The epiphany

Imagine if they had a bidding war, and nobody came. That’s exactly what’s been happening in Toronto over the past three-and-a-half weeks as realtors try to stage auctions and end up with crickets. It was only two months ago this awesomely pathetic blog took you inside the F&F action in scrumptious North Toronto hoods to witness a dozen or more bids per anorexic McMansion.

Same drill every time. House goes on MLS. Rock star realtor sign goes up. Seller refuses to even look at bids until Tuesday night at six. Asking price is the opening bid. Offers stapled to certified cheques for at least $50,000. Top two or three bidders summoned from cars outside for final round. Seller asks for more. Gets it. Rock star realtor swaggers outside and slaps on a ‘SOLD OVER ASKING’ sticker. Climbs into Mercedes roadster pre-loaded with HGTV chick.

This is how houses priced over a million (average for the area) routinely sold in seven days for a hundred or two above asking. But that ended in early June. In fact one couple who thought they were going into a bidding war tacked $90,000 on to their offer just to learn there were no other combatants. The selling agent led them to believe there’d be bloodshed, only to reveal ten minutes after the offer was presented that it had been the only one.

Ooops. Did I forget to mention that? Oh well, sorry. Ciao.

The Toronto Real Estate Board will release its monthly numbers tomorrow and they’ll be strong, prompting the usual testo-drenched housing bulls to come here for a dump. Average price will be higher again, in part because of the wars now ended. But look closely at sales trends. They’re starting to show the same weakness that preceded Vancouver’s widening real estate chasm.

As I told you two days ago, the results from that city would be arresting. When they came on Wednesday the scope of the sales plunge was evident. Deals crashed 17% from May to June, and were lower by 27% from the same month a year earlier. As I also told you, the local realtor cartel would not announce useful sales numbers.  Instead it insisted that the ‘MLSLink® Housing Price Index (HPI) composite benchmark’ is ahead by 1.2%. In reality, the average single family home has lost 12% of its value, a decline which could well triple.

Said Toronto-Dominion Bank deputy chief economist Derek Burleton, “The Vancouver market is leading the Toronto market in terms of a correction. Toronto’s housing market correction is more likely to be a story of 2013, 2014.” Well, sort of. The brunt of the price crunch will not take place this year, but selling a house could turn from auction to agony.

So, is Vancouver now the model for the early stages of a Canadian correction?

Probably. Frenetic activity, bidding wars, rampant price increases and xenophobia, followed by panic buying (‘buy now or buy never’) and even greedier sellers. Shacks, empty lots with used-condom decor and battered bungs rented by bikers are suddenly ‘worth’ a million. And then, like flicking a switch, it ends. The moment of absurdity and capitulation occurs. Buyer lust becomes revulsion. And it’s over. Even realtors are punting.

This is why real estate’s the most emotional of assets, so among the most dangerous. When sentiment turns, it’s cooked. Sellers who held out for a few tens of thousands more are abandoned. Realtors trying to fan passion end up amusing themselves. Buyers, repulsed by engineered wars, massive overpricing, unmitigated pressure and being treated like losers by the prom queen, split. Economists vex.

Vancouver’s slowdown is “striking, because nothing has really fundamentally changed in the market. It’s hard to pinpoint. Something has affected the psychology,” Derek Burleton told a Globe guy. “This is just the beginning of a downward trend in Vancouver,” added CIBC’s Benny Tal, who alluded to “housing market fatigue.”

But it’s more like disgust. Global TV. Brad Lamb. Yellow helicopters. Bob Rennie. Rock star realtors. Salivating sellers. CREA’s fibs. HAM. And kids with no money buying a better house than your parents ever had with a down payment the bank gave them for showing up.

At a certain point it becomes obvious. That Bre-X moment. The epiphany.

It’s never different this time. Except we always forget.

226 comments ↓

#1 Keeping the Faith on 07.04.12 at 10:09 pm

If I didn’t know any better Garth, I would guess you are posting from the Left Coast the last few nights with this late night posting.
Taking in a little of the “medical bud”?

You deserve it.
This story is done anyway, nothing else to write about accept the descent.
Maybe posting 4 nights a week is due, semi-retirement.
Soon enough this site is going to turn into re-runs of the Jersey Shore, hot heads, bad tans and wash rinse and repeat. That dog don’t bark anymore.

#2 Josef on 07.04.12 at 10:09 pm

First!!! OH yeah BABY !!! YEAH!!! Garth you’re starting to post past my bed time. Great words of wisdom as usual. Saved my family member from a plunge into Real Estate Hornieness.

#3 IM in C on 07.04.12 at 10:10 pm

Here’s the link to the story referred to by Garth in the above post:

http://www.moneyville.ca/article/1221563–toronto-realtor-calls-for-stiffer-bidding-war-rules-after-clients-offer-90-000-over-with-no-rival-bids

#4 Randy on 07.04.12 at 10:11 pm

Hooray for the debt culture….

#5 Randy on 07.04.12 at 10:13 pm

What do you mean there were no rival bids….I was bidding against myself….haha

#6 Mr Buyer on 07.04.12 at 10:13 pm

Vancouver’s slowdown is “striking, because nothing has really fundamentally changed in the market.
………………………………………………………………….
Nothing has to change for a bubble to collapse. Each purchase brings a bubble further along its simple life cycle that has always ended in a crash. Can’t flip it, can’t afford it. It is done.

#7 Raj on 07.04.12 at 10:18 pm

Now this is from a realtor,

Time to Cash Out:

Is the Vancouver real estate market heading for another crash?

http://keithroy.com/blog.html/time-to-cash-out–1976393

#8 Mr Buyer on 07.04.12 at 10:18 pm

Even free money will not prevent a bubble from crashing, in fact in all likelihood it will accelerate the life cycle and onset of the usual crash. There will be no high plateau, soft landing or riding out of dips that coming to pass. It is a bubble and bubbles end in crashes (even in Ottawa).

#9 T.O. Bubble Boy on 07.04.12 at 10:18 pm

The ultimate failed bidding war was the Chaplin Cres house I posted earlier:

C2403342
135 CHAPLIN CRES, Toronto, Ontario… now $1!!!
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=12132700&PidKey=286875431

Price Changes:
June 4th 2011: $799,000 (bought for a flip, obviously)
May 31st, 2012: $979,000 (one year later, a post-reno attempt at a bidding war)
June 10th: $1,099,000 (hmm… no bites on the bidding war, so increase price by $120k)
June 27th: $1,049,000
July 4th: $1 (attempting to get the last greater fool before 30-yr mortgages dissapear?)

Nice enough house, nice neighbourhood, tough luck on the flip and attempted bidding war.

Kinda like their neighbours (same neighbourhood, also lost money on a flip):
http://www.torontolife.com/daily/style/from-the-print-edition/2012/06/26/the-sell-hard-lesson/

#10 syd on 07.04.12 at 10:19 pm

G and M says we are richer than americans. what a joke

http://www.theglobeandmail.com/commentary/canadians-are-richer-than-they-think/article4380634/

#11 Mr Buyer on 07.04.12 at 10:21 pm

90k over with no other bidders. This is TO’s moment.

#12 randman on 07.04.12 at 10:21 pm

No sympathy for these people at all

It’s the buyers.. not the realtors who are at fault here.

Blatant blind idiotic stupid greed and nothing more

My contempt cup runneth over …… did these folks ever go to school?

If so was it “Sister Mary Elephant’s school for the mentally challenged”?

Please make it end and put these idiots out of their misery

#13 mid-Ontario on 07.04.12 at 10:25 pm

Great column tonight Garth.
You are so right…when it turns, it just turns off.
Been thru it a few times.
1989 was a jaw dropper at the time.
Everything just stopped dead and then faded away 25% over the next year or two.

#14 gloom and doom on 07.04.12 at 10:27 pm

oh wow therestillselling like crazy in toronto ..wow 90 g,s over

#15 Nick on 07.04.12 at 10:27 pm

10$ says Garth will be quoted in Vanity Fair before the end of the year. I smell a Vancouver Crashing story coming. I live in L.A. and people go nuts when I tell them about RE prices in Van. “Didn’t they learn anything from watching us?” they usually ask. “I need another drink” is my usual reply.

#16 Uh Oh Canada on 07.04.12 at 10:27 pm

I think a lot of people in general have lost interest in real-estate- including myself. There is that feeling of apathy in the air. Ah, every hype has a beginning and an end.

#17 lilyflor on 07.04.12 at 10:29 pm

bidding $90,000 over asking with no competition, the ugly is already starting to show

#18 TurnerNation on 07.04.12 at 10:31 pm

Hmm does the signed & deposit-ed offer form all or a part of the final contract? Were they hooped?
If they fled, could be sued for the contract’s Specific Performance. Or, losing only their deposit – kind of a liquidated damages clause?

Disclosure: renter, never bought a house.

#19 Alex n calgary on 07.04.12 at 10:36 pm

One wonders how long until the Toronto market is hit along with Calgary. How will commodity prices be affected, the overall economy, will the decline be fast? slow? Lowe’s was pretty dead on tuesday, I wonder if people will flee calgary in droves when the jobs dry up? At least Vancouver is the start.
Mostly I’d be pleased to stay in this rental house for longer then a year, this crazy housing boom crap has us moving way to much, damn garage is barley even unpacked…
Thanks for the updates Garth, appreciated!

#20 Gtaprick on 07.04.12 at 10:38 pm

Awesome post!
I drive through leaside daily, I’ve noticed for sale signs staying on longer than usual, and multiple open house signs week after week. Also noticed it in other bidding war neighbourhoods in east York.

#21 Freedom First on 07.04.12 at 10:39 pm

This post always talks about being either: house-horny, lustful for stainless steel and granite, greedy for money for nothing, envious from the deprived house-horny to their house owning peers, entitlement behavior for the house-horny, house-horny-ness abuse by the entitled youth towards their gluttonous and selfish boomer parents who ruined everything and now owe them a down-payment, arrogant house-horny boomer parents harassing their offspring to perpetuate the family gene pool of house-horny-ness by buying a house right now……..and let us not forget the maestro of the mother of all house binges “F” and his band of “P”‘s……….Thank you Garth, I love it, from me, and I am sure, from all the house horny you have managed to bring back from the housing abyss this last few years…….and I know, there is much to be written yet…….it’s not over til it’s over:)

#22 eddy on 07.04.12 at 10:41 pm

yep, everyday i drive past 3 lisings in 416 who staged bidding wars and no
luck, they all raised their list prices and are sitting. its denial. depression and acceptance will follow

#23 Retired Boomer - WI on 07.04.12 at 10:41 pm

90 Grand OVER asking? Best Pray the dump won’t appraise high enough, and void the offer. (Well, it works in the US).

#24 Loon on 07.04.12 at 10:42 pm

Vancouver: our crash is different.

#25 gokou3 on 07.04.12 at 10:46 pm

#3. That $90k-over bidder is a typical example of interesting but totally expected human psychology. If there were 9 other bidders who bidded $89k over, she would have felt like a genius.

If I were the seller, I wouldn’t even re-negotiate back down $45k — of course unless I worried that this bidder would bail and I didn’t think there’s another sucker who would overpay.

#26 LSD on 07.04.12 at 10:47 pm

“…rampant price increases and xenophobia”

Garth all you have to do is open your eyes…or try asking anyone who has been trying to buy a condo in the past 2 years. The majority have gone overseas. Hopefully one day you will pull that bloated head of yours out of your culu and see the truth. twat.

#27 vatoDETH on 07.04.12 at 10:49 pm

I can relate to Alex. It’s a huge pain worrying about where you’re going to live. How much will my rent be? Why am I unable to save for the future, or invest in entrepreneurial endeavors that would actually help this country in some ways?

Real Estate booms can kill innovation in other sectors and fields. We all need a roof over our head and this has been extortion of many peoples finances. Waiting and waiting and waiting and waiting…

#28 Trader on 07.04.12 at 10:50 pm

“That Bre-X moment”… love it, so Canadian!

#29 Paully on 07.04.12 at 10:52 pm

Wow, $90,000 over with no competing bids? I hope the seller throws in a little lube! That just plain hurts!

#30 Einzatgruppen kanada on 07.04.12 at 10:53 pm

90 over and no other bids? Gee I thought it would be Mimico – you know – the new beach.

#31 Not 1st on 07.04.12 at 10:54 pm

Garth, somebody offering $90k over asking and no other bidders show up…well that just has to be the peak greater fool moment doesn’t it? Better mark this day on the calender.

#32 TNT on 07.04.12 at 10:56 pm

Global TV, Globe and Mail, CBC, RE blogs… deer in the head lights looks as to why Vancouvers housing market is tanking. Listen up people, Vancouver is nice but not that nice, most people are indebt on average up to153%. Maybe the light switch has been hit and people are realizing they don’t want to work their entire lives to pay off an overpriced ball and chain? Time is the only thing that is of true value. Zombie Press meets Zombie Realtors, makes a killing.

#33 Regan on 07.04.12 at 10:59 pm

The couple up the street from me have already bought another home – beating out 6 others in a bidding war to get it – and now their house has been on the market for 26 days. Ouch. It’s one thing to know this can happen intellectually, but quite another to see it. Gulp.
Oh, and thanks for the tip on listing histories – I checked out some suspected shenanigans on a property I’ve been looking up, $759 on June 1, re-listed at $816, now down to $799. Thanks to Garth, I’m avoiding the whole messy business.

#34 Bo Xilai on 07.04.12 at 11:01 pm

Yup, today was a good confirmation that Vancouverites have hit that “I Need to Change my Depends” moment…
… BC Global TV boycotting any mention of real estate in their supper hour program, the near unanimous disdain for real estate greed in the comment section of the Vancouver Sun.
Over-leveraged homeowners writing in for debt/financial advice once their HELOCapalooza is finished.
Q4 ’08 – Q1 ’09 was just the appetizer… Vancouver RE Bears are now waiting for the main course.

#35 so it begins... on 07.04.12 at 11:03 pm

the GTA will not need wait till 2013 for a correction,
Remember no one predicted that vancouver would fall this spring. The GTA will not be able to surpass last year’s record breaking stats and the herd will easily start running the opposite direction. SALES are already falling in the GTA and inventory is rising .
It ‘s starting ….

#36 Hoof-Hearted on 07.04.12 at 11:06 pm

Born in Vancouver and raised here.

Its a sh*thole..a movie set..a boulevard of false hope and broken dreams.

Delusional politicians and Snivel servants with self deemed rights

#37 The_Iceman on 07.04.12 at 11:09 pm

Re: #34 – Bo Xilai

Unlike Global, I have to give CTV Vancouver credit…the sales slowdown was the first story on tonight’s supper-hour news.

Of course, they’re saying that “…it might now be a good time to buy…”, not telling people that we may get a sucker’s rally before the REALLY big drop to come.

