Hard landing

On October 19th, 1987 I was a dashing daily newspaper editor and succulent columnist, writing for a hot little Toronto tab. I walked over to the Dow Jones teletype machine in my office where the signal bell was ringing madly in a robotic version of cardiac arrest. The market was crashing.

No, not a 2012-style candyass crash where people keel over with a 5% dip. This was epochal. By the end of the session the Dow had lost 22.6% of its value. To this day it remains the greatest single drubbing in financial history. I walked through the newsroom to the babe who ran the paper’s clipping ad photo library and ordered up all the pix we had of the Great Depression.

But things recovered. Sort of. No depression. However two years later the housing market, then at a record, bubbly, frothy high, started to wobble. Interest rates edged up, and panicked newbie buyers lined up overnight to snap houses, lest they be priced out forever. Three years later condo sales had plunged and speculators were apoplectic. Four years later we were in the midst of recession which jacked up the jobless and punished real estate so mercilessly prices wouldn’t recover for more than a decade in Toronto and elsewhere. In fact it was not until the mid-2000s that the average house was once again worth what it had been in 1988.

That was a hard landing.

Well, it’s now been a little more than three years since financial markets laid the last egg. On March 9th, 2009, we hit bottom, as the Dow finished a tortuous 55% decline that spanked those poor people with lots of equity mutual funds in their RRSPs. This also took place when real estate in Canada was at a high water mark and house lust was everywhere. Ironically, the catalyst for the crash was the detritus of the American housing market, then falling into tatters.

Financial markets have recovered that loss, housing stumbled briefly then continued to bloat, while confidence has not been so lucky. This time we also avoided a deflationary depression, but it came at a cost. Emergency interest rates ushered in to avoid disaster spawned a credit bubble and record levels of household debt. After being burned on their ill-bought funds, people flocked to housing, pushing prices to historic highs even as the economy languished and wages swamped.

So here we are. GDP growth is anemic. Inflation outstrips salary increases. Four in ten families have trouble paying their bills. And 70% of us own homes upon which we have placed $1.2 trillion in mortgages. Our major trading partners are also struggling, and oil (Canada’s biggest export) has recently lost 30% of its value. At least we still have RIM. Oh, wait…

This is a crash landing. In the making.

Could Canada enter a recession five years after markets tanked, as happened in 1987? I have no idea, but apparently F and the Ps took the possibility seriously enough to make all those changes last week. As I said at the time, the coordinated actions were an attempt to bring about a soft landing for real estate, and avoid something like the quick, sharp and economy-murdering 20% drop in house prices that poisoned the early 90s.

Will it work? Was it enough? Too much?

The giant credit rating agency Moody’s says fuhgeddaboudit. We’re cooked.

In a report written by analysts William Burn and Andriy Stepanyants, Moody’s claims that F’s attempts were too little, too late. They come after household debt levels have already raced off the chart, leaving homeowners (remember that’s seven in ten of us) with very little financial flexibility. That means if interest rates move higher, debt servicing becomes tortuous. Also if the economy slows and recession appears, few families can cope with job loss since making the monthly is already a struggle.

Their conclusion: hard landing.

How serious is this? Apparently enough to have caused two of the major chartered banks to ask F to double the minimum downpayment for buying a home, even knowing that would stop the real estate market dead in its tracks, throttling their mortgage business. But the elfin god said no. And you know why.

If Moody’s is right, it happens anyway.

This coming long weekend’s expected to see a flurry of quick sales as panicked newbie buyers rush to beat the looming July 9th deadline, and lock into long, fat home loans.

Apparently nothing ever changes.

213 comments ↓

#1 Lost cash on 06.26.12 at 10:20 pm

Good to be first

#2 T.O. Bubble Boy on 06.26.12 at 10:22 pm

ahhhh… 1987, when F was still just an ambulance-chasing lawyer!

#3 JSS on 06.26.12 at 10:24 pm

This was the most serious article I have read here so far. Gulp.

#4 Party On Garth on 06.26.12 at 10:25 pm

Was recently reading a local forum in Milton. There is a thread discussing real estate prices. Most of the posters were recent buyers of new construction McMansions and were generally mouthy and dismissive of anyone predicting a downturn in prices.

It will be hard to feel bad for those types when they are blind sided.

#5 T.O. Bubble Boy on 06.26.12 at 10:25 pm

stating the obvious:
Nearly half of Canadians dislike Stephen Harper: Poll

#6 Useless mortgage borkers criminals in an ALL OUT PANIC! on 06.26.12 at 10:29 pm

50% CRASH in housing and higher for Condo’s . It’s going to be a nasty housing crash AKA a HARD landing realtors and mortgage brokers. Now post on Garths blog in a PANIC!

#7 To Be Fair on 06.26.12 at 10:31 pm

To be fair, Moody’s was instrumental in the US Financial Crisis by rating investment products that consisted of packaged subprime mortgages as AAA.

We all know how that turned out.

Somewhat ironic that they’re now trying to warn us about a real estate bubble.

#8 TurnerNation on 06.26.12 at 10:32 pm

“You are either with us or with the realtors”!

#9 James on 06.26.12 at 10:33 pm

so here’s the question. if we are 3 years past the rock bottom, are there significant changes in attitudes that may alter what happens next? while we can imply based on precedent i wonder if there are any drivers which may push us into different avenues even if the conclusion is the same.

#10 T on 06.26.12 at 10:34 pm

Thank you Garth for taking the time to write every day!

#11 Sebee on 06.26.12 at 10:35 pm

I’ve learned something in this short life of mine. It pays to be patient. Also it pays to be cool and not drool over stainless. Urinals at my local pool hall are stainless.

Not what they’re for. — Garth

#12 Stupid Canucks on 06.26.12 at 10:36 pm

http://vancouvercondo.info/2009/12/banker-bubble-talk-bundle.html/page-1/#comment-60086

#13 Throwstone on 06.26.12 at 10:36 pm

Excellent post…

F is not so bright. Elusive, cunning, slippery…YEP. But not that smart.

Kinda makes one sick to think of what’s to come.

Economic tailspin!

Somebody get a booster seat for F to see out the window.

#14 Stupid Canucks on 06.26.12 at 10:37 pm

I wrote this almost 3 years ago…

San Franciscan in Va Says:
December 3rd, 2009 at 12:06 pm
I can’t help but just laugh my guts out about what is happening in this town (Vancouver), province (British Columbia) and country (Canada). To me, this pipedream looks very much like the 2002-2005 hay days of the California housing boom. I have personally experienced this and can probably write a book about it. I think the title of it would be called “Collusion”. It is merely how all bubbles are created. Collusion, on the part of the government by a way of low interest rates, a drive to increase homeownership at all costs in order to extract political dividends including becoming a subprime lender of last resort (e.g. CMHC in Canada’s case), mortgage and real estate broker and borrower fraud, unwarranted government subsidies to certain segments of the economy, i.e. the construction, real estate and financial intermediation sectors , to name a few.

Location exclusivity being touted as miraculous reason for why prices are not where they should really be. Complete detachment from reality when it comes to economic and financial fundaments (e.g. price / rent ratios, price to earnings, population income potential, economic diversification etc). To add fuel to the fire which is destined to inevitably engulf all colluded parties involved, purported “chronic housing shortages”,” multi-decade demand outstripping supply” continuously trumpeted analyses and trends,

“land-use restrictions” or “ lack of buildable land” justifications for why housing prices are so high, “net growth in foreign and inter-state (province) migration”, “the presence of a diversified economy “, and so the list went on, were all symptoms of the bubble mania which took hold in California in the early part of the decade. This was all good until there were no more greater fools left to bid up the inflated housing prices, and so the party abruptly stopped. People realized that they were not buying homes. In fact, they were renting them for the price of the mortgage. Those aforementioned fallacies, and many more others, are some of the principal reasons why the bubble burst in the States and why it will follow suit in Canada. British Columbia is no California, heck, Canada’s GDP is less than that of post-bubble California, with the country’s economy NOT as well diversified as one would expect, BUT heavily dependent on a few industries (e.g. oil and gas, energy, forestry and other derivative commodity industries, heavy machinery, construction etc.). Noteworthy is that Vancouver MSA’s per capita income is half of what per capita incomes are in the San Francisco Bay Area, certain portions of Los Angeles and San Diego areas, where prices have plummeted more than 50% from their peak.

It’s only a matter of time until the bubble bursts. The deflation in the U.S. started when the Federal Reserve began increasing interest rates. This could, however, start sooner than that. One should pay a close attention on consumer psychology when it relates to perceived expectations in the future. Often, this is how contagions, financial panics, great depressions are started. The longer the imbalances persist in the greater economy when it comes to housing, the more painful and protracted the adjustment is going to be when it comes. The Canadian government can keep the last fool from wanting to dump his inflated housing mortgage on the market for as long it provides backstop guarantee. However, financial markets are going to severely punish the Canadian government shortly by dumping its dollar, lowering its perceived credit worthiness (thus increasing implicitly and explicitly borrowing costs in the economy). A scenario just like this is currently unfolding in the U.S. Anyone wanna buy BC, Ontario provincial government bond at 9%? You start printing enough money until the federal currency is eventually debased and has little incremental value left.

After having met recently with “respectable mortgage brokers” who have been in the business for over 25+ years, I am now firmly convinced that this market is going to have a crash landing like one never experienced before. Pre-sales “pink paper” flipping (as what was called in the U.S.) where respective condo owners would trade condos like call options by purchasing condos without any intention of taking possession of the unit(s) and thus procuring further the housing bubble, funky appraisals based on comparable sales only with little to no historical economic fundamentals in place, liar loans (i.e. stated income (NIQ loans), stated assets) etc. are all hallmarks of the impeding and most definitely inevitable collapse of housing prices in Canada.

#15 RE Bear on 06.26.12 at 10:45 pm

lol… pic reminds me of two pilot quotes… “any landing is a good landing”… and “there are old pilots and bold pilots, but no old, bold pilots”… hahaha

#16 The American on 06.26.12 at 10:45 pm

And so the crash will begin. Really, is ANYONE surprised at all? If you are surprised, you may consider chosing a better therapist. That, or just remain ignorant and you may remain blissfully naive (until it hits you like a Mac truck). The fundamentals never existed to warrant prices in Canada where they stand. All things return to the mean. Always. Never has it not happened.

#17 Randy on 06.26.12 at 10:46 pm

Why aren’t the property owners in Toronto being required to pay for the infrastructure rehabilitation that is so desperately needed in Toronto ?????

They pay the lowest taxes in the GTA area and yet they have benefitted most from the decaying infrastructure in Toronto …..

While property owners have a huge wealth effect from the real estate bubble in Toronto …..the place is falling apart…..congestion is disgusting, transit sucks, expressways crumbling and falling on motorists…..

God knows when the bubble bursts and the wealth effect disappears they won’t want any tax increases….

#18 Editor on 06.26.12 at 10:48 pm

In the GTA suburbs, one nearby house that’s been sitting just dropped the price by just about 3.5%. A couple of miles away, another dropped its price by more than 1% (la di da) last week. Like little droplets here and there as the rain begins.

#19 LH on 06.26.12 at 10:48 pm

1990s crash was caused by sharply higher interest rates. With 10y bonds around 2%, the market is saying low for long. I am calling for a slow fizzle in the good hoods of Toronto, with pockets of irrationality still present in C01. As for condos and non-C areas? Even worse, condos in non-central areas? Sell now, or look forward to decades of debt slavery!

#20 Inglorious Investor on 06.26.12 at 10:51 pm

Excellent post, Mr. Turner. I appreciate the historical backdrop.

Like a couple of primordial neophytes who frolic around their silvan world in ignorant bliss until they bite the forbidden fruit, those of us who perceive RE as some financial Garden of Eden desperately need to consume some knowledge so we can finally shed our innocent belief that in RE land, prices never go down.

Sadly, as is happening in the United States, it may require an Almighty wrath before most of us realize how exposed we are, and start looking for the fig leaves.

#21 Not 1st on 06.26.12 at 10:51 pm

If we hard land, then there are going to be a dozen other countries right there with us including U.S.A. Europe and China. We will all be in good company.

Most already did. — Garth

#22 gokou3 on 06.26.12 at 10:52 pm

The psychological effect of rising downpayment from 5 to 10% is probably like dropping the amortization from 25 to 15 yr. Just saying.

#23 timbo on 06.26.12 at 10:52 pm

You know you have had a long night of drinking when you cannot remember where you parked the jet ;)

http://usa.chinadaily.com.cn/china/2012-06/27/content_15524908.htm

“The overuse of labor outsourcing will not only harm workers’ legal rights but also bring harm to regular employment and the labor contract system,” Wu said when explaining the draft to members of the NPC Standing Committee on Tuesday.”

Damn outsourcing is everywhere…………

http://www.alterforex.com/commodity-currencies-turn-around-but-euro-slide-continues/

Meanwhile, in Italy, both data and this morning’s credit auction have further added to the Euro’s woes. Italian Retail Sales in April contracted by 6.8 percent on a yearly-basis, a clear sign that consumers have been paring back their consumption habits in expectation of crushing austerity measures coming down the pipe in the coming months. At the auction this morning, Italian 2-year notes’ yield paid rose to 4.712% from 4.04% in May, the highest such level since December 2011.

If anything, one thing is blatantly obvious: Italy and Spain are quickly headed towards bailouts.

Arrange the deck chairs and relax. It’s only a small leak and we have plenty of buckets…………………..

#24 Stupid Canucks on 06.26.12 at 10:52 pm

Btw, I stick to every word I had said 3 years ago. Amazing how some of my predictions are starting to come true….Oh…I only lasted about 10 months in Raincouver…that’s before thoughts about jumping off the single bridge there start flooding one’s mind:-)…Who the hell in the world would ever want to live in a subarctic rain forest anyway beats the heck out of me???

