been around for a 1000 years and really work.


Yes thanks but whatever HC is smoking has been around even longer :p