#38 Canadian Watchdog on 07.04.12 at 11:10 pm

“Vancouver’s slowdown is “striking, because nothing has really fundamentally changed in the market.”

The slowdown is due to tight credit and less lending, not a lack of demand. There is never a shortage of speculators and reckless borrowers. If CMHC boosted its limit to $800bn, banks would have kept lending to anyone with a heartbeat—boosting prices up to the next precipice.

#39 Backstep on 07.04.12 at 11:12 pm

“But that ended in early June.”

Hey Garth, how do you know that? Official RE stats? Broker anecdotes? I’d love to believe you, but need to know where you got this.

#40 Stupesing in Cabbagetown on 07.04.12 at 11:12 pm

#26 LSD – feeling a little nasty tonight are we? Truth is, anyone who tried to buy a condo these past two years is a fool and anyone who actually bought is about to lose a lot of money.

#41 Toronto_CA on 07.04.12 at 11:14 pm

I wouldn’t be surprised if condo sales/prices started to crash as early as August, because of the July 9th changes. We should all pop champagne on July 9th, that is the day of joy for the RE bears. Well I hope it is.

For this couple who overbid by 90k, I have no sympathy. Either they were stupid, or swindled by a RE broker in which case they should sue or try to back out of the deal. I didn’t read the article yet, I’ve got a final exam in the morning and studying takes up my time when I’m not waiting for Garth to finally update us with his wisdom du jour.

Prediction for Toronto’s RE numbers, they will be contrasted heavily with Vancouver’s slump by the MSM.

#42 Increasing that 1% on 07.04.12 at 11:15 pm

90k over asking with no other bidders, …would be sad, if it wasn’t kind of funny
–must be some way out…? oh, the Realtor convinced the listing agent and sellers to agree to 45k over asking for the $1million home–meh…some transparency would be warranted, or someone should be get’n sued

#43 blase on 07.04.12 at 11:17 pm

Garth,

Your Chatham post got me to wondering.
$200,000 saved.

Scenario A: live in Chatham, make $40,000/year, buy a house for $200,000, have two homestays paying $1000/month. Future pay could be higher, but maybe not much more.

Scenario B: live in cowtown, making $60,000/year, with future top-out pay at $95,000. rent a house for $1800/month, have two home stays paying $1000/month.

What does the Oracle of Ontario sayeth?

#44 jess on 07.04.12 at 11:18 pm

A Toronto realtor is calling for tougher rules around bidding wars after her clients were shocked to discover they’d paid $90,000 over asking for a midtown house on which theirs was the only offer.

is that legal?

#45 Raj on 07.04.12 at 11:18 pm

#12 randman,
I 100% agree with you.It’s all buyers fault.
These fools deserve to loose every penny.
I make over 100k/year and happily renting ,not because I can’t afford to buy house, but because I refused to participate in this show of madness since 2006.

#46 James on 07.04.12 at 11:18 pm

there’s a lot on TO and Vancouver, what’s the next trigger? Calgary? Looking around there doesn’t appear to be that much changing, am I missing something?

#47 First to last on 07.04.12 at 11:30 pm

So they were ok to pay way over asking price because a bunch of people wanted it, but once they found out they were the only ones they wanted to pay less? Sounds like market insanity to me. Pump and dump is alive and well look at Facebook

#48 John on 07.04.12 at 11:30 pm

Mid-Ontario wrote:

“1989 was a jaw dropper at the time.
Everything just stopped dead and then faded away 25% over the next year or two.”
——-

Could you spell out how this is like 1989? I see nothing in common. No matter what angle you look at.

What factors would be in place to cause such an incredibly slow decline ( 25% over 2 years). Since 1989 and 2012 have nothing in common, it sounds like an uninformed guess out of thin air.

A good way to look at the comparison would be to break down how the economy is constructed and operates today.

A dead stop in July-August 2012 means something completely different than a dead stop in 1989. For reasons that have been repeated on this blog over and over again. But they are ignored over and over… and out comes 2012 wrapped in a 1989 fantasy.

#49 Mr Buyer on 07.04.12 at 11:32 pm

Higgs Boson and 90k over bid on a house in TO. These are special days (more so due to the former rather than the latter).

#50 tkid on 07.04.12 at 11:43 pm

#18 TurnerNation, if you add conditions to the contract, such as it has to pass a home inspection, then all conditions must be met before the contract is binding. When I bought, I signed the first contract but it had conditions on it (usually financing and inspection), and once the inspection was over signed a waiver to say the home inspection condition was met. If one doesn’t like the results of the home inspection, then the condition isn’t met and the contract is null and void. Sometimes the buyer will request a markdown in price to reflect repair costs, or the seller gets the repairs completed.

Only a fool or someone truly desperate will sign an offer free of conditions. Once the contract is final, then you are on the hook for the full purchase price.

#51 Canadian Watchdog on 07.04.12 at 11:48 pm

FYI Garth.

1) Banks’ uninsured mortgages increasing http://postimage.org/image/k2kxppbwx/

2) Banks’ insured mortgages flat http://postimage.org/image/epdpyi95d/
2a) of which pooled and unsold http://postimage.org/image/4hi6l0mtj/

3) MBS investor holdings declining http://postimage.org/image/nsnqmp90f/

And when all else fails, this is where banks go to dump their toxic securities that investors aren’t buying. http://postimage.org/image/kjkpremiv/

As I always say: when the lending stops, everything stops.

#52 CoreyMc on 07.04.12 at 11:50 pm

#45 James

I have a feeling that your a realtor from Calgary, am I right?

#53 jess on 07.04.12 at 11:53 pm

Clock runs out on subprime lawsuit against CIBC
JEFF GRAY – Law Reporter

The Globe and Mail

Published Wednesday, Jul. 04 2012, 2:32 PM EDT

why a three year limit?
=======

#54 Lily Joe on 07.04.12 at 11:55 pm

I must say this is not going to turn out good! i sold my McMansion in 2010 in small town Manitoba and am thankful I did!

My father sent me to your site when I asked if I had done the right thing and bought a small 1961 clean solid home in need of slight maintenance.

I could smell trouble in the air when you realize everyne wants a payment out of your income. ~ you make your own decisions on how you spend your money and $90 over ask is just silly!

What has happened to society & finances ~ how fun is paying your whole life with wolves @ your heals to own a home?

Thanks for you posts Garth ~ i look forward to them everynight and the comments

#55 Richard on 07.05.12 at 12:05 am

i read somewhere the 90K ended up being 45K over cause the buyers were pissed…
great post…

#56 T.O. Bubble Boy on 07.05.12 at 12:16 am

Everyone needs to stop focusing on the $90,000 total, and start thinking like the buyers.

$90,000 is only $378.54 per month when amortized over 30 years @ 3%.

They buyers were happy to get in before being priced out forever… that $90,000 would be $425.92 if amortized over 25 years.

So, thinking like the greater fool who “won” the bidding war — they saved $47.38 a month by getting this house before the mortgage rules are changed!

#57 Mister Obvious on 07.05.12 at 12:19 am

#36 Hoof-Hearted

“Born in Vancouver and raised here. Its a sh*thole..a movie set..a boulevard of false hope and broken dreams.”
———————–

I was born and raised here too. It ain’t so bad. You just have to learn to “live in the postcard”. That means renting right downtown or very near there. The only place public transit works reasonably well is in the downtown core or along one of the Skytrain lines. Outside of that, the bus system is poor indeed.

But don’t even think of driving in Vancouver. That’s a recipe for an ulcer. This city comes into its own once you turf your automobile.

Be able to walk to everthing you need and the places you enjoy. Embrace the rain. Have one or two excellent umbrellas and comfortable waterproof footware for those days when it really pelts. It will help you to appreciate the summer when it finally comes from mid July to mid August.

Another great bonus: The constant onshore breeze from the pacific blows all the pollution that would otherwise blanket they city up the Fraser Valley to Chillwack and beyond. (Sorry about that people, but its out of my control).

Above all, never, ever consider owning any form of residential real estate here. Leave that to the greater fools. That’s how to be happy in Vancouver.

#58 Nostradamus Le Mad Vlad on 07.05.12 at 12:54 am


Accompanying Garth’s post, John Mauldin — We’re coming to the end, ‘tho it does not specifically cover RE. The fat lady’s singing for a lotta things now.

BTW, is the dog from any particular faith? First time I’ve ever seen one in quiet contemplation!
*
Major US banks going under? Could be a ploy to extrapolate more taxpayer’s money; Tidy profit a.k.a. good business; Passing The Buck First lesson politicos are taught; TwentySomethings Declare your financial emptiness (sorry, independence); Peer-to-Peer Lending bypassing the banks; Stockton, CA Trend? ObummerCare in the economy; French Implosion; The Fourth Reich’s Superstate; Pension Woes = Muni Debt Crises? The American Dream left quite a while ago; Experts? We’re all xpurts now; VW to buy rest of Porsche for chickenfeed.

10:21 clip Free Energy? It’s here, we’re just paying for it; 2:14 clip Via ObombaCare, NAmerica is turning into a service-based continent; Red Iceberg (China); Saudi Resource Curse (with the infighting); Ben (Bankrupting) Bernanke The S system; Aha Matey! Thar she blows (in union with Cdn. RE); Next Oil Price Spike Up or down? City Ugly repeat; Paul Krugman’s Iceland “Definitely not a role model”; The Fourth Reich Cracked? What’s Your Net Worth?
*
British comedy For those who are familiar with it, adieu Eric Sykes; 2:01 clip Free falling into a snow bank, after his ‘chute didn’t open; Clothing Thank Gdo I’m a man; 0:30 clip 4th of July fireworks direct from the sun; 1:33 clip SArabia buying nuke-capable missiles from China; 12:43 audio clip Peak oil? Don’t think so; 1:11 clip UFO filmed just behind ‘copter fighting fires; Marble Caves of Chile Nice pix; Food Stamp Diet Eat right, get fit; Vanishing Star Dust Someone’s doing some housecleaning.

#183 Blue Monster Lover of Meats and Vegetables on 07.04.12 at 10:15 pm — “Hey, I never said America was perfect but it’s the best example in human history and their constitution is one of the greatest documents ever written to limit the tyranny of a government over the people.”

Hi there, BM. I direct you to this — USSA As mentioned earlier, Obomba and Soros are following Castro’s guidance, in taking the west down the left-hand path, and because of that, more and more Americans are renouncing their citizenship. Everything changes. We probably don’t like it, but must adapt to the new way of looking at it.
*
disciple — Here’s one for your files.

#59 Rural Rick on 07.05.12 at 1:00 am

Scenario A: live in Chatham, make $40,000/year
Doing what detassling corn?
Flat roof warning. 2 years repaired and the first thing they mention. These types of buildings have finite lives.
And this is Chatham.
Know your market!

#60 Dave on 07.05.12 at 1:04 am

Visited Toronto recently for the first time. Had a friend who lives there take me to all the “nice” areas. What a dump! This city is smog central and you can’t even swim in the lakes half the time because of the pollution. Can’t see who in their right mind would pay 90k over asking to live in this city.

#61 Investx on 07.05.12 at 1:06 am

Can someone explain how the MLSLink® Housing Price Index (HPI) composite benchmark works and why it’s a poor reflection of housing prices?

#62 blase on 07.05.12 at 1:10 am

Smoking Man, are you still sticking to your declaration of no-end in sight to TO housing lust?

#63 EJ on 07.05.12 at 1:11 am

What’s the point of making your initial offer an amount greater than the asking price ? If someone outbids you, don’t you then have a chance to counter-offer?

This was just stupid.

This should also work the other way around though. If the seller is asking for a certain amount, and receives a bid for that much with reasonable or no conditions, they should be legally obliged to accept it, or face a penalty in return. Say, the amount of the deposit, the same it would cost a bidder to back out of the deal.

#64 aaci-home dog on 07.05.12 at 1:13 am

Interesting….one realtor at MacDonald Realty says buy…the other says sell….commissions to them either way though…good posts Garth…!

#65 Mr Buyer on 07.05.12 at 1:19 am

Can anybody tell me where the start button has gone on the windows 8 desktop. If they removed it without an option to use it that is just silly and opens the door for equally klunky user interfaces to gain some desktop market share. If you need a tutorial to be just as productive as you were in windows 7 then microsoft may be taking a step backwards from the desktop perspective.

#66 Mr Buyer on 07.05.12 at 1:22 am

There is a key part of minimizing that wraps the declines coming from the crashing of the bubble in the idea that it is part of a natural cycle rather than what it is, which of course is the crash following a bubble.

#67 Mr Buyer on 07.05.12 at 1:34 am

#38 Canadian Watchdog on 07.04.12 at 11:10 pm
“Vancouver’s slowdown is “striking, because nothing has really fundamentally changed in the market.”

The slowdown is due to tight credit and less lending, not a lack of demand. There is never a shortage of speculators and reckless borrowers. If CMHC boosted its limit to $800bn, banks would have kept lending to anyone with a heartbeat—boosting prices up to the next precipice.
………………………………………
Eventually people stop buying. It does not matter how much free money there is. There comes a price at which people will go no further. There is an end to speckers and flippers as eventually they are specking and flipping to one another. The lending practices do not matter on the way down only on the way up (from The Simple Life Cycles of Bubbles due out on Kindle right after I write it). I am guessing the monthly nut becomes prohibitive so much so that sales have to be made within a month and at a level of appreciation in price that becomes increasingly difficult to reconcile with any notion of value (likely the very idea of money having value begins to be called into question). In any event a climax is reached and a crash invariably ensues. Free money or not.

#68 Michael F on 07.05.12 at 1:42 am

A local housing bull after bidding $200k over the reserve only to find out he was bidding against himself denounced an inquiring housing bear as a chicken little because the price the bull just paid proves the strength of property as an investment.

#69 Musings on 07.05.12 at 1:47 am

Whew, Vancouver crashes.

Finally.

Buyer’s revulsion is the new black. Wear it well on the way to the property morgue, formerly called a real estate office.

#70 Humpty Dumpty on 07.05.12 at 2:18 am

OOOMMMMMMMM…… Five Fingers Monti has wonnnn..

“The shock doctrine”

— an induced disaster forcing austerity measures on sovereign nations. In desperation, they would come to heel, relinquishing the sovereign right of governments to an unelected body of technocrats. And that is what the ESM seems to achieve.

http://www.huffingtonpost.com/ellen-brown/european-stabilization-mechanism_b_1641552.html

Now take a deep breath and roll over into dog position.

#71 Canuck Abroad on 07.05.12 at 2:27 am

9 / TO Bubble Boy – I remember that house, it sat on mls.ca for months and months before the flipper bought it. The problem with this house is it is right next to a petrol station. A thin row of trees separate it from a big PetroCanada, and across Avenue Road there is also an Esso. So unfortunately the location is terrible and the house took ages to sell even when the market was in the seller’s favour.