#25 T.O. Bubble Boy on 06.26.12 at 10:56 pm

House flippers losing money on a million-dollar flip in a hot Toronto neighbourhood:
http://www.torontolife.com/daily/style/from-the-print-edition/2012/06/26/the-sell-hard-lesson/

#26 Orange Dot Amongst Cowboys on 06.26.12 at 10:58 pm

I am a kid fresh out of school, a 22 y/o Junior Engineer. Since my grad a year ago, I made a plan to buy a place by my 25th birthday.

At first I felt like a chump for paying rent in the meantime. My bank once tried to convince me that using my 30k, 7% int., credit line as a down payment would be a great idea. They said it didnt make sense to wait till my mid-20s. Feeling pressured, I ubruptly declined and literally ran.

I continued to feel like a chump while I saw handfuls of my peers jumping on houses, until I found your blog a couple of months back. I’m glad my awkward tendency to run away kicked in at that moment in the bank.

Here’s hoping 3 years from now on my 25th birthday, it will be a much better time to buy. And hopefully I’m not still stuck in Edmonton, this place blows and is too full of cowboys.

#27 "The Bubble Shave" on 06.26.12 at 11:01 pm

“Stick a fork in me, Garth! I’m done!”

#28 bubble head on 06.26.12 at 11:07 pm

A 15% correction for 1.5m mcMansion homes would result in the same DOLLAR amount for the tear me downs
that once stood there.

And heres why – on St. Germain Street (Ave Rd and Lawrence) lie two homes with the same lot size on the same street. One for sale at 900k (tear me down) the other 1.69m (McMansion). To turn the tear me down to the McMansion it would take about 500k (closing and carrying costs , permits and design fees, and the cost of actually building the home). We are now at 1.4m when the 1.69m sells (less realtor fees) the owner or flipper is left with 100k profit . So if the 1.69 homes drop 15% to maintain the profit, the tear me down must go down the same dollar amount.
When the McMansions starting selling in the Yonge and Sheppard are for 1.8m the tear me downs went from 750k to 950k because it was still cheaper to buy the land and build your own home.

#29 wes coast on 06.26.12 at 11:10 pm

Moody’s says hard landing. Where do you stand on this. Is Moody’s wrong? Hard landing or drop with slow melt. Would be cool to have an online poll of your blog-oiovitches. We can call it the ‘unfools index’

#30 East Van on 06.26.12 at 11:11 pm

The eve of (economic) destruction:

http://business.financialpost.com/2012/06/25/is-this-1931-all-over-again-paul-krugman-nouriel-roubini-niall-ferguson-and-more-think-so/

Useless extremism. There is no valid comparison. — Garth

#31 Smoking mans smarter coousin on 06.26.12 at 11:12 pm

1987……Remember it well.

A family member had a good Gov’t job…but played the Stock Market..almost addicted to it.

He reached a point….where he felt he could retire…early…not even 50 years old.

He took us out for dinner to celebrate .

The market TANKED….marriage broke up….and now works in menial jobs renting an apartment .

#32 Stupid Canucks on 06.26.12 at 11:14 pm

Still don’t have an answer to this…Any suggestions?

San Franciscan in Va Says:
December 3rd, 2009 at 4:52 pm
How do we captalize on that? I am thinking of shorting the Canadian housing market. The problem I have encountered so far is that 1) there are few publicly traded home builders (if any), 2) no tradable sector-wide indices (except banking which I would ignore for the moment as banks in Canada have been smart to pass on the mortgage risk to the government thanks to the explicit guarantee through entities like CMHC. The only exception being the confluence of multiple risk factors to bring about systemic risk in the financial system just like in the U.S.), 3) most financial bellweather companies outside of banks and holders of income producing real estate (e.g. pension funds, life companies, REITs etc) are also privately held and not tradable. The problem is that the market appears to be much more closed and not easily permeable than that of the U.S. In that sense, the most direct effect of a decline in the sector in the future would be a sudden and severe decline in gross domestic output against which the government is going to have to print out a whole bunch of inflated Canadian dollars to counteract that. Betting on cyclical changes in output is a painstaking undertaking and not very lucrative, either.

I guess the Canadian dollar appears to be the only viable proxy for a possible future hedge betting on housing prices decline in Canada. However, housing price adjustments can take place over multiple years (e.g. the United States), and often without a clear and immediate shorting target it would be very difficult to make money this way. Any suggestions in an open forum?

#33 rentin on 06.26.12 at 11:16 pm

“Apparently enough to have caused two of the major chartered banks to ask F to double the minimum downpayment for buying a home,”

If the banks are making moves to help CMHC avoid default, what are they getting in return?

#34 Mr Buyer on 06.26.12 at 11:18 pm

The bubble will crash no matter what is done at this point. We passed the point of no return a long long time ago. I will have to think hard to work up a reasonable guess as to approximately when we passed into the arena that has but one exit but it was far far away in the rear view window. Doubling of down payments will just hasten the end but otherwise is will have no impact. You could actually continue on with everything unchanged and we will still crash. In fact no money down and .001% will bring us to the same place and maybe even sooner.

#35 Smoking Man on 06.26.12 at 11:22 pm

I see much spin in your post gartho and I would gladdly show you why you are wrong but unfortunatly my pc just got had a hard crash and typing on an out dated black berry is to painfull . Too bad had the greatest post ever now its lost.

I would suspect LaughingCND but he’s probably doing the bubble head happy dance somewhere

#36 Smoking Man not on 06.26.12 at 11:28 pm

We are on the cusp of a major change.

Vancouver down by 30% while the GTA rockets higher.

I’ll uncork to that.

#37 eagle eyes on 06.26.12 at 11:29 pm

Earlier this year, I did a search of total number of listings in Richmond BC, suburbs of Vancouver, and results were somewhere around 2345. I did the same search today and the results showed 2804. I think it has slowed down…don’t you think? But Garth is right, there are still some greater fools out there. You just have to look harder.

#38 Canadian Watchdog on 06.26.12 at 11:29 pm

This is not 1987 Garth. It’s a financial experiment gone horribly wrong.

http://postimage.org/image/tufcchxfn/
http://postimage.org/image/wa2ev0vxx/

“There are really only three options to reduce debt: restructuring, inflation and growth.” —Mark Carney June 21, 2012.

The former is more likely considering the latter has failed.

#39 timbo on 06.26.12 at 11:30 pm

http://www.guardian.co.uk/business/2012/jun/24/central-banks-gdp

“It advocated cutting state support for banks, saying it would push them into being more disciplined in their business decisions and improve risk management. It concluded the global economy was unbalanced and becoming more so.”

Cutting the purse strings can cause a fit………

http://yanisvaroufakis.eu/2012/06/26/greece-is-ungovernable-while-the-euros-derailment-continues-on-abc-tv-7-30-report/

“They cannot fix the Greek economy. The Greek economy is finished. The Greek economy is in a great, great depression. The growing social economy is in its long, long winter of discontent. There is no power, no force within the Greek economy, with Greek society that can avert – it’s like – imagine if we were in Ohio in 1931 and we were to ask: what can Ohio politicians do to get Ohio out of the Great Depression? The answer is nothing.

Sums it up quite well…..

#40 Fabrega on 06.26.12 at 11:31 pm

F had no balls to do the right thing. His and the Conservative legacy will be the RE crash. The thing is God help us all if the NDP ever get elected.

#41 Inglorious Investor on 06.26.12 at 11:32 pm

The Crash of ’87. Ah, yes, the good old days. Sigh…

#42 bcc on 06.26.12 at 11:34 pm

the time had come. thanks for giving us the warnings about RE, and teaching us about the better alternatives, 6 days a week, for i can’t remember that many years.

so the next question may be, what attitude should we have when we know friends (the majority of them) who are having bigger and bigger problem financially?

#43 Musings on 06.26.12 at 11:41 pm

Boom, sizzle, pop, fizzle, plop.

The five stages of real estate death.

We are in stag-3 now, the ‘big pop’ … as affirmed by all in-the-know out there.

Death by starvation is a long, nagging, relentless process.

Only when one’s treasured household equity has desiccated like 10-year old pemmican will it be over. It will take a decade before we are out of this mess.

Too long for most Boomers’ to recover and for Gen “Y’s to scarred to pick up the pieces. With poor employment prospects for most over-inflated and hyper- hypothecated university degrees, (which used to be called high-school diplomas), the younger set will avert the real-estate bug for an entire generation … seeing it as a trap like ‘candied poison.’

However, for most indentured Canadians already in the vise, the financial obligations already signed-up for unfortunately will not be kind.

This is why it is called a ‘mort ‘- ‘gage’. A ‘contract’ until one’s death.

#44 Particleboard McMansion on 06.26.12 at 11:43 pm

I hear talk of an $0.85 dollar in 2013 which will drive up interest rates, and naturally the credit/housing bubble’s about to make a mess all over itself.

Can anyone say what this one-two combo is likely to do to the Canadian equity markets (and crappy index ETFs therein)? How about bond prices?

Metals, currency and commodities are easy to figure out, I just don’t understand what will happen if the dollar falls back into reasonable territory on reduced commodity prices while a credit bubble goes “pop” and interest rates jump.

Anyone? Anyone?

#45 50% correction predictor on 06.26.12 at 11:43 pm

Someone wants to buy a condo? Plenty of choices.

Brand new. maintenance fee for a two bedroom: $681/month. Oh, my!

The delusional owner still wants $100/sf markup. Good luck. (click the link. if not, go to MLS®: C2394997 )

http://www.realtor.ca/propertyDetails.aspx?propertyId=12097763&PidKey=-527332676

#46 Basil Fawlty on 06.26.12 at 11:44 pm

I don’t know how a depression is defined anymore, however with 25% unemployment overall and 50% youth unemployment Spain just might qualify. Then there is Greece, Ireland, Italy?, Hungary and a bunch of other eastern block countries.
Then everytime someone tells us Europe’s crisis is contained there is another $100B bailout of the bankrupt banking system.
When are people going to wake up to the fact that there is serious problem here? Are banker bailouts in the trillions not stark proof that the situation is not normal. 15 of the worlds largest banks are downgraded and everyone yawns and reaches for the Doritos bowl.
What a joke!

#47 Carp on 06.26.12 at 11:50 pm

The 87 crash was awesome… I was in a college computer course oriented around lotus 123. The project was to track a stock portfolio in a spreadsheet. It helped me in during the tech bubble and identifying trough and peaks.

My dad selling his home at the peak in late 80’s re-inforced that as well!

#48 Investx on 06.26.12 at 11:50 pm

“This is a crash landing. ”

So Garth, you’re revising your prediction and no longer expect a slow melt?

#49 truth hammer on 06.26.12 at 11:51 pm

Evil trolls who were appointed by the past regime need to be rooted out. It’s the insidious legacy intrests of appointed bureaucrats planted by the liberals that are set to derail the economy faster than any other thing.

http://fullcomment.nationalpost.com/2012/06/26/john-ivison-federal-government-office-space-grows-even-as-public-service-shrinks/

I’ve said it before…fire them all and start replacing the business of governing at market rates…..to the benefit of Canadians and not unions and the other special interest spoilers who have it in for the citizen.

I’m surprised that there are still a few troglodytes who don’t understand that the Liberals never ‘balanced the budget’ when in fact they just off loaded the debt and deficit they’d built up in the thirty years of Trudeau’s bizarre fairy dust apoplectic spending onto the provinces and minor governments and thereby forcing local governments to raise taxes on everything and cut back on bricks and mortar etc.

#50 Ronaldo on 06.26.12 at 11:53 pm

#24 Stupid Canucks – ”Who the hell in the world would ever want to live in a subarctic rain forest anyway beats the heck out of me???”

Ya can’t be a wimp to live up here. Enjoy your new life.

#51 Inglorious Investor on 06.26.12 at 11:59 pm

#31 Smoking mans smarter coousin on 06.26.12 at 11:12 pm

The sad part is, is only took about two years for the market to recover from the Crash of ’87. And after that it was up, up and away, almost straight through until 2000. So your friend sold out at the bottom? If so, how typical. I sold my MF’s one day shy of the top in 2008. Remember, when the TSX was licking 15,000?

Or maybe I’m being harsh. Perhaps your friend was familiar with market history. If memory serves, the Crash of ’29 bottomed in mid ’32 (almost 90% later) and did not recover in nominal terms until about ’54. Now, that was a crash!

#52 SCIB on 06.27.12 at 12:01 am

This and every lying, cheating, thieving, Government must pay for their sins.
This Government chose to steal the interest and value of seniors pensions in order to curry favor with voters.
In the process of reducing interest rates and 0/40 mortgages they won an election. Well they can try to win again without my vote.
I will vote against all and every government that cheats, lies and steals its way into power.

#53 a prairie dawg on 06.27.12 at 12:02 am

#15 RE Bear

… pic reminds me of two pilot quotes…

– — –

I like how it symbolizes the oblivious beach lovers unaware of the crash. (beach lovers being synonymous with the Canadian public)

Notice that 2 of them stare the other way, while 1 is concerned enough to call someone.

Like 20 million Canadians staring the other way, while 10 million try to prepare for what’s coming.

#54 Observor on 06.27.12 at 12:05 am

WHAT 1987 DOW CRASH?

Yes, of course the Dow crashed hard in October 1987.

Less well known is the fact that the Dow finished 1987 higher than where it started. Not higher than its peak that year, but higher than where it started that year.

October 19 and 20, 1987 were epochal opportunities.

