Katie and her 14-year-old son rented a condo in mid-town Toronto for $1,650 a month. “I need to have my own place,” she told me about three months ago. “Do you know any good realtors?” Being a full-service kinda guy, I hooked her up with Jamie, who’s bought and sold stuff for me over the last twenty-five years.

Regretfully, though. She was about to make a big mistake. And she did. Last month she closed on a two-bedroom condo in a worse location (30 tortuous subway minutes to the north) and spent $400,000 to do it. “Now my monthly is only $750,” she chirped at me, “in condo fees and taxes.” Of course gone was the $400,000 she’d had invested yielding 5%, plus closing costs of $1,200 and land transfer tax of $8,200.

Savings: $10,800 per year. Lost income: $20,500. Risk: extreme. And all to live in a boring uptown location, since the apartment she used to rent would cost $650,000.

Why risk? Simple. In major cities condos have been overbuilt, overhyped and aimed at the two most unstable groups of buyers on the planet – speckers and virgins. As dirt-based real estate became unaffordable to people without any money, savings or discipline (but who were nonetheless entitled to own) condomania moved in to fill the void. These McHouses could be bought with a credit card deposit, required zero domestic skills, qualified for 100% financing, had no maintenance and could always be rented, giving the illusion of an investment.

As more kids bought while mortgage rates fell, prices increased, attracting flippers like flies to a Kia. The inevitable result in the GTA, for example, was extreme: 148 new towers planned or being built, containing 43,000 more units. This is more than anywhere else on earth. On a per capita basis, places like Vancouver and Calgary are not far behind. And all will suffer.

In fact, it’s started. The average price of new condos in Toronto fell by 6% last month from a year ago, even while the market value of new SFHs jumped. New home sales in total tumbled 27% from 2011, and condo deals fell 21.4%. Is this a market you want to be buying into? For that matter, how about all the kids who bought last year with 5% down – are they not de facto under water?

Mais non! cries the new home building industry. Says CEO Bryan Tuckey: “As of the end of June, the high-rise market is at 38 per cent above the long-term average, ranking it the second-highest on record despite being down 20 per cent from last year. Meanwhile its low-rise counterpart sits at 27 per cent below the low-term average.” There ya go. Just divide  the high-rise, long-term average ranking, discounting the drop, into the low-rise, low-term average, add a dash of endorphins and whatever the guy in the Porsche is inhaling, and it’s clear. “So far, the numbers have painted 2012 to be an average year when it comes to sales.”

Apparently economists at RBC are toking, too. The bank made baby waves this week with a report saying condos are not overvalued, there’s no bubble and you sure look like you need a mortgage. Senior egghead Robert Hogue claims condos are going up because single-family homes are too expensive for the 38,000 new households formed each year in the region.

And he’d have a point, if it were not for the fact that 80% of new condo deals are being done by speculators – who have no intention (at least the smart ones) of buying a unit to rent it for reverse cash flow. Besides, even Hogue admits prices have to drop – by up to 7%, he figures. That’s enough (as mentioned above) to plunge recent buyers into negative equity. And imagine how all those Vespa-driving Millennials used to getting a prize for showing up will respond to losing all their money. There’ll be yoghurt everywhere.

By the way, RBC’s Hogue also thinks a lot of condo projects will be cancelled or delayed. So besides that construction crash and falling prices, well, everything is cool. Sure you don’t want a loan, son?

I tried to talk Katie out of this, but no go. The man won.


#1 Superman on 07.24.12 at 8:43 pm

Someone on Vancouvercondo posted this new rendition of the Barenaked Ladies “If I had a million dollars” song. It’s catchy… I think someone needs to turn it into a youtube video:



If I lost a million dollars
(If I lost a million dollars)
I’d have bought me a house
(A big old Vancouver house)
If I lost a million dollars
(If I lost a million dollars)
I’d sell my furniture on Craigslist
(Maybe my fancy clothing too)
And if I lost a million dollars
(If I lost a million dollars)
Well, I’d buy you a k-car
(84 months payment of course)
If I lost a million dollars, I’d lose your loveeeeeee

If I lost a million dollars
I’d post rants on greaterfool
If I lost a million dollars
You could too, it wouldn’t be that hard
If I lost a million dollars
Maybe I could sell my fridge to BC hydro
You know, they come and pick those up for free now right?
Like, no money at all?
No… I don’t think so.
How am I supposed to pay my mortgage?
I don’t know, sell your kidney?
Uh… do you have a buyer?

If I lost a million dollars
(If I lost a million dollars)
I wouldn’t shop on Robson Street
(No one else would either)
And if I lost a million dollars
(If I lost a million dollars)
Well I’d rent out my basement suite
(You already rent out your basement suite)
And if I lost a million dollars
(If I lost a million dollars)
Well then I’d rent out my living room
(I feel sorry, for you)
And if I lost a million dollars, you’d divorce me….

If I lost a million dollars
We’d have to walk to the store
If I lost a million dollars
My k-car payments would default hard
If I lost a million dollars
We couldn’t afford to eat kraft dinner
But we would eat kraft dinner
Of course we would, we’d just eat the no name brand
And steal those little ketchup packets from fast food places
That’s right, all the fanciest ketchup… MCDONALDS KETCHUP!
Mmmmm mmmmmm hmmmm

If I lost a million dollars
(If I lost a million dollars)
Well I’d buy you a green dress
(From value village, Surrey’s best)
And if I lost a million dollars
(If I lost a million dollars)
Well I’d stop paying strata fees
(They are overrated, anyways)
And if I lost a million dollars
(If I lost a million dollars)
Well I’d steal wifi from Timmy’s
(You’ve always done that anyways)

If I lost a million dollars
I’d have bought in Vancouverrrrrr

If I lost a million dollars, If I lost a million dollars
If I lost a million dollars, If I lost a million dollars
If I lost a million dolllarrrssss….

I’d be broke.

#2 Tim on 07.24.12 at 8:45 pm

I’d rather they continue to build over priced condos in BC than put in a pipeline. Christy Clark’s senior adviser is Gwynn Morgan, former CEO of Encana. Guess which way she leans? She’s weaseling out of taking a stand against this pipeline because even she can figure out that most BC residents don’t want it, due to the potential of environmental devastation.

#3 Grim Reaper/Crypt Speculator on 07.24.12 at 8:50 pm

Fiiirstt ……..or at least not last

#4 The American on 07.24.12 at 8:51 pm

Are you f*!$ing kidding me?

#5 THANG on 07.24.12 at 8:52 pm


#6 American Werewolf in BC on 07.24.12 at 8:53 pm

I think that most here can agree that when housing debt can no longer be serviced by growth in wages, bubbles pop. But this is just a simple application of a greater fundamental rule in economics.

How many here have considered that future growth may never be enough to service existing debt & obligations, beyond the housing market?

Most of our infrastructure has been built while we had plentiful energy per capita. A simple well in the ground would pull it out. Now all the low-hanging fruit is gone, and we are pulling hydrocarbons out of dirt. Less and less energy is being produced for the same amount of work. And it is energy that fuels growth.

What if we are standing at a cliff here and being somewhat blinded by the housing & financial bubbles. Garth, have you considered our entire civilization is on the cusp of a bubble built on easy energy & materials, that are harder and harder to obtain? If this is the case, what of the future?

I don’t mean to be a doomer, but may we are past per capita peak energy, and maybe even a well-balanced, diversified portfolio won’t get you through a rough patch.

Who knows. In any case, you can’t eat gold.

#7 The American on 07.24.12 at 8:56 pm

This is unbelievable. Even in the U.S. the banks were never intricately as involved in keeping artificially values propped as it is in Canada. Please, Canadian cousins, I beg you to DEMAND transparency into your system, including the likes of free-of-charge, publicly-published information with respect to past sales history, inventory outstanding, re-engineering of verbiage surrounding “subprime,” “liar loans,” “ARMs,” etc. The delusion in Canada is utterly staggering. This is not longer a game of “kick the can down the road,” but instead of “kick the people in the gut with lies and GTFO when people start to take notice.” WAKE UP, ALREADY!!!

#8 TurnerNation on 07.24.12 at 8:57 pm

Yields crushed today, again. Watch out…

#9 yoposter on 07.24.12 at 8:58 pm

midtown location: 2 bed -2 washroom- 1500$
condo next door to mine $430,000.
cost- $2560 for month.. off course with 10% down..
loving my freedom…

#10 totalinvestor.com on 07.24.12 at 9:00 pm

doesn`t Katie read your blog?

#11 The American on 07.24.12 at 9:00 pm

Just spoke to my Canadian friend, Paul, on Facetime via iPhone, this evening. He’s having dinner in the midst of the Toronto cranes all around him. It reminds me of Miami, circa 2004. Hmmmmm, I wonder how this will end.

#12 T.O. Bubble Boy on 07.24.12 at 9:04 pm

RBC is the #1 mortgage lender in Canada, about $30B ahead of TD (http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2012/02/mortgage-market-share-top-10-lenders.html)

Funny that TD is calling this a bubble, but RBC isn’t? Maybe that’s because TD has more locations in the U.S. than Canada these days, and also has a huge consumer credit book thanks to the MBNA buy last year.

Even CIBC already started running away from its mortgage business — so maybe only RBC is banking on the Canadian homebuyer to make its numbers?

#13 Einzatgruppen kanada on 07.24.12 at 9:04 pm

RBC are like the WSIB. You could lay off about a third of them and pass the workload to the other two thirds. Savings aside all that would be lost are coffee & smoke breaks and clogged elevators.

#14 Saskatoon-Living on 07.24.12 at 9:09 pm

Saskatoon next???

#15 Condo crash in Toronto on 07.24.12 at 9:10 pm

Yup …Garth is right. Anyone who bought last year is now UNDERWATER on their condo which they can not rent for cash flow positive and if they sell they will take a loss of $20-30K and this is just the 6% drop with much more to come. Condo’s could see a 50-70% crash in prices over the next 2-3 years. It’s going to be a really hard and fast crash.

#16 Smoking Man on 07.24.12 at 9:10 pm

Some times you’re the fly. But the machine is always the wind shield

Recap of my stunning predictions on http://www.Greaterfool.ca

Since I been blogging I called interest rates will never go up Cha Ching. 10 year bond at the lowest in history.

Last fall I called a stunning spring market regarding real estate in GTA Cha Ching

I called the go with throttle up(disaster coming) around May 1st last highs of the TSE market. Cha Ching.

In the spring I called the re market insane past my expectations.I said the machine and MSM would bombard gloom and doom re real estate stories till balance between buyers and sellers was restored.

Well that day happened yesterday, as a gracious blogger at GF pointed out a surge of 82% listings in GTA.

Now today RBC was the first out of the gate with No bubble here.others to follow in the next few days.
The talking down of the market was a success, now we have a balanced market of supply and demand.

LaughingCON will call me a Realtor, Realtard. But I’m not.

I’m a fking brilliant observer of the obvious that the masses have had stripped out by the educational industrial complex.

We will see a balanced tug of war MSM reports that will focus on keeping the market balanced.

Why is all this happening now.

Because next year when Carney has to drop the overnight rate after the EURO gets flushed. Carney does not want to create a situation where the tax farm slaves revolt and ask for a raise.

The machine has taken 30 years to slowly push your labor credits and productivity gains to the investment class, they aint going to give it up with out a fight.

LaughingCON I have fully profiled you, wasn’t easy with your robo postings. You are a weak man.

#17 Hahaha on 07.24.12 at 9:11 pm




#18 A Yank in BC on 07.24.12 at 9:18 pm

But Katie did get what she wanted, and has pride of ownership to boot. There is at least some value to that, I suppose.

#19 Jas on 07.24.12 at 9:21 pm

Great article! Condo bubble is going to pop soon.

#20 Hello on 07.24.12 at 9:22 pm

FFFFFiiiiiiiirrrrrrrrrrsssssssssstttttttttt ??????

#21 Justin Case on 07.24.12 at 9:23 pm

All those Boomers that used their HELOCs to get their kids into the game are going to start getting nervous….