#72 Jennifer on 07.05.12 at 2:34 am

that was delightful :) you are really on a roll tonight Garth :)

#73 Scott in Gibsons on 07.05.12 at 2:49 am

Watch the blood drain out of the faces of the spec’ers. THEY will vanish overnight. Buyers will not. There are always buyers of real estate in all markets, it’s only their behaviour that changes. Buyers will now take their time making decisions and will tear sellers apart.

#74 Buy? Curious? on 07.05.12 at 2:51 am

I want to hear stories of people that are going to buy, go in with low-ball offers. Ones that the seller finds insulting. “What? Do you know what this house is worth?” they’ll shout but just smile and reply “It’s good for 1 hour.” Bahahaha! I just hope it’s to more senior citizens who were hoping to cash out and live large in their twilight years.

#75 futureexpatriate on 07.05.12 at 3:20 am

Tomorrow’s Toronto = Today’s Detroit

#76 new-era on 07.05.12 at 3:49 am

48 John on 07.04.12 at 11:30 pm

Mid-Ontario wrote:

“1989 was a jaw dropper at the time.
Everything just stopped dead and then faded away 25% over the next year or two.”
——-

Could you spell out how this is like 1989? I see nothing in common. No matter what angle you look at.

What factors would be in place to cause such an incredibly slow decline ( 25% over 2 years). Since 1989 and 2012 have nothing in common, it sounds like an uninformed guess out of thin air.

A good way to look at the comparison would be to break down how the economy is constructed and operates today.

A dead stop in July-August 2012 means something completely different than a dead stop in 1989. For reasons that have been repeated on this blog over and over again. But they are ignored over and over… and out comes 2012 wrapped in a 1989 fantasy.

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

I would say its way different this time.

1) Debt is higher.
2) wages verses cost of living ratio is worst now
3) The bubble ratio is much bigger that the last.
4) Last of all (GLOBAL Recession)

This crash will be an EPIC depressionary collapse. Mabey leading to deflation.

#77 Tony on 07.05.12 at 5:03 am

Re: #48 John on 07.04.12 at 11:30 pm

The absolute peak of that market was actually around the third week of September of 1987. It took another two years for the news of two years ago to make television and the newspapers before the average home owner became aware of it but two years too late.

#78 Tony on 07.05.12 at 5:06 am

Home prices in Vancouver were on the decline but the crash in the Chinese real estate market in China seemed to turn it into a freefall.

#79 mid-Ontario on 07.05.12 at 6:40 am

#48 John
“Could you spell out how this is like 1989? I see nothing in common. No matter what angle you look at.”
——————————————————–
RE was going crazy in 1989 simply because of mass interest interest in making money in RE, not because the economy was booming. Same thing today, only worse. You have a whole generation used to living off of credit (not true in 1989), never seen interest rates much over 6% (not true in 1989 just a thought.

#80 Dividend Yield Investor on 07.05.12 at 6:44 am

Due to the American holiday I missed the prior day post. the video of Jackie, and as a retired investment manager, is OMG. Not sure if she was selling condos or something else. Take out a 2nd mortgage [gush, gush] and jump into this golden opportunity [gush, gush] and make a ton of money [hot steamy breath].

Once the down turn arrives for every one to see, so will her video’s with low cut dresses. The true indicator for when Canadian RE hits bottom is when Jackie is doing a pole and lap dances in order to sell properties.

Am I being too harsh?

Dividend Man
Atlanta GA

#81 Steven Rowlandson on 07.05.12 at 6:56 am

If real estate is about to have a Bre-X moment then there is only one thing to do and that is to just stand back and let realtors and home owners twist in the wind and then wait a while untill there is almost nothing left of prices and then step in and buy what one wants for next to nothing…. Financial extinction is part of the natural order of things. It is also the price of economic recovery and a new credit cycle or economic spring time.

#82 House Horny Housewife on 07.05.12 at 7:22 am

Garth,

Just as well.

This bidding war business is ridiculous. Over here, our realtors have never heard of such a thing and when I mentioned it to ours she wasn’t even sure if it is legal.

In this neck of the woods, people price things a little higher in order to get what they feel is a fair price but prices are not unrealistic (except for the luxury lakefronts, of course, which can sometimes show how out of touch with reality these particular types of sellers are).

If you are lucky enough to get a buyer, you treat him or her with the utmost respect and make it as easy as possible for the sale. People usually come for at least two visits before making an offer and they have lots of questions. Everyone has an inspection and often this results in the price going even lower. THAT’S the way things are in real life. Buying a property sight unseen for hundreds of thousands over asking is so outrageous and stupid that no further comment need be made.

HOWEVER, it IS too bad that naive couple bought in Toronto because my house is currently up for sale and I would have given it to them for only $50,000.00 over asking ;)

HHHW

#83 Randy on 07.05.12 at 7:26 am

House prices should be higher in Calagary….After taxes it costs a lot more to live in Ontario and Vancouver…..Why do you think that Premium athletes never sign with any of the Toronto teams….If they did, they would lose $ Millions and $ Millions….Toronto will never see another sports championship…

#84 Market Bull on 07.05.12 at 7:31 am

Here’s an epiphany for you:

TREB stats for June: 467 properties sold for $1,000,000 or more.

There is no good news in that. — Garth

#85 Timbo on 07.05.12 at 7:34 am

http://www.businessinsider.com/china-cuts-interest-rates-2012-7

“Wow! This is coming out of nowhere.

China’s central bank just cut its benchmark interest rate by 0.25 percent. It also lowered it’s one-year lending rate by 0.31 percent.”

Damn, The economy must be just a humming along with these rate cuts. Must keep the party going………

http://www.telegraph.co.uk/finance/economics/9378227/Bank-of-England-increases-QE-by-50bn-the-full-statement.html

“The Committee also voted to increase the size of its asset purchase programme, financed by the issuance of central bank reserves, by £50bn to a total of £375bn. ”

The helicopters are in the air! Flood the banks with cash and watch the markets soar……………..

#86 TimV on 07.05.12 at 7:48 am

#72 Scott in Gibsons: For a competent spec builder, the profits from spec building are large enough that it would take more than a 10%/annum market decline to really hurt them in any way, I believe. I’m speaking from the GTA, but I would guess that Gibsons is similar.

Note that “competent” is an important qualifier, since there are some renovators — I’ve talked with some — who make sufficiently poor choices that they have lost money even in the last couple years of rising markets.

#87 Market Bull on 07.05.12 at 7:55 am

BMO Survey Highlights:

The average mortgagor has 15 years left until they will be mortgage free.

Only 12% of mortgagors have greater than 25 years left on their amortization.

66% of mortgagors make additional payments other than their basic mortgage payments.

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2012/07/15-years-to-go.html#more

P.S. Latest RBC study indicated that 43% of homeowners have no mortgage at all.

#88 Timbo on 07.05.12 at 8:04 am

http://www.ft.com/intl/cms/s/0/077c9f4a-c67a-11e1-963a-00144feabdc0.html

“In a decision widely anticipated by financial markets, the ECB on Thursday reduced its main policy rate by a quarter of a percentage point to 0.75 per cent, the first time it has pushed the rate under 1 per cent.

The ECB also cut the interest rate on its deposit facility to zero, marking a dramatic step in attempts by the central bank to reduce general market interest rates and stimulate inter-bank lending.”

ZEROO!! YAHOO!
Let the free money flow and the good times return
Go stock market go!!!!…..

#89 TurnerNation on 07.05.12 at 8:06 am

Our elite leaders. If you ever wonder who runs our country…Globe yesterday reported on ex French PM Sarkozy droping by Power corp’s Paul Desmarais Sr’s Quebec cottage. That’s some dinner party.
I bet Power corp. let Paul Martin to power.

The joke’s on us. Power corp. Get it?

Do you think our opinion? Not likely. All countries are ruled like firedoms, with healthy doses of corporate nepotism.

#90 Smoking Man on 07.05.12 at 8:11 am

#61 blase

Still sticking to 2014 for toronto . It appearse that vancover is melting but the inventorey is drying up like a spit ball on las vegas blvd at noon. Like I have always said the herd of owners are much more stuborn that the usa counter parts.

Take note bubble heads. Van is up 90 precent since 2002. Tor only 40 precent. China and the ECB cut overnight rate by .25.
Carney will follow shortly. Hence the taking down before he does it.

Until I see more cars in the HOV lanes on the QEW bur to oakville. No crash and steady price gains in GTA. We are now entering the soft part of the year cycle msm will try and explote that for all its worth

Our herd is different. Will have no effect

#91 Kevin on 07.05.12 at 8:36 am

@randman (#12):

“It’s the buyers.. not the realtors who are at fault here.

Blatant blind idiotic stupid greed and nothing more.”

In what universe can the people offering to pay WAY over asking be considered “greedy?” Wouldn’t the sellers be the greedy party? You know, the ones actually receiving the money?

If someone walked into a Porsche dealership and offered $300,000 for a $150,000 Porsche, how would that make him “greedy?” Wouldn’t that just make him stupid?

#92 jess on 07.05.12 at 8:47 am

reminder

CBC News
On July 9, the FBI is shutting down servers put in place following the end of “Operation Ghost Click”, an investigation into a ‘click fraud’ ring out of Estonia, and thousands of Canadians could be affected.

All computers that still use these servers will meet a virtual brick wall on July 9 and be unable to connect to the internet until their computers are cleared of the associated ‘DNSChanger’ virus…
http://news.sympatico.cbc.ca/world/thousands_could_lose_internet_access_july_9_due_to_virus/b287a604

#93 jess on 07.05.12 at 8:47 am

reminder

CBC News
On July 9, the FBI is shutting down servers put in place following the end of “Operation Ghost Click”, an investigation into a ‘click fraud’ ring out of Estonia, and thousands of Canadians could be affected.

All computers that still use these servers will meet a virtual brick wall on July 9 and be unable to connect to the internet until their computers are cleared of the associated ‘DNSChanger’ virus…
http://news.sympatico.cbc.ca/world/thousands_could_lose_internet_access_july_9_due_to_virus/b287a604

#94 betamax on 07.05.12 at 9:12 am

Morons making $90k over asking ‘bully bids’ deserve what happens to them. Arguably, they deserve worse, but no matter.

Apparently the buying agent begged the sellers down to accepting a mere $45k over asking…though that’ll of course be much more paid over decades at higher rates.

Compound the $45k over bid with the fact that they bought at the peak, and their purchase should provide a life-time of teeth gnashing. Enjoy!

#95 Iconoclast on 07.05.12 at 9:25 am

90k over asking with no other bids?
I can only imagine the gut-wrenching regret they feel.

But no sympathy from me; nobody made them make that offer.

This story hitting the airwaves will nominate these folks for the “Greatest Fool” award for 2012. (That, and the Chinese “student” with the 1.4M bungalow a few months back)

And this will likely make insane, no-condition bidding wars a thing of the past. Certainly for anyone paying attention.

Good riddance.

#96 truth hammer on 07.05.12 at 9:33 am

Falling sales amidst falling interest rates…….say it ain’t so Garth. Here’s a novel idea from George Ure over at Urban Survival…..the ‘reverse reverse mortgage’

“Free Money!

Well, almost, anyway: The European Central Bank has cut interest rates to a record low 0.75%. Sure makes it easy for the bankster class to refinance national debts cheaply and for the longer term, huh?

All this global rush to lower rates is paying for both people with enough dough and credit scores to buy homes: Bankrate.com reports this morning that “Mortgage rates moved lower once again, with the average 30-year fixed mortgage rate setting a new record low of 3.87 percent, according to Bankrate.com’s weekly national survey. The average 30-year fixed mortgage has an average of 0.43 discount and origination points.”

—-

I keep waiting for someone invent the reverse-reverse mortgage so I can buy a home. The reverse-reverse idea is you buy a home and then someone pays you to live in it… I mean as weird as financial abstractions have become, why not?”

The new rate regime can only result in more hyperinflation on consumer goods with the nightmare scenario of fixed incomers starving to buy ‘half loaves’ of bread ( popular before the French Revolution’ and those whose incomes simply will not stretch to afford the rising rents that over stretched landlords are demanding for increasingly deplapitated properties.

Risk Management is obviously a class that Carney forget to attend. F should consider the unintended consequences of following the herd and supporting a euro centric status quo.

#97 daystar on 07.05.12 at 9:38 am

40 Stupesing in Cabbagetown on 07.04.12 at 11:12 pm

“Truth is, anyone who tried to buy a condo these past two years is a fool and anyone who actually bought is about to lose a lot of money.” – SiC

What buyers completely missed over the last couple year or more is they never asked the all important question. “What is this place going to be selling for 3, 5 and 7 years from now?” What are credit conditions going to be and interest rates and incomes and employment and the economy and vacancy rates etc., the rear view mirror is their future. Some folks just don’t look ahead.

What comes next is buyers trying to catch a falling knife. Ouch.

#98 betamax on 07.05.12 at 9:44 am

It looks like Vancouver is finally tanking and, honestly, I hardly care. Intellectually, it’s interesting to watch it unfold, but emotionally I feel indifferent. If I previously felt a desire to buy, that desire died of fatigue long ago.

Now that the bubble has popped, I’m in no hurry to catch a falling knife. I’ll buy when prices bottom, or close to it, and I don’t care how many years it takes.

Given that most who want to buy already have, and the few that haven’t don’t want to, I think buyer fatigue will be the new norm for the foreseeable future.

#99 Toronto Realtors in an all out PANIC! on 07.05.12 at 9:47 am

The housing crash is hitting toronto as sales have not only have stopped by many sales have fallen though as homes that sold last month are for sale this month. GTA realtors like smokingman are in a panic and many will be using lease busters to get out of their BMW lease before they lose it all. The fake economy is crumbling without HELOC free money. Mortgage brokers are in a panic as phone calls have stopped and the crickets moved in . Foreclosures in the GTA have been jumping higher. doesn’t look good and the realtors and mortgage brokers posting on garth’s blog in a PANIC know it. Why else are they here?

#100 refinow on 07.05.12 at 9:55 am

I have often wondered who is appraising these homes that sold over list ??

Here in Ontario people need to understand the dangers of putting in a firm offer.

If you are financing less then 80.1% of the purchase price, in most cases the lender will necessitate the requirement of an appraisal.

The policy of all lenders across the province is they will lend based on the lower of the purchase price or the current appraised value.

So the couple whu paid $90K over list, which was eventually dropped to 45K over list, over guilt or fear of pending law suit, still need an appraisal to to support that value.

These people buying condo’s in Toronto and the surrounding areas with closing dates of 18 months or greater are at the greatest risk.

If…. no…. lets go with when….the housing prices correct these Condo speculators who bought with small deposits with long standing closing dates will understand this policy first hand.