As was March 2009. And today stocks look almost as cheap as they were in March 2009. P/E ratios are attractive.

To the brave go the spoils.

Winners win and losers lose.

#55 Hard landing | The Retiring Boomer™ on 06.27.12 at 12:05 am

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

#56 Mr Buyer on 06.27.12 at 12:16 am

#49 truth hammer on 06.26.12 at 11:51 pm
………………………………………………………….
You sir are a propagandist.

#57 Mr Buyer on 06.27.12 at 12:23 am

#42 bcc on 06.26.12 at 11:34 pm
the time had come. thanks for giving us the warnings about RE, and teaching us about the better alternatives, 6 days a week, for i can’t remember that many years.

so the next question may be, what attitude should we have when we know friends (the majority of them) who are having bigger and bigger problem financially?
…………………………………………………..
Take a page from Smoking man (I can not believe I just typed that) and start crying poor now before they all start knocking at your door looking for cash (unless you enjoy lending cash or saying no). It seems deception does have its uses after all but I prefer to call it camouflage, it helps me sleep better at night.

#58 50% correction predictor on 06.27.12 at 12:26 am

42 bcc on 06.26.12 at 11:34 pm


so the next question may be, what attitude should we have when we know friends (the majority of them) who are having bigger and bigger problem financially?
______________________

You can become a Certified Post RE Bubble Trauma Psychoglogical Counsellor and make a living out of it!

I heard community colleges in GTA are opening courses for this certificate this fall. Register now! Spaces are limited.

#59 fiendish Thingy on 06.27.12 at 12:26 am

re: Today’s photo…

Those people on the beach, enjoying the sunshine and the view?

They’re renters.

#60 BC Bring Cash on 06.27.12 at 12:27 am

The whole housing market should have taken a breather back in 2008. However H F & C kept the party going with easy money so the Harper Govt. in all their wisdom could get a majority Govt. It is all about politics pure and simple. Another manufactured event to con the the masses and they fell for it. Harper don’t give a rats ass about employment, jobs, middle class lifestyle, ETC…
He is the Corporate Puppet he was elected to be. That he is and always will be. More free trade deals are coming which mean even more job losses for us and more rights for the multinationals taking advantage of the rest of us. Free trade only means a bill of rights for the multi national corporations.

#61 City Slicker on 06.27.12 at 12:28 am

No worries here guys it’s only a matter of time before the Fed’s Bernanke unleashes QE3. Things are definitely tearing apart at the seams.

#62 Mr Inconsistent on 06.27.12 at 12:51 am

Investx,

Cut the guy some slack … his views evolve with the facts. However the G-man could acknowledge the occasional revision of his views. This is not George Orwell’s blog.

#63 Bottoms_Up on 06.27.12 at 12:52 am

#26 Orange Dot Amongst Cowboys on 06.26.12 at 10:58 pm
—————————————————
In 3 years the crash may just be getting good…you may want to revise your outlook and consider buying when you’re 30 (gives you more years to save up for a dp).

#64 Junius on 06.27.12 at 12:54 am

#49 Truth Hammer,

You are entitled to your own opinions bit not your own facts. Conservative govts in Canada and Republican govts in the US have run bigger deficits than their Liberal and Democratic counter parts.

Paul Martin in Canada and Bill Clinton in the US are the best examples. Ideologically driven perspectives make you blind and dumb.

#65 Fort Mac Flatlander on 06.27.12 at 12:57 am

I know this is a housing blog, but what is your opinion on the future of credit availability in Canada in the coming years? Pull out that crystal ball (or magic 8-ball.) We have seen a reduction in credit availability and certainly velocity south of the border and the European crisis certainly will not help things. JMHO.

Thanks

#66 Davey Boy on 06.27.12 at 12:57 am

# 24 Stupid Canucks

There are lots of nice bridges in Vancouver to jump off of, and now there’s a beautiful one replacing the Port Mann bridge, not sure if you have to pay the toll prior to jumping though.

#67 Aaron - Melbourne on 06.27.12 at 1:00 am

http://www.stuff.co.nz/auckland/local-news/7160771/Estate-agents-fear-home-truths

The Real Estate Institute of New Zealand is taking issue with changes that would make it illegal for agents to make unsubstantiated claims, saying the changes could open “floodgates of complaints”.
**
Spare a thought for this real estate agent. Under the benign title of “Popular Local Club House” this Waipukurau home, above left, in the central Hawke’s Bay has been listed on Trade Me since Thursday. The “well-known property” has been “set up for family and club gatherings” but the agent insists it could be converted “back to its former glory”.

If a magic real estate decoder programme could be run over the listing the unvarnished truth would read: “Mongrel Mob gang headquarters for sale.”

***********

have any of you seen Once were warriors?

#68 LS in Arbutus on 06.27.12 at 1:09 am

Believe me some people will be surprised.

I know someone that just bought a $2.4 million house on a 33 foot lot on the West side. They have small children. I feel genuinely concerned for them.

#69 Increasing that 1% on 06.27.12 at 1:15 am

And, Garth, what about you in ’93? That had to be you – with the Kim Campbell gang, descending upon Main St. in Brampton.
Thought you were some sort of Secret Service agent. You doubled as part of the security detail.. Nice, dark suit, the dark hair-ooh the hair, the beard, the sunglasses. The dark pointed cowboy boots….Garth.
You were somewhat intimidating, concerned we might be in the line of fire.
But you said a casual ‘Hi’, …recognizing some were actually excited to witness history–
but oblivious to what was to happen soon after
And, Brampton was going downn

#70 bromance on 06.27.12 at 1:33 am

No such thing as a soft landing. A melt is either avoidable or not. They never get it just right.

#71 earlybird on 06.27.12 at 1:34 am

Great post again! : )
The interest rates have been low for too long, pulling way too much future demand into the present. F’s decision was prudent, but too late. It does seem like its in slow motion, people are in very precarious positions if they have bought in the last few years, a rate uptick, job loss here and there, low commodity prices, macro issues, energy spike, even a little of all, and things we cant think of, leaves real estate extremely risky to the downside as an investment. They are fighting strong deflation, and can barely generate inflation, and will eventually run out of interference….I mean ammo….but there are ALWAYS opportunities in any scenario!

#72 blase on 06.27.12 at 1:44 am

I like Stupid Canucks post.

Was in vancouver once in October. Sucky.

My buddy loves the place more than his wife.

People from van think they are special. Hmmm. How can it be special if it’s pretty much an asian city now? So, it’s special like Hong Kong-Seoul-Beiijing-Ho Chi Min City?

In Calgary, people realize it’s not the same city it was when it had half the population 20 years ago.

Do vancouverites realize it’s not the same place they grew up in? When you can’t actually afford to live in the city you claim to be a part of?

I’m getting ready to kick back with a cold one and enjoy watching vancouver unravel. Then I’ll crack open another and enjoy the toronto carnage.

I should buy some dollar store and cat food stocks.

#73 Jay Currie on 06.27.12 at 1:47 am

On the Dog Walk Index (DWI) another move with no sign occurred today. Which means that, on the other side of the block we have “for sale”, vacant, vacant.

My leafy suburb – and Garth you know the one – in Victoria never has any houses for sale. It’s a private club; except the smart money able to buy the 2m plus houses has put’em up for sale. 16 red dots out of 200 plus another thirty which are vacant/off the market.

Average price 1.5m. No crappy fibreboard construction – these houses were built from old growth.

The smartest money has already left. The smart money is selling and the dumb money is renovating.

The dog is very happy indeed.

#74 Mark on 06.27.12 at 1:48 am

“I guess the Canadian dollar appears to be the only viable proxy for a possible future hedge betting on housing prices decline in Canada. However, housing price adjustments can take place over multiple years (e.g. the United States), and often without a clear and immediate shorting target it would be very difficult to make money this way. Any suggestions in an open forum?”

Its my view, in a housing decline, that the banks will be the prime beneficiaries as they are effectively ‘short’ the housing market, and ‘long’ the government debt. Also the CAD$ should rise quite substantially as the lending expansion comes to a halt and Canadians stop shorting (ie: borrowing) the CAD$ in order to buy houses and fill them with imported Chinese schlock.

#75 Mark on 06.27.12 at 1:49 am

Just further to the above, remember that most Canadian banks tripled in price after a lull in the early 1990s.

#76 [email protected] on 06.27.12 at 2:05 am

An additional factor in the early 1990s that helped to keep the housing market depressed was NAFTA. This move by the Mulroney government cost many Canadians their jobs, particularly in eastern Canada.

As Garth says, it took a long time for the housing market to recover. Many were forced to sell their homes when their jobs disappeared, wiping out virtually all of the equity they had built up over a period of years.

#77 John on 06.27.12 at 2:17 am

Realtor in Vancouver suburb of Richmond says that if you own a million dollar home in Richmond and you have to sell, “you will have to resort to much deeper price cuts” to sell your home.

http://whispersfromtheedgeoftherainforest.blogspot.ca/2012/06/tues-post-2-how-bad-is-richmond-right_26.html

#78 Canuck Abroad on 06.27.12 at 2:47 am

Not sure if this has been posted previously but Steve Keen is in Toronto and giving two talks on the debt bubble / global crisis. One is 28 June 7pm and the other 5 July 5 pm, both downtown TO. Worth seeing if you get a chance.

http://www.debtdeflation.com/blogs/2012/06/22/upcoming-talks-in-toronto/

#79 Buy? Curious? on 06.27.12 at 3:03 am

As long as people have jobs to service their mortgages nothing is going to change. Once Harper joins the austerity parade, then we’ll see a correction. However, those expecting to grab a house on the cheap are disllusional. As banks begin to collapse, good luck trying to get your money. How much do you really know how deposit insurance works? If I were you, load up on debt and hide your money.

#80 Crash Callaway on 06.27.12 at 3:08 am

So F spends the last 4 years placing a gazillion traps all over the Tundra and now suddenly turns activist to stop the cruel and inhumane treatment of the blind & stupid caught in them.

The devilish little gnome will soon toss your ass right out of your home. After all it was the bankers that advanced the loan to buy the traps.

#81 Humpty Dumpty on 06.27.12 at 3:13 am

Fasten your seat buckle folks, it appears we are about to fly into a whole lot of turbulence…

Iran, Russia, China, Syria plan massive war game’

http://www.jpost.com/LandedPages/PrintArticle.aspx?id=274391

Appears nothing does ever change….

Some are just never satisfied with the amount of real estate they occupy…

#82 Tim on 06.27.12 at 3:15 am

#24 re Stupid American,
We’ll take the rain forest over any city or town in America– land of consumerism, a crumbling empire, 50 million people on food stamps, guns galore, greatest polarization between rich and poor of any developed nation, hollowed out middle class…

#83 Fort Mac Flatlander on 06.27.12 at 3:15 am

#32 Stupid Canucks

You can always short RONA and other DIY hardware stores.

#84 new-era on 06.27.12 at 3:16 am

Canada’s Real estate bubble is very large

http://www.newwestnewsleader.com/opinion/letters/160400205.html

Its funny how everyone is coming out of the woods to wag their fingers at the Canadian housing bubble.

It must be depressing to those whom has recently bought a McMansion

#85 B.Anchor on 06.27.12 at 3:18 am

Relevant excerpt from George Soros on the Euro crisis….

“Among other things, I developed a model of a boom-bust process or bubble which is endogenous to financial markets, not the result of external shocks. According to my theory, financial bubbles are not a purely psychological phenomenon. They have two components: a trend that prevails in reality and a misinterpretation of that trend. A bubble can develop when the feedback is initially positive in the sense that both the trend and its biased interpretation are mutually reinforced. Eventually the gap between the trend and its biased interpretation grows so wide that it becomes unsustainable. After a twilight period both the bias and the trend are reversed and reinforce each other in the opposite direction. Bubbles are usually asymmetric in shape: booms develop slowly but the bust tends to be sudden and devastating. That is due to the use of leverage: price declines precipitate the forced liquidation of leveraged positions.”

#86 Tim on 06.27.12 at 3:20 am

#49 The liberals left the neo-cons with a 14 billion dollar surplus- which Harper pissed away. Unfortunately it is because of people like you he has a majority

#87 YVR Optimist on 06.27.12 at 3:30 am

I’m with To Be Fair (#7)

This is the same Moody’s who was rating tranche after tranche of worthless CDOs as AAA?

They have been wrong before, and how, and it wasn’t that long ago. I know, I know, they’re only expressing an ‘opinion’.

How the rating agencies came up with their ratings on various CDOs and other new financial products over the last decade and still managed to stay in business (let done out of jail or civil court) after the cataclysmic failure of said assets is something that is completely beyond me.

#88 Peterfromcalgary on 06.27.12 at 4:12 am

Hey and lets not forget the nightmare scenario.

Turkey launches an Air Strike against Syria in retaliation for downing it airplane in international air space on Friday.

Syria retaliates and NATO is dragged into a war with Syria which causes Iran and Russia to defend Syria against NATO.

OR

Israel launches an air strike against Iran nuclear weapons program but messes up and spreads toxic enriched uranium over Iran and neighbours. Iran shuts down the Strait of Hormuz. Arab governments afraid of a public emboldened by Arab Spring launch an attack on Israel because the Arab populace is really upset about being radioactive.

OR

Oil drops to $30 making the Canadian’s dollar drop to 80 cents. Panic selling happens and the bank of Canada is forced to raise interest rates to keep the Lonnie from free falling.

or.

Greece drops the Euro, Spain and Italy to remain competitive are also force to drop the Euro.

Come up with your own economic nightmare it is great fun.