#22 Superman on 07.24.12 at 9:26 pm

Richmond MOI is approaching 20

#23 Smoking Man on 07.24.12 at 9:28 pm

#195 GTA Girl on 07.24.12 at 2:51 pm
Thanks for the link wierd or what.

Vlad your the best web researcher on here.

Get me the scope on Scopolamine something that needs to be shared.

Posted the reference to it on Prison Planet re joker nut bar. never made it past modirator. perhaps this something we should not talk about.

#24 Bill Gable on 07.24.12 at 9:28 pm

I have to report (*Pass the oxygen) – at our Vancouver W/E Apt. complex – we actually had one couple come and look at one of the many apartments for sale, or pending listing….
Only later was I told – nope – just two other agents.

This kid smells the phrase = “Mark to Market” bandied about, with the crowd I get to interview a lot.


If that is the case. Mr. Turner, his charming wife, Bandit and the Harley, and the rest of us dawgs, better get on the surfboard – because the Banking gears are grinding to a halt again.

Credit markets get the chills – we get Ebola.

Toots – (*sidebar) – WHY? WHY?

Sorry = now back to Game of Thrones.

#25 Questioning RE in Calgary on 07.24.12 at 9:29 pm


I think everywhere but Calgary will tank-in my estimate, TO and Vancouver will drop 30-40%. Much to my chagrin, sfh’s in Calgary will probably only drop 10-15%. They haven’t shot through the roof like the aforementioned cities in recent years and peak oil will keep them inflated. Manufacturing in the east is just going to get worse, but I can’t see the oil sands machine being stopped. Its terrible for the local environment, releases staggering amounts of CO2, but as long as it is yielding tax dollars and keeping this pathetic national economy above water, its going to keep on rolling. I dont own and want Calgary houses to correct 30%, but it ain’t gonna happen.

#26 Loon on 07.24.12 at 9:30 pm

Wtf? Are those newlydeds throwing chicken carcasses in the air ?

#27 eat gold on 07.24.12 at 9:30 pm


you can totally eat gold!

and drink it too!

wife just had a gold fleck topped pizza.

last weekend, buddy was downing gold fleck hard alcohol.


#28 tkid on 07.24.12 at 9:30 pm


30 ‘tortuous’ minutes on the subway beats my 40 minutes by streetcar. Why? Because the TTC keeps evicting folks off the damn streetcar at Roncesvales in order to send the streetcar back the way it came.

The TTC likes to do this the most when it is raining, dark as hell outside, or freakin’ freezing outside.

I’d drive, but my route would include driving under the slowly falling apart Gardiner.

I wouldn’t spend $400,000 on a condo all at once tho’. I seriously considered purchasing a $60,000 two bed condo in Burlington (halfway between Mom and work) with reasonable monthly fees ($400 bucks! A two bedder has fees of $400 brand new!).

This drought has me worried. Been buying pinto beans to squirrel away. If I don’t use ’em/need ’em this year or the next, they store for 30 years and can always be donated to a soup kitchen.

#29 Steph on 07.24.12 at 9:33 pm

Ok, we’ve established that there is a bubble and it is bursting.

Now, can anyone enlight the last remaning cells in my brain and tell me what is the stategy behing this global madness?

I’m new here. Reading this blog for a while, but first time poster.

Can I at least get a little welcome answer ;)

#30 Uptick on 07.24.12 at 9:39 pm

Kia rocks. Harley sucks.

#31 Nemesis on 07.24.12 at 9:42 pm

New trends in social photography. Hmmm… There’s got to be a good chicken joke in there somewhere.

When it comes to husbands, a Broiler in the Pan is worth more than a WoodCock in the hand?

Chicken chucking a sound marriage doth make?

Never fricassee a fryer when you can pluck a pullet?

A GameHen makes a wonderful catch?

Help me out here, Nostra…

#32 Raj on 07.24.12 at 9:42 pm

Has US housing bottomed out? Not quite


#33 American Werewolf in BC on 07.24.12 at 9:43 pm

#7 The American

Its unbelievable. I don’t think there is any other way to consider this bubble than purposely engineered. And considering who is going to be the losers, the motives do not look too grand.

#34 Harry Palms on 07.24.12 at 9:44 pm

#217 Keith in Calgary on 07.24.12 at 4:49 pm
Car lease versus buy

The last time I took a serious look at leasing versus financing, it added up to a dumb idea. Particularly for anyone who drives more than 20K per year

The prevailing interest rates were such that the three year lease payments was not too far off the four year “buy” payment, and the four year lease payment was edging towards the five year buy payment.

This was based on MSRPs of course. The spread is actually smaller if you consider that

-they’ll negotiate a better bottom line if
they only have to sell the effing rustbox once,

-you don’t have to worry about getting dinged for extra mileage, and “wear-and-tear” type charges on lease return

There are advantages for leasing, but they don’t exist for many drivers.

The lease is back. I’ll look at it again and run the numbers as soon as my present ride turns back into a pumpkin.

#221 T.O. Bubble Boy on 07.24.12 at 5:07 pm
@ #218 Investx / #212 char

Empty condos.

Noted that recently after reading about the percentage of sales to spec’ers on this pathetic blog.

There are lots of empties, but some are maybe:

-indicative of young hipsters out doing young hip stuff at that hour (or maybe at home doing hip stuff at that hour……I know some of the most fun things I’ve ever done featured being at home with the lights out, and one or more lady friends).

-indicative of young hipsters that can’t afford the gouging at the hands of Toronto Hydro because they’re drowning in fees, mortgage bills, and the revolving debt used to furnishing the shoebox in the sky. :o!

#35 AD on 07.24.12 at 9:49 pm

As soon as I saw Minto’s showroom just East of Yonge on Sheppard for the new condos at 88 Sheppard East 6 months ago, I knew they would never break ground, but today proves it. They now have a huge sign outside offering FREE ICE CREAM if you come inside. I kid you not.

#36 JSS on 07.24.12 at 9:52 pm

I was thinking of buying a Kia

#37 Grim Reaper/Crypt Speculator on 07.24.12 at 9:55 pm

I was Fiirrrsttttt in a line up to be Fiirrrsttttt on Blog’s Garth..err Garths’ Blog.

Something verry very fishy going on……hmmm……maybe its my bone white complexion, dermatologically challenged features… and razor sharp wit and sycthe…….PREJUDICE !!!

PS Smoking Man ..quit butt-ing in.

#38 DJB on 07.24.12 at 9:59 pm

Garth, If Katie paid cash for her condo she could at least Smith Maneuver it. Take out a $200K Heloc and throw it back into a 7% ETF and write the Heloc interest off as a carrying cost.

#39 Toronto mine sweeper on 07.24.12 at 10:08 pm

last weekend, buddy was downing gold fleck hard alcohol.

It’s called Goldshlager, German liquor.

Guess that’s why moody downgraded RBC.

#40 BigAl (Original) on 07.24.12 at 10:09 pm

Milton, Ont.

Here’s 7 brand new homes, all the same tiny 1650 sq. ft. model, being flipped in the same neighbourhood, basically within a couple of blocks:

House1 $495,000

House2 $499,000

House3 $499,900

House4 $499,925

House5 $519,000 (been on the market for a year now)

House6 $525,000

House 7 $499,900 (Private sale, reduced from $509,900)

There was one other where the owner gave up and rented it out just last week.

Now, here’s the builder’s site, offering the same house, new as-yet unbuilt units for $435,990 base price (before upgrades):
Look under 30′ homes, model: Plan 5 Corner

Here’s the costs of some of the upgrades (fireplace, glass shower, etc)

These homes have not been moving well re-sale at all. But, most of these flippers signed for these homes in fall 2010 for a base price of $340,000. For living in long term, good deal. But for flippers, I think they’re in for a disappointment. (One of them is on its second flip…sold in Nov. 2011 for $450,000).

#41 bubble head on 07.24.12 at 10:11 pm


Reports an 82% increase in listings w/w

#42 nufio on 07.24.12 at 10:12 pm

What is this magical fund that gives 7%?

Actually I said 5%. — Garth

#43 TurnerNation on 07.24.12 at 10:15 pm

Canada: where kids are forced into learning French.

Guess what, French is not on the Top 10 list of world languages spoken. Spanish is. Americans are more likely to learn Spanish.

Why are we taught this second rate language?
Would we become more effective in world business if taught a more useful second language in school?

Cue truth hammer and his ‘3 decades of Trudeau wishy washy-ness’.

#44 tkid on 07.24.12 at 10:15 pm

The empty condo next door, the one selling for $40,000 less than the one I rent, is up for rent for $1300. $1300 is what the place costs the landlord monthly, sans income taxes.

#45 Just Park It on 07.24.12 at 10:20 pm

How is it possible that people can make such harsh economic impulse purchases that has a high percentage of failure based on historical events. I feel beside myself when I read day after day of complete contempt towards financial security. Have we reached a moment in our society that will be written in history books as the greatest economic disaster, fearfully I think so.

And a final note, is there any other mammal, any species within this entire solar system other than man that relishes on the misfortune of his fellow human beings. I think we as a society have reached a new low. To think less of, mock those we have no clue who they are but seize the moment to dance at their financial destruction…very sad indeed.

Maybe, just maybe – there is a higher being – and when being called upon, you will be judged as you have judged others…

I can only hope this correction takes a mild and slow approach, I hope those who lose everything do not take their anger out on society and this entire system becomes a state of mass hysteria.

#46 Smoking Man on 07.24.12 at 10:25 pm

Ah come on Garth that was beauty last paragraph.

O well maybe it’s best

#47 randman on 07.24.12 at 10:26 pm


Welcome ;) There is no easy or short answer to your question …. I could write a long essay but don’t have the
time nor patience…besides most people …won’t understand ..and as Garth says this is a blog on RE

You need to look at some other blogs concerning this on the web and decide for yourself how it’s all gone so wrong..

Short answer is that human behavior is predictable and all this has happened before on a much smaller scale.

The human race has a wonderful habit of destroying
itself through greed and deceit and fraud.This time is no different but it will be an epic retrenchment.

I believe most has to do with governments and their lust for power and ignorance of basic economic laws and freedom.

I’m not religious but the story of Noah seems appropriate these days.

#48 John on 07.24.12 at 10:30 pm

The American wrote:

“This is unbelievable. Even in the U.S. the banks were never intricately as involved in keeping artificially values propped as it is in Canada. Please, Canadian cousins, I beg you to DEMAND transparency into your system, including the likes of free-of-charge, publicly-published information with respect to past sales history, inventory outstanding, re-engineering of verbiage surrounding “subprime,” “liar loans,” “ARMs,” etc. The delusion in Canada is utterly staggering. This is not longer a game of “kick the can down the road,” but instead of “kick the people in the gut with lies and GTFO when people start to take notice.” WAKE UP, ALREADY!!!”

Not sure how this would work. Who would the people “demand transparency” from. MP’s? Who?

This could not have happened without the people giving away their power.

Even now, as long as there is an unbroken possibility to consume, people have no need to investigate beyond the mainstream media.

#49 Casual Observer on 07.24.12 at 10:33 pm

Came across four panelists discussing the economy on “The Bottom Line” (CBC), and according to Patricia Croft, Canada will be the only country in the world that is able to slowly deflate RE prices without the bubble bursting. Apparently things are different here. Who knew?

#50 MO on 07.24.12 at 10:39 pm

Interesting find…

Most expensive cities in the world.

Toronto = #15


#51 jess on 07.24.12 at 10:42 pm

dream brochures

..”Some savers who thought they were putting their cash on deposit in recent years, on the advice of their local bank, were in fact sold bonds or preference shares in those banks – if a bank were to fail, these products are not covered by the national depositors’ compensation scheme.

Read more: http://www.dailymail.co.uk/money/news/article-2178167/Spanish-bank-bailouts-property-crash-wreck-Brits-retirement-plans.html#ixzz21b9bEV1A

#52 randman on 07.24.12 at 10:51 pm


The delusion in Canada did not run through all cul de sacs!

Many of us knew what was coming….

We just didn’t say too much to the non believers..

We never would have been invited to those cocktail parties with all the hot chicks…

So we kept our mouths shut!


#53 Jim on 07.24.12 at 10:53 pm

“manufacturing in the east is just going to get worse, but I can’t see the oil sands machine being stopped.”