If prices correct by 30%, and their purchase price was $300,000 and it is a non owner occupied rental property, the maximum mortgage the Banks will advance would be ::

Purchase Price $300,000
30% correction $90,000

New Financing Value $210,000

Maximum mortgage is 80% of $210,000 for rental Property, remember, CMHC no longer insures non Owner occupied homes… Grand Total $168,000

So New Down Payment to Close $132,000

But wait, they can always refinance their own home to pull out more equity to cover the short fall. But now there are no refinances allowed greater than 80% of the current market of the value their own home, oops lost borrowing power there too…

The Toronto Condo Market is going to get real FUGLY really fast…

#101 Frank le Skank on 07.05.12 at 9:59 am

Isn’t it illegal for a real-estate agent to falsify a bid on a house in order to get someone else to bid on it? Or are these people so stupid that they just over paid by $90,000 without an opposing bid. This couple should get a new RE agent. They are still overpaying, I don’t get it? I read this in the Toronto Metro this morning and the first thing that popped into my head is that if they pay $45,000 over asking with no opposition, they are the greatest fools of them all.

If history is an indicator, we are looking at about 5-7 years of falling prices, a fairly slow decent. Does anyone think that the excessive HAM/speculation, dept/HELOC madness or lack of first time home buyers could expedite the falling of prices?

#102 Kim on 07.05.12 at 10:11 am

Where is the government looking into this criminal activity? How many fake bidding wars have their been in toronto?all thanks to free CHMC money. Where is the govenment to expose and watch these criminal realtors?

http://www.moneyville.ca/article/1221563–toronto-realtor-calls-for-stiffer-bidding-war-rules-after-clients-offer-90-000-over-with-no-rival-bids

#103 refinow on 07.05.12 at 10:12 am

TO Bubble Boy wrote…….

” Everyone needs to stop focusing on the $90,000 total, and start thinking like the buyers.

$90,000 is only $378.54 per month when amortized over 30 years @ 3%.

They buyers were happy to get in before being priced out forever… that $90,000 would be $425.92 if amortized over 25 years.

So, thinking like the greater fool who “won” the bidding war — they saved $47.38 a month by getting this house before the mortgage rules are changed!”

You in a nut shell just summed up the moronic, rationale that has got so many Canadians into the Dangerous Debt Levels of today.

First of all with that type of Logic, you are clearly a Real Estate agent…..

This fear of getting priced out of the Market, is the Realtor Mantra that shows you clearly know what is about to happen.

Funny how those exact words were spoken in Calgary before values started to drop, next in Vancouver, and now in Toronto. I even recall hearing those same words coming from US Realtors in 2007-2008…

For me that is the official indicator that when your Realtor speaks those words, “Before you get Priced Out of The MARKET” is the time you immediately shake the hands of your Realtor, say thank you for all the time and effort that has been put forward, turn and run…… as fast as you can. Don’t look back…. Keep Running……

30 Year Amortizations are not a selling feature, it is a near life sentence of being in debt.

These changes are only a fraction of what truly needs to be done to stop future Canadians from signing up for a long future of financial hardship.

#104 jwkimba on 07.05.12 at 10:17 am

@ #62 This should also work the other way around though. If the seller is asking for a certain amount, and receives a bid for that much with reasonable or no conditions, they should be legally obliged to accept it, or face a penalty in return.

Thats how it is in california (LA and Orange county, may vary by county). If you list for X and someone writes a cheque for X, ther property is sold. Wen you list you are entering into a contract, someone else can fufill that contract.

The same rule applies to things like cars, tv’s, etc. A car dealer can’t advertise a car for $1 then turn down offers for 1$.

#105 mel in victoria on 07.05.12 at 10:28 am

precious metals ETFs might be worth a nibble……..just a nibble..

#106 cramar on 07.05.12 at 10:28 am

The die was cast long before I found this pathetic blog. Two years ago I figured that RE was vulnerable to fall in our area so we started to consider selling and moving. I only found this blog a few months ago and if anything Garth has made me more paranoid (not bad see Grove’s book “Only the Paranoid Survive”). What I can give Garth credit for is the “Rule of 90”. It is only a subjective guideline, but great to shoot for since I wanted to reduce my exposure to RE.

Approaching retirement gives you have a choice of where to live. Based on climate, population, and RE prices we chose to look in SW Ontario, specifically in the Leamington/Kingsville area. Why there? The area is the southern-most land in Canada (same latitude as N. Calif), hence it has the 2nd warmest winter climate in Canada after southern B.C. (I won’t factor in rain). It is not in the snow belt like London/Chatham. It is a small town, which we wanted, and housing is dirt cheap like Windsor to the north. Spent two years and a dozen trips to finally find a suitable property. Two other offers on it at the first open house, so went in with a cash offer and no conditions (thank you HELOC). Bingo! Cash is king!

The biggest unknown was putting our Kitchener house on the market. Was it going to sell fast, is now too late, or just before the last train leaves? I wanted to sell it myself (Comfree) and save the RE commission. First people to look at it snapped it up at asking price! I didn’t even get a chance to put the listing on MLS! They are a young horny family with two small kids. He was horny and she was Horny! They had been house hunting for a long time. Our house is a perfect location for them! It was more important to us to find the right people for our place rather than get the max. price in a bidding war.

I just hope for their sake that house prices do not collapse over the next few years, now that they have taken on a mortgage to buy their first house. We were there once in their shoes with little kids too. And if RE falls here, I hope it will mostly effect the newer $475,000 RIM specials and not the more affordable ones in established hoods. We want to help them out as best we can by giving them lots of added bonus stuff, and introducing them to all the neighbours.

As for us? We bought a 3-BR single-story brick bungalow (like a Willowdale special) with attached 2-car garage and 150′ lot in Leamington. For $130k. Sure it needs updating (like a Willowdale special), but that is what we want to do. My wife gets bored easily and doing renos keeps her occupied. It will keep me occupied. And we dropped our exposure to RE from around 48% to 23%.

Why not just rent? We are house horny and like making over a house in our own image for our own needs. We’ll see what the future brings. This is about all I can do now to physically prepare for the hard times to come.

Maybe just in time? Maybe on the last chopper out of Saigon? Time will tell.

#107 daystar on 07.05.12 at 10:33 am

I can’t help but think Garth, that the slowdown we are seeing in Vancouver is related not just to what is happening to RE in China but changes to the investor program with Immigration in 2011:

http://www.cicnews.com/2011/06/breaking-news-announced-canadian-immigration-programs-06988.html

People might not have liked the term “selling citizenships” to describe the investor program but:

http://www.canadavisa.com/canada-immigration-investors.html

Its hard not to see it that way for permanent citizenships into Canada. To put it into perspective, before this change there was no cap and the minister expected the cap to be reached within a few days from Chinese nationals. Applicants loaned $800,000 to the government for 5 years for 0% interest, or paid a fee if they wished not to make the loan. The fee is not given on the government website. (what was it anyone, $50,000? It’ll be interesting to see if 700 assumed processed applicants in July will be enough to generate HAM to boost the numbers ever so slightly this summer)

Another program that foreign nationals used to buy their way in was the entrepreneur program and it has also since ended.

http://www.canadavisa.com/immigration-canada-entrepreneurs.html

Its not hard to conclude that this has taken HAM out of the market since last year and the stats show:

http://www.bnn.ca/News/2012/7/4/Vancouver-now-a-buyers-market-report-finds.aspx

Sales are down 27% yoy and the CRE won’t talk about values. Couple this with press like this:

http://www.cbc.ca/player/Shows/The+National/About+the+Show/Peter+Mansbridge/ID/2229772604/?page=2

and tighter credit:

http://www.cbc.ca/news/business/story/2012/06/21/flaherty-mortgage-cmhc.html

… and this goose is cooked, especially for delusional Vancouver.

#108 amos811 on 07.05.12 at 10:40 am

is it true?

http://ca.finance.yahoo.com/news/the–manhattanization–of-toronto-will-change-family-housing-dreams.html

#109 T.O. Bubble Boy on 07.05.12 at 10:52 am

@ #83 Market Bull

Here’s an epiphany for you:

TREB stats for June: 467 properties sold for $1,000,000 or more.

Epiphany: a sudden, intuitive perception of or insight into the reality or essential meaning of something, usually initiated by some simple, homely, or commonplace occurrence or experience.

hmmm…. so, June 2012 was “commonplace”?

I wouldn’t call a 10% average price increase combined with a -9% SFH sales decrease and a -18% Condo sales decrease (even with pre-built assignment sales included) normal or commonplace.

The true epiphany here is that the seemingly “hot” sales numbers are actually “cold” because sales volumes are shrinking across the board.

Another epiphany in those numbers is that those 467 million-dollar properties are skewing the average price (given the smaller number of total sales). So, MEDIAN price would be a far better indicator… that $634,652 average SFH price is more like $500k as a Median.

#110 Timbo on 07.05.12 at 11:06 am

http://www.bloomberg.com/news/2012-07-05/denmark-cuts-rates-to-record-lows-as-zero-threshold-breached.html

Denmark’s central bank cut its main borrowing costs to record lows and brought the rate it offers on certificates of deposit below ZERO, as policy makers test uncharted territory to fight a capital influx.

“The central bank’s battle to curb the krone risks undermining a recovery in the banking industry from a burst real estate bubble. Low interest rates are making it “increasingly difficult, if not impossible” for banks to earn money on deposits, Thomas Hovard, head of credit research at Danske Bank A/S, said before the rate cut.

Denmark’s banks, which had 186 billion kroner in deposits at the central bank as of yesterday, are struggling to emerge from a burst real estate bubble that has sent house prices plunging 25 percent since their 2007 peak. More than a dozen banks have failed since then and two thirds of the country’s regional lenders reported losses last year, leaving the industry reluctant to withdraw funds from safe central bank accounts and channel them into the economy. ”

New motto, “Safety before profits”………..

http://www.reuters.com/article/2012/07/05/us-usa-housing-rents-idUSBRE86404Z20120705

“Five years after the housing bubble burst, the United States is in the midst of a housing affordability crisis. Home prices have fallen a third from their peaks, but many Americans cannot benefit because they cannot get a mortgage.

With credit tight, many consumers have no choice but to rent. Others who can afford to buy are also renting, because they view real estate as a lousy investment. With this increased demand, rents in some cities have jumped by double-digit percentage rates.”

Rising rents with no income growth leads to expansion?….

#111 Industrial Guy on 07.05.12 at 11:18 am

“Vancouver sales hit 10-year low, real estate board declares a buyer’s market”

June sales are down 27.6-per-cent decline compared to June 2011. Isn’t June the traditionally the peak of the house buying season?

The funny thing is …… None of the Minister of F’s new rules have come into effect either …. Wouldn’t we expect to see a slight blip in June as the last of the fools try to get into the market under the old rules?

This will not end well …. it’s already started poorly.

http://www.vancouversun.com/business/commercial-real-estate/Vancouver+sales+year+real+estate+board+declares+buyer+market/6882325/story.html#ixzz1zlEbi4GH

#112 Jimmy on 07.05.12 at 11:24 am

This pathetic blog truly is pathetic. I’m no realtor, and in fact I myself am hoping that real estate moderates. However, your repeated reminders of how you told us this or that would happen indicate a level of narcissism. The fact is, the housing decline you’ve been leading your impoverished followers to believe would happen for years has not materialized. The mortgage rules changes will not induce correction — only a rise in rates will do that, and there’s not indication its going to happen any time soon. Face it — you have a legion of bitter, low-income wannabe home owners who would delight in the economy being trashed if it would mean that they could obtain a mansion in Bridal Path for $100,000. I don’t know who’s worse: the realtors or the bitter wannabes. Or maybe you are the biggest villain here for milking the gullible masses to suit your own ends, and for letting your ego and your need to be right get in the way of your message.

Ah, the smell of singed realtors in the morning… — Garth

#113 Gypsy on 07.05.12 at 11:27 am

http://credit.bank-banque-canada.ca/householdcredit
Total Household Debt – May 2012 – BOC http://postimage.org/image/3tc88pe3j/
Source of House Hold Debt – May 2012 – BOC http://postimage.org/image/z1kt613tr/
It looks like that amount of debt held by NHA MBS program has reduced drastically in recent months.
Amount of Mortgage held by charted banks increased by 303 B while NHA MBS decreased by 240B over last 12 Months, but mostly this change start to happen since beginning of 2012.
Can someone explain this?

#114 Ex-Cowtown on 07.05.12 at 11:32 am

#60 Investx on 07.05.12 at 1:06 am

Can someone explain how the MLSLink® Housing Price Index (HPI) composite benchmark works and why it’s a poor reflection of housing prices?

+++++++++++++++++++++++++++++++++++++

From what I’ve been able to dig up it is virtually impossible to tell what the index actually measures. I would ignore it completely and utterly. It is impossible to calculate independently, so there is no way to confirm if the RE industry numbers are accurate of phony… or how phony they are.

The # is supposed to reflect issues such as finished basement, quality of kitchen, roof, landscaping, grass, windows, neighbors dog’s bathroom habits, etc. but it is so totally subjective that it is also totally meaningless.

The RE industry shot themselves in the foot on this one as the index is complete tripe. However, you can be assured that the data is “specially selected” to skew things heavily in the realtors favour.

The only safe way to approach it is to look at their index and deduct 15-20%. 30% may be even safer.

It is a complete waste of time to look at RE industry approved stats now. They jumped the shark and lost touch with reality.

You might as well be asking Bernie Madoff what his new funds are paying and ask if they are safe.

#115 Aussie Roy on 07.05.12 at 11:45 am

Tony on 07.05.12 at 5:03 am

Re: #48 John on 07.04.12 at 11:30 pm

The absolute peak of that market was actually around the third week of September of 1987. It took another two years for the news of two years ago to make television and the newspapers before the average home owner became aware of it but two years too late.

…………………………………………………………………………..

“It took another two years for the news of two years ago to make television and the newspapers before the average home owner became aware of it but two years too late.”

On a national basis the Australian market topped in March 2010. National prices are now 10% lower.

There is no crash, never was a bubble, the housing market is supported by strong fundamentals and now is the perfect time to buy, say the MSM and your average Joe in 2012.

I agree it’s a very slow awakening, Australia is still not there yet, after 2 years of RE prices and demand being in freefall, and stock on market exploding. The good news is, denial by itself will not reverse the current trend, so it’s only a matter of time before the truth is unavoidable, even to the most delusional.

I’m still not willing to even guess when this might happen but I don’t doubt for a second that it will.

Our host, has many more insightful, logic based blogs to author before the majority of people even consider he might just be right.

#116 CP on 07.05.12 at 11:51 am

http://www.huffingtonpost.ca/2012/07/05/toronto-home-sales_n_1651109.html?utm_hp_ref=canada

Oh really MSM? You don’t say…

#117 penpal on 07.05.12 at 11:57 am

@ # 86 Market Bull(shit)

Prices in all markets are set at the margin.