#89 Longterm on 06.27.12 at 5:44 am

#44 Particleboard McMansion

If you think that the Canuck buck is going to drop relative to the US dollar then a good option is to stack your portfolio full of high quality US dividend paying companies via ETFs. Dividend aristocrats in the US are cheap right now and and in CND dollar terms very cheap. If the Loonie depreciates not only will you be collecting a large dividend in US dollars that you can reinvest but you will make a substantial capital gain, or perhaps more correctly, a substantial retention of purchasing power as your CDN dollars will be effectively converted to US dollars at the current high exchange rate.

#90 Smoking Man on 06.27.12 at 6:09 am

The dumb ones,
Dr’s Track 6ers and Condo Buyers

What is it about higher schooling or as I like to put it longer schooling that make obedient expert memorize regurgitates feel superior. And then they come across a track 5er.

Just changed vets because the last one wanted to pay off his mortgage on one visit
My dog has a fast growing growth on her belly, take her to the vet and she removes it, suggests getting a biopsy to see if it’s cancer, she says no charge. I said Ok, that was the first alarm bell, week later she says she wants to talk to me in person. If she wasn’t so cute would have told her were to go.
So I meet up with her and she says dogs got cancer, we can send her out for cemo, and other treatment. I said ok what will that cost, my dog is 13.
She says she don’t know. But if she doesn’t have it right away she has one month to live. Strike two butch your out, after pressuring for a price she throws out 2k to 5k.
I said my buddy has a farm and for a 2 dollar bullet I can instantly end any suffering she may face. That was about 8 months ago, dog is thriving. Wonder how many Track 6ers get taken like this. Must be a lot look at all the condo sales in Toronto.

Now meet the real life grim reaper, Harry Bellefonte look alike, scary as shit. My 90 year old mom was thriving two weeks ago, zooming around the mall in her walker, she had a fall fractured her hip. Got it hammered back together by a great surgeon. Blood work reviles she has bad liver enzyme’s, so back to hospital she goes. She’s a bit weak cause of the surgery a few weeks ago.

The Grim Reaper Doc on the seniors ward gives me a big lecture cause I won’t sign a DNR, your making her suffer look how week she is, bla bla bla. Lets nark her up and put her in palliative care. The asshole doesn’t even know she just had a hip job in the same hospital, that was attached to her chart, which he never read or did not care. My bluntness and emotionless direct questions dazzled him. Most people probably reach for Kleenex after talking to this guy. He asked me what I did for a living, after he noticed me paying close attention to his body language and commenting on it.
I lied and said I work in behaviour science, but am not allowed to breach my security clearance by telling him what dept I work for. The loser bought it. Then I got him close and said , Look Dr I know what your mandate , Understand the complexities and cost that we are all facing, but my mother is special, and it will be in your personal best interests to do the right thing in this case. He then says she has a stone blocking her duct to to her liver, I will schedule her for a scope and we will have it removed. She should see another 5 years
That’s how you play life or death poker kids, always play the player.

#91 Tarun Gupta on 06.27.12 at 6:15 am

Thank you Garth for taking the time to write every day!

#92 John on 06.27.12 at 6:27 am

About comparisons:

The eve of (economic) destruction:

“http://business.financialpost.com/2012/06/25/is-this-1931-all-over-again-paul-krugman-nouriel-roubini-niall-ferguson-and-more-think-so/

Useless extremism. There is no valid comparison. — Garth”
———–

But there are no comparisons even being made, valid or otherwise.

A serious consideration of the facts is still waiting. Patiently. Take a guess at what most people reading “Extremism, there is no valid comparison” have done, are doing and will do. That’s right…no serious comparisons.

Today’s article was very lucid inside a fatally limited playing field. October 1987 is connected to 1995
deregulations led by a Goldman Sachs lobby ( US Treasury head) and the birth of massive derivatives, the dotconomy, the 2001 “war on terror” distraction accompanying the run-up ( inflating asset values everywhere…especially housing).

You’re choosing not to make comparisons and just react, react, react.

Eventually it feels like walking past Kingdom Hall where the “saved ones” are breaking into song, and an overjoyed reveler thrusts a Watchtower into your hand as you try to pretend you don’t see it all.

So at what point will the serious comparisons begin? Start with March 2009. Take the same amount of time March 2009-present and project forward. It’s just one simple factor. The former exists due to funny money printing and a much higher level of denial ( not even including a dozen other major and obvious factors, clearly visible to all). Compare. Money printing and denial levels running forward the same way.

Ahhh, Kingdom Hall breaks into chorus. I can’t even hear myself think now…much less perform objective analysis.

#93 David B on 06.27.12 at 6:54 am

The more things change the more they remain the same …. Greed got them in and they continue to believe greed will get them out …. put $1000 on double 00 …..spin the wheel

#94 bigrider on 06.27.12 at 7:22 am

Garth-“On March 9th 2009, we hit bottom, the dow finished a tortuous 55% decline that spanked those poor people with lots of equity mutual funds in their RRSP’s”

Yes and that 1% or so saving in MER really saved those lucky people with lots of equity ETF’s in their RRSP’s. LMAO.

Your cheap shots at the mutual fund industry, although warranted in many cases, is trransparent and unbecoming to you Garth.

We all know ETF’s are more efficient and cost effective tools, in most cases, for financial market investing.

However, pretending that individuals were somehow ‘saved’ during that period by being in ETF’s instead of funds is misleading.

Where did I mention ETFs? — Garth

#95 yorel on 06.27.12 at 7:29 am

relating to #5
Sounds like the last election results.
Your point being…?

#96 Pr on 06.27.12 at 8:03 am

…2 major chartered banks to ask F to double the minimum downpayment for buying a home…
The day that happen, you will realize, what the real market is all about! And the people with money, usually , know how to keep it. Most of them are not buying right now. Like some say: Buy when theirs is blood in the street!

#97 Ferrari321 on 06.27.12 at 8:04 am

Thanks for writing daily – very appreciated

#98 down and out on 06.27.12 at 8:06 am

What housing crash ,here in southern Ontario we have been living in the aftermath of a market down cycle for a few years and like a bad skin rash it seems to be spreading. There is the odd bargain but flipping and speculation is way down ,newbies to the market need a steady job before even getting enough for a down payment which I hope they use has a permanent shelter not a wealth building strategy.

#99 Herb on 06.27.12 at 8:08 am

#49 Truth Hammerer,

you’re not even hammering the truth out of shape anymore, you’re just yammering.

Aroint thee, Roach!

#100 Herb on 06.27.12 at 8:14 am

#64 Junius,

would that his “[i]deologically driven perspectives” make him “dumb”. Unfortunately they are making him vociferous.

#101 Jim Lahey, Sunnyvale Trailer Park Supervisor on 06.27.12 at 8:26 am

“Ironically, the catalyst for the crash was the detritus of the American housing market, then falling into tatters.”

Former Chief Economist for CIBC World Markets, Jeff Rubin states in his book, Why Your World is About to Get a Whole Lot Smaller, that $147 a barrel oil is what caused the crash of 2008 and not the American sub-prime housing market. Ricky thinks the crash was caused by his shorting activities but I agree with Rubin.

Expensive oil did not make people borrow beyond their means and buy homes they could not afford. However Rubin’s thesis (which I know well) has merit. Nothing explains everything. — Garth

#102 timbo on 06.27.12 at 8:29 am

http://www.cbsnews.com/8301-201_162-57461273/stockton-calif-to-become-largest-city-to-declare-bankruptcy/?tag=pop;stories

“”The average citizen will not put up with this. Their home prices have plummeted, they have no jobs, a lot of people are getting fed up so that they have to resort to crime.” said Gregory Pitsch, a 22-year-old unemployed resident who made an unsuccessful run for mayor. “I’m asking you to make the right decision, not destroy the property values in this city, which bankruptcy will do.”

But city officials say Stockton has run out of options. In recent years, thousands of new homes mushroomed in Stockton, part of a suburban housing boom that attracted buyers from the San Francisco Bay area and beyond.”

A small taste of things to come………….

http://business.financialpost.com/2012/06/26/natural-gas-players-may-bend-the-rules-in-rush-for-land/?__lsa=a7ef9d99

“Allegations that Encana Corp. and U.S. rival Chesapeake Energy Corp. were plotting to fix land prices in Michigan are bringing out an ugly, dark side of the North American tight gas and oil revolution.”

Nothing new. Slap the wrist twice and
tell them to play nice…….

#103 stickler on 06.27.12 at 8:32 am

@ #82 Tim on 06.27.12 at 3:15 am

” #24 re Stupid American,
We’ll take the rain forest over any city or town in America ”

>> Who’s we? You have been drinking the Vancouver cool aid again haven’t you? You sound like another arrogant (and ignorant) Canadian.

#104 truth hammer on 06.27.12 at 8:55 am

#82 T……..Don’t use the royal ‘we’ to include all Canadians. As ‘we’ are finding now that the media gag laws have been relaxed under the Conservatives, a growing number of Canadians are not as virulently anti-American or as leftist as the Liberal propagandists would have you believe.

Yes, we have had a generation that has been brainwashed by the liberal propagandists. The education system is diseased with liberal propaganda. It may take a generation for the fog to lift …but it is obvious from the general discussion in Canada that people are realizing that they have been duped by the Liberal regime…and this is precisely the reason that Canadians en masse have thrown the bums out.

Everyone understands that pushing the leftist diatribe on children through the 80’s and 90′ has been socially destructive. We have seen a collapse of productivity and the ratcheting up of taxation to disguise the lack of an economy.

‘We’ have contracts like this

http://www.vancouversun.com/news/BCTF+reaches+tentative+settlement+with+province/6845276/story.html

strangling the taxpayer. These legacy organizations that were allowed to fester under the past regime are exactly what is wrong with Canada. ‘We’ are not talking about taking anything away from Canadians…we are talking about rationalizing the 3 decades of excess that has created an elite class of leftist reactionairies that are living far and above the expectations of average Canadians.

Isn’t it predictable that the teachers strike in BC is settled just in time for the teachers vacation to kick in? What happened to all the talk of class sizes after the payoff kicked in?

The explosion of Charter Schools will create a new generation of kids free from the propaganda of the leftist elites…..at least our children may have a chance to think freely and succeed without the burden of leftist ideology.

#105 patiently_waiting on 06.27.12 at 8:56 am

Garth….I keep hearing about Toronto, Vancouver and the west GTA areas….How about the Durham region…any predictions on how much of a drop there????

#106 torontorocks on 06.27.12 at 9:01 am

Its interesting seeing everyone get all in a lather over this news. They can raise the minimum down payment to 10% and that won’t change anything, except for new entrants into the market, who won’t be able to say come up with the 10%, in conjunction with 25 year ams and no cash backs. SO its like musical chairs – they get in the house now before regs change, keep hoping for low interest rates as they roll over, hope their economic situation improves so they can make big downpayments to pay down the mortage and get debt free within a few years. then the house is free and clear and there’s no reason to sell. hence the logic – get in now or get priced out forever.

the only thing that will change things are interest rate increases, particularly at refi time. and lenders can keep their rates as low as they need to right now.

our sound economic policy has more to do with the fact that we’re relatively irrelevant globally than sound stewardship.

CMHC can bump their limit to 1 trillion, we’ll all still pay it as good little taxpayers.

US interest rates have been at historic lows for years, and the housing market languishes amid massive equity loss. So much for your theory. — Garth

#107 Keith in Calgary on 06.27.12 at 9:10 am

Remember my comment from yesterday……?

“On my morning drive here in Calgary I cut thru a trendy inner city neighbourhood known as Altadore.

It’s the typical tear down kind of place where $700K cardboard infill shacks now occupy what once used to be huge green yards full of nice mature trees and beautiful character homes. On one segment of the street I always take, about 10 blocks long, there are 4 huge holes in the ground that suddenly have all the yellow iron removed, the contractors are long gone, and those large metal fences have gone up around the lots, indicating that everything has stopped cold in it’s tracks.

Funny ‘dat.”

————————

Well last night I drove home in the other direction down the same street, inner city shortcuts are sweet eh ?……….in addition to aforementioned 4 holes, there are also 3 partially completed new builds that have now been fenced off, and left unfinished with spray painted or store bought FOR SALE signs out front……….and if you count really fast, add another 7 RE agent shingles from different places on the same length ot street to the total.

Shades of 2008, when I counted 27 condos for sale in a 4 block stretch just north of Chinook Centre here in Calgary.

The criminal scum in GLOBAL will never report this.

#108 fancy_pants on 06.27.12 at 9:11 am

So these guys have indirectly proven their actions (emergency interest rates, 0/40 mortgages) propelled RE into a bubble, their counter-actions came way too late (tightening mortgages rules), and their warnings, lecturing and finger wagging are working overtime to find a scapegoat telling society to stop consuming on credit.

aka: politician

#109 Roland on 06.27.12 at 9:30 am

Truth Hammer has not being paying attention. Canada today is “liberal” only in the classical sense, i.e. we’re closer to pure capitalism than ever.

Since the mid-80’s Canada’s governments have all been pro-free-trade, pro-deregulation, pro-finance, pro-tax-cut, and pro-big-business.

Truth hammer, Canada’s governments, Liberal and Conservative, have been getting absolutely everything you want, so quit whingeing!

#110 45north on 06.27.12 at 9:44 am

smoking man: always play the player.

like hockey eh?

city veterinarians have it pretty easy. you may personally doubt her (the vet) but imagine trying to sue!

#111 Stupid Canucks on 06.27.12 at 9:45 am

#104 – you are absolutely right. Just look at Wisconsin for theory validation. Even in delusionally leftist California where I have lived for half my life, unions are on the retreat. There is a pervasive sense of entitlement that comes with unionization that tends to destroy any productivity gains made in the general economy. At the root of the problem, there is always self-servient government policy of career corrupt politicians. It seems as though even the retirement home faces of the U.S. Supreme Court are in on the gig judging by the way they cavalierly rejected to hear arguments yesterday for stalled campaign finance reform now many decades in the making.