You can’t? Not even for a short period?

The oilsands is nonprofitable if oil is under a certain amount (I think $85 per barrel). People I talk to are worried, and I note that oilfield service companies have been losing ground in the stock market lately. I’m no expert and I don’t follow closely, but I would not be so sure that the oil sands are going to be churning along at the same rate for the next decade.

#54 John on 07.24.12 at 10:55 pm

Maybe public sentiment has changed. Nobody would ever refer to Mark Carney as a “banking rock star” now, and comments like “there are whispers of Carney being considered for the head of The Bank of England” wouldn’t be all that impressive.

How far has the “credibility meter” dropped since April? Feels like perception has shifted a lot.

#55 jess on 07.24.12 at 10:55 pm

vacancy rates another number that is stretchy

#56 PeakOil on 07.24.12 at 11:13 pm

Here is your answer Steph. I ain’t sayin’ this is certain but it looks to me that peak oil has started to get traction. If you don’t know what peak oil is, I cannot do it justice in one short post. Look it up and draw your own conclusion. The only thing I can add to the argument is that fractional banking needs a lot of interest payments on top of what is already going on, in other words growth. Hope it helps..

#57 Stinky the Fish on 07.24.12 at 11:13 pm


#58 GTAGirl on 07.24.12 at 11:14 pm

Im not sure if the new CEO of BILD drives a Porsche, Garth.

But the former Chair drove a Aston Martin DB9, bought at full price, which quickly devalued for. $400k to now below $120k…

Bad investment, not unlike a 500sqft condo on King street

#59 Doug in London on 07.24.12 at 11:17 pm

@Casual Observer, post #49:
I also watched The Bottom Line on CBC tonight. What Patricia Croft said is something we call wishful thinking. If this elusive soft landing didn’t occur elsewhere in the world, why should it occur here? Similarly, prices dropped during the real estate busts of the early 1980’s and 1990’s, so why should this time be different? Oh, I forgot, it’s different here in Canada.

#60 Not 1st on 07.24.12 at 11:17 pm

Garth, this Jamie fellow…does he tell it like it is? or is he part of the realtor pumper establishment?

#61 45north on 07.24.12 at 11:29 pm

Superman: And if I lost a million dollars, you’d divorce me…

pretty funny

BigAl: Now, here’s the builder’s site, offering the same house, new as-yet unbuilt units for $435,990 base price

in California, as the bubble popped the builders consistently undercut private re-sellers

TurnerNation: Canada: where kids are forced into learning French.

Why are we taught this second rate language?
Would we become more effective in world business if taught a more useful second language in school?

it’s one thing to argue the usefulness of Spanish versus French and its quite another to learn how to speak either one

Casual Observer: Canada will be the only country in the world that is able to slowly deflate RE prices without the bubble bursting. Apparently things are different here. Who knew?

well I’d say in Ottawa, prices are slowly deflating. At the moment.

#62 tkid on 07.24.12 at 11:36 pm

#53 John, Carney’s credibility is quite high. The “Canadian Crew” have managed to stave off disaster for 5 years. This is a feat that more than one country in Europe would like to have duplicated.

Do not let your hatred for the Conservatives blind you to just how bad things have become elsewhere.

Because those bad things are a’coming to a neighbourhood near you. Prep for ’em. Is that not part of Mr. Turner’s message? Eschew debt. Love liquidity …

#63 Blue Monster Lover of Meats and Vegetables on 07.24.12 at 11:49 pm

#223 Junius on 07.24.12 at 5:29 pm

#213 Jess,

I think Hedges is brilliant. He makes a very compelling case. One of the few authentic, intelligent voices out there today.
Ha! More proof I’m right. Spot on.

Chris Hedges is a commie. Takes one to know one.
Everyone take note of the communists amongst us.

#64 Sebee on 07.24.12 at 11:54 pm

Must be hard selling investment advice when apparent financial authorities with big letters following their job titles are clearly misleading the public. And we wonder why investing public wants to trust no one. Does this guy from RBC make you want to trust them?

#65 W. Buffett (Willy) on 07.25.12 at 12:02 am

As uncle Warren says, “we will see who is swimming naked when the credit tide goes out.“

#66 North o' TO on 07.25.12 at 12:05 am


Maybe, just maybe – there is a higher being – and when being called upon, you will be judged as you have judged others…

I can only hope this correction takes a mild and slow approach, I hope those who lose everything do not take their anger out on society and this entire system becomes a state of mass hysteria.


From your comments, I’d say you are quite judgmental yourself.

Personally I’d be happy to see a return of RE prices to normalcy, as in approx. 3.5 times average household income. Will this affect many people negatively? Yes.

How will it affect Me? Well, I’m 45 and still priced out of a house so I am looking forward to an opportunity to get a fair deal on a house. (not that I believe I’ll ever see it increase in value in my lifetime, but I’m happy enough not to lose a massive chunk of my hard-earned money on it)

So yes, I do wish for a return to normalcy and would be happy to see it. It doesn’t mean I take joy in the pain of others. I wish the correction would cause no pain but it will anyways and we will all be paying for it (tax increases, bailouts and who knows what).

However, I’ll gladly pay my portion of the bill and go shopping for a house around the same time.

Why this incessant desire by so many to see a SLOW correction? Who does that really help? Think of all the nearly underwater homeowners that continue their payments for a couple years until.. uhoh.. value dropped AGAIN and they are underwater and broke? If they knew they were underwater earlier (ie.. a SHARP correction), they would walk away or go bankrupt earlier and GET ON WITH THEIR LIVES much quicker. What about buyers? oh, a SLOW correction, so basically smart buyers KEEP WAITING, knowing house prices have further to fall… meanwhile how many others buy houses only to find the values continue to drop. sound familiar? .. like US housing maybe? who is really benefitting from this? well, banks I guess but can’t really think of anyone else.. Slow correction / soft landing means house price index continues to flail and the economy can’t really recover until the bottom has been hit (yes, that is an arguable point but my opinion really)

Now take a look at iceland. no bank bailouts, they took the hit full on and are now enjoying a economy on the upswing. yeah, there’s more to it than that but realistically I like their approach better. To draw out a correction makes your economy languish much longer, bankrupts more people that try to time the bottom (incorrectly, usually) and keeps underwater homeowners enslaved for a much longer portion of their life.

I’ve been seeing more and more accusations on this blog about others taking joy in people’s pain. In my experience (and most of the other readers, I suspect) I have done all I can to warn everyone I know to watch out for a highly possible RE correction. Some listen some don’t and it is a frustrating experience to say the least, as most people, even now truly do not believe it. My joy will be to finally get a fair deal in this corrupted market where television media, newspapers, the CREA and even your politicians have done everything they possibly can to get the average Canadian to place the bet of a lifetime on a game they are not going to win.

anyway, my opinion.. didn’t want to write it but judgmental accusations got me flared up I guess.

#67 thinker on 07.25.12 at 12:12 am

Thank you for sharing the story Garth, but what we need to know is what % was the rent/ownership of family monthly income – if they are taking home 10k-15k, this purchase is nothing, if 2k – Houston, sorry Ottawa, we have a problem

#68 Tim on 07.25.12 at 12:13 am

Re #43
The French were here first and they help build this country. If you don’t want to accommodate the French, then move to Calgary.

#69 Tim on 07.25.12 at 12:16 am

Patricia Croft must have a substantial interest in housing, or maybe she’s on the payroll of one of the big banks. She thinks this will be the only country to avoid a crash in real estate. lol

#70 bclandguy on 07.25.12 at 12:18 am

#2 Tim

I think to otherside a bit on the pipeline…as long as we in BC get more royalties, meaning percent per liter for the life of the line, it will be good, I see they are trying that but the Alberta govt is saying no, WE NEED to be Strong in BC and demand the max!….and also let the feds and Alberta fund the monitoring.

#71 ANONYMOUS on 07.25.12 at 12:22 am

Don’t worry so much Garth,
Katie’s job earning her $600,000 per year job (AS ALL POSTERS HERE SEEM TO BE EARNING THESE DAYS) will easily be able to pay off that $400,000 condo in as little as 3 years.

So what’s the worry?

#72 Junius on 07.25.12 at 12:30 am

#257 Steph (Previous Post),

You are really asking 3 separate questions about the financial crash. (1) How did the crash happen; (2) Why was it different in housing in some countries – ie the housing crashes in the US, UK, Spain, etc. vs. Germany and (3) what about Canada.

The first question is really a failure of current economic theory. It is a story of ideology over common sense and the hubris of policy makers. The best and most straight forward explanation comes from Australian Economics Professor Steve Keen here:


The various housing bubbles were an extension of what Keen says where governments made money cheaper and there became a credit bubble in lots of assets. Houses became the primary asset bubble in many countries where rules regarding lending were relaxed such as the US, UK, Spain, Ireland, etc.

Germany is interesting because they did not follow the others. However you have to remember that the Germany economy is the least consumer driven in Europe. It is export driven and many would argue it was already stoked by a credit bubble of a different sort called the European Union. The Germans ability to lend money to the PIIGS allowed them to essentially vendor finance the purchase of their own goods. This meant there was no need to stoke the German consumer because they were already stoking the PIIGS.

The Canadian situation is different than the other countries because of the timing. The US and the others had all began their housing crashes by 2006 and certainly by 2008 it was clear to everyone what was going to happen – disaster. It was at this time Canada decided to follow the others by loosening the CMHC rules.

Garth has told his story before on this Blog about his time in government and how he reacted when he found out this was the plan. He clearly predicted the future would be what we are seeing now – a bubble and then a crash.

The question that you have to ask is why? If they didn’t know what would happen then they were stupid because it was obvious what was going on in the US. The only other explanation is the one I gave – power and greed.

The responsible decision would have been to let the market fall and look to stimulate the economy in other ways. However the Conservatives knew the changes would pump the market for at least a few years. They made this choice knowing that they were creating a debt bubble that would eventually end with the destruction of wealth and lives. What possible other explanation is there?

#73 yield on 07.25.12 at 12:40 am

Actually Garth, I think you’ve been saying 6%, now you’re saying 5%

The example was for a conservative, income-oriented investor. One size does not fit all. — Garth

#74 Grim Reaper/Crypt Speculator on 07.25.12 at 12:50 am

Not sure tossing Eastern Canada Liberal MLA’s into the air during nuptials is legal without a permit…

…….not that there is anything wrong with that..(ya 4Q’n losers)

#75 Carpe Diem on 07.25.12 at 12:51 am


I assume you are not French speaking.

The English and French built this nation for 100’s of years. If you can do without French, so be it … good for you.

But in Eastern Ontario (including Ottawa) and Quebec, you need to speak and write French for some jobs. It’s that’s simple and it’s called demographics.

Since the French and English built the best country in the work, suck it up and deal with it.

I’ve been in Richmond, BC where signs in Chinese are bigger than English (if even present). I hated living in that swamp and sold my home and went back closer to home.

Countries where French is a national language:

Central African Republic
Democratic Republic of Congo
Ivory Coast
Republic of Congo

Beat that!

#76 Carpe Diem on 07.25.12 at 12:53 am

Here is another list …..

Other member states of the Organisation Internationale de la Francophonie (OIF):
Cape Verde
Equitorial Guinea
Sao-Tomé et Principe

#77 Soylent Green is People on 07.25.12 at 12:59 am

How did she earn that 1,600 rent for condo with her son? What is her job?


#78 Blacksheep on 07.25.12 at 1:25 am

Daystar # 249,

Sorry to disappoint you, but I’m not attempting to influence anyone. I was simply responding to John’s frustrations. Based on what you type, I would suggest you spend more energy focusing on your personal delusions, as going forward, the ‘system’ will not be kind, to the ignorant.

take care

#79 new-era on 07.25.12 at 1:43 am

We know home ownership is 70%.

But does anyone know the percentage of people who own more that one home?