Every value relies on the last price paid in that market.

You may be too stupid to see that reality, but I suspect you are a Realtor who already knows that.

I’ll enjoy the losses you are about to suffer.

#118 jess on 07.05.12 at 12:00 pm

a product of environment

I’m not a liar,” “I became a liar.” Samuel Israel III
http://dealbook.nytimes.com/2012/06/25/a-con-man-who-lives-between-truth-and-fiction/

Sorkin: A Con Man Who Lives Between Truth and Fiction (June 26, 2012)
Bayou’s former chief executive, Samuel Israel III, is serving 20 years in prison for fraud. He pleaded defrauding clients of more than $400 million

http://definitions.uslegal.com/m/manifest-disregard-doctrine/
Bayou Award Against Goldman Is Upheld
By SUSANNE CRAIG
An appeals court panel has upheld a $20.5 million arbitration award to the creditors of Bayou, who had accused Goldman Sachs of helping the hedge fund perpetrate a Ponzi scheme
Goldman cleared trades for Bayou, and the unsecured creditors’ committee filed its arbitration claim against Goldman in 2008.

#119 Spiltbongwater on 07.05.12 at 12:03 pm

Does anyone know if there are any Realtors tm. that work exclusively with buyers, or exclusively with sellers? I have a hard time believing that a Realtor tm. will work in my best interest to help me get the lowest price possible when the sale will affect the value of the listing they have across the complex. Can a lawyer work both sides of the court, 1 case represent the plaintiff, and next case represent the defendent? Not sure how a Realtor tm. can work both sides of the fence and represent anyones best interest other then their own.

#120 Hoof-Hearted on 07.05.12 at 12:09 pm

Matt Taibbi & Eliot Spitzer On ‘Cartel-Style Corruption’ Behind Libor Scam: ‘The Mob Learned From Wall Street’ (Video)

http://www.infiniteunknown.net/2012/07/05/matt-taibbi-eliot-spitzer-on-cartel-style-corruption%E2%80%99-behind-libor-scam-the-mob-learned-from-wall-street-video/

#121 Buy? Curious? on 07.05.12 at 12:10 pm

Toronto’s real estate numbers are going to look worse than Tom Cruise’s custody battle!

Team Katie.

#122 Aussie Roy on 07.05.12 at 12:24 pm

Aussie Headlines

Provident implosion exposes Australias low-doc mortgage risks

THE $130 million collapse of subprime lender Provident Capital has highlighted the emerging problems in the nation’s low-doc and no-doc lending markets, which flourished during the years of the last property boom.

In practical terms this meant that loans to developers that went bad, and would be likely unrecoverable, were not recognised as such in the companies accounts, because it was at managements’ discretion to declare them ‘bad’ or to continue with the optimistic view that all would be right in the end.

MMM, no mark to market reporting, where have I heard that before?.

http://www.dailytelegraph.com.au/news/sydney-news/recievers-to-take-over-provident/story-e6freuzi-1226414297001

#123 Doug in London on 07.05.12 at 12:29 pm

@mel in victoria, post #104;
The same can be said for energy and resource funds, although prices were better last week than now.

#124 vancity on 07.05.12 at 12:29 pm

Anyone who get’s involved in a bidding war gets what they deserve and has more money than brains.

#125 Dontcallmeshirley on 07.05.12 at 12:45 pm

@ #111 Gypsy,

The answer to your question is new IFRS rules.

#126 arit on 07.05.12 at 12:48 pm

To 11 Jimmy

” Face it — you have a legion of bitter, low-income wannabe home owners who would delight in the economy being trashed if it would mean that they could obtain a mansion in Bridal Path for $100,000. ”

I step up. That’s me. Definitely legion. But the bitterness is gone, a long time ago. Where is Bridal Path?
And now that I saved so much money from my low income due to not buying, I can cross off “wannabe home owners”.
I don’t think my stash should be spent on poorly built collections of wood-shavings-and-chinese-glue. Rather rent. Maybe forever.
But eating popcorn and watching realtors (R) sweat blood is kinda fun.
Regards

arit

#127 joe on 07.05.12 at 12:54 pm

Its much easier spending money you havent earned as you have no concept of what the money takes to earn. This is the type of market demand that will be gone after July 9th. The greatest fools went out with a bang.

#128 Bottoms_Up on 07.05.12 at 12:56 pm

#162 Mr Buyer on 07.04.12 at 7:35 pm
——————————————–
Ok, so you’re talking about an 88% price appreciation over 11 years, for one specific house (anecdotal evidence).

That appreciation works out to a little shy than 6% per year (the stock market does better than that). Factor in 3% inflation and yes the house is over valued, but is unlikely to come crashing down (but as Garth has outlined here, it does not necessarily have to come crashing down to create economic and social problems).

You will have to come up with a better example of irrational prices, or prices that doubled in the past few years, to explain why Ottawa is set for a 50% crash. ; )

#129 Ex-Cowtown on 07.05.12 at 12:59 pm

#86 Market Bull

It only took 10% of the U.S. homeowners to sink the entire U.S. housing market.

Using your logic, as long as the hole in the Titanic was less than 40% of the area of the hull, no problem.

We now know who the realtor was that clipped the greater fools for $90K above asking.

I love realtors: mathematically incompetent, but only in a way that puts $$$ in their pockets.

#130 Bottoms_Up on 07.05.12 at 12:59 pm

#176 Victoria on 07.04.12 at 8:44 pm
———————————————–
No one likes to lose money, even rich people.

So…if you stood to lose a few hundred thousand dollars, wouldn’t you consider selling to preserve a capital gain?

#131 penpal on 07.05.12 at 12:59 pm

@ # 110 Jimmy

Hey dude, your FEAR is showing!

Making sweeping assumptions about who reads this blog just demonstrates your lack of critical judgement and the irrelevance of your post.

#132 penpal on 07.05.12 at 1:12 pm

TO: Smoking Man

If you are such a great investor, etc. why waste your time on this blog with Peons?

Why not start a blog or website and charge for your great insight.

Oh yeah, …..forgot you did that and nobody came to visit!

What a bald. skinny, small dicked pathetic piece of trash you are!

Gee Garth I like this new “free-for-all” insult-a-thon you let people get away with here.

sarc / off

And please don’t delete my comments, they are at least as valid as SM’s post in the last thread and you let that go….

#133 2centCdn on 07.05.12 at 1:15 pm

#117 Spiltbongwater
Not sure how a Realtor tm. can work both sides of the fence and represent anyones best interest other then their own.
………………………..
Duh! ….. their own of course …. they just want to make a living like you do …. and the easier the better. Sales people have to make sales. 2.5% or 5% of $400K isn’t much different than 2.5 or 5% of $350K. I’ve bought and sold a bunch of houses the last 20 years and what realtors say and what is driving them are two different things. In my town of 50,000 ish …. there’s almost a realtor club. Most work together and look after each other … but they do compete with and hate each other at some level as well : ) But most don’t want to make waves in the club.

Reminds me of the time I had some legal things going on with my business and my lawyer and the other lawyer were swearing and cursing each other and dragging my case on forever …. only for me to see them in a local bar having a drink and a laugh a day after my case finally went to court. And my lawyer bill magically came out to exactly how much my lawyer “won” for me. How bout that!

Yes …. the way we’re lead to believe the world works and the way the world REALLY works are usually two very different things.

In general …. everyone should guard their wallet around anyone who smiles too much, dresses too well, drives too nice of a car and holds out their hand for a shake. They need a piece of you to pay fo those teeth, clothes and Beemer, Merc or Range Rover lease.

#134 Industrial Guy on 07.05.12 at 1:18 pm

Jimmy, Take it easy. No one here want to see the destruction of the national economy. .. but, you can’t dispute the facts. The Harper Government did all the wrong things and now were in one Hell of a of a situation. They goosed the economy with emergency low interest rates and permitted home owners to turn their homes into ATMs. Was this all part of their strategy to win a Majority Government? ABSOLUTELY!

Household debt is at an all time high. The economy is badly fractured. Growth is highly sectoral. Our petro-dollar is killing off what’s left of Ontario’s manufacturing exports. According to the Purchasing Managers Index, domestic manufacturing is actually growing but, most of that is tied to resource developments (Alberta’s oil sands, Northern Ontario’s Ring of Fire, the Off Shore oil). so, were still fuelling our case of “Dutch disease”.

The thing we need to ask before the next Federal election is ..Were the Conservatives good stewards of the National economy? .. How could a responsible Government expect a different outcome from what occurred in Ireland , Spain and the USA by duplicating their errors.

“Low-income wannabe home owners”? Hardly. This pathetic blog has a legion of realists who look at the facts and see danger while others rush in to be slaughtered. There’s a lot of very smart people here who can see a manipulated market and know to stay away until the greed freaks have had their fill. No sane person would expect Million dollar home on Toronto’s Bridal Path to sell for $100,000. That’s the unique circumstances of Detroit, Michigan … maybe Windsor … But certainly not here. A downturn like that would collapse most of Toronto’s housing stock to mobile home prices. Home building in Canada would come to a screeching halt causing massive increases in unemployment and and a catastrophic decline in GDP. We all make something or provide some service to pay our bills. Why would we wish such a catastrophe on ourselves?

I don’t see anyone “milking the gullible masses” on this blog …. but we do have our share of Kool-Aid guzzlers like yourself. CHEERS!

#135 antiflakflak on 07.05.12 at 1:19 pm

Vancouver is finished –now going to be taken over by the Agenda 21 Vision crowd, greenmongering (UN gang) build public affordable housing, stack and pack along scaretrain routes. Using the tool of unaffordability to get their agenda in, once the other side i.e the corporates with backing from gov’t (banking cartels) have done the major damage. Joe average will never win sandwiched between these two.

#136 Toronto_CA on 07.05.12 at 1:26 pm

This is from my RE agent cousin. I retorted, but in case anyone wants to hear what a RE agent is saying about the Burlington market:

“I disagree with a small point “The facts are simple; real estate is easier to sell when prices are going up, realtors are happier when more houses are selling and open houses are more fun when buyers come to look.” Honestly, this town (Burlington) needs a couple hundred listings to hit the market all at once (and maybe that Is coming) to slow things down (balance the market). I feel sorry for buyers out there right now with the lack of product on the market and it is pushing prices up like crazy. I do agree with part of that statement “real estate is easier to sell when the market is hot”. A good downward spiral pushes a lot of the fly-by-night agents, and some of the “don’t quit my day job” FSBO know-it alls out of the market. There is a lot of stuff that your Grandfather does that I would never do in todays world…but I listen to everything he says to me about Real Estate (he has a hell of a lot of experience). I take a lot from your aunt too…she may not think so, but I absorb every word she says. Historically the market moves in 3 year cycles…this has been a 15 year run with a 6 month blip when the US Market crashed. It’s been and continues to be a hell of a ride. I still believe we are not headed for an over all crash but I have concerns for areas that have certainly seen a boom and in some cases in specific markets. The Party may be over there. I’m still a believer that Toronto is the center of the universe for Canada, it is where business is done. There is still demand for housing in the GTA, but the condo Market downtown is saturated, and this guy has pretty much summed up Vancouver. Grab yourself a Martini, sit back and watch this play-out. I think the next few months will be interesting….I think it will get even more interesting when rates begin to move”

#137 penpal on 07.05.12 at 1:35 pm

@ # 85 Tim V

You couldn’t be more off base.

It’s all borrowed money usually on spec homes built by small builders.

That is why they go broke, not just lose money in housing market downturns.

#138 Bottoms_Up on 07.05.12 at 1:35 pm

#101 Kim on 07.05.12 at 10:11 am
——————————————
It is perfectly legal to write in your offer:

“We offer the full asking price, but we will offer $5,000 more than any other registered offer if so received”.

Of course you’d have to be careful of fake offers biding up the price.

#139 BCObserver on 07.05.12 at 1:37 pm

I still don’t get why Toronto and Van are compared here all the time. Toronto is just terrible!

Another wrong comparison here is US vs Can. Canada is accessible by almost half a million immigrants yearly. That is a huge factor in the housing demand. Immigrants are coming here with money, and most importantly – eager to work and spend.

#140 penpal on 07.05.12 at 1:43 pm

@ # 96 Daystar

Those that asked the questions were told “higher”, “more”and “prices never goes down” by their RE agents.

Gullible people that didn’t ask the questions were misled by MSM and RE agents, appraisers, etc., their mom-in-law, etc. so convincingly that they didn’t have to ask the questions.

People either chose to be irrational or were led to irrational decisions by being told lies and choosing not to do any critical reasoning.

In all cases, they are about to get a lesson in hard times.

#141 Canadian Watchdog on 07.05.12 at 1:49 pm

At least we know TREB’s president Richard Silver is well aware of how the media will respond when he can no longer fudge the numbers to his own interest. http://postimage.org/image/gwo5vxr3f/

#142 The American on 07.05.12 at 1:55 pm

At #103: JWKIMBA, sorry, but that is NOT how it is in LA or anywhere else in the U.S. for that matter. A seller reserves the right to accept or deny any offer, even if at the full asking price. Nothing must transpire whatsoever, even if an offer were made with no contingencies for over asking price. The only thing that could happen is the seller may be on the hook to pay the listing agent’s commission if a buyer were at the table with a reasonable offer, even if the seller rejects that offer. That’s real estate law in the U.S.

#143 Not 1st on 07.05.12 at 2:04 pm

Garth, are you liking the extreme ponzi action coming out of europe today?

#144 The American on 07.05.12 at 2:06 pm

At #103: JWKIMBA, when you list anywhere in the U.S., LA included, you are enering into a contract ONLY with the listing brokerage – not the buyer or any potential buyer. If you do not fulfill the contract terms with the listing brokerage, they may reserve the right to seek remedy. The seller is never entering into a contract with a buyer until mutual acceptance is established from BOTH buyer and seller.

For example, I list my home for $1,000,000 through Coldwell Banker. I enter into a six month contract with them that states they will market my property for the contract term length. In turn, I must pay a selling commission to the listing brokerage if a buyer attempts to make a reasonable offer (highly subjective in a court of law), even if I reject that offer. 99.99% of the time a listing brokerage will NEVER go after this commission, even if the seller rejects a fair offer. There are many reasons why he listing brokerage may not go after it, reputation being the primary reason.

While listed, let’s say I get an offer from an interested party for $1,100,000 with no contingencies. I have ZERO legal obligation to the buyer to accept the offer, and I legally reserve the right to reject the offer. Often, this happens. The only thing that could possibly happen is the listing broker could potentially, although very unlikely, go after the listing commission, which is usally 3% of the list price. In the U.S. the total commission a seller pays is usually 6%. 3% to the listing broker and 3% to the buyer’s broker. This is, of course, negotiable, but the 6% is fairly standard. If you don’t want to pay that much, you can negotiate it down. Good luck, however, having any realturd show your home to potential buyers.