#112 Bigrider on 06.27.12 at 9:46 am

Garth to bigrider # 94 ” where did I mention ETF’s”

You are correct , you did not mention ETF’s this time.

Where I take issue with you is this notion you so often promote, that somehow the investor is so much more vulnerable to a poor performing portfolio in mutual funds than he is in other financial market investment vehicles.

Mutual funds are highest in cost, granted. Other than that, a poorly structured portfolio asset allocation , whether it be in MF’s , ETF’s or direct ownership of the financial asset will yield virtually similar results.

#113 The American on 06.27.12 at 9:46 am

At #64: Junius is correct. Historically speaking, conservative administrations have ran not only larger, but significantly larger, deficits than liberal administrations. I know this may seem counterintuitive, but its a fact.

#114 45north on 06.27.12 at 9:49 am

PeterFromCalgary: Hey and lets not forget the nightmare scenario.

like you live in Calgary

#115 Canadian Watchdog on 06.27.12 at 9:50 am

Just released.

Family income and income of individuals: Sub-provincial data, 2010.

“In 2010, Ottawa–Gatineau had the highest median total family income (before tax) of all the census metropolitan areas (CMAs), at $90,790, according to data derived from personal income tax returns.”

“For people not in census families, the largest increase was in St. John’s (+2.3%), and the largest decline was in Vancouver (-5.6%).”

http://www.statcan.gc.ca/daily-quotidien/120627/dq120627b-eng.htm?WT.mc_id=twtB2554

#116 Boombust on 06.27.12 at 9:50 am

“Who the hell in the world would ever want to live in a subarctic rain forest anyway beats the heck out of me?…”

As opposed to what?

Living in a typical, slummy US city?

#117 TurnerNation on 06.27.12 at 9:51 am

As was posted on weekend, here’s a clip of our fourm host as a cub reporter. Pre 1987 crash.

Blast from the past: a young Garth writing for the Toronto Sun.
1981. Still going strong!

Fast forward to 6:40

http://www.youtube.com/watch?feature=player_embedded&v=ASaSldxSnG0#!

#118 Junius on 06.27.12 at 9:52 am

#106 torontorocks,

You said,”our sound economic policy has more to do with the fact that we’re relatively irrelevant globally than sound stewardship.”

Sound economic policy? Say what? Did you miss the part where this so-called sound policy was simply the creation of a ponzi scheme debt bubble that is now bursting? There was and is no sound policy.

As for the decoupling from the world economy, watch and see how well that works.

#119 Boombust on 06.27.12 at 9:53 am

“Yes, we have had a generation that has been brainwashed by the liberal propagandists…”

You’re an idiot.

#120 The American on 06.27.12 at 9:58 am

I’ll settle this once and for all… Between Vancouver and San Francisco there is zero comparison. One city is amass with monotones architecture, rain, cold, poor attitudes, and zero innovation. That would be Vancouver. The other has much nicer weather, dynamic architecture, a rich history that shows through, world’s most amazing cuisines, ten times nicer shopping, and really cool people. That would be San Francisco. See! No comparison. :-)

I would say, however, I don’t like that person’s name handle, and he/she was a little harsh.

#121 eaglebay - Parksville on 06.27.12 at 9:58 am

#24 Stupid Canucks on 06.26.12 at 10:52 pm
“Oh…I only lasted about 10 months in Raincouver…that’s before thoughts about jumping off the single bridge there start flooding one’s mind:-)…Who the hell in the world would ever want to live in a subarctic rain forest anyway beats the heck out of me???”
________________

Ask the thousands of Americans who live along the BC Coast and Vancouver Island.

#122 TurnerNation on 06.27.12 at 10:20 am

#49 truth hammer on 06.26.12 at 11:51 pm

“It’s the insidious legacy intrests of appointed bureaucrats….”

You mean, like the current slew of *appointed, unelected* Sentors by the Cons? When they campaigned on the very opposite?
Appointing such distinguished luminaries as a portly hothead ex-reporter? Is this the best we can do?

god you are dumb. Please, remove yourself from this forum.

#123 eaglebay - Parksville on 06.27.12 at 10:23 am

#52 SCIB on 06.27.12 at 12:01 am
“I will vote against all and every government that cheats, lies and steals its way into power.”
___________

I guess you’ll never vote again.

#124 Bottoms_Up on 06.27.12 at 10:28 am

# 106 torontorocks on 06.27.12 at 9:01 am
——————————————-
If they knock-out the bottom of the market, then no one buys entry level housing. If no one buys entry level housing, then no one buys ‘move up’ houses. If no one buys ‘move up’ houses, then EVERYONE is stuck in their homes.

No demand = no sales = significant price reductions in order to generate demand.

Coming to a city near you.

#125 VicBC on 06.27.12 at 10:28 am

#104 truth hammer

http://www.660news.com/news/local/article/377494–canadians-disapprove-of-the-prime-minister-and-ruling-tories

Enough said

#126 Observor on 06.27.12 at 10:29 am

How YOU doing?

Median income of families in Canada by City listed here

http://www.statcan.gc.ca/daily-quotidien/120627/dq120627b-eng.pdf

#127 Bottoms_Up on 06.27.12 at 10:35 am

#90 Smoking Man on 06.27.12 at 6:09 am
——————————————-
You could consider filing a complaint against your ex-vet with the CVMA (in violation of the Canadian Veterinary Oath):

http://canadianveterinarians.net/about-oath.aspx

Canadian Veterinary Oath

As a member of the veterinary medical profession, I solemnly swear that I will use my scientific knowledge and skills for the benefit of society.

I will strive to promote animal health and welfare, relieve animal suffering, protect the health of the public and environment, and advance comparative medical knowledge.

I will practise my profession conscientiously, with dignity, and in keeping with the principles of veterinary medical ethics.

I will strive continuously to improve my professional knowledge and competence and to maintain the highest professional and ethical standards for myself and the profession.

CVMA 2004

#128 TurnerNation on 06.27.12 at 10:38 am

Thank you Smoking Man for taking the time to write every day!

#129 Joe on 06.27.12 at 10:38 am

If unemployment increases and incomes continue to stagnate, it’ll turn into a housing bust like what happened in the USA. Changes in policy won’t have such a profound effect on the market tho (as seen in the US). It’s mainly about JOBS.

#130 Observor on 06.27.12 at 10:43 am

Canadian House Prices Rose in May

According to latest index data

http://www.housepriceindex.ca/admin.aspx?mode=voirHTML&nonews=218&qui=3370&langue=EN

cue knashing of teeth, cries of data manipulation and warnings of “just you wait and see, it’s a gonna CRASH, HARD”

As for me I don’t give a rip either way. All entertainment to me.

#131 Spiltbongwater on 06.27.12 at 10:44 am

Was John Travolta the pilot of that plane? I bet he was getting a massage from a male massuse and had the plane on auto pilot. Either that or he was sitting co pilot tugging on the pilots stick when it crashed.

#132 Dorothy on 06.27.12 at 10:49 am

It seems to me that a lot of the blog dogs who simply can’t wait for a housing crash to happen, feel that way because they are waiting for an opportunity to BUY.

Therefore, it would appear that there is a lot of pent up demand for real estate, which would be unleashed once the market is percieved to have hit bottom.

Therefore, what I’ve said in previous discussions will come true. What goes down, will eventually come up again!

#133 Mixed Bag on 06.27.12 at 10:54 am

#90 Smoking Man on 06.27.12 at 6:09 am

Good for you SM, great post. I hope your mother does well.

Was at the hospital yesterday with my son for a broken leg, similar not reading the chart / computer missing information / information not communicated in full.
You have to be vigilant, because the only person who cares is you.

Interesting, so many staff at the fracture clinic, but only one who actually sets the casts. The fracture tech says they’ve discontinued that training in Canada. WTH?

#134 Tony on 06.27.12 at 11:14 am

Two things are certain Canada will be back in recession and after the U.S. election America will probably be in a depression as truth will finally reign supreme down in America.

#135 Doug in London on 06.27.12 at 11:15 am

@Smoking mans smarter cousin, post #31:
In many postings, but especially this one, there’s talk of how the stock market crash caused so much havoc in some people’s lives. Does anyone understand that 1) that crash represented an INCREDIBLE BUYING OPPORTUNITY for anyone with cash, and 2) those who stayed invested during this crash would have seen the value of their portfolio go up many times over in the next 20 years? This “crash” was more like a momentary power interruption (called an auto reclose in the utility industry) caused by a lightning strike than an actual sustained crash like in 1929.

#136 mousey on 06.27.12 at 11:17 am

Lots of “priced below assessment” on Van west side listings. Most of these places are total dumps asking between 1 and 1.5 million. One says that they are even throwing the house in for nothing. Oh, gee, so generous. Should have offered to tear it down for nothing. Absolutely cannot fathom buying such crap for 1 million plus. Most of these horrid places are on busy streets and look like rat holes/hovels that I wouldn’t live in even as a student and I’m no spoiled brat. I don’t think there is going to be a hard landing in Van west side, but the more you look around at what you can get elsewhere, surely there has to be a vendor expectation adjustment that will bring prices lower.

#137 torontorocks on 06.27.12 at 11:24 am

#106 – Garth, I’m still trying to understand the dynamics of how this will work then? The US didn’t have the CMHC backstopping all those BS loans being made – hence there was a reckoning in the market. Here, they just raise the taxes. Plus, while I get the thinness of the equity in the houses means we don’t need to see 15% interest rates in order to see the impact on housing prices, I’m still struggling to see why they would suddenly fall in price if people are still able to make that monthly. there was a lot of debt issued on houses that were financed via liar loans with no cash flow to support the underlying pool. here, we have a government guarantee aka taxes for all the crap thats in the system.

my theory may not have been conveyed very well, but I’m still very attractive.

#138 American Werewolf in BC on 06.27.12 at 11:36 am

#79 Buy? Curious? on 06.27.12 at 3:03 am
However, those expecting to grab a house on the cheap are disllusional.

The fact that so many people are expecting to grab cheap homes will in fact make it a reality; the bursting of a real-estate bubble hinges primarily on public perception once prices become this divorced from fundamentals. All at once, there is a tsunami of perception building against this market.

BTW, the banks won’t collapse.

#139 Jim Lahey, Sunnyvale Trailer Park Supervisor on 06.27.12 at 11:44 am

“Expensive oil did not make people borrow beyond their means and buy homes they could not afford. However Rubin’s thesis (which I know well) has merit. Nothing explains everything. — Garth”

Expensive oil brought an end to the sub prime lending however and brought on the biggest post war recession. As Rubin points out in a recent blog, the current lower oil prices is a sign that the world can’t afford to stay out of a recession. It is a catch 22 situation going forward. If governments can get economies rolling again, oil will once again spike due to dwindling supplies of cheap oil and kaboom, recession city here we come again. To quote Rubin:

“But by far the greatest impact that oil price shocks have on the global economy is the one they make on inflation and, hence, interest rates. This linkage is the means by which they have typically delivered a mortal blow to economic growth. Oil shocks have always given rise to growth-ending increases in interest rates as central banks are forced to respond to the inflationary fallout they leave behind.
The last recession was no exception. As oil prices soared from $35 per barrel in early 2004 to almost $150 per barrel in the summer of 2008, consumer price inflation in the US tripled to a rate of almost six per cent. It didn’t take long before interest rates caught up to inflation and, in the process, blew up the massively over-leveraged subprime mortgage market and the economy with it.”

#140 ./. on 06.27.12 at 11:54 am

Why is everyone upset with realtors, etc? If the people were dumb enough to take on more than they could afford, it’s their own fault. They knew they would be paying for a long time. Maybe they should have stayed renters. Buyers should only be mad at themselves for being so stupid.

#141 JamieGroulx on 06.27.12 at 12:08 pm

Just wondered if you had time to chime in on the BCBS’s pondering of an upgrade to Gold’s capital asset tier from 3 to tier 1. I know you’re not a gold bug & nor am I, but I’m starting to wonder if this upgrade will go through. Now that Spain is holding it’s hands out and Greece is in line for a fifth time to the trough, the BCB is considering an upgrade to the ‘precious metal’ to a tier one in order to assist teetering banks from the effects of the Grexit in Europe and closer to home, the downgrading of ‘Too Big To Fail’ banks in North America. These downgrades mean that the Banks will have to offer more collateral when trading derivatives, this coupled with new regulations demanding that banks keep 4% of total capital in tier 1 assets, which are exclusively AAA-rated holdings. So a push to upgrade gold from a 3 to tier 1 is in the best interests of banks holding gold, as this will allow them to use the precious metal to cover some of the 4%. I haven’t read anything about China’s influence or take on the subject at hand, but the jurisdiction of the BCBS is global, so there must be some interesting articles down that way.

#142 Useless mortgage borkers criminals in an ALL OUT PANIC! on 06.27.12 at 12:13 pm

torontorocks #106

You uneducated realtors and mortgage brokers are going ot be in a world of hurt. It’s obvious you have no understanding of economics but why would you when you are a two week trained realtors or mortgage broker? Looks for Toronto condo’s to crash greater then 50% and houses to crash upto 50%.

#143 Buy? Curious? on 06.27.12 at 12:24 pm

Via Rail cutting 200 jobs. Rogers cutting 350 jobs. RIM jobs are disappearing too. Argh! I thought RIM jobs were as safe as houses!

I can’t wait to see June numbers.