#80 geogar on 07.25.12 at 1:44 am

Ah… so. Size does matter! Just ask Katie

#81 DJB on 07.25.12 at 1:45 am

BMO Covered Call Utilites ETF ZWU.T yields 7%
iShares Canadian Monthly Income ETF FIE.T yields 7.7%
BMO Covered Call Bank ETF ZWB.T yields 7%

#82 Motzu on 07.25.12 at 1:47 am

As read on http://vreaa.wordpress.com/

“I have a friend I literally begged to sell his condo a year ago. Instead he poured in 50 K worth of Miele and Granite and teak floors. He lost his job on Tuesday.
He called this morning, and he sounded terrible. I dropped in on the way back home (he lives in Yaletown) – and when I got to his shoebox, he looked like he hadn’t slept in a month.
He was nearly in tears. I asked him to tell me what was going on and I just listened.
Maxed credit cards. Leased Land Rover. 60 inch TV – all the toys.
He has one bank account that has $123 bucks in it, and a two week severance check worth $1190.
He was frantic. His Mortgage payment is coming up at the end of the month, $2350.
What could I do for this guy? He can try and list his shoebox – but he owes 412 K on it and it won’t sell.
His student loans total? $45 K – he has an MA in Fine Arts. His animation job was chopped.

I have a sinking feeling that my poor pal is in a crowded boat.
The whole mess makes me sick.
This is just starting.
What is coming is a disaster. I am very concerned that we have a generation of folks that will be destroyed. Maybe two.”

… I hope he have a bar and some bottles in his condo …

Poor guy …

#83 Bast on 07.25.12 at 2:03 am

Just booked a Vegas vacay for September – was in London (yes, UK) in May, and was just down at my condo in the mountains last weekend – and am happily top-downing it around Calgary this summer in my Miata. It is gooood to be a renter!

#84 TheRealTruth on 07.25.12 at 2:06 am

Blog Dogs need to start thinking outside the box..

Gurgoan, a large city just outside New Delhi, has stopped issueing new water connection permits for households. Yes, that’s right. Only existing homes (sfd, condos) will have a water supply. This is due to severe depletion of India’s groundwater aquifers.

So homeowners are going to be the real winners as their places shoot up in value that will make Vancouver look like a backwater.

The rest: 550,000 a year and rising.


#85 cynically on 07.25.12 at 2:56 am

To #7 American — You’ll need the world’s biggest alarm clock to wake us up!

#86 Daniel on 07.25.12 at 3:45 am

I don’t understand why people think they cannot get 5% return on their money.

You can go with a little risk and get funds, preferreds, and a little fixed – as Garth says.

Or if you have around 50k, by a couple oil stocks paying 7-8%, some REITs at 4%, bank preferreds at 5% and some fixed at 2%, about 5k in CEF.A (just in case) … wait it out – All your stocks will rise in the next (pessimistically 10 years, optimistically some will double, or triple in the next 10 years) and you get a dividend the whole time.

#87 Lee on 07.25.12 at 3:57 am

#45 Just Park It

To quote Fallout Boy, ‘The best of us can find happiness in misery.’

#88 Buy? Curious? on 07.25.12 at 4:44 am

I know what Katie’s going through. A single mama, trying to make a better life for her son. In the absence of a partner, the condo represents a sense of security. Good on you Katie.


#89 mid-Ontario on 07.25.12 at 5:09 am

#52 Jim
Oilsands break point is close to $70/b.
$20 billion allocated for next year.
Projects do not stop and start quickly.
Belief in patch for long term price well above $70.

The east under McGuinty “leadership” is doomed.
One of the worst ever in a series of bad, bad and badder.

#90 Questioning Calgary stats on 07.25.12 at 5:11 am

#25 Questioning RE in Calgary

The performance of Calgary’s housing market has been weak compared to Toronto and Vancouver over the past 3 years. This weakness will not disappear now that the mortgage rules have changed (and will be changing). CMHC will be scaling back its involvement in the housing market in Canada. If anything, the relatively weak housing market in Calgary over the last 3 years will be accented due to these mortgage rule changes.

Back in 2009, house prices in Calgary (sfh and condo) were crashing and would have kept crashing if it were not for the massive intervention that took place at that time. CMHC was mandated back then to take on higher risk mortgages. As well, interest rates were slashed to emergency levels and kept there. In 2009, CMHC had about $300 B on its books and now that total is about $600 B. There are no plans to push the $600 B ceiling higher. CMHC will be insuring smaller mortgages and less of them going forward. This will cause Calgary house prices to decrease (much more than 10-15%).

Over the past 3 years Calgary’s market did not establish new all-time highs in price, despite the above mentioned unprecedented, emergency intervention. This is not a positive sign for house prices in Calgary moving forward.

For anyone thinking of buying in Calgary right now. Don’t. The new mortgage rules will cause prices to decrease and there will be plenty of time in the future to buy at much lower prices. Wait it out for 1.5 to 2 years and then reconsider buying. This could easily save you $100,000 to $200,000 on the purchase price (and at least double that in total interest over the life of your mortgage). You will thank yourself.

#91 Aussie Roy on 07.25.12 at 5:25 am

Aussie Headlines

Why the Melbourne Property Market Could Be Set For Two Years of Pain

According to SQM research, the record level of ‘stock on market’ in Melbourne is now sitting at around 41,000 unsold houses (and 14,000 apartments). This level of stock has been increasing steadily, and is now double what it was just two years ago.

A note from Goldman Sachs a few weeks back suggested that the true clearance rate for Melbourne property at the time was in fact 11.8%, rather than the official 55.8%.

Debt is the lifeblood of the property market, but people are now borrowing less. The size of the average loan is 4% less than it was a year ago, and the number of loans made is starting to contract for the first time in decades. With the housing boom driven by available debt and rampant property speculation, the opposite is also true. The falling property market will partly be a factor of debt contraction.

So Melbourne’s case is a particularly potent mix of oversupply and weak demand.

And their prediction is for more pain in the residential property market.

On top of whatever happens in the second half of this year, they see a fall of 12% in 2013, and then a drop of 9% in 2014.

Assuming the market creeps down a bit more during the second half of this year, to finish 10% below the peak, then by the end of 2014 these predictions would see the market fall by a compound total of 28% under the peak.


Would you act as guarantor for your children? Comment below

Parents who have the means may be keen to help their children get into their first home. Others may feel they are under pressure to help. In their efforts to assist their children, many parents end up getting into a financial arrangement that has the potential to be dangerous – acting as guarantor


Australian Property Monitors data shows Point Piper apartment rents have fallen 20 per cent and in Dawes Point 25 per cent in six months.

There have also been substantial drops in median house rents in some exclusive suburbs. In Dover Heights they have dropped 15 per cent and in Darling Point they’ve dropped more than 30 per cent in six months. In Vaucluse they have fallen close to 30 per cent over a year


#92 Pat on 07.25.12 at 5:29 am

#7 The American wrote”
“…Please, Canadian cousins, I beg you to DEMAND transparency into your system, including the likes of free-of-charge,..”

and bla-bla-bla, bla-bla-bla…

What’s it to you, really? Don’t you have anything better to spend your emotions on? Some princess Kate – type celebrity? Or maybe switch on the TV. I’m sure the gun control battles are raging full force on the American channels right now (I can’t watch TV in this country; it is unbearable).

#93 eagle eyes on 07.25.12 at 6:03 am

Have you ever thought…. All it would take to pick up real estate would be for the Government to change immigration policies? Canada limited applications and re-vamped the rules for qualifications. At one time, $800,000 invested into Canada would entitle someone to come Canada, which included buying real estate. HAM would come to Canada and buy a $1m home for their wife and kids. They would return to China to continue to work, while the wife stayed in Canada looking after the children who would get a Canadian education. Once they received their citizenship, the family would return to China and eventually sell their property. Open the floodgates and real estate in Richmond would flourish once again.

#94 The real Kip on 07.25.12 at 6:13 am

Lots of sold signs where I live in north GTA, Georgina. I can’t believe how fast they are selling.

#95 Not 1st on 07.25.12 at 7:38 am

The canadian oil business made 2 huge blunders that will cost them in the short term;

1.) The first was not making an effort to fully supply the domestic market with domestic product. Its unbelievable that with Hiberia and Alberta production that Ontario and Quebec are still getting offshore imports. This was a no brainer.

2. Underestimating U.S. reserves and new willingness to tap them via fracking and offshore drilling. The U.S. is very quickly filling in its own supply in the past 5 years and could become energy independent.

Hence now the complete panic to get a pipeline to the coast so we can get this production off to the chinese. This effort should have been started a decade ago, now its going to take another decade to get done. I see canadian crude getting landlocked and stranded very soon.

#96 jim on 07.25.12 at 7:44 am

The GTA market has stalled as very little is selling. Don’t understand why realtors post their lies here of houses selling when its clear that market sales have crashed and now prices are down. Realtor desperation is very obvious on this blog. Anyhow love your blog Garth.

#97 Randy on 07.25.12 at 7:55 am

Apparently the McGuinty Government and all the Liberal Vote-Monkey will be soon announcing a conprehensive program to deal with the Housing Bubble in parts of Ontario….This comprehensive Plan includes sky-high energy costs and more and higher crushing taxes…..

#98 realtors in a panic on 07.25.12 at 8:09 am

It’s obvious realtors here like smokingman are clueless when it comes to economics. Then again what do people expect from uneducated six week trained so called professionals? The downturn in RE is well underway and prices are falling and will crash over time. The fake economy ie. Construction / renovation/ mortgage broker/ realtor or any other RE related jobs are already taking hit as credit is going tighter. This effects the real economy from rona to retail as people cut back on spending. Maxed out home owners who are unable to sell to a greaterfool is now finally forced to go bankrupt and now We are seeing just that with a increase in power of sales all over the GTA. It’s also obvious realtors here are in a panic. It’s going to be a nasty crash realtors a nasty crash.

#99 TurnerNation on 07.25.12 at 8:22 am

Another anecdote, adding to yesterday’s. Toronto’s downtown condo rental market is tight. Know someone who’s been looking off and on for months. Each place is quickly snapped up. I suspect, people are no longer willing to buy. Some rumours of rental bidding wars for prime units.

#100 2centsCdn on 07.25.12 at 8:33 am

#29 Steph
“Now, can anyone enlight the last remaning cells in my brain and tell me what is the stategy behing this global madness?

The CMHC, which Flaherty noted was originally intended to assist social housing, has evolved into a key pillar of Canada’s overall housing market, providing government backing to lenders on so called high-leverage mortgages.

The guarantee, which essentially removes banks’ exposure, helped stabilize Canada’s housing market during the 2008-09 credit squeeze by encouraging banks to keep lending. But many believe it is now contributing to what have become overheated housing market conditions, sky-high home prices and record high household debt.

The banks could lend money at zero risk ….. so everyone with a pulse got approved. And people who couldn’t qualify for a Sears credit card were being approved for hundreds and hundreds of thousands of dollars at the cheapest interest rates in history ….. they went on a buying spree …. builders couldn’t build houses and condo’s fast enough.

This whole thing was a patch to calm fears of the global financial world collapsing back in 08.

I’m sure Flaherty (and other countries Flahety’s) never dreamed that by throwing a safety rope ……. so many would run and hang themselves with it.

#101 jess on 07.25.12 at 8:40 am

how’s that workin’ 4 ya?

fun (d) raising “growth” members

October 15, 2004
Bullish on Bush: How George Bush’s Ownership Society Will Make America Stronger

Stephen Moore (born February 16, 1960) is an American economic writer and policy analyst who founded and served as president of the Club for Growth from 1999 to 2004

in 2005 he founded the 501(c)(4) Free Enterprise Fund with other prominent Club for Growth members including Arthur Laffer and Mallory Factor.[2] Under Moore’s direction, the Free Enterprise Fund lobbied for Social Security privatization, the permanent repeal of estate tax, and for tort reform.[3] It is also opposed to the Sarbanes–Oxley Act. (wiki)

#102 Steven Rowlandson on 07.25.12 at 8:40 am

By the way, RBC’s Hogue also thinks a lot of condo projects will be cancelled or delayed. So besides that construction crash and falling prices, well, everything is cool. Sure you don’t want a loan, son?