#145 John on 07.05.12 at 2:12 pm

I work for GTA charity. Interesting letter we’ve received today from one of our donors.
“Ever since we have our pledge, my husband who is in real estate has suffered a lack of sales, in the extreme. Our intention is still to honour the amount of XYZ and we can catch up easily ONCE THE CASH IS FLOWING AGAIN”. Well I guess in your dreams…

#146 The American on 07.05.12 at 2:13 pm

At #138: BCObserver, Canada being accessed by over a half million immigrants each year is a laughable excuse for any fundamental why property values will remain high, let alone sustainable in the first place.

The U.S. alone has more immigration each year than all other nations on Earth… COMBINED.

There goes your “argument.”

#147 penpal on 07.05.12 at 2:19 pm

@ $ 138 BC Observer

Got any sources / statistics / links to back this up?

Nah…. didn’t think so.

Another genius spouting the same old BS.

Why even bother posting?

#148 disciple on 07.05.12 at 2:22 pm

The banks should take the losses because the buyers have paid the insurance premiums on behalf of the banks. CMHC is taxpayer funded, therefore we should have the power to break such an obvious fraudulent insurance contract on grounds of national insolvency.

About 250K people work in the banking sector in Canada, and I’m almost certain, the majority would not be affected… Therefore, crisis averted… CEO’s don’t get their bonuses (oh well)… Bankers learn their lesson… Investors in the banks learn their lesson… Prices instantly revert to reasonable market values… Mostly everyone is happy…

Vote for potential candidates who will make this happen, who have the spines to make this happen. Your world is saved instantly overnight. Praise be.

#149 disciple on 07.05.12 at 2:23 pm

Do I really think it is this simple? Of course not, but the general idea is valid. Instead of wasting time talking about how stupid people are, why not begin the task of fixing the problem?

#150 penpal on 07.05.12 at 2:26 pm

@ # 128 Ex-Cowtown

Exactly my point @ comment #130, illustrated better by yourself.

PRICES are set at the margin but affect all VALUES!

#151 citizen of convenience on 07.05.12 at 2:27 pm

Scary thing is here any house price can potentially change +-10% even maybe more like 20% and there is mortgage and insurance for that. This means there is no real market valuation, everything is in air. You can agree to pay 2 million for 1 million house and will still get approved apparently.
This is sick and scary. I wish all this ponzi will go down deep and people actually start thinking about making money by producing something, usually happens with hard work and using brain.

#152 disciple on 07.05.12 at 2:28 pm

Is it because most Canadian investors are heavily invested in the banking sector? Because the TSX is bank-heavy? Would failing banks enact their vengeance upon the nation? It would be a purging of the financial parasite class. Why is nobody on this blog prepared to even entertain the possibility? Someone, please, educate me.

#153 Devore on 07.05.12 at 2:28 pm

G&M strikes back with stupidity:

http://www.theglobeandmail.com/report-on-business/economy/housing/in-vancouver-the-sellers-market-recedes/article4389244/

While there is anecdotal evidence that foreign investors are losing their appetite for real estate in the Vancouver, experts remain perplexed as to exactly why the city is seeing such a decline in transactions right now.

I thought it would have been obvious. How about, prices are too high? Although the article features a picture of a SOLD sign, it should really have this picture instead: http://www.johnlund.com/images/889720-001.jpg

#154 dd on 07.05.12 at 2:29 pm

Bill Gross:

Not only banks and insurance companies but sovereign nations as well cannot all be counted on to guarantee a return of principal, let alone a return on investment.

An authentic debt crisis – which the world is now experiencing – can only be ultimately cured in two ways:
1) default on it, or
2) print more money in order to inflate it away.

http://investments.pimco.com/insights/External%20Documents/Investment_Outlook_July_2012_Whats_in_a_Name.pdf

#155 Jimmy on 07.05.12 at 2:35 pm

Always remember “It’s different now” is no less valid a statement that “the bubble is going to burst soon”. Anyone who thinks they can accurately identify a true bubble and predict its collapse is deluded. Hindsight is required, otherwise all you have is a bunch of variables that cannot tell the whole story because most of the data is unavailable. The macroshock will not announce its arrival. The fact that the masses are starting to jump on the housing correction bandwagon suggests to me that its not ready to happen yet. It’ll wait until everyone has gone to sleep again.

#156 Hoof-Hearted on 07.05.12 at 2:38 pm

#132 2centCdn on 07.05.12 at 1:15 pm

Reminds me of the time I had some legal things going on with my business and my lawyer and the other lawyer were swearing and cursing each other and dragging my case on forever …. only for me to see them in a local bar having a drink and a laugh a day after my case finally went to court. And my lawyer bill magically came out to exactly how much my lawyer “won” for me. How bout that!
==================================

What’s that saying…a Town with one lawyer …lawyer is poor….more than one lawyer..they are all rich?

All these parties that rely on a money out of thin air system will become desperate…watch out for new versions of old scams

#157 james on 07.05.12 at 2:47 pm

#52

#158 james on 07.05.12 at 2:50 pm

#52 corey mc, nope not a realtor but am in calgary. i see the town starting to construct condos right before the crash despite hearing no reports of massive inmigration or work. i have been surveying the acreage market as well as some other house prices since february and there doesn’t seem to be much movement. that said we totally agree that deflation will occur and are just sitting tight till we see it. our focus is to get out of town and on a piece of land (5 – 10 acres) but haven’t really seen any movement at the 900 – 1 mil range quite yet.

#159 TNT on 07.05.12 at 2:50 pm

How about no more bidding wars, why and when did people’s largest life investment turn into a Tijauna barter fest?
Sold for over vs motivated seller. Buy Buy Sell Sell! Gotta get in Gotta get out.
How about home appraisals and sales being done by a qualified third party, not by a couple of RE Agents who’s main objective is your cash, that’s called inside trading.
How about get rid of the Realtors all together and instill a certified non objective credible process, teams of people who are paid by a salary and are held accountable by protocols. How about a true home assessment. It amazes me how these RE rock stars have so much influence on our lives and bank accounts, its ridiculous.

#160 Smoking Man on 07.05.12 at 2:51 pm

131#. Penpal

You are such a track 6er.

My obvious attack on LaughingCDN was to draw out a responce.any responce. He copys and pastes the same words since 2008. Wana get a feel for his mental state that way I can recomend the proper therpy. As your self when have I ever attacked anyone on here appart from this one.

As far as Bald. Yes. Skinny I wish and a little mcHappy I was in the pool

On peons. I’m a peon too just a bit wealther

As far as investor goes. I’m not. I’m a gambler I take big risks

And my blog yesterday it had 1200 hits and haven’t even posted any thing in a about a week.

And I chalange you to find any off my predictions in the archives here or on the globe and mail that where wrong. Even when I bought YLO and rode it to the basment I said its a stupid move from the first post on. My ego took over and lost logic

As much as an asshole and shit head I may appear no one on this planet can call the future as accuratly as me. And a lot of blog dogs now it..

Are you new hear

#161 Bill on 07.05.12 at 2:51 pm

They interviewed this poor girl on the CBC News Network who was about to buy her first home before the new mortgage rules come into affect. 18 years old, works in a call center, and doesn’t want to keep throwing her money away on rent. Was worried that the new rules would be the difference between eating soup all month, or being able to afford proper groceries. I bet her realtor is very pleased that they were able to sucker another first time buyer just before the scary deadline.

#162 IM in C on 07.05.12 at 3:00 pm

Garth — Todays example of people so house [email protected] that they bid against themselves, defines the ‘greatest fool’

#163 Beach Bum on 07.05.12 at 3:03 pm

#110 Jimmy –

“bitter, low-income wannabe home owners”… that is going to be GTA realtors in 2013.

Yours truly,
“happy, high-income, multiple home owner”

#164 VICTORIA TEA PARTY on 07.05.12 at 3:05 pm

CHINA’S OWN VERSION OF EPIPHANY

China’s announcement of reductions in key rates, in order to crank up their flagging economy, might be too too late.

My stock broker sent me this analysis of things Chinese today.

Read on:

“…Credit Suisse Economist for Non-Japan Asia Dong Tao believes the timing of the action was a surprise, ahead of the release of the June economic data, and that the central bank has become more explicit about asymmetric rate cuts recently. This is the second rate cut in a month, following the previous move on June 7. Until a month ago, the central bank had been …(taking)more subtle actions like fine-tuning the loan quota and adjusting the reserve requirement ratio.

Dong believes this move is clearly a response to the weak loan growth and soft investment activities, in our view…

PLEASE NOTE:

“…Dong’s feedback from the ground suggests to him that the stimulus has already lost steam, and the initial data indicated that the stimulus has failed to jump-start the broad-based economy.

Moreover Dong does not think monetary easing will be effective to rescue the economy. He thinks China is in a liquidity trap and that further cuts in interest rates can hardly generate business interest….”

IN OTHER WORDS…

Canada’s major recipient of what is hoped to be more and more of ourn natrual resources is one sick puppy.

It doesn’t mean that long-term China won’t still be a safe bet for our stuff, but for now thjings are a little wobbly.

That’s because Europe, China’s largest single shipping destination for all of that stuff stuffed into millions of shipping cans, is getting more and death-like, economically-speaking, every day.

It’s not fun to watch a bunch of former warring, now relatively peaceful European, tribes coming apart at the seams.

Even the Eurozone’s banker-in-chief, and former bad guy Germany, is suffering the slings and arrows of outrageous economic dissembly.

MOREOVER

The ECB’s new lower interest rate and the Bank of England’s decision to print up some more currency (announced today) met with a cool reception from investors, thus adding more worry beads to this amazing economic catastrophe as it moves to some sort of denounement, just when we do not know.

ALL BE WARY

Our picayune real estate markets will have some further adjustments, I am sure about that.

An interesting winter is now shaping up.

#165 2centCdn on 07.05.12 at 3:10 pm

The media machine will take a while to spin up to speed …. but it’s (almost reluctantly) starting.

http://www.bnn.ca/News/2012/7/5/Condo-sales-plunge-in-Toronto-prices-hold.aspx

What’s been talked about on this blog for over a year (but has been craftily smoke and mirrored, hidden, denied and fudged by the industry) is in progress. Pull up a lawn chair, get a cold beverage and watch the fireworks the next year or two.

#166 daystar on 07.05.12 at 3:22 pm

#139 penpal on 07.05.12 at 1:43 pm

Sad but true. Choices, choices, some choose the school of hard knocks. It lays the hurt on, but live and learn.

#167 palebird on 07.05.12 at 3:30 pm

#138

And the point is? That there are less immigrants going to the USA than Canada with money and wanting to make a go of it? Pull your head out of your a##. The USA is preferred destination for majority of people immigrating to the western world.

#168 Alpaca Lips Now on 07.05.12 at 3:43 pm

I’ve been reading this (not pathetic) blog with interest for some time, and recommending it to my friends in real estate here in TO, and to my friends who may be in a buying position. I’m urging the latter to wait, as I have.

I’m an American citizen, renting in Liberty Village since 2006, resident as of 2009. I watched the American fantasy of GW Bush’s lurid “Ownership Society” evaporate, from the front lines as an 20-year Ohio homeowner wishing to sell, and as a zoning board member trying to guide sustainable development in our township. As you can tell, I gave up trying, now we’re in Canada.

I’ve watched as every decent live-work space (original lofts) in Toronto has fallen to condos. I’m in the last remaining industrial building in Liberty, which has been sold to commercial.

I have to disagree with Smoking Man and others who are in the bubble here in TO. Jobs are hemorrhaging right now in Ontario, and the high tech sector is wobbly. Public employees are on the ropes. Personal debt is outrageous, even compared to US standards of conspicuous consumption.

What is the basis of the next economy that will maintain the bubble of asset prices? More debt? A glut of young and older unemployed people on top of economic and asset deflation is not the tide to lift our boats. Growth has stopped, while debt and prices in Canada are high. Its clear we need to settle our debts and clear the decks.

We’re looking at a period of stagflation, except with low interest rates. That’s something I have experienced.

#169 Questioning Calgary stats on 07.05.12 at 3:44 pm

At #110 Jimmy, you proudly declare that Garth has been wrong in the past when, in fact, he was right. In 2008-2009 the housing market tanked 15% across all of Canada in 6 to 8 months. Do you remember that? You obviously do not. It took dramatic, extreme, emergency measures at that time to create a market turnaround in the worst financial conditions in the world since the 1930s. All you need to do is look at the total amount insured by CMHC to get an idea of what was done. Since that time CMHC has approximately doubled the amount on their books. Remember, CMHC has been around for about 65 years. Suddenly, previously unqualified applicants were given mortgages and poof, the market reinflated. Where would we be now if it were not for these actions? Considering we were already down 15%, 30% doesn’t sound outrageous.

But you conveniently ignore these facts or you were not paying attention at the time.

Garth was correct and you should give him credit.

#170 Kenny Banya on 07.05.12 at 3:50 pm

My Toronto neighborhood is bidding war central, has been featured in the “done deals” section of the Globe multiple times, house selling for $90k over asking is standard procedure. But… even here the relisting has begun. Garbage houses don’t sell, wait for months, get taken off the market and then re-listed for 5% less. That may not sound like much but it’s the beginning of the psychological shift. Why not wait a few more months and get another 5% off?

My wife and I are playing the waiting game because there’s no particular hurry, our landlords aren’t going to raise the rent on us, we are expecting a baby and don’t have the time/money/energy for home renos. “Helpful” family have been urging condo ownership on us – LOL.

I like Toronto_CA’s idea of a Greaterfool citywide party on July 9th, champagne and steaks for the long-shunned real estate bears to celebrate the beginning of the end. Let’s do it!

#171 R. Olausen on 07.05.12 at 3:57 pm

The big question in real estate is are you a weak hand or strong hand. In fall of 2008 by selling one of the two condos I was on the hook for, I joined the strong hand gang. I, like most, see an attack on the weak hands that will take a swipe out of their ranks but since this is a calculated cull, I doubt the fiat currency elite will tear the whole edifice down. By the way, I was 47 in 1999 when I brought my 5% down, paid the C.M.H.C. an equal amount, and signed at 7.85% for 5 yrs. at a 25 yr amortization to begin my first real estate purchase. 12 years later my wife calls me Mon Roi (my king)for making the right calls as the fiat, elite game the weak hands to oblivion.

#172 Realtors don't like realtors either.... on 07.05.12 at 3:59 pm

Re: #110 Jimmy

Sorry, you are wrong… your misread it about us….
You wrote about Garth….
“maybe you are the biggest villain here for milking the gullible masses to suit your own ends”

Many hundreds if not thousands of people in Vancouver BC read this blog, because the MSM is telling us all BS here.
It’s collusion, and even the CBC ran a piece yesterday interviewing two realtors on the drive home (radio), that said it’s a balanced market – and one even suggested that it would be good to get in before the rules changed. I have heard this enough times, that I don’t get furious, so I just sighed and said ” just a few more fools we’ll have to backstop as taxpayers”.