#144 Arthur on 06.27.12 at 12:37 pm

#72 blase

I haven’t been to the others but comparing Seoul to Vancouver is pretty insulting to Seoul. My wife has some Korean friends who think of Vancouver as a small fishing town.

#145 DonDWest on 06.27.12 at 12:38 pm

#132 Dorothy

The few hundred bears who stroll this blog are not enough people to create another real estate bubble.

This blog received 20,529 visits yesterday. Just to be accurate. — Garth

#146 Really on 06.27.12 at 12:47 pm

They could have easily allowed our market to fully correct like it SHOULD have in 2009. They could have blamed it on the US collapse, but no we stupidly pushed through it thinking that we will hold on until the system recovers.

I guess our people didn’t assume that the USA would bail out their banking friends instead of allow them to fail and actually restart the American economy with a good foundation. The USA choose a Japanese style recovery (the Japanese STILL haven’t recovered) rather than allow the market to fix the problems.
This means the USA is going to have a decade or two of no/little/fedfaked growth.
So sorry Canada not allowing the market to do what it should have done in 2009 will cost us even more now. Bad decisions, weak leadership, but what can we expect from a complacent neutered country anyway.

Yes btw, I’m glad to be here, it’s a good (not great) place to live, but it could be so much better if we had leadership that actually cared about the people AND had the courage to make hard long term decisions.

(just for the record NO current party does that or even promises that – Harper is the closest but still unacceptable. The NDP is insane and not to be trusted to do the right thing EVER. The Liberals, lol it’s hard to say anything about them without either laughing or being disgusted.)

#147 TNT on 06.27.12 at 12:48 pm

What’s the light in the tunnel…is it the housing market?

#148 Bubble bath, anyone? on 06.27.12 at 12:51 pm

DELETED

#149 Timing is Everything on 06.27.12 at 12:53 pm

The top 10 Canadian cities for family income…

http://tinyurl.com/btjlkdd

#150 FullOfFear on 06.27.12 at 12:54 pm

Garth, you have excellent advice on real estate and give good insight on financial matters in general. But this post has me questioning my reading material. Normally I stay clear (far far away) from a guy who refers to himself as having been “succulent” (which Webster’s defines as juicy or moist and tasty). But, hey … the article’s are free.

Like a cactus. — Garth

#151 Timing is Everything on 06.27.12 at 1:11 pm

Can you spare some saliva?

On the local AM radio news [Victoria]…it was reported that drivers were not told that this is voluntary or confidential. 85% of drivers just gave their DNA to TPTB…They were illegally ‘detained’, but did not know it. What a system. Stick a fork in it. That’s an understatement…

http://tinyurl.com/6way3vb

#152 Debtfree on 06.27.12 at 1:21 pm

@88 pfc
MIT comes up with a solar collector the utilizes the infrared spectrum adds it to ultraviolet spectrum increasing efficiency by a factor of two.
Electric cars ,trucks ,buses , planes and trains become the norm.
The French develope fussion and make it commercially viable.
The population world wide continues to drop .
Pressure on farm land drops to the point that the fallow system returns making chemical fertilizers less necessary .
The price of lab grown meat drops in prices below the cost of feedlot unhealthy , hormone filled ,antibiotic saturated and inhumanly treated animals .
World wide dictators and despots are reigned . Poverty is addressed making organized murder by governments a thing of the barbaric past. Oil is no longer burned but is used for polymers . Albertas people start thinking in the creative realm and clean up after themselves.
You’re right it’s fun coming up with a nightmare scenario for you . Thanks pfc.

#153 Blue Monster Lover of Meats and Vegetables on 06.27.12 at 1:24 pm

More free trade deals are coming which mean even more job losses for us and more rights for the multinationals taking advantage of the rest of us. Free trade only means a bill of rights for the multi national corporations.
—–
There’s nothing wrong with free trade if our economy is competitive. The problem is Canada has to many free riders, public sector workers, socialized healthcare, a crappy and costly education system, subsidized daycare and CBC and VIA trains….. the list is long.

Cut all the waste, privatize everything that can be privatized and then eliminate the income tax and capital gains taxes, increase interest rates, SO PEOPLE WOULD SAVE AGAIN! THEN our private sector would be able to compete on the world stage.

So, free trade is good if you have a free economy. Else we’re no different from North Korea. Welcome to Canada, surrender your liberty and enjoy poverty while the socialized free riders work their best to help you. Yeah right!

#154 Mark W on 06.27.12 at 1:29 pm

http://www.realtor.ca/propertyDetails.aspx?propertyId=11537906&PidKey=89756497

HAM.

#155 Bottoms_Up on 06.27.12 at 1:34 pm

#140 ./. on 06.27.12 at 11:54 am
———————————-
Sure, people should be accountable for their own decisions.

But, when you hire a real estate agent, someone who is suppose to be professional and represent your interests, they shouldn’t be spouting car salesman type lines “it’s never been a better time to buy”; “let’s make an offer now before we miss out”; “I can arrange an 8% mortgage through a shoddy lender for you” etc.

If you see a lawyer or doctor or architect or vet or dentist for advice, and make decisions based on what they tell you, yes, you are responsible for those decisions, but you are acting based on the advice of a professional (so if the professional screws up, lies, misleads, tells half truths, they should also be, and are, accountable).

Why should real estate agents be any different?

#156 From Mississauga With Love on 06.27.12 at 1:43 pm

Dream on guys. No hard landing here. Many of the immigrant cultures in the GTA worship real estate to death, and they will do whatever it is in their capacity to hang on to their homes and not sell at reduced prices. Where I live in Mississauga, the population is mostly Indian, and what they have in their mind is housing scarcity and significant price increases where they come from. There is no way prices in India will keep increasing but will get reduced in Mississauga.

#157 Bottoms_Up on 06.27.12 at 1:46 pm

#137 torontorocks on 06.27.12 at 11:24 am
—————————————
Pick up an economics 101 textbook and read about supply and demand and pricing.

Sure, people may be able to make their mortgage payments. That doesn’t mean the price of their house isn’t going to crash.

The price is dictated by a lot of things (government policies, access to money etc.), but mainly the supply of houses on the market, and the demand to buy those houses, sets the price (and government policy and access to money influences supply and demand).

Thus, with the change in mortgage qualification rules, reducing the amortization period (making the monthly payment higher), this reduces the size of the mortgage one can take on, and actually removes some people from the market (entry level buyers–some won’t qualify to buy a house any longer).

From my own example, under these new rules, I wouldn’t have been able to buy my house. A few years ago, I was only able to buy because of the policies in place at that time (35 yr amortization, thus keeping my monthly mortgage payment under the debt service ratio ceiling). So I was part of the ‘demand’ side of the equation back then, helping to push up real estate prices.

The ‘demand’ side of the equation has now been effectively squashed with the policy change, and the ‘supply’ side is only going to increase (as people want to crystallize their capital gains, searching for the last of the greater fools), creating a perfect storm for house prices.

This all has nothing to do with people continuing to or being able to make their mortgage payments.

#158 Blue Monster Lover of Meats and Vegetables on 06.27.12 at 1:48 pm

Then I got him close and said , Look Dr I know what your mandate , Understand the complexities and cost that we are all facing, but my mother is special, and it will be in your personal best interests to do the right thing in this case. He then says she has a stone blocking her duct to to her liver, I will schedule her for a scope and we will have it removed. She should see another 5 years
——
Good for you SM.
That’s how the Russian system works too. It’s who you know or how you deal. I’m surprised you didn’t have to bribe him, i think that’s a common occurrence these days.

The problem with our system is they already have your money! Treating you is just an expense.

The economic incentives are no treatment and a quick death. It’s great for the funeral homes, energy (if you’re cremated) and florists.

Welcome too Canada, we hope you live long and work hard or else drop dead.

#159 Motzu on 06.27.12 at 1:53 pm

I laughed my lungs out reading these RE ads …

Ohhh my … Im still crying …

http://www.theonion.com/features/real-estate/

(just hit your browser’s stop button before flash popup)

My Fav :

__________________________________

Never imagined you’d be 35, married with two kids, and working a job you can’t stand in a town you once vowed to leave? Then this 3-bedroom, 2.5-bath suburban monument to averageness is for you! Easy access to strip malls, chain restaurants, and charming walking trails for quiet sobbing. -Reference number 4JF389-

__________________________________

#160 Jeannie on 06.27.12 at 1:58 pm

Garth…one of your best articles to date.
If this dose of reality doesn’t wake some people up, nothing will.

#161 2centCdn on 06.27.12 at 2:02 pm

#143 Buy? Curious?
Yah, but Walmart announced yesterday that they will be hiring 4,000 in Canada in the next few years ……… what’s the problem : )

#162 Blue Monster Lover of Meats and Vegetables on 06.27.12 at 2:04 pm

#116 Boombust on 06.27.12 at 9:50 am

“Who the hell in the world would ever want to live in a subarctic rain forest anyway beats the heck out of me?…”

As opposed to what?

Living in a typical, slummy US city?
—–
Get out more, downtown Detroit and some down and out burbs are pretty rough, but the northern areas, suburbs and centers, are gorgeous. Detroit, I’d say on the whole puts every city in Canada to shame and by American standards is crawling out of a tar pit.

#163 Blue Monster Lover of Meats and Vegetables on 06.27.12 at 2:06 pm

Crawling out of the tar pit and about to enter the feather factory. Meanwhile, Calgary and Alberta is turning into a tar pit!

#164 daystar on 06.27.12 at 2:17 pm

#56 Mr Buyer on 06.27.12 at 12:16 am

Its a possibility when they bring up gag laws in the context of propaganda, especially considering Garth’s former background in politics but the quality isn’t there. I wouldn’t pay for that (but maybe the volume of the lack of quality is the value, what a way to buy support). TH’s etiology is either disordered (OCPD) or he’s paid like you say and if its the latter, it would be a sad shame because politics is not the primary reason for this blog’s existence. Its heavily related at times, but financial literacy is much more to the point.

I’m still leaning much moreso towards a disorder of some kind, there’s far too much obsession, self absorbsion, esteem issues in his comment history. I’m haven’t ruled out a male in his 40’s with Aspergers:

http://www.videojug.com/interview/obsessive-compulsive-personality-disorder

#165 fancy_pants on 06.27.12 at 2:28 pm

#132 Dorothy on 06.27.12 at 10:49 am

I understand the supply and demand explanation but comparing a few hundred (maybe a thousand) GT blog dogs eager to buy vs. millions in over their heads doesn’t balance the equation very well.

your mileage may vary.

…and to add to post #143: Fed’s also slimming down
http://www.cbc.ca/news/politics/story/2012/06/27/pol-public-service-cuts-wed.html

#166 Stupid Canucks on 06.27.12 at 2:28 pm

Re # 121- yes, I have asked – at least a few of them, and they can’t wait to get the hell out of there. Oh, wait: the ones I know did already. Some retired and Costa Rica and Texas, while others moved to Wisconsin, California and Georgia for work. Look up suicide rates for the Greater Seattle MSA. You’ll be surprised what you will see in comparison to suicide rates in places like Japan…

#167 Stupid Canucks on 06.27.12 at 2:34 pm

Oh, and one more thing. I don’t intend to get into verbal diarrhea with people who clearly have inferiority complexes…

#168 Dave on 06.27.12 at 2:39 pm

I’m with ya on the pending correction, but quoting Moody’s? Aren’t they 1/2 of the reason for the MBS fiasco? And yet we’re supposed to believe they have the faintest clue what they’re talking about? Half the people at Moody’s can’t even spell Moody. It’s where you end up if you’re IQ is below even the wall street idiot threshold.

I think you’re argument is solid, but for the love of god, please leave Moody’s out of it.

#169 Deflation on 06.27.12 at 2:41 pm

Been a long time reader, thanks for another great article Garth.

Personally, I think the hard landing would be far uglier; mainly due to China’s hard landing (currently in motion), and that US has not recovered with enough strength in this globalized economy.

Not trying to be a merchant of fear… but considering China’s recent electricity consumption and PMI; as well as coal, steel and copper surplus in storage, the picture doesn’t look good.

You may not agree, but I also believe common share price of Canadian Financials will fall as a result. CMHC may have covered their mortgage loan risk, but then in a deflationary environment our banks won’t be making as much; added there are other loan risks such as consumer lendings.

#170 Junius on 06.27.12 at 2:42 pm

#120 The American,

You forgot to mention that San Francisco is home to Apple, Google, Cisco, Intel etc. while Vancouver has Lululemon.

#171 torontorocks on 06.27.12 at 2:49 pm

#142 I’m not an agent or broker you maniac! I’m just saying – what bottom? Tom and Sue buy a house for $900,000, they carry the monthly for $3,000 for the next 36 to 72 months and voila, they’re paid down to a meaningful amount. no sale needed.

#172 TurnerNation on 06.27.12 at 3:01 pm

#140 ./. on 06.27.12 at 11:54 am

The greedy Canadian realtors do not allow public access to price changes, price changes, history.
Unlike USA’s Zillow and Trulia web sites.

Greedy realtors tell first time 20-something buyer rubes that it’s okay buying a 500sq foot condo for $400,000 to “get into the market” or maybe “it’s a hot spring market”.

Soon: Panic on their part! I bet Lease Busters car website will become flooded with desperate realtors looking to get out of their BMW leases.

#173 jess on 06.27.12 at 3:01 pm

(g) banksters

…”Barclays will pay $450M for manipulating interest rates which affected how much people pay for loans to attend college or buy a house.
“Banks must not attempt to influence LIBOR or other indices based upon concerns about their reputation or the profitability of their trading positions,” CFTC Chairman Gary Gensler said.