From my perspective in Barrie Ontario a construction crash has been a reality for the past 3 years. This is because wages are 40 years out of date relative to real estate prices. Underpaid people who are priced out of the country don’t need houses they can’t afford. As for dropping house prices I seriously doubt there has been any meaningfull price reductions yet. There will be no recovery untill the average house price is about $50,000 plus or minus $10,000 and thats if wages don’t drop from where they are now. The speculative excesses in price inflation of the past 40 years have to be purged before real estate prices reaches fair market value.

#103 BillyBob on 07.25.12 at 8:42 am

Re: Senior egghead Robert Hogue claims condos are going up because single-family homes are too expensive for the 38,000 new households formed each year in the region.

a one bedroom condo cannot serve the same purpose as a detached dwelling, these are two different products appealing to two different buyers with different space needs singles vs. families

talk about a lame effort to convince the public that the market is just fine

#104 Vik on 07.25.12 at 9:16 am

#42 nufio on 07.24.12 at 10:12 pm

What is this magical fund that gives 7%?

Actually I said 5%. — Garth

Try FIE or CHB.

#105 Marina on 07.25.12 at 9:23 am

Lots of “For Sale” signs where I live in Etobicoke, GTA. Never seen so many of them.

#106 Chris on 07.25.12 at 9:27 am

So my co-worker (29, single female) is looking at buying a 2nd house as a rental property. She currently owns with probably at least 100k in equity b/c she bought when prices were “normal” in Saskatoon and have since tripled.

She told me this morning that Scotia Bank will:
1) Give her a mortgage “no problem”
2) Let her use the equity in her current home as the downpayment on this 2nd house
3) Even give her a bunch of cash to play around with for reno’s to the new home.

Seriously… How is that even possible or legal??? For 2nd homes, don’t you need to put 20% down CASH, and not borrow that cash from somewhere else (ie home equity)??

I told her it’s a terrible idea. She thinks it’s a great idea. Let the greed / stupidity work its ways.

#107 Steph on 07.25.12 at 9:30 am


I think you have a beginning of an answer.

Oil may have peaked 15 years ago and they know it. It maybe the reason for all this madness.

The banking system is fueled by oil, new oil coming in the market is new money created at the system needs a constant flow of new money. If not, it dies.

So oil production is not increasing money supply? Let’s increase it with someting else. How about the internet? This bubble crashed? How about homes?

No coincidence electric cars and solar energy are coming back with a vengence and sponsored by who?

Our good governements of course.

In the end, I believe it’s a good move.

#108 Junius on 07.25.12 at 9:31 am


You said, “I’m sure Flaherty (and other countries Flahety’s) never dreamed that by throwing a safety rope ……. so many would run and hang themselves with it.”

How are you so sure? He had ample evidence of what it had done in other countries. Garth may have something to say about this. At minimum he should have known.

Btw – the CMHC has been around since shortly after the war. Flaherty just changed its rules in 2008. Traditionally Canadians needed to have at least 20% down and mortgages were restricted to 25 year amortizations. He introduced the 0/40 in 2008. Again, very hard to see how he didn’t know what it would do.

#109 Junius on 07.25.12 at 9:34 am

#92 eagle eyes,

You said,”Have you ever thought…. All it would take to pick up real estate would be for the Government to change immigration policies? ”

You sound like TRT. Still pushing your agenda I see.

Answer is no. Immigration alone will not raise house prices.

#110 Aussie Roy on 07.25.12 at 9:35 am

Aussie Headlines

LUCK – Labouring Under Certain Knowledge

RBA Chief “we should welcome the sceptics. Perhaps some of their concerns are valid. The Reserve Bank gives a lot of thought to these issues; we certainly do not dismiss them. We should always be wary of the conventional wisdom being too easily accepted. We should never, ever, assume that ‘it couldn’t happen here’.

Those who have followed Steve’s research into the financial instability for some time would understand that this so called LUCK (Labouring Under Certain Knowledge) is unsustainable on the grounds that conventional economic theories fundamentally ignore the essential role of banks, money and debt. Their oversimplified models provide a false sense of certainty around a dynamic uncertain real world economy.


#111 Junius on 07.25.12 at 9:41 am

#83 TRT,

So, are you suggesting that we look for places to buy where the ground water is disappearing or the environment will fail? Farmland in drought stricken regions or near nuclear disasters?

Kind of turns location, location, location on its head doesn’t it?

#112 The American on 07.25.12 at 9:53 am

At#91: Pat, I much rather prefer to watch a comedy and laugh. Something like this perhaps…


#113 Honus Wagner on 07.25.12 at 9:56 am

What do folks think about the Ottawa condo market? Many buildings have gone up in the past few years, many are in process, and many more are planned.
I enjoy renting mine.

#114 Form Man on 07.25.12 at 10:02 am

#107 Junius

Actually Flaherty began relaxing mortgage rules in 2006. Before Harper even took power, U.S. companies such as AIG etc, were lobbying for deregulation in Canada. Flaherty and Harper embraced the ideas enthusiastically. It fit with their ideology and they were in the hunt for a majority government, so juicing the housing market would increase the ‘wealth effect’, allowing the cons to trumpet this as ‘superior economic management’.
By 2008 it was obvious the American experiment with deregulation of mortgage rules was a disaster, but that didn’t worry F and H. They were convinced of their own ‘exceptional’ economic abilities, and forged ahead.
It worked out wonderfully for the cons. They did indeed win their majority. Over the next couple of years Canadian voters will see how badly the cons have actually damaged the economy.
Ranting ideologues such as truthhammer and others will continue argue that the balanced budgets and solid management of the Chretien administration was simply ‘communism’.

#115 Just(not)AnotherSheeple on 07.25.12 at 10:03 am

Re: #107 Junius

Btw – the CMHC has been around since shortly after the war. Flaherty just changed its rules in 2008. Traditionally Canadians needed to have at least 20% down and mortgages were restricted to 25 year amortizations. He introduced the 0/40 in 2008.

History lessons regarding the CMHC “innovations”:

1999 – introducing the 5% down country-wide (5/25 years amortization);

2001 – introduction of Canada Mortgage Bonds;

2003 – remove the house price ceiling for CMHC insurance;

2005 – introduced the 5% down with 30 years amortization.

Do I need to tell you who was in the office at that time?

#116 live within your means on 07.25.12 at 10:16 am

#67 Tim on 07.25.12 at 12:13 am & Carpe Diem 73 & 74

Totally agree.

When I read some of the comments by Libertarian types on this blog I want to puke. Many who post on MSM sites call those who don’t support this govt’s ideology to be lefty communists. I don’t comment on the sites. I have a BIL (former Red Tory) who is such a hypocrite – even his wife agrees. He was in the Reserves eons ago – suffered hearing loss. Is entitled to the most expensive hearing aids every 2 yrs. (+ other stuff). Never uses them according to sis. My DH was happy when BIL stayed home to take care of the critters when we had a family BBQ. BIL considers himself a financial, political, medical know it all. One of my Bros happened to mention that BIL & sis leased their car 4 yrs aqo (an Elantra) & next year they’ll have to pay out $7,500. to buy it. Was news to me. She shares all the car costs w/her DH & both have spent beyond their means for yrs. I could go on ..it’s sickening the amount of stuff she buys, then gives away, etc. Parents years ago thought she tried to buy friends. Love her, but worry about her.

Sorry for my rant

#117 Kenny Banya on 07.25.12 at 10:17 am

I’m having an interesting dinner tonight… friends coming over who are hot to trot on buying a million dollar home on two very modest incomes/no savings.

Will report back to the greaterfool collective tomorrow morning! Should be fun.

#118 Stoopid Idiot on 07.25.12 at 10:18 am


#119 expat_engineer on 07.25.12 at 10:24 am

#83 TheRealTruth

“Only existing homes (sfd, condos) will have a water supply.”

Thats not how it works in India. Im sure You know better.
The new building will simply dig their own bore wells anyway and every time
any official drops by the check, they (official) will simply ask for the bribe to ensure that the well can keep operating.

#120 Timbo on 07.25.12 at 10:26 am


“Demand for new U.S. homes unexpectedly dropped in June from a two-year high, indicating the housing recovery will be uneven. ”

It’s not all bad but the party hats are still packed away..


“Britain’s economic output collapsed by 0.7% in the second quarter of 2012 as the country’s double-dip recession extended into a third quarter.”

With Europe melting down it is only going to get better, right?…………..

#121 Canadian Watchdog on 07.25.12 at 10:26 am

#114 Just(not)AnotherSheeple #107 Junius

There is nothing new with CMHC’s risk to taxpayers. This has been going on for decades.

Circa 1980 — CMHC Faces Severe Losses: Secret Report http://tinyurl.com/cs3wxk2

#122 refinow on 07.25.12 at 10:26 am

RBC, holds the biggest chunk of the real estate pie, and they are adamantly denying the real estate bubble here in Canada… Maybe because if it pops, they subsequently lose the most….

Yesterday more stats were released that housing prices have increased almost 17% in the last 4 years….

Wonder why they are now comparing today’s figures from 4 years ago… Because in 2008 there was a drop in value, making the increase in figures look nice and profitable.

They used to compare stats from the year before. Cant do that any more, shows losses.

Then they were showing stats from 2 years before… Cant do that. Only shows a break even…

How dumb to they think the public is with this constantly changing benchmark, to illustrate Real estate gains.

I guess if they keep backing up the Benchmark, they will always show increases in real estate values…

Thanks RBC I can sleep well tonight knowing there is no Condo/Real Estate Bubble ……

#123 Ret on 07.25.12 at 10:27 am

Good news: Katie now has paid thousands of dollars upfront and indentured herself for the next ?? years to buy some “pride of ownership.”

Not so good news: “Pride of ownership,” can’t even be spread on a cracker.

#124 expat_engineer on 07.25.12 at 10:30 am

In The rental townhome opposite me I have a new neighbour. His profession ? You guessed it, REALTOR ™

Apparently he has a really bad last 12 months and was forced to sell his house.

Now he has CRA auditing his taxes because they cant believe he had a really bad year.

Gee… The housing market is sooooo HOTTTTT


#125 Ret on 07.25.12 at 10:45 am

My daughter was renting a 535sf condo in T.O and went looking for a bigger rental. She reports that realtors showed here some real crap units for big dollars. Let’s see what happens by next March as thousands of new units are completed in an obviously declining condo market.

She found a place on her own that was larger and $200 month less just down the street on Queen’s Quay. Management sweetened the monthly rent when they checked her excellent credit rating. Loser tenants don’t pay rent and cost thousands to get rid of. She even has an angled view of the lake now.

#126 IM in C on 07.25.12 at 10:51 am

Debt that can’t be repaid ; won’t be repaid.

Saw the above quote. Led me to wonder. What is the definition of -can’t be repaid-? Perhaps that is why it might be different here. We Canadians are such puppies, we will repay debts that others “can’t”.

#127 The American on 07.25.12 at 10:59 am

At #91: Pat, or this even…













#128 randman on 07.25.12 at 11:12 am

For Realtors and Mortgage Brokers…



#129 truth hammer on 07.25.12 at 11:23 am

Yields have fallen allright……..we’re back to the early 1700’s when such records first kept. The glad handing and spending of global governments have wiped out 300 years of economic progress. In spite of the top blocks of the pyramid crashing to the ground ( PIIGS) our own government insists that low rates and free money will save the day……any student of history can tell you what happened 300 years ago when King Louis tried Lockes Gambit……….and for th eundereducated…..and uninterested nintendo generation….it didn’t end well……it’s deja vu…..part deux…..the redux.

A rush to security on the part of investors, driving yields lower and prices higher, hardly means the wiping out of 300 years of economic progress. You are such a drama queen. — Garth

#130 truth hammer on 07.25.12 at 11:31 am

PS….#113 FM….The Liberal government never ‘balanced the budget’…..that crap has been pushed by the CBC ad nauseum….and the truth has since been reported quite publicly….even the Liberals don’t try to use that phrase anymore….where have you been?

the fact is that the Liberals off loaded the entire deficit on the provinces and local governments and this caused a huge rise in taxes for the people to absorb…. instead of the libs spending within their means on the federal level. It was like if you gave your maxed out credit card bill to your neighbor and said….”You pay this”.