Look Jimmy the realtor – the Cameron Muir calls himself an economist – well, I guess the guy selling corn at the side of the road is one too, cause he can tell me how the corn crop in Chilliwack is doing based on the rain we get…

Point is, we are sick of all the lies, and that Realtors can lead the sheeple with no accountablity to them as people, as a family, or us as a society.
We are SICK of the fact, they make the sale and move on, while the poor family holds the debt, rents out the basement to make ends meet, and they have the nerve to say “$100,000 is only $100 a month more, it’s
doable”

Realtors don’t deserver to be called professionals, someone at the bank making $14 hr, takes a 1 year program to be qualified in selling mutual funds – and nobody says leverage up to buy them….. and they have more liability than these Realtors…. shame on them!!!!!!

To all that hold cash – maybe one day they’ll raise the rates, but I doubt it.

Shame on Global, down with the pseudo economists, and the Feds. All in the name of greed.

Recent livablity survey – Vancouver ranks as unliveable cause we don’t have the population. We are small potatoes, but call ourselves world class. Well, apparently people elseware think differently.
Look at our premier shopping district – Robson street = empty for lease signs everywhere. That is not world class. It’s all Shill work, Toursim Vancouver, and Christie Clark buying our votes with first time home buyer $10k credits. ……

All is not well here, that is why we are mad……

(End rant)

#173 Kenny Banya on 07.05.12 at 4:00 pm

oh and since we are always referencing Australia, and it’s the relevant Anglo resource economy that is supposedly immune to downturns and filled with HAM bidding up every house…

“Record number of houses for sale in Melbourne”

SQM Research managing director Louis Christopher said the Melbourne result was a record, surpassing the flood of homes and apartments put up for sale in 2008 during the global financial crisis.

‘‘I fail to see how the other data providers can record rising dwelling prices in Melbourne when there is this much stock on the market,’’ Mr Christopher said.

In June, home prices rose 1 per cent in Melbourne for the month, according to figures by RP Data. However, Melbourne’s house prices were still down 6.6 per cent from a year ago.

Melbourne’s ‘‘over-supply’’ of unsold homes and apartments can be explained, Mr Christopher believes, by a combination of prolonged weakened demand for housing and a glut of new developments that have been added to the housing pool.

Mr Christopher said he expected Melbourne’s residential prices to continue falling.

Read more: http://www.theage.com.au/business/property/record-number-of-houses-for-sale-in-melbourne-20120704-21guk.html#ixzz1zmQdtxe4

#174 Gregory Fjetland on 07.05.12 at 4:02 pm

Check out the massive Chinese built ghost city in Angola

http://www.businessinsider.com/chinese-built-ghost-town-kilamba-angola-2012-7#-1

#175 Toronto_CA on 07.05.12 at 4:05 pm

At #154 Jimmy – you can pick out a bubble before it collapses, though yes it is nearly impossible to predict when it will collapse.

All you need to do for housing is look at the long term house price to income or house price to rental mean. If it starts to go completely wacky from what it has been historically in a short period and something like cheap easy credit has recently been introduced, it is a bubble plain and simple. When the bubble will burst is difficult to say, but it is not wrong to point out “it is not different here” or identify a bubble while it’s still on.

#176 mid-Ontario on 07.05.12 at 4:06 pm

Sorry “John 48”. My thought was inadvertently cut up.
Full text below:

#48 John
“Could you spell out how this is like 1989? I see nothing in common. No matter what angle you look at.”
——————————————————–
RE was going crazy in 1989 simply because of mass interest interest in making money in RE, not because the economy was booming. Same thing today, only worse. You have a whole generation used to living off of credit (not true in 1989), never seen interest rates much over 6% (not true in 1989 just a thought.

#177 mid-Ontario on 07.05.12 at 4:10 pm

The full text not being relayed for some reason..the rest is as follows:

…the current generation has never seen interest rates over 6% (not true in 1989 just a thought.

#178 In GARTH Almighty not God we Trust on 07.05.12 at 4:15 pm

#110 Jimmy

“This pathetic blog truly is pathetic.”

Well the bearded mystic oracle, all knowing, all wise, financial tea leaf reading prognosticator, former parliamentarian, minister of all revenues in this land, denouncer of parliamentarian peckerheads and peckerettes, lone voice of reason crying out in the HELOC infested wasteland of Canada has referred to this blog as pathetic himself. On that observation you are in accordance with the wise one. You might even be correct about some here praying for a crash so they can finally buy real estate. But not all who frequent this site are in that boat. I own my own home outright and a rental property outright. I also have plenty of liquid funds on top of that. Further you are missing the bigger message of the bearded mystic oracle. An indebted country such as Canada is in deep doo dah. The insane credit binge this country has been on for some time now and which real estate is a big component of, is going to have a very, very bad ending.

#179 Westernman on 07.05.12 at 4:26 pm

Kim @ # 101,
Congratulations on being the prototypical Canadian with the ” why isn’t the Government there to protect us from our own willful stupidity ” line of reasoning…
Is there anything, anything at all that a Canadian can do without the ” Government ” being called in for the rescue?
No wonder the country is in the pathetic condition it’s in…

#180 T.O. Bubble Boy on 07.05.12 at 4:41 pm

@ #102 refinow

You in a nut shell just summed up the moronic, rationale that has got so many Canadians into the Dangerous Debt Levels of today.

First of all with that type of Logic, you are clearly a Real Estate agent…..

I am the furthest thing from a Realtor… I’ve just spent far too much time on this blog, and I live in the current epicentre of RE stupidity: North Toronto.

#181 BCObserver on 07.05.12 at 4:43 pm

#145: The American

The U.S. alone has more immigration each year than all
other nations on Earth… COMBINED.
There goes your “argument.”
———————

Garth should land you his calculator – you did not learn how to count.

US gets about 1 million immigrants yearly, but how much it is in relation to it’s huge population (311 million)? It is only 0.32%. When half a million for Canada to it’s 33 million population is about 1.5%.

Also, It’s not about quantity, it is about quality. US gets either green card winners or illegal Mexicans naturalizing afterwards… Try to immigrate to Canada if you don’t have a bachelor degree (at least) + min years of experience – impossible.

#182 jess on 07.05.12 at 4:56 pm

halting metals project and releasing demonstrators, comes after thousands protested in southwest city.

An active involvement of the younger generation of protesters made this possible. China calls them the after-90s, people who are born after 1990. According to official announcements and weibo entries, high school students play an important role in the protests where they marched in the front lines with banners followed by their parents and family.

Sina weibo has over 60 per cent of users who are under 30 years old. So it’s not hard to see how the young generation grasped the power of speech and made a real difference.

Like blogger Hanhan analyzed in his article on Wednesday, “I thought that us, the after-80s, after-90s, we are the sacrificed generation, but now maybe we can fulfill the wishes our fathers’ generation didn’t manage to fulfill. These are the masters of our future, they have come…to make a change…to do something good.”
http://blogs.aljazeera.com/blog/asia/chinese-citizen-journalism-succeeds

#183 Dave on 07.05.12 at 5:03 pm

#140
Ann Hannah is the new President of TREB.

#184 Canadian Watchdog on 07.05.12 at 5:17 pm

#86 Market Bull

P.S. The BMO Survey was sampled from 1000 homeowners.

You should really go away now. It’s over.

#185 eagle eyes on 07.05.12 at 5:19 pm

Referring to yesterday’s blog re: multi-unit development in Chatham. FYI – it takes approx 2 years to oust a non-paying tenant from hell out of your rental property. It ain’t as sweet as you think to be a landlord.

So don’t invest. Next? — Garth

#186 Jan on 07.05.12 at 5:27 pm

Real Estate has become an organized crime syndicate just like dope dealers etc.
There is so much money to be made in this racket they will do and say anything to keep this gravy train going!

#187 Inglorious Investor on 07.05.12 at 5:49 pm

This just in…
The Toronto Real Estate Board blames the 13% drop in June home sales in the 416 to that a-hole Miller’s land transfer tax—despite the fact that the tax has been in place for over four years.

In other news…
Vancouver home owners shocked to learn that their mortgage payments include interest charges. Prices sure to plunge further.

#188 Mr Buyer on 07.05.12 at 5:50 pm

#154 Jimmy on 07.05.12 at 2:35 pm
Always remember “It’s different now” is no less valid a statement that “the bubble is going to burst soon”. Anyone who thinks they can accurately identify a true bubble and predict its collapse
…………………………………………………………….
Actually the life cycle of a bubble is fairly easy to predict as they have all followed the same simplistic pattern to date. I think you are about 18 months late posting this comment on this blog. If memory serves it was around that time the bubble deniers were in full force around here.

#189 Mr Buyer on 07.05.12 at 5:57 pm

#138 BCObserver on 07.05.12 at 1:37 pm
I still don’t get why Toronto and Van are compared here all the time. Toronto is just terrible!

Another wrong comparison here is US vs Can. Canada is accessible by almost half a million immigrants yearly. That is a huge factor in the housing demand. Immigrants are coming here with money, and most importantly – eager to work and spend.
………………………………………………………….
The HAM is the reason we are safe types had their hey day here in the comment section of this blog a few months back.

#190 Market Bull on 07.05.12 at 5:58 pm

#181 Canadian Watchdog:

Yeah right, it’s all over doomer boy.

Oh, except that the average sale price on TREB is up 7.3% YoY for the month of June.

Oh SNAP!

#191 DM in C on 07.05.12 at 6:03 pm

Wow Jimmy, that’s a lot of vitriol for anonymous ppl on a free blog. Got a little too much invested in your HELOC?

Bitter? Not worth my time. Low income? Nope, I’m a VP at my company. And like others, have no clue where Bridal Path is — a local church?

Renting is the smart choice these days.

#192 Mr Buyer on 07.05.12 at 6:05 pm

#127 Bottoms_Up on 07.05.12 at 12:56 pm
#162 Mr Buyer on 07.04.12 at 7:35 pm
——————————————–
Ok, so you’re talking about an 88% price appreciation over 11 years, for one specific house (anecdotal evidence).

That appreciation works out to a little shy than 6% per year (the stock market does better than that). Factor in 3% inflation and yes the house is over valued, but is unlikely to come crashing down (but as Garth has outlined here, it does not necessarily have to come crashing down to create economic and social problems).

You will have to come up with a better example of irrational prices, or prices that doubled in the past few years, to explain why Ottawa is set for a 50% crash. ; )
………………………………………………….
I think rather than digging up stats and supporting my assertion I am just going to let this one play out. Ottawa will crash. It has been running on pipe dreams like the rest of the nation for the better part of 7 years now. But how am I supposed to know? There is no reason for 300k homes in mechanicsville, even in a booming economy.

#193 Smoking Man on 07.05.12 at 6:09 pm

#167 Alpaca Lips Now on 07.05.12 at 3:43 pm

The herd is much more different than the USA version.

GTA is made up of many first and second gen immigrants.

They only know RE

in spite of the bombardment of negative stories in the papers and tv, this market will stay solid regarding prices. Sales will slow but inventory will vanish as it did in 2008, some bargains may pop up,

Today the financial post headline

Toronto home sales dive 13% in June

But 9422 homes sold is nothing to sneeze at and if you combine sales from Jan to July vs last year, 2012 was huge.

now we are entering summer and fall seasonal decline, so it will be pounced on by MSM till central planning says stop.

But I would love to be wrong on this, my kids need it but a crash aint going to happen in GTA

I would love for the bubble heads to make me eat these words in a year from now.

#194 Mr Buyer on 07.05.12 at 6:16 pm

#86 Market Bull on 07.05.12 at 7:55 am
BMO Survey Highlights:

P.S. Latest RBC study indicated that 43% of homeowners have no mortgage at all.
……………………………………………………………
Am I to assume that this purported 43% will stave off the crash of the real estate market that always follows a bubble?

#195 penpal on 07.05.12 at 6:19 pm

@ 181 Cdn Watchdog

Nice dismissal!
And so true!

#196 Beach Boy on 07.05.12 at 6:20 pm

Thanks to Beach Girl I am opening a house for unweded mothers. Very profitable plus lost of fun. Real estate investment rock. Thanks again Beach Grany.

#197 Smoking Man on 07.05.12 at 6:25 pm

The fat lady is singing in TO but I’m not selling my investment properties. That’s how a zilioner does it. You tax slaves should learn from the best.

#198 Grim Reaper/Crypt Speculator on 07.05.12 at 6:25 pm

#159 Smoking Man on 07.05.12 at 2:51 pm

And my blog yesterday it had 1200 hits and haven’t even posted any thing in a about a week.

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

1200 hits….?

You mean b*tch slaps or spankings ?

#199 cramar on 07.05.12 at 6:30 pm

And speaking of condos… We have all heard of the stats on the number of condos available and being built in Toronto vs. other major cities such as Chicago.

Just got a call from son in Chicago last night. He was telling me his 1-BR condo he bought about three years ago at a good price compared to others at $164,000 is now worth about $95,000. Ouch! It is rented generating an income so I said just keep renting it. It is in a fantastic location a stone’s throw from the beach, parks and pathways. Just goes to show what could happen in TO. But I forgot that Canada and especially the world-class TO “is different!”

Helping to mitigate this, he figures that the rarer 3-BR that he bought as a cheap foreclosure last year and lives in, is worth 30% more now.

#200 godblessamerica on 07.05.12 at 6:33 pm

#145, #166

You don’t seem to know how to count. Garth should land his calculator to you.

US gets 1 million immigrants yearly. That is 0.3% of their population, comparing to Canada’s 1.5%. By the way, 90% of immigrants settle in GTA or Vancouver. That is a lot. Also, it is not just quantity, it is about quality too. Canada has the most strict immigration qualifying process, where US gets mostly green card winners, and illegal Mexicans naturalizing afterwards.

#201 Smoking Man on 07.05.12 at 6:49 pm

#101 Jimmy

The mortgage rules changes will not induce correction — only a rise in rates will do that, and there’s not indication its going to happen any time soon. Face it — you have a legion of bitter, low-income wannabe home owners who would delight in the economy being trashed if it would mean that they could obtain a mansion in Bridal Path for $100,000. I don’t know who’s worse: the realtors or the bitter wannabes.
……………………………………………………………….

Beauty

but words like that are not going to get you invited to the bubble head ball.

#202 Piccaso on 07.05.12 at 7:05 pm

#24 Loon on 07.04.12 at 10:42 pm

But our crash is different

—————————————

Good one!
LMAO

#203 neo on 07.05.12 at 7:09 pm

At #163VICTORIA TEA PARTY on 07.05.12 at 3:05 pm
CHINA’S OWN VERSION OF EPIPHANY

China’s announcement of reductions in key rates, in order to crank up their flagging economy, might be too too late.