According to the CFTC, starting in 2005 Barclays based its proposed settings for the Libor on the requests of its derivatives traders, who wanted to manipulate the rate to benefit their trading positions. The traders would ask their Barclays colleagues to adjust their rate proposals up or down.

A May 2007 email from a Barclays trader in New York illustrates this, the CFTC said. The email said: “Pls. go for 5.36 Libor again tomorrow, very long and would be hurt by a higher setting … thanks.”

Under the settlement, Barclays agreed to more strictly separate its traders from their colleagues involved in daily proposals for the Libor rate.

Assistant Attorney General Lanny Breuer said that Barclays was the first bank to cooperate extensively with the investigation. Barclay’s cooperation greatly helped the Justice Department in the probe, he said….

http://www.usatoday.com/money/industries/banking/story/2012-06-27/barclays-penalty/55854212/1

#174 Al on 06.27.12 at 3:17 pm

#115 – Canadian Watchdog. Thanx for the Census Income data link. looks like families in Greater Sudbury earn more than thos in Toronto.

#175 Derek R on 06.27.12 at 3:19 pm

#78 Canuck Abroad on 06.27.12 at 2:47 am wrote:
Not sure if this has been posted previously but Steve Keen is in Toronto and giving two talks on the debt bubble / global crisis. One is 28 June 7pm and the other 5 July 5 pm, both downtown TO. Worth seeing if you get a chance.

http://www.debtdeflation.com/blogs/2012/06/22/upcoming-talks-in-toronto/

Wish I could. Bit too far from Calgary though.

#176 Sid on 06.27.12 at 3:23 pm

Been reading this blog for over a year now, and telling everyone I know of the upcoming RE crash they keep laughing at me.

Sold my house in Oakville, ON exactly 12 months now and renting on a nearby street. Only to see my neighbours with same size house and roughly same condition, reap $75K more than I sold mine. How disappointing!

If they don’t sell they ‘reap’ nothing. Nice try, realtor boy. — Garth

#177 Derek R on 06.27.12 at 3:29 pm

#79 Buy? Curious? on 06.27.12 at 3:03 am wrote
As long as people have jobs to service their mortgages nothing is going to change. Once Harper joins the austerity parade, then we’ll see a correction.

I wish that were true. But sadly the job losses will start soon after the banks stop shovelling out new cash in the form of mortgages. When’s that due to happen? Oh yes. July 9th. I would expect job losses to start really getting into gear about October then.

Of course if H decides to stop shovelling out cash via the deficit and do austerity anyway, the job losses will be much worse. If — and I shudder at the thought — but if Canada’s trade balance also goes negative, then it’ll be a triple whammy — JobAgeddon.

So let’s hope austerity gets junked before it even starts. Canada will have enough on its plate with private debt deflation and export loss without having to worry about public debt deflation too.

#178 Sebee on 06.27.12 at 3:46 pm

Maybe Latinos will save Canada too?

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/us-housing-market-poised-for-new-boom-economist/article4374679/

#179 betamax on 06.27.12 at 3:47 pm

#7 TBF — To actually be fair, Moody’s is either right or wrong according to the veracity of its current analysis, regardless of past error.

“Once wrong, always wrong” is a fallacy. People can learn from mistakes, and reversing a previous bad call isn’t necessarily ironic.

#180 daystar on 06.27.12 at 3:57 pm

http://www.theglobeandmail.com/report-on-business/moodys-warns-on-mortgage-debt/article4369806/

There are a number of excellent questions that beg for answers. I wish I had more time to tackle a few but the link above, that which Garth eludes to, is cause for worry.

What has to be on everyone’s mind (the thinking kind, anyhow) is the future of interest rates. As long as Bernanke keeps rates at rock bottom in the U.S, borrowing costs for Canada should remain cheap where they are at right now but nothing is certain. I think about some of the things I’ve predicted in the past that didn’t come true (I thought Spanish yields would trend lower after a bailout was announced, didn’t happen. I will say however, that their need to borrow isn’t dramatic like it was earlier in the year so its not a major issue right now until November but we shall see with Spain, their bonds are turning to junk and I didn’t think it would happen this quickly. Readers, thats what RE bubbles gone bust can do). I also thought commodities would have picked up past the middle of June and it did briefly but we are now trending toward May lows again in mining and energy is still finding its bottom so I’m getting surprised by the markets in the near term in a sense but I think July valuations will recover somewhat.

The Canadian dollar could trend to .85 cents over the next year, thats a possibility and because our nominal GDP is priced in U.S. dollars and our gross public debt is so high (109% according to this link):

http://www.statcan.gc.ca/daily-quotidien/120615/t120615b004-eng.htm

… its alarming considering the context of what Moody’s has had to say about Canada’s real estate sector and lets keep in mind that when Harper took over a little over 6 years ago up til’ 08′, Canada’s gross public debt to GDP ratio was less than 70% so its grown by 40% over the last 4 years. I don’t think there is a government in the world that has run up public debt to this extent over the last 4 years, I really don’t. Ireland perhaps? Portugal maybe. Iceland, Greece, yeah, governments that are going bankrupt. See for yourselves where 109% places us, its not in good company:

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html

This is the record Harper has had and yet we see him lecturing a newly minted president Hollande in France on fiscal deficit spending on France’s own soil, while Conservative MP’s howl and decry social spending in Europe during a time when they are trying to negotiate a free trade deal. Canadians should know that the way our Harper government has handled Europe over the last month is embarrassing and I’m sugar coating it. Bereft of not knowing the difference between right and wrong, offering a clearcut example of grotesque hypocracy would be far more accurate, the numbers don’t lie. Diplomatically speaking, Canada has taken some major hits because of our Harper government and its not because Mulcair says so, its because it is so. I hope Canadians are picking up on this.

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/indi01f-eng.htm

The breakdown that the government of Canada provides:

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/indi01f-eng.htm

…there are some question marks that remain unanswered concerning central government assets valued at $317 billion (no breakdown I can find at stats can) and the liability of pensions and other accounts are vague in terms of breakdowns of future timeline costs and sectors so its really hard for the public to assess risk scenarios for Canada until one looks at these numbers. There is also the question of $236 billion worth of government guarantee’s (Mortgage backed securities, Asset backed commerical paper backstopped through CMHC) and what these assets are worth, I would think 90 cents on the dollar or higher, but there is no true way of knowing since the timelines of this debt hasn’t run its course and such assets are unquestionably sensitive to interest rates so…

What I can say is that Moody’s downgrades don’t come silently when it comes to governments and downgrades will effect Canada’s cost to borrow and what they are saying now through the media is a precursor to downgrades. We could see an immediate reaction to the cost of borrowing for our government bonds or, due to Bernanke’s low rate policy see no change. I think that rates could come up as a consequence but they would be marginal until Bernanke allows treasury bonds to self regulate (they stop buying their own bonds, general consensus is 2014 but it could be advance to late 2013 depending on housing valuations there and please, lets not bet against america).

Lets keep in mind that the government of Ontario has faced downgrades already? The way the general public should interpret media links like Moody’s negative view on Canada’s real estate is that the government of Canada could face a downgrade. Considering that our gross public debt to GDP ratio has skyrocketed from less than 70% to 109% where it is today in just 4 short years, I believe a downgrade is reflective with this kind of credit distortion, especially when one considers the prospects of an .85 cent dollar. (oil is a toughy though, look at what would happen to oil if war broke out in Iran) 109% is based on a dollar at or slightly above par. A dollar at .85% would push Canada’s gross public debt into the 120’s, comparable to where Italy is right now. Net debt is another issue, but like I say, how can one assess risk with assets applied to gross public debt when these assets aren’t clearly defined by government?

I’m thinking our federal government will face a credit downgrade within 6 weeks from Moody’s considering their PR (especially when they site RE as a risk) and the numbers. Readers will have to come to their own conclusions as to what happens from there but Canadians should be defensive here over the mid term and price in the possibilities of BoC rates at 5 to 6% (add another 3% for the spread between chartered bank rates and the BoC) between 3 and 5 years from now and if BoC rates stay at 1% until the beginning of 2014, it will mean that 60% of all mortgages (5 year terms) and 30% of the rest (VRM’s) will be renewing or climbing into much higher rates than what we see today. 10 year mortgages are the way to go but there is a cost to switching banks (one has to requalify with CMHC’s present regs).

Readers need to acknowledge something else here as well. Since 08′, ratings agency reputations have been battered so they have been trying to restore their reputation or they quite simply will cease to become relevant. Couple this fact with the Harper government’s decision to tighten CMHC regs to everyone’s surprise. Was our Harper government told that a downgrade is coming and why? Is the IMF pressuring Ottawa to do this?

You decide but F’s decision to tighten CMHC are looking more and more like they are coming from external pressures.

One final point posed to you all in the form of a question. Do you see the importance of voting and becoming more engaged in the political process or is a RE/credit bubble what you all voted for and supported? Is this what Canadians wanted, record levels of debt sure to be followed by higher rates pricing in risk?

Because this is what we’ve got. One more question, why not. When Harper’s term is over as PM and he’s up for re-election and he’s asked if he’s happy with his accomplishments over the last decade and if his vision of Canada’s future has been realized while the economy is predictably falling apart from a legacy of debt and “normal to above normal” interest rates, is there anyone in the know who believes that privately, his answer won’t be “yes”?

#181 daystar on 06.27.12 at 4:04 pm

Lol, wups, I guess I took the time.

#182 SOLD houses For Sale AGAIN? on 06.27.12 at 4:10 pm

Seen a few houses in the past couple of months which had a sold signs and then a month later the sold sign is taken off and the for sale sign remains. Can any realtor explain why this is happening so often now? Do realtors record fake sold houses? Should there be a criminal investigation looking into this?

#183 LTL_FTC on 06.27.12 at 4:16 pm

Garth – sometimes I feel guilty for reading your daily posts but not paying any money (except for your books). Is that bad?

Extremely. — Garth

#184 betamax on 06.27.12 at 4:25 pm

#24 Stupid Canucks: “Who the hell in the world would ever want to live in a subarctic rain forest anyway”

Because it is sub-arctic. Rain instead of snow. In Canada, that’s the best we can hope for.

#50 Ronaldo: “Ya can’t be a wimp to live up here.”

Implying it’s an arduous place to live rather affirms SC’s position.

#120 The American: “Between Vancouver and San Francisco there is zero comparison.”

Agreed. A closer comparison would be with Seattle, which is widely regarded as a cold, damp, rainy place. Oddly, Vancouver, with a similar climate, makes claim to BPOE. Obviously, someone’s drunk on too much Koolaid.

I don’t know why so many feel the need to defend Vancouver’s weather (i.e. not the city itself) when the weather so obviously sucks. This summer is abysmal so far.

Yes, there’s some things I love about Vancouver, but I’ve lived in other places and been just as happy living in those other places. Essentially, I live in Vancouver because it doesn’t snow much and I have a job here that pays six figures and doesn’t exist in smaller cities in Canada.

Otherwise, I’d move to somewhere smaller, buy some acreage and have about six dogs running around the place. That would be BPOE for me.

#185 Howdy There on 06.27.12 at 4:32 pm

Ratings agencies are a lagging indicator.

#186 Toronto_CA on 06.27.12 at 4:45 pm

“This blog received 20,529 visits yesterday. Just to be accurate. — Garth”

Oh Garth. If you wanted to put on a little ad up in the corner or something I’m sure no one would begrudge you. I have bought Money Road but your writing on the blog is worth a bit of revenue to me. Oh well. Thank you for your tireless and unpaid work here 6 days a week.

From my office window I can see the 78 story Aura Condo monstrosity going up at Yonge and Gerrard. It’s the closest thing I’ve seen yet to Canada’s very own Tower of Babel.

Blog viewership is a sentiment indicator, however insignificant. — Garth

#187 jess on 06.27.12 at 4:49 pm

truth hammer – voucher schools /charter

Baton Rouge – Christian private schools in Louisiana will soon start a curriculum that teaches that the Loch Ness monster is evidence that evolution is wrong. Schools following the curriculum will be receiving state voucher money transferred from public school funding.

Read more: http://www.digitaljournal.com/article/327378#ixzz1z1qkfkqj

#188 The American on 06.27.12 at 4:57 pm

At #181: SOLD house For Sale AGAIN, the answer(s) are actually quite simple. Also, its very telling the market has shifted substantially if you are indeed seeing this behavior. A “Sold!” sign does not mean the property has closed as sold. It only means they have a mutually-accepted contract between both the buyer and seller. No conveyance of deed has necessicarly transpired at this point. Realtors, for whatever reason, reserve the right to put a “Sold!” sign up during this process. In the U.S., however, the behavior changed, and instead realtors began putting up “Pending!” signs, which is a far more accurate representation of where the buyer and seller are in the sales cycle.

Here are just a few reasons:
1) Financing fell through for the buyers as the bank’s lending standards may have changed while in escrow during the closing period. Bank’s reserve the right to back out prior to actual closing.
2) The buyer may have gotten cold feet sensing a shift in the market, and the buyer may be willing to leave his/her earnest money on the table as they now may feel they could save even more money if they wait. Yes, even hundreds of thousands of dollars in earnest money were often left on the table in the U.S. as buyers would back out of contracts at the last minute. Don’t fret, though, in real estate law it is sometimes difficult for the Seller to actually keep the earnest money (this greatly depends on the laws that govern the provence, or in our case, the state).
3) The seller may have felt he/she could have received a better offer and voided the mutually-accepted contract as a result, holding out for a better buyer in the future. This is for more uncommon as the Seller can often be sued for this behavior if the buyer can show damages were sustained.
4) The home could have been in a mutually-accepted contract, but prior to closing there is always the contingency inspection period, barring the buyer did not waive this contingency (most don’t now adays, but at peak of market in the U.S. many buyers were stupid enough to actually waive this inspection). If the inspection came back unfavorable (meaning the property needs a lot of expensive work), the buyer has the right to back out if they cannot reach another agreement with the Seller, which often requests the seller make remedy to those items in the inspection that need tending prior to close of the transaction.
5) The agents may have struck a mutually-accepted offer between buyer and seller, but in the midst of the escrow period, the agent(s) discovered the seller does not have right to convey the property to the buyer. Hence the contract is actually null and void. No harm can be claimed by the seller, but the buyer may seek legal action and/or monetary damages.