What we need is structural change….not more Liberal obfusacation and dogma.

You’re right. Libs did not balance the budget. They ran a surplus. It was spent my Mr. Harper. — Garth

#131 Interesting Times on 07.25.12 at 11:38 am

Just had to post this one. They want how much for this ugly house on a small lot???

Listed on June 16th at $1,288,888

After a month it didn’t sell so they dropped the price to $999,000 to encourage a bidding war…. No takers.

Today the price was raised to $1,175,000 to reflect its ‘true’ market value. ha ha ha ha ha ha

Good luck!


#132 AprilNewwest on 07.25.12 at 11:43 am

#91 Pat – The American speaks the truth.

#133 Interesting Times on 07.25.12 at 11:44 am

Folks, check out http://www.guava.ca to see what’s happening in the Toronto market every day. I marvel at all the price cuts coming through. Looks like the free fall is starting.


#134 AprilNewwest on 07.25.12 at 11:55 am

#68 Tim- Patricia Croft has said in the recent past that her house had gone up to 1mil since she bought it some yrs back. I guess she doesn’t want to see housing decline to far as she seemed quite pumped about her own great luck unless as you say she may have other reasons for downplaying the housing decline.

#135 Timbo on 07.25.12 at 11:58 am


“The price of oil is falling after the U.S. reported a surprise increase in supplies.”

Surprise? lol…………


“The market yield on sovereign debt is also the rate of interest a government must pay to lenders. In Spain for example, the 3.2 per cent jump in 10-year yields to 7.6 per cent over the past 12 months has vastly increased interest expenses for the financially-strapped government.”

This is not a result of a projected 40% drop in home prices is it?……..

#136 Bottoms_Up on 07.25.12 at 11:58 am

#67 Tim on 07.25.12 at 12:13 am
Actually, the aboriginals were here first, approximately 15,000 years ago. They walked/boated over from Russia, and down the west coast. Now maybe THAT’S why house prices are so high in Vancouver?


#137 zeeman1 on 07.25.12 at 12:01 pm

You’re right. Libs did not balance the budget. They ran a surplus. It was spent my Mr. Harper. — Garth

Yes Garth, but that was after they downloaded tens of billions to the provinces, didn’t cut federal taxes AND raided the EI surplus (a public insurance fund, not a source of tax revenue) on top of that.

Harper continued to hire unnecessary civil servants and caved to the majority opposition who wanted him to spend even more, but at least Harper can admit he hated the process.

I wish he had the balls to call them on it but he doesn’t.

And now we have a $40 billion deficit, rather than a $6 billion surplus. Well done, Mr. H. — Garth

#138 Steve on 07.25.12 at 12:01 pm

#129 truth hammer on 07.25.12 at 11:31 am

“What we need is structural change….not more Liberal obfusacation and dogma.”

Which type should we be getting then? Conservative, New Democratic, or maybe Green obfuscation and dogma?

#139 Steve on 07.25.12 at 12:13 pm

#135 zeeman1 on 07.25.12 at 12:01 pm

Seems like politicians with balls AND a propensity to do what is right for the country do not remain in politics…

#140 KG on 07.25.12 at 12:16 pm

I would like to get that 5% return.

#141 Yuriy on 07.25.12 at 12:22 pm

We were looking for a condo to buy back in 2001 and all two-bedroom condos seemed too small for our family of 3. (average size was 900 sq) so we didn’t buy. I cannot imagine how even the family of two could fit into modern 600 sq condos without any closets.

#142 Oceanside on 07.25.12 at 12:25 pm

36 JSS on 07.24.12 at 9:52 pm
I was thinking of buying a Kia.

Just to put this Kia thing to rest…..My wife had a company car until recently, a 1010 Kia Forte. Big motor, leather, 17″ etc…Mechanically it was good but Kia still has to catch up in the “perceived quality”department.

Tinny sounding doors and trunk,cheap leather, poorly calibrated automatic (always searching) terrible carpets that are similar to the old indoor-outdoor people put on their porches in the 1970’s. Nowhere near the quality of a Hyundai, Honda, Toyota or Volkswagen. I don’t imagine they will hold their resale value very well.

In the real estate department, we have leased a nice house near the beach in Parksville until the spring of next year…Then maybe the time for us to buy, certainly looks that way now.

#143 Grab your millions and run on 07.25.12 at 12:37 pm

Real Estate is toasted anyways, why don’t squeeze it a little bit more. Hallelujah!!!

#144 jess on 07.25.12 at 12:38 pm

Canada will be the only country in the world that is able to slowly deflate RE prices

wow …what control canada has over this “free” market
spoken with such confidence and with the same tone as Mr. Paulsen’s “goldilocks .”

#145 To #135 Bottoms_Up on 07.25.12 at 12:42 pm

My firiend, it sounds like quite old news.

Sorry to tell you but the world is run by the strongest. It was always this way, and it will be always this way.
Sometimes it is just pure physical power, but most of the time it’s the smartest and most determined ones that end on the top. The rest is left with their investments in condos.

#146 Victor on 07.25.12 at 12:42 pm

Very true about ‘80% owned by speculators’.
There is a new highrise at Park Lawn Rd and Lakeshore Blvd in Toronto. Dark as hell, only few appartments with lights in evenings. Would expect owners or management to buy gadgets to turn on the lights some time to show it as inhabited. :)

#147 disciple on 07.25.12 at 12:49 pm

#106 Steph… The objective is not to increase the money supply, but control the flow of it. It’s all about control. Like the banks (of a river) control the current(cy). What does it matter if you have 500 trillion dollars like some people on this planet do, if you don’t control the world’s shipping lanes (like some people do)?

Peak Oil is a myth with a geo-political agenda. Look up the term “black propaganda” to understand this more.

I’m starting to see your agenda. What is “a good move”? Are you saying that TPTB are our benefactors? Thanks for the laugh, but I’ve heard that one before… Careful now, or I might figure out who you are…

#148 On The Brink Book on 07.25.12 at 12:50 pm

More commentary on the Canadian housing bubble!

Latest video: RBC says there is no condo bubble, but does anybody believe them?

‘In this video I detail how RBC and generally all bankers and realtors will cling to the lie that the housing market is safe and sturdy, and that even when time proves them to be absolutely 100% wrong, there will be zero accountability or justice imposed on them.’

Thanks Garth, keep up the great commentary, I am sending my parents your way since they won’t listen to their own son, but I’m hoping they will listen to an ex-MP…

#149 Realtors in an all out PANIC! on 07.25.12 at 12:55 pm

Interesting Times on 07.25.12 at 11:44 am Folks, check out http://www.guava.ca to see what’s happening in the Toronto market every day. I marvel at all the price cuts coming through. Looks like the free fall is starting.


Wow. prices in the GTA are CRASHING HARD! Looks like it’s going to be a nasty crash realtors a nasty crash.

#150 Canadian Watchdog on 07.25.12 at 1:24 pm

Municipal Property Assessment Corporation (MPAC) – Residential Sale Prices in Ontario: Full Report http://www.mpac.on.ca/media_centre/default.asp

Average residential sale prices in Ontario are up 17 per cent since 2008, Municipal Property Assessment Corporation report shows.

#151 Buy? Curious? on 07.25.12 at 1:35 pm

Who was the idiot that listed all the countries that french was spoken in to demonstrate the value of learning french in Canada? Haiti? Ivory Coast? Senegal? Rwanda? Great point *sarcastically clapping* Let me rush out and order Conversational French 101 and book off my vacation time right now.

French Canadians have been blackmailing the rest of Canada for way too long. Time to redraw the the voting lines.

Learning French increases your babe appeal. Il fonctionne vraiment! — Garth

#152 MarcFromOttawa on 07.25.12 at 1:38 pm

-RBC economists smoking grass
-Dead chickens in the air
-A guy named Tuckey
-Tete carree #43 TurnerNation

So many different topics in today’s blog.

#153 Junius on 07.25.12 at 1:42 pm

Just (another sheeple) and Canadian Watch dog,

I am not placing the entire blame of the CMHC on the Conservatives. I am aware that Liberal governments made change to it as well.

However I have two very fundamental issues with Conservatives. The first is that they had the opportunity to look at the US experience and stop the insanity in Canada. They did not. Instead they doubled down.

The second is their smug attitude that somehow they are great stewards of the economy when they are clearly hypocrites. They used a ponzi scheme to stoke the economy and now we will all suffer for it. All of this from so called Conservatives.

#154 Steven Rowlandson on 07.25.12 at 1:47 pm

The New Economic Collapse Video: It makes uncomfortable but urgent viewing.

When Casey Research Chief Technology Investment Analyst Alex Daley met former Reagan Budget Director David Stockman to talk about the economy and where he sees it leading taxpayers investors and savers in the near future, he got some very intriguing insights from a man who served right at the heart of the US federal government.

If David Stockman is correct many will need pain killers or some means to escape from reality. 2008 was just a warm up compared to what is to come and yes it will be bad for real estate.

#155 jess on 07.25.12 at 2:05 pm

#133 AprilNewwest
google this

Geneva-based consultancy Covalence

Who was named best ethical bank?
Do computers need eyes perhaps why the blind eye

#156 Canadian Watchdog on 07.25.12 at 2:05 pm

Remember what I said about next month being the one year mark for TREB’s new report and the perfect time to divert the public away from GTA’s headline average price Garth?

Notice the regional/district reports now? http://www.torontorealestateboard.com/market_news/market_watch/index.htm

I assure you they will do whatever it takes to avoid reporting GTA’s average headline price by 2013, just to avoid MSM printing double digit declines.

#157 daystar on 07.25.12 at 2:11 pm

#77 Blacksheep on 07.25.12 at 1:25 am Daystar # 249,

Ignorant, delusional. And then you tell me to take care. Your kindness and sincerity overwelms me.

#158 In Garth Not God We Trust on 07.25.12 at 2:15 pm

#153 Steven Rowlanson

“If David Stockman is correct many will need pain killers or some means to escape from reality. 2008 was just a warm up compared to what is to come and yes it will be bad for real estate.”

2008 and not will not be repeated as stated by the bearded mystic oracle, all knowing, all wise, all seeing financial prognosticator without equal, former minister of national revenues, denouncer of parliamentarian peckerheads and peckerettes, Harley riding, Amazon surrounded lone voice of financial reason crying out in the HELOC infested wasteland of Canada and who in the goodness of his own heart, runs this pathetic blog. If the mighty one (Garth not God) saith so, thus is shall be! Sheeesh!!

#159 jess on 07.25.12 at 2:16 pm

big mouth vs liitle it will make your muscles strong

#160 Curious George on 07.25.12 at 2:18 pm

Hi Garth,

Curious whether you have any insight into the owner-occupancy rates of GTA/GVA… condos? Don’t you think this would be a good barometer as to how quickly the “alleged” bubble will pop?

Really enjoying your blog!!!

#161 Alex N Calgary on 07.25.12 at 2:28 pm

I was just reading a transactions sheet for Sotheby’s on some condo’s sold, 5k down, total commision 12k PER 300-350k unit.
Thats just condo’s, million dollar properties are 33k in commision, yep, Thirty THREE THOUSAND dollars for selling one rathole million dollar property. Does anyone wonder why estate agents and banks will go to any length to lie, cheat and pander about statistics and numbers to keep making out RAGEOUS money on this crap, I can’t wait for them all to lose their pathetic jobs and all those fat commision cheques, invested in properties, they lose it all. Disgusting

#162 R on 07.25.12 at 2:36 pm

Condos are only a baby step above owning a trailer home in a trailer park. They are usually occupied by young renters or crabby geriatrics. And the quality of the construction ???…It’s always a good idea to wait, save some money and but a nice STARTER bung. Much better value for the money. In B.C. once the depreciation reports become mandatory in December 2013 I think the condo market will look very different.

#163 jess on 07.25.12 at 2:38 pm

victorian england’s accent supreme
english = the brits left but india’s link language neutral

#164 daystar on 07.25.12 at 2:43 pm

#77 Blacksheep on 07.25.12 at 1:25 am Daystar # 249,

Sorry to disappoint you, but I’m not attempting to influence anyone. – Blacksheep

Ah, but you are attempting to do so.