My stock broker sent me this analysis of things Chinese today.

Read on:

“…Credit Suisse Economist for Non-Japan Asia Dong Tao believes the timing of the action was a surprise, ahead of the release of the June economic data, and that the central bank has become more explicit about asymmetric rate cuts recently. This is the second rate cut in a month, following the previous move on June 7. Until a month ago, the central bank had been …(taking)more subtle actions like fine-tuning the loan quota and adjusting the reserve requirement ratio.

Dong believes this move is clearly a response to the weak loan growth and soft investment activities, in our view…

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

Aww yes, those smart Chinese officials as Garth refers to them at work. China GDP comes out July 17th. It will not be good. I brought this point up with Garth and how the second half of this year will be ugly and he pooh poohed the notion. The S&P is going to be in triple digits whether he wants to accept it or not. Being close to 1,400 right now is a joke. High Frequency Trading coupled with thin volume is leaving this market very vulnerable as they will eventually cannibalize themselves as retail continues to sit on the sidelines. Those corporate profits turning over in the second half as well. Perhaps Garth will reach an ephiphany on all of that.

Tempus Fugit…The second half of the year is here (-;

#204 Devore on 07.05.12 at 7:27 pm

#34 Bo Xilai

Over-leveraged homeowners writing in for debt/financial advice once their HELOCapalooza is finished.

You mean like this:

http://www.theprovince.com/business/Living+within+your+means/6874827/story.html

We’ve always used our line of credit to pay our bills and credit cards. We’d then refinance our mort-gage to pay off our line of credit.

We’ve never had trouble making our mortgage payments so we were a little surprised when the bank told us we don’t qualify for our usual refinancing. Now we’re not sure what to do because our credit line is maxed and it’s only a matter of time before we can’t afford the payments. Help!

“Usual refinancing”? Huh? So that’s what a negative savings rate looks like.

#205 Keeping the Faith on 07.05.12 at 7:30 pm

#26 LSD
Croak already why don’t you

#206 Keeping the Faith on 07.05.12 at 7:32 pm

#86 Market Bull

Interesting numbers you pulled from the reports.

Riddle me this, based on what you say and based on what is about to happen in the next 48 months, here’s a hint 36% drop in national real estate home prices in Canada …
How will you explain it since it wasn’t in the reports?

Good luck brother.

#207 Nostradamus Le Mad Vlad on 07.05.12 at 7:37 pm


#163 VICTORIA TEA PARTY — “It doesn’t mean that long-term China won’t still be a safe bet for our stuff, but for now thjings are a little wobbly.” — China (and Asia, in general) is one of the main reasons why the feds. don’t have much interest in the EZone, but if the EZone and Asia take a bath together, we’ll be soaping their backs, so it is going to be an interesting winter.
*
Oz and China Knocking off the US$; Scams and Is Osamabindeadalongtimenow still alive, or is this Billary in drag? Economically Impossible (the socialization of America); BoE QE leading to this? US mfg. “. . . unexpectedly fell . . .”; Seizing Mortgages California really is weird; Barclays bought Lehman Why? “Translation: “We had them by the balls!” wrh.com; Financial Propagandists Avoid the m$m like the plague; Denmark Scandinavian countries are getting their own NIRP up and running; The Banking System plus the banxters.
*
Moscow Upping the rhetoric; Bypassing ‘net censorship in five easy steps; Soros Right on schedule; Pebtagon + Congress = Drones, and Redirecting drones via GPS; Monsanto Roundup is doing a good job at killing everything in sight; India Next stop for HAARP; Fukushima and Stuxnet An act of war. The ‘quake was man-made and the Stuxnet virus prevented the reactors from automatically shutting down, plus this; Tiny Bubbles Getting extreme? Kannaduhhh Safe haven for politico terrorists; 2:22 clip De-industrializing Europe through GW, then shifting it east; Gen. Stanley McChrystal Bring back the draft (so we can keep the wars going indefinitely).

#208 Keeping the Faith on 07.05.12 at 7:37 pm

#110 Jimmy
Combined family income $250K, renters and waiting.

no wannabes here, just waiting for my cohort to lose their shirts while we enjoy the benefits of:
– no hassles
– no upgrades
– no worries
…ooops spilled another drink on the brand new carpet, “oh well, It’s a rental”
…ooops chipped another piece out of the fake granite countertop
“oh well, It’s a rental”

Jimmy = Loser

#209 jess on 07.05.12 at 7:48 pm

.#118 Hoof-Hearted

The lesson is learned …in how to cheat from the last guy

This is competition?

…The best part, according to a suit filed by the county, was that JPMorgan even agreed to pay Goldman Sachs Group Inc. (GS) $3 million if it wouldn’t compete for a $1.1 billion interest-rate swap that JPMorgan entered into with Jefferson County. The payments were all undisclosed — the Goldman money, the suit claimed, was shuffled through a separate derivatives contract created just to make the payment — and decreased the proceeds the county received from the offerings.

http://www.bloomberg.com/news/2012-07-01/how-wall-street-scams-counties-into-bankruptcy.html

#210 Daisy Mae on 07.05.12 at 8:10 pm

#47 First to last: “So they were ok to pay way over asking price because a bunch of people wanted it, but once they found out they were the only ones they wanted to pay less? Sounds like market insanity to me.”

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

Sounds like fraud.

#211 Canadian Watchdog on 07.05.12 at 8:15 pm

#187 Market Bull

“Oh, except that the average sale price on TREB is up 7.3% YoY for the month of June.”

Ah huh, just like Vancouver was up 7.6% in December…Your average price metric is baseless, so here’s some help. http://postimage.org/image/cj6jvnv23/

#212 Daisy Mae on 07.05.12 at 8:17 pm

55Richard on 07.05.12 at 12:05 am
‘i read somewhere the 90K ended up being 45K over cause the buyers were pissed…’

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

Agreement should be voided.

#213 cynically on 07.05.12 at 8:19 pm

Sounds like the old aphorism stilll holds – “when the US sneezes, Canada catches cold” – but perhaps it has taken a little longer this time and just how severe only the future will tell.

#214 Smoking Man on 07.05.12 at 8:30 pm

#195 Grim Reaper/Crypt Speculator on 07.05.12 at 6:25 pm

Believe it or not I have many fans, lots of track 5ers out their, even Garths a fan but will never admit it.

When you learn to use the force for the universe you will know how I do it.

till then hate me all you want

#215 Daisy Mae on 07.05.12 at 8:30 pm

#110 Jimmy: “Or maybe you are the biggest villain here for milking the gullible masses to suit your own ends, and for letting your ego and your need to be right get in the way of your message.

Ah, the smell of singed realtors in the morning… — Garth”

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

This tirade is pathetic. You can’t fool Garth.

#216 Toronto_CA on 07.05.12 at 8:47 pm

Smoking Man on 07.05.12 at 6:49 pm
#101 Jimmy

The mortgage rules changes will not induce correction — only a rise in rates will do that,

Beauty
____________

Smoking Man, how does one reconcile lowered rates in the USA but declining prices 5 years in a row? Obviously, at some points, low rates don’t entice people to pay ridiculous prices for condos and bungalows. I think that point has now been reached. Interest rates going lower or remaining lower are not relevant at this point.

#217 Realtors in an all out PANIC on 07.05.12 at 8:57 pm

Look at all the realtors posting in an all out panic as home sales CRASH over 13% and condos CRASH over 18% and that’s from the realtors manipulated fake numbers. Realtor smokingman is posting in an all out PANIC as well as the other realtors who post on garths blog as the housing crash has hit Toronto. It’s going to be a nasty crash realtors but you realtors know this which is why you post on garths blog.

#218 Realtors in an all out PANIC on 07.05.12 at 9:03 pm

I’ve been telling you all sales are crashing in Toronto with many deal falling through as realtors peel off the sold sign and do more empty open houses. Realtors like smokingman are in a panic and it’s obvious from their posts. This is happening before the rule change. Mortgage brokers are saying the phones have just stopped. Vancouver and Toronto are said to be looking at a 50% drop or greater over the next two years and this comes from realtors in the GTA who talk about this in private. It’s going to be a nasty crash. If you didn’t get out you are ruined.

#219 daystar on 07.05.12 at 9:30 pm

#110 Jimmy on 07.05.12 at 11:24 am

This pathetic blog truly is pathetic. – Jimmy

Hmmm…. belittling the environment, presumably in an attempt to inflate.

“I’m no realtor, and in fact I myself am hoping that real estate moderates.” – Jimmy

Evidence of self absorbsion.

“However, your repeated reminders of how you told us this or that would happen indicate a level of narcissism.” – Jimmy

“I told ya so” is narcissistic? lol, still putting others down in a reup attempt to inflate.

“The fact is, the housing decline you’ve been leading your impoverished followers to believe would happen for years has not materialized.” – Jimmy

Running us all down now with a general smear with an intellectual putdown to the host. A Classical attempt to inflate through deflation. Weighed down with low self esteem, Jimmy launches a desperate attempt to remain buoyant and strains to keep the ego afloat through deflation and devalue.

I feel for him.

“The mortgage rules changes will not induce correction — only a rise in rates will do that, and there’s not indication its going to happen any time soon.” – Jimmy

The ganstas:

http://notnumber.files.wordpress.com/2011/09/keith-tucker-cartoon-banksters.jpg

… beat you to it with higher rates. The mortgage wars are over. (dated numbers, have these changed much, anyone know?)

http://www.canadamortgage.com/ratesshow/showrates.cfm

…minimizing regs that inflate monthly’s doesn’t make much sense either but you gotta beat ’em! You got a beat ’em, beat ’em beat ’em up!

http://www.youtube.com/watch?v=f7WATlbiZ6M

“Face it — you have a legion of bitter, low-income wannabe home owners who would delight in the economy being trashed if it would mean that they could obtain a mansion in Bridal Path for $100,000. – Jimmy

Another desperate attempt to inflate low esteem through mass deflation. Jimmy needs to cheapen, minimize and devalue in order to have value, self worth.

It saddens me.

“I don’t know who’s worse: the realtors or the bitter wannabes.” – Jimmy

Another general smear with one final attempt to “Re UP” his esteem through devaluation.

“Or maybe you are the biggest villain here for milking the gullible masses to suit your own ends, and for letting your ego and your need to be right get in the way of your message.” – Jeff

Drowning in low self esteem, Jimmy struggles for narcissistic supply. Jimmy labels the host as the greater villian over realtors and bitter virgins while smearing the masses as “gullible”. Feeling pitifully inferior and inadequate, Jimmy’s despondence and atrophed self hope projects general rundowns in one final bid to reinflate. This appears to be a case of cerebral narcissism here at some level.

Jimmy’s continuous attempts for sympathetically sad emotions from others through intellectual deflation suggests an obsession with superior intellect driven with the belief that superior intellect commands absolute power, that which would then be recognized as supporting self worth.

If only I had more time to help you Jay but there are documentaries that I have found to be quite helpful. They have much to teach you:

http://en.wikipedia.org/wiki/Cenobite_(Hellraiser)

:)

#220 Jimmy on 07.05.12 at 9:34 pm

I own an income property (no mortgage) AND rent. If I could have my way, house prices would moderate 10-15% and stay relatively flat for a while. That’s what would be best for the country. But I know I can no better predict a correction, downturn, upturn, or whatever than the average economist (most of whom don’t have a clue). When your prognostications of impending housing doom stretch on from months into years, you start to lose your credibility Garth. Stick with the financial planning content. That’s what’s most useful for your readers — not the endless warnings on real estate.

#221 John on 07.05.12 at 9:49 pm

Jimmy wrote:

“I can no better predict a correction, downturn, upturn, or whatever than the average economist (most of whom don’t have a clue). When your prognostications of impending housing doom stretch on from months into years, you start to lose your credibility Garth. Stick with the financial planning content”
——

This kind of nonsense is pretty predictable. When someone doesn’t like what the facts are pointing to, and under no circumstances could accept the implications, they turn to the ye olde relativism BS.

Could you predict what happens to a glass vase dropped from the 14th floor of a building?

Your angle stopped being a hand possible to play at least 2 years ago. Wake up. Consider what you’re saying. It’s nonsense based on not looking around you…at a really deep level.

#222 randman on 07.05.12 at 9:59 pm

@randman (#12):

“It’s the buyers.. not the realtors who are at fault here.

Blatant blind idiotic stupid greed and nothing more.”

In what universe can the people offering to pay WAY over asking be considered “greedy?” Wouldn’t the sellers be the greedy party? You know, the ones actually receiving the money?

If someone walked into a Porsche dealership and offered $300,000 for a $150,000 Porsche, how would that make him “greedy?” Wouldn’t that just make him stupid?”

Kevin…good point but I am looking at the end result
and still subscribe that the buyers were greedy thinking they could re-flip for more profit down the road. nobody would be paying $90,000 over ask thinking they
weren’t gonna get their money out and more at some point in future!!

#223 randman on 07.05.12 at 10:01 pm

“Sounds like the old aphorism stilll holds – “when the US sneezes, Canada catches cold” – but perhaps it has taken a little longer this time and just how severe only the future will tell.”

Canada will be getting more than a cold …try herpes!!

#224 Snowboid on 07.05.12 at 10:34 pm

#73 Buy? Curious? on 07.05.12 at 2:51 am…

When the owner of our previous Okanagan condo offered it for almost $ 400K four months ago, we low-balled at $ 275K. The owner was shocked! It was professionally appraised, you know!

Big (1800 sq ft) but older luxury condo, needed $50K in upgrades.

It’s now listed at around $ 350K and won’t sell for that.

We decided if a call comes from the owner, our offer is now $ 250K.

Patient as always…

#225 betamax on 07.06.12 at 2:53 am

#112 Jimmy: “you have a legion of bitter, low-income wannabe home owners”

But you, you’re a sweetheart!

Read my post prior to yours, #98. I’m in no hurry to buy, quite the opposite. I make six figures and my wife makes a higher-than-average salary. We’re happily renting a nice place and saving a bundle every month.

#220 Jimmy: “your prognostications of impending housing doom stretch on from months into years, you start to lose your credibility Garth.”

As for months stretching into years, that’s typically how long housing bubbles last, so expecting something otherwise is either wrong-headed or deliberately disingenuous.

So, have fun with your straw men. I’m sure it’s a lot of fun setting them up and kicking them over, all the while giggling like a schoolgirl and briefly imagining yourself a hero, but try to remember that they’re not actually real.

#226 maxx on 07.06.12 at 12:20 pm

Rock star realtors indeed!
Realtards only reacted to (artificially induced) economic conditions and rode the wave.
Realtards never had nor will they ever have any semblance of Royal Jelly.
Real rock stars still have something to sell with changing times-
Realtards………..not so much.