I could list at least twenty more reasons, but these tend to be the top five. If this is what is happening now more frequently, it certainly indicates it is now shifting toward a buyer’s market.

#189 Timing is Everything on 06.27.12 at 4:57 pm

#120 The American
#169 Junius

What’s Stockton, Ca., USA like? Dominoes come to mind.

‘Stockton bankruptcy: Biggest U.S. city to file for bankruptcy’

“Thirteen cities, counties and other government entities filed for bankruptcy protection last year. Stockton, a city of 290,000, is the seventh U.S. municipality to file this year.”

http://tinyurl.com/ckwfho6

#190 jess on 06.27.12 at 5:03 pm

swaps traders shop talk going back 2006!

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9359392/Key-emails-how-Barclays-manipulated-Libor.html

David Meister, the CFTC’s director of enforcement, said:

The American public and our markets rely upon the integrity of benchmark interest rates like LIBOR and Euribor because they form the basis for hundreds of trillions of dollars of transactions and affect nearly every corner of the global economy.

Banks that contribute information to those benchmarks must do so honestly. When a bank acts in its own self-interest by attempting to manipulate these rates for profit, or by submitting false reports that result from senior management orders to lower submissions to guard the bank’s reputation, the integrity of benchmark interest rates is undermined. The CFTC launched this investigation to protect the markets and the public from such illegal conduct, and today’s action demonstrates that we will bring the full force of our authority to bear as we carry out that mission.

#191 Dorothy on 06.27.12 at 5:20 pm

In response to #155 –

The reason Realtors don’t give the same kind of advice as professionals such as lawyers and doctors, is because Realtors are SALESPEOPLE – plain and simple.

Their job is to represent the person whose house they are selling, and get them the best price possible. Because (unless you, the Buyer, are paying for the agents exclusive services as your personal agent) it is the SELLER who is paying the Realtor’s commission.

People need to remember that their Realtor is not their friend, but rather a SALESPERSON whose advice should be taken with a pinch of salt.

#192 jess on 06.27.12 at 5:36 pm

whoop de do -Top executives forgo bonuses after bank fined £290m for ‘serious, widespread’ role in manipulating crucial interest rates

so what if they weren’t found out?

#193 realtors in an ALL OUT PANIC! on 06.27.12 at 5:46 pm

From Mississauga With Love #156

You stupid realtors living in a dream world. I am sure since you are a realtor you’ve heard from your mortgage buddies how indian’s left Canada and went back to india while defaluting on all their debt. Many indians on the edge are trying to sell before they go bankrupt. Many got liar loans but those loans are no longer avalible to keep the ponzi going. Mississauga and Brampton are already seeing an increase of listings and prices drops with foreclosured homes exploding in these two cities. It’s going to be a nasty crash realtors.

#194 Debtfree on 06.27.12 at 5:57 pm

no wonder our precious leader can’t show his face in Elliot lake Ontario .
http://www.winnipegfreepress.com/canada/tories-were-warned-about-cutting-funding-for-search-and-rescue-teams-160583915.html

one can only imagine how alone people in Vancouver will be when the Big one happens . lets hope the house of sober second thought will have a sober second thought .

#195 jess on 06.27.12 at 6:01 pm

http://www.cbc.ca/news/politics/story/2012/06/27/pol-public-service-cuts-wed.html

Securities regulators’ fines called ‘a farce’
$444M in penalties levied, but $285M has not been collected

Recovery is often limited as a significant number of cases involve serious fraud where there is little or no likelihood of ever collecting the money,” he added.

…One of the fines last year was a million dollars — so hard to recoup when it’s a complicated scheme and people are out of the country,” she added.

#196 Erlenmeyer on 06.27.12 at 6:03 pm

@42 bcc

Just laugh at them, ask them how that pride of ownership is coming. Then remind them of the times that you sent them the greaterfool link through email and they replied “well… see, my realtor thinks differently…” Then remind them of the times that you told them that renting was not paying someone else’s mortgage. Finally, talk about how good it feels to max your TFSA for the year…. and add that your landlord just installed a new high efficiency furnace.

If they’re really your friends they shouldn’t care ;-)

Hippo taking a dump !!

#197 Soccer Game! on 06.27.12 at 6:21 pm

Portugal sucks!!!

Spain rules!!!

#198 Blacksheep on 06.27.12 at 6:25 pm

Daystar,

“Or he’s paid like you say and if its the latter, it would be a sad shame because politics is not the primary reason for this blog’s existence.”
————————————
This, coming from you, is pure…frigg’in…GOLD!

take care,
Blacksheep

#199 Arthur on 06.27.12 at 6:27 pm

#170 torontorocks

You are incorrect if the down payment is low. After 5 years on a 30 year mortgage you will only pay down about 11% if your interest rate is 3% and less if it is higher. If it is a 25 year mortgage only 13% will have been paid down.

For many new buyers who are 5% down with 30 year mortgages if prices fall only 12% they will be unable to sell without losing all of their down payment and taking on additional debt to pay real estate agent fees etc.

#200 Devore on 06.27.12 at 7:19 pm

#81 Humpty Dumpty

Fasten your seat buckle folks, it appears we are about to fly into a whole lot of turbulence…

Iran, Russia, China, Syria plan massive war game’

That’s odd, when NATO has “massive war games”, no one blinks an eye.

#201 new-era on 06.27.12 at 7:20 pm

Seen a couple of sold signs go up today.

Anyone buying a house now is a total idiot. (Greatest fool!)

A 15% drop will wipe out their down payment and make them a debt slave to the banks

#202 Nostradamus Le Mad Vlad on 06.27.12 at 7:40 pm


Realistic post more than anything.

#81 Humpty Dumpty — “Iran, Russia, China, Syria plan massive war game” — Add in the US and Israel doing their own joint war games, the four minesweepers the US has directed to the SoH plus their carrier — Soros and Obomba’s plans (in conjunction with Noddin’ Yahoo) for WW3 look to be right on schedule; toss in martial law and the suspension of American elections in Nov., and you’re right on the money, such as here.
*
The Fourth Reich vs. Obomba Since Obomba is the most lavish-spending prez. in history, Germany is correct to ignore him; Loan Sharks The amounts are stunning; Teaming Up Next to the Falklands; RBS – NatWest Ain’t over ’til it’s over; Bonus Time Where is ours? Benefits up, wages down; India and Iran Helping one another; China in talks with US home builder; Good Question Why do Cdns. pay more than Americans? Merkel No Eurobonds; BIS on BBs (that’s big banks); ECB Negative interest rates?
*
3:15 clip Monsanto’s seedy practices, and
Grow food, not lawns; GW didn’t cause this; X37-B Long time in space; 3:32 clip Electronics stop near object in Baltic Sea; NATO Always ready to invade and cause trouble! Plus BdBs behind all this? Obviously, it makes them oodles more lolly; Roche Conveniently overlooking complaints; GM Corn Syngenta faces criminal charges; Phoney Tony Run for the hills! 2:21 clip Putin says Russia has no trouble recognizing Palestinian state; Euro Depop?

#203 Devore on 06.27.12 at 7:40 pm

#109 Roland

Canada today is “liberal” only in the classical sense, i.e. we’re closer to pure capitalism than ever.

Since the mid-80′s Canada’s governments have all been pro-free-trade, pro-deregulation, pro-finance, pro-tax-cut, and pro-big-business.

Without fair, across-the-board changes, you can at best describe this as crony capitalism.

Free trade, deregulation, tax cuts, have all heavily favoured established players over new entrants. The very phrase “pro big business” is antithetical to “pure capitalism”.

Your stance is not surprising. Most people can only see things in black and white. Keeps things simple. If you’re not in my camp, you’re supporting the enemy. Never mind that there are infinite shades of gray, as well as an entire third dimension of colour you’re refusing to even acknowledge.

#204 Devore on 06.27.12 at 7:48 pm

#113 The American

At #64: Junius is correct. Historically speaking, conservative administrations have ran not only larger, but significantly larger, deficits than liberal administrations. I know this may seem counterintuitive, but its a fact.

Hardly counterintuitive. Again, just a reflection of the black-vs-white attitude. With us or against us. Left or right. The false dichotomy dominating western politics.

This is not counterintuitive when you consider no fiscally conservative (the very label is ambiguous and misleading at best) government has been elected to power in Canada, US or Europe for a century. The only difference lies in the preferred direction of public profligacy. The corporate direction, more overtly favoured by “conservatives” is just better able to more efficiently extract money from the government.

The only fact here is both teams have failed to deliver on their promises, whether it is balanced budgets or improved public services.

Plenty of places to point fingers, ultimately leading nowhere.

#205 Serbia-Vancouver Lady on 06.27.12 at 7:57 pm

http://youtu.be/7-0lV5qs1Qw

#206 Be curious!!! on 06.27.12 at 8:19 pm

Garth, you are becoming pathetic. Why would you delete #148. It was just innocent link to a picture not any worse or better than what you publish yourself. Are you afraid of competition.

I was afraid of embarrassing you. Your mom’s online. — Garth

#207 maxx on 06.27.12 at 8:23 pm

“F and the Ps”…………LOL!
I love this blog. Garth, your amazingly sharp prosaic style is matched to perfection by your wit…..and sense of humour.

#208 American Werewolf in BC on 06.27.12 at 8:29 pm

#190 Dorothy on 06.27.12 at 5:20 pm
“Their job is to represent the person whose house they are selling, and get them the best price possible.”

===============

Their job is to simply facilitate a sale in the shortest amount of time as possible

Realtors’ commissions are sliced so many different ways that the highest price, while desirable, can become counter-productive for them to achieve if they must hold the listing longer. They will gladly talk you down in price if it means a quick sell.

Realtors are there to butter-up sellers and buyers using “expertise” and psychological tools. At least in the states, the actual “work” they do to conduct a transaction is normally sub-par and riddled with errors (ask any title & escrow company, who spend lots of time fixing Realtors’ mistakes).

#209 grum on 06.27.12 at 8:46 pm

#67 Aaron – Melbourne
have any of you seen Once were warriors?
——————————————

Yes, I have.
What’s more, I grew up near Waipukurau…

#210 JOBS CUTS....more JOB CUTS on 06.27.12 at 8:51 pm

Everyday more people are losing their jobs and add the fact GDP is going to take a hit http://www.theglobeandmail.com/report-on-business/top-business-stories/canadas-new-mortgage-rules-will-trim-gdp-growth-td-economists/article4374707/ since the fake growth in the housing bubble was due to 100% debt . Canadians have 152% debt to income ratio and many can not service their debt since many paid debt with debt. These debt on debt payment has been closed. Sit back and watch a 50% correction in Canadian housing prices which the 4 week trained realtors will say isn’t true. LOL

#211 2centsCdn on 06.27.12 at 9:18 pm

#190 Dorothy on 06.27.12 at 5:20 pm
“Their job is to represent the person whose house they are selling, and get them the best price possible.”

I agree with American Werewolf ……
I’ve bought and sold 12-13 houses and a couple of commercial buildings for my business over the last 30 years …… and make no mistake ….. an agents goal is to get it SOLD as fast as possible. He or she doesn’t eat, have shelter or drive unless your place is sold and closes.

When an agents commission is reduced only $2,000 to $2,500 for every $100,000 you come down in price …… you can see why soon into a listing, a selling agent is trying to talk the seller DOWN in price and the buying agent is trying to talk the buyer UP in his or her offer (not the other way around ….. the way you would think and hope).

Agents LOVE getting the sign on the lawn … then they are nearly guaranteed half of the 4 to 5% commission ….. but they hate spending money advertising on expensive local papers …… thus the “quick sale has proven the best strategy” pitch and the ever popular “your first buyer has historically proven to be the best buyer” pitch.

The fun will be as sales slow down (and an agents personal bills start piling up) …… to see how all of our “hard working” and “looking out for our best interest” agents who said “there’s no real estate slow down in Canada” change their pitch to “hey! …. you don’t want to get stuck with this sucker ….. it might be worth 50 grand less in a few months … unload it now!”

The same people who ran this thing through the roof will be instrumental in it’s demise …. they get paid almost the same whether your condo brings 300 grand or 400 grand. But they get zero if it doesn’t sell.

#212 Investx on 06.27.12 at 9:51 pm

62 Mr Inconsistent on 06.27.12 at 12:51 am
Investx,

Cut the guy some slack … his views evolve with the facts. However the G-man could acknowledge the occasional revision of his views. This is not George Orwell’s blog.
—————————————————————-

I’m fine with that; just looking for confirmation.

#213 Boombust on 06.27.12 at 11:03 pm

Boombust…

“Get out more, downtown Detroit and some down and out burbs are pretty rough, but the northern areas, suburbs and centers, are gorgeous. Detroit, I’d say on the whole puts every city in Canada to shame and by American standards is crawling out of a tar pit.”

Surely you jest.

What is the main indutry in downtown Detoit?

“Quicken Loans.” Because, retail square footage is cheap.

Why?

Because the city is a toadhole. That’s why.