I was simply responding to John’s frustrations. – Blacksheep.

And you ran down groups to do it.

Based on what you type, I would suggest you spend more energy focusing on your personal delusions, as going forward, the ‘system’ will not be kind, to the ignorant. – Blacksheep

And I would suggest you don’t get swirled in by your own negativity. When you personally attack individuals and groups, it will splash back on you. Trust me… I know this well and if you want an example outside of myself, try anyone is is nationalist. You know, a patriot. Someone who has a Canadian citizenship and actually likes Canada enough to defend it. Yesterday, you called such folks “delusional”, you know, folks who believe in whats behind the flag and border. Do you really have to do that to respond to someone’s frustrations?

Again, I’m asking you to think it through.

#165 American Werewolf in BC on 07.25.12 at 2:55 pm

#146 disciple on 07.25.12 at 12:49 pm
Peak Oil is a myth with a geo-political agenda.


I wont get into semantics, but a very clear phenomenon is declining net available energy per capita, driven by 1) increasing population, and 2) declining energy returned on energy invested (EROEI).


While we may never run out of oil, coal, natural gas, etc, and may even be able to produce more, it takes a larger and larger amount of energy to obtain these resources. Since 1970, the EROEI on oil and gas has dropped by half; while we used to be able to put wells in the ground, now we put them in the sea and refine bitumen (requiring a lot of energy).

If the energy required to obtain oil and other resources (like minerals) continues to increase, that leaves less energy to grow the economy. If we have an economy that is bottlenecked by declining net available energy, then that leaves less surplus to pay down debt–debt which was accumulated based on growth projections when we had a much higher EROEI. If we cannot grow at a rate needed to service debt & obligations, as well as maintain our existing infrastructure, everything is going to swiftly grind to a stagflating halt. In fact, it may already be in the process of a greater deleveraging of our entire civilization.

But all in all, this means we have trouble on the horizon. If debt cannot even be serviced, it will collapse. This means there will be no financial support /support/capital available for typical expansion and growth, much less maintenance. Further, whatever growth we can squeeze out of the available energy (that which was not spent obtaining it) goes toward production that is to be spread among more and more people. Inevitably, based on how the market distributions this production/wealth, it means that everyone will get less and less of the wealth produced (though disparity will ensure some get none of it).

Remember, everything we have around us–wealth, infrastructure, technology, debt, industrial agriculture–was established and supported when mankind springboarded ahead with high EROEI. And now, it is a proven fact that EROEI is on the decline, while cornecopium ideals don’t seem to be providing applicable solutions. It may be a long way down once everyone in the world figures out that their easy-energy generated reality and standard of living cannot further be supported going forward.

In the meantime, enjoy some popcorn and watch all the bubbles perpetually pop for the next decade, while the elephant in the room is ignored.

#166 Stickler on 07.25.12 at 2:55 pm

I have to go back to my sock analogy…

Option 1: pay $1 / month for use of socks. They are laundered for free and fixed for free when they wear out.

Option 2: pay $240 for socks you own…plus pay for the laundry yourself, and sow them up when they wear out. Pay the government $1.80 per year for sock ownership tax as well. If you don’t have the $240 in cash then add in interest for borrowing the money to buy the socks.

Which option would you pick?

#167 mythbuster on 07.25.12 at 2:55 pm

Garth: “In fact it’s started.”

Garth, you well know that the current decline is cyclical. Whether this is the real decline we’ve been anticipating will be ‘revealed’ by the market next year… if it continues down counter-cyclically… :)

I thought it was because of solar storms. — Garth

#168 Jim on 07.25.12 at 3:00 pm

So when are condo prices going to start falling in Saskatoon? I keep watching the market and there is still a major housing shortage and rent is rising faster than the condo sales. Surely, Saskatchewan isn’t immune to the terrible market forces?

#169 Bottoms_Up on 07.25.12 at 3:02 pm

#144 To #135 Bottoms_Up on 07.25.12 at 12:42 pm
Sorry, to be clear, by ‘aboriginals’ I actually mean those Africans that left Africa 70,000 years ago, some walking northwest (into Europe) and others walking northeast into Asia (and finally into Alaska) — thus, Europeans coming to the Americas 500 years ago are really the long-lost siblings of the first peoples in the Americas….

#170 CP on 07.25.12 at 3:09 pm

Well well well… look who just used the “C” word:


#171 Stickler on 07.25.12 at 3:17 pm

Also, trying to catch a falling knife can be painful. Boom…Spanish telecoms giant Telefonica on Wednesday cancelled its dividend and share buy-back programme for 2012 and cut by half its shareholder payout in 2013

#172 jess on 07.25.12 at 3:38 pm

predator companies
tried and tested debt managers …

Vortex Debt Group is now Synergy Debt Group, Clear Blue Debt …www.mymoneycoach.ca/cgi/…/Vortex-Debt-Group-Review-CanadaCached
You +1’d this publicly. Undo
11 Jun 2011 – The Vortex Group of companies makes appealing and enticing claims about its debt settlement service, but are they true? Here are the facts.
U.S. ‘debt resettlement’ firm draws Canadian warnings – Canada – CBCwww.cbc.ca/news/canada/story/…/debt-resettlement-warnings.htmlYou +1’d this publicly. Undo
2 Jun 2011 – Canadian consumer groups are warning about Vortex Debt Group, a U.S. based debt resettlement company that is now operating in Canada,

#173 Ray on 07.25.12 at 4:01 pm

#165 Stickler

$240 actually looks like a bargain. The socks are selling over $300 nowadays.

#174 Junius on 07.25.12 at 4:13 pm

#166 mythbuster,

You said,”Garth, you well know that the current decline is cyclical.”

Really? Not a chance. The “cycle” that created the boom was based on a credit bubble that cannot be repeated. Therefore the decline will be long term.

You need to learn the difference between balance sheet recessions and business cycle recessions. We are in a balance sheet recession and they typically last for years and perhaps more than a decade.

#175 Buy? Curious? on 07.25.12 at 4:13 pm

Il fonctionne vraiment! It really works. C’mon. Obviously you haven’t been on a XEROX sales 3 month course and applied the same techniques to picking up women. I can sell $100K copier and sleep with the admin staff before you can say GTA Bubble.

#176 IM in C on 07.25.12 at 4:26 pm

@169 CP

These are the best lines in the article:

“There is always a stand-off period at the end of a housing bubble, when prospective buyers refuse to meet the price of sellers, who refuse to drop the asking price,” he said in a note. “Eventually it begins to dawn on sellers that the market has shifted and, as they become more desperate, they eventually agree to lower their asking price. But until that happens, any stagnation in prices can be misinterpreted as a successful soft landing.”

#177 Nostradamus Le Mad Vlad on 07.25.12 at 5:08 pm

#23 Smoking Man — “Get me the scope on Scopolamine something that needs to be shared.”

Here are some goodies: Here, here, here, here (this one is interesting as it gives possible side effects) and here. It doesn’t look like a very pleasant drug.

#24 Bill Gable — “Credit markets get the chills – we get Ebola.” — Is it time to bring the credit markets down? Keep in mind this was pre-planned, except for the cycle change.

#31 Nemesis — “Help me out here, Nostra…” — Try this remedy:

KFC 3 piece original with fries and gravy instead of slaw. One a day, washed down with a medium port and brandy. with a pink gin follow-up. Should be clear in a few years!

#166 mythbuster — “I thought it was because of solar storms. — Garth” — Along with fairy/pixiedust, angel-drawers, sun spots and the Maple Sausage Laughs winning the Stanley Cup!

#178 Leggendario on 07.25.12 at 5:35 pm

The things that boggles me here in Saskatoon that most of the people that I know who bought a house thinks that Saskatoon was immune to the impact of Global Economic problem.

1. Most of the people here think that this province was rich in natural resources. They didn’t think that there will going to be job losses and reduction in the price of commodities in the global markets. – The thing is that 2008 was only 4 years ago and most people already forgotten that the price of commodities has a strong correlation to the global economy.

2. Saskatchewan is growing – they are saying that the driving force of this province is the growing population and low availability of rental properties. There are also large amount of increase in rental cost compare to income.

3. The provincial government is rich and not experiencing any form of budgetary problems that can impact jobs in the Government sector.

– As a passive observer I think we are screwed irregardless of the province where you live in. Living above your means doesn’t ends well. It just a matter of choice. Garth is correct in sating that most people these days have inflated sense of entitlement.

“If you earned it, you can have it.” – the thing is that most of the people that I know doesn’t even earned it but they have RV’s, 2 SUV’s and half a million dollar houses, all living with an RN’s salary me and my wife was both RN’s and we have both investments and business overseas. But we just live in a small apartment (1 bedroom) have a pre-owned SUV (Paid cash with a 4K discount), and keeping life simple, and we can say we are both happy satisfied and productive.

I don’t want to criticize people because it is their right and it is their choice and I think if ever there is down turn everyone will be suffering from it (including us). But the thing is that people should learn and people should suffer in able for them to learn.

Just only my 2 cents, hopefully the government can do something to correct some of the unexpected outcomes of their policy. They met their goal of propping up the economy but only artificially because they also created one of the biggest credit bubble in history.


#179 jess on 07.25.12 at 5:58 pm

Finance Committee on May 29th, 2006Evidence of meeting #6 for Finance in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was mortgage.

On May 29th, 2006. See this statement in context.
May 29th, 2006 / 3:40 p.m.
Mark Tonnesen President, CEO, Triad Guaranty Insurance Corporation


“My name is Mark Tonnesen and I’m the CEO for Triad Guaranty Insurance Corporation. Prior to joining Triad I was vice-chairman of RBC Insurance in Toronto.

Triad is a private mortgage insurance company, headquartered in the United States, and is currently before OSFI with a draft application to provide this insurance in Canada. It was founded in 1987, based on the philosophy of strong risk management, product innovation, and superior customer service. Our products are primarily offered in areas where affordable housing is a priority. In fact, our typical customer is a first-time homebuyer with an average house price of around $150,000.

I am here to support the government’s intention to open this market to more providers. This move will create upsides for taxpayers and consumers alike. First, adding more market participants will reduce the risk to taxpayers and increase the stability of the housing market by spreading the risk across multiple providers; reducing the risk assumed by government providers; bringing additional diversified capital into the market; and eliminating the risk where one private mortgage insurance company could pull out of the market, leaving the entire Canadian housing sector in turmoil…”


Standing Committee on Finance


Monday, May 29, 2006

Monday, May 29, 2006

The Standing Committee on Finance met in a televised session at 3:30 p.m. this day, in Room 237-C, Centre Block, the Chair, Brian Pallister, presiding.

Members of the Committee present: Diane Ablonczy, Rick Dykstra, Yvan Loubier, Hon. John McCallum, Hon. John McKay, Massimo Pacetti, Brian Pallister, Michael Savage, Thierry St-Cyr, Hon. Garth Turner and Judy Wasylycia-Leis.

Acting Members present: Dean Del Mastro for Luc Harvey.

In attendance: Library of Parliament: Alexandre Laurin, Analyst; June Dewetering, Principal.

Witnesses: RBC Financial Group: Catherine Adams, Vice-President, Home Equity Financing, RBC Royal Bank. AIG United Guaranty Canada: Andy Charles, President and CEO. Canadian Home Builders’ Association: John Kenward, Chief Operating Officer. Canada Mortgage and Housing Corporation: Karen A. Kinsley, President. PMI Group, Inc.: David Liu, Vice President, International Markets. Canadian Institute of Mortgage Brokers and Lenders: Jim Murphy, Senior Director, Government Relations and Communications. Canadian Real Estate Association: Dale Ripplinger, Director – Chair, Federal Affairs Committee. Mouvement des caisses Desjardins: Noël Roy, Chef de produit, financement hypothécaire, Direction, développement de l’offre. Triad Guaranty Insurance Corporation: Mark Tonnesen, President, CEO. Genworth Financial Canada: Peter Vukanovich, President and CEO.

Pursuant to Standing Order 81(4), the Committee resumed consideration of the Main Estimates 2006-2007: VOTE 10 under FINANCE referred to the Committee on Tuesday, April 25, 2006.

The witnesses made statements and answered questions.

#180 Blacksheep on 07.25.12 at 6:03 pm

Daystar # 155,163,

One whom suffers a psychiatric condition, sometimes displays an inability to grasp reality. Yours is known as: “Compulsive Systemic Defence Disorder” or CSDD.
Thank you for your concerns, but you’ve misinterpreted my vantaged perspective. The glass is definitely half full, as my insight illuminates opportunities, missed by most. Unfortunately the masses, are as the saying goes, “To busy working to make money”

take care

#181 Westernman on 07.25.12 at 6:12 pm

Turner Nation @ # 43,
Why are kids being taught a second rate language? Because this is Canada and in Canada Quebec gets what it wants – always…
If Quebec wanted Anglophones to have to wear their pants backwards Ottawa would pass a law the next day requiring it…
I don’t know why in hell English Canada puts up with that province…

#182 Victoria Tea Party on 07.25.12 at 6:13 pm


Dear Katie,

Read the following. It’s Tim Geithner, the US Secretary of the Treasury speaking to Congressmen in DC today.

Normally he is Mr. Sunshine, when he talks about the intractable economic catastrophe the United States has been glued to since 2007.

This is a direct quote:

“I’ll tell you my general view on this,” Secretary of Treasury Tim Geithner said about the economy in his testimony to Congress.

“The economy is not growing fast enough. Unemployment is very high. There’s a huge amount of damage left in the housing market. Americans are living with the scars of this crisis.”

“The institutions with authority should be doing everything they can to try to make economic growth stronger,” Geithner said.

“That is an obligation we all share. Congress…has the authority for the most powerful tools we have available to help economic growth. We’d like Congress to use those tools now in this context…we will keep supporting anything practical, sensible, that will make growth stronger, help get more people back to work…make credit more available to more people…to a home…refinance a mortgage…make sure businesses can expand…”

Sorry about using most of this clip here, Katie, but you can drive a Mac Truck through those sentences they’re so loose, filled as they are with fear and loathing about the Empire’s positive economic outlook.

As it stands now, he says, IT DOESN’T HAVE ONE!

And that’s from the most powerful cabinet member in the Obama administration!!

And there’s this from CNBC, another typical cheerleader for the Emp, Katie:

Sales of newly built homes fell hard in June, despite newfound optimism in the housing recovery, especially among the home builders themselves.

Signed contracts to buy new homes fell 8.4 percent from the previous month, according to the U.S. Commerce Department, although they are still up 15 percent from a year ago.

Sales levels are now at their lowest since January.

This is the second miss for housing in the same month. Sales of existing homes fell as well, despite expectations for a gain.

The biggest drop in new home sales came in the Northeast, down 60 percent month-to-month… (while) “Builder stocks have continued to outperform the market…,” wrote analysts at Deutsche Bank… “…we think downside tail risk is mounting for 2H12. It shouldn’t take more than muddle-through economic growth for housing recovery to continue, but the risks are that even that doesn’t happen or it happens unevenly against tenuous investor optimism.”

You bought at THE WRONG TIME.

Toronto’s phoney-baloney real estate (condo) market, dominated as it seems to be by a herd of crazed real estate cultists and other assorted this ‘n’ that, is no match for the mega-disaster that continues to spread south of the line riddled through every aspect of the American economy.

There is no sunlight and it’s now way past the 2012 half-way point!

Therefore, southern Ontario could be largely an economic wasteland by this Christmas.

For more gut-wrenching developments, check out Spanish bond yields and watch Greece disappear from all of our radars soon as it prepares to be bounced from the Euorzone by an angry Germany. And watch the UK, Italy, and France. Oh, yes, France!

So much debt the world over and no co-ordinated efforts, yet, to do something, anything, about it.

Sovereign states’ interests prevent such an outcome anytime soon, if ever. It’s the “if ever” that worries me, Katie. Good luck to you and your child.

#183 Steven Rowlandson on 07.25.12 at 6:21 pm

Re#157 In Garth Not God We Trust.
Is Garth Turner your God?

Got a problem with that, mortal? — Garth

#184 AprilNewwest on 07.25.12 at 6:37 pm

When the depreciation reports come into effect end of next yr I’m being told strata fees will likely increase … alot
in many cases. I wouldn’t touch a condo ’till after that has taken place and maybe not even then. Condos are such crap.

#185 John on 07.25.12 at 6:46 pm

Victoria Tea Party wrote:

“So much debt the world over and no co-ordinated efforts, yet, to do something, anything, about it.

Sovereign states’ interests prevent such an outcome anytime soon, if ever. It’s the “if ever” that worries me, Katie. Good luck to you and your child.”
You don’t think this isn’t going to a “coordinated” effort? I’d say it is. That’s the idea. That’s the game.

#186 John on 07.25.12 at 6:56 pm

Nostra, you inspire confidence.

You know I haven’t even thought of a Kentucky 3 piece with fries and gravy since about 1992…last time I had one. That’s really quite an image. Washed down with liquor also. You’re a good man.

#187 Hoof-Hearted on 07.25.12 at 6:59 pm

SASKATOON – Some residents of a rural municipality in Saskatchewan are predicting a tax revolt after officials in Corman Park approved a property tax increase of 36 per cent.

Reeve Mel Henry says it has to be done because the proper planning wasn’t done over the years to keep up with the infrastructure.

He says the RM is on the hook to decommission the South Corman Park landfill at a cost of $2 million.

Ratepayer Gary Derenoski says his taxes have gone up from $1,460 in 2010 to $2,750 this year.

He says there has to be better communication with council.

The rural municipality, which has a population of about 8,400 in the rural area surrounding Saskatoon, has an annual budget of about $14 million.



Not surprised ….

Here in HAM-ville Richmond BC…..I look at the roads and cannot believe the major cracks in the pavement….all over town…..in winter…. major potholes.

These crack addicts in Local Gov’t will have pissed $$$ down a rathole on frivolous issues……, and then be ready to jack up taxes as the infrastructure crumbles

#188 Blacksheep on 07.25.12 at 7:01 pm

American Werewolf in BC # 164,

“Remember, everything we have around us–wealth, infrastructure, technology, debt, industrial agriculture–was established and supported when mankind springboarded ahead with high EROEI. And now, it is a proven fact that EROEI is on the decline, while cornecopium ideals don’t seem to be providing applicable solutions. It may be a long way down once everyone in the world figures out that their easy-energy generated reality and standard of living cannot further be supported going forward.”

“In the meantime, enjoy some popcorn and watch all the bubbles perpetually pop for the next decade, while the elephant in the room is ignored”.
Finally, some brutal honesty that unfortunately, no one wants to hear. $150 a barrel oil, was an economic rev limiter for business. Gives pause to the idea of signing on the doted line for long term debts, based on future expectations of return.

What are ten year bonds telling us?

take care

#189 disciple on 07.25.12 at 11:21 pm

#165 American Werewolf… Your assumptions are wrong. (If we cannot grow at a rate needed to service debt & obligations, as well as maintain our existing infrastructure, everything is going to swiftly grind to a stagflating halt. In fact, it may already be in the process of a greater deleveraging of our entire civilization.)

Infrastructure is permanent enough. Civilization is additive and does not depend on continued growth. That is a bankster mythos… What you assume to be the pinnacle of civilization in the West, is not. Oil is an outdated energy source. It is only the legacy global power structures who are preventing your mind from grasping it. Or maybe it’s your collective greed.

Cornucopian? Your Western arrogance is suffocating. You will eventually see how wrong you are… on so many levels…

#190 disciple on 07.25.12 at 11:33 pm

#189 Blacksheep… “brutal honesty that no one wants to hear”. And yet we’ve been hearing this for 5 decades. We have enough of everything to go around, so the problem is not the oil. The problem is not overpopulation. The problem is not technology. The problem is “us”. The 1% in our midst that are insane, and insanely clever, who have convinced us of the supposed “boogey-men” everywhere. Civilization will collapse? Who cares? Perhaps only that 1% and their mind-controlled zombie followers who fear Peak Oil, or Global Warming, or Elenin, or Viruses, or whatever the flavour of the month…

Why is there so much fear? Mixed with apathy and hopelessness… And Blacksheep, that is all I am sensing from you. You are being played.

#191 daystar on 07.26.12 at 2:18 am

#181 Blacksheep on 07.25.12 at 6:03 pm

One whom suffers a psychiatric condition, sometimes displays an inability to grasp reality. – Blacksheep


Yours is known as: “Compulsive Systemic Defence Disorder” or CSDD.

Lol, so whats the cure, pre-emptive strikes? Oh wait! I understand. :D


Thank you for your concerns, but you’ve misinterpreted my vantaged perspective. – Blacksheep

Well, yes, well, that can happen, I do have a history.

The glass is definitely half full, as my insight illuminates opportunities, missed by most. Unfortunately the masses, are as the saying goes, “To busy working to make money” – Blacksheep

Good! Glad to hear it, I was actually a bit concerned until now. Its nice to be wrong sometimes ;)

#192 cynically on 07.26.12 at 2:37 am

Re @154 – David Stockman indeed was Reagan”s budget director and was the proponent of Trickle Down economics, the main idea of the Republicans today. This theory believes that if you give the tax breaks to the very rich, then they, by their spending will keep the economy strong and the workers will benefit from that same money “tickling down” to their level. As Romney will tell you, give the money to him and his fellow millionaires in the form of lower taxes and they will get the economy going again. Sounds good but David Stockman rescinded his belief in the theory and today believes the tax breaks should go to the working people as the very rich can and will spend anyway. Just an interesting aside from the present RE discussion yet pertinent too, at least in the US.

#193 Motzu on 07.26.12 at 12:28 pm


I have a really good time reading the “absurd Vacouver property of the week” section of this blog.

#194 NAM not HAM on 07.26.12 at 1:50 pm

Anyone know why extendicare isn’t outperforming like other REITs? It’s got a nice dividend yield, but is that sustainable. All other REITs are so expensive right now.

#195 Bill Gable on 07.26.12 at 5:06 pm

China – hard landing?

They need 8.1% GDP growth (The Company ,line) to keep the riots under 10,000.

Growth is cratering – same as the Chinese quirk of using stored commodities as collateral on shady construction loans.
Now China NEEDS the US to buy crap at Wal-Mart.

US has no money.

Things are getting nasty at the edges. It was always thus.

Read your History.

Go one step further than your MP and actually do some investigating (no offence, Mr. Turner) – and look at what is really going on.

There are some total gems in today’s post.

Just think what’s logically next?

Your guess is probably wiser than Ben Bernanke’s next move is going to be. (Love how a Country like the USA doesn’t print it’s own MONEY. That’s what I call a Reserve Currency!)

#196 AS on 07.26.12 at 7:43 pm

I follow your blog religiously (about the only thing I do this way …) and have a great deal of respect and admiration for your experience, expertise, but mostly — backbone.

I must say, though, that this particular entry left me entirely puzzled :
-first you stated Katie wanted a home,
-as such, you very helpfully referred her to someone you yourself have worked with for years,
-next you expressed your dismay that she would actually go and buy a place ?…

I’m not sure I was with you any longer at that point… I would have perhaps expected a detailed market analysis (as you did in the rest of this post) BEFORE she actually commit to this, not afterwards.

Or perhaps I missed the fact that you indeed cautioned her first, which she fully and light-heartedly ignored, which puts you entirely out of the realm of responsibility in this case. (if you as an advisor did not advise her to the best of your knowledge and capability, surely there is a breach of confidence somewhere?!?)

Sadly, this “give her the rope” scenario — and shaking your head when she does hang herself, is not something I would have expected from someone with your integrity.

Surely this lady will now read your blog and pay more attention in the future, as we all do, thanks to your advice — but the deed is done, as far as she is concerned. No amount of reading can help her now… and I certainly hope that someone who knows better will enlighten me BEFORE I do something with negative results for a while to come.

Please do not feel any pressure to post this, if you do not feel it appropriate for your readers, as my interest is not to be “published” on the internets, as much as determining the correct way forward, for myself and others, based on your and others’ trusted advice.

Thanks for your consideration of